SEVERANCE COMPENSATION AGREEMENT

               dated as of February 18, 1999, between BATH NATIONAL
BANK, a New York Corporation (the "Company") and EDWARD C. GALPIN

     The Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the
Executive, to their assigned duties without distraction in
potentially disturbing circumstances arising from the possibility of
a change in control of the Company.

     This Agreement sets forth the severance compensation which the
Company agrees it will pay to the Executive if the Executive's
employment with the Company terminates under one of the circumstances
described herein following a Change in Control of the Company (as
defined herein).

     1.  Term.  This Agreement shall terminate, except to the extent
that any obligation of the Company hereinunder remains unpaid as of
such time, upon the earliest of (i) five years from the date hereof
if a Change in Control of the Company has not occurred within such
five year period; (ii) the termination of the Executive's employment
with the Company based on death, Disability (as defined in Section
3(b)), Retirement (as defined in Section 3(c)) or Cause (as defined
in Section 3(d) or by the Executive other than for Good Reason (as
defined in Section 3(e)); and (iii) five years from the date of a
Change in Control of the Company if the Executive has not terminated
his employment for Good Reason as of such time.

     2.  Change in Control.  No compensation shall be payable under
this Agreement unless and until (a) there shall have been a Change in
Control of the Company, while the Executive is still an employee of
the Company and (b) the Executive's employment by the Company
thereafter shall have been terminated in accordance with Section 3.
For purposes of this Agreement, a Change in Control of the Company
shall be deemed to have occurred if (i) there shall be consummated
(x) any consolidation or merger of the Company in which the Company
shares of the Company's Common Stock would be converted into cash,
securities or other property, other than a merger of the Company in
which the holders of the Company's Common Stock immediately prior to
the merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the
assets of the Company, or (ii) the stockholders of the Company
approved any plan or proposal for the liquidation or dissolution of
the Company, or (iii) any person (as such term is used in Sections
13(d) and 14 (d) (2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 30% or
more of the Company's outstanding Common Stock, or (iv) during any
period of five consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors shall cease for
any reason to constitute a majority thereof unless the election, or
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the nomination for election by the Company's stockholders, of each
new director was approved by a vote of at least two-thirds of the
directors then still in office who where directors at the beginning
of the period.

     3.  Termination Following Change in Control.  (a)  If a Change
in Control of the Company shall have occurred while the Executive is
still an employee of the Company, the Executive shall be entitled to
the compensation provided in Section 4 upon the subsequent
termination of the Executive's Employment with the Company by the
Executive or by the Company unless such termination is as a result of
(i) the Executive's death; (ii) the Executive's Disability (as
defined in Section 3(c) below; (iv) the Executive's termination by
the Company for Cause (as defined in Section 3(d) below; or (v) the
Executive's decision to terminate employment other than for Good
Reason (as defined in Section 3(e) below).

     (b)  For purposes of Section 1 of this Agreement, the Executive
shall incur a disability if the Executive is absent from his duties
with the Company for a period of more than six consecutive months due
to a physical or mental illness and the Executive does not return to
the full time performance of his duties within 30 days after the
receipt of written notice from the Company of its intention to
terminate his employment.


     (c)  Retirement.  The term "Retirement" as used in this
Agreement shall mean termination by the Company or the Executive of
the Executive's employment based on the Executive's having reached
age 65 or such other age as shall have been stated in any written
agreement between the Executive and the Company.

     (d)  Cause.  The Company may terminate the Executive's
employment for Cause.  For purposes of this Agreement only, the
Company shall have "Cause" to terminate the Executive's employment
hereunder only on the basis of fraud, misappropriation or
embezzlement on the part of the Executive, that is , in the opinion
of the Board of Directors of the Company, detrimental to the
business, assets, or reputation of the Company.  Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters of the entire membership of the
Company's Board of Directors at a meeting of the Board called and
held for the purpose (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel,
to be heard before the Board), finding that in the good faith opinion
of the Board the Executive was guilty of conduct set forth in the
second sentence of this Section 3(d) and specifying the particulars
thereof in detail.

     (e)  Good Reason.  The Executive may terminate the Executive's
employment for Good Reason at any time during the term of this
Agreement.  For purposes of this Agreement "Good Reason" shall mean
any of the following (without the Executive's express written
consent):
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        (  i)  The assignment to the Executive by the Company of
      duties inconsistent with the Executive's position, duties,
      responsibilities and status with the Company immediately prior
      to a Change in Control of the Company, or a change in the
      Executive's titles or offices as in effect immediately prior to
      a Change in Control of the Company, or any removal of the
      Executive from or any failure to reelect the Executive to any
      of such positions, except in connection with the termination of
      his employment for Disability, Retirement or Cause or as a
      result of the Executive's death or by the Executive other than
      for Good Reason;

        ( ii)  a reduction by the Company in the Executive's base
      salary as in effect on the date hereof or as the same may be
      increased from time to time during the term of this Agreement
      or the Company's failure to increase (within 12 months of the
      Executive's last increase in base salary) the Executive's base
      salary after a Change in Control of the Company in an amount
      which at least equals, on a percentage basis, the average
      percentage increase in base salary for all officers of the
      Company effected in the preceding 12 months;

        (iii)  any failure by the Company to continue in effect any
      benefit plan or arrangement (including, without limitation, the
      Company's Profit Sharing Plan, Group Annuity Contract, group
      life insurance plan, senior executive survivor life insurance
      supplement, and medical, dental, accident and disability plans)
      in which the Executive is participating at the time of a Change
      in Control of the Company (or any other plans providing the
      Executive with substantially similar benefits) (hereinafter
      referred to as "Benefit Plans"), or the taking of any action by
      the Company which would adversely affect the Executive's
      participation in or materially reduce the Executive's benefits
      under any such Benefit Plan or deprive the Executive of any
      material fringe benefit enjoyed by the Executive at the time of
      a Change in Control of the Company;

       ( iv)  any failure by the Company to continue in effect any
     incentive plan or arrangement (including, without limitation,
     the Company's Annual Incentive Compensation Plan, Long-Term
     Performance Incentive Plan, Long-Term Incentive Bonus Plan, as
     amended, bonus and contingent bonus arrangements and credits and
     the right to receive performance awards and similar incentive
     compensation benefits) in which the Executive is participating
     at the time of a Change in Control of the Company (or any other
     plans or arrangements providing him with substantially similar
     benefits) hereinafter referred to as "Incentive Plans") or the
     taking of any action by the Company which would adversely affect
     the Executive's Participation in any such Incentive Plan or
     reduce the Executive's benefits under any such Incentive Plan,
     expressed as a percentage of his base salary, by more than 10
     percentage points in any fiscal years as compared to the
     immediately preceding fiscal year;

<PAGE>


       (  v)  a relocation of the Company's principal executive
     offices to a location outside of Steuben County, or the
     Executive's relocation to any place other than the location at
     which the Executive performed the Executive's duties prior to a
     Change in Control of the Company, except for required travel by
     the Executive on the Company's business to an extent
     substantially consistent with the Executive's business travel
     obligations at the time of a Change in Control of the Company;

       ( vi)  any failure by the Company to provide the Executive
     with the number of paid vacation days to which the Executive is
     entitled at the time of a Change in Control of the Company;

       (vii)  any material breach by the Company of any provision of
     this Agreement;

       (viii)  any failure by the Company to obtain the assumption of
     this Agreement by any successor or assign of the Company; or

       ( ix)  any purported termination of the Executive's employment
     which is not effected pursuant to a Notice of Termination
     satisfying the requirements of Section 3(f), and for purposes of
     this Agreement, no such purported termination shall be
     effective.

     (f)  Notice of Termination.  Any termination by the Company
pursuant to Section 3(b), 3(c) or 3(d) shall be communicated by a
Notice of Termination.  For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate those
specific termination provisions in the Agreement relied upon and
which sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provisions so indicated.  For
purposes of this Agreement, no such purported termination by the
Company shall be effective without such Notice of Termination.

     (g)  Date of Termination.  "Date of Termination" shall mean (a)
if this Agreement is terminated by the Company for Disability, 30
days after Notice of Termination is given to the Executive (provided
that the Executive shall not have returned to the performance of the
Executive's duties on a full-time basis during such 30-day period) or
(b)  if the Executive's employment is terminated by the Company for
any other reason, the date on which a Notice of Termination is given;
provided that if within 30 days after any Notice of Termination is
given to the Executive by the Company the Executive notifies the
Company that a dispute exists concerning the termination, the Date of
Termination shall be the date the dispute is finally determined,
whether by mutual agreement by the parties or upon final judgment,
order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected).

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     4.  Severance Compensation upon Termination of Employment.  If
the Company shall terminate the Executive's employment other than
pursuant to Section 3(b), 3(c) or 3(d) or if the Executive shall
terminate his employment for Good Reason, then the Company shall pay
to the Executive as severance pay in a lump sum, in cash, on the
thirtieth day following the Date of Termination, an amount equal to
three times the average of the aggregate annual compensation paid to
the Executive during the 3 calendar years preceding the change in
control of the Company by the Company and any of its subsidiaries
subject to United States or Canadian income taxes.  Average annual
compensation shall include base salary, annual bonus, and profit
sharing plan contributions.  If the company does not agree with the
Executive's calculation of the lump sum payment, the matter will be
resolved by Urbach, Kahn & Werlin, PC, Certified Public Accountants,
and both the Executive and the Company will accept Urbach, Kahn &
Werlin's calculation as final.

     5.  No Obligation To Mitigate Damages; No Effect on Other
Contractual Rights.   (a)  The Executive shall not be required to
mitigate damages or the amount of any payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the
amount of any payment provided for under this Agreement be reduced by
any compensation earned by the Executive as the result of employment
by another employer after the Date of Termination, or otherwise.

     (b)  The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in
any way diminish the Executive's existing rights, or rights which
would accrue solely as a result of the passage of time, under any
Benefit Plan, Incentive Plan or Securities Plan, employment agreement
or other contract, plan or arrangement.

     6.  Successor to the Company. (a)  The Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and
substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required
to perform it if no such succession or assignment had taken place.
The company will deliver to the Executive within ten days of the
effectiveness of any such succession or assignment, the written
Agreement of the succession to perform all of the obligations of the
Company under this Agreement and that the failure to deliver such
Agreement will entitle the Executive to terminate his employment for
Good Reason at any time thereafter.  As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any
successor or assign to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 6 or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.  If at any time during the term of
this Agreement the Executive is employed by any corporation a
majority of the voting securities of which is then owned by the
Company, "Company" as used in Sections 3, 4, 11 and 12 hereof shall

<PAGE>


in addition include such employer.  In such event, the Company agrees
that it shall pay or shall cause such employer to pay any amounts
owed to the Executive pursuant to Section 4 hereof.

     (b)  This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees
and legatees.  If the Executive should die while any amounts are
still payable to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee, or other designee or,
if there is no such designee, to the Executive's estate.

     7.  Notice.  For purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt requested,
postage prepaid, as follows:

               If to the Company:
                 Bath National Bank
                 44 Liberty Street
                 Bath, New York 14810

               If to the Executive:
                 Edward C. Galpin
                 7227 Apple Street
                 Bath, New York 14810

or such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.

     8.  Miscellaneous.  No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and the
Company.  No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.  No agreements or
representations, oral or otherwise, express or implied, with respect
to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement.  This Agreement shall be
governed by and construed in accordance with the laws of the State of
New York.

     9.  Validity.  The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.

<PAGE>


    10.  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.

    11.  Legal Fees and Expenses.  The Company shall pay all legal
fees and expenses which the Executive may incur as a result of the
Company's contesting the validity, interpretation, and enforceability
of the Agreement.

    12.  Confidentiality.  The Executive shall retain in confidence
any and all confidential information known to the Executive
concerning the Company and its business so long as such information
is not otherwise publicly disclosed.

IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.



                               BATH NATIONAL BANK



Date: February 18, 1999       _______________________________
                               Name:    Robert H. Cole
                               Title:   Chairman of the Board



                               ______________________________
Date: February 18, 1999        Name:    Edward C. Galpin
                               Title:   Executive Vice President