LOGO

                                18 OAKLAND AVENUE
                          WARWICK, NEW YORK 10990-0591
                                 (914) 986-2206


                                              August 21, 1998


Dear Shareholder:

         You are cordially invited to attend the 1998 Annual Meeting of
Shareholders ("Annual Meeting") of Warwick Community Bancorp, Inc. ("Company"),
the holding company for The Warwick Savings Bank ("Bank"), which will be held at
The Inn at Central Valley, Smith Clove Road, Central Valley, New York 10917, on
September 22, 1998 at 9:30 a.m., Eastern time.

         The attached Notice of the 1998 Annual Meeting of Shareholders and
Proxy Statement describe the formal business to be transacted at the Annual
Meeting. Directors and officers of the Company, as well as a representative of
Arthur Andersen LLP, the accounting firm appointed by the Board of Directors to
be the Company's independent auditors for the period beginning June 1, 1998 and
ending December 31, 1998, will be present at the Annual Meeting to respond to
appropriate questions from our shareholders.

         The Board of Directors of the Company has determined that an
affirmative vote on each matter to be considered at the Annual Meeting is in the
best interests of the Company and its shareholders and unanimously recommends a
vote "FOR" each of these matters.

         YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, THE BOARD OF DIRECTORS
URGES YOU TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THIS WILL NOT PREVENT YOU FROM
VOTING IN PERSON AT THE ANNUAL MEETING, BUT WILL ASSURE THAT YOUR VOTE IS
COUNTED IF YOU ARE UNABLE TO ATTEND. IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE
NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO ATTEND AND TO VOTE PERSONALLY AT THE ANNUAL MEETING.
EXAMPLES OF SUCH DOCUMENTATION INCLUDE A BROKER'S STATEMENT, LETTER OR OTHER
DOCUMENT CONFIRMING YOUR OWNERSHIP OF SHARES OF THE COMPANY.

         On behalf of the Board of Directors and the employees of the Company
and the Bank, thank you for your continued support.

                                       Sincerely yours,


                                       [Facsimile signature]


                                       Timothy A. Dempsey
                                       President and Chief Executive Officer


<PAGE>






                                      LOGO

                                18 OAKLAND AVENUE
                          WARWICK, NEW YORK 10990-0591
                                 (914) 986-2206


                NOTICE OF THE 1998 ANNUAL MEETING OF SHAREHOLDERS
                        TO BE HELD ON SEPTEMBER 22, 1998


         NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Warwick Community Bancorp, Inc. ("Company") will be held at The Inn at Central
Valley, Smith Clove Road, Central Valley, New York 10917, on September 22, 1998
at 9:30 a.m., Eastern time, for the following purposes:

         1.    To elect three directors, each to serve for a three-year term;

      2.       To ratify the appointment of Arthur Andersen LLP as independent
               auditors for the Company for the period beginning June 1, 1998
               and ending December 31, 1998; and

      3.       To transact such other business as may properly come before the
               Annual Meeting and any adjournment or postponement thereof. As of
               the date hereof, the Board of Directors of the Company is not
               aware of any such other business.

         The Board of Directors has fixed the close of business on August 12,
1998 as the record date for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting and any adjournment or postponement
thereof. A list of shareholders entitled to vote at the Annual Meeting will be
available for inspection at 18 Oakland Avenue, Warwick, New York, for a period
of ten days prior to the Annual Meeting and will also be available at the Annual
Meeting.

         A copy of the 1998 Annual Report to Shareholders of the Company, which
for purposes of the regulations of the Federal Deposit Insurance Corporation
serves as the Annual Disclosure Statement of The Warwick Savings Bank, a wholly
owned subsidiary of the Company, accompanies this Notice of the 1998 Annual
Meeting of Shareholders. Shareholders may obtain, free of charge, an additional
copy of the Annual Report by writing to Margaret Sgombick, Marketing Director,
The Warwick Savings Bank, P.O. Box 591, Warwick, New York 10990-0591.

         YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, THE BOARD OF DIRECTORS
URGES YOU TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE. RETURNING THE PROXY CARD WILL
NOT PREVENT YOU FROM VOTING IN PERSON IF YOU ATTEND THE ANNUAL MEETING.

                                       By Order of the Board of Directors


                                       [Facsimile signature]


                                       Nancy L. Sobotor-Littell
                                       Corporate Secretary
Warwick, New York
August 21, 1998


<PAGE>



                                      LOGO

                                18 OAKLAND AVENUE
                          WARWICK, NEW YORK 10990-0591
                                 (914) 986-2206


                            ------------------------


                             PROXY STATEMENT FOR THE
                       1998 ANNUAL MEETING OF SHAREHOLDERS

                        TO BE HELD ON SEPTEMBER 22, 1998

                               GENERAL INFORMATION

GENERAL

         This Proxy Statement and accompanying Proxy Card are being mailed to
shareholders of Warwick Community Bancorp, Inc. ("Company") on or about August
21, 1998 in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Shareholders of the
Company to be held at The Inn at Central Valley, Smith Clove Road, Central
Valley, New York 10917, on September 22, 1998 at 9:30 a.m., Eastern time, and at
any adjournment or postponement thereof ("Annual Meeting").

         On December 23, 1997, The Warwick Savings Bank ("Bank") completed its
conversion from a New York State mutual savings bank to a New York State stock
savings bank ("Conversion"). The Company, a Delaware corporation, operates as a
bank holding company for the Bank, its wholly owned subsidiary.


RECORD DATE AND VOTING RIGHTS

         The Board of Directors of the Company has fixed the close of business
on August 12, 1998 as the record date ("Record Date") for the determination of
the holders of the Company's issued and outstanding common stock, par value $.01
per share ("Common Stock"), entitled to notice of and to vote at the Annual
Meeting. Only holders of record of Common Stock at the close of business on the
Record Date will be entitled to vote at the Annual Meeting. At the close of
business on the Record Date, there were 6,606,548 shares of Common Stock
outstanding. The presence, in person or by proxy, of the holders of at least a
majority of the total number of outstanding shares of Common Stock entitled to
vote at the Annual Meeting is necessary to constitute a quorum thereat.

         Each holder of shares of Common Stock outstanding on the Record Date
will be entitled to one vote for each share held of record (except for Excess
Shares, if any, as defined below) upon each matter to be voted upon at the
Annual Meeting. As provided in the Company's Certificate of Incorporation, if
any person beneficially owns, directly or indirectly, shares of Common Stock in
excess of 10% of the then issued and outstanding shares of Common Stock, all
such shares beneficially owned by such person in excess of the 10% threshold
shall be deemed to be "Excess Shares," and the holder thereof shall be entitled
to cast only one one-hundredth (1/100) of a vote per share for each Excess
Share. A person or entity is deemed to beneficially own shares owned by an
affiliate or associate as well as persons acting in concert with such person or
entity. The Company's Certificate of Incorporation authorizes the Board of
Directors (i) to interpret and apply the 

<PAGE>



provisions of the Certificate of Incorporation governing Excess Shares and to
determine, on the basis of information known to them after reasonable inquiry,
all facts necessary to ascertain compliance with such provisions and (ii) to
demand that any person who is reasonably believed to beneficially own Excess
Shares supply information to the Company to enable the Board of Directors to
implement and apply such provisions.

         If the enclosed Proxy Card is properly executed and received by the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions indicated thereon. IF
NO INSTRUCTIONS ARE GIVEN, EXECUTED PROXIES WILL BE VOTED FOR THE PROPOSALS
IDENTIFIED IN THE NOTICE OF THE 1998 ANNUAL MEETING.


VOTE REQUIRED

         Directors are elected by a plurality of the votes cast in person or by
proxy at the Annual Meeting. The holders of Common Stock may not vote their
shares cumulatively for the election of directors. Ratification of the
appointment of Arthur Andersen LLP as the Company's independent auditors
requires the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock represented in person or by proxy at the Annual Meeting
and entitled to vote thereon. ACCORDINGLY, SHARES AS TO WHICH THE "ABSTAIN" BOX
HAS BEEN SELECTED ON THE PROXY CARD WITH RESPECT TO THE APPOINTMENT OF ARTHUR
ANDERSEN LLP AS INDEPENDENT AUDITORS FOR THE COMPANY WILL BE COUNTED AS PRESENT
AND ENTITLED TO VOTE AND WILL HAVE THE EFFECT OF A VOTE AGAINST THAT PROPOSAL.
IN CONTRAST, SHARES UNDERLYING BROKER NON-VOTES WILL NOT BE COUNTED AS PRESENT
AND ENTITLED TO VOTE AND WILL HAVE NO EFFECT ON THE VOTE FOR SUCH PROPOSAL.


REVOCABILITY OF PROXIES

         The presence of a shareholder at the Annual Meeting will not
automatically revoke such shareholder's proxy. However, a shareholder may revoke
a proxy at any time before it is voted by (1) filing a written notice of
revocation with the Corporate Secretary of the Company prior to the Annual
Meeting, (2) delivering to the Corporate Secretary prior to the Annual Meeting a
duly executed proxy bearing a later date or (3) attending the Annual Meeting,
filing a written notice of revocation with the secretary of the Annual Meeting
and voting in person.

         IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
NAME, YOU WILL NEED APPROPRIATE DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER
TO BE ADMITTED TO THE ANNUAL MEETING AND TO VOTE AT THE ANNUAL MEETING. Examples
of such documentation include a broker's statement, letter or other document
that will confirm your ownership of shares of the Company.


SOLICITATION OF PROXIES

         The Company will bear the costs of soliciting proxies from its
shareholders. In addition to the solicitation of proxies by mail, Kissel-Blake
Inc., a proxy solicitation firm, will assist the Company in soliciting proxies
for the Annual Meeting and will be paid a fee estimated to be $2,500, plus
out-of-pocket expenses. Proxies may also be solicited personally, by telephone,
facsimile or other means by directors, officers and employees of the Company or
its subsidiaries, without additional compensation. The Company will also request
persons, firms and corporations holding shares in their names or in the name of
their nominees, which are beneficially owned by others, to forward proxy
materials to and obtain proxies from such beneficial owners, and will reimburse
such holders for reasonable expenses incurred in connection therewith.


                                       2

<PAGE>

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

         The following table sets forth certain information as to those persons
believed by management to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock as of July 31, 1998. Other than those persons
listed below, the Company is not aware of any person who is the beneficial owner
of more than 5% of the Company's outstanding shares of Common Stock as of July
31, 1998. Except as otherwise indicated, the information provided in the
following table was obtained from filings with the Securities and Exchange
Commission ("SEC") and with the Company pursuant to the Securities Exchange Act
of 1934, as amended ("Exchange Act"). For purposes of the following table and
the table set forth under "Stock Ownership of Management," in accordance with
Rule 13d-3 under the Exchange Act, a person is deemed to "beneficially own" any
shares of Common Stock (a) over which such person has, directly or indirectly,
sole or shared voting or investment power or (b) of which such person has the
right to acquire beneficial ownership, including the right to acquire beneficial
ownership by the exercise of stock options, at any time within 60 days after
July 31, 1998. As used herein, "voting power" includes the power to vote, or
direct the voting of, such shares, and "investment power" includes the power to
dispose, or direct the disposition of, such shares.

<TABLE>
<CAPTION>
   TITLE OF CLASS         NAME AND ADDRESS OF                     AMOUNT AND NATURE OF     PERCENT OF COMMON STOCK
     OF SECURITY             BENEFICIAL OWNER                     BENEFICIAL OWNERSHIP           OUTSTANDING
     -----------             ----------------                     --------------------           -----------

<S>                    <C>                                         <C>                            <C> 
Common Stock           Warwick Community Bancorp, Inc.             528,523(1)                     8.0%
                       Employee Stock Ownership Plan and
                       Trust ("ESOP")
                       18 Oakland Avenue
                       Warwick, New York 10990-0591    

Common Stock           Bay Pond Partners, L.P.                     364,000(2)                     5.5%
                       75 State Street
                       Boston, Massachusetts 02109
</TABLE>

----------------------

(1)      The ESOP is administered by the Bank as Plan Administrator and by a
         committee established pursuant to the ESOP ("ESOP Committee"). The
         assets of the ESOP are held in a trust ("ESOP Trust") for which Marine
         Midland Bank serves as trustee ("ESOP Trustee"). The ESOP Trust
         purchased such shares following the Bank's Conversion with funds
         borrowed from the Company. The Common Stock acquired by the ESOP is
         released from a suspense account and allocated annually to the accounts
         of participants based upon the contributions made to the ESOP by the
         Company. The ESOP Committee may instruct the ESOP Trustee regarding
         investment of assets held in the ESOP Trust. The ESOP Trustee generally
         votes all allocated shares held in the ESOP Trust in accordance with
         the instructions of participants. As of December 31, 1997, 31,016 of
         the 528,523 shares were allocated to participants. Pursuant to the
         terms of the ESOP, unallocated shares are generally voted by the ESOP
         Trustee in a manner calculated to most accurately reflect the voting
         instructions received from participants regarding the allocated shares
         so long as such vote is in accordance with the requirements of the
         Employee Retirement Income Security Act of 1974, as amended. Each
         member of the ESOP Committee disclaims beneficial ownership of the
         shares of Common Stock held in the ESOP.

(2)      Based on information in a Schedule 13G, dated April 7, 1998, filed on
         behalf of Bay Pond Partners, L.P. ("Bay Pond"), a Delaware limited
         partnership, Wellington Hedge Management LLC ("WHML"), a Massachusetts
         limited liability company which is the sole general partner of Bay
         Pond, and Wellington Hedge Management, Inc., a Massachusetts
         corporation which is the managing member of WHML. Bay Pond has shared
         voting and shared dispositive power over all of the shares shown.

                                       3

<PAGE>

STOCK OWNERSHIP OF MANAGEMENT

         The following table sets forth information with respect to the shares
of Common Stock beneficially owned by each director of the Company, by each
executive officer of the Company identified in the Summary Compensation Table
included on page 13 of this Proxy Statement and by all directors and executive
officers of the Company or the Bank as a group as of July 31, 1998. Except as
otherwise indicated, each person and each group shown in the table has sole
voting and investment power with respect to the shares of Common Stock
indicated.

<TABLE>
<CAPTION>
                                                                     AMOUNT AND NATURE OF       PERCENT OF COMMON
                                                                     BENEFICIAL OWNERSHIP       STOCK OUTSTANDING
             NAME                           TITLE (1)                     (2)(3)(4)(5)(6)              (7)
             ----                           ---------               ----------------------             ---

<S>                                                                         <C>                       <C> 
Timothy A. Dempsey                President, Chief Executive                84,878                    1.3%
                                    Officer and Director    
                                  Executive Vice President,

Ronald J. Gentile                 Chief Operating Officer                   71,380                    1.1%
                                    and Director
Frances M. Gorish                 Director                                  14,920                     *
R. Michael Kennedy                Director                                  44,920                     *
Fred M. Knipp                     Director                                  23,920                     *
Emil R. Krahulik                  Director                                  13,920                     *
Thomas F. Lawrence, Jr.           Director                                  10,920                     *
Henry L. Nielsen, Jr.             Director                                  27,920                     *
John W. Sanford III               Director                                  12,420                     *
Robert N. Smith                   Director                                  24,420                     *
All directors and executive officers      
as a group (15 persons)                                                    482,856                  7.3%
</TABLE>

---------------------
* Less than 1.0% of outstanding Common Stock.
(1) Titles are for both the Company and the Bank.

(2)  The figures shown include shares held in trust pursuant to the ESOP that
     have been allocated as of December 31, 1997 to individual accounts of ESOP
     participants as follows: Mr. Dempsey, 986 shares; Mr. Gentile, 1,041
     shares; and all executive officers as a group, 5,357 shares. Such persons
     have voting power (subject to the duties of the ESOP Trustee) but no
     investment power, except in limited circumstances, as to such shares. The
     figures shown do not include 497,507 shares held in trust pursuant to the
     ESOP that have not been allocated to any individual's account and as to
     which the members of the Company's ESOP Committee (consisting of Messrs.
     Dempsey, Gentile and Budich, Ms. Sobotor-Littell and Ms. Rudy) and each of
     the participants identified in the table may be deemed to share investment
     power, except in limited circumstances, thereby causing each such person to
     be deemed a beneficial owner of such shares. Each of the members of the
     ESOP Committee and the participants identified in the table disclaims
     beneficial ownership of such shares and, accordingly, such shares are not
     attributed to the members of the ESOP Committee or the participants
     identified in the table individually. See "Election of Directors --
     Executive Compensation -- Employee Stock Ownership Plan and Trust."

(3)  The figures shown include shares held pursuant to The Warwick Savings Bank
     401(k) Savings Plan ("401(k) Plan") that have been allocated as of July 31,
     1998 to individual accounts as follows: Mr. Dempsey, 216 shares; Mr.
     Gentile, 3,238 shares; and all executive officers as a group, 13,787
     shares. Such persons have shared voting and investment power as to such
     shares. See "Election of Directors -- Executive Compensation -- 401(k)
     Plan."

                                              (FOOTNOTES CONTINUED ON NEXT PAGE)

                                       4
<PAGE>



(4)  The figures shown include shares held under the Recognition and Retention
     Plan of Warwick Community Bancorp, Inc., over which each individual has
     sole voting but no investment power, as follows: Mr. Dempsey, 52,854
     shares; Mr. Gentile, 36,998 shares; each of Mrs. Gorish and Messrs.
     Kennedy, Knipp, Krahulik, Lawrence, Nielsen, Sanford and Smith, 8,919
     shares; and all directors and executive officers as a group, 240,479
     shares. See "Election of Directors -- Executive Compensation -- Recognition
     and Retention Plan."

(5)  The figures shown include shares held pursuant to the Benefit Restoration
     Plan of The Warwick Savings Bank ("BRP") as to which each person identified
     has no voting power, but may be deemed to share investment power, as
     follows: Mr. Dempsey, 821 shares; Mr. Gentile, 102 shares; and all
     executive officers as a group, 923 shares. See "Election of Directors --
     Executive Compensation -- Benefit Restoration Plan."

(6)  The figures shown include shares over which individuals may be deemed to
     share voting and investment power (other than as disclosed in notes 2, 3, 4
     and 5) as follows: Mr. Dempsey, 15,000 shares; Mr. Gentile, 15,000 shares;
     Mr. Kennedy, 17,000 shares; Mr. Knipp, 15,000 shares; Mr. Lawrence, 1,000
     shares; Mr. Sanford, 2,500 shares; Mr. Smith, 5,500 shares; and all
     directors and executive officers as a group, 83,500 shares.

(7)  Percentages with respect to each person or group of persons have been
     calculated on the basis of 6,606,548 shares of Common Stock, the number of
     shares of Common Stock outstanding as of July 31, 1998. No officer or
     director has the right to acquire beneficial ownership of additional shares
     of Common Stock within 60 days after July 31, 1998.




                                  PROPOSAL ONE

                              ELECTION OF DIRECTORS

GENERAL

         The Certificate of Incorporation and By-Laws of the Company provide
that the Board of Directors shall be divided into three classes. The directors
of each class serve for a term of three years, with one class elected each year.
In all cases, directors serve until their successors are duly elected and
qualified. Currently, the Board of Directors of the Company consists of 10
members.

         The terms of three directors expire at the Annual Meeting. Each of the
three incumbent directors, Timothy A. Dempsey, Fred M. Knipp and Henry L.
Nielsen, Jr., has been nominated by the Board of Directors to be re-elected at
the Annual Meeting, each to serve for a three-year term expiring at the 2001
Annual Meeting and until their successors are otherwise duly elected and
qualified. Each nominee has consented to being named in this Proxy Statement and
to serve if elected. However, if any nominee should become unable to serve, the
proxies received in response to this solicitation that were voted in favor of
such nominee will be voted for the election of such other person as shall be
designated by the Board of Directors of the Company, unless the Board of
Directors shall determine to reduce the number of directors pursuant to the
By-Laws of the Company. In any event, proxies cannot be voted for a greater
number of persons than the three nominees named.


INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS

         The following table sets forth certain information with respect to each
nominee for election as a director and each continuing director whose term does
not expire at the Annual Meeting. There are no arrangements or understandings
between the Company and any director or nominee pursuant to which such person
was elected or nominated to be a director of the Company. For information with
respect to security ownership of directors, see "General Information -- Stock
Ownership of Management."

                                        5
<PAGE>


<TABLE>
<CAPTION>

                                                                                                         DIRECTOR
NAME                                AGE(1)      END OF TERM     POSITION HELD WITH THE COMPANY           SINCE(2)
----                                ------      -----------     ------------------------------           --------
NOMINEES FOR A THREE-YEAR
  TERM EXPIRING IN 2001

<S>                                   <C>           <C>         <C>                                        <C>
Timothy A. Dempsey                    64            1998        President, Chief Executive
                                                                Officer     and Director                   1974

Fred M. Knipp                         67            1998        Director                                   1992

Henry L. Nielsen, Jr.                 72            1998        Director                                   1962

CONTINUING DIRECTORS

Ronald J. Gentile                     49            1999        Executive Vice President, Chief
                                                                   Operating Officer and Director          1990

Frances M. Gorish                     71            2000        Director                                   1979

R. Michael Kennedy                    46            2000        Director                                   1997

Emil R. Krahulik                      64            1999        Director                                   1984

Thomas F. Lawrence, Jr.               70            1999        Director                                   1965

John W. Sanford III                   61            2000        Director                                   1986

Robert N. Smith                       49            2000        Director                                   1994

</TABLE>

(1)  At July 31, 1998.

(2)  Includes terms as trustee of the Bank and of predecessor affiliated
     institutions prior to the incorporation of the Company on September 10,
     1997.

         The principal occupation and business experience of each nominee for
election as director and each continuing director are set forth below.


                       NOMINEES FOR ELECTION AS DIRECTORS

         TIMOTHY A. DEMPSEY serves as the President, Chief Executive Officer and
a director of the Company. Mr. Dempsey has been involved in the financial
institutions industry for more than 45 years and has served as President and
Chief Executive Officer of the Bank since 1985 and as a director since 1974. He
also serves as President, Chief Executive Officer and a director of the Bank's
wholly owned subsidiaries, including Warsave Development, Inc. ("Warsave"), WSB
Financial Services, Inc. ("WSB Financial") and WSB Mortgage Company of New
Jersey, Inc. ("WSB Mortgage"). In addition, he serves as a director of the
Institutional Investors Capital Appreciation Fund, Inc., a director of the
M.S.B. Fund Inc. and Chairman of the Orange County Water Authority.


                                       6

<PAGE>

         FRED M. KNIPP has served as a director of the Bank since 1984. He is 
the President, Chief Executive Officer and a director of the Warwick Valley
Telephone Company and a director of Centrex Communications Corporation.

          HENRY L. NIELSEN, JR. has served as a director of the Bank since 
1962. He is the President of Nielsen Construction Co., Inc. and is a director of
the Warwick Valley Telephone Company. He is also a trustee of the Warwick
Historical Society and the Warwick Cemetery Association. Mr. Nielsen also serves
as a director of Warsave, WSB Financial and WSB Mortgage.


         THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
               VOTE "FOR" THE NOMINEES FOR ELECTION AS DIRECTORS.


CONTINUING DIRECTORS

         RONALD J. GENTILE serves as the Executive Vice President, Chief
Operating Officer and a director of the Company. Mr. Gentile joined the Bank and
has been a director since 1990. In addition, he serves as Vice President of the
Bank's wholly owned subsidiaries, including Warsave, WSB Financial and WSB
Mortgage. Prior to joining the Bank, Mr. Gentile served as a senior bank
examiner for the Federal Deposit Insurance Corporation. He is also a member of
the board of directors of the TriState Health System, Inc. and Winslow
Therapeutic Riding Unlimited, and a former President and member of the board of
directors of the Warwick Valley Rotary Club.

         FRANCES M. GORISH joined the Bank in 1944 and has served as a director
since 1979. Now retired, she served in various capacities for the Bank, most
recently as Vice President and Corporate Secretary. In addition, she serves as
treasurer of the Salvation Army, Lorena Abbott Service Unit, and the treasurer
of the Florida Historical Society. Mrs.
Gorish also serves as a director of Warsave, WSB Financial and WSB Mortgage.

         R. MICHAEL KENNEDY became a director of the Bank in 1997. Mr. Kennedy
is a general partner and manager of various real estate companies, all managed
through Kennedy Companies. He is also the general managing partner of the
Fireplace Restaurant.

         EMIL R. KRAHULIK has served as a director of the Bank since 1984. He is
a partner in the law firm of Beattie & Krahulik and serves as the Bank's general
counsel.

         THOMAS F. LAWRENCE,  JR. has been a director of the Bank since 1965. 
Mr. Lawrence, now retired, formerly served as President of Warwick Auto Company
Inc. He is also President of the Warwick Cemetery Association. Mr. Lawrence also
serves as a director of Warsave, WSB Financial and WSB Mortgage. Mr. Lawrence is
Nancy L. Sobotor-Littell's father.

         JOHN W.  SANFORD III has been a director  since 1986.  Mr.  Sanford
also serves as President of John W. Sanford & Son, Inc., an insurance agency,
and is a partner in Maple Terrace Farms, a dairy beef business.

         ROBERT N.  SMITH has  served as a director  since  1994.  He is  
currently the President of Lazear-Smith and Vander-Plaat Memorial Home and
Lazear-Smith Funeral Home. Mr. Smith is also sole proprietor of Smith and Gesell
Associates, a bookkeeping and tax preparation service.


                                       7

<PAGE>

BOARD AND COMMITTEE MEETINGS

         The Board of Directors meets on a monthly basis and may have additional
special meetings from time to time. During the fiscal year ended May 31, 1998,
the Board of Directors met 19 times. No current director attended fewer than 75%
of the total number of Board meetings and committee meetings of which such
director was a member. There is no standing nominating committee of the Board of
Directors. For the part of the fiscal year ended May 31, 1998 during which the
Company was not yet in existence, the information contained in this section
reflects information for the Bank.

         The Board of Directors of the Company maintains the following standing
committees:

         The EXECUTIVE  COMMITTEE consists of Mr. Dempsey,  Mr. Nielsen,  Mr. 
Lawrence, Mrs. Gorish, Mr. Krahulik and Mr. Sanford. The Executive Committee
generally oversees the affairs of the Company, considers proposals from
management in relation to the election of officers and makes recommendations to
the Board regarding those individuals nominated to officer positions. The
Executive Committee met 23 times during the fiscal year ended May 31, 1998.

         The AUDIT COMMITTEE consists of Messrs. Knipp, Sanford, Kennedy,
Lawrence and Smith. The Audit Committee meets periodically with its independent
certified public accountants to arrange the Company's annual financial statement
audit and to review and evaluate recommendations made during the annual audit.
The Audit Committee also reviews and evaluates the procedures and performances
of the Company's internal auditing staff. The Audit Committee met 2 times during
the fiscal year ended May 31, 1998.

         The COMPENSATION  COMMITTEE  consists of Mr. Nielsen,  Mrs.  Gorish,  
Mr. Kennedy and Mr. Smith. The Compensation Committee is responsible for
overseeing the development, implementation and conduct of the Company's
employment and personnel policies, notices and procedures, including the
administration of the Company's and the Bank's compensation and benefit
programs. The Compensation Committee met 1 time during the fiscal year ended May
31, 1998.


DIRECTORS' COMPENSATION

         FEE ARRANGEMENTS. Currently, each director of the Bank who is not an
employee of the Bank or the Company receives a fee of $400 for each Board
meeting attended and $250 for each committee meeting attended. In addition, the
members of the Re-Inspection Committee of the Bank each receive an annual fee of
$250. Directors of the Company are not separately compensated for their services
as such.

         OPTION PLAN AND RRP. The Stock Option Plan of Warwick Community
Bancorp, Inc. ("Option Plan") and the Recognition and Retention Plan of Warwick
Community Bancorp, Inc. ("RRP") were adopted by the Board of Directors of the
Company and subsequently approved by the Company's shareholders at a special
meeting held on June 24, 1998 ("Special Meeting"). On June 24, 1998, the
effective date of the Option Plan, each non-officer director of the Company was
granted a non-qualified stock option to purchase 19,819 shares of Common Stock.
These options are scheduled to vest at the rate of 20% per year over a five-year
period beginning on June 24, 1999 and will become immediately exercisable upon
the director's death or disability. Similarly, on June 24, 1998, the effective
date of the RRP, stock awards were granted to each non-officer director with
respect to 8,919 shares of Common Stock. These awards are also scheduled to vest
in 20% annual increments over a five-year period beginning on June 24, 1999,
with accelerated vesting to occur in the event of the director's death or
disability.

                                       8

<PAGE>


EXECUTIVE OFFICERS

         The following individuals are the executive officers of the Company and
have the titles set forth across from their names.

<TABLE>
<CAPTION>

         NAME                               POSITIONS HELD WITH THE COMPANY
         ----                               -------------------------------

<S>                                         <C>
         Timothy A. Dempsey                 President and Chief Executive Officer
         Ronald J. Gentile                  Executive Vice President and Chief Operating Officer
         Arthur W. Budich                   Senior Vice President, Treasurer and Chief Financial Officer
         Laurence D. Haggerty               Senior Vice President
         Donna M. Lyons                     Senior Vice President/Auditor
         Barbara A. Rudy                    Senior Vice President
         Nancy L. Sobotor-Littell           Corporate Secretary and Director of Human Resources
</TABLE>

         The executive officers of the Company are elected annually and hold
office until their respective successors have been elected and qualified or
until death, resignation or removal by the Board of Directors. The Company has
entered into employment agreements with certain of its executive officers which
set forth the terms of their employment. See "-- Executive Compensation --
Employment Agreements."

         Biographical information of the executive officers of the Company who
are not directors is set forth below.

         ARTHUR W. BUDICH, age 47, has served as the Senior Vice President,
Treasurer and Chief Financial Officer of the Bank since 1992. He has been
employed by the Bank in various capacities since 1986. He also serves as
Treasurer of the Bank's wholly owned subsidiaries, which include Warsave, WSB
Financial and WSB Mortgage.

         LAURENCE D. HAGGERTY, age 54, has served as Senior Vice President in
the Commercial Lending department of the Bank since joining the Bank in 1991.

         DONNA M. LYONS,  age 43, has served as Senior Vice  President of the 
Bank since 1992 and has served as Auditor of the Bank since joining the Bank in
1989.

         BARBARA A. RUDY, age 45, has served as Senior Vice President in the
Loan Servicing department of the Bank since 1991. She has been employed by the
Bank in various capacities since 1972.

         NANCY L. SOBOTOR-LITTELL, age 41, has served as the Corporate Secretary
and Director of Human Resources of the Bank since 1988. She has been employed by
the Bank in various capacities since 1975. In addition, she serves as Corporate
Secretary of the Bank's wholly owned subsidiaries, including Warsave, WSB
Financial and WSB Mortgage. Ms.
Sobotor-Littell is Mr. Lawrence's daughter.


COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

         THE FOLLOWING REPORT OF THE COMPANY'S COMPENSATION COMMITTEE IS
PROVIDED IN ACCORDANCE WITH THE RULES AND REGULATIONS OF THE SEC. PURSUANT TO
SUCH RULES AND REGULATIONS, THIS REPORT SHALL NOT BE DEEMED "SOLICITING
MATERIAL" FILED WITH THE SEC SUBJECT TO REGULATION 14A OR 14C OF THE SEC OR
SUBJECT TO SECTION 18 OF THE EXCHANGE ACT.

                                       9

<PAGE>

         Under the rules and regulations of the Securities and Exchange
Commission, the Company is required to provide certain information with respect
to the compensation and benefits provided to the Company's chief executive
officer ("CEO") and other executive officers of the Company for the year ended
May 31, 1998. Compensation for the Company's CEO and other executive officers is
generally determined on a calendar year basis, rather than a fiscal year basis.
Because the Company had no significant assets, liabilities or operations until
December 23, 1997, the discussion below reflects the policies of the
Compensation Committee (previously, the Budget Committee) of the Bank prior to
such date and the Compensation Committee of the Company subsequent to such date.

         The Compensation  Committee  annually reviews and makes
recommendations to the Board of Directors of the Company regarding the policies
that govern executive compensation and stock ownership programs, including the
compensation of Mr. Dempsey, the President and CEO of the Company. The
Compensation Committee of the Company is comprised of four members of the Board
of Directors of the Company who are not officers of the Bank or the Company and
for calendar year 1998 consists of Mr. Nielsen, Mrs. Gorish, Mr. Kennedy and Mr.
Smith.

         The overall compensation structure of the Company is aimed at
establishing a compensation package that rewards both individual performance and
the Company's performance and is competitive with compensation levels at
comparable banking institutions. In connection with the conversion of the Bank
from mutual to stock form and the initial public offering of the Company in
1997, the Bank retained a nationally recognized compensation consulting firm as
an independent compensation expert with respect to the Company's plans and
programs. Based upon published professional survey data of similarly situated
publicly-traded financial institutions operating in relevant markets, such firm
rendered an opinion to the Bank that, with respect to the total cash
compensation for executive officers, such compensation, viewed as a whole and on
an individual basis, was reasonable and proper in comparison to the compensation
provided to the executive officers at similarly situated publicly-traded
financial institutions, and that the shares of stock to be reserved under the
ESOP, the RRP and the Stock Option Plan, as a whole, were reasonable in
comparison to similar publicly-traded financial institutions.

         BASE SALARY. In 1997, the Compensation Committee compared the salaries
of the Company's officers with those of nine other peer banks (Catskill Savings
Bank, Cayuga Savings Bank, Cortland Savings Bank, Fulton Savings Bank, Oneida
Savings Bank, Oswego City Savings Bank, The Rome Savings Bank, Skaneatles
Savings Bank and Watertown Savings Bank) and a group of nine other banks located
in the same geographical area as the Bank (Goshen Savings Bank, MSB Bank,
Pawling Savings Bank, Putnam County Savings Bank, Rhinebeck Savings Bank,
Rondout Savings Bank, Sawyer Savings Bank, Ulster Savings Bank and Walden
Savings Bank), taking into account asset size and relative performance. The
relative performance was measured using financial performance factors for the
year 1996 and the first six months of 1997. The peer group and the group of
banks in the Bank's geographical area are different than the companies included
in the Nasdaq Composite Index and Nasdaq Bank Composite Index used in the
Performance Graph on page 12 of this Proxy Statement since these two indices
reflect the stock performance of a significantly broader group of companies and
financial institutions.

         Based upon such comparison, the Compensation Committee concluded that,
in order to give the Company's executive officers incentives to keep performing
at their current and higher levels, the salary levels for the Company's CEO and
other executive officers should reflect the level of performance achieved by the
Bank and should be aligned with the interests of the Company's shareholders. In
addition, the Compensation Committee concluded that salary level should take
into account the officer's individual responsibility and performance as well.

                                       10


<PAGE>

         STOCK OWNERSHIP PROGRAMS. The Compensation Committee believes that
providing executive officers with significant stock ownership and stock options
aligns the interests of executive officers with the interests of the Company's
shareholders. In this regard, the Company adopted the ESOP at the time of the
Company's initial public offering in 1997. In addition, as contemplated during
the Bank's Conversion and the Company's initial public offering, in April 1998
the Board of Directors of the Company adopted, and in June 1998 the Company's
shareholders approved, the Stock Option Plan and the RRP.

         In April 1998, the Board of Directors granted, subject to shareholder
approval, stock options under the Stock Option Plan to certain officers,
including Messrs. Dempsey and Gentile, at an exercise price equal to the fair
market value of the Company's shares on the date of shareholder approval of the
Stock Option Plan. These grants were awarded to provide an incentive for future
performance by giving the grantees, including the executive officers, equity
interests in the Company. The size of the grants to executive officers were
based in part on the practices of other similar institutions and in part on the
performance and position of the executive officer of the Company. Such stock
options are generally granted for a term of 10 years and generally vest (that
is, become exercisable) 20% upon the first anniversary of the date the Stock
Option Plan was approved by shareholders, and 20% more on each subsequent
anniversary thereof.

         In April 1998, the Board of Directors also granted, subject to
shareholder approval, awards of shares of the Company's stock under the RRP to
certain officers, including Messrs. Dempsey and Gentile. The number of shares
awarded to the executive officers were based in part on the practices of other
similar institutions and in part on the performance and position of the
executive officer of the Company. Such stock awards generally vest (that is,
become distributable to the officer) 20% upon the first anniversary of the date
the RRP was approved by shareholders, and 20% more on each subsequent
anniversary thereof.

         CHIEF EXECUTIVE OFFICER. The Compensation Committee reviewed the
performance of Mr. Dempsey as President and CEO of the Bank and the Company over
the past year. The Compensation Committee concluded that his performance was
excellent, in terms of the continued development and achievement of the Bank's
and the Company's overall strategic goals and objectives as set forth in the
Bank's business plan, the successful Conversion of the Bank and the initial
public offering of the Company, and the Bank's and the Company's financial
results. Mr. Dempsey also actively participated in a variety of outside
organizations and causes, including various community and industry
organizations, which served to benefit the Company. Based upon the foregoing,
the Compensation Committee recommended, and the Board of Directors approved, an
increase in Mr. Dempsey's annual rate of salary from $200,000 for calendar year
1997 to $210,000 for calendar year 1998. In addition, based on the
considerations discussed above, Mr. Dempsey was granted options to purchase
100,000 shares of the Company's stock under the Stock Option Plan and was
awarded 52,854 shares of the Company's stock under the RRP.

                       The Compensation Committee:
                       Henry L. Nielsen, Jr., Chairman
                       Frances M. Gorish
                       R. Michael Kennedy
                       Robert N. Smith


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         During 1998,  the  Compensation  Committee  consisted of Mr.  Nielsen,
Mrs. Gorish, Mr. Kennedy and Mr. Smith. There are no interlocks, as defined
under the rules and regulations of the SEC, between members of the Compensation
Committee or executive officers of the Company and corporations with respect to
which such persons are affiliated, or otherwise.


                                       11


<PAGE>


PERFORMANCE GRAPH

         Pursuant to the rules and regulations of the SEC, the graph below,
prepared by SNL Securities, L.C., compares the performance of the Company's
Common Stock with that of the Nasdaq Composite Index (U.S. Companies) and the
Nasdaq Bank Composite Index (banks and bank holding companies, over 99% of which
are based in the United States) from December 23, 1997, the date of the
Company's initial public offering, through May 31, 1998. The graph is based on
an investment of $100 in the Company's Common Stock at its closing price of
$15.625 on December 23, 1997 and, with respect to each Nasdaq index, the graph
assumes the reinvestment of all dividends paid in additional shares of the same
class of equity securities as those below.

[OBJECT OMITTED]
<TABLE>
<CAPTION>

                                                Period Ending
                                   -----------------------------------------------
Index                              12/23/97 1/31/98  2/28/98  3/31/98  4/30/98  5/31/98
--------------------------------------------------------------------------------
<S>                                 <C>     <C>      <C>      <C>      <C>      <C>   
Warwick Community Bancorp, Inc.     100.00  100.50   102.40   113.60   112.80   108.80
NASDAQ - Total US                   100.00  107.32   117.40   121.74   123.80   117.03
NASDAQ - Banks                      100.00   98.45   103.88   108.84   110.24   106.54
</TABLE>



Note:   There can be no assurance that the performance of Warwick Community
        Bancorp, Inc. will continue into the future with the same or similar 
        trends depicted in the graph above.


                                       12
<PAGE>

EXECUTIVE COMPENSATION

         The following table sets forth the cash compensation paid to the Chief
Executive Officer and all executive officers of the Company who received
compensation in excess of $100,000 for services rendered in all capacities to
the Company and the Bank during the fiscal year ended May 31, 1998.

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                                                                                   LONG-TERM
                                               ANNUAL COMPENSATION            COMPENSATION AWARDS(1)
                                               -------------------            ----------------------
                                                             OTHER                                 ALL    
                                                            ANNUAL       RESTRICTED              OTHER   
                                                            COMPEN          STOCK                LTIP      COMPEN- 
NAME AND                                 SALARY     BONUS   -SATION      ON AWARDS    OPTIONS    PAY-      SATION
PRINCIPAL POSITION               YEAR    ($)(2)      ($)      ($)(3)      ($)(4)       (#)(4)    OUTS      (5)($)
------------------               ----    ------    ------     ------      -------    ---------   ----    --------
<S>                              <C>      <C>       <C>        <C>          <C>         <C>      <C>     <C>
Timothy A. Dempsey
President and                    1998     208,067    --        --           --          --        --      37,430
Chief Executive Officer          1997     189,750    --        --           --          --        --       5,052

Ronald J. Gentile
Executive Vice President and     1998     135,282    --        --           --          --        --      23,717
Chief Operating Officer          1997     123,862    --        --           --          --        --       3,618
</TABLE>


(1)  For the fiscal year ended May 31, 1998 the Bank had no long-term incentive
     plan in existence.

(2)  Salary includes the amount of each individual's salary deferrals under the
     401(k) Plan.

(3)  For the fiscal year ended May 31, 1998, there were no: (a) perquisites with
     an aggregate value for any named individual in excess of the lesser of
     $50,000 or 10% of the total of the individual's salary and bonus for the
     year; (b) payments of above-market preferential earnings on deferred
     compensation; (c) payments of earnings with respect to long-term incentive
     plans prior to settlement or maturation; or (d) preferential discounts on
     stock.

(4)  During the fiscal year ended May 31, 1998 there were no grants made under
     the RRP or the Option Plan.

(5)  Includes the matching contributions made by the Bank under the 401(k) Plan,
     which for the fiscal year ended May 31, 1998 totaled $4,922 for Mr. Dempsey
     and $4,247 for Mr. Gentile. Also includes the value of allocations under
     the ESOP, which for the fiscal year ended May 31, 1998 totaled $16,762 for
     Mr. Dempsey and $17,697 for Mr. Gentile. Also includes the Bank's
     contributions to the trust established for the BRP (excluding amounts
     contributed with respect to supplemental retirement benefits thereunder)
     with respect to supplemental 401(k) Plan benefits and supplemental ESOP
     benefits, which for the fiscal year ended May 31, 1998 totaled $15,746 for
     Mr. Dempsey and $1,773 for Mr. Gentile. The dollar amounts with respect to
     allocations under the ESOP and contributions under the BRP with respect to
     supplemental ESOP benefits are based on $17.00 per share, the closing price
     of the Common Stock as reported on the Nasdaq Stock Market on May 31, 1998.
     See " -- 401(k) Plan," " -- Employee Stock Ownership Plan and Trust" and "
     -- Benefit Restoration Plan."


         EMPLOYMENT AGREEMENTS. Effective upon the Conversion of the Bank, the
Company entered into Employment Agreements with each of Mr. Dempsey, Mr.
Gentile, Mr. Budich and Ms. Sobotor-Littell ("Senior Executives"). The
Employment Agreements provide for three-year terms, with automatic daily
extensions such that the remaining terms of the Employment Agreements shall be
three years unless written notice of non-renewal is given by the Company or the
Senior Executive, and, in any event, will terminate on the last day of the month
following the Senior Executive's 68th birthday. The Employment Agreements
provide that the Senior Executive's base salary will be reviewed annually. It is
anticipated that this review will be performed by the Company's Compensation
Committee and approved by non-employee members of the Board of Directors, and
the Senior Executive's base salary may be increased on the basis of such
officer's job performance and the overall performance of the Company. The
Employment Agreements also provide for, among other things, entitlement to
participation in stock, retirement and welfare benefit plans and 

                                       13

<PAGE>


reimbursement for ordinary and necessary business expenses. Senior Executives
would also be entitled to reimbursement of certain costs incurred in
interpreting or enforcing the Employment Agreements. The Employment Agreements
provide for termination by the Company at any time for "cause" as defined in the
Employment Agreements.

         In the event that (i) the Company terminates a Senior Executive's
employment for reasons other than for cause, (ii) a Senior Executive resigns
from the Company for certain reasons specified in the Employment Agreements or
(iii) a "change of control" as defined in the Employment Agreements occurs, the
Senior Executive (or, in the event of the Senior Executive's death, such Senior
Executive's estate) would be entitled to a lump sum cash payment in an amount
generally equal to (a) the Senior Executive's earned but unpaid salary, (b) the
present value of the amount the Senior Executive would have earned in salary had
he or she continued working through the unexpired term of the Employment
Agreement and (c) the present value of the additional contributions or benefits
that such Senior Executive would have earned under the specified employee
benefit plans or programs of the Bank or the Company during the remaining term
of the Employment Agreement and payments that would have been made under any
incentive compensation plan during the remaining term of the Employment
Agreement. The Employment Agreements also provide for the cashout of any stock
options, appreciation rights or restricted stock as if the Senior Executive was
fully vested. The Bank and the Company would also continue the Senior
Executive's life, health and any disability insurance or other benefit plan
coverage for the remaining term of the Employment Agreement. Reasons specified
as grounds for resignation for purposes of the Employment Agreements include:
failure to elect or re-elect the Senior Executive to such officer's position;
failure to vest in the Senior Executive the functions, duties or authority
associated with such position; if the Senior Executive is a member of the Board
of Directors of the Bank or Company, failure to re-nominate or re-elect such
Senior Executive to such Board; any material breach of contract by the Bank or
the Company that is not cured within 30 days after written notice thereof; or a
change in the Senior Executive's principal place of employment to a location in
excess of 50 miles from the Bank's principal office in Warwick, New York. In
general, for purposes of the Employment Agreements and the plans maintained by
the Company or the Bank, a "change of control" will generally be deemed to occur
when a person or group of persons acting in concert acquires beneficial
ownership of 25% or more of any class of equity security of the Company or the
Bank, upon shareholder approval of certain mergers or consolidations of the
Company or the Bank, upon liquidation or sale of substantially all the assets of
the Company or the Bank or upon a contested election of directors which results
in a change in the majority of the Board of Directors.

         Cash and benefits paid to a Senior Executive under the Employment
Agreement, together with payments under other benefit plans, following a change
of control of the Bank or the Company may constitute an "excess parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as amended
("Code"), resulting in the imposition of a 20% excise tax on the recipient and
the denial of the deduction for such excess amounts to the Company and the Bank.
In the event that any amounts paid to a Senior Executive following a change of
control would constitute excess parachute payments, the Employment Agreements
provide that such Senior Executives will be indemnified for any excise taxes
imposed due to such excess parachute payments, and any additional excise, income
and employment taxes imposed as a result of such tax indemnification.

         EMPLOYEE RETENTION AGREEMENTS. Effective upon the Conversion, the Bank
entered into Retention Agreements with each of Mr. Haggerty, Ms. Lyons, Ms. Rudy
and Mr. Anderson ("Contract Employees"). The purpose of the Retention Agreements
is to secure the Contract Employees' continued availability and attention to the
Bank's affairs, relieved of distractions arising from the possibility of a
corporate change of control. The Retention Agreements do not impose an immediate
obligation on the Bank to continue the Contract Employees' employment, but
provide for a period of assured employment ("Assurance Period") in the event of
a "change of control" as defined in the Retention Agreements, which definition
is similar to the definition of change of control contained in the Employment
Agreements. The Retention Agreements provide for one-year terms, with automatic
daily extensions such that the remaining term shall be one year unless written
notice of 

                                       14

<PAGE>


non-renewal is given by the Bank or the Contract Employee, and, in any
event, will end on the last day of the month following the Contract Employee's
68th birthday. The Retention Agreements provide for an initial Assurance Period
of one year commencing on the date of a change of control during the term of the
Retention Agreement. In general, the applicable Assurance Periods will be
automatically extended on a daily basis under the Retention Agreements until
written notice of non-extension is given by the Bank or the Contract Employee,
in which case the Assurance Period would end on the first anniversary of the
date such notice is given.

         If a Contract Employee is discharged without "cause," as defined in the
Retention Agreements, during the Assurance Period, or prior to the commencement
of the Assurance Period but within 3 months of, and in connection with, a change
of control, or the Contract Employee voluntarily resigns during the Assurance
Period for certain specified reasons, the Contract Employee (or, in the event of
the Contract Employee's death, such Contract Employee's estate) would be
entitled to a lump sum cash payment in an amount generally equal to (a) the
Contract Employee's earned but unpaid salary, (b) the present value of the
amount the Contract Employee would have earned in salary had he or she continued
working during the remaining term of the Assurance Period and (c) the present
value of the additional contributions or benefits that such that Contract
Employee would have earned under the specified employee benefit plans or
programs of the Bank or Company during the remaining term of the Assurance
Period. Reasons specified as grounds for resignation for purposes of the
Retention Agreements include: failure to elect or re-elect the Contract Employee
to such officer's position; failure to vest in the Contract Employee the
functions, duties or authority associated with such position; if the Contract
Employee is a member of the Board of Directors of the Bank or Company, failure
to re-nominate or re-elect such Contract Employee to such Board; certain
reduction in salary or material reduction in benefits; any material breach of
contract by the Bank or the Company that is not cured within 30 days after
written notice thereof; or a change in the Contract Employee's principal place
of employment to a location in excess of 50 miles from the Bank's principal
office in Warwick, New York.

         The Retention Agreements also provide for the cashout of stock options,
appreciation rights or restricted stock as if the Contract Employee was fully
vested. Each Contract Employee's life, health and any disability coverage would
also be continued during the Assurance Period. The total amount of termination
benefits payable to each Contract Employee under the Retention Agreements is
limited to three times the Contract Employee's average total compensation for
the prior five calendar years. Payments to the Contract Employees under their
respective Retention Agreements will be guaranteed by the Company to the extent
that the required payments are not made by the Bank.

         EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. The Company established, and
the Bank adopted, for the benefit of eligible employees, an ESOP and related
trust, which became effective upon completion of the Conversion. Substantially
all employees of the Bank or the Company who have completed 1,000 hours of
service during a consecutive twelve-month period will be eligible to become
participants in the ESOP.

         Generally, shares held in the ESOP trust are allocated among the
accounts of participants who are employees of the Bank or the Company on the
last day of the plan year on the basis of the participants' total taxable
compensation for the year of allocation. Benefits generally become vested at the
rate of 20% per year beginning on a participant's third year of service, with
100% vesting after seven years of service (including past service). Participants
also become immediately vested upon termination of employment due to death,
retirement at age 65 or older, permanent disability or upon the occurrence of a
change of control. The ESOP generally provides that, upon certain changes of
control as described in the ESOP, unallocated shares in the ESOP will be sold to
repay any outstanding loan and all remaining unallocated shares or proceeds
thereof will be allocated among participants who were employed immediately
preceding the change of control in proportion to compensation for that part of
the year prior to the change of control.


                                       15

<PAGE>



         A participant who terminates employment prior to the end of a plan year
for reasons other than death, retirement or disability will not receive an
allocation under the ESOP for that plan year. Forfeitures will be reallocated
among remaining participating employees in the same proportion as the annual
allocation that is made on the basis of compensation. Vested benefits may be
paid in a single sum or installment payments and are payable upon death,
retirement at age 65 or older, disability or separation from service.

         The ESOP is administered by a committee of the Company's Board of
Directors ("ESOP Committee") and by the Bank as the Plan Administrator. Marine
Midland Bank has been appointed as the trustee for the ESOP. The ESOP Committee
may instruct the trustee regarding investment of funds contributed to the ESOP.
The ESOP trustee, subject to its fiduciary duty, must vote all allocated shares
held in the ESOP in accordance with the instructions of the participating
employees. Under the ESOP, unallocated shares generally will be voted in a
manner calculated to most accurately reflect the instructions received from
participants regarding the allocated stock as long as such vote is in accordance
with the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").

         STOCK OPTION PLAN. The Option Plan was adopted by the Board of
Directors of the Company and subsequently approved by the Company's shareholders
at the Special Meeting. Subject to the terms of the Option Plan, employees,
directors and officers of the Company, the Bank and its affiliates are eligible
to participate in the Option Plan. The Option Plan is not subject to ERISA and
is not a tax-qualified plan under the Code. The Company has reserved 660,654
shares of Common Stock ("Option Shares") for issuance upon exercise of stock
options granted under the Option Plan.

         The Board of Directors and the members of the Compensation Committee
who are disinterested directors ("Option Committee") administer the Option Plan.
The Option Committee determines, subject to the terms of the Option Plan and
Rule 16b-3 promulgated under the Exchange Act, the officers and employees to
whom Options will be granted, the number of shares subject to each Option, the
terms of such Options (including provisions regarding exercisability and
acceleration of exercisability) and the procedures by which the Options may be
exercised.

         Options granted under the Option Plan may be either "incentive stock
options," which qualify for favorable federal income tax treatment, or
non-qualified stock options, which do not so qualify. Options granted under the
Option Plan will generally vest at a rate of 20% per year beginning on the first
anniversary of the grant date and generally remain exercisable until the tenth
anniversary of the grant date, subject to earlier expiration upon termination of
employment as defined in the Option Plan. In the case of termination due to
death or disability, all options granted become immediately exercisable.

         Subject to certain specific limitations and restrictions set forth in
the Option Plan and such limitations as may be imposed from time to time by the
Board of Directors, the Option Committee has authority to interpret the Option
Plan, to prescribe, amend and rescind rules and regulations, if any, relating to
the Option Plan and to make all determinations necessary or advisable for the
administration of the Option Plan.

         RECOGNITION AND RETENTION PLAN. The RRP was adopted by the Board of
Directors of the Company and subsequently approved by the Company's shareholders
at the Special Meeting. The RRP provides for stock awards ("Awards") to eligible
officers, employees, outside directors and directors emeritus of the Company,
the Bank and its affiliates. The RRP is not subject to ERISA and is not a
tax-qualified plan under the Code.

         The Board of Directors and the members of the Compensation Committee
who are disinterested directors ("RRP Committee") administer the RRP. The Board
of Directors or the RRP Committee will determine at the time of the grant the
number of shares of Common Stock subject to an Award and the vesting 


                                       16

<PAGE>

schedule applicable to the Award and may, in its discretion, establish other
terms and conditions applicable to the Award.

         The Company has established a trust ("RRP Trust") and has contributed,
or will cause to be contributed to the Trust, from time to time, such amounts of
money or property as shall be determined by the Board of Directors, in its
discretion. A trustee will invest the assets of the RRP Trust in Common Stock
and in such investments as shall be determined by the RRP Committee. The assets
of the RRP Trust will be used to purchase, in the aggregate, no more than
264,261 shares of Common Stock. Shares of Common Stock subject to an Award are
held in the RRP Trust until the Award vests, at which time the shares of Common
Stock attributable to the portion of the Award that have vested are distributed
to the Award holder. An individual to whom an Award is granted is entitled to
exercise voting rights and receive dividends with respect to stock subject to
Awards granted to him or her whether or not vested.

         Generally, shares granted to outside directors or directors emeriti
will vest and become distributable at a rate of 20% per year, over a five-year
period, subject to accelerated vesting in the case of death or disability. The
shares granted to eligible officers and employees will vest according to a
schedule established by the RRP Committee, but in no event at a rate of more
than 20% per year, subject to accelerated vesting in the case of death or
disability.

         Subject to certain specific limitations and restrictions set forth in
the RRP and such limitations as may be imposed from time to time by the Board of
Directors, the RRP Committee has authority to interpret the RRP, to prescribe,
amend and rescind rules and regulations, if any, relating to the RRP and to make
all determinations necessary or advisable for the administration of the RRP.

         401(K) PLAN. The Bank maintains The Warwick Savings Bank 401(k) Savings
Plan ("401(k) Plan"), a tax-qualified profit-sharing plan under Sections 401(a)
and 401(k) of the Code. Employees who satisfy prescribed eligibility
requirements may make pre-tax salary deferrals under section 401(k) of the Code.
Salary deferrals are made by election, subject to the limits prescribed by the
401(k) Plan and a limit imposed under the Code (which is $10,000 for 1998). The
Bank makes matching contributions equal to a percentage of salary contributions
determined annually by the Bank, up to 3% of salary. Employees are fully vested
in their salary deferrals and become incrementally vested in the Bank's
contribution after one year and fully vested in the Bank's contributions after
five years.

         The Bank amended the 401(k) Plan in connection with the Conversion to
provide that the Bank's matching contributions will be invested in an investment
fund consisting primarily of Common Stock of the Company. In addition,
participating employees may elect to invest all or a portion of their remaining
account balances in such investment fund or the other investment funds provided
under the 401(k) Plan. Common Stock held by the 401(k) Plan may be newly issued
or treasury shares acquired from the Company or outstanding shares purchased in
the open market or in privately negotiated transactions. All Common Stock held
by the 401(k) Plan is held by an independent trustee and allocated to the
accounts of individual participants. Participants control the exercise of voting
and tender rights relating to the Common Stock held in their accounts.

         PENSION PLAN. The Bank maintains The Warwick Savings Bank Defined
Benefit Pension Plan ("Pension Plan"), a non-contributory, tax-qualified defined
benefit pension plan, for eligible employees. All employees, except (i) those
paid on an hourly basis or contract basis, (ii) leased employees or (iii)
employees regularly employed by outside employers for maintenance of properties,
are eligible to participate in the Pension Plan upon the later of (i) the end of
the twelve-month period in which he or she completes 1,000 hours of service or
(ii) the date he or she attains age 21. The Pension Plan provides an annual
benefit for each participant, including the executive officers named in the
Summary Compensation Table above, equal to 2% of the 


                                       17

<PAGE>

participant's average annual compensation, multiplied by the participant's years
of credited service, up to a maximum of 30 years.

         Average annual compensation is the average of a participant's
compensation over the three years of employment out of the participant's last
10-year period of employment during which the participant's compensation is the
highest. A participant is fully vested in his or her pension benefit after five
years of service. The Pension Plan is funded by the Bank on an actuarial basis,
and all assets are held in trust by the Pension Plan trustee.

         BENEFIT RESTORATION PLAN. In connection with the Conversion, the Bank
adopted the Benefit Restoration Plan of The Warwick Savings Bank ("BRP") to
provide eligible employees with the benefits that would be due to such employees
under the Pension Plan, the 401(k) Plan and the ESOP if such benefits were not
limited under the Code. The BRP is also intended to make up allocations lost by
participants of the ESOP who retire prior to the complete repayment of the ESOP
loan. BRP benefits to be provided with respect to the Pension Plan are reflected
in the pension table and BRP benefits to be provided with respect to the ESOP
and the 401(k) Plan are reflected in the Summary Compensation Table.

         PENSION PLAN TABLE. The following table sets forth the estimated annual
benefits payable under the Pension Plan upon a participant's normal retirement
at age 65, expressed in the form of a single life annuity, and any related
amounts payable under the BRP, for the average annual compensation and years of
credited service specified.

<TABLE>
<CAPTION>
                                    PENSION PLAN TABLE(1)

AVERAGE ANNUAL
 COMPENSATION                   YEARS OF CREDITED SERVICE AT RETIREMENT
 ------------                   ---------------------------------------
                             15              20               25               30               35(2)
                             --              --               --               --               -----
<S>                       <C>            <C>              <C>              <C>               <C>      
 $125,000                 $37,500        $ 50,000         $ 62,500         $ 75,000          $  75,000
  150,000                  45,000          60,000           75,000           90,000             90,000
  175,000(3)               52,500          70,000           87,500           105,000           105,000
  200,000(3)               60,000          80,000          100,000           120,000           120,000
  225,000(3)               67,500          90,000          112,500           135,000(4)        135,000(4)
  250,000(3)               75,000          100,000         125,000           150,000 (4)       150,000(4)
</TABLE>

    (1)   The annual benefits shown in the table above assume the participant
          would receive his or her retirement benefits under the Pension Plan
          and the BRP in the form of a straight life annuity at normal
          retirement age.

    (2)   Normal retirement benefits are limited to 60% of average annual
          earnings.

    (3)   For the Pension Plan year ending September 30, 1997, the annual
          compensation for calculating benefits under the Pension Plan may not
          exceed $150,000 (as adjusted for subsequent years pursuant to Code
          provisions). The limitation is $160,000 for the plan year beginning
          October 1, 1997 and will be adjusted to reflect cost of living
          increases after 1997 in accordance with Section 401(a)(17) of the
          Code. The table reflects amounts payable in conjunction with the BRP.

     (4)  These are hypothetical benefits based upon the Pension Plan's normal
          retirement benefit formula. The maximum annual benefit permitted under
          Section 415 of the Code in 1997 is $125,000 or, if higher, a member's
          current accrued benefit as of December 31, 1982 (but not more than
          $136,425). The $125,000 ceiling will be adjusted to reflect cost of
          living increases after 1997 in accordance with Section 415 of the
          Code. The BRP will provide the difference between the amounts
          appearing in this table and the maximum amount allowed by the Code.


                                       18

<PAGE>

         The following table sets forth the years of credited service and the
average annual compensation (as defined above), determined as of May 31, 1998,
for each of the individuals named in the Summary Compensation Table.

                        YEARS OF CREDITED SERVICE         AVERAGE ANNUAL
                          YEARS          MONTHS           COMPENSATION
                          -----          ------           ------------

Mr. Dempsey                25               3               $193,473
Mr. Gentile                 8               0               $121,806

TRANSACTIONS WITH CERTAIN RELATED PERSONS

         From time to time the Bank makes loans or extends credit to its
executive officers and to certain persons related to its executive officers and
directors, to the extent consistent with applicable laws and regulations. All
such loans are made by the Bank in the ordinary course of business and on the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and do not and will not
involve more than the normal risk of collectibility or present other unfavorable
features. The outstanding principal balance of such loans to executive officers
and their associates totaled $448,610 as of May 31, 1998. In addition, the Bank
has committed a line of credit of $2.5 million to the Warwick Valley Telephone
Company, of which $700 thousand was outstanding at May 31, 1998. Mr. Knipp is
the Chief Executive Officer and Mr. Nielsen is a director of Warwick Valley
Telephone Company.

         Mr. Krahulik is a partner in the law firm of Beattie & Krahulik, which
the Bank retains to provide certain legal services. In the fiscal year ended May
31, 1998, the Bank paid $128,082 for legal services provided during such period.
In addition, the firm received fees in the amount of approximately $543,535 from
third parties pursuant to its representation of the Bank in loan closings and
other legal matters for the fiscal year ended May 31, 1998. WSB Mortgage and
Beattie & Krahulik are co-tenants on the lease for WSB Mortgage's office in West
Milford, New Jersey.


COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Under the securities laws of the United States, the Company's
directors, its executive officers, and any person holding more than ten percent
of the Company's Common Stock are required to file initial reports of ownership
of the Company's Common Stock and reports of changes in that ownership to the
SEC. Specific due dates for these reports have been established and the Company
is required to disclose in this Proxy Statement any failure to file by these
dates during the fiscal year ended May 31, 1998. All of such filing requirements
of the Company's directors and executive officers were satisfied during the
fiscal year ended May 31, 1998, based upon their written representations and
copies of the reports that they have filed with the SEC.



                                  PROPOSAL TWO

               RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS


         On July 21, 1998, the Company changed its fiscal year from the
twelve-month period ending May 31st to the twelve-month period ending December
31st. The Board of Directors also appointed the firm of Arthur Andersen LLP to
continue as independent auditors for the Company for the period beginning June
1, 1998 and 


                                       19

<PAGE>

ending December 31, 1998, subject to ratification of such appointment by the
Company's shareholders. Representatives of Arthur Andersen LLP are expected to
be present at the Annual Meeting. The representatives will have an opportunity
to make a statement if they desire to do so and will be available to respond to
questions.


               THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
           SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT
         OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR THE COMPANY



                             ADDITIONAL INFORMATION

NOTICE OF BUSINESS TO BE CONDUCTED AT ANNUAL MEETING

         The By-Laws of the Company provide an advance notice procedure for a
shareholder to properly bring business before an Annual Meeting or to nominate
any person for election to the Board of Directors. The shareholder must be a
shareholder of record and have given timely notice thereof in writing to the
Corporate Secretary of the Company. To be timely, a shareholder's notice must be
delivered to or received by the Corporate Secretary not later than the following
dates: (i) with respect to an annual meeting of shareholders, 60 days in advance
of the anniversary of the previous year's annual meeting if the current year's
meeting is to be held within 30 days prior to, on the anniversary date of, or
after the anniversary of the previous year's annual meeting; and (ii) with
respect to an annual meeting of shareholders held at a time other than within
the time periods set forth in the immediately preceding clause (i), or with
respect to a special meeting of shareholders for the election of directors, the
close of business on the 10th day following the date on which notice of such
meeting is first given to shareholders. Notice shall be deemed to first be given
to shareholders when disclosure of such date of the meeting of shareholders is
first made in a press release reported to the Dow Jones News Services,
Associated Press or comparable national news service, or in a document publicly
filed by the Company with the SEC pursuant to Section 13, 14 or 15(d) of the
Exchange Act. A shareholder's notice to the Corporate Secretary shall set forth
such information as required by the By-Laws of the Company. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and proxy card relating to an annual meeting any shareholder proposal
or nomination which does not meet all of the requirements for inclusion
established by the SEC in effect at the time such proposal or nomination is
received. See "-- Date For Submission of Shareholder Proposals."


DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS

         Pursuant to the proxy soliciting regulations of the SEC, any
shareholder proposal intended for inclusion in the Company's proxy statement and
proxy card relating to the Company's 1999 Annual Meeting of Shareholders must be
received by the Company a reasonable time before the Company makes its proxy
solicitation in connection with such meeting. Nothing in this paragraph shall be
deemed to require the Company to include in its proxy statement and proxy card
for such meeting any shareholder proposal which does not meet the requirements
of the SEC in effect at the time. Any such proposal will be subject to 17 C.F.R.
ss.240.14a-8 of the rules and regulations promulgated by the SEC under the
Exchange Act.


                                       20

<PAGE>


                                  OTHER MATTERS

         As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matters to be brought before the shareholders
at the Annual Meeting. If, however, any other matters not now known are properly
brought before the meeting, the persons named in the accompanying Proxy Card
will vote the shares represented by all properly executed proxies on such
matters in such manner as shall be determined by a majority of the Board of
Directors.


                              FINANCIAL STATEMENTS

         A copy of the Company's Annual Report for the fiscal year ended May 31,
1998, containing consolidated statements of financial condition as of May 31,
1998 and May 31, 1997 and related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the fiscal years ended May 31,
1998, 1997 and 1996, prepared in conformity with generally accepted accounting
principles, accompanies this Proxy Statement. The consolidated financial
statements have been audited by Arthur Andersen LLP whose report thereon appears
in the Annual Report. The Annual Report serves as the Bank's Annual Disclosure
Statement for purposes of the regulations of the Federal Deposit Insurance
Corporation. Upon request, shareholders will be furnished, free of charge, an
additional copy of the Annual Report.

         The Company is required to file an annual report on Form 10-K for the
fiscal year ended May 31, 1998 with the SEC. Shareholders may obtain, free of
charge, a copy of such annual report (excluding exhibits) by writing to Margaret
Sgombick, Marketing Director, The Warwick Savings Bank, P.O. Box 591, Warwick,
New York 10990-0591. A copy of the Form 10-K is also available on the SEC's
Electronic Data Gathering Analysis and Retrieval ("EDGAR") System at the SEC's
website, www.sec.gov.


                                          By Order of the Board of Directors,


                                          [Facsimile signature]


                                          Nancy L. Sobotor-Littell
                                          Corporate Secretary


Warwick, New York
August 21, 1998


TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED.


                                        21