<PAGE>
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, DC 20549

                          FORM 10-K

          Annual report pursuant to Section 13 of the
                Securities Exchange Act of 1934

          For the fiscal year ended December 31, 1998
                Commission File No.: 0-21628

                     HAVEN BANCORP, INC.
      (exact name of registrant as specified in its charter)

                          DELAWARE 
 (State or other jurisdiction of incorporation or organization)

                         11-3153802
                  (I.R.S. Employer I.D. No.)

         615 Merrick Avenue, Westbury, New York 11590
           (Address of principal executive offices)

                        (516) 683-4100
      (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:
            Common Stock par value $0.01 per share
                      (Title of class)

The registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K.  [ X ]  

The aggregate market value of the voting stock held by non-
affiliates of the registrant, i.e., persons other than directors
and executive officers of the registrant is $112,701,403 and is
based upon the last sales price as quoted on the Nasdaq Stock
Market for March 26, 1999.

The registrant had 8,867,781 shares outstanding as of March 26,
1999.
<PAGE>
                             INDEX

                             PART I                             Page

Item 1.   Description of Business ..........................    1 - 53
            Business .......................................    1 - 2
            Market Area and Competition ....................    2 - 3
            Lending Activities .............................    3 - 12
            Delinquencies and Classified Assets ............   12 - 16
            Allowances for Loan and REO Losses .............   16 - 19
            Investment Activities ..........................   19 - 22
            Mortgage-Backed Securities .....................   23 - 28
            Sources of Funds ...............................   28 - 31
            Borrowings .....................................   32 - 33
            Subsidiary Activities ..........................   34 - 35
            Personnel ......................................     35
            Regulation and Supervision .....................   35 - 48
            Federal and State Taxation .....................   48 - 50
Item 2.   Properties .......................................   51 - 52
Item 3.   Legal Proceedings ................................   52 - 53
Item 4.   Submission of Matters to a Vote of Security
            Holders ........................................     53

                            PART II

Item 5.   Market for Registrant's Common Equity and
          Related Stockholder Matters ......................   53 - 54
Item 6.   Selected Financial Data ..........................     54
Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations ..............     54
Item 7a.  Quantitative and Qualitative Disclosures 
          about Market Risk ................................     54
Item 8.   Financial Statements and Supplementary Data ......     54
Item 9.   Change In and Disagreements with Accountants on
          Accounting and Financial Disclosure ..............     54

                            PART III

Item 10.  Directors and Executive Officers of the
            Registrant ......................................    54
Item 11.  Executive Compensation ...........................     55
Item 12.  Security Ownership of Certain Beneficial
          Owners and Management ............................     55
Item 13.  Certain Relationships and Related Transactions ...     55

                             PART IV

Item 14.  Exhibits, Financial Statements, Schedules and 
          Reports on Form 8-K ..............................  55 - 57



                                                              i
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                          EXHIBIT INDEX

The following exhibits are physically filed with this report:

Exhibit 10.2(F)  Change in Control Agreement between Haven
                 Bancorp, Inc. and Mark A. Ricca
Exhibit 10.2(G)  Change in Control Agreement between CFS Bank
                 and Mark A. Ricca
Exhibit 11.0     Computation of earnings per share
Exhibit 13.0     Portions of the 1998 Annual Report to
                 Stockholders 
Exhibit 23.0     Consent of Independent Auditors
Exhibit 27.0     Financial Data Schedule 
Exhibit 99       Proxy Statement for 1999 Annual Meeting

Additional exhibits are incorporated herein by reference from
prior filings of Haven Bancorp, Inc. set forth in Item 14.

             DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Stockholders for the fiscal year
ended December 31, 1998, are incorporated by reference into Parts
I and II of this Form 10-K.

Portions of the Proxy Statement for the 1999 Annual Meeting of
Stockholders are incorporated by reference into Part III of this
Form 10-K.

























                                                             ii
<PAGE>
                             PART I

ITEM 1.   DESCRIPTION OF BUSINESS

                           BUSINESS
Haven Bancorp, Inc. ("Haven Bancorp" or the "Company") was
incorporated under Delaware law on March 25, 1993 as the holding
company for CFS Bank ("CFS" or the "Bank") in connection with the
Bank's conversion from a federally chartered mutual savings bank
to a federally chartered stock savings bank.  The Company is a
savings and loan holding company and is subject to regulation by
the Office of Thrift Supervision ("OTS"), the Federal Deposit
Insurance Corporation ("FDIC") and the Securities and Exchange
Commission ("SEC").  The Company is headquartered in Westbury,
New York and its principal business currently consists of the
operation of its wholly owned subsidiary, the Bank.  At December
31, 1998, the Company had consolidated total assets of $2.4
billion and stockholders' equity of $119.9 million.

Currently, the Company does not transact any material business
other than through its subsidiary, the Bank.

The Bank was established in 1889 as a New York-chartered building
and loan association and converted to a New York-chartered
savings and loan association in 1940.  The Bank converted to a
federally chartered mutual savings bank in 1983.  As the Bank
expanded its presence in the New York tri-state area it changed
its name to CFS Bank in 1997.  The Bank is a member of the
Federal Home Loan Bank ("FHLB") System, and its deposit accounts
are insured to the maximum allowable amount by the FDIC.  At
December 31, 1998, the Bank had total assets of $2.4 billion and
stockholders' equity of $137.2 million.

The Bank's principal business has been and continues to be
attracting retail deposits from the general public and investing
those deposits, together with funds generated from operations and
borrowings, primarily in one- to four-family, owner-occupied
residential mortgage loans.  Since 1994, the Bank has gradually
increased its activity in multi-family and commercial real estate
lending.  In addition, the Bank will invest in debt, equity and
mortgage-backed securities to supplement its lending portfolio. 
Although the Bank has dicontinued offering certain consumer
loans, during 1998 the Bank also invested in home equity loans,
home equity lines of credit and other marketable securities.

On May 1, 1998, the Bank completed the purchase of the loan
production franchise of Intercounty Mortgage, Inc.  The business
operates as a division of the Bank under the name CFS Intercounty
Mortgage ("IMI") originating and purchasing residential loans for
the Bank's portfolio and for sale in the secondary market,
primarily through six loan origination offices located in New  

                                                              1
<PAGE>
York, New Jersey and Pennsylvania.  Loan sales in the secondary
market are primarily on a servicing-released basis, for which the
Bank earns servicing-released premiums.

On November 2, 1998, the Company purchased 100% of the
outstanding common stock of Century Insurance Agency, Inc.  The
insurance agency operates as a wholly owned subsidiary of the
Company under the name CFS Insurance Agency, Inc. ("CIA"),
providing automobile, homeowners and casualty insurance to
individuals, and various lines of commercial insurance to
individuals.

The Bank's results of operations are dependent primarily on its
net interest income, which is the difference between the interest
income earned on its loan and securities portfolios and its cost 
of funds, which consists of the interest paid on its deposits and
borrowed funds.  The Bank's net income is also affected by its
non-interest income, including, beginning May 1, 1998, the
results of the acquisition of the loan production franchise of
CFS Intercounty Mortgage, its provision for loan losses and its
operating expenses consisting primarily of compensation and
benefits, occupancy and equipment, real estate operations, net,
federal deposit insurance premiums and other general and
administrative expenses.  The earnings of the Bank are
significantly affected by general economic and competitive
conditions, particularly changes in market interest rates, and to
a lesser extent by government policies and actions of regulatory
authorities.

                  MARKET AREA AND COMPETITION

The Bank has been, and continues to be, a community oriented
savings institution offering a variety of traditional financial
services to meet the needs of the communities in which it
operates.  Management considers the Bank's reputation and
customer service as its major competitive advantage in attracting 
and retaining customers in its market area.

The Bank's primary market area is concentrated in the
neighborhoods surrounding its eight full service banking and
fifty-nine supermarket banking facilities located in the New York
City boroughs of Queens, Brooklyn, Manhattan and Staten Island,
the New York counties of Nassau, Suffolk, Rockland and
Westchester and in New Jersey and Connecticut.  During 1998, the
Bank opened twenty-five supermarket branches.  Management
believes that supermarket branching is a cost effective way to
extend the Bank's franchise and put its sales force in touch with
more prospective customers than possible through conventional
bank branches.  Management believes that all of its branch
offices are located in communities that can generally be charac-
terized as stable, residential neighborhoods of predominantly 

                                                              2
<PAGE>
one- to four-family residences and middle income families.

During the past five years, the Bank's expanded loan work-out and
resolution efforts have successfully contributed toward reducing
non-performing assets to manageable levels.  Although there are
encouraging signs in the local economy and the Bank's real estate
markets, it is unclear how these factors will affect the Bank's
asset quality in the future.  See "Delinquencies and Classified
Assets."

The New York City metropolitan area has a large number of
financial institutions, many of which are significantly larger
and have greater financial resources than the Bank, and all of
which are competitors of the Bank to varying degrees.  The Bank's
competition for loans and deposits comes principally from savings
and loan associations, savings banks, commercial banks, mortgage
banking companies, insurance companies and credit unions.  In
addition, the Bank faces increasing competition for deposits from
non-bank institutions such as brokerage firms and insurance
companies in such areas as short-term money market funds,
corporate and government securities funds, mutual funds and
annuities and insurance.  Competition may also increase as a
result of the lifting of restrictions on the interstate
operations of financial institutions.

                   LENDING ACTIVITIES

LOAN PORTFOLIO COMPOSITION.  The Bank's loan portfolio consists
primarily of conventional first mortgage loans secured by owner
occupied one- to four-family residences, and, to a lesser extent,
multi-family residences, commercial real estate and construction
and land loans.  Also, the Bank's loan portfolio includes
cooperative loans, which the Bank has not originated since 1990
except to facilitate the sale of real estate owned ("REO") or to
restructure a problem asset.  During 1998, loan originations and
purchases totaled $1.22 billion (comprised of $1.04 billion of
residential one- to four-family mortgage loans, $156.8 million of
commercial and multi-family real estate loans, $2.8 million of
construction loans and $16.4 million of consumer loans).  One- to
four-family mortgage loan originations included $570.0 million of
loans originated and purchased for sale in the secondary market. 
During 1998, the Bank sold $515.8 million of one- to four-family
mortgage loans in the secondary market on a servicing-released
basis.

At December 31, 1998, the Bank had total mortgage loans
outstanding of $1.27 billion, of which $888.6 million were one-
to four-family residential mortgage loans, or 67.9% of the Bank's
total loans.  At that same date, multi-family residential
mortgage loans totaled $215.5 million, or 16.5% of total loans. 
The remainder of the Bank's mortgage loans, included $163.9 

                                                             3
<PAGE>
million of commercial real estate loans, or 12.5% of total loans,
$4.0 million of cooperative apartment loans, or 0.3% of total
loans and $2.7 million of construction and land loans, or 0.2% of
total loans.  Other loans in the Bank's portfolio principally
consisted of home equity lines of credit and consumer loans
totaling $34.9 million, or 2.7% of total loans at December 31,
1998.

The following table sets forth the composition of the Bank's loan
portfolio, excluding loans held for sale, in dollar amounts and
in percentages of the respective portfolios at the dates
indicated.

<TABLE>
<CAPTION>
                                                             At December 31,
                                                             ---------------
                              1998              1997              1996              1995              1994
                         ---------------   ---------------   ---------------   ---------------   ---------------
                                 Percent           Percent           Percent           Percent           Percent
                                   of                of                of                of                of
                         Amount   Total    Amount   Total    Amount   Total    Amount   Total    Amount   Total
                         ------  -------   ------  -------   ------  -------   ------  -------   ------  -------
                                                          (Dollars in thousands)
<S>                     <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
Mortgage loans:
  One- to four-family   $888,610  67.85%  $805,690  69.93%  $556,818  65.63%  $325,050  57.03%  $258,698  49.34%
  Multi-family           215,542  16.46    143,559  12.46    105,341  12.42     79,008  13.86     94,259  17.98
  Commercial             163,935  12.52    148,745  12.91    127,956  15.08    111,038  19.48    102,415  19.54
  Cooperative              3,970   0.30     19,596   1.70     19,936   2.35     10,187   1.79     24,369   4.65
  Construction and land    2,731   0.20      2,263   0.20      4,227   0.50      5,737   1.01      3,491   0.67
                       ---------  -----  ---------  -----    -------  -----    -------  -----    -------  -----
Total mortgage loans   1,274,788  97.33  1,119,853  97.20    814,278  95.98    531,020  93.17    483,232  92.17

Other loans:
  Home equity lines of 
    credit                15,173   1.16     15,449   1.34     15,677   1.85     16,454   2.89     17,802   3.39
  Property improvement 
    loans                  2,634   0.20      4,392   0.38      6,957   0.82     10,248   1.80     11,814   2.26
  Loans on deposit 
    accounts                 957   0.07        895   0.08        809   0.10        821   0.14        940   0.18
  Commercial loans           445   0.03        453   0.04        351   0.04        479   0.08        605   0.12
  Guaranteed student loans   774   0.06        882   0.08        985   0.12      1,181   0.21      1,761   0.34
  Unsecured consumer loans 2,029   0.16        450   0.04        809   0.10      1,950   0.34      2,366   0.45
  Other loans             12,914   0.99      9,770   0.84      8,506   0.99      7,834   1.37      5,737   1.09
                       --------- ------  --------- ------    ------- ------    ------- ------    ------- ------
Total other loans         34,926   2.67     32,291   2.80     34,094   4.02     38,967   6.83     41,025   7.83
                       --------- ------  --------- ------    ------- ------    ------- ------    ------- ------
Total loans            1,309,714 100.00% 1,152,144 100.00%   848,372 100.00%   569,987 100.00%   524,257 100.00%
                                 ======            ======            ======            ======            ======
Less:
  Unearned discounts, 
   premiums and deferred
   loan fees, net            966            (1,363)             (786)           (1,029)           (1,375)
  Allowance for loan 
   losses                (13,978)          (12,528)          (10,704)           (8,573)          (10,847)
                       ---------         ---------           -------           -------           -------
Loans, net            $1,296,702        $1,138,253          $836,882          $560,385          $512,035
                       =========         =========           =======           =======           =======

</TABLE>





                                                              4
<PAGE>
The following table shows the estimated contractual maturity of
the Bank's loan portfolio at December 31, 1998, assuming no
prepayments.

<TABLE>
<CAPTION>
                                 At December 31, 1998    
                              Mortgage   Other      Total    
                               Loans     Loans      Loans
                              --------   -----     -------
                                    (In thousands)
<S>                          <C>        <C>      <C>
Amounts due:
 Within one year              $ 42,933  $ 4,517   $ 47,450
                               -------   ------    -------
 After one year:
  One to three years            67,251    3,847     71,098
  Three to five years           20,807    3,048     23,855
  Five to ten years            283,909   12,167    296,076
  Ten to twenty years          359,518   11,347    370,865
  Over twenty years            500,370     -       500,370
                             ---------   ------  ---------
    Total due after one year 1,231,855   30,409  1,262,264
                             ---------   ------  ---------
    Total                   $1,274,788  $34,926 $1,309,714
                             =========   ======  =========
</TABLE>


The following table sets forth at December 31, 1998, the dollar 
amount of all loans due after December 31, 1999, and whether such
loans have fixed interest rates or adjustable interest rates.

<TABLE>
<CAPTION>
                                  Due After December 31, 1999
                                  Fixed    Adjustable    Total 
                                  -----    ----------    -----
                                         (In thousands)
<S>                             <C>       <C>         <C>
Mortgage loans:
  One- to four-family           $474,056   $388,921   $  862,977
  Multi-family                    34,708    167,195      201,903
  Commercial real estate          62,230    101,653      163,883
  Cooperative                        804      2,288        3,092
Other loans                        9,643     20,766       30,409
                                 -------    -------    ---------
  Total                         $581,441   $680,823   $1,262,264
                                 =======    =======    =========



                                                              5
<PAGE>
The following table sets forth the Bank's loan originations, loan
purchases, sales and principal repayments for the periods
indicated:


</TABLE>
<TABLE>
<CAPTION>
                                                 Years Ended December 31,          
                                     1998       1997      1996      1995      1994
                                    ------     ------    ------    ------    ------
                                                     (In thousands)
<S>                               <C>         <C>       <C>       <C>       <C>
Mortgage loans (gross):
At beginning of year             $1,119,853   $814,278  $531,020  $483,232  $648,321
  Mortgage loans originated:
   One- to four-family              177,544    121,498    98,783    64,139    77,499
   Multi-family                      88,504     64,181    46,310    11,726      -
   Commercial real estate            68,319     69,495    35,886    26,047     4,688
   Cooperative (1)                       34       -         -           63       499
   Construction and land loans        2,806      3,773     1,562     4,367     1,000
                                  ---------    -------   -------   -------   -------
     Total mortgage loans 
      originated                    337,207    258,947   182,541   106,342    83,686
  Mortgage loans purchased          297,906    200,900   172,300    26,241      -
  Transfer of mortgage loans
    to REO                             (623)    (1,695)   (3,470)   (4,638)  (10,998)
  Transfer of mortgage loans from/
    (to) loans held for sale           -          -       10,594   (12,038)     -
  Principal repayments             (269,164)  (151,215)  (78,209)  (67,274)  (64,686)
  Sales of mortgage loans (2)      (104,700)    (1,362)     (498)     (845) (173,091)
  Transfer of loans to MBSs (3)    (105,691)      -         -         -         -
                                  ---------  ---------   -------   -------   -------
At end of year                   $1,274,788 $1,119,853  $814,278  $531,020  $483,232
                                  =========  =========   =======   =======   =======
Other loans (gross):
At beginning of year               $ 32,291   $ 34,094  $ 38,967  $ 41,025  $ 33,898
  Other loans originated             16,413     11,491     8,735    10,746    21,533
  Principal repayments              (13,778)   (13,294)  (13,608)  (12,804)  (14,406)
                                    -------    -------   -------   -------   -------
At end of year                     $ 34,926   $ 32,291  $ 34,094  $ 38,967  $ 41,025
                                    =======    =======   =======   =======   =======
</TABLE>

(1)  Cooperative loans originated in the five years ended
December 31, 1998 were done solely to facilitate the
restructuring and the sale of delinquent cooperative loans and
cooperative units held by the Bank as REO.
(2)  During 1998, the Bank sold $83.3 million of adjustable-rate
mortgage loans in several bulk sales transactions.  Also during
1998, the Bank sold $14.0 million of cooperative apartment loans. 
As part of a major bulk sales program in 1994, the Bank sold
$170.5 million of loans.
(3)  During 1998, the Bank securitized $105.7 million in loans
with Fannie Mae ("FNMA").  The resulting securities were retained
and transferred to the Bank's securities available for sale
portfolio.

ONE- TO FOUR-FAMILY MORTGAGE LENDING.  The Bank offers both
fixed-rate and adjustable-rate mortgage ("ARM") loans secured by
one- to four-family residences located primarily in Long Island
(in the New York counties of Nassau and Suffolk Counties), the
New York City boroughs of Queens, Manhattan, Brooklyn and Staten
Island, the New York counties of Rockland and Westchester
Counties, as well as in Albany and Rochester, New York, New
Jersey, Pennsylvania and Connecticut.   
                                                              6
<PAGE>
Loan originations are generally obtained from existing or past
customers, members of the local communities, local real estate
brokers and attorney referrals.  The substantial majority of the
Bank's loans are originated through efforts of Bank-employed
sales representatives who solicit loans from the communities
served by the Bank by calling on real estate attorneys, brokers
and individuals who have expressed an interest in obtaining a
mortgage loan.  The Bank also originates loans from its customer
base in its branch offices.  In 1995, the Bank also began
purchasing loans on a flow basis from correspondent mortgage
bankers in New York, New Jersey and Connecticut to supplement its
one- to four-family loan originations.

The Bank generally originates one- to four-family residential
mortgage loans in amounts up to 95% of the lower of the appraised
value or selling price of the property securing the loan. 
Properties securing such loans are primarily owner-occupied
principal residences.  One- to four-family mortgage loans may be
originated with loan-to-value ratios of up to 97% of the
appraised value of the property under the FNMA Community Home
Buyers Program, which targets low to low/moderate income
borrowers.  Residential condominium loans are originated in
amounts up to a maximum of 95% of the appraised value of the
condominium unit.  Private Mortgage Insurance ("PMI") is required
whenever loan-to-value ratios exceed 80% of the price or
appraised value of the property securing the loan.  Loan amounts
generally conform to Freddie Mac ("FHLMC") limits.  Mortgage
loans originated by the Bank generally include due-on-sale
clauses that provide the Bank with the contractual right to deem
the loan immediately due and payable in the event that the
borrower transfers ownership of the property without the Bank's
consent.  Due-on-sale clauses are an important means of enabling
the Bank to redeploy funds at current rates thereby causing the
Bank's loan portfolio to be more interest rate sensitive.  The
Bank has generally exercised its rights under these clauses.

The Bank currently offers fixed-rate loans up to $1,000,000 on
one- to four-family residences with terms up to 30 years.  During
1996, the Bank introduced 30 year and 15 year fixed-rate bi-
weekly loans.  Interest rates charged on fixed-rate mortgage
loans are competitively priced based on market conditions and the
Bank's cost of funds.  Origination fees on fixed-rate loans
typically range from 0% to 3% of the principal amount of the
loan.  Generally, the Bank's standard underwriting guidelines
conform to the FNMA/FHLMC guidelines.

The Bank currently offers ARM loans up to $1,000,000 which adjust
either annually, or in 3, 5, 7, 10 or 15 years with maximum loan
terms of 30 years.  The Bank's ARM loans typically carry an
initial interest rate below the fully-indexed rate for the loan. 
For one year ARMs, the Bank qualifies borrowers based upon a rate

                                                              7
<PAGE>
of 2% over the initial rate.  The initial discounted rate is
determined by the Bank in accordance with market and competitive
factors and, as of December 31, 1998, the discount offered by the
Bank on the one year ARM loan ranged from 126 basis points (with
0% origination fees) to 176 basis points (with 2% origination
fees) below the fully-indexed rate, which was 7.38% as of such
date.  The discount offered by the Bank on the three year ARM
loan ranged from 88 basis points (with 0% origination fees) to
130 basis points (with 2% origination fees) below the fully-
indexed rate, which was 7.38% as of December 31, 1998.  The
discount offered by the Bank on the five year ARM loan ranged
from 100 basis points (with 0% origination fees) to 150 basis
points (with 2% origination fees) below the fully-indexed rate,
which was 7.38% as of December 31, 1998.  As of December 31,
1998, the discount offered by the Bank on the seven year ARM loan
ranged from 88 basis points (with 0% origination fees) to 138
basis points (with 2% origination fees) below the fully-indexed
rate, which was 7.38% as of such date.  As of December 31, 1998,
the discount offered by the Bank on the ten year ARM loan ranged
from 63 basis points (with 0% origination fees) to 113 basis
points (with 2% origination fees) below the fully indexed rate,
which was 7.38% as of such date.  Finally, as of December 31,
1998, the discount offered by the Bank on the fifteen year ARM
loan ranged from 13 basis points (with 0% origination fees) to 63
basis points (with 2% origination fees) below the fully-indexed
rate which was 7.38%.  As of December 31, 1998, the Bank's ARM
loans, with the exception of the seven, ten and fifteen year ARM
loans, adjust by a maximum of 2.0% each adjustment period, with a
life-time cap of 6% over the initial note rate.  The maximum
periodic rate adjustment on the seven year, ten year and fifteen
year ARM loans for the first adjustment period are 5% which
defaults to 2% for all adjustment periods thereafter.  The Bank
currently charges origination fees ranging from 0% to 2.0% for
its one- to four-family ARM loans.  ARM loans generally pose a
risk that as interest rates rise, the amount of a borrower's
monthly loan payment also rises, thereby increasing the potential
for delinquencies and loan losses.  This potential risk is
mitigated by the Bank's policy of originating ARM loans with
annual and lifetime interest rate caps that limit the amount that
a borrower's monthly payment may increase.  During 1998, the Bank
originated or purchased $363.3 million of one- to four-family ARM
loans for portfolio.

The Bank originates 30 year and 15 year fixed-rate loans for
immediate sale, primarily to private investors while generally
retaining ARM loans, 10, and 20 year fixed-rate loans, and 15 and
30 year bi-weekly fixed-rate loans for portfolio.  The Bank
arranges for the sale of such loans at the acceptance of the
commitment by the applicant to the investor through "best
efforts" commitments.  The Bank sells loans on a servicing-
released basis.  For the year ended December 31, 1998, the Bank 

                                                              8
<PAGE>
originated and purchased approximately $570.0 million of
primarily fixed rate, one- to four-family loans for sale in the
secondary market, $515.8 million of which were sold in 1998.

COOPERATIVE APARTMENT LOANS.  Until 1990, the Bank originated
loans secured by cooperative units.  Since 1990, the Bank has not
originated any loans secured by cooperative units with the 
exception of loans to facilitate the restructuring of a
classified asset or sale of REO.  In 1994, the Bank was approved
as a seller/servicer in a FNMA pilot program, enabling it to
originate cooperative apartment loans for immediate sale to FNMA. 

MULTI-FAMILY LENDING.  The Bank originates multi-family loans
with contractual terms of up to 15 years where the interest rate
generally reprices during the term of the loan and is tied to
matching U.S. Treasury Notes plus a margin.  These loans are
generally secured by apartment and mixed-use (commercial and
residential, with the majority of income coming from the
residential units) properties, located in the Bank's primary
market area and are made in amounts of up to 75% of the appraised
value of the property.  In making such loans, the Bank bases its
underwriting decision primarily on the net operating income
generated by the real estate to support the debt service, the
financial resources credit history and ownership/ management
experience of the principals/guarantors, and the marketability of
the property.  The Bank generally requires a debt service
coverage ratio of at least 1.20x and sometimes requires personal
guarantees from borrowers.  As of December 31, 1998, $215.5
million, or 16.4% of the Bank's total loan portfolio, consisted
of multi-family residential loans.

Multi-family, commercial real estate and construction and land
lending are generally believed to involve a higher degree of
credit risk than one- to four-family lending because such loans
typically involve higher principal amounts and the repayment of
such loans generally is dependent on income produced by the
property to cover operating expenses and debt service.  Economic
events that are outside the control of the borrower or lender
could adversely impact the value of the security for the loan or
the future cash flows from the borrower's property.  In
recognition of these risks, the Bank applies stringent
underwriting criteria for all of its loans.  The Bank originates
multi-family, commercial real estate and construction and land
loans on a conservative basis.  See "Commercial Real Estate
Lending" and "Construction and Land Lending".

COMMERCIAL REAL ESTATE LENDING.  The Bank originates commercial
real estate loans that are generally secured by properties used
exclusively for business purposes such as retail stores, mixed-
use properties (residential and retail or professional office 

                                                              9

<PAGE>
combined where the majority of the income from the property comes
from the commercial business), light industrial and small office
buildings located in the Bank's primary market area.  The Bank's
commercial real estate loans are generally made in amounts up to
the lesser of 70% of the appraised value of the property or 65%
for owner occupied properties.  Commercial real estate loans are
made on a negotiated basis for terms of up to 15 years where the
interest rate generally reprices during the term of the loan and
is tied to the prime rate or the U.S. Treasury Note rate matched
to the repricing frequency of the loan.  The Bank's underwriting
standards and procedures are similar to those applicable to its
multi-family loans, whereby the Bank considers the net operating
income of the property and the borrower's expertise, credit
history and profitability.  The Bank generally requires that the
properties securing commercial real estate loans have debt
service coverage ratios of not less than 1.30x and also generally
requires personal guarantees from the borrowers or the principals
of the borrowing entity.  At December 31, 1998, the Bank's
commercial real estate loan portfolio totaled $163.9 million, or
12.5% of the Bank's total loan portfolio.

CONSTRUCTION AND LAND LENDING.  The Bank's construction loans
primarily have been made to finance the construction of one- to
four-family residential properties, multi-family residential
properties and retail properties.  The Bank's policies provide
that construction and land development loans may generally be
made in amounts up to 70% of the value when completed for
commercial properties and 75% for multi-family.  The Bank
generally requires personal guarantees and evidence that the
borrower has invested an amount equal to and not less than 20% of
the estimated cost of the land and improvements.  Construction
loans generally are made on a floating rate basis (subject to
daily adjustment) and a maximum term of 18 months, subject to
renewal.  Construction loans are generally made based on pre-
sales or pre-leasing.  Loan proceeds are disbursed in increments
as construction progresses and as inspections warrant.  As of
December 31, 1998, the Bank had $2.7 million, or 0.2% of its
total loan portfolio invested in construction and land loans.

OTHER LOANS.  During 1998, the Bank also offered home equity
loans, equity lines of credit, business lines of credit and
Government-guaranteed student loans.  As of December 31, 1998,
other loans totaled $34.9 million, or 2.7% of the Bank's total
loan portfolio.  Effective January 1, 1999, the Bank indefinitely
discontinued offering consumer loan products, including home
equity loans and home equity lines of credit due to shrinking
volume and spreads coupled with high origination costs.

LOAN APPROVAL PROCEDURES AND AUTHORITY.  For one- to four-family
real estate loans each loan is reviewed and approved by an
underwriter and another departmental officer with credit

                                                             10
<PAGE>
authority appropriate for the loan amount and type in accordance
with the policies approved by the Board of Directors.  Multi-
family, commercial and construction loans are approved by
designated lending officers respective of the amounts within
their lending authorities which are approved by the Board of
Directors.  Commercial loans up to $3,000,000 must be approved by
the Officers Loan Committee, whereas, loans between $3,000,000
and $5,000,000 must be approved by the Loan Committee of the
Board of Directors.  Loans exceeding $5,000,000 must be approved
by the Board.  Loans not secured by real estate as well as
unsecured loans, depending on the amount of the loan and the
loan-to-value ratio, where applicable, require the approval of at
least one lending officer and/or underwriter designated by the
Board.

For all loans originated by the Bank, upon receipt of a completed
loan application from a prospective borrower, a credit report is
ordered and certain other information is verified by the Bank's
loan underwriters and, if necessary, additional financial
information is required.  An appraisal of the real estate
intended to secure the proposed loan is performed, as required by
OTS regulations and prepared by an independent appraiser
designated and approved by the Bank.  The Board annually approves
the independent appraisers used by the Bank and approves the
Bank's appraisal policy.  It is the Bank's policy to obtain title
insurance on all real estate first mortgage loans.  Borrowers
must also obtain hazard insurance prior to closing and flood
insurance and PMI where required.  Borrowers generally are
required to advance funds on a monthly basis together with each
payment of principal and interest to a mortgage escrow account
from which the Bank makes disbursements for items such as real
estate taxes, and in some cases, hazard insurance premiums.

LOAN CONCENTRATIONS.  As a result of OTS regulations, the Bank
may not extend credit to a single borrower or related group of
borrowers in an amount greater than 15% of the Bank's unimpaired
capital and surplus.  An additional amount of credit may be
extended, equal to 10% of unimpaired capital and surplus, if the
loan is secured by readily marketable collateral, which does not
include real estate.

At December 31, 1998, the Bank's loans-to-one borrower limit was
$22.7 million.  None of the Bank's borrowers exceeded this limit
in accordance with applicable regulatory requirements.

           DELINQUENCIES AND CLASSIFIED ASSETS

DELINQUENT LOANS.  The Bank entered into a sub-servicing
agreement with Norwest Mortgage, Inc. ("Norwest"), commencing on
November 16, 1998, under which Norwest performs all residential
mortgage loan servicing functions on behalf of the Bank for the 

                                                             11
<PAGE>
Bank's portfolio loans, as well as for loans serviced for third
party investors.  Norwest's collection procedures for mortgage
loans include sending a notice after the loan is 16 days past
due.  In the event that payment is not received after the late
notice, phone calls are made to the borrower by Norwest's
collection department.  When contact is made with the borrower at
any time prior to foreclosure, the collection department attempts
to obtain full payment or the loss mitigation department attempts
to work out a repayment schedule with the borrower to avoid
foreclosure.  Generally, foreclosure procedures are initiated
when a loan is over 95 days delinquent.  Loss mitigation efforts
continue throughout the foreclosure process.

CLASSIFIED ASSETS.  Federal regulations and the Bank's
Classification of Assets Policy provide for the classification of
loans and other assets considered by the Bank to be of lesser
quality as "substandard", "doubtful" or "loss" assets.  An asset
is considered substandard if it is inadequately protected by the
current net worth and paying capacity of the obligor and/or of
the collateral pledged, if any.  Substandard assets include those
characterized by the "distinct possibility" that the insured
institution will sustain "some loss" if the deficiencies are not
corrected.  Assets classified as doubtful have all of the
weaknesses inherent in those classified substandard with the
added characteristic that the weaknesses present make "collection
or liquidation in full," on the basis of currently existing
facts, conditions, and values, "highly questionable and
improbable."  Assets classified as loss are those considered
"uncollectible" and of such little value that their continuance
as assets without the establishment of a specific loss reserve is
not warranted.  Pursuant to OTS guidelines, the Bank is no longer
required to classify assets as "special mention" if such assets
possess weaknesses but do not expose the Bank to sufficient risk
to warrant classification in one of the aforementioned
categories.  However, the Bank continues to classify assets as
"special mention" for internal monitoring purposes.

Non-performing loans (consisting of non-accrual loans and
restructured loans) decreased from $28.3 million at December 31,
1994 to $16.9 million at December 31, 1995, $13.9 million at
December 31, 1996, $12.5 million at December 31, 1997 and $8.4 
million at December 31, 1998.  The continued decline in the
balance of non-performing loans during the five year period was
due to the Bank's ongoing efforts to reduce non-performing
assets, as well as to an improved economy.  REO decreased each
year during the five years ended December 31, 1998 from $7.8
million at December 31, 1994 (net of an allowance for REO of
$717,000) to a balance at December 31, 1998 of $200,000 (net of
an allowance for REO of $25,000).  The Bank intends to continue 



                                                             12
<PAGE>
its efforts to reduce non-performing assets in the normal course
of business, but it may continue to seek opportunities to dispose
of its non-performing assets through sales to investors or
otherwise.  The Bank also has restructured loans, which has
enabled the Bank to avoid the costs involved with foreclosing on
the properties securing such loans while continuing to collect
payments on the loans under their modified terms.  Troubled debt
restructurings ("TDRs") are loans for which certain concessions,
such as the reduction of interest rates or the deferral of
interest or principal payments, have been granted due to the
borrower's financial condition.

At December 31, 1998, the Bank had 13 restructured loans with
aggregate principal balances of $1.9 million.  Of this amount,
34.7% were residential loans (including cooperative apartment
loans) and 65.3% were multi-family loans.  Management is able to
avoid the costs of foreclosing on loans that it has restructured. 
However, restructured loans have a higher probability of becoming
delinquent than loans that have no previous history of
delinquency.  To the extent that the Bank is unable to return
these loans to performing status, the Bank will have to foreclose
on such loans, which will increase the Bank's REO.

The Bank's policy is to recognize income on a cash basis for
restructured loans for a period of six months, after which such
loans are returned to an accrual basis if they are performing in
accordance with their modified terms.  At December 31, 1998, the
Bank had 11 restructured loans with principal balances of $1.9
million that were on accrual status.  For restructured loans that
are 90 days or more past due, the loan is returned to non-accrual
status and previously accrued but uncollected interest is
reversed.

At December 31, 1998, the Bank's classified assets consisted of
$6.6 million of loans and REO of which $55,000 was classified as
doubtful.  The Bank's assets classified as substandard at
December 31, 1998 consisted of $5.7 million of loans and $202,000 
of gross REO.  Classified assets in total declined $4.6 million,
or 41.1% since December 31, 1997.  At December 31, 1998, the Bank
also had $5.6 million of commercial real estate loans that it had
designated special mention.  The loans were performing in
accordance with their terms at December 31, 1998 but were deemed
to warrant close monitoring by management due to one or more
factors, such as the absence of current financial information
relating to the borrower and/or the collateral, financial
difficulties of the borrower or inadequate cash flow from the
security property.





                                                             13
<PAGE>
At December 31, 1998, 1997 and 1996, delinquencies in the Bank's
loan portfolio were as follows:
<TABLE>
<CAPTION>
                             At December 31, 1998               At December 31, 1997
                      --------------------------------   ---------------------------------
                         60-89 Days    90 Days or More      60-89 Days    90 Days or More 
                      ---------------- ---------------   ---------------- ----------------
                      Number Principal Number Principal  Number Principal Number Principal
                        of    Balance    of    Balance     of    Balance    of    Balance
                      Loans  of Loans  Loans  of Loans   Loans  of Loans  Loans  of Loans 
                      ------ --------  ------ ---------  ------ --------  ------ ---------
                                             (Dollars in thousands)
<S>                   <C>    <C>       <C>    <C>        <C>    <C>       <C>    <C>
One- to four-family    50    $ 5,201    40      3,843      8    $ 1,339    42    $ 3,534
Multi-family            2        591     -       -         -        -       9      2,362
Commercial              2        306     7      2,175      1         33     9      3,305
Cooperative            -        -       26        303      3        128     8        699
Construction and 
 land loans            -        -        -       -         -        -       1        100
Other loans            94      1,177    47        207     26        452    19        396
                       --     ------   ---     ------    ---     ------   ---     ------
   Total loans        148    $ 7,275   120    $ 6,528     38    $ 1,952    88    $10,396
                       ==     ======   ===     ======    ===     ======   ===     ====== 
   Delinquent loans
    to total loans (1)         0.56%            0.50%             0.17%            0.90%
                               ====             ====              ====             ====
</TABLE>
<TABLE>
<CAPTION>
                             At December 31, 1996
                      ---------------------------------
                         60-89 Days    90 Days or More 
                      ---------------- ----------------
                      Number Principal Number Principal
                        of    Balance    of    Balance 
                      Loans  of Loans  Loans  of Loans  
                      ------ --------- ------ ---------
                           (Dollars in thousands)
<S>                   <C>    <C>       <C>    <C>
One- to four-family     9    $   950    47    $ 4,083
Multi-family           -         -       6      1,463
Commercial             -         -      11      4,321
Cooperative             5        281     9        431
Construction and 
 land loans            -         -       1         60
Other loans            26        171    21        375
                      ---     ------   ---     ------
   Total loans         40    $ 1,402    95    $10,733
                      ===     ======   ===     ======
   Delinquent loans
    to total loans (1)         0.17%            1.27% 
                               ====             ====
</TABLE>
(1)  Restructured loans that have become seasoned for the
required six month period and are currently performing in
accordance with their restructured terms are not included in
delinquent loans.  There was 1 residential restructured loan for
$183,000 that was included in loans delinquent 90 days or more at
December 31, 1998.  At December 31, 1996, there was 1
restructured loan for $77,000 that was included in loans
delinquent 90 days or more because it had not yet performed in
accordance with its modified terms for the required six-month
seasoning period. 

NON-PERFORMING ASSETS.  The Bank does not accrue interest on
loans 90 days past due and restructured loans that have not yet
performed in accordance with their modified terms for at least 

                                                             14
<PAGE>
six months.  If non-accrual loans had been performing in
accordance with their original terms, the Bank would have
recorded interest income from such loans of approximately
$425,000, $736,000 and $688,000 for the years ended December 31,
1998, 1997 and 1996, respectively, compared to $117,000, $146,000
and $220,000, which was recognized on non-accrual loans for such
periods, respectively.  If all restructured loans, as of December
31, 1998, 1997 and 1996, had been performing in accordance with
their original loan terms (prior to being restructured), the Bank
would have recognized interest income from such loans of
approximately $396,000, $197,000 and $305,000 for the years ended
December 31, 1998, 1997 and 1996, respectively.  The following
table sets forth information regarding all non-accrual loans
(which consist of loans 90 days or more past due and restructured
loans that have not yet performed in accordance with their
modified terms for the required six-month seasoning period),
restructured loans and REO.
<TABLE>
<CAPTION>
                                                        At December 31,
                                         1998      1997      1996      1995      1994
                                        ------    ------    ------    ------    ------
                                                     (Dollars in thousands)
<S>                                    <C>       <C>       <C>       <C>       <C>
Non-accrual mortgage loans             $  6,321  $ 10,000  $ 10,358   $ 9,116  $ 18,474
Restructured mortgage loans               1,857     2,136     3,160     7,072     9,550
Non-accrual other loans                     207       396       375       689       275
                                        -------   -------   -------   -------   -------
   Total non-performing loans             8,385    12,532    13,893    16,877    28,299
Real estate owned, net of
  related reserves                          200       455     1,038     2,033     7,844
                                        -------   -------   -------   -------   -------
   Total non-performing assets         $  8,585  $ 12,987  $ 14,931  $ 18,910  $ 36,143
                                        =======   =======   =======   =======   =======
Non-performing loans to total loans        0.64%     1.09%     1.64%     2.97%     5.41%
Non-performing assets to total assets      0.36      0.66      0.94      1.28      2.85
Non-performing loans to total assets       0.35      0.63      0.88      1.15      2.23
</TABLE>

             ALLOWANCES FOR LOAN AND REO LOSSES

The allowance for loan losses is increased by charges to income
and decreased by charge-offs (net of recoveries).  Impaired loans
and related reserves have been identified and calculated in
accordance with the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors
for Impairment of a Loan", and the amendment thereof, SFAS No.
118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures".  The total allowance for loan
losses has been determined in accordance with the provisions of
SFAS No. 5, "Accounting for Contingencies".  The Bank's allowance
for loan losses is intended to be maintained at a level
sufficient to absorb all estimable and probable losses inherent
in the loan portfolio.  The Bank reviews the adequacy of the
allowance for loan losses on a monthly basis taking into account
past loan loss experience, known and inherent risks in the
portfolio, adverse situations that may affect the borrower's  

                                                             15
<PAGE>
ability to repay, the estimated value of any underlying
collateral, current and prospective economic conditions and
current regulatory guidance.

During the five years ended December 31, 1998, the allowance for
loan losses as a percentage of non-performing loans increased
steadily to 166.7% at December 31, 1998.  The increase is a
direct result of the steady decline in non-performing loans
during that five year period.  Non-performing loans as a
percentage of total loans declined steadily from 5.41% at
December 31, 1994 to 0.64% at December 31, 1998.  The decline is
due to the decrease in non-performing loans, as well as an
increase in total loans.

The Bank's provisions for loan losses has remainded relatively
stable over the last three years.  Specifically, the Bank made
provisions for loan losses of $13.4 million, $2.8 million, $3.1
million, $2.8 million and $2.7 million for the five years ended
December 31, 1998, respectively.

The Bank will continue to monitor and modify its allowances for
loan and REO losses as conditions dictate.  Although the Bank
maintains its allowances at levels that it considers adequate to
provide for potential losses, there can be no assurance that such
losses will not exceed the estimated amounts.



























                                                             16
<PAGE>
The following table sets forth the changes in the Bank's
allowance for loan losses at the dates indicated.

<TABLE>
<CAPTION>
                                       At or For the Years Ended December 31,
                                    1998      1997      1996      1995      1994
                                   ------    ------    ------    ------    ------
                                              (Dollars in thousands)
<S>                               <C>       <C>       <C>       <C>       <C>
Balance at beginning of year      $12,528   $10,704   $ 8,573   $10,847   $21,606
Charge-offs:
  One- to four-family                (435)     (964)     (771)     (472)     (264)
  Cooperative                        (256)     (370)     (524)   (2,142)   (8,747)
  Multi-family                       (708)     -          (30)   (1,299)   (7,932)
  Non-residential and other          (935)     (352)     (560)   (1,541)   (7,798)
                                   ------    ------    ------    ------    ------
    Total charge-offs (1)          (2,334)   (1,686)   (1,885)   (5,454)  (24,741)
Recoveries                          1,119       760       891       405       582
                                   ------    ------    ------    ------    ------
Net charge-offs                    (1,215)     (926)     (994)   (5,049)  (24,159)
Provision for loan losses           2,665     2,750     3,125     2,775    13,400
                                   ------    ------    ------    ------    ------
Balance at end of year            $13,978   $12,528   $10,704   $ 8,573   $10,847
                                   ======    ======    ======    ======    ======
Ratio of net charge-offs during
 the year to average loans out-
 standing during the year           0.09%     0.09%     0.15%     0.93%     3.83%
Ratio of allowance for loan
 losses to total loans at
 the end of year (2)                1.07      1.09      1.26      1.51      2.07
Ratio of allowance for loan
 losses to non-performing loans
 at the end of the year (3)       166.70     99.97     77.05     50.80     38.33
</TABLE>

(1)  Total charge-offs for the year ended 1994 were attributable
to bulk sale transactions.

(2)  The steady decline in the ratio of allowance for loan losses
to total loans is attributable to a decline in non-performing
loans as previously mentioned coupled with growth in the Bank's
total loans outstanding.

(3)  The ratio of allowance for loan losses to non-performing
loans has increased significantly over the last five years as
non-performing loans have declined.















                                                             17
<PAGE>
The following table sets forth the Bank's allocation of its
allowance for loan losses to the total amount of loans in each of
the categories listed.
<TABLE>
<CAPTION>
                                                   At December 31,  
                        1998            1997            1996            1995            1994
                       ------          ------          ------          ------          ------
                            % of            % of            % of            % of            % of  
                          Loans in        Loans in        Loans in        Loans in        Loans in
                          Category        Category        Category        Category        Category
                          to Total        to Total        to Total        to Total        to Total
                   Amount  Loans   Amount  Loans   Amount  Loans   Amount  Loans   Amount  Loans
                   ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
                                                  (Dollars in thousands)
<S>                <C>     <C>    <C>     <C>     <C>      <C>    <C>     <C>     <C>      <C>
Mortgage loans:
  Residential (1)  $10,139  84.62%  $7,039  84.09%  $5,929  80.40%  $3,838  72.67%  $5,685  71.97%
  Commercial         3,579  12.51    5,201  12.91    4,340  15.08    4,175  19.48    4,308  19.53
  Construction        -      0.21      -     0.20      -     0.50       69   1.00      248   0.66
Other loans            260   2.66      288   2.80      435   4.02      491   6.85      606   7.84
                    ------ ------   ------ ------    ----- ------   ------ ------   ------ ------
Total allowance for
  loan losses (2)  $13,978 100.00% $12,528 100.00% $10,704 100.00%  $8,573 100.00% $10,847 100.00%
                    ====== ======   ====== ======    ===== ======   ====== ======   ====== ======
</TABLE>
(1)  Includes one- to four-family, multi-family and cooperative
loans.

(2)  In order to comply with certain regulatory reporting
requirements, management has prepared the above allocation of the
Bank's allowance for loan losses among various categories of the
loan portfolio for each of the years in the five-year period
ended December 31, 1998.  In management's opinion, such
allocation has, at best, a limited utility.  It is based on
management's assessment as of a given point in time of the risk
characteristics of each of the component parts of the total loan
portfolio and is subject to changes as and when the risk factors
of each such component changes.  Such allocation is not
indicative of either the specific amounts or the loan categories
in which future charge-offs may be taken, nor should it be taken
as an indicator of future loss trends.  In addition, by
presenting such allocation, management does not mean to imply
that the allocation is exact or that the allowance has been
precisely determined from such allocation.

                   INVESTMENT ACTIVITIES

The investment policy of the Bank, which is established by the
Board of Directors and implemented by the Bank's Asset/Liability
Committee, is designed primarily to provide and maintain
liquidity, to generate a favorable return on investments without
incurring undue interest rate and credit risks, and to complement
the Bank's lending activities.  Federally chartered savings
institutions have the authority to invest in various types of
liquid assets, including U.S. Treasury obligations, securities of
various federal agencies, certain certificates of deposit of

                                                             18
<PAGE>
insured banks and savings institutions, certain bankers'
acceptances, repurchase agreements and federal funds.  Subject to
various restrictions, federally chartered savings institutions
may also invest their assets in commercial paper, investment
grade corporate debt securities and mutual funds whose assets
conform to the investments that a federally chartered savings
institution is otherwise authorized to make directly. 
Additionally, the Bank must maintain minimum levels of
investments that qualify as liquid assets under OTS regulations. 
See "Regulation and Supervision-Federal Savings Institution
Regulation-Liquidity."  Historically, the Bank has maintained
liquid assets above the minimum OTS requirements and at a level
believed to be adequate to meet its normal daily activities.  At
December 31, 1998, the Bank had money market investments and debt
and equity securities available for sale in the aggregate amount
of $1.7 million and $109.6 million, respectively, with fair
values of $1.7 million and $109.0 million, respectively.

On June 30, 1998, the Company transferred the then remaining
$138.2 million of MBSs and $45.4 million of debt securities held
to maturity to securities available for sale ("AFS").  The
transfer was done to enhance liquidity and take advantage of
market opportunities.  At December 31, 1998, the securities AFS
portfolio totaled $889.3 million of which $266.3 million were
adjustable-rate securities and $623.0 million were fixed-rate
securities.

The following table sets forth certain information regarding the
carrying and market values of the Company's money market
investments, debt and equity securities and FHLB-NY stock at the
dates indicated:
<TABLE>
<CAPTION>
                                                  At December 31, 
                                   1998                  1997                   1996
                                  ------                ------                 ------
                           Carrying    Market    Carrying     Market     Carrying   Market
                            Value      Value       Value      Value        Value    Value  
                           --------    ------    --------     ------      -------   ------
                                               (In thousands)
<S>                        <C>         <C>       <C>          <C>         <C>       <C>
Debt and Equity Securities:
U.S. Government and 
  agency obligations      $ 77,705    $ 77,705    $135,672    $135,715    $170,709    $169,849
Corporate debt securities   19,684      19,684      45,390      45,315      45,350      45,227
Preferred stock             11,590      11,590       4,123       4,123      27,329      27,329
                           -------     -------     -------     -------     -------     -------
     Subtotal              108,979     108,979     185,185     185,153     243,388     242,405
                           -------     -------     -------     -------     -------     -------
Federal Funds sold            -           -           -           -          5,000       5,000
FHLB-NY stock               21,990      21,990      12,885      12,885       9,890       9,890
Money market investments     1,720       1,720       4,561       4,561       1,869       1,869
                           -------     -------     -------     -------     -------     -------
     Total                $132,689(1) $132,689(1) $202,631(1) $202,599(1) $260,147(1) $259,164(1)
                           =======     =======     =======     =======     =======     =======
</TABLE>
(1) Includes debt and equity securities AFS totaling $109.0
million, $118.8 million and $146.1 million at December 31, 1998,
1997 and 1996, respectively, carried at fair value.

                                                             19
<PAGE>
The table below sets forth certain information regarding the
carrying value, weighted average yields and maturities of the
Company's money market investments and debt and equity securities
at December 31, 1998.

<TABLE>
<CAPTION>

                                                              At December 31, 1998
               ----------------------------------------------------------------------------------------------------------------
                                                                                             Total Money Market Investments
                                     More than       More than Five                          and Debt and Equity Securities
               One Year or Less  One to Five Years    to Ten Years   Due After 10 Years ---------------------------------------
               ----------------- -----------------   --------------- ------------------  Average
                        Weighted          Weighted          Weighted          Weighted  Remaining           Estimated  Weighted
               Carrying Average  Carrying Average  Carrying Average  Carrying Average   Years to  Carrying    Fair     Average
                Value    Yield     Value   Yield    Value    Yield    Value    Yield    Maturity   Value      Value     Yield
               -------- -------- -------- -------- -------- -------- -------- --------  --------- --------   --------  --------
                                                           (Dollars in thousands)
<S>             <C>     <C>      <C>      <C>      <C>      <C>      <C>      <C>       <C>       <C>        <C>        <C>
U.S. Government 
  securities and
  agency 
  obligations    $5,030   6.5%  $  9,944    5.4%  $   -       -  %  $ 62,731    7.0%    17.1     $ 77,705    $ 77,705      6.7%
Corporate debt
  securities     18,670   5.3       -        -        -       -        1,014    8.7      1.9       19,684      19,684      5.5
Money market
  investments     1,720   4.4       -        -        -       -         -        -        -         1,720       1,720      4.4
                -------          -------           -------           -------                      -------     -------         
     Total     $ 25,420   5.5%  $  9,944    5.4%  $   -       -  %  $ 63,745    7.0%    13.8     $ 99,109    $ 99,109      6.4%
                =======          =======           =======           =======                      =======     ======= 
Preferred Stock                                                                                  $ 11,590    $ 11,590      5.0%
FHLB-NY stock                                                                                    $ 21,990    $ 21,990      7.0%
                                                                                                  =======     ======= 
</TABLE>











                                                             20
<PAGE>
                  MORTGAGE-BACKED SECURITIES

The Bank also invests in mortgage-backed securities ("MBSs").  At
December 31, 1998, total MBSs, net, aggregated $780.3 million, or
32.6% of total assets.  At December 31, 1998, 43.3% of the MBS
portfolio, including Collateralized Mortgage Obligations ("CMOs")
and Real Estate Mortgage Investment Conduits ("REMICs"), were
insured or guaranteed by either FNMA, FHLMC or the Ginnie Mae
("GNMA").  At December 31, 1998, $242.6 million, or 31.1% of
total MBSs were adjustable-rate and $537.7 million, or 68.9% of
total MBSs were fixed-rate. 

The following table sets forth the carrying amount of the
Company's MBS portfolio in dollar amounts and in percentages at
the dates indicated.

<TABLE>
<CAPTION>
                                                           At December 31, 
                                              1998              1997              1996
                                             ------            ------            ------
                                                 Percent           Percent           Percent
                                        Carrying   of     Carrying   of     Carrying   of
                                         Value    Total    Value    Total    Value    Total
                                        -------- -------  -------- -------  -------- -------
                                                        (Dollars in thousands)
<S>                                     <C>      <C>      <C>      <C>      <C>      <C>
MBSs(1):
  CMOs and REMICS - Agency-backed(2)    $106,552  13.66%  $174,707  32.14%  $117,969  27.96%
  CMOs and REMICS - Non-agency(2)        442,352  56.69    169,480  31.17     94,877  22.48
  FHLMC                                   52,167   6.69     91,110  16.76     97,953  23.21
  FNMA                                   178,767  22.91    107,377  19.75    110,182  26.12
  GNMA                                       434   0.05        982   0.18        983   0.23
                                         ------- ------    ------- ------    ------- ------
Net MBSs                                $780,272 100.00%  $543,656 100.00%  $421,964 100.00%
                                         ======= ======    ======= ======    ======= ======
</TABLE>

(1)  Includes MBSs AFS of $780.3 million, $380.6 million and
$224.0 million at December 31, 1998, 1997 and 1996, respectively.
(2)  Included in total MBSs are CMOs and REMICs, which, at
December 31, 1998, had a gross carrying value of $548.9 million. 
A CMO is a special type of pass-through debt in which the stream
of principal and interest payments on the underlying mortgages or
MBSs is used to create classes with different maturities and, in
some cases, amortization schedules, as well as a residual
interest, with each such class possessing different risk
characteristics.  The Bank has in recent periods increased its
investment in REMICs and CMOs because these securities generally
exhibit a more predictable cash flow than mortgage pass-through
securities.  The Bank's policy is to limit its purchases of
REMICs to non high-risk securities as defined by the OTS.






                                                             21
<PAGE>
The following tables set forth certain information regarding the
carrying and market values and percentage of total carrying
values of the Bank's mortgage-backed and related securities
portfolio.

<TABLE>
<CAPTION>
                                                         At December 31, 
                                     1998                       1997                      1996
                                    ------                     ------                    ------
                          Carrying  % of    Market   Carrying  % of    Market   Carrying  % of    Market
                           Value    Total   Value     Value    Total   Value     Value    Total   Value 
                          --------  -----   ------   --------  -----   ------   --------  -----   ------
                                                      (Dollars in thousands)
<S>                       <C>       <C>     <C>      <C>       <C>     <C>      <C>       <C>     <C>
Held to maturity:
MBSs:
   FHLMC                  $   -       -  % $   -     $ 27,472   5.05% $ 27,769  $ 39,889   9.45% $ 39,594
   FNMA                       -       -        -       61,492  11.31    61,093    71,460  16.94    69,914
                           -------  -----   -------   -------  -----   -------   -------  -----   -------
Total MBSs                    -       -        -       88,964  16.36    88,862   111,349  26.39   109,508
                           -------  -----   -------   -------  -----   -------   -------  -----   -------
Mortgage-related securities:
  CMOs and REMICS-Agency 
     backed                   -       -        -       21,217   3.90    21,101    24,449   5.79    24,142
  CMOs and REMICS-
     Non-agency               -       -        -       52,876   9.73    53,363    62,142  14.73    62,032
                           -------  -----   -------   -------  -----   -------   -------  -----   -------
Total mortgage-related
  securities                  -       -        -       74,093  13.63    74,464    86,591  20.52    86,174
                           -------  -----   -------   -------  -----   -------   -------  -----   -------
Total mortgage-backed and
  related securities
  held to maturity            -       -        -      163,057  29.99   163,326   197,940  46.91   195,682
                           -------  -----   -------   -------  -----   -------   -------  -----   -------
Available for sale:
MBSs:
   GNMA                        434   0.05       434       982   0.18       982       983   0.23       983
   FHLMC                    52,167   6.69    52,167    63,638  11.71    63,638    58,064  13.76    58,064
   FNMA                    178,767  22.91   178,767    45,885   8.44    45,885    38,722   9.18    38,722
                           -------  -----   -------   -------  -----   -------   -------  -----   -------
Total MBSs                 231,368  29.65   231,368   110,505  20.33   110,505    97,769  23.17    97,769
                           -------  -----   -------   -------  -----   -------   -------  -----   -------
Mortgage-related securities:
  CMOs and REMICs-Agency
    backed                 106,552  13.66   106,552   153,490  28.23   153,490    93,520  22.16    93,520
  CMOs and REMICs-
    Non-agency             442,352  56.69   442,352   116,604  21.45   116,604    32,735   7.76    32,735
                           -------  -----   -------   -------  -----   -------   -------  -----   -------
Total mortgage-related
  securities               548,904  70.35   548,904   270,094  49.68   270,094   126,255  29.92   126,255
                           ------- ------   -------   -------  -----   -------   -------  -----   -------
Total mortgage-backed
  and mortgage-related
  securities available
  for sale                 780,272 100.00   780,272   380,599  70.01   380,599   224,024  53.09   224,024
                           ------- ------   -------   -------  -----   -------   -------  -----   -------
Total mortgage-backed and
  related securities      $780,272 100.00% $780,272  $543,656 100.00% $543,925  $421,964 100.00% $419,706
                           ======= ======   =======   ======= ======   =======   ======= ======   =======
</TABLE>








                                                             22
<PAGE>
The table below sets forth certain information regarding the
carrying value, weighted average yields and maturities of the
Company's mortgage-backed and related securities at December
31, 1998.
<TABLE>
<CAPTION>
                                                     At December 31, 1998
                                     Over One to      Over Five to                                Mortgage-Backed
                One Year or Less     Five Years        Ten Years       Over Ten Years       and Related Securities Totals 
                ----------------     -----------      ------------     --------------       -----------------------------
                                                                                        Average
                         Weighted          Weighted          Weighted          Weighted Remaining          Estimated Weighted
                Carrying Average  Carrying Average  Carrying Average  Carrying Average  Years to  Carrying  Market   Average
                 Value    Yield    Value    Yield    Value    Yield    Value    Yield   Maturity   Value    Value     Yield  
                -------- -------- -------- -------- -------- -------- -------- -------- --------- -------- --------- --------
                                                           (Dollars in thousands)
<S>             <C>      <C>      <C>      <C>       <C>     <C>      <C>      <C>      <C>       <C>      <C>       <C>
Available for sale:
 FNMA           $   797    7.50%  $  -        -  %   $10,417   5.80%  $167,553   6.50%     18.1  $178,767   $178,767  6.46%
 FHLMC              203    6.38     1,170    6.02      6,137   6.44     44,657   6.63      22.0    52,167     52,167  6.60
 GNMA              -        -        -        -         -       -          434   6.33      25.3       434        434  6.33
 CMOs and REMICs   -        -       3,534    5.84       -       -      545,370   6.50      27.1   548,904    548,904  6.50
                 ------    ----    ------    ----     ------   ----    -------   ----      ----   -------    -------  ----
Total mortgage-
  backed and
  related 
  securities    $ 1,000    7.27   $ 4,704    5.89%   $16,554   6.03%  $758,014   6.51%     24.7  $780,272  $780,272   6.50%
                 ======    ====    ======    ====     ======   ====    =======   ====      ====   =======   =======   ====
</TABLE>

At December 31, 1998, the weighted average contractual maturity
of the Bank's mortgage-backed and related securities portfolio
was 24.7 years.












                                                             23
<PAGE>
The following table shows the carrying value, maturity or period
to repricing of the Company's mortgage-backed and related
securities portfolio at December 31, 1998.

<TABLE>
<CAPTION>
                                      At December 31, 1998 
                                                                 Total
                                                Fixed-         Mortgage-
                                       ARM      Rate             Backed
                        Fixed-Rate    MBSs &    CMOs &  ARM    and Related
                           MBSs       REMICs    REMICs  CMOs   Securities
                        ----------  ----------  ------  ----   -----------
                                        (In thousands)
<S>                      <C>         <C>       <C>     <C>      <C>
Amounts due or repricing:
 Within one year         $    990  $ 39,559   $  -    $181,314  $221,863
                          -------   -------    ------  -------   -------
After one year:
 One to three years             6    20,671     3,521     -       24,198
 Three to five years        4,973      -         -        -        4,973
 Five to 10 years          12,563      -         -        -       12,563
 10 to 20 years            99,266      -       14,365     -      113,631
 Over 20 years             50,173      -      350,766     -      400,939
                          -------   -------   -------  -------   -------
Total due or repricing
  after one year          166,981    20,671   368,652     -      556,304
                          -------   -------   -------  -------   -------
Total                     167,971    60,230   368,652  181,314   778,167
Adjusted for:
  Unamortized yield 
    adjustment                753       561    (1,752)     430        (8)
  Unrealized gain(loss)     1,492       361       566     (306)    2,113
                          -------   -------   -------  -------   -------
Total mortgage-backed and
  related securities     $170,216  $ 61,152  $367,466 $181,438  $780,272
                          =======   =======   =======  =======   =======
</TABLE>














                                                             24
<PAGE>
The following table sets forth the carrying value and the
activity in the Company's mortgage-backed and related securities
portfolio during the periods indicated.

<TABLE>
<CAPTION>
                                For the Years Ended December 31,
                                   1998       1997       1996
                                  ------     ------     ------
                                            (In thousands)
<S>                              <C>         <C>        <C>
Mortgage-backed and related
   securities:        
At beginning of period            $543,656   $421,964   $629,889
 Loans securitized                 105,691       -          -
 MBSs purchased                       -        56,941     41,647
 MBSs sold                          (6,618)   (18,932)  (101,604)
 CMOs and REMICs purchased         687,923    365,002    158,654
 CMOs and REMICs sold             (349,464)  (206,901)  (205,760)
 Amortization and repayments      (199,636)   (76,771)   (97,969)
Change in unrealized gain (loss)    (1,280)     2,353     (2,893)
                                  --------    -------    -------
 Balance of mortgage-backed and
   related securities at end
   of period (1)                  $780,272   $543,656   $421,964
                                   =======    =======    =======
</TABLE>

(1)  Includes $780.3 million, $380.6 million and $224.0 million
of mortgage-backed and related securities AFS at December 31,
1998, 1997 and 1996, respectively, carried at fair value.

The Asset/Liability Committee determines when to make substantial
changes in the MBS portfolio.  In 1998, the Company purchased
$687.9 million of CMOs and REMICs, of which $106.3 million were
adjustable-rate and $581.6 million were fixed-rate securities. 
During 1998, the Bank continued to emphasize MBSs reflecting
management's strategy to improve duration and yield of the AFS
portfolio.  Adjustable-rate securities as a percentage of total
MBSs was 31%, 48% and 42% at December 31, 1998, 1997 and 1996,
respectively.  At December 31, 1998, $337.9 million, or 43.3% of
the Bank's MBS portfolio, was directly insured or guaranteed by
the FNMA, FHLMC or GNMA.  FNMA and FHLMC provide the certificate
holder a guarantee of timely payments of interest and scheduled
principal payments, whether or not they have been collected.  The
GNMA MBSs provide a guarantee to the holder of timely payments of
principal and interest and is backed by the full faith and credit
of the U.S. Government.  The privately-issued CMOs and REMICs
contained in the Bank's AFS portfolio at December 31, 1998
totaling $442.4 million, or 56.7% of MBSs have generally been
underwritten by large investment banking firms with the timely

                                                             25
<PAGE>
payment of principal and interest on these securities supported
(credit enhanced) in varying degrees by either insurance issued
by a financial guarantee insurer, letters of credit or
subordination techniques.  Substantially all such securities are
rated AAA by one or more of the nationally recognized securities
rating agencies.

MBSs generally yield less than the loans that underlie such
securities, because of the cost of payment guarantees or credit
enhancements that result in nominal credit risk.  The MBS
portfolio had a weighted average yield of 6.50% for the year
ended December 31, 1998.  In addition, MBSs are more liquid than
individual mortgage loans and may be used to collateralize
obligations of the Bank.  In general, MBSs issued or guaranteed
by FNMA and FHLMC and certain AA-rated mortgage-backed pass-
through securities are weighted at no more than 20% for risk-
based capital purposes, and MBSs issued or guaranteed by GNMA are
weighted at 0% for risk-based capital purposes, compared to an
assigned risk weighting of 50% to 100% for whole residential
mortgage loans.  These types of securities thus allow the Bank to
optimize regulatory capital to a greater extent than non-
securitized whole loans.

                    SOURCES OF FUNDS

GENERAL.  Deposits, loan, mortgage-backed and debt securities
repayments, retained earnings and, to a lesser extent, FHLB
advances are the primary source of the Company's and the Bank's
funds for use in lending, investing and for other general
purposes.

DEPOSITS.  The Bank offers a variety of deposit accounts having a
range of interest rates and terms.  The Bank's deposits consist
of savings, NOW, checking, money market and certificate accounts. 
The flow of deposits is influenced significantly by general
economic conditions, changes in money market rates, prevailing
interest rates and competition.

During 1996, the Bank implemented its supermarket banking
program.  During September of 1996, the Bank and Pathmark Stores,
Inc. entered into an agreement to open approximately 44 full-
service bank branches in Pathmark supermarkets throughout New
York City, Long Island, Westchester and Rockland counties by
early 1999.  By the end of 1996, the Bank had opened four
supermarket branches with deposits totaling $12.1 million. 
During 1997, the Bank opened twenty-eight supermarket branches
resulting in a total of thirty-two locations at December 31, 1997
with deposits totaling $157.2 million.  During 1998, the Bank
opened an additional twenty-five supermarket branches resulting 
in a total of fifty-seven locations at December 31, 1998 with
deposits totaling $504.0 million.  The supermarket branches are 

                                                             26
<PAGE>
located in the New York City boroughs of Queens, Brooklyn,
Manhattan and Staten Island, the New York counties of Nassau,
Suffolk, Rockland and Westchester and in New Jersey and
Connecticut.  At December 31, 1998, the Bank had 35 branches in
Pathmark Stores, Inc., 14 in ShopRite Supermarket, Inc., 4 in
Edward Super Food Stores, 2 in Big Y Food Stores, 1 in Shaws and
1 mini-branch in The Grand Union Co.  Core deposits equaled 54.0%
of total in-store branch deposits, compared to 45.5% in
traditional branches.  Overall core deposits represented 47.7% of
total deposits at December 31, 1998 compared to 42.7% at December
31, 1997.  The Bank believes that supermarket branching is a
cost-effective way to extend its franchise and put its sales
force in touch with a significant number of prospective
customers.  The branches are open seven days a week and provide a
broad range of traditional banking services, as well as the full
package of financial services offered by CFS Investments, Inc.
("CFSI").  In 1999, the Bank has opened two additional
supermarket branches and is scheduled to open one more.  The Bank
has established a relationship with ShopRite Stores under which
the Bank has the right to open in-store branches in all new or
renovated ShopRite Stores in New Jersey and Connecticut.

The Bank's deposits are obtained primarily from the areas in
which its branch offices are located.  The Bank relies primarily
on customer service and long-standing relationships with
customers to attract and retain these deposits.  Certificate
accounts in excess of $100,000 are not actively solicited by the
Bank nor does the Bank use brokers to obtain deposits.  During
1998, the Bank continued to offer competitive rates without
jeopardizing the value of existing core deposits.  During 1997,
the Bank experienced a shift in deposits from certificate of
deposit accounts into savings and checking accounts which
continued in 1998.  Certificates of deposit decreased from 57.3%
of deposits at December 31, 1997 to 52.3% of deposits at December
31, 1998.  During 1998, the Bank introduced a "Liquid Asset"
savings account in all supermarket branches which pays the
account holder a fixed-rate of interest in the first year on
account balances of $2,500 or more.  The Liquid Asset account
currently pays 4.25% for the first year.  The Company has been
able to maintain a substantial level of core deposits which the
Company believes helps to limit interest rate risk by providing a
relatively stable, low cost long-term funding base.  The Company
expects to attract a higher percentage of core deposits from its
supermarket branch locations as these locations continue to grow
and mature.







                                                             27
<PAGE>
The following table presents the deposit activity of the Bank for
the periods indicated.

<TABLE>
<CAPTION>
                                 Years Ended December 31,
                                1998       1997       1996
                               ------     ------     ------
                                      (In thousands)
<S>                          <C>         <C>        <C>
Deposits                     $5,753,644 $3,208,355 $2,441,295
Withdrawals                   5,458,274  3,031,457  2,428,315
                              ---------  ---------  ---------
Net deposits                    295,370    176,898     12,980
Interest credited on deposits    62,328     50,326     41,362
                              ---------  ---------  ---------
Total increase in deposits   $  357,698 $  227,224 $   54,342
                              =========  =========  =========
</TABLE>

Time deposits by maturity at December 31, 1998 over $100,000 are
as follows:

           Maturity Period                        Amount  
           ---------------                        ------
                                              (In thousands)
           Three months or less                  $24,244
           Over three through six months          27,618
           Over six through 12 months             18,605
           Over 12 months                         14,042
                                                  ------
                Total                            $84,509
                                                  ======



















                                                             28
<PAGE>
The following table sets forth the distribution of the Bank's
deposit accounts for the periods indicated and the weighted
average nominal interest rates for each category of deposits
presented.

<TABLE>
<CAPTION>
                                                          Years Ended December 31,
                                           1998                     1997                     1996
                                          ------                   ------                   ------
                                         Percent Weighted         Percent Weighted         Percent Weighted
                                            of   Average             of   Average            of    Average
                                 Average  Total  Nominal  Average  Total  Nominal  Average  Total  Nominal
                                 Balance Deposits Rate    Balance Deposits Rate    Balance Deposits Rate   
                                 ------- -------- ------  ------- -------- ------  ------- -------- ------
                                                          (Dollars in thousands)
<S>                             <C>      <C>      <C>    <C>      <C>      <C>    <C>      <C>      <C>
Savings accounts                $441,759  28.22%  2.81%   $371,872  30.01%  2.51%   $373,337  33.46%  2.49%
Checking accounts                187,297  11.96   0.73     134,546  10.86   1.31     111,425   9.99   1.01
                                 -------  -----   ----     -------  -----  -----     -------  -----  -----
Total savings and checking 
   accounts                      629,056  40.18   2.19     506,418  40.87   2.07     484,762  43.45   2.13
                                 -------  -----   ----     -------  -----  -----     -------  -----  -----
Money market accounts             57,597   3.68   3.54      54,107   4.37   3.37      58,108   5.21   3.32
                                 -------  -----   ----     -------  -----  -----     -------  -----  -----
Certificate accounts:
  91 days                          5,620   0.36   3.87       5,799   0.47   3.83       7,783   0.70   3.92
  6 months                       164,647  10.52   5.33      85,558   6.90   5.37      85,768   7.69   5.12
  7 months                         4,519   0.29   3.93      13,116   1.06   5.26       2,228   0.20   2.99
  One year                       382,497  24.43   5.62     265,891  21.45   5.69     203,259  18.22   5.51
  13 months                       27,514   1.76   5.53      21,314   1.72   5.79      11,036   0.99   5.12
  18 months                       33,985   2.17   5.77      34,321   2.77   5.79      23,407   2.10   5.98
  2 to 4 years                   160,667  10.26   5.99     145,081  11.71   6.04     131,931  11.82   5.87
  Five years                      93,898   5.99   6.23     101,972   8.23   6.23     101,690   9.11   6.30
  7 to 10 years                    5,644   0.36   6.31       5,547   0.45   6.31       5,666   0.51   6.28
                               --------- ------   ----    -------- ------   ----    ------- ------   ----
Total certificate accounts       878,991  56.14   5.68     678,599  54.76   5.79     572,768  51.34   5.66
                               --------- ------   ----   --------- ------   ----   --------- ------   ----
Total deposits                $1,565,644 100.00%  4.20% $1,239,124 100.00%  4.16% $1,115,638 100.00%  4.00%
                               ========= ======   ====   ========= ======   ====   ========= ======   ====
</TABLE>

<PAGE>
The following table presents, by various rate categories, the
amount of certificate accounts outstanding at December 31, 1998,
1997 and 1996 and the periods to maturity of the certificate
accounts outstanding at December 31, 1998.
<TABLE>
<CAPTION>
                                                Period of Maturity from December 31, 1998
                                                -----------------------------------------
                                                Within   One to  Two to  Over
                            At December 31,       One      Two    Three   Three
                        1998     1997     1996    Year    Years   Years   Years    Total 
                       ------   ------   ------  ------   ------  ------  -----   -------
                                                      (In thousands)
<S>                    <C>    <C>       <C>      <C>      <C>     <C>     <C>     <C>
Certificate accounts:
  3.99% or less      $ 31,712 $  6,682 $ 10,396 $ 26,493 $ 3,592  $   77 $ 1,550 $ 31,712
  4.00% to 4.99%      131,330    6,942   18,545  121,015   7,774   1,467   1,074  131,330
  5.00% to 5.99%      610,219  548,849  456,789  557,808  27,230   9,528  15,658  610,219
  6.00% to 6.99%      123,436  211,302  104,732   62,068  19,600      41  41,727  123,436
  7.00% to 7.99%        5,052    7,808   10,637      492   4,560    -       -       5,052
                      -------  -------  -------  ------- -------  ------  ------  -------
     Total           $901,749 $781,583 $601,099 $767,876 $62,756 $11,108 $60,009 $901,749
                      =======  =======  =======  ======= =======  ======  ======  =======
</TABLE>




                                                             29
<PAGE>
                        BORROWINGS

Although deposits are the Bank's primary source of funds, the
Bank has from time to time utilized borrowings as an alternative
or less costly source of funds.  The Bank's primary source of
borrowing is advances from the FHLB-NY.  These advances are
collateralized by the capital stock of the FHLB-NY held by the
Bank and certain of the Bank's MBSs.  See "Regulation and
Supervision-Federal Home Loan Bank System."  Such advances are
made pursuant to several different credit programs, each of which
has its own interest rate and range of maturities.  The maximum
amount that the FHLB-NY will advance to member institutions,
including the Bank, for purposes other than meeting withdrawals,
fluctuates from time to time in accordance with the policies of
the OTS and the FHLB-NY.  At December 31, 1998, the Bank had
$325.2 million of advances outstanding from the FHLB-NY.

In addition, the Bank may, from time to time, enter into sales of
securities under agreements, generally for up to 30 days, to
repurchase ("reverse repurchase agreements") with nationally
recognized investment banking firms.  Reverse repurchase
agreements are accounted for as borrowings by the Bank and are
secured by designated securities.  The proceeds of these
transactions are used to meet cash flow or asset/liability needs
of the Bank.  At December 31, 1998, the Bank had $88.7 million of
reverse repurchase agreements outstanding.

On February 12, 1997, Haven Capital Trust I, a trust formed under
the laws of the State of Delaware, issued $25 million of 10.46%
capital securities.  The Company is the owner of all the
beneficial interests represented by common securities of the
Trust.  The Trust used the proceeds from the sale of the capital
securities to purchase the Company's 10.46% junior subordinated
deferrable interest debentures due 2027.  See Note 11 of Notes to
Consolidated Financial Statements in the Registrant's 1998 Annual
Report to Stockholders on page 37 which is incorporated herein by
reference.

The Bank has an ESOP loan from an unrelated third party lender
with an outstanding balance of $1.5 million and an interest rate
of 7.06% at December 31, 1998.  See Note 14 of Notes to
Consolidated Financial Statements in the Registrant's 1998 Annual
Report to Stockholders on page 42 which is incorporated herein by
reference.  The loan, as amended on December 29, 1995, is payable
in thirty-two equal quarterly installments beginning December
1995 through September 2003.  The loan bears interest at a
floating rate based on the federal funds rate plus 250 basis
points.




                                                             30
<PAGE>
The following table sets forth certain information regarding
borrowed funds for the dates indicated:
<TABLE>
<CAPTION>
                                At or For the Years Ended December 31,
                                         1998      1997      1996
                                        ------    ------    ------ 
                                          (Dollars in thousands)
<S>                                    <C>       <C>       <C>
FHLB-NY Advances: 
  Average balance outstanding          $301,557  $191,550  $152,005
  Maximum amount outstanding at any
    month-end during the period         431,000   247,000   195,000
  Balance outstanding at end of period  325,200   247,000   178,450
  Weighted average interest rate 
    during the period                     5.19%     5.69%     5.54%
  Weighted average interest rate 
    at end of period                      5.13%     5.86%     4.72%
Securities Sold under Agreements to
  Repurchase:
  Average balance outstanding          $142,348  $172,310  $128,677
  Maximum amount outstanding at any
    month-end during the period         191,291   229,280   142,906
  Balance outstanding at end of period   88,690   193,028   142,906
  Weighted average interest rate 
    during the period                     5.71%     5.68%     5.65%
  Weighted average interest rate 
    at end of period                      5.50%     5.94%     5.09%
Other Borrowings (1):
  Average balance outstanding          $ 26,626  $ 25,231  $  7,667
  Maximum amount outstanding at any
    month-end during the period          26,766    30,120    10,725
  Balance outstanding at end of period   26,456    26,766     5,077
  Weighted average interest rate 
    during the period                    10.32%     8.15%     6.38%
  Weighted average interest rate
    at end of period                     10.20%    10.29%     9.63%
Total Borrowings:
  Average balance outstanding          $470,531  $389,091  $285,951
  Maximum amount outstanding at any
    month-end during the period         649,057   466,794   348,631
  Balance outstanding at end of period  440,346   466,794   326,433
  Weighted average interest rate 
    during the period                     5.95%     5.86%     5.84%
  Weighted average interest rate
    at end of period                      5.51%     6.15%     5.11%
</TABLE>

(1)  Includes the CMO, ESOP loan and Holding Company Obligated
Mandatorily Redeemable Capital Securities.


                                                             31
<PAGE>
                 SUBSIDIARY ACTIVITIES
COLUMBIA RESOURCES CORP ("Columbia Resources").  Columbia
Resources is a wholly owned subsidiary of the Bank and was formed
in 1984 for the sole purpose of acting as a conduit for a
partnership to acquire and develop a parcel of property in New
York City.  Columbia Resources acquired the property, but never
developed it.  The property was later sold.  During 1996, two REO
commercial properties totaling $524,000 were transferred from the
Bank to Columbia Resources to limit exposure to the Bank from
unknown creditors.  By December 31, 1996 the properties were
written down to a combined value of $440,000.  The properties
were subsequently sold during 1997.

CFS INVESTMENTS, INC. ("CFSI").  CFSI is a wholly owned
subsidiary of the Bank organized in 1989 that is engaged in the
sale of tax deferred annuities, securities brokerage activities
and insurance.  CFSI participates with FISERV Investor Services,
Inc., which is registered as a broker-dealer with the SEC, NASD,
and state securities regulatory authorities.  All employees of
CFSI engaged in securities brokerage activities are dual
employees of FISERV.  Products offered through FISERV include
debt and equity securities, mutual funds, unit investment trusts
and variable annuities.  Fixed annuities, life and health
insurance, and long term nursing care products are offered
through CFSI; a licensed general agent with the New York State
Department of Insurance.

HAVEN CAPITAL TRUST I.  On February 12, 1997, Haven Capital Trust
I, a statutory business trust formed under the laws of the State
of Delaware issued $25 million of 10.46% capital securities.  See
Note 11 of Notes to Consolidated Financial Statements in the
Registrant's 1998 Annual Report to Stockholders on page 37 which
is incorporated herein by reference.

COLUMBIA PREFERRED CAPITAL CORPORATION ("CPCC").  On June 9,
1997, the Bank established a real estate investment trust
("REIT") subsidiary, CPCC.  At December 31, 1998, the REIT held
$334.0 million of the Bank's residential loan portfolio.  The
establishment of the REIT enables the Bank to achieve certain
business goals including providing the Bank with a contingency
funding mechanism without disrupting its investment policies and
enhancing the Bank's ability to track and manage the mortgage
portfolio transferred to CPCC since the transferred portion of
its mortgage loan portfolio is segregated into a separate legal
entity.

CFS TRAVEL SERVICES, INC.  The Company, through its wholly owned
subsidiary, CFS Travel Services, Inc. ("CFS Travel"), established
February 28, 1998 offered customers and their families and
friends, organized, escorted day long excursions and overnight
trips.  This subsidiary was subsequently dissolved on March 31,
1999.
                                                             32
<PAGE>
CFS INSURANCE AGENCY, INC.  On November 2, 1998, the Company
completed the purchase of 100% of the oustanding common stock of
CIA.  CIA, headquartered in Centereach, New York, provides 
automobile, homeowners and casualty insurance to individuals and 
various lines of commercial insurance to businesses.  CIA
operates as a wholly-owned subsidiary of the Company.
 
                        PERSONNEL

As of December 31, 1998, the Bank had 941 full-time employees and
65 part-time employees.  Even though the employees are not
represented by a collective bargaining unit, the Bank considers
its relationship with its employees to be good. 

                REGULATION AND SUPERVISION

GENERAL

The Bank is subject to regulation, examination and supervision by
the OTS, as its chartering agency, and the FDIC, as the deposit
insurer.  The Bank is a member of the FHLB System and its deposit
accounts are insured up to applicable limits by the Savings
Association Insurance Fund ("SAIF") managed by the FDIC.  The
Bank must file reports with the OTS and the FDIC concerning its
activities and financial condition in addition to obtaining
regulatory approvals prior to entering into certain transactions
such as mergers with, or acquisitions of, other financial
institutions.  Periodic examinations by the OTS and the FDIC
monitor the Bank's compliance with various regulatory
requirements.  This regulation and supervision establishes a
comprehensive framework of activities in which an institution can
engage and is intended primarily for the protection of the
insurance fund and depositors.

            FEDERAL SAVINGS INSTITUTION REGULATION

Business Activities.  The activities of federal savings
institutions are governed by the Home Owners' Loan Act, as
amended (the "HOLA") and, in certain respects, the Federal
Deposit Insurance Act ("FDI Act") and the regulations issued by
the agencies to implement these statutes.  These laws and
regulations delineate the nature and extent of the activities in
which federal associations may engage.  In particular, many types
of lending authority for federal associations, (e.g., commercial,
non-residential real property loans, consumer loans), are limited
to a specified percentage of the institutions's capital or
assets.

Loans to One Borrower.  Under the HOLA, savings institutions are
generally subject to the national bank limit on loans to one
borrower.  Generally, this limit is 15% of the Bank's unimpaired 

                                                             33
<PAGE>
capital and surplus plus an additional 10% of unimpaired capital
and surplus if such loan is secured by readily-marketable
collateral, which is defined to include certain financial
instruments and bullion.  At December 31, 1998, the Bank's
unimpaired capital and surplus was $151.1 million and its limit
on loans to one borrower was $22.7 million.  At December 31,
1998, the Bank's largest aggregate amount of loans to one
borrower had an aggregate balance of $13.0 million.

QTL Test.  The HOLA requires savings institutions to meet a
Qualified Thrift Lender ("QTL") test.  Under the QTL test, a
savings association is required to maintain at least 65% of its
"portfolio assets" (total assets less:  (i) specified liquid
assets up to 20% of total assets; (ii) intangibles, including
goodwill; and (iii) the value of property used to conduct
business) in certain "qualified thrift investments" (primarily
residential mortgages and related investments, including certain
mortgage-backed and related securities) in at least 9 months out
of each 12 month period.  A savings association that fails the
QTL test must either convert to a bank charter or operate under
certain restrictions.  As of December 31, 1998, the Bank
maintained 72.06% of its portfolio assets in qualified thrift
investments and had more than 65% of its portfolio assets in
qualified thrift investments in each of the prior 12 months. 
Therefore, the Bank met the QTL test.

Limitation on Capital Distributions.  OTS regulations impose
limitations upon all capital distributions by savings
institutions, such as cash dividends, payments to repurchase or
otherwise acquire its shares, payments to shareholders of another
institution in a cash-out merger and other distributions charged
against capital.  Effective April 1, 1999, the OTS amended its
capital distribution regulations to reduce regulatory burdens on
savings associations.  The regulations being replaced, which were
effective throughout 1998, established three tiers of
institutions, which are based primarily on an institution's
capital level.  An institution that exceeded all fully phased-in
regulatory capital requirements before and after a proposed
capital distribution ("Tier 1 Bank") and had not been advised by
the OTS that it was in need of more than normal supervision,
could, after prior notice to, but without the approval of the
OTS, make capital distributions during a calendar year equal to
the greater of:  (i) 100% of its net earnings to date during the
calendar year plus the amount that would reduce by one-half its
"surplus capital ratio" (the excess capital over its fully
phased-in capital requirements) at the beginning of the calendar
year; or (ii) 75% of its net earnings for the previous four
quarters.  Any additional capital distributions would have
required prior OTS approval.  In the event the Bank's capital
fell below its capital requirements or the OTS notified it that
it was in need of more than normal supervision, the Bank's 

                                                             34
<PAGE>
ability to make capital distributions could be restricted.  In
addition, the OTS could prohibit a proposed capital distribution
by any institution, which would otherwise be permitted by the
regulation, if the OTS determines that such distribution would
constitute an unsafe or unsound practice.  Under the amendments
adopted by the OTS, certain savings associations will be
permitted to pay capital distributions during a calendar year
that do not exceed the association's net income for that year
plus its retained net income for the prior two years, without
notice to, or the approval of, the OTS.

If adopted as proposed, certain savings associations will be
permitted to pay capital distributions within the amounts
described above for Tier 1 institutions without notice to, or the
approval of, the OTS.  However, a savings association subsidiary
of a savings and loan holding company, such as the Bank, will
continue to have to file a notice unless the specific capital
distribution requires an application.

Liquidity.  The Bank is required to maintain an average daily
balance of specified liquid assets equal to a monthly average of
not less than a specified percentage (currently 4%) of its net
withdrawable deposit accounts plus short-term borrowings. 
Monetary penalties may be imposed for failure to meet the
liquidity requirements.  The Bank's average liquidity ratio for
December 31, 1998 was 4.24% which exceeded the then applicable
requirement.  The Bank has never been subject to monetary
penalties for failure to meet its liquidity requirements.

Assessments.  Savings institutions are required by regulation to
pay assessments to the OTS to fund the agency's operations.  The
general assessment, paid on a semi-annual basis, is computed upon
the savings institution's total assets, including consolidated
subsidiaries, as reported in the Bank's latest quarterly Thrift
Financial Report.  The assessments paid by the Bank for the years
ended December 31, 1998 and 1997, totaled $322,000 and $285,000,
respectively.  The OTS has adopted amendments to its regulations,
effective January 1, 1999, that are intended to assess savings
associations on a more equitable basis.  The new regulations will
base the assessment for an individual savings association on
three components: the size of the association, on which the basic
assessment would be based; the association's supervisory
condition, which would result in an additional assessment based
on a percentage of the basic assessment for any savings
institution with a composite rating of 3,4 or 5 in its most
recent safety and soundness examination; and the complexity of
the association's operations, which would result in an additional
assessment based on a percentage of the basic assessment for any
savings association that managed over $1 billion in trust assets,
serviced for others loans aggregating more than $1 billion, or
had certain off-balance sheet assets aggregating more than $1 

                                                             35
<PAGE>
billion.  In order to avoid a disproportionate impact on the
smaller savings institutions, which are those whose total assets
never exceeded $100 million, the new regulations provide that the
portion of the assessment based on assets size will be the lesser
of the assessment under the amended regulations or the
regulations before the amendment.  Management believes that any
change in its rate of OTS assessments under the amended
regulations will not be material.

Branching.  OTS regulations permit federally chartered savings
associations to branch nationwide under certain conditions. 
Generally, federal savings associations may establish interstate
networks and geographically diversify their loan portfolios and
lines of business.  The OTS authority preempts any state law
purporting to regulate branching by federal savings associations. 

Transactions with Related Parties.  The Bank's authority to
engage in transactions with related parties or "affiliates"
(i.e., any company that controls or is under common control with
an institution, including the Company and its non-savings
institution subsidiaries) is limited by Sections 23A and 23B of
the Federal Reserve Act ("FRA").  Section 23A limits the
aggregate amount of covered transactions with any individual
affiliate to 10% of the capital and surplus of the savings
institution and also limits the aggregate amount of transactions
with all affiliates to 20% of the savings institution's capital
and surplus.  Certain transactions with affiliates are required
to be secured by collateral in an amount and of a type described
in Section 23A, and the purchase of low quality assets from
affiliates is generally prohibited.  Section 23B generally
requires that certain transactions with affiliates, including
loans and asset purchases, must be on terms and under
circumstances, including credit underwriting standards, that are
substantially the same or at least as favorable to the
institution as those prevailing at the time for comparable
transactions with non-affiliated companies.  Notwithstanding
Sections 23A and 23B, savings institutions are prohibited from
lending to any affiliate that is engaged in activities that are
not permissible for bank holding companies under Section 4(c) of
the Bank Holding Company Act ("BHC Act").  Further, no savings
institution may purchase the securities of any affiliate other
than a subsidiary.

The Bank's authority to extend credit to its executive officers,
directors and 10% shareholders, as well as to entities controlled
by such persons, is currently governed by Sections 22(g) and
22(h) of the FRA, and Regulation O thereunder.  Among other
things, these regulations require that such loans to be made on
terms and conditions, including credit underwriting standards,
substantially the same as those offered to unaffiliated
individuals and not involve more than the normal risk of 

                                                             36
<PAGE>
repayment.  Regulation O also places individual and aggregate
limits on the amount of loans the Bank may make to such persons
based, in part, on the Bank's capital position, and requires that
certain board approval procedures be followed.  HOLA and the OTS
regulations, with certain minor variances, apply Regulation O to
savings institutions.

Enforcement.  Under the FDI Act, the OTS has primary enforcement
responsibility over savings institutions and has the authority to
bring action against all "institution-affiliated parties,"
including controlling stockholders, and any stockholders,
attorneys, appraisers and accountants who knowingly or recklessly
participate in any violation of applicable law or regulation or
breach of fiduciary duty or certain other wrongful actions that
causes or is likely to cause a more than a minimal loss or other
significant adverse effect on an insured savings association. 
Formal enforcement action may range from the issuance of a
capital directive or cease and desist order to removal of
officers or directors, receivership, conservatorship or
termination of deposit insurance.  Civil penalties cover a wide
range of violations and can amount to $5,000 per day for less
serious violations, and up to $1 million per day in more
egregious cases.  Under the FDI Act, the FDIC has the authority
to recommend to the Director of the OTS that enforcement action
be taken with respect to a particular savings institution.  If
action is not taken by the Director of the OTS, the FDIC has
authority to take such action under certain circumstances. 
Federal law also establishes criminal penalties for certain
violations. 

Standards for Safety and Soundness.  The FDI Act requires each
federal banking agency to prescribe for all insured depository
institutions standards relating to, among other things, internal
controls, information systems and audit systems, loan
documentation, credit underwriting, interest rate risk exposure,
asset growth, and compensation, fees and benefits and such other
operational and managerial standards as the agency deems
appropriate.  The OTS and the federal banking agencies have
adopted a final rule and Interagency Guidelines Prescribing
Standards for Safety and Soundness ("Guidelines") to implement
these safety and soundness standards.  The Guidelines set forth
the safety and soundness standards that the federal banking
agencies use to identify and address problems at insured
depository institutions before capital becomes impaired.  The
Guidelines address internal controls and information systems;
internal audit system; credit underwriting; loan documentation;
interest rate risk exposure; asset growth; asset quality;
earnings and compensation, fees and benefits.  If the appropriate
federal banking agency determines that an institution fails to
meet any standard prescribed by the Guidelines, the agency may
require the institution to submit to the agency an acceptable 

                                                             37
<PAGE>
plan to achieve compliance with the standard, as required by the
FDI Act.  The final rule establishes deadlines for the submission
and review of such safety and soundness compliance plans, when
such plans are required.

Capital Requirements.  The OTS capital regulations require
savings institutions to meet three minimum capital standards: a
tangible capital ratio requirement of 1.5% of total assets as
adjusted under the OTS regulations, a core capital ratio
requirement of 3.0% of core capital to such adjusted total
assets, which ratio requirement will, effective April 1, 1999, be
3% only for those savings institutions who been assigned a
composite rating of 1 under the Uniform Financial Institutions
Rating System, and will be 4% for all other savings institutions,
and a risk-based capital ratio requirement of 8.0% of core and
supplementary capital to total risk-based assets.  Tangible
capital is defined, generally, as common stockholders' equity
(including retained earnings), certain noncumulative perpetual
preferred stock and related earnings, minority interests in
equity accounts of fully consolidated subsidiaries, less
intangibles other than certain mortgage servicing rights and
investments in and loans to subsidiaries engaged in activities
not permissible for a national bank.  Core capital (also called
"Tier 1" capital) is defined similarly to tangible capital, but
core capital also includes certain qualifying supervisory
goodwill and certain purchased credit card relationships.  In
addition, the OTS prompt corrective action regulation provides
that a savings institution that has a core capital ratio of less
than 4% (3% for institutions receiving the highest rating under
the Uniform Financial Institutions Rating System, will be deemed
to be "undercapitalized" and may be subject to certain
restrictions).  See "- Prompt Corrective Regulatory Action."

The risk-based capital standard for savings institutions requires
the maintenance of total capital (which is defined as core
capital and supplementary capital) to risk-weighted assets of at
least 8%.  In determining the amount of risk-weighted assets, all
assets, including certain off-balance sheet assets, are
multiplied by a risk-weight of 0% to 100%, as assigned by the OTS
capital regulation based on the risks OTS believes are inherent
in the type of asset.  The components of core capital are
equivalent to those discussed earlier under the 3% leverage
standard.  The components of supplementary capital currently
include cumulative preferred stock, long-term perpetual preferred
stock, mandatory convertible debt securities, subordinated debt
and intermediate preferred stock and, within specified limits,
the allowance for loan and lease losses.  Overall, the amount of
supplementary capital included as part of total capital cannot
exceed 100% of core capital.

The OTS has incorporated an interest rate risk component into its

                                                             38
<PAGE>
regulatory capital rule.  The final interest rate risk rule also
adjusts the risk-weighting for certain mortgage derivative
securities.  Under the rule, savings associations with "above
normal" interest rate risk exposure would be subject to a
deduction from total capital for purposes of calculating their
risk-based capital requirements.  A savings association's
interest rate risk is measured by the decline in the net
portfolio value of its assets (i.e., the difference between
incoming and outgoing discounted cash flows from assets,
liabilities and off-balance sheet contracts) that would result
from a hypothetical 200-basis point increase or decrease in
market interest rates divided by the estimated economic value of
the association's assets, as calculated in accordance with
guidelines set forth by the OTS.  A savings association whose
measured interest rate risk exposure exceeds 2% must deduct an
interest rate component in calculating its total capital under
the risk-based capital rule.  The interest rate risk component is
an amount equal to one-half of the difference between the
institution's measured interest rate risk and 2%, multiplied by
the estimated economic value of the association's assets.  That
dollar amount is deducted from an association's total capital in
calculating compliance with its risk-based capital requirement. 
Under the rule, there is a two quarter lag between the reporting
date of an institution's financial data and the effective date
for the new capital requirement based on that data.  A savings
association with assets of less than $300 million and risk-based
capital ratios in excess of 12% is not subject to the interest
rate risk component, unless the OTS determines otherwise.  The
rule also provides that the Director of the OTS may waive or
defer an association's interest rate risk component on a
case-by-case basis.  The OTS has indefinitely deferred the
implementation of the interest rate risk component in the
computation of an institution's risk-based capital requirement. 
The OTS continues to monitor the interest rate risk of individual
institutions and retains the right to impose additional capital
on individual institutions.  If the Bank had been subject to an
interest rate risk capital component as of December 31, 1998,
there would have been no material effect on the Bank's
risk-weighted capital.

At December 31, 1998, the Bank met each of its capital
requirements, in each case on a fully phased-in basis.  A chart
which sets forth the Bank's compliance with its capital
requirements appears in Note 17 to Notes to Consolidated
Financial Statements in the Registrant's 1998 Annual Report to
Stockholders on page 46, and is incorporated herein by reference.

            PROMPT CORRECTIVE REGULATORY ACTION
Under the OTS prompt corrective action regulations, the OTS is
required to take certain supervisory actions against
undercapitalized institutions, the severity of which depends upon

                                                             39
<PAGE>
the institution's degree of capitalization.  Generally, a savings
institution that has a total risk-based capital of less than 8.0%
or either a leverage ratio or a Tier 1 risk-based capital ratio
that is less than 4.0% is considered to be undercapitalized.  A 
savings institution that has a total risk-based capital less than
6.0%, a Tier 1 risk-based capital ratio of less than 3.0% or a
leverage ratio that is less than 3.0% is considered to be
"significantly undercapitalized" and a savings institution that
has a tangible capital to assets ratio equal to or less than 2.0%
is deemed to be "critically undercapitalized."  Subject to a
narrow exception, the banking regulator is required to appoint a
receiver or conservator for an institution that is critically
undercapitalized.  The regulation also provides that a capital
restoration plan must be filed with the OTS within 45 days of the
date an association receives notice that it is "under-
capitalized", "significantly undercapitalized" or "critically
undercapitalized."  Compliance with the plan must be guaranteed
by any parent holding company.  In addition, numerous mandatory
supervisory actions become immediately applicable to the
institution depending upon its category, including, but not
limited to, increased monitoring by regulators, restrictions on
growth,and capital distributions and limitations on expansion. 
The OTS could also take any one of a number of discretionary
supervisory actions, including the issuance of a capital
directive and the replacement of senior executive officers and
directors.

                INSURANCE OF DEPOSIT ACCOUNTS
The FDIC has adopted a risk-based insurance assessment system. 
The FDIC assigns an institution to one of three capital
categories based on the institution's financial information, as
of the reporting period ending seven months before the assessment
period, consisting of (1) well capitalized, (2) adequately
capitalized or (3) undercapitalized, and one of three supervisory
subcategories within each capital group.  The supervisory
subgroup to which an institution is assigned is based on a
supervisory evaluation provided to the FDIC by the institution's
primary federal regulator and information which the FDIC
determines to be relevant to the institution's financial
condition and the risk posed to the deposit insurance funds.  An
institution's assessment rate depends on the capital category and
supervisory category to which it is assigned.

Assessment rates currently range from 0.0% of deposits for an
institution in the highest category (i.e., well-capitalized and
financially sound, with no more than a few minor weaknesses) to
0.27% of deposits for an institution in the lowest category
(i.e., undercapitalized and substantial supervisory concern). 
The FDIC is authorized to raise the assessment rates as necessary
to maintain the required reserve ratio of 1.25%.  As a result of
the Deposit Insurance Funds Act of 1996 (the "Funds Act"), both 

                                                             40
<PAGE>
the BIF and the SAIF currently satisfy the reserve ratio
requirement.  If the FDIC determines that assessment rates should
be increased, institutions in all risk categories could be
affected.  The FDIC has exercised this authority several times in
the past and could raise insurance assessment rates in the
future.  If such action is taken by the FDIC, it could have an
adverse effect on the earnings of the Bank.

The Funds Act also amended the FDI Act to expand the assessment
base for the payments on the Financing Corporation ("FICO")
obligations.  Beginning January 1, 1997, the assessment base
included the deposits of both BIF- and SAIF-insured institutions. 
Until December 31, 1999, or any earlier date on which the last
savings association ceases to exist, the rate of assessment for
BIF-assessable deposits shall be one-fifth of the rate imposed on
SAIF-assessable deposits.  The annual rate of assessments for the
payments on the FICO obligations for the quarterly semi-annual
period beginning on January 1, 1998 was 0.0156% for BIF-
assessable deposits and 0.0628% for SAIF-assessable deposits. 
For the quarterly period beginning on July 1, 1998, the rates of
assessment for the FICO obligations are 0.0122% for BIF-
assessable deposits and 0.0610% for SAIF-assessable deposits. 
Accordingly, as a result of the Funds Act, the Bank has seen a
decrease in the deposit assessments paid to the FDIC.

              FEDERAL HOME LOAN BANK SYSTEM
The Bank is a member of the FHLB System, which consists of 12
regional FHLBs.  The FHLB provides a central credit facility
primarily for member institutions.  The Bank, as a member of the
FHLB of New York, is required to acquire and hold shares of
capital stock in the FHLB in an amount at least equal to 1% of
the aggregate principal amount of its unpaid residential mortgage
loans and similar obligations at the beginning of each year, or
1/20 of its advances (borrowings) from the FHLB, whichever is
greater.  The Bank was in compliance with this requirement with
an investment in FHLB stock at December 31, 1998 of $22.0
million.  FHLB advances must be secured by specified types of
collateral, and all long-term advances may only be obtained for
the purpose of providing funds for residential housing finance.

The FHLBs are required to provide funds for the resolution of
insolvent thrifts and to contribute funds for affordable housing
programs.  These requirements could reduce the amount of
dividends that the FHLBs pay to their members and could also
result in the FHLBs imposing a higher rate of interest on
advances to their members.  For the years ended December 31,
1998, 1997 and 1996, dividends from the FHLB to the Bank amounted
to $1.2 million, $710,000 and $571,000, respectively.  If
dividends were reduced or interest on future FHLB advances
increased, the Bank's net interest income would likely also be
reduced.  Further, there can be no assurance that the impact of 

                                                             41
<PAGE>
recent legislation on the FHLBs will not also cause a decrease in
the value of the FHLB stock held by the Bank.

                   FEDERAL RESERVE SYSTEM
The Federal Reserve Board regulations require depository 
institutions, including savings institutions, to maintain
non-interest-earning reserves against their transaction accounts
(primarily NOW and regular checking accounts).  The current
Federal Reserve Board regulations generally require that reserves
be maintained against aggregate transaction accounts as follows: 
for accounts aggregating $46.5 million or less (subject to
adjustment by the Federal Reserve Board) the reserve requirement
is 3%; and for accounts greater than $46.5 million, the reserve
requirement is $1,395,000 plus 10% (subject to adjustment by the
Federal Reserve Board between 8% and 14%) against that portion of
total transaction accounts in excess of $46.5 million.  The first
$4.9 million of otherwise reservable balances (subject to
adjustments by the Federal Reserve Board) are exempted from the
reserve requirements.  The Bank is in compliance with the
foregoing requirements.  Because required reserves must be
maintained in the form of either vault cash, a
non-interest-bearing account at a Federal Reserve Bank or a
pass-through account as defined by the Federal Reserve Board, the
effect of this reserve requirement is to reduce the Bank's
interest-earning assets.  FHLB System members are also authorized
to borrow from the Federal Reserve "discount window," but Federal
Reserve Board regulations require institutions to exhaust all
FHLB sources before borrowing from a Federal Reserve Bank.

                 HOLDING COMPANY REGULATION
The Company is a non-diversified unitary savings and loan holding
company within the meaning of the HOLA.  As such, the Company is
required to be registered with the OTS and is subject to OTS
regulations, examinations, supervision and reporting
requirements.  In addition, the OTS has enforcement authority
over the Company and its non-savings institution subsidiaries. 
Among other things, this authority permits the OTS to restrict or
prohibit activities that are determined to be a serious risk to
the subsidiary savings institution.  The Bank must notify the OTS
30 days before declaring any dividend to the Company.

As a unitary savings and loan holding company, the Company
generally is not restricted under existing laws as to the types
of business activities in which it may engage, provided that the
Bank continues to be a QTL.  See "- Federal Savings Institution
Regulation - QTL Test" for a discussion of the QTL requirements. 
Upon any non-supervisory acquisition by the Company of another
savings association, the Company would become a multiple savings
and loan holding company (if the acquired institution is held as
a separate subsidiary) and would be subject to extensive
limitations on the types of business activities in which it could

                                                             42
<PAGE>
engage.  The HOLA limits the activities of a multiple savings and
loan holding company and its non-insured institution subsidiaries
primarily to activities permissible for bank holding companies
under Section 4(c)(8) of the BHC Act, subject to the prior 
approval of the OTS, and to other activities authorized by OTS
regulation.

The HOLA prohibits a savings and loan holding company, directly
or indirectly, or through one or more subsidiaries, from
acquiring more than 5% of the voting stock of another savings
institution or holding company thereof, without prior written
approval of the OTS; and from acquiring or retaining, with
certain exceptions, more than 5% of a non-subsidiary holding
company, or a non-subsidiary company engaged in activities other
than those permitted by the HOLA; or acquiring or retaining
control of a depository institution that is not insured by the
FDIC.  In evaluating applications by holding companies to acquire
savings institutions, the OTS must consider the financial and
managerial resources and future prospects of the company and
institution involved, the effect of the acquisition on the risk
to the insurance funds, the convenience and needs of the
community and competitive factors.

The OTS is prohibited from approving any acquisition that would
result in a multiple savings and loan holding company controlling
savings institutions in more than one state, except:  (i) the
approval of interstate supervisory acquisitions by savings and
loan holding companies, and (ii) the acquisition of a savings
institution in another state if the laws of the state of the
target savings institution specifically permit such acquisitions. 
The states vary in the extent to which they permit interstate
savings and loan holding company acquisitions.

                  LEGISLATIVE DEVELOPMENTS

Congress continues to work toward passage of legislation to
modernize the financial services industries.  Proposed
legislation being considered by committees of the House of
Representatives and of the Senate would permit affiliations
between banking, insurance and securities companies and, thereby,
expand significantly the financial services that could be offered
by bank holding companies.  Such expanded financial activities
would be permissible for financial holding companies that
controlled subsidiary depository institutions that qualified as
well capitalized and well managed and that had satisfactory CRA
ratings.  The proposed legislation would grandfather unitary
savings and loan holding companies in activities currently
permitted such holding companies.  The outcome of such proposed
legislation is uncertain.  Therefore, the Company is unable to
determine the extent to which such legislation, if enacted, would
affect the Company's business.

                                                             43
<PAGE>
                  FEDERAL SECURITIES LAWS
The Company's Common Stock is registered with the Securities and
Exchange Commission under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").  The
Company is subject to the information, proxy solicitation,
insider trading restrictions and other requirements under the
Exchange Act.

The registration, under the Securities Act of 1933, as amended
(the "Securities Act") of shares of the Common Stock issued in
the Conversion does not cover the resale of such shares.  Shares
of the Common Stock purchased by persons who are not affiliates
of the Company may be resold without registration.  Shares
purchased by an affiliate of the Company will be subject to the
resale restrictions of Rule 144 under the Securities Act.  If the
Company meets the current public information requirements of Rule
144 under the Securities Act, each affiliate of the Company who
complies with the other conditions of Rule 144 (including those
that require the affiliate's sale to be aggregated with those of
certain other persons) would be able to sell in the public
market, without registration, a number of shares not to exceed,
in any three-month period, the greater of (i) 1% of the
outstanding shares of the Company or (ii) the average weekly
volume of trading in such shares during the preceding four
calendar weeks.  Shares acquired through the Company's option
plans have been registered under the Securities Act and,
therefore, are not subject to resale restrictions.  Provision may
be made in the future by the Company to permit affiliates to have
their shares registered for sale under the Securities Act under
certain circumstances.

                    THE YEAR 2000 PROBLEM
The information related to the Year 2000 problem is incorporated
herein by reference to "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Computer Issues
for the Year 2000" in the Registrant's 1998 Annual Report to
Stockholders on page 21.

                   FEDERAL AND STATE TAXATION

FEDERAL TAXATION
General.  The Company and the Bank report their income on a
calendar year basis using the accrual method of accounting and
will be subject to federal income taxation in the same manner as
other corporations with some exceptions.  The following
discussion of tax matters is intended only as a summary and does
not purport to be a comprehensive description of the tax rules 
applicable to the Bank or the Company.  The Company and its
subsidiaries file a consolidated Federal income tax return on a
calendar-year basis. The Bank and the Company have not been
audited by the Internal Revenue Service during the last five
fiscal years.
                                                             44
<PAGE>
Under the Small Business Job Protection Act of 1996 ("1996 Act"),
signed into law in August 1996, the special rules for bad debt
reserves of thrift institutions no longer apply and, therefore,
the Bank cannot make additions to the tax bad debt reserves but
is permitted to deduct bad debts as they occur.  Additionally,
under the 1996 Act, the Bank is required to recapture (that is,
include in taxable income) the excess of the balance of its bad
debt reserves as of December 31, 1995 over the balance of such
reserves as of December 31, 1987 ("base year").  The Bank's
federal tax bad debt reserves at December 31, 1995 exceeded its
base year reserves by $2.7 million which will be recaptured into
taxable income ratably over a six year period.  This recapture
was suspended for 1996 and 1997, whereas, one-sixth of the excess
reserves was recaptured into taxable income for 1998.  The base
year reserves will be subject to recapture, and the Bank could be
required to recognize a tax liability, if (i) the Bank fails to 
qualify as a "bank" for Federal income tax purposes; (ii) certain
distributions are made with respect to the stock of the Bank (see
"Distributions"); (iii) the Bank uses the bad debt reserves for
any purpose other than to absorb bad debt losses; or (iv) there
is a change in Federal tax law.  Management is not aware of the
occurrence of any such event.

Distributions.  To the extent that the Bank makes "non-dividend
distributions" to stockholders, such distributions will be
considered as made from the Bank's base year reserve to the
extent thereof, and then from the supplemental reserve for losses
on loans and an amount based on the amount distributed will be
included in the Bank's taxable income.  Non-dividend
distributions include distributions in excess of the Bank's
current and accumulated earnings and profits, distributions in 
redemption of stock, and distributions in partial or complete
liquidation.  However, dividends paid out of the Bank's current
or accumulated earnings and profits, as calculated for federal
income tax purposes, will not be considered to result in a
distribution from the Bank's bad debt reserves.

Corporate Alternative Minimum Tax.  The Internal Revenue Code of
1986, as amended, imposes a tax on alternative minimum taxable
income ("AMTI") at a rate of 20%.  AMTI is increased by an amount
equal to 75% of the amount by which a corporation's adjusted
current earnings exceeds its AMTI (determined without regard to
this adjustment and prior to reduction for net operating losses).

Dividends Received Deduction and Other Matters.  The Company may
exclude from its income 100% of dividends received from the Bank
as a member of the same affiliated group of corporations.  The
corporate dividends received deduction is generally 70% in the
case of dividends received from unaffiliated corporations with
which the Company and the Bank will not file a consolidated tax
return, except that if the Company or the Bank owns more than 20%

                                                             45
<PAGE>
of the stock of a corporation distributing a dividend, 80% of any
dividends received may be deducted.

STATE AND LOCAL TAXATION
New York State and New York City Taxation.  The Bank and the
Company are subject to New York State and City franchise taxes on
net income or one of several alternative bases, whichever results
in the highest tax.  "Net income" means Federal taxable income
with adjustments.  The Company's annual tax liability for each
year is the greatest of a tax on allocated entire net income;
allocated alternative entire net income; allocated assets to New
York State and/or New York City; or a minimum tax.  Operating
losses cannot be carried back or carried forward for New York
State or New York City tax purposes.  The Bank is also subject to
the 17% Metropolitan Commuter District Surcharge on its New York
State tax after the deduction of credits.  The Company is also 
subject to taxes in New Jersey and Connecticut due to the
establishment of in-store branches.

In response to the 1996 Act, the New York State and New York City
tax laws have been amended to prevent the recapture of existing
tax bad debt reserves and to allow for the continued use of the
PTI method to determine the bad debt deduction in computing New
York City and New York State tax liability.

Delaware Taxation.  As a Delaware holding company not earning
income in Delaware, the Company is exempted from Delaware
Corporate income tax but is required to file an annual report
with and pay an annual franchise tax to the State of Delaware.

ITEM 2.  PROPERTIES

The Bank conducts its business through eight full-service banking
and fifty-nine supermarket banking facilities (two of which were
opened during the first quarter of 1999) located in the New York
City boroughs of Queens, Brooklyn, Manhattan and Staten Island,
the New York counties of Nassau, Suffolk, Rockland and
Westchester and in New Jersey and Connecticut.  The Bank provides
residential mortgage banking services through its CFS Intercounty
Mortgage division operating from six loan origination offices in
New York, New Jersey and Pennsylvania.  The Company provides
casualty insurance through its subsidiary, CIA from three offices
located in Long Island, New York.  In December 1997, the Company
purchased an office building and land in Westbury, New York for
its new administrative headquarters.  The purchase was
consummated under the terms of a lease agreement and Payment-in-
lieu-of-Tax ("PILOT") agreement with the Town of Hempstead
Industrial Development Agency ("IDA").  The Company completed
improvements to the building and began using the building as its
corporate headquarters in July 1998.  The cost of the land and
building, including improvements was $12.8 million.  The total

                                                             46
<PAGE>
net book value of the Company's and the Bank's premises and
equipment was $39.2 million at December 31, 1998, which included
fifty-seven supermarket branches.  The Company believes that the
Bank's current facilities are adequate to meet the present and
immediately foreseeable needs of the Bank and the Company.
<TABLE>
<CAPTION>
                                                                                  Net Book Value
                                                                                  of Property or
                                                                                     Leasehold
                                                            Date                   Improvements
                                                Leased or Leased or Date of Lease at December 31,
     Location                                     Owned   Acquired  Expiration(1)       1998     
     --------                                   --------- --------- ------------- ---------------
                                                                                (in thousands)
<S>                                             <C>       <C>        <C>           <C>
Main Office Complex(2):
  93-22/93-30 & 94-09/94-13 Jamaica Avenue         Owned     1957         -          $2,208
  & 87-14/86-35 94th St. Woodhaven, NY 11421
Traditional Branches:
  80-35 Jamaica Avenue, Woodhaven, NY 11421        Owned     1979         -             251
  82-10 153rd Avenue, Howard Beach, NY 11414       Owned     1971         -             561
  98-16 101st Avenue, Ozone Park, NY 11416         Owned     1976         -             451
  244-19 Braddock Avenue, Bellerose, NY 11426(3)   Leased    1973        2003           117
  106-17 Continental Ave, Forest Hills, NY 11375   Leased    1959        1999            13
  343 Merrick Road, Amityville, NY 11701           Leased    1977        2001           416
  104-08 Rockaway Beach Blvd., Rockaway  
    Beach, NY 11693                                Leased    1996        1999            34
Supermarket Branches:
  700-60 Patchogue Rd., Medford, NY 11763          Leased    1996        2001           173
  1121 Jerusalem Avenue, Uniondale, NY 11553       Leased    1996        2001           192
  533 Montauk Highway, Bayshore, NY 11708          Leased    1996        2001           223
  625 Atlantic Avenue, Brooklyn, NY 11217          Leased    1996        2001           198
  575 Montauk Highway, W. Babylon, NY 11704        Leased    1997        2002           203
  2335 New Hyde Park Rd, New Hyde Park, NY 11040   Leased    1997        2002           223
  1251 Deer Park Ave., N. Babylon, NY 11703        Leased    1997        2002           212
  101 Wicks Road, Brentwood, New York 11717        Leased    1997        2002           222
  3635 Hempstead Turnpike, Levittown, NY 11756     Leased    1997        2002           228
  6070 Jericho Turnpike, Commack, NY 11726         Leased    1997        2002           226
  2150 Middle Country Rd., Centereach, NY 11720    Leased    1997        2002           227
  1897 Front Street, East Meadow, NY 11554         Leased    1997        2002           235
  8101 Jericho Turnpike, Woodbury, NY 11796        Leased    1997        2002           227
  92-10 Atlantic Avenue, Ozone Park, NY 11416      Leased    1997        2002           230
  395 Route 112, Patchogue, NY 11772               Leased    1997        2002           219
  1764 Grand Avenue, Baldwin, NY 11510             Leased    1997        2002           226
  5145 Nesconset Hwy., Port Jefferson, NY 11776    Leased    1997        2002           248
  31-06 Farrington Street, Whitestone, NY 11357    Leased    1997        2002           226
  5801 Sunrise Highway, Sayville, NY 11741         Leased    1997        2002           220
  531 Montauk Highway, W. Babylon, NY 11776        Leased    1997        2002           229
  155 Islip Avenue, Islip, NY 11751                Leased    1997        2002           232
  800 Montauk Highway, Shirley, NY 11967           Leased    1997        2002           237
  253-01 Rockaway Turnpike, Woodmere, NY 11422     Leased    1997        2002           227
  227 Cherry Street, New York, NY 10002            Leased    1997        2002           227
  45 Route 59 Monsey, NY 10952                     Leased    1997        2002           233
  195 Rockland Center, Rte. 59, Nanuet, NY 10954   Leased    1997        2002           244
  1905 Sunrise Highway, Bayshore, NY 11708         Leased    1997        2002           243
  941 Carmens Road, Massapequa, NY 11758           Leased    1997        2002            84
  500 South River Street, Hackensack, NJ 07470     Leased    1997        2002           180
  1 Pathmark Plaza, Mount Vernon, NY               Leased    1997        2002           268
  2875 Richmond Avenue, Staten Island, NY 10306    Leased    1997        2002           257
  111-10 Flatlands Avenue, Brooklyn, NY 11230      Leased    1997        2002           236
  1245 61st Street, Boro Park, NY 11219            Leased    1998        2003           257
  2650 Sunrise Highway, East Islip, NY 11730       Leased    1998        2003           172
  492 E. Atlantic Avenue, E. Rockaway, NY 11554    Leased    1998        2003           245
  1-37 12th Street, Brooklyn, NY 11205             Leased    1998        2003           243
  130 Wheatley Plaza, Greenvale, NY 11548          Leased    1998        2003           258
  335 Nesconset Highway, Hauppauge, NY 11788       Leased    1998        2003           162
  360 No. Broadway, Jericho, NY 11753              Leased    1998        2003           244
  42-02 Northern Blvd., L.I.C., NY 11100           Leased    1998        2003           237
  2540 Central Park Ave, No. Yonkers, NY 10710     Leased    1998        2003           222
  130 Midland Avenue, Portchester, NY 10573        Leased    1998        2003           285
  1351 Forest Avenue, Staten Island, NY 10302      Leased    1998        2003           247
  2424 Hylan Blvd., Staten Island, NY 10306        Leased    1998        2003            24
  1757 Central Park Ave, Yonkers, NY 10710         Leased    1998        2003           293

                                                                                           47
<PAGE>
  Route 28 and Union Ave, Bound Brook, NJ 08805    Leased    1998        2003           201
  Rte 70 & Chambers Bridge Rd, Bricktown, NJ 08723 Leased    1998        2003           213
  367 Highway 22 West, Hillside, NJ 07205          Leased    1998        2003           327
  201 Roosevelt Place, Palisades Park, NJ 07650    Leased    1998        2003           211
  625 Hamburg Turnpike, Wayne, NJ 07470            Leased    1998        2003           189
  145 Highway 36 West, Long Branch, NJ 07764       Leased    1998        2003           202
  23 Marshall Hill Road, West Milford, NJ 07480    Leased    1998        2003           210
  404 Main Street, Ansonia, CT 06401               Leased    1998        2003           173
  500 Sylvan Avenue, Bridgeport, CT 06610          Leased    1998        2003           238
  533 South Broad Street, Meridan, CT 06450        Leased    1998        2003           254
  157 Cherry Street, Milford, CT 06460             Leased    1998        2003           177
  6 Queen Street, Newtown, CT 06460                Leased    1998        2003           201
  650 Wolcott Street, Waterbury, CT 06705          Leased    1998        2003           260
  131 Campbell Avenue, West Haven, CT 06516        Leased    1998        2003           176
Corporate Headquarters:
  615 Merrick Avenue, Westbury, NY                 Owned     1997          -         11,419
</TABLE>

(1) Rent expense for the year ended December 31, 1998 was $1.7
million.
(2) On March 25, 1999, the Bank sold the properties, consisting
of land, buildings and building improvements located at 93-22 and
93-30 Jamaica Avenue, Woodhaven, New York.  As of December 31,
1998, the Bank entered into a contract of sale for its properties
located at 94-09 and 94-13 Jamaica Avenue and 87-14 and 86-35
94th Street, Woodhaven, New York.  These properties are expected
to be sold in the second quarter of 1999.
(3) Includes land that is adjacent to the branch office that was
acquired by the Bank in 1973.

ITEM 3.  LEGAL PROCEEDINGS

In February, 1983, a burglary of the contents of safe deposit
boxes occurred at a branch office of the Bank. At December 31,
1998 and currently, the Bank has a class action lawsuit related
thereto pending, whereby the plaintiffs are seeking recovery of
approximately $12,900,000 in actual damages and an additional
$12,900,000 in unspecified damages. The Bank's ultimate
liability, if any, which might arise from the disposition of
these claims cannot presently be determined. Management believes
it has meritorious defenses against this action and has and will
continue to defend its position. Accordingly, no provision for
any liability that may result upon adjudication of this action
has been recognized in the accompanying consolidated financial
statements.

The Company is involved in various legal actions arising in the
ordinary course of business, which in the aggregate, are believed
by management to be immaterial to the financial position of the
Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


 
                                                             48
<PAGE>
                          PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

Information relating to the market for Registrant's common equity
and related stockholder matters appears under "Common Stock
Information" in the Registrant's 1998 Annual Report to
Stockholders on page 53, and is incorporated herein by reference.

Information relating to the payment of dividends by the
Registrant appears in Note 17 to Notes to Consolidated Financial
Statements in the Registrant's Annual Report on page 45 and is
incorporated herein by reference.

The Company initiated a quarterly cash dividend of $0.05 per
share in the third quarter of 1995 paid on October 20, 1995.  The 
following schedule summarizes the cash dividends paid for 1996,
1997 and 1998:

  Dividend Payment      Dividend Paid 
        Date            Per Share (1)        Record Date
  ----------------      -------------        -----------
  January 19, 1996          .05              January 2, 1996
  April 29, 1996            .05              April 8, 1996
  July 12, 1996             .075             June 27, 1996
  October 28, 1996          .075             October 7, 1996
  January 17, 1997          .075             December 30, 1996
  April 24, 1997            .075             April 4, 1997
  July 18, 1997             .075             June 30, 1997
  October 17, 1997          .075             September 29, 1997
  January 1998              .075             December 1998
  April 1998                .075             March 1998
  July 1998                 .075             June 1998
  October 1998              .075             September 1998

(1) As adjusted to reflect the 2-for-1 stock split effective
November 1997 ("stock split").

The following schedule summarizes the dividend payout ratio
(dividends declared per share divided by net income per share)

                Dividends        Net income
  Year        Paid per share     per share       Payout ratio
 ------       --------------     ----------      ------------
  1996            $0.25            $1.13             .221%
  1997             0.30             1.32             .227
  1998             0.30             0.95             .316




                                                             49
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

The above-captioned information appears in the Registrant's 1998
Annual Report to Stockholders on pages 6 and 7 and is
incorporated herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

The above-captioned information appears under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Registrant's 1998 Annual Report to
Stockholders on pages 8 through 22 and is incorporated herein by
reference.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
          MARKET RISK

The above-captioned information appears under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Asset/Liability Management" and "- Interest Rate
Sensitivity Analysis" in the Registrant's 1998 Annual Report to
Stockholders on pages 9 through 11 and is incorporated herein by
reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of Haven Bancorp, Inc. and
its subsidiaries, and the notes related thereto together with the
report thereon by KPMG LLP appears in the Registrant's 1998
Annual Report to Stockholders on pages 23 through 51 and are
incorporated herein by reference.

ITEM 9.  CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

None.

                          PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to Directors and Executive Officers of
the Registrant is incorporated herein by reference to the
Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on April 21, 1999, on pages 5 through 8.

ITEM 11.  EXECUTIVE COMPENSATION

The information relating to executive compensation is
incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on 

                                                             50
<PAGE>
April 21, 1999, on pages 9 through 22 (excluding the Report of
the Compensation Committee on pages 12 through 14 and the Stock
Performance Graph on page 15).

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

The information relating to security ownership of certain
beneficial owners and management is incorporated herein by
reference to the Registrant's Proxy Statement for the Annual
Meeting of Stockholders to be held on April 21, 1999, on pages 3
through 4 and pages 6 through 8.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information relating to certain relationships and related
transactions is incorporated herein by reference to the
Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on April 21, 1999, on pages 22 and 23.

                          PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
          ON FORM 8-K

(a)  The following documents are filed as a part of this report:
(1)  Consolidated Financial Statements of the Company are
incorporated by reference to the following indicated pages of the
1998 Annual Report to Stockholders.
                                                            Pages
     Consolidated Statements of Financial Condition
     as of December 31, 1998 and 1997 ...................    23
     Consolidated Statements of Income for the Years
     Ended December 31, 1998, 1997 and 1996 .............    24
     Consolidated Statements of Changes In Stockholders'
     Equity for the Three Years Ended December 31, 1998 .    25 
     Consolidated Statements of Cash Flows for the Years
     Ended December 31, 1998, 1997 and 1996 .............    26
     Notes to Consolidated Financial Statements ......... 27 - 50
     Independent Auditors' Report .......................    51

The remaining information appearing in the Annual Report to
Stockholders is not deemed to be filed as part of this report,
except as expressly provided herein.

(2)  All schedules are omitted because they are not required or
applicable, or the required information is shown in the
consolidated financial statements or the notes thereto.




                                                             51
<PAGE>
(3)  Exhibits (filed herewith unless otherwise noted)
     (a)   The following exhibits are filed as part of this
report:
     3.1     Amended Certificate of Incorporation of Haven
             Bancorp, Inc.(1)
     3.2     Certificate of Designations, Preferences and Rights
             of Series A Junior Participating Preferred Stock(2)
     3.3     Bylaws of Haven Bancorp, Inc.(3)
     4.0     Rights Agreement between Haven Bancorp, Inc. and
             Chase Manhattan Bank (formerly Chemical Bank)(2)
     10.1(A) Employment Agreement between Haven Bancorp, Inc. and
             Philip S. Messina(4)
     10.1(B) Amendatory Agreement to the Employment Agreement
             between Haven Bancorp, Inc. and Philip S. Messina(5)
     10.1(C) Employment Agreement between CFS Bank and Philip S.
             Messina (5)
     10.2(A) Form of Change in Control Agreement between
             Columbia Federal Savings Bank and certain executive
             officers, as amended(4)
     10.2(B) Form of Amendment to Change in Control Agreement
             between CFS Bank and certain executive officers(5)
     10.2(C) Form of Change in Control Agreement between Haven
             Bancorp, Inc. and certain executive officers, as
             amended(4)
     10.2(D) Form of Amendment to Change in Control Agreement
             between Haven Bancorp, Inc. and certain executive
             officers (5)
     10.2(E) Employment Agreement between Columbia Federal
             Savings Bank and Andrew L. Kaplan (5)
     10.2(F) Change in Control Agreement between Haven Bancorp,
             Inc. and Mark A. Ricca dated as of April 10, 1998
             (filed herewith)
     10.2(G) Change in Control Agreement between CFS Bank
             and Mark A. Ricca dated as of April 10, 1998
             (filed herewith)
     10.4    (a) Amended and Restated Columbia Federal Savings
             Bank Recognition and Retention Plans and Trusts for
             Officers and Employees(6)
     10.4    (b) Amended and Restated Recognition and Retention
             Plan and Trusts for Outside Directors(6)
     10.5    Haven Bancorp, Inc. 1993 Incentive Stock Option
             Plan(6)
     10.6    Haven Bancorp, Inc. 1993 Stock Option Plan for
             Outside Directors(6)
     10.7    Columbia Federal Savings Bank Employee Severance
             Compensation Plan, as amended(4)
     10.8    Columbia Federal Savings Bank Consultation and
             Retirement Plan for Non-Employee Directors(6)
     10.9    Form of Supplemental Executive Retirement Plan(3)
     10.10   Haven Bancorp, Inc. 1996 Stock Incentive Plan(4)


                                                             52
<PAGE>

     10.11   Purchase and Assumption Agreement, dated as of
             March 11, 1998, by and amont Intercounty Mortgage,
             Inc., CFS Bank and Resource Bancshares Mortgage
             Group, Inc.(7)
     11.0    Computation of earnings per share (filed herewith)
     13.0    1998 Annual Report to Stockholders (filed herewith)
     21.0    Subsidiary information is incorporated herein by
             reference to "Part I - Subsidiaries"
     23.0    Consent of Independent Auditors (filed herewith)
     27.0    Financial Data Schedule (filed herewith)
     99      Proxy Statement for 1999 Annual Meeting (filed
             herewith)

_______________

(1)  Incorporated by reference into this document from the
Exhibits to Form 10-Q for the quarter ended September 30, 1998,
filed on November 16, 1998.

(2)  Incorporated by reference into this document from the
Exhibits to Form 8-K, Current Report, filed on January 30, 1996.

(3)  Incorporated by reference into this document from the
Exhibits to Form S-1, Registration Statement and any amendments
thereto, filed on April 14, 1993, Registration No. 33-61048.

(4)  Incorporated by reference into this document from the
Exhibits to Form 10-K for the year ended December 31, 1995, filed
on March 29, 1996.

(5)  Incorporated by reference into this document from the
Exhibits to Form 10-K for the year ended December 31, 1997, filed
on March 31, 1998.

(6)  Incorporated by reference into this document from the
Exhibits to Form 10-K for the year ended December 31, 1994, filed
on March 30, 1995.

(7)  Incorporated by reference into this document from the
Exhibits to Form 8-K, Current Report, filed on July 2, 1998.


     (b)  Reports on Form 8-K.

          A report on Form 8-K was filed by the Company dated
October 9, 1998 relating to the Company's execution of a
definitive purchase agreement in connection with the purchase of
Century Insurance Agency, Inc.



                                                             53
<PAGE>
                         SIGNATURES

Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
                                     HAVEN BANCORP, INC.


                                     By:  /s/ Philip S. Messina
                                          ---------------------
                                          Philip S. Messina
Dated:  March 30, 1999                    Chairman of the Board

Pursuant to the requirements of the Securities and Exchange Act
of 1934, this report has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
     Name                      Title                   Date
<S>                        <C>                       <C>

/s/ Philip S. Messina      Chairman of the Board,    March 30, 1999
-------------------------- President and Chief
Philip S. Messina          Executive Officer


/s/ George S. Worgul       Director                  March 30, 1999
--------------------------
George S. Worgul 


/s/ Robert M. Sprotte      Director                  March 30, 1999
--------------------------
Robert M. Sprotte


/s/ Michael J. Fitzpatrick Director                  March 30, 1999
--------------------------
Michael J. Fitzpatrick


/s/ William J. Jennings II Director                  March 30, 1999
--------------------------
William J. Jennings II


/s/ Michael J. Levine      Director                  March 30, 1999
--------------------------
Michael J. Levine
                                                             54
<PAGE>


/s/Msgr. Thomas J. Hartman Director                  March 30, 1999
--------------------------
Msgr. Thomas J. Hartman


/s/ Catherine Califano     Senior Vice President and March 30, 1999
-------------------------- Chief Financial Officer
Catherine Califano

</TABLE>








































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