EXHIBIT 13.0


This report contains statements that are forward-looking in
nature within the meaning of the Private Securities Litigation
Reform Act of 1995 and are subject to risks and uncertainties
that could cause actual results to differ materially. Such risks
and uncertainties include, but are not limited to, those related
to overall business conditions, particularly in the markets in
which Haven operates, fiscal and monetary policy, competitive
products and pricing, credit risk management and changes in
regulations affecting financial institutions and other risks and
uncertainties discussed from time to time in the Company's SEC
filings.


Table of Contents

1   President's Letter
4   Financial Highlights
5   A Year of Achievement
12  Selected Financial and Other Data
14  Management's Discussion and Analysis
27  Consolidated Financial Statements
31  Notes to Consolidated Financial Statements
54  Independent Auditors' Report
55  Directors and Officers/Directory
56  Stockholder Information


























                    FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)       1997        1996
<S>                                                 <C>         <C>
At Year End
Total Assets                                        $1,974,890   1,583,545
Loans, Net                                           1,138,253     836,882
Securities Available for Sale                          499,380     370,105
Debt Securities Held to Maturity                        66,404      97,307
Mortgage-Backed Securities Held to Maturity            163,057     197,940
Real Estate Owned, Net                                     455       1,038
Deposits                                             1,365,012   1,137,788
Borrowed Funds                                         466,794     326,433
Stockholders' Equity                                   112,865      99,384
Non-Performing Assets                                   12,987      14,931
</TABLE>
<TABLE>
<CAPTION>
                                            1997        1996        1995
<S>                                       <C>         <C>         <C>
For the Year
Net Interest Income                      $ 51,906      47,885      41,319
Provision for Loan Losses                   2,750       3,125       2,775
Non-Interest Income                        13,912       9,554       9,022
Real Estate Operations, Net                   352         277       1,405
SAIF Assessment Charge                       -          6,800        -
Other Non-Interest Expense                 45,495      31,378      30,387
Income Tax Expense                          6,138       6,434       7,230
Net Income                                 11,083       9,425       8,544
Net Income per common share(1):
     Basic                                   1.32        1.13        0.99
     Diluted                                 1.24        1.08        0.96
Performance Ratios
Return on Average Assets                     0.62%       0.62        0.63
Return on Average Assets excluding
  SAIF Assessment Charge                     0.62        0.89        0.63
Return on Average Equity                    10.41        9.83        9.27
Return on Average Equity excluding
  SAIF Assessment Charge                    10.41       14.04        9.27
Net Interest Margin                          3.06        3.29        3.17
Non-Performing Assets to Total Assets        0.66        0.94        1.28
Allowance for Loan Losses to
  Non-Performing Loans                      99.97       77.05       50.80
</TABLE>
(1) Per share amounts reflect the 2-for-1 stock split effective
November 1997.
(2) Net income excluding the SAIF assessment charge would have
been $13.5 million, or $1.62 per basic common share ($1.55 per
share, diluted).

Haven Bancorp, Inc. is the holding company for CFS Bank (formerly
Columbia Federal Savings Bank), its wholly owned subsidiary which
converted from a federally chartered mutual to a federally
chartered stock savings bank on September 23, 1993, whose
principal business is the operation of the Bank. The Bank, which
was organized in 1889, is a community oriented institution
offering deposit products, residential and commercial real estate
loans and a full range of financial services including discount
brokerage, mutual funds, annuities and insurance. Headquartered
in Woodhaven, New York, the Bank serves its customers through
eight full-service banking and thirty-eight supermarket banking
facilities located in the New York City Boroughs of Queens,
Brooklyn, Manhattan and Staten Island and in Nassau, Suffolk,
Rockland and Westchester Counties, New York, northern New Jersey
and western Connecticut. The Bank's deposits are insured up to
the maximum allowable amount by the Federal Deposit Insurance
Corporation ("FDIC").
Dear Fellow Stockholders,

I am pleased to report that by all accounts 1997 was a
remarkable year for Haven Bancorp. There were many positive
developments during the year that I'll describe in detail below.
Above all, it was a year in which we added a substantial number
of new customers. The absolute numbers documenting our
accomplishments are quite impressive. The strategies underlying
these measures are equally notable because they form the basis of
our business plan that we continue to successfully implement. Our
supermarket branching program, a major element in our overall
strategy, reflects Haven's efforts to create value in products
and services for our existing and new customers, which in turn we
expect will create value for our shareholders.

Haven Bancorp reported net income for 1997 of $11.1 million,
marking the first time in the Company's history that earnings
exceeded $10 million. The principal earnings drivers last year
were excellent growth in mortgage loans and strong increases in
fee income. What makes these figures even more noteworthy was
that in 1997 we made a substantial net investment in the
supermarket branching program. During the year, we opened twenty-
eight new supermarket branches compared to four in 1996, the year
we began the program. The supermarket branching program is
rolling out close to our original plan for new locations and we
expect to open a similar number this year. More importantly, the
internal measures we use to gauge the success of the program
indicate we are meeting our projections.  We believe that in 1998
the majority of our supermarket branches will have exceeded their
breakeven thresholds.

Haven's earnings gains are largely the result of our successful
mortgage loan origination efforts. In 1993, we began emphasizing
traditional single family mortgage lending. During 1995, we began
purchasing single family residential mortgages from a select
number of third-party originators and also stepped up our
commercial real estate lending activities. Over the past three
years, the volume of real estate mortgage loans originated and
purchased has progressively increased from $133 million in 1995
to $355 million in 1996 and to $460 million last year. By year-
end 1997, our portfolio of first mortgage loans totaled $1.1
billion, more than double the size of the portfolio just two
years earlier. The quality of these loans remains excellent as
reflected in the delinquency and charge-off measures we closely
monitor. At year-end 1997, our ratio of non-performing assets to
total assets was 0.66%, 30% better than that ratio at year-end
1996 and well below that of our industry peers. We remain
steadfastly committed to maintaining a high level of asset
quality.

Another important element in Haven's earnings has been fee
income, which was approximately $14 million in 1997, representing
a 45% increase over fee income in 1996.  Substantial increases in
deposit fees and annuity, mutual fund and insurance revenues were
increasingly generated at the supermarket branches. The increase
in deposit fees reflect the early measures of customer acceptance
and product profitability, particularly at the supermarket
branches and have exceeded our initial expectations. Positively
Free Checking continues to be CFS Bank's most popular deposit
product and has gained an even greater customer response at the
supermarket branches than at traditional branches. We also
continue to experience good customer response to CFS Investments
offerings. CFSI's sales volume in 1997 totaled $71.7 million.
To put the growing importance of fee income into perspective, the
combination of deposit account and CFSI fees last year were equal
to approximately 18% of net interest income. We are pleased with
the efforts of Haven's marketing staff in creating innovative,
exciting new products and services and the job our sales force
has done transforming these products into revenues. We are
delivering a diverse package of financial services to a growing
market in a cost-effective manner.  Many financial institutions
talk about this concept. At Haven, we have made it a reality.

Our supermarket branching strategy is an example of our belief
that "business as usual" doesn't work anymore. We are continually
thinking of new ways to reach out to our customers and provide
them with innovative products and services. Haven's long-standing
and deeply ingrained sales orientation is proving to be a
valuable element in this equation. Our growing franchise provides
us with a dynamic platform to increase our business base and our
sales force is successfully leading the effort to produce an
increasing share of the new markets in which we are operating. To
illustrate, during 1997 we opened approximately 7,000 new
accounts at traditional branches and approximately 55,000 new
accounts at supermarket branches. This contrast between the
growth characteristics of a mature traditional branch system and
a rapidly expanding in-store banking environment is quite
dramatic. Even more exciting is the 50,000 - plus new customers
available to whom we can cross-sell our products, and, we expect
the number of new accounts to continue to grow in 1998. Instead
of waiting for business to come to us we are actively creating
new opportunities every day through product development and
aggressive customer outreach which continue to be an integral
part of our daily activities.

The expansion of our supermarket branching program into New
Jersey and Connecticut prompted us to change our Bank's name from
Columbia Federal Savings Bank to CFS Bank. We did this to ensure
a uniform identity at all our branches in the three states in
which we now operate. CFS Bank branches are now located
throughout New York City, Nassau and Suffolk counties on Long
Island, Westchester and Rockland counties north of New York City,
Fairfield county in Connecticut and Bergen county in New Jersey.

In order to support an expanding staff associated with our
growing franchise, we recently purchased a building in Westbury,
Long Island that will be our new corporate headquarters. We plan
to relocate this summer and will consolidate the four separate
locations we have outgrown.  We expect to realize operating
efficiencies from having all of Haven's non-branch employees
under one roof and certain tax advantages associated with being
headquartered outside New York City.

While our name and headquarters changes provide a sense of
newness to the organization, we continue to benefit from the
continuity and experience provided by our senior management.  I
am confident in our executive leadership's ability to analyze and
navigate through the complexities and rapid change of the
financial services industry. We continue to emphasize the
generation of high quality assets and the operating efficiencies
emanating from our increasing market share. We anticipate, as
incremental costs associated with the expanding supermarket
branching program level off that tangible evidence of this cost-
effective method of delivering products and services to our
banking customers will become more apparent.

Our customers and the investment community are recognizing the
Company more and more as a thoughtful and creative
innovator.  In February 1997, Haven Capital Trust issued $25
million of 10.46% Capital Securities which Haven is using for
general corporate purposes. Last year, CFS Bank established
Columbia Preferred Capital Corporation, a majority-owned
operating subsidiary organized as a Real Estate Investment Trust,
to hold a portion of the Bank's residential loan portfolio. This
structure gives us considerable latitude to more efficiently
finance our growth and has resulted in certain tax savings.
We remain committed to enhancing shareholder value.  Haven
produced a total return to its shareholders in 1997 of 57%
compared to 31% for the S & P 500 Stock Index. We announced a
two-for-one stock split paid in November 1997 in the form of a
100% stock dividend that should increase our stock market
liquidity and attract additional shareholders.

We constantly consider the future and what we must do to make
certain Haven Bancorp remains in the vanguard of the financial
services industry. Our efforts in supermarket branching have
opened many new doors for us and have contributed greatly to the
Company's growing franchise value. These new branches are
providing attractive sources of core funding and fee income. As
this network matures, we expect to see it generate an increasing
proportion of incremental loan growth. An indication of this
occurred in January, when we received a record number of loan
applications to re-finance home mortgages. Slightly more than
twenty percent of these applications were generated at our
supermarket branches and virtually all of them were from new
customers. To further broaden our appeal to existing and
prospective customers, we recently re-energized our home equity
lending program, providing our sales force with an additional,
attractive product.We continue to explore other possible
alternatives that would provide Haven with incremental sources of
quality asset growth and new products.

Amidst all of the changes occurring at Haven, we have not lost
sight of the importance of maintaining our focus on one critical
issue, our employees. With a growing staff, particularly at the
sales level, senior management has been creating new methods to
more effectively train and motivate our employees to reach new
levels of achievement. Rather than view employees as existing
solely to serve management, Haven demonstrates to employees that
management exists to support their needs and to extend their
capabilities to serve our customers. Our organization has grown
from 422 employees at the end of 1996 to 683 currently, and I am
pleased with how the Company has effectively assimilated and
guided these new people to impressive levels of productivity. We
are constantly thinking of additional ways to further engage our
staff in order to raise still higher the standard of our
accomplishments.  We are dedicated to the belief that the people
of Haven represent our most valuable asset.

We are optimistic about our vision for the year. Although the
current interest rate environment, with a relatively flat yield
curve, places great pressure on our margins, we entered the year
with very strong growth momentum. We are confident this strength
in new business will mitigate the current spread compression.
We anticipate this year will be the turning point in our
supermarket branching program and are enthusiastic about the
course of this strategy. I offer my most sincere gratitude to our
loyal shareholders who continue to demonstrate their confidence
and support in Haven Bancorp and to our dedicated and tireless
staff without whom we could not have achieved our success.

Sincerely,



Philip S. Messina
President and Chief Executive Officer

March 3, 1998

















              SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                  December 31,
(In thousands)                                    1997      1996      1995      1994      1993
                                                 ------    ------    ------    ------    ------
<S>                                           <C>        <C>       <C>       <C>       <C>
Total assets                                  $1,974,890 1,583,545 1,472,816 1,268,774 1,229,140
Loans, net                                     1,138,253   836,882   560,385   512,035   659,808
Securities available for sale                    499,380   370,105   503,058    48,189    38,190
Debt securities held to maturity                  66,404    97,307   127,796   130,706    19,208
Mortgage-backed securities held to maturity      163,057   197,940   190,714   495,111   412,677
Real estate owned, net                               455     1,038     2,033     7,844    17,887
Deposits                                       1,365,012 1,137,788 1,083,446 1,013,162   986,760
FHLB advances                                    247,000   178,450   134,175    86,000    55,800
Other borrowed funds                             219,794   147,983   136,408    39,081    80,216
Stockholders' equity                             112,865    99,384    98,519    86,235    95,810
</TABLE>


           SELECTED FINANCIAL RATIOS AND OTHER DATA
<TABLE>
<CAPTION>
                                                     At or For the Years Ended December 31,
(In thousands of dollars,                         1997      1996      1995      1994      1993
 except per share data)                          ------    ------    ------    ------    ------
<S>                                             <C>       <C>       <C>       <C>       <C>
Performance Ratios:
Return on average assets                           0.62%     0.62      0.63     (0.35)    (0.06)
Return on average assets excluding SAIF
  assessment charge (1)                            0.62      0.89      0.63     (0.35)    (0.06)
Return on average equity                          10.41      9.83      9.27     (4.90)    (1.05)
Return on average equity excluding SAIF
  assessment charge (1)                           10.41     14.04      9.27     (4.90)    (1.05)
Stockholders' equity to total assets               5.72      6.28      6.69      6.80      7.79
Net interest spread                                2.89      3.12      2.99      3.34      3.28
Net interest margin (2)                            3.06      3.29      3.17      3.48      3.38
Average interest-earning assets to
  average interest-bearing liabilities           104.02    103.95    104.23    104.42    102.61
Operating expenses to average assets (3)           2.54      2.04      2.18      2.26      2.26
Stockholders' equity per share (4)              $ 12.85     11.49     10.92      9.47      9.74
Asset Quality Ratios:
Non-performing loans to total loans (5)            1.09%     1.64      2.97      5.41      9.37
Non-performing assets to total assets              0.66      0.94      1.28      2.85      6.65
Allowance for loan losses to non-
  performing loans (5)                            99.97     77.05     50.80     38.33     33.83
Allowance for loan losses to total loans           1.09      1.26      1.51      2.07      3.17
Other Data:
Number of deposit accounts                      234,183   171,382   155,424   140,701   132,044
Mortgage loans serviced for others             $174,866   197,017   219,752   239,844   110,058
Loan originations and purchases                $471,338   363,576   143,329   105,219   146,640
Facilities:
Full service offices                              40        14         9         9         9
</TABLE>

(1)  Excludes the SAIF assessment charge in 1996 of $6.8 million.
(2)  Calculation is based on net interest income before provision
for loan losses divided by average interest-earning assets.
(3)  For purposes of calculating these ratios, operating expenses
equal non-interest expense less real estate operations, net where
applicable, of $0.4 million, $0.3 million, $1.4 million, $12.3
million and $9.4 million for the five years ended December 31,
1997, respectively. For the five years ended December 31, 1997,
non-performing loan expense of $0.2 million, $0.4 million, $0.6
million, $0.9 million and $1.2 million, respectively, was also
excluded from non-interest expense. For the year ended December
31, 1996, the SAIF assessment charge of $6.8 million was also
excluded.
(4)  Based on 8,784,700, 8,650,814, 9,022,914, 9,102,812 and
9,833,750 shares outstanding at December 31, 1997, 1996, 1995,
1994 and 1993, respectively.  Share amounts
reflect the 2-for-1 stock split effective November 1997.
(5)  For purposes of calculating these ratios, non-performing
loans consist of all non-accrual loans and restructured loans.


           SELECTED CONSOLIDATED OPERATING DATA
<TABLE>
<CAPTION>
                                                       Years Ended December 31,
(In thousands of dollars,                    1997      1996      1995      1994      1993
 except per share data)                     ------    ------    ------    ------    ------
<S>                                        <C>       <C>       <C>       <C>       <C>
Interest income                           $126,306    109,253    96,434    81,491    79,236
Interest expense                            74,400     61,368    55,115    40,289    41,833
Net interest income                         51,906     47,885    41,319    41,202    37,403
Provision for loan losses                    2,750      3,125     2,775    13,400     6,400
Net interest income after provision
  for loan losses                           49,156     44,760    38,544    27,802    31,003
Non-interest income:
Loan fees and servicing income               3,110      1,807     2,241       790       943
Savings/checking fees                        5,478      3,378     2,861     2,282     2,205
Net (loss) gain on sales of
  interest-earning assets                       (5)       140       126       372       552
Insurance annuity and mutual fund fees       3,758      3,114     2,525     2,025     1,736
Other                                        1,571      1,115     1,269     1,060     1,072
Total non-interest income                   13,912      9,554     9,022     6,529     6,508
Non-interest expense:
Compensation and benefits                   24,251     15,737    14,889    13,605    11,809
Occupancy and equipment                      6,334      3,478     3,334     3,238     3,631
Real estate operations, net                    352        277     1,405    12,253     9,401
SAIF recapitalization charge                  -         6,800      -          -        -
Federal deposit insurance premiums             736      2,327     2,653     2,709     2,554
Other                                       14,174      9,836     9,511     9,336     9,416
Total non-interest expense                  45,847     38,455    31,792    41,141    36,811
Income (loss) before income tax expense
  (benefit)                                 17,221     15,859    15,774    (6,810)      700
Income tax expense (benefit)                 6,138      6,434     7,230    (2,475)    1,392
Net income (loss)                         $ 11,083      9,425(2)  8,544    (4,335)     (692)
Net income (loss) per common share (1):
  Basic                                   $   1.32       1.13(2)   0.99     (0.48)    (0.05)(3)
  Diluted                                 $   1.24       1.08(2)   0.96     (0.47)    (0.05)(3)
</TABLE>

(1) Per share amounts reflect the 2-for-1 stock split effective
November 1997.
(2) Net income excluding the SAIF assessment charge would have
been $13.5 million, or $1.62 per basic common share ($1.55 per
share, diluted).
(3) Represents loss per common share for the quarter ended
December 31, 1993 since the stock conversion occurred on
September 23, 1993.










MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL
Haven Bancorp, Inc. ("Haven Bancorp" or the "Company") was formed
on March 25, 1993 as the Holding Company for CFS Bank (formerly
Columbia Federal Savings 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 headquartered in Woodhaven, New York and its
principal business currently consists of the operation of its
wholly-owned subsidiary, CFS Bank. The Company had no operations
prior to September 23, 1993.

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
primarily in one-to four-family, owner occupied residential
mortgage loans. In addition, in times of low loan demand, the
Bank will invest in debt, equity and mortgage-backed securities
to supplement its lending portfolio. The Bank also invests, to a
lesser extent, in multi-family residential mortgage loans,
commercial real estate loans and other marketable securities.

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 consist of the interest paid on its deposits and
borrowed funds. The Bank's net income also is affected by its
provision for loan losses as well as non-interest income and
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.

FINANCIAL CONDITION
The Company had total assets of $1.97 billion at December 31,
1997 compared to $1.58 billion at December 31, 1996, an increase
of $391.3 million, or 24.7%.

The Company's portfolio of debt and equity securities and
mortgage-backed securities ("MBSs") available for sale ("AFS")
totaled $499.4 million, an increase of $129.3 million, or 34.9%
at December 31, 1997 compared to $370.1 million at December 31,
1996. At December 31, 1997, $250.5 million of the AFS securities
portfolio were adjustable-rate securities and $248.9 million were
fixed-rate securities. The overall growth in the AFS portfolio in
1997 was primarily due to securities purchased for a leverage
program related to the issuance of trust preferred securities by
the Company as well as the investment of deposit flows during the
year not utilized for loan originations and the reinvestments of
cash flows from the securities held to maturity portfolio.
During 1997, the Company purchased $511.1 million of debt and
equity securities and MBSs for its AFS portfolio, of which $136.8
million were adjustable-rate and $374.3 million were fixed-rate.
The purchases were intended to minimize market risk and improve
the overall net interest margin in the portfolio.  The purchases
for the AFS portfolio included $41.5 million related to a $85.0
million leverage program implemented during the first quarter to
initially invest a portion of the proceeds of the $25.0 million
10.46% Capital Securities issued by Haven Capital Trust I and to
offset the additional interest expenses.  Principal repayments,
calls and proceeds from sales of AFS securities totaled $386.1
million.  A portion of the proceeds from AFS sales were used to
fund loan originations and to purchase both residential loans on
a flow basis and bulk whole loan packages totaling $200.9
million.

At December 31, 1997, the debt securities and MBS held to
maturity portfolios totaled $229.5 million, comprised of $59.1
million of adjustable-rate securities and $170.4 million of
fixed-rate securities. During 1997, the Company did not purchase
any securities for its held to maturity portfolio.  Principal
repayments on MBSs and debt securities and maturities and calls
on debt securities held to maturity totaled $65.6 million. The
estimated fair value of the Company's debt securities and MBS
held to maturity portfolios were $0.2 million above the carrying
value of the portfolios at December 31, 1997. It is the Company's
intent to hold these securities until maturity and therefore the
Company does not expect to realize the current unrealized gains
brought about by the current market environment.

Net loans increased by $301.4 million, or 36.0% during 1997 to
$1.14 billion at December 31, 1997 from $836.9 million at
December 31, 1996. Loan originations and purchases during 1997
totaled $471.3 million (comprised of $322.4 million of
residential one-to four-family mortgage loans, $133.6 million of
commercial and multi-family real estate loans, $3.8 million of
construction loans and $11.5 million of consumer loans). One-to
four-family mortgage loan originations included $200.9 million of
loans purchased in the secondary market during 1997. Commercial
and multi-family real estate loan originations increased by $49.8
million to $133.6 million in 1997 from $83.8 million in 1996, or
59.4% comprised of $64.2 million of multi-family loans and $69.4
million of commercial real estate loans. Total loans increased
substantially while the Company continued towards its objective
to shift toward adjustable-rate loans. At December 31, 1997,
total loans were comprised of $626.4 million adjustable-rate
loans and $524.4 million fixed-rate loans. During 1997, principal
repayments totaled $164.5 million and $1.7 million was
transferred to real estate owned ("REO").

Included in other assets at both December 31, 1997 and 1996 was
$6.2 million of net deferred tax assets.  The overall deferred
tax asset was unchanged from 1996 because the increase in the
difference between the financial statement credit loss provision
and the tax bad debt deduction was offset by an increase in the
deferred tax liability related to securities marked to market for
financial statement purposes. Also, there was a $0.3 million
decrease in the deferred tax liability related to the potential
recapture of the New York City tax bad debt reserve which was no
longer necessary due to New York tax legislation enacted in 1997.
(See Note 9 to Notes to Consolidated Financial Statements).
Management believes that the Company's projected future earnings
will allow the Company to generate future taxable income
sufficient to utilize the deferred tax asset over time.

Deposits totaled $1.37 billion at December 31, 1997, an increase
of $227.2 million, or 20.0% from $1.14 billion at December 31,
1996. Interest credited retained totaled $50.3 million in
addition to deposit growth of $176.9 million.  As of December 31,
1997, the Bank had thirty-two supermarket branches with total
deposits of $157.2 million compared to four locations with
deposits totaling $12.1 million at December 31, 1996.  The
supermarket branches are located in Queens, Brooklyn, Manhattan,
Staten Island, Nassau, Suffolk, Rockland and Westchester counties
and northern New Jersey.  Core deposits equaled 32.5% of total
in-store branch deposits, compared to 45.3% in traditional
branches.  Overall, core deposits represented 43.8% of total
deposits at December 31, 1997 compared to 47.2% at December 31,
1996.

Borrowed funds increased 43.0% to $466.8 million at December 31,
1997 from $326.4 million at December 31, 1996. The increase in
borrowings was primarily due to the addition of $25.0 million of
10.46% Capital Securities issued by Haven Capital Trust I in
February 1997 which are included in borrowed funds in the
consolidated statements of financial condition and the addition
of an $85.0 million leverage program which was implemented during
the first quarter to offset the additional interest expense
resulting from the issuance of the Capital Securities.  A portion
of the increase was offset by the pay-down of short-term
borrowings as a result of deposit growth during 1997.

Stockholders' equity totaled $112.9 million, or 5.7% of total
assets at December 31, 1997, an increase of $13.5 million, or
13.6% from $99.4 million, or 6.3% of total assets at December 31,
1996. The increase reflects net income of $11.1 million, an
increase of $1.7 million related to the allocation of ESOP stock,
amortization of awards of shares of common stock by the Bank's
Recognition and Retention Plans and Trusts ("RRPs") and
amortization of deferred compensation plan and $0.8 million
related to stock options exercised, and related tax effect. In
addition, there was an increase of $2.5 million in unrealized
appreciation on AFS securities.  These were partially offset by
dividends declared of $2.6 million.


DISCUSSION OF MARKET RISK
As a financial institution, the Company's primary component of
market risk is interest rate volatility. Fluctuations in interest
rates will ultimately impact both the level of income and expense
recorded on a large portion of the Bank's assets and liabilities,
and the market value of all interest-earning assets, other than
those which possess a short term to maturity. Since virtually all
of the Company's interest-bearing liabilities and interest-
earning assets are at the Bank, virtually all of the Company's
interest-rate risk exposure lies at the Bank level. As a result,
all significant interest rate risk management procedures are
performed at the Bank level. Based upon the Bank's nature of
operations, the Bank is not subject to foreign currency exchange
or commodity price risk. The Bank's real estate loan portfolio,
concentrated primarily within the New York metropolitan area, is
subject to risks associated with the local economy. The Bank does
not own any trading assets. See "Non-Performing Assets." At
December 31, 1997, the Bank had $25.0 million of interest rate
caps outstanding. (See Note 13 to Notes to Consolidated Financial
Statements.) The Bank's interest rate management strategy is
designed to stabilize net interest income and preserve capital
over a broad range of interest rate movements. See "Interest Rate
Sensitivity Analysis" below.

INTEREST RATE SENSITIVITY ANALYSIS
The matching of assets and liabilities may be analyzed by
examining the extent to which such assets and liabilities are
"interest rate sensitive" and by monitoring an institution's
interest rate sensitivity "gap". An asset or liability is said to
be interest rate sensitive within a specific time period if it
will mature or reprice within that time period. The interest rate
sensitivity gap is defined as the difference between the amount
of interest-earning assets maturing or repricing within a
specific time period and the amount of interest-bearing
liabilities maturing or repricing within the same period. A gap
is considered positive when the amount of interest-earning assets
maturing or repricing exceeds the amount of interest-bearing
liabilities maturing or repricing within the same period. A gap
is considered negative when the amount of interest-bearing
liabilities maturing or repricing exceeds the amount of interest-
earning assets maturing or repricing within the same period.

Accordingly, in a rising interest rate environment, an
institution with a positive gap would be in a better position to
invest in higher yielding assets which would result in the yield
on its assets increasing at a pace closer to the cost of its
interest-bearing liabilities, than would be the case if it had a
negative gap. During a period of falling interest rates, an
institution with a positive gap would tend to have its assets
repricing at a faster rate than one with a negative gap, which
would tend to restrain the growth of its net interest income.

The Company closely monitors its interest rate risk as such risk
relates to its operational strategies. The Company's Board of
Directors has established an Asset/Liability Committee,
responsible for reviewing its asset/liability policies and
interest rate risk position, which generally meets weekly and
reports to the Board on interest rate risk and trends on a
quarterly basis.

The following table sets forth the amounts of interest-earning
assets and interest-bearing liabilities outstanding at December
31, 1997 which are anticipated by the Company, based upon certain
assumptions described below, to reprice or mature in each of the
future time periods shown. Adjustable-rate assets and liabilities
are included in the table in the period in which their interest
rates can next be adjusted. For purposes of this table,
prepayment assumptions for fixed interest-rate assets are based
upon industry standards as well as the Company's historical
experience and estimates. The Company has assumed an annual
prepayment rate of approximately 14% for its fixed-rate MBS
portfolio. The computation of the estimated one-year gap assumes
that the interest rate on passbook account deposits is variable
and, therefore, interest sensitive. During the falling interest
rate environment throughout 1997, these funds were maintained at
an average rate of 2.51%. The Company has assumed that its
passbook, NOW and money market accounts, which totaled $528.0
million at December 31, 1997, are withdrawn at the annual
percentages of approximately 10%, 5% and 17%, respectively.

<TABLE>
<CAPTION>
                                                            More Than  More Than  More Than   More Than
                                   Three                    One Year     Three    Five Years  Ten Years
                                   Months      Three to        to       Years to     to          to       More Than
(Dollars in thousands)             or Less   Twelve Months Three Years Five Years Ten Years  Twenty Years Twenty Years  Total
                                   -------   ------------- ----------- ---------- ---------- ------------ ------------  -----
<S>                                <C>       <C>           <C>         <C>        <C>        <C>          <C>          <C>
Interest-earning assets:
Mortgage loans (1)                $  76,500     144,539       302,465     257,904   220,947     107,498        -      1,109,853
Other loans (1)                      12,138       7,911         2,026       2,325     5,224       2,271        -         31,895
MBSs held to maturity                 6,255      16,796        44,829      42,510    52,667        -           -        163,057
Debt securities held to maturity      5,000       3,609        41,815        -         -         15,981        -         66,405
Securities available for sale       499,379        -             -           -         -           -           -        499,379
Money market investments              4,561        -             -           -         -           -           -          4,561
                                    -------     -------       -------     -------   -------     -------      ------   ---------
Total interest-earning assets       603,833     172,855       391,135     302,739   278,838     125,750        -      1,875,150
Premiums, net of unearned
  discount and deferred fees (2)         19           5            12           9         9           4        -             58
                                    -------     -------       -------     -------   -------     -------      ------   ---------
Net interest-earning assets         603,852     172,860       391,147     302,748   278,847     125,754        -      1,875,208
                                    -------     -------       -------     -------   -------     -------      ------   ---------
Interest-bearing liabilities:
Passbook accounts                     9,582      28,671       105,746      69,121    87,717      60,637      17,271     378,745
NOW accounts                          1,334       4,003        49,868      13,343    17,905       9,830       1,826      98,109
Money market accounts                 2,173       6,514        22,241      10,456     8,180       1,483          82      51,129
Certificate accounts                162,950     432,757       135,522      50,136       218        -           -        781,583
Borrowed funds                      310,775      93,163        20,620      17,020       232        -         24,984     466,794

Total interest-bearing liabilities  486,814     565,108       333,997     160,076   114,252      71,950      44,163   1,776,360

Interest sensitivity gap           $117,038    (392,248)       57,150     142,672   164,595      53,804     (44,163)     98,848
                                    =======     =======       =======     =======   =======     =======      ======   =========
Cumulative interest sensitivity
  gap                              $117,038    (275,210)     (218,060)    (75,388)   89,207     143,011      98,848
                                    =======     =======       =======     =======   =======     =======      ======   =========
Cumulative interest sensitivity gap
  as a percentage of total assets      5.93%     (13.94)%      (11.04)%     (3.82)%    4.52%       7.24%       5.01%
Cumulative net interest-earning
  assets as a percentage of
  interest-sensitive liabilities     124.04%      73.84%        84.27%      95.12%   105.37%     108.26%     105.56%
</TABLE>
(1)  For purposes of the gap analysis, mortgage and other loans
are reduced for non-performing mortgage loans and other loans but
are not reduced for the allowance for loan losses.
(2)  For purposes of the gap analysis, premiums, unearned
discount and deferred fees are pro-rated.

At December 31, 1997, the Company's total interest-bearing
liabilities maturing or repricing within one year exceeded its
total interest-earning assets maturing or repricing within the
same time period by $275.2million, representing a one year
cumulative gap ratio of negative 13.94%.

In order to reduce its sensitivity to interest rate risk, the
Company's current strategy includes emphasizing the origination
or purchase for portfolio of adjustable-rate loans, debt
securities and MBSs and maintaining an AFS securities portfolio.
During 1997, the Company purchased $136.8 million of adjustable-
rate MBSs which are expected to help protect net interest margins
during periods of rising interest rates. In 1997, the Company
originated or purchased $317.4 million of adjustable-rate
mortgage loans. Historically, 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. At December
31, 1997, core deposits represented 43.8% of deposits compared to
47.2% of deposits at December 31, 1996. The Company expects to
attract a higher percentage of core deposits from its supermarket
branch locations as these locations continue to grow and mature.

The Company's interest rate sensitivity is also monitored by
management through the use of a model which internally generates
estimates of the change in net portfolio value ("NPV") over a
range of interest rate change scenarios.  NPV is the present
value of expected cash flows from assets, liabilities, and off-
balance sheet contracts.  The NPV ratio, under any interest rate
scenario, is defined as the NPV in that scenario divided by the
market value of assets in the same scenario.  The Office of
Thrift Supervision ("OTS") also produces a similar analysis using
its own model, based upon data submitted on the Bank's quarterly
Thrift Financial Reports, the results of which may vary from the
Company's internal model primarily due to differences in
assumptions utilized between the Company's internal model and the
OTS model, including estimated loan prepayment rates,
reinvestment rates and deposit decay rates.  For purposes of the
NPV table, prepayment speeds similar to those used in the Gap
table were used.  The following table sets forth the Company's
NPV as of December 31, 1997.
<TABLE>
<CAPTION>
                                            Net Portfolio Value
Changes            Net Portfolio Value       as a % of Assets
in Rates       ---------------------------- -------------------
in Basis                  Dollar Percentage          Change in
 Points        Amount     Change   Change       %   Percentage(1)
               ------     ------ ----------  ----   ----------
                             (Dollars in Thousands)
<S>           <C>        <C>      <C>        <C>     <C>
200          $ 77,239   $(68,181) (46.89)%   4.16%   (43.55)%
100           119,736    (25,684) (17.66)    6.25    (15.20)
Base case     145,420       -        -       7.37       -
(100)         181,427     36,007   24.76     8.98     21.85
(200)         207,720     62,300   42.84    10.11     37.18
</TABLE>

(1) Based on the portfolio value of the Company's assets in the
base case scenario.

As in the case with the Gap table, certain shortcomings are
inherent in the methodology used in the above interest rate risk
measurements.  Modeling changes in NPV requires the making of
certain assumptions which may or may not reflect the manner in
which actual yields and costs respond to changes in market
interest rates.  In this regard, the NPV model presented assumes
that the composition of the Company's interest-sensitive assets
and liabilities existing at the beginning of a period remains
constant over the period being measured and also assumes that a
particular change in interest rates is reflected uniformly across
the yield curve regardless of the duration to maturity or
repricing of specific assets and liabilities.  Accordingly,
although the NPV measurements provide an indication of the
Company's interest rate risk exposure at a particular point in
time, such measurements are not intended to and do not provide a
precise forecast of the effect of changes in market interest
rates on the Company's net portfolio value and will differ from
actual results.

AVERAGE STATEMENTS OF FINANCIAL POSITION
The following table sets forth certain information relating to
the Company's average consolidated statements of financial
condition and consolidated statements of income for the three
years ended December 31, 1997 and reflects the average yield on
assets and average cost of liabilities for the periods indicated.
Such yields and costs are derived by dividing income or expense
by the average balance of assets or liabilities, respectively,
for the periods shown. Average balances are derived from average
daily balances. The average balance of loans includes loans on
which the Company has discontinued accruing interest. The yields
and costs include fees which are considered adjustments to
yields.

<TABLE>
<CAPTION>
                                                  1997                            1996                          1995
                                                            Average                         Average                       Average
                                        Average             Yield/      Average             Yield/    Average             Yield/
(Dollars in thousands)                  Balance   Interest   Cost       Balance   Interest   Cost     Balance   Interest   Cost
                                        -------   --------  -------     -------   --------  -------   -------   --------  -------
<S>                                    <C>        <C>       <C>        <C>        <C>       <C>      <C>        <C>       <C>
Assets:
Interest-earning assets:
Mortgage loans                         $ 956,819   $75,266    7.87%     $647,516   $53,110    8.20%     $503,085  $42,115    8.37%
Other loans                               32,639     3,220    9.87        35,952     3,638   10.12        40,418    4,215   10.43
MBSs(1)                                  482,523    32,755    6.79       543,810    37,517    6.90       557,977   37,510    6.72
Money market investments                   5,743       343    5.97         2,175       176    8.09         4,313      339    7.86
Debt and equity securities (1)           215,926    14,722    6.82       227,521    14,812    6.51       199,600   12,255    6.14
                                       ---------   -------             ---------   ------              ---------   ------
Total interest-earning assets          1,693,650   126,306    7.46     1,456,974   109,253    7.50     1,305,393   96,434    7.39
Non-interest earning assets               88,231   -------                61,120   -------                57,149   ------
                                       ---------                       ---------                       ---------
Total assets                           1,781,881                       1,518,094                       1,362,542
                                       =========                       =========                       =========
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Passbook accounts                        371,872     9,338    2.51       373,337     9,314    2.49       405,932   10,105    2.49
Certificate accounts                     134,546     1,130    0.84       572,768    32,436    5.66       503,990   29,426    5.84
NOW accounts                              54,107     1,823    3.37       111,425       999    0.90        96,242      939    0.98
Money market accounts                    678,599    39,309    5.79        58,108     1,929    3.32        45,472    1,585    3.49
Borrowed funds                           389,091    22,800    5.86       285,951    16,690    5.84       200,788   13,060    6.50
                                       ---------   -------             ---------    ------             ---------   ------
Total interest-bearing liabilities     1,628,215    74,400    4.57     1,401,589    61,368    4.38     1,252,424   55,115    4.40
Other liabilities                         47,247   -------                20,628    ------                17,946   ------
                                       ---------                       ---------                       ---------
Total liabilities                      1,675,462                       1,422,217                       1,270,370
Stockholders' equity                     106,419                          95,877                          92,172
                                       ---------                       ---------                       ---------
Total liabilities and stockholders'
  equity                              $1,781,881                      $1,518,094                      $1,362,542
Net interest income/net interest       =========                       =========                       =========
  rate spread (2)                                  $51,906    2.89%               $47,885    3.12%               $41,319   2.99%
Net interest-earning assets/net                     ======    ====                 ======    ====                 ======   ====
  interest margin (3)                    $65,435              3.06%      $55,385             3.29%     $52,969             3.17%
Ratio of interest-earning assets          ======              ====        ======             ====       ======             ====
  to interest-bearing liabilities                   104.02%                        103.95%                       104.23%
                                                    ======                         ======                        ======
</TABLE>

(1)  Includes AFS securities and securities held to maturity.
(2)  Net interest rate spread represents the difference between
the average yield on interest-earning assets and the average cost
of interest-bearing liabilities.
(3)  Net interest margin represents net interest income before
provision for loan losses divided by average interest-earning
assets.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31,
1997 AND 1996

GENERAL
The Company reported net income of $11.1 million for 1997
compared to net income of $9.4 million for 1996. The $1.7 million
increase in earnings was primarily attributable to an increase of
$17.1 million in interest income, an increase of $4.4 million in
non-interest income, a decrease of $0.4 million in the provision
for loan losses and a decrease of $0.3 million in income tax
expense.  These factors were mainly offset by interest expense
which increased by $13.0 million and non-interest expense which
increased by $7.4 million primarily due to the Bank's in-store
branch expansion.

INTEREST INCOME
Interest income increased by $17.1 million, or 15.6% to $126.3
million in 1997 from $109.3 million in 1996. The increase was
primarily the result of an increase in interest income on
mortgage loans which was partially offset by a decrease in
interest income on MBSs and other loans.

Interest income on mortgage loans increased by $22.2 million, or
41.7% to $75.3 million in 1997 from $53.1 million in 1996
primarily as a result of an increase in the average mortgage loan
balance of $309.3 million partially offset by a decrease in
average yield on mortgage loans of 33 basis points. During 1997,
the Bank originated or purchased $459.8 million of mortgage
loans.  Mortgage loans were originated at an average rate of
7.52% for 1997 compared to 7.56% for 1996.  The decline in the
average rate for originations was primarily due to decreases in
the rate indices used for residential and commercial real estate
loans and the increasing percentage of relatively lower yielding
residential mortgages.  These indices which are the 30 year
treasury bond and the 5 year treasury note declined 71 and 50
basis points, respectively, during 1997 when compared to December
31, 1996. In addition, loan satisfactions during 1997 totaled
$134.1 million, some of which were at higher interest rates than
current originations.  Principal repayments totaled $151.2
million in 1997 compared to $78.2 million in 1996.

RATE/VOLUME ANALYSIS
The following table presents the extent to which changes in
interest rates and changes in the volume of interest-earning
assets and interest-bearing liabilities have affected the
Company's interest income and interest expense during the periods
indicated. Information is provided in each category with respect
to (i) changes attributable to changes in volume (changes in
volume multiplied by prior rate), (ii) changes attributable to
changes in rate (changes in rate multiplied by prior volume), and
(iii) the net change. The changes attributable to the combined
impact of volume and rate have been allocated proportionately to
the changes due to volume and the changes due to rate.
<TABLE>
<CAPTION>
                                      Year Ended December 31, 1997  Year Ended December 31, 1996
                                              Compared to                   Compared to
                                      Year Ended December 31, 1996  Year Ended December 31, 1995
                                         Increase (Decrease)           Increase (Decrease)
                                        In Net Interest Income        In Net Interest Income
                                                Due to                        Due to
(In thousands)                         Volume    Rate      Net       Volume    Rate      Net
                                       ------   ------     ---       ------   ------     ---
<S>                                   <C>       <C>       <C>       <C>       <C>       <C>
Interest-earning assets:
Mortgage loans                        $24,376   (2,220)    22,156    11,866     (871)   10,995
Other loans                              (329)     (89)      (418)     (455)    (122)     (577)
MBSs(1)                                (4,172)    (590)    (4,762)     (974)     981         7
Money market investments                  223      (56)       176      (173)      10      (163)
Debt and equity securities(1)            (776)   1,431        (90)    1,787      770     2,557
                                       ------    -----     ------    ------   ------    ------
Total                                  19,322   (1,524)    17,053    12,051      768     12,819
                                       ------    -----     ------    ------   ------    ------
Interest-bearing liabilities:
Passbook accounts                         (41)      65         24      (791)     -         (791)
NOW accounts                              200      (69)       131       141      (81)        60
Money market accounts                    (135)      29       (106)      424      (80)       344
Certificate accounts                    6,113      760      6,873     3,935     (925)     3,010
Borrowed funds                          6,053       57      6,110     5,067   (1,437)     3,630
                                       ------    -----     ------    ------   ------    ------
Total                                  12,190      842     13,032     8,776   (2,523)     6,253
                                       ------    -----     ------    ------   ------    ------
Net change in net interest income     $ 7,132   (3,111)     4,021     3,275    3,291      6,566
                                       ======    =====     ======    ======   ======    ======
</TABLE>

(1)  Includes AFS securities and securities held to maturity.

Interest income on other loans decreased by $418,000, or 11.5% to
$3.2 million in 1997 from $3.6 million in 1996 due to a decrease
of $3.3 million in average balances and a decline of 25 basis
points in the average yield. The Bank's consumer loan products
with the exception of equity loan/lines were discontinued in
November 1995. However, during the fourth quarter of 1997, the
Bank added unsecured loans to its list of consumer loan products
to expand the array of products available to its customers.

Interest income on MBSs was $32.8 million for 1997 compared to
$37.5 million in 1996. The average balance for 1997 decreased by
$61.3 million, or 11.3% to $482.5 million from $543.8 for 1996.
In addition, the average yield on the MBS portfolio decreased by
11 basis points to 6.79% for 1997 from 6.90% in 1996.  During
1997, the Bank purchased $421.9 million of MBSs for its AFS
portfolio which were partially offset by sales totaling $226.3
million.  The MBS securities purchased for the AFS portfolio
during 1997 represented 82.5% of total purchases for the AFS
portfolio because these securities allow the Bank to shorten its
duration exposure for net interest margin purposes and also
provide a better cash flow for reinvestment purposes.  The sales
from the AFS portfolio were used to fund mortgage loan
originations, purchases of loans in the secondary market and also
for managing the AFS portfolio to improve overall yield and
shorten duration of various securities.

Interest income on money market investments increased by
$167,000, or 94.9% to $343,000 in 1997 from $176,000 in 1996
primarily as a result of an increase in average balances of $3.6
million in 1997.

Interest on debt and equity securities decreased by $90,000, or
0.6% to $14.7 million in 1997 from $14.8 million in 1996
primarily as a result of a decrease in the average balance of
$11.6 million partially offset by an increase in average yield of
31 basis points. During 1997, the Company purchased $89.2 million
of debt and equity securities for its AFS portfolio which were
offset by sales totaling $111.4 million. The increase in the
overall yield to 6.82% from 6.51% was due to the purchase of
callable agency securities and sales of Federal National Mortgage
Association ("FNMA") preferred stock.

INTEREST EXPENSE
Interest expense increased by $13.0 million, or 21.2% to $74.4
million in 1997 from $61.4 million in 1996. The increase was
partially attributable to an increase in interest on deposits of
$6.9 million, or 15.5% to $51.6 million in 1997 from $44.7
million in 1996. The increase in interest on deposits was due to
an increase of $123.5 million, or 11.1% in average deposits to
$1.24 billion in 1997 from $1.12 billion in 1996. The increase in
average deposits was due to inflows of $145.1 million in the
supermarket branches and $104.4 million in the traditional
branches.  The overall cost of deposits was 4.16% in 1997
compared to 4.00% in 1996.

Interest expense on certificate accounts increased by $6.9
million, or 21.2% to $39.3 million in 1997 from $32.4 million in
1996. The average balance of certificate accounts increased by
$105.8 million, or 18.5% to $678.6 million in 1997 from $572.8
million in 1996. The increase in average balances of certificate
accounts was primarily due to inflows of $98.4 million in the
supermarket branches and $82.1 million in the traditional
branches.  The average cost of certificates increased to 5.79% in
1997 from 5.66% in 1996.  In 1997, passbook accounts experienced
an excess of deposits over withdrawals of $14.0 million primarily
due to inflows into the supermarket branches of $28.7 million.
Certificates of deposit experienced an excess of deposits over
withdrawals of $141.3 million.  The Company's in-store branch
program accounted for $98.4 million of the increase in deposit
balances for certificates of deposit.  Money market accounts
decreased by $3.9 million during 1997.

Interest on borrowed funds increased by $6.1 million, or 36.6% to
$22.8 million in 1997 compared to $16.7 million in 1996. Borrowed
funds on an average basis increased by $103.1 million in 1997 due
to the addition of $25.0 million of capital securities issued by
Haven Capital Trust I and the addition of an $85.0 million
leverage program which was implemented during the first quarter
to offset the additional interest expense resulting from the
issuance of the capital securities. The average cost of
borrowings increased to 5.86% in 1997 from 5.84% in 1996.

NET INTEREST INCOME
Net interest income increased by $4.0 million, or 8.4% to $51.9
million in 1997 from $47.9 million in 1996. The average yield on
interest-earning assets decreased to 7.46% in 1997 from 7.50% in
1996, and the average cost of liabilities increased by 19 basis
points to 4.57% in 1997 from 4.38% in 1996 primarily due to the
growth in certificate of deposit accounts and the issuance of the
trust preferred securities. The net interest rate spread was
2.89% in 1997 compared to 3.12% in 1996.

PROVISION FOR LOAN LOSSES
The Bank provided $2.7 million for loan losses in 1997 compared
to $3.1 million in 1996. The provision for loan losses reflects
management's periodic review and evaluation of the loan
portfolio. The decrease in the provision for loan losses was
mainly due to the continued decline in non-performing loans to
$12.5 million at December 31, 1997 from $13.9 million at December
31, 1996.  As of December 31, 1997, the allowance for loan losses
was $12.5 million compared to $10.7 million at December 31, 1996.
As of December 31, 1997, the allowance for loan losses was 1.09%
of total loans compared to 1.26% of total loans at December 31,
1996. The decrease was attributable to the growth in the loan
portfolio and a decline in non-performing loans. The allowance
for loan losses was 99.97% of non-performing loans at December
31, 1997 compared to 77.05% at December 31, 1996.

NON-INTEREST INCOME
Non-interest income increased by $4.4 million, or 45.6% to $13.9
million in 1997 from $9.6 million in 1996. Fee income on savings
and checking accounts increased by $2.1 million, or 62.2%
primarily due to an increase of approximately 53,000 in the
number of savings and checking accounts. This growth was
primarily due to the Company's in-store branch program which
added approximately 48,000 savings and checking accounts during
1997.  Insurance, annuity and mutual fund fees increased by
$644,000, or 20.7% due to an increase of $185,000 in annuity
income and an increase of $471,000 in mutual fund income. The
increase in sales of annuity and mutual fund products by CFS
Investment Services, Inc. (formerly Columbia Investment Services,
Inc.) ("CFSI"), the Bank's wholly-owned subsidiary, is partially
due to the increased demand for alternative sources of
investments by the Bank's depositors and the addition of the
supermarket branches. Approximately 63% of CFSI sales were
external. Loan fees and servicing income increased by $1.3
million, or 72.1% to $3.1 million in 1997 from $1.8 million in
1996. The increase was attributable to a prepayment fee of $2.0
million on a commercial real estate loan during the fourth
quarter of 1997.  During 1997, the Company realized a net loss of
$5,000 on the sales of interest-earning assets.  Miscellaneous
income increased by $456,000, or 40.9% to $1.6 million in 1997
from $1.1 million in 1996.  The increase is primarily due to an
increase of $186,000 in fees on ATM surcharges and $142,000 due
to the close-out of CFSB Funding, Inc., the Bank's finance
subsidiary during 1997. Also, fee income on refinance
transactions increased by $67,000 from 1996.

NON-INTEREST EXPENSE
Non-interest expense increased by $7.4 million, or 19.2% to $45.8
million in 1997 from $38.5 million in 1996. Non-interest expense
for 1996 included a one-time SAIF recapitalization charge of $6.8
million which was paid during the fourth quarter of 1996.
Excluding this special assessment, non-interest expense increased
by $14.2 million, or 44.8% in 1997.  The Company's in-store
branch expansion program accounted for $11.5 million of the
increase in 1997.  Compensation and benefit costs increased by
$8.5 million, or 54.1% to $24.3 million in 1997 from $15.7
million in 1996.  The in-store branch expansion accounted for
$5.3 million of the increase in compensation costs since the Bank
added 226 employees for its supermarket branches in 1997.  Salary
costs for the Bank's subsidiary, CFSI, also increased by $540,000
due to higher sales volume.  Federal social security taxes
increased by $537,000 and the cost incurred for hospitalization,
group life insurance, federal and NYS unemployment insurance
increased by $431,000 from the prior year due to the increase in
staff.  ESOP compensation increased by $201,000 from 1996 due to
the increase in the average price of Haven Bancorp common stock
for the year.  Occupancy and equipment costs increased by $2.9
million, or 82.1% to $6.3 million in 1997 from $3.5 million in
1996 primarily due to the addition of 28 supermarket branches
during 1997 and a $150,000 charge for obsolete signage in
connection with the name change to CFS Bank.  REO operations, net
increased by $75,000, or 27.1% to $352,000 for 1997 from $277,000
for 1996.  The increase is due to a decline in profits realized
on the sale of REO properties since the REO portfolio, exclusive
of reserves, decreased to $542,000 at December 31, 1997 from $1.1
million at December 31, 1996.  The significant decrease in the
federal deposit insurance premium costs of $1.6 million was due
to a decrease in the assessment rate from 23 basis points in 1996
to 6.48 basis points in 1997.  Miscellaneous operating costs
increased by $4.3 million, or 44.1% to $14.2 million in 1997 from
$9.8 million in 1996.  Operating expenses including stationery,
telephone, postage and insurance increased by $1.6 million and
professional consulting fees increased by $555,000 from 1996
primarily due to the in-store branch program and services related
to the formation of Columbia Preferred Capital Corp. ("CPCC"),
the Bank's real estate investment trust ("REIT") subsidiary.  In
addition, the Bank incurred staff placement costs of $184,000
primarily for in-store branches in New Jersey and Connecticut.
Advertising costs increased by $430,000 due to the growth in both
the loan portfolio and deposit base.  NYCE and PLUS fees
increased by $122,000 also due to the growth in the deposit base.
Appraisal and credit costs increased by $162,000 during 1997 due
to the growth in the loan portfolio. Miscellaneous operating
losses increased by $416,000 because the results for 1996
included the reversal of a reserve regarding claims subsequently
paid by a check collection service.  Operating expenses for CFSI
increased by $209,000 due to higher sales volume.

INCOME TAX EXPENSE
Income tax expense was $6.1 million in 1997 compared to $6.4
million in 1996.  The effective tax rate for 1997 was 35.6%
compared to 40.6% for 1996.  The decrease in the effective tax
rate is due to several factors: first, during the first quarter
of 1997, a deferred tax liability of $330,000 was reversed
related to the potential recapture of the New York City tax bad
debt reserve which was no longer necessary due to New York City
tax legislation enacted earlier this year.  The New York City tax
law was amended in the first quarter of 1997 to conform to the
New York State tax treatment for bad debt reserve.  The
legislation "decouples" New York State's and New York City's
thrift bad debt provisions from the federal tax law and allows
for the use of the percentage of taxable income method ("PTI")
for computing the tax bad debt reserves.  The second factor which
contributed to the tax savings when compared to the prior period
was the switch to the PTI method for calculating the bad debt
deduction for New York City.  The final factor contributing to
the decline in the effective tax rate for 1997 was the
establishment of CPCC during the second quarter of 1997 which
resulted in certain tax savings. (See Note 9 to Notes to
Consolidated Financial Statements.)

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31,
1996 AND 1995

GENERAL
The Company reported net income of $9.4 million for 1996 compared
to a net income of $8.5 million for 1995. The $0.9 million
increase in earnings was primarily attributable to an increase of
$12.9 million in interest income, an increase of $0.5 million in
non-interest income and a reduction of $0.8 million in income tax
expense.  These factors were mainly offset by interest expense
which increased by $6.3 million, an increase of $0.4 million in
the provision for loan losses and non-interest expense which
increased by $6.7 million (which included the one-time $6.8
million SAIF assessment charge).

INTEREST INCOME
Interest income increased by $12.9 million, or 13.3% to $109.3
million in 1996 from $96.4 million in 1995. The increase was
primarily the result of an increase in interest income on
mortgage loans, and debt and equity securities which were
partially offset by a decrease in interest income on other loans
and money market investments.

Interest income on mortgage loans increased by $11.0 million, or
26.1% to $53.1 million in 1996 from $42.1 million in 1995
primarily as a result of an increase in the average mortgage loan
balance of $144.4 million partially offset by a decrease in
average yield on mortgage loans of 17 basis points. During 1996,
the Bank originated or purchased $354.9 million of mortgage loans
which included $172.3 million of one-to four-family mortgage
loans purchased in the secondary market during 1996.  Mortgage
loan originations for 1996 were originated at an average rate of
7.56% compared to 8.03% for 1995.  The decline in the average
rate for originations was primarily due to decreases in the rate
indices used for residential and commercial real estate loans.
These indices which are the 30 year treasury bond and the 5 year
treasury note declined 19 and 21 basis points, respectively, for
1996 when compared to 1995. Principal repayments totaled $78.2
million in 1996 compared to $67.0 million in 1995.

Interest income on other loans decreased by $577,000, or 13.7% to
$3.6 million in 1996 from $4.2 million in 1995 due to a decrease
of $4.5 million in average balances and a decline of 31 basis
points in the average yield. The Bank's consumer loan products
with the exception of equity loan/lines were discontinued in
November 1995. The consumer loan portfolio balance will continue
to amortize until all loans are satisfied except for the
overdraft line-of-credit product.

Interest income on MBSs was $37.5 million for both 1996 and 1995.
The average balance for 1996 decreased by $14.2 million, or 2.5%
to $543.8 million from $558.0 for 1995. This decrease was offset
by the average yield which increased by 18 basis points to 6.90%
for 1996 from 6.72% in 1995. During 1996, the Bank purchased
$161.1 million of MBSs for its AFS portfolio which were offset by
sales totaling $304.2 million. The average balance for 1996 was
down only $14.2 million because 96% of the net change in the MBS
portfolio occurred during the second half of 1996. The sales from
the AFS portfolio were used to fund mortgage loan originations,
purchases of loans in the secondary market and also for managing
the AFS portfolio to improve overall yield and shorten duration
of various securities. The improvement in the overall yield on
MBS securities was due to an increase in market rates during the
first quarter of 1996. During 1996, the Bank also purchased $38.4
million of MBSs for the held to maturity portfolio which were
offset by principal repayments totaling $32.0 million.

Interest income on money market investments decreased by
$163,000, or 48.1% to $176,000 in 1996 from $339,000 in 1995
primarily as a result of a decrease in average balances of $2.1
million in 1996. The decrease in the average balances is the
result of the Company's strategy to take advantage of its
liquidity and invest in higher yielding assets.

Interest on debt and equity securities increased by $2.6 million,
or 20.9% to $14.8 million in 1996 from $12.3 million in 1995
primarily as a result of an increase in the average balance of
$27.9 million and an increase in average yield of 37 basis
points. During 1996, the Company purchased $160.1 million of debt
and equity securities for its AFS portfolio which were offset by
sales totaling $63.5 million. The increase in the overall yield
to 6.51% from 6.14% was due to the acquisition of callable agency
securities and FNMA preferred stock. In addition, during 1996,
the Bank purchased $7.0 million of debt securities for the held
to maturity portfolio offset by principal repayments totaling
$37.5 million.

INTEREST EXPENSE
Interest expense increased by $6.3 million, or 11.3% to $61.4
million in 1996 from $55.1 million in 1995. The increase was
partially attributable to an increase in interest on deposits of
$2.6 million, or 6.2% to $44.7 million in 1996 from $42.1 million
in 1995. The increase in interest on deposits was due to an
increase of $64.0 million, or 6.1% in average deposits to $1.12
billion in 1996 from $1.05 billion in 1995. The overall cost of
deposits was 4.00% for both years.

Interest expense on certificate accounts increased by $3.0
million, or 10.2% to $32.4 million in 1996 from $29.4 million in
1995. The average balance of certificate accounts increased by
$68.8 million, or 13.6% to $572.8 million in 1996 from $504.0
million in 1995. The average cost of certificates decreased to
5.66% in 1996 from 5.84% in 1995. During most of 1996, the Bank
continued to experience net outflows from passbook accounts into
its certificates of deposit accounts. In 1996, passbook accounts
experienced an excess of withdrawals over deposits of $16.0
million, while certificates of deposit experienced an excess of
deposits over withdrawals of $36.8 million. Interest expense on
passbook accounts decreased by $791,000, or 7.8% to $9.3 million
in 1996 from $10.1 million in 1995 primarily due to a decrease in
average balances of $32.6 million due to customers seeking higher
yielding investment opportunities including the Bank's
certificates of deposit accounts. The Bank maintained its
passbook rate at 2.49% for both years.

Interest on borrowed funds increased by $3.6 million, or 27.8% to
$16.7 million in 1996 compared to $13.1 million in 1995. Borrowed
funds on an average basis increased by $85.2 million in 1996 due
to an increase in short-term advances with the Federal Home Loan
Bank ("FHLB") and reverse repurchase agreements with brokers to
provide funding for loan originations and partial funding for
residential loans purchased in the secondary market which
included two bulk purchases totaling approximately $70.0 million.
The average cost of borrowings decreased to 5.84% in 1996 from
6.50% in 1995 due to a reduction in short and intermediate term
rates during the end of 1995 and the beginning of 1996.

NET INTEREST INCOME
Net interest income increased by $6.6 million, or 15.9% to $47.9
million in 1996 from $41.3 million in 1995. The average yield on
interest-earning assets increased by 11 basis points to 7.50% in
1996 from 7.39% in 1995, and the average cost of liabilities
decreased by 2 basis points to 4.38% in 1996 from 4.40% in 1995.
The net interest rate spread was 3.12% in 1996 compared to 2.99%
in 1995.

PROVISION FOR LOAN LOSSES
The Bank provided $3.1 million for loan losses in 1996 compared
to $2.8 million in 1995. The provision for loan losses reflects
management's periodic review and evaluation of the loan
portfolio. The increase in the provision for loan losses was due
to the growth in the Bank's residential and commercial mortgage
loan portfolios. As of December 31, 1996, the allowance for loan
losses was $10.7 million compared to $8.6 million at December 31,
1995. As of December 31, 1996, the allowance for loan losses was
1.26% of total loans compared to 1.51% of total loans at December
31, 1995. The decrease was attributable to the growth in the loan
portfolio and a decline in non-performing loans. The allowance
for loan losses was 77.05% of non-performing loans at December
31, 1996 compared to 50.80% at December 31, 1995.

NON-INTEREST INCOME
Non-interest income increased by $532,000, or 5.9% to $9.6
million in 1996 from $9.0 million in 1995. Fee income on savings
and checking accounts increased by $517,000, or 18.1% primarily
due to an increase of approximately 16,000 in the number of
active accounts. Annuity, insurance and mutual fund fees
increased by $589,000, or 23.3% due to an increase of $224,000 in
annuity income, an increase of $200,000 in mutual fund income and
an increase of $165,000 in revenue from the distribution of
traditional life insurance products. The increase in sales of
annuity and mutual fund products by CFSI, the Bank's wholly-owned
subsidiary, is partially due to the increased demand for
alternative sources of investments by the Bank's depositors.
Approximately 45% of sales were from withdrawals of deposit
balances from the Bank. Finally, loan fees and servicing income
decreased by $434,000, or 19.4% to $1.8 million in 1996 from $2.2
million in 1995. The decrease was attributable to prepayment fees
on commercial real estate loans which were higher in 1995 due to
the prepayment of several large commercial real estate loans.
During 1996, the Company realized net gains of $371,000 on the
sales of AFS securities which were offset by an increase of
$228,000 in the valuation allowance on cooperative apartment
loans held for sale.

NON-INTEREST EXPENSE
Non-interest expense increased by $6.7 million, or 21.0% to $38.5
million in 1996 from $31.8 million in 1995. The increase in non-
interest expense was primarily due to the SAIF recapitalization
charge of $6.8 million which was recorded in the third quarter of
1996. On September 30, 1996, the President signed into law the
Deposit Insurance Funds Act of 1996 which empowered the Board of
Directors of the FDIC to impose and collect the assessment. The
special assessment rate was 65.7 basis points per $100 of insured
deposits at March 31, 1995. Compensation and benefit costs
increased by $848,000, or 5.7% to $15.7 million in 1996 from
$14.9 million in 1995. Salary costs increased by $1.6 million due
to normal merit increases, staff hired for the supermarket
banking program and an increase in commission costs for CFSI.
These factors were partially offset by a curtailment gain of
$266,000 which was recorded upon the freeze of the Bank's pension
plan as of July 1, 1996. The curtailment gain coupled with a
decrease in the normal accrual for 1996 reduced pension expense
by $462,000 when compared to the previous year. During 1996, the
Bank accrued a matching contribution for its employee 401(k)
contributions of $120,000. REO operations, net decreased by $1.1
million, or 80.3% to $277,000 for 1996 from $1.4 million for
1995. REO expenses incurred on properties in the portfolio
decreased by $669,000 and the provision for REO decreased by
$459,000, respectively, since the REO portfolio decreased by
$995,000, or 48.9% from the previous year. The annual premium
paid for SAIF insurance, exclusive of the SAIF assessment charge,
decreased by $326,000, or 12.3% to $2.3 million for 1996 from
$2.7 million for 1995 due to a reduction in the premium for the
fourth quarter of 1996 which included a rebate for the 1996
overassessment. Finally, other non-interest expenses increased by
$325,000, or 3.4% to $9.8 million for 1996 from $9.5 million for
1995. During 1996, advertising costs increased by $233,000 to
support the Bank's various products and for the implementation of
the supermarket banking program. Miscellaneous expenses increased
by $587,000 due to the settlement of two legal suits totaling
$150,000 and agency fees incurred to hire staff for the
supermarket program. These increases were partially offset by the
reversal of a reserve of $430,000 for potential losses relating
to checks in process of collection which were held by Nationar.
During 1996, the Bank recovered all of its previously outstanding
claims.

INCOME TAX EXPENSE
Income tax expense was $6.4 million in 1996 compared to $7.2
million in 1995. In the fourth quarter of 1996, the Company
recorded the benefit resulting from a change in the method it
used for determining the federal tax return treatment of its bad
debt reserve. This resulted in a reduction in its effective
federal tax rate for the fourth quarter of 1996 and the entire
year. In the third quarter of 1996, the Company recorded a tax
benefit relating to the method of computing its bad debt reserve
for New York State income tax purposes. Income tax expense for
1996 was reported at an effective tax rate of 40.6% compared to
45.8% in 1995. (See Note 9 to Notes to Consolidated Financial
Statements.)

NON-PERFORMING ASSETS
The following table sets forth information regarding non-
performing assets which include 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), accruing
restructured loans and real estate owned.

<TABLE>
<CAPTION>
                                      December 31,
(In thousands)                  1997      1996      1995
                               ------    ------    ------
<S>                           <C>        <C>       <C>
Non accrual loans:
One-to four-family            $ 3,534     4,083     3,800
Cooperative                       698       431       871
Multi-family                    2,531     1,463       967
Non-residential and other       3,633     4,756     4,167
                               ------    ------    ------
Total non-accrual loans        10,396    10,733     9,805
                               ------    ------    ------
Restructured loans:
One-to four-family                679       887       853
Cooperative                       290       486       494
Multi-family                    1,167     1,427     3,602
Non-residential and other        -          360     2,123
                               ------    ------    ------
Total restructured loans        2,136     3,160     7,072
                               ------    ------    ------
Total non-performing loans     12,532    13,893    16,877
                               ------    ------    ------
REO, net:
One-to four-family                126       266     1,148
Cooperative                       295       292       723
Multi-family                     -         -          156
Non-residential and other         121       561       184
                               ------    ------    ------
Total REO                         542     1,119     2,211
Less allowance for REO            (87)      (81)     (178)
                               ------    ------    ------
REO, net                          455     1,038     2,033
                               ------    ------    ------
Total non-performing assets   $12,987    14,931    18,910
                               ======    ======    ======
</TABLE>

The Company's expanded loan workout/resolution efforts have
successfully contributed toward reducing non-performing assets to
manageable levels. Since year-end 1995, non-performing assets
have declined by $5.9 million, or 31.3%, from a level of $18.9
million to $13.0 million at year-end 1997. The decrease in non-
performing assets is reflected in the following ratios: Non-
performing loans to total loans was 1.09% for 1997 compared to
1.64% for 1996 and 2.97% for 1995; Non-performing assets to total
assets was 0.66% for 1997 compared to 0.94% for 1996 and 1.28%
for 1995 and Non-performing loans to total assets was 0.63% for
1997 compared to 0.87% for 1996 and 1.15% for 1995. There can be
no assurance that non-performing assets will continue to decline.

The decrease in non-performing assets in 1997 was primarily due
to continued sales of REO properties and a continued decline in
non-performing loans. During 1997, the Company sold 37 REO
properties with a fair value of $1.4 million. Total restructured
loans decreased by $1.0 million during 1997 due to transfers to
classified loan status and the REO portfolio. Total non-accrual
loans decreased by $337,000 during 1997.

The decrease in non-performing assets in 1996 was primarily due
to continued sales of REO properties and a continued decline in
non-performing loans. During 1996, the Company sold 60 REO
properties with a fair value of $3.1 million. During 1996, 2
restructured loans with a balance of $2.1 million were
reclassified to performing loans since they had performed in
accordance with their modified terms for a period of 18 months
and are no longer considered classified assets. Total non-accrual
loans increased by $928,000 during 1996 due to an increase in
non-residential loans.

LIQUIDITY
The Bank is required to maintain minimum levels of liquid assets
as defined by the OTS regulations. This requirement, which may be
varied by the OTS depending upon economic conditions and deposit
flows, is based upon a percentage of withdrawable deposits and
short-term borrowings. The required ratio is currently 4%. The
Bank's ratio was 8.94 % at December 31, 1997 compared to 14.99%
at December 31, 1996.

The Company's primary sources of funds are deposits, principal
and interest payments on loans, debt securities and MBSs,
retained earnings and advances from FHLB and other borrowings.
Proceeds from the sale of AFS securities are also a source of
funding, as are, to a lesser extent, the sales of annuities,
insurance and securities brokerage activities conducted by the
Bank's wholly-owned subsidiary, CFSI. While maturities and
scheduled amortization of loans and securities are somewhat
predictable sources of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates,
economic conditions, competition and regulatory changes.

The Company's most liquid assets are cash and short term
investments. The levels of these assets are dependent on the
Company's operating, financing, lending and investing activities
during any given period. At December 31, 1997 and December 31,
1996, cash and short term investments totaled $40.3 million and
$35.7 million, respectively.

The Company and the Bank have other sources of liquidity which
include debt securities maturing within one year and AFS
securities. Other sources of funds include FHLB advances, which
at December 31, 1997, totaled $247.0 million. If needed, the Bank
may borrow an additional $3.9 million from the FHLB.

The Company's cash flows are comprised of three primary
classifications: cash flows from operating activities; investing
activities and financing activities. Net cash provided by (used
in) operating activities, consisting primarily of interest and
dividends received less interest paid on deposits were $26.0
million, $10.7 million and $(8.3) million for the years ended
December 31, 1997, 1996 and 1995, respectively. Net cash used in
investing activities, consisting primarily of disbursements of
loan originations and securities purchases, offset by principal
collections on loans and proceeds from maturities of securities
held to maturity or sales of AFS securities or disposition of
assets including REO were $385.8 million, $117.6 million and
$197.6 million for the years ended December 31, 1997, 1996 and
1995, respectively. Net cash provided by financing activities,
consisting primarily of net activity in deposits and borrowings,
purchases of treasury stock, payments of common stock dividends
and proceeds from stock options exercised were $364.4 million,
$103.7 million and $214.3 million for the years ended December
31, 1997, 1996 and 1995, respectively.

At December 31, 1997, the Bank had outstanding loan commitments
to originate $77.4 million of loans. The Bank also had
commitments to purchase $10.0 million of MBSs. The Bank believes
that it will have sufficient funds available to meet these
commitments. At December 31, 1997, certificates of deposit which
are scheduled to mature in one year or less totaled $595.7
million.

CAPITAL RESOURCES
See Note 14 to Notes to Consolidated Financial Statements.

INFLATION AND CHANGING PRICES
The consolidated financial statements and notes thereto presented
herein have been prepared in accordance with generally accepted
accounting principles, which require the measurement of financial
position and operating results in terms of historical dollars
without considering the changes in the relative purchasing power
of money over time and changes due to inflation. The impact of
inflation is reflected in the increased cost of the Bank's
operations. Unlike most industrial companies, nearly all the
assets and liabilities of the Bank are monetary. As a result,
interest rates have a greater impact on the Bank's performance
than do the effects of general levels of inflation. Interest
rates do not necessarily move in the same direction or to the
same extent as the price of goods and services.

COMPUTER ISSUES FOR THE YEAR 2000
As a financial services company, the Bank is aware of the
potential issues the year 2000 could have on its computer systems
and programs.  During fiscal year 1997, the Bank initiated a
review of its computer systems and programs to determine which,
if any, systems and programs are not capable of recognizing the
year 2000.  Communications were initiated with all of the Bank's
vendors that supply the Bank with these systems and programs.
The Bank's efforts to determine what, if any, issues exist have
been substantially completed.  Where the potential computer
issues for the year 2000 have been identified, vendors have
committed to resolving such issues by no later than December 31,
1998. Management has not yet determined the total financial
impact of resolving year 2000 computer issues.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
See Note 1 to Notes to Consolidated Financial Statements.

STOCK DATA
Haven common stock, listed under the symbol HAVN is publicly
traded on the Nasdaq Stock Market. As of March 4, 1998, the
Company had approximately 428 stockholders of record (not
including the number of persons or entities holding stock in
nominee or street name through various brokerage firms) and
8,835,588 outstanding shares of common stock (excluding treasury
shares). The common stock traded in a high and low range of $23
and $137/8  during the year ended December 31, 1997 which have
been adjusted to reflect the stock split.



















































      CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                     December 31, December 31,
(Dollars in thousands, except for share data)            1997         1996
<S>                                                  <C>          <C>
ASSETS
Cash and due from banks                               $   35,745       28,848
Money market investments                                   4,561        6,869
Securities available for sale (note 2)                   499,380      370,105
Debt securities held to maturity (estimated
  fair value of $66,372 and $96,324 in 1997
  and 1996, respectively) (note 3)                        66,404       97,307
Federal Home Loan Bank of NY Stock, at cost               12,885        9,890
Mortgage-backed securities held to maturity
  (estimated fair value of $163,326 and $195,682
  in 1997 and 1996, respectively) (notes 4 and 8)        163,057      197,940
Loans (note 5):
First mortgage loans                                   1,098,894      793,556
Cooperative apartment loans                               19,596       19,936
Other loans                                               32,291       34,094
                                                       ---------    ---------
Total loans                                            1,150,781      847,586
Less allowance for loan losses (note 6)                  (12,528)     (10,704)
                                                       ---------    ---------
Loans, net                                             1,138,253      836,882
Premises and equipment, net (note 13)                     27,062        8,820
Accrued interest receivable (notes 2, 3, 4 and 5)         12,429       12,172
Other assets (note 9)                                     15,114       14,712
                                                       ---------    ---------
Total assets                                          $1,974,890    1,583,545
                                                       =========    =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits (note 7)                                     $1,365,012    1,137,788
Borrowed funds (note 8)                                  466,794      326,433
Mortgagors' escrow balances                                3,234        4,621
Due to broker                                             10,000        1,000
Other liabilities (note 9)                                16,985       14,319
                                                       ---------    ---------
Total liabilities                                      1,862,025    1,484,161
                                                       ---------    ---------
Commitments and contingencies (notes 6 and 13)
Stockholders' Equity(1) (note 14):
Preferred stock, $.01 par value, 2,000,000 shares
  authorized, none issued                                   -            -
Common stock, $.01 par value, 10,500,000 shares
  authorized, 9,918,750 issued; 8,784,700 and
  8,650,814 shares outstanding in 1997 and 1996,
  respectively                                               100          100
Additional paid-in capital                                50,065       48,794
Retained earnings, substantially restricted (note 14)     73,567       65,092
Unrealized gain (loss) on securities available for
  sale, net of tax effect (note 2)                         1,671         (840)
Treasury stock, at cost (1,134,050 and 1,267,936
  shares in 1997 and 1996, respectively)                 (10,246)     (11,049)
Unallocated common stock held by ESOP (note 11)           (1,529)      (1,854)
Unearned common stock held by Bank's Recognition
  Plans and Trusts (note 11)                                (364)        (267)
Unearned compensation (note 11)                             (399)        (592)
                                                       ---------    ---------
Total stockholders' equity                               112,865       99,384
                                                       ---------    ---------
Total liabilities and stockholders' equity            $1,974,890    1,583,545
                                                       =========    =========
</TABLE>

(1) Share amounts reflect the 2-for-1 stock split effective
November 1997.

See accompanying notes to consolidated financial statements.


                  CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                         Years Ended December 31,
(Dollars in thousands, except per share data)           1997       1996       1995
<S>                                                  <C>        <C>        <C>
Interest income:
Mortgage loans                                     $   75,266     53,110     42,115
Other loans                                             3,220      3,638      4,215
Mortgage-backed securities                             32,755     37,517     37,510
Money market investments                                  343        176        339
Debt and equity securities                             14,722     14,812     12,255
                                                      -------    -------     ------
Total interest income                                 126,306    109,253     96,434
                                                      -------    -------     ------
Interest expense:
Deposits:
Passbook accounts                                       9,338      9,314     10,105
NOW accounts                                            1,130        999        939
Money market accounts                                   1,823      1,929      1,585
Certificate accounts                                   39,309     32,436     29,426
Borrowings                                             22,800     16,690     13,060
                                                      -------    -------     ------
Total interest expense                                 74,400     61,368     55,115
                                                      -------    -------     ------
Net interest income before provision for loan losses   51,906     47,885     41,319
Provision for loan losses (note 6)                      2,750      3,125      2,775
                                                      -------    -------     ------
Net interest income after provision for loan losses    49,156     44,760     38,544
                                                      -------    -------     ------
Non-interest income:
Loan fees and servicing income                          3,110      1,807      2,241
Savings/checking fees                                   5,478      3,378      2,861
Net (loss) gain on sales of interest-earning assets        (5)       140        126
Insurance annuity and mutual funds fees                 3,758      3,114      2,525
Other                                                   1,571      1,115      1,269
Total non-interest income                              13,912      9,554      9,022
Non-interest expense:
Compensation and benefits (notes 10 and 11)            24,251     15,737     14,889
Occupancy and equipment (note 13)                       6,334      3,478      3,334
Real estate owned operations, net                         352        277      1,405
SAIF recapitalization charge (note 7)                    -         6,800       -
Federal deposit insurance premiums                        736      2,327      2,653
Other                                                  14,174      9,836      9,511
                                                      -------    -------     ------
Total non-interest expense                             45,847     38,455     31,792
                                                      -------    -------     ------
Income before income tax expense                       17,221     15,859     15,774
Income tax expense (note 9)                             6,138      6,434      7,230
                                                      -------    -------     ------
Net income                                            $11,083      9,425      8,544
                                                      =======    =======     ======
Net income per common share:(1)  Basic                $  1.32       1.13       0.99
                                 Diluted              $  1.24       1.08       0.96
                                                      =======    =======     ======
</TABLE>
(1) Per share amounts reflect the 2-for-1 stock split effective
November 1997.

See accompanying notes to consolidated financial statements.











                CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                         The three years ended December 31, 1997
<TABLE>
<CAPTION>
                                                                 Unrealized
                                                                 Gain (Loss)           Unallocated  Unearned
                                            Additional          on Securities            Common      Common
                                     Common  Paid-In   Retained   Available   Treasury Stock Held  Stock Held   Unearned
                                     Stock   Capital   Earnings   for Sale     Stock     by ESOP     by RRPs  Compensation Total
                                     ------ ---------- -------- ------------- -------- ----------- ---------- ------------ -----
                                                           (In thousands of dollars, except for share data)
<S>                                  <C>    <C>        <C>      <C>           <C>      <C>         <C>        <C>         <C>
Balance at December 31, 1994         $ 100    46,445     50,331    (1,880)     (5,093)   (2,725)      (943)         -     86,235
Net income                              -       -         8,544       -           -         -          -            -      8,544
Dividends declared                      -       -          (902)      -           -         -          -            -       (902)
Purchase of treasury stock
  (151,140 shares)                      -       -          -          -        (1,360)      -          -            -     (1,360)
Reissued Treasury Stock contributed
  to RRP (19,836 shares)                -         49       -          -           119       -         (168)         -       -
Stock options exercised and
  related tax effect (51,406 shares)    -         45        (54)      -           311       -          -            -        302
Unrealized appreciation on
  securities transferred from
  held to maturity to available
  for sale, net of tax effect           -       -          -        2,091         -         -          -            -      2,091
Change in unrealized appreciation
  (depreciation) on securities
  available for sale, net of
  tax effect                            -       -          -        1,872         -         -          -            -      1,872
Allocation of ESOP stock and
  amortization of award of RRP
  stock and related tax benefits                 742                                        528        467                 1,737
                                      ----    ------     ------     -----      ------    ------      ------       ----    ------
Balance at December 31, 1995           100    47,281     57,919     2,083      (6,023)   (2,197)      (644)         -     98,519
Net income                              -       -         9,425       -           -         -          -            -      9,425
Dividends declared                      -       -        (2,229)      -           -         -          -            -     (2,229)
Purchase of treasury stock
  (451,074 shares)                      -       -          -          -        (5,516)      -          -            -     (5,516)
Treasury Stock issued for deferred
  compensation plan (60,162 shares)     -        401       -          -           372       -          -           (782)    -
Stock options exercised and related
  tax effect (18,812 shares)            -        104        (23)      -           118       -          -            -        199
Change in unrealized appreciation
  (depreciation) on securities
  available for sale, net of
  tax effect                            -       -          -       (2,923)        -         -          -            -     (2,923)
Allocation of ESOP stock and
  amortization of award of RRP stock
  and related tax benefits              -        999       -         -            -         343       377           -      1,719
Amortization of deferred compensation
  plan                                                                                                             190       190
                                      ----    ------     ------     -----      ------    ------      ------       ----    ------
Balance at December 31, 1996           100    48,794     65,092      (840)    (11,049)   (1,854)     (267)        (592)   99,384
Net income                              -       -        11,083      -            -         -          -            -     11,083
Dividends declared                      -       -        (2,608)     -            -         -          -            -     (2,608)


Reissued treasury stock contributed
  to RRP and deferred compensation
  plan (18,904 shares)                  -        236       -         -            113       -        (206)        (143)     -
Stock options exercised and related
tax effect (114,982 shares)             -        116       -         -            690       -          -            -         806
Change in unrealized appreciation
  (depreciation) on securities
  available for sale, net of
  tax effect                                                        2,511                                                   2,511
Allocation of ESOP stock and
  amortization of award of RRP stock
  and related tax benefits                       919                                        325       109                   1,353
Amortization of deferred compensation
  plan                                                                                                             336        336
                                      ----    ------     ------     -----      ------    ------      ------       ----    ------
Balance at December 31, 1997         $ 100    50,065     73,567     1,671     (10,246)   (1,529)     (364)        (399)   112,865

</TABLE>

(1) Share amounts reflect the 2-for-1 stock split effective
November 1997.

See accompanying notes to consolidated financial statements.





















               CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                            Years Ended December 31,
(Dollars in thousands)                                      1997      1996      1995
<S>                                                       <C>       <C>       <C>
Cash flows from operating activities:
Net income                                                $11,083     9,425     8,544
Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating activities:
Amortization of cost of stock benefit plans                 1,689     1,909     1,737
Amortization of net deferred loan origination fees           (231)     (245)     (433)
Premiums and discounts on loans, mortgage-backed
  and debt securities                                         210       233       390
Provision for loan losses                                   2,750     3,125     2,775
Provision for losses on real estate owned                     251       291       750
Deferred income taxes                                      (1,540)      230     5,232
Net loss (gain) on sales of interest-earning assets             5      (140)     (126)
Depreciation and amortization                               1,592       878       925
Increase in accrued interest receivable                      (257)   (1,436)   (2,163)
Increase (decrease)  in due to broker                       9,000    (4,000)  (25,800)
Increase in other liabilities                               2,702     2,278     1,682
Increase in other assets                                   (1,265)   (1,804)   (1,844)
                                                          -------   -------   -------
Net cash provided by (used in) operating activities        25,989    10,744    (8,331)
                                                          -------   -------   -------
Cash flows from investing activities:
Net increase in loans                                    (306,328) (269,343)  (65,505)
Proceeds from disposition of assets (including REO)         2,785     4,313     9,703
Purchases of securities available for sale               (511,075) (321,162)  (28,964)
Principal repayments on securities available for sale      48,377    73,472     2,800
Proceeds from sales of securities available for sale      337,696   374,840    25,152
Purchases of debt securities held to maturity                -       (6,989)  (99,022)
Principal repayments, maturities and calls on debt
  securities held to maturity                              30,954    37,511    60,693
Purchases of mortgage-backed securities held to maturity     -      (38,357) (175,859)
Principal repayment on mortgage-backed securities
  held to maturity                                         34,660    32,004    74,163
Purchases of Federal Home Loan Bank Stock, net             (2,995)   (1,752)   (1,250)
Net (increase) decrease in premises and equipment         (19,834)   (2,108)      483
                                                          -------   -------   -------
Net cash used in investing activities                    (385,760) (117,571) (197,606)
                                                          -------   -------   -------
Cash flows from financing activities:
Net increase in deposits                                  227,224    54,342    70,284
Net increase in borrowed funds                            140,361    55,850   145,502
(Decrease) increase in mortgagors' escrow balances         (1,387)    1,394        90
Purchase of treasury stock                                   -       (5,516)   (1,360)
Payment of common stock dividends                          (2,598)   (2,475)     (454)
Stock options exercised                                       760        95       257
                                                          -------   -------   -------
Net cash provided by financing activities                 364,360   103,690   214,319
                                                          -------   -------   -------
Net increase (decrease) in cash and cash equivalents        4,589    (3,137)    8,382
Cash and cash equivalents at beginning of year             35,717    38,854    30,472
                                                          -------   -------   -------
Cash and cash equivalents at end of year                 $ 40,306    35,717    38,854
                                                          =======   =======   =======
Supplemental information:
Cash paid during the year for:
Interest                                                 $ 73,757    60,187    54,042
Income taxes5,893 7,824 685
Additions to real estate owned                              1,695     3,470     4,638
Loans transferred (from) to loans held for sale              -      (10,594)   12,038
Securities purchased not yet received                      10,000     1,000     5,000
Mortgage-backed securities and debt securities
  held to maturity transferred to securities
  available for sale                                         -         -      447,200
                                                          =======   =======   =======
</TABLE>
See accompanying notes to consolidated financial statements.





        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Haven Bancorp, Inc. (the "Holding Company") was formed on March
25, 1993, as the holding company for CFS Bank, formerly known as
Columbia Federal Savings Bank (the "Bank"). On September 23,
1993, the Holding Company completed its initial public offering
of 9,918,750 shares of common stock in connection with the Bank's
conversion from a federally chartered mutual savings bank to a
federally chartered stock savings bank (the "Conversion").
Concurrent with the conversion process, the Holding Company
acquired all of the issued and outstanding stock of the Bank with
a portion of the net proceeds.

The accounting and reporting policies of the Holding Company and
the Bank and its subsidiaries (the "Company") conform to
generally accepted accounting principles and to general practices
within the banking industry. The following summarizes the
significant policies and practices:

PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of the Holding Company and its subsidiary, the Bank, and
its wholly-owned subsidiaries. All significant intercompany
transactions and balances are eliminated in consolidation. In
preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of each
consolidated statement of financial condition and revenues and
expenses for the year then ended. Actual results could differ
from those estimates.

For purposes of reporting cash flows, cash and cash equivalents
include cash and due from banks and money market investments.
On October 23, 1997, the Company's Board of Directors approved a
two-for-one common stock split. The additional shares were issued
on November 28, 1997 to shareholders of record on October 31,
1997. The par value of the Company's common stock remains
unchanged at $.01. Accordingly, all information with respect to
shares of common stock fully reflects the stock split.

MONEY MARKET INVESTMENTS
Money market investments represent instruments with maturities of
ninety days or less. These investments are carried at cost,
adjusted for premiums and discounts which are recognized in
interest income over the period to maturity.

DEBT, EQUITY AND MORTGAGE-BACKED SECURITIES
Debt and mortgage-backed securities ("MBSs") which the Company
has the positive intent and ability to hold until maturity are
carried at cost, adjusted for amortization of premiums and
accretion of discounts on a level yield method over the remaining
period to contractual maturity, adjusted, in the case of MBSs,
for actual prepayments. Debt and equity securities and MBSs to be
held for indefinite periods of time and not intended to be held
to maturity are classified as available for sale securities and
are recorded at fair value, with unrealized gains (losses), net
of tax, reported as a separate component of stockholders' equity.
Gains and losses on the sale of securities are determined using
the specific identification method and are included in non-
interest income.

LOANS
Loans are carried at their unpaid principal balances, less
unearned discounts, net deferred loan origination fees and the
allowance for loan losses. Purchased loans are recorded at cost.
Related premiums or discounts are amortized to expense or
accreted to income using the level-yield method over the
estimated life of the loans.

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"
require that impaired loans that are within their scope be
measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate or as a
practical expedient, at the loan's current observable market
price, or the fair value of the collateral if the loan is
collateral dependent. The amount by which the recorded investment
of an impaired loan exceeds the measurement value is recognized
by creating a valuation allowance through a charge to the
provision for loan losses. SFAS No. 114 does not apply to those
large groups of smaller-balance homogeneous loans that are
collectively evaluated for impairment, which, for the Company,
include one-to four-family first mortgage loans and cooperative
apartment loans ("residential loans") and consumer loans.

Loans individually reviewed for impairment by the Company within
the scope of SFAS No. 114 are limited to loans modified in
a troubled debt restructuring ("TDR") and commercial and multi-
family first mortgage loans. The measurement value of the
Company's impaired loans was based on the fair value of the
underlying collateral. The Company's impaired loan identification
and measurement process are conducted in conjunction with the
Company's review of the adequacy of its allowance for loan
losses. Specific factors utilized in the impaired loan
identification process include, but are not limited to,
delinquency status, loan-to-value ratio, the condition of the
underlying collateral, credit history and debt coverage. At a
minimum, such loans are classified as impaired by the Company
when they become past due 90 days. A loan modified in a TDR
subsequent to the adoption of SFAS No. 114 (prospectively on
January 1, 1995) is, except as noted, considered impaired. A loan
modified in a TDR subsequent to the adoption of SFAS No. 114 is
not considered impaired in years following the restructuring if
the restructuring agreement specifies an interest rate equal to
or greater than the rate the Company was willing to accept at the
restructuring date for a new loan with comparable risk and the
loan is not impaired based on the terms of the restructuring
agreement. Loans that were modified in a TDR prior to the
Company's adoption of SFAS No. 114 that are not considered
impaired based on the terms of the restructuring agreement
continue to be accounted for under SFAS No. 15, "Accounting by
Debtors and Creditors for Troubled Debt Restructurings."

The Company places loans, including impaired loans, on non-
accrual status when they become past due 90 days. All interest
previously accrued and not collected is reversed against interest
income, and income is subsequently recognized only to the extent
cash is received until, in management's judgement, a return to
accrual status is warranted.

Cash receipts on impaired loans are applied to principal and
interest in accordance with the contractual terms of the loan
unless full payment of principal is not expected, in which case,
both principal and interest payments received are applied as a
reduction of the carrying value of the loan. For non-performing
impaired loans, interest income is recognized to the extent
received in cash and not otherwise utilized to reduce the
carrying value of the loan. For impaired loans not classified as
non-performing by the Company, interest income is recognized on
an accrual basis as the Company anticipates the full payment of
principal and interest due. The Company's policy is to recognize
income on a cash basis for TDRs for a period of six months, after
which such loans are returned to an accrual status.

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 SFAS No. 114. The total
allowance for loan losses has been determined in accordance with
the provisions of SFAS No. 5, "Accounting for Contingencies." The
Company'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 Company 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
ability to repay, the estimated value of any underlying
collateral, current and prospective economic conditions and
current regulatory guidance.

Management believes that the allowance for loan losses is
adequate. While Management uses available information to
recognize losses on loans, future additions to the allowance may
be necessary based on changes in economic conditions and the
reviews of various regulatory agencies.

Loan fees received and certain direct loan origination costs are
deferred, and the net fee or cost is recognized in income using
the interest method over the contractual lives of the related
loans, adjusted for estimated prepayments.

PREMISES AND EQUIPMENT
Land is carried at cost. Buildings, leasehold improvements,
furniture, fixtures and equipment are carried at cost, less
accumulated depreciation and amortization. Premises and equipment
are depreciated using the straight-line method over the estimated
useful lives of the respective assets except for leasehold
improvements which are amortized over the related lease term or
estimated useful life.

REAL ESTATE OWNED
Real estate properties acquired through loan foreclosure are
recorded at the lower of cost or estimated fair value less
estimated selling costs at the time of foreclosure. Subsequent
valuations are periodically performed by management and the
carrying value may be adjusted by a valuation allowance,
established through charges to income and included in real estate
operations, net to reflect subsequent declines in the estimated
fair value of the real estate. REO is shown net of the allowance.
Operating results of REO, including rental income, operating
expenses, and gains and losses realized from the sales of
properties owned, are also recorded in real estate operations,
net.

REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are accounted for as financing
transactions. Accordingly, the collateral securities continue to
be carried as assets and a borrowing liability is established for
the transaction proceeds.

INCOME TAXES
The Company utilizes the asset and liability method of accounting
for income taxes. Under the asset and liability method, deferred
income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets
and liabilities. The effect on deferred taxes of a change in tax
rates is recognized in income in the period that includes the
enactment date. Additionally, the recognition of net deferred tax
assets is based upon the likelihood of realization of tax
benefits in the future. A valuation allowance would be provided
for deferred tax assets which are determined more than likely not
to be realized.

BENEFIT PLANS
The Company maintains various pension, savings, employee stock
ownership and other benefit plans and programs for its employees,
including the Bank's Retirement Plan covering substantially all
employees who have attained minimum service requirements. The
Bank's funding policy is to make contributions to the plan at
least equal to the amounts required by applicable Internal
Revenue Service regulations. The Bank periodically evaluates the
overall effectiveness and economic value of such programs, in the
interest of maintaining a comprehensive benefit package for
employees. Based on an evaluation of the Retirement Plan in 1996,
the Bank concluded that future benefit accruals under the
Retirement Plan would cease, or "freeze" on July 1, 1996.
Although the benefit accruals are frozen, the Bank will continue
to maintain and provide benefits under its Employee Stock
Ownership Plan ("ESOP") and Employee 401(k) Thrift Incentive
Savings Plan ("401(k) Plan"). In connection with the Retirement
Plan "freeze," the Bank resumed its matching of contributions to
the 401(k) Plan on July 1, 1996.

Post-retirement and post-employment benefits are recorded on an
accrual basis with an annual provision that recognizes the
expense over the service life of the employee, determined on an
actuarial basis.

STOCK COMPENSATION PLANS
Effective January 1, 1996, the Company adopted SFAS No. 123,
"Accounting for Stock-Based Compensation."  SFAS No. 123 permits
either the recognition of compensation cost for the estimated
fair value of employee stock-based compensation arrangements on
the date of grant, or the continued application of APB Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25")
in accounting for its plans with disclosure in the notes to the
financial statements of the pro forma effects on net income and
earnings per share, determined as if the fair value-based method
had been applied in measuring compensation cost.  The Company has
adopted the disclosure option.  Accordingly, no compensation cost
has been recognized for the Company's stock option plans.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
The Company has utilized interest rate caps to manage its
interest rate risk. Generally, the net settlements on such
transactions used as hedges of non-trading liabilities are
accrued as an adjustment to interest expense over the life of the
agreements.

NET INCOME (LOSS) PER COMMON SHARE
The Company adopted SFAS No. 128, "Accounting for Earnings Per
Share" effective December 15, 1997.  SFAS No. 128 requires
restatement of all prior-period earnings per share ("EPS") data
presented.  SFAS No. 128 replaces the presentation of primary EPS
with a presentation of basic EPS.  Basic EPS excludes dilution
and is computed by dividing income available to common
stockholders by the weighted average number of common shares
outstanding for the relevant period.  The weighted average number
of shares outstanding does not include shares which are
unallocated by the ESOP in accordance with American Institute of
CPAs ("AICPA") Statement of Position ("SOP") 93-6, "Employers
Accounting for ESOPs."  Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock
that then shares in the earnings of the entity.  Diluted EPS is
computed similarly to fully diluted EPS pursuant to APB No. 15
"Earnings Per Share."

RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 130, "Reporting Comprehensive Income."  The
Statement establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses,
gains, and losses) in a full set of general-purpose financial
statements.  Comprehensive income is defined as the change in
equity of a business enterprise during a period from transactions
and other events and circumstances from nonowner sources.  SFAS
No. 130 requires that all items that are required to be
recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements.
SFAS No. 130 also requires that an enterprise (a) classify items
of other comprehensive income by their nature in a financial
statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a statement
of financial position.  SFAS No. 130 is effective for fiscal
years beginning after December 15, 1997.  Reclassification of
prior periods will be required.  Management has not completed its
review of SFAS No. 130, and has not determined the impact, if
any, that adoption of SFAS No. 130 will have on the Company.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information."  The
Statement establishes standards for the way an enterprise reports
information about operating segments in annual financial
statements and requires that enterprises report selected
information about operating segments in interim financial reports
issued to shareholders.  Operating segments are components of an
enterprise about which separate financial information is
available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in
assessing performance.  The Statement requires a reconciliation
of total segment revenue and expense items and segment assets to
the amounts in the enterprise's financial statements.  The
Statement also requires a descriptive report on how the operating
segments were determined, the products and services provided by
the operating segments, and any measurement differences used for
segment reporting and financial statement reporting.  SFAS No.
131 is effective for fiscal years beginning after December 15,
1997.  In the initial year of application, comparative
information for earlier years is to be restated.  Management has
not completed its review of SFAS No. 131, but does not anticipate
that the adoption of SFAS No. 131 will have a significant effect
on the Company.



2.  SECURITIES AVAILABLE FOR SALE

The amortized cost and estimated fair values of securities
available for sale at December 31 are summarized as follows:
<TABLE>
<CAPTION>
                                                              Gross       Gross    Estimated
                                                 Amortized  unrealized  unrealized   fair
(In thousands)                                     Cost       gains       losses     value
<S>                                              <C>        <C>         <C>        <C>
1997
Debt and equity securities available for sale:
  U.S. Government and agency obligations         $115,466        285      (1,093)   114,658
  Preferred stock                                   4,095         38         (10)     4,123
                                                  -------      -----       -----    -------
                                                  119,561        323      (1,103)   118,781
                                                  -------      -----       -----    -------
MBSs available for sale:
  GNMA Certificates                                   943         39         -          982
  FNMA Certificates                                45,860        556        (531)    45,885
  FHLMC Certificates                               62,649      1,074         (85)    63,638
  CMOs and REMICs                                 267,754      3,228        (888)   270,094
                                                  -------      -----       -----    -------
                                                  377,206      4,897      (1,504)   380,599
                                                  -------      -----       -----    -------
Total                                            $496,767      5,220      (2,607)   499,380
                                                  =======      =====       =====    =======
1996
Debt and equity securities available for sale:
  U.S. Government and agency obligations         $121,647        163      (3,058)   118,752
  Preferred stock                                  26,896        433         -       27,329
                                                  -------      -----       -----    -------
                                                  148,543        596      (3,058)   146,081
                                                  -------      -----       -----    -------
MBSs available for sale:
  GNMA Certificates                                   949         34         -          983
  FNMA Certificates                                38,230        518         (26)    38,722
  FHLMC Certificates                               56,863      1,226         (25)    58,064
  CMOs and REMICs                                 126,942        230        (917)   126,255
                                                  -------      -----       -----    -------
                                                  222,984      2,008        (968)   224,024
                                                  -------      -----       -----    -------
Total                                            $371,527      2,604      (4,026)   370,105
                                                  =======      =====       =====    =======
</TABLE>

Gross gains of approximately $1,044,000, $1,948,000 and $126,000
for the years ended December 31, 1997, 1996 and 1995,
respectively, were realized on sales of securities available for
sale. Gross losses amounted to approximately $1,064,000 and
$1,577,000 for the years ended December 31, 1997 and 1996,
respectively. There were no gross losses during the year ended
December 31, 1995.

The Company's portfolio of MBSs available for sale has an
estimated weighted average expected life of approximately 7 years
at December 31, 1997. At December 31, 1997, $250.5 million of
MBSs available for sale were adjustable-rate securities.
U.S. Government and agency obligations at December 31, 1997 had
contractual maturities between April 30, 1999 and June 25, 2024.
Accrued interest receivable on securities available for sale
amounted to approximately $4,286,000 and $4,848,000 at December
31, 1997 and 1996, respectively.

3.  DEBT SECURITIES HELD TO MATURITY

The amortized cost, gross unrealized gains and losses and
estimated fair values of debt securities held to maturity at
December 31 are summarized as follows:
<TABLE>
<CAPTION>

                                                              Gross       Gross    Estimated
                                                 Amortized  unrealized  unrealized   fair
(In thousands)                                     Cost       gains       losses     value
<S>                                              <C>        <C>         <C>        <C>
1997
U.S. Government and agency obligations           $ 21,014        70          (27)    21,057
Corporate debt securities                          45,390        31         (106)    45,315
                                                  -------      ----        -----    -------
Total                                            $ 66,404       101         (133)    66,372
                                                  =======      ====        =====    =======
1996
U.S. Government and agency obligations           $ 51,957        16         (876)    51,097
Corporate debt securities                          45,350        46         (169)    45,227
                                                  -------      ----        -----    -------
Total                                            $ 97,307        62       (1,045)    96,324
                                                  =======      ====        =====    =======
</TABLE>

The amortized cost and estimated fair value of debt securities
held to maturity at December 31 by contractual maturity are shown
below. Actual maturities will differ from contractual maturities
because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
                                                         1997                   1996
                                                             Estimated              Estimated
                                                 Amortized     fair     Amortized     fair
(In thousands)                                     Cost        value      Cost        value
<S>                                              <C>         <C>        <C>         <C>
Due in one year or less                          $  8,609      8,605        -          -
Due after one year through five years              41,815     41,801      54,324     54,212
Due after five years through ten years               -          -         12,022     11,853
Due after ten years                                15,980     15,966      30,961     30,259
                                                   ------     ------      ------     ------
Total                                            $ 66,404     66,372      97,307     96,324
                                                   ======     ======      ======     ======

Accrued interest receivable on debt securities held to maturity
amounted to approximately $667,000 and $1,318,000 at December 31,
1997 and 1996, respectively.

4.  MORTGAGE-BACKED SECURITIES HELD TO MATURITY
The amortized cost, gross unrealized gains and losses and
estimated fair values of MBSs held to maturity at December 31 are
summarized as follows:

</TABLE>
<TABLE>
<CAPTION>
                                                              Gross       Gross    Estimated
                                                 Amortized  unrealized  unrealized   fair
(In thousands)                                     Cost       gains       losses     value
<S>                                              <C>        <C>         <C>        <C>
1997
FNMA Certificates                                $ 61,492        258        (657)    61,093
FHLMC Certificates                                 27,472        465        (168)    27,769
CMOs and REMICs                                    74,093        821        (450)    74,464
                                                  -------      -----       -----    -------
Total                                            $163,057      1,544      (1,275)   163,326
                                                  =======      =====       =====    =======
1996
FNMA Certificates                                $ 71,460        185      (1,731)    69,914
FHLMC Certificates                                 39,889        284        (579)    39,594
CMOs and REMICs                                    86,591        409        (826)    86,174
                                                  -------      -----       -----    -------
Total                                            $197,940        878      (3,136)   195,682
                                                  =======      =====       =====    =======
</TABLE>
The estimated weighted average expected life of the MBSs held to
maturity portfolio was approximately 4 years at December 31,
1997.

At December 31, 1997 and 1996, $8.8 million and $10.1 million,
respectively, of the MBSs held to maturity portfolio consists of
adjustable-rate securities. Such securities had an estimated fair
value of $8.8 million and $10.0 million, respectively.

The privately-issued CMOs and REMICs contained in the Company's
held to maturity and available for sale portfolios have generally
been underwritten by large investment banking firms with the
timely 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. These securities are
subject to certain credit-related risks normally not associated
with U.S. Government and agency mortgage-backed securities. Among
such risks is the limited loss protection generally provided by
the various forms of credit enhancements as losses in excess of
certain levels are not protected. Furthermore, the credit
enhancement itself is subject to the credit worthiness of the
enhancer. Thus, in the event a credit enhancer does not fulfill
its obligations, the MBS holder could be subject to risk of loss
similar to the purchaser of a whole loan pool. Management
believes that the credit enhancements are adequate to protect the
Company from losses, and therefore the Company has not provided
an allowance for losses on its privately issued MBSs.

Accrued interest receivable on MBSs held to maturity amounted to
approximately $1,025,000 and $1,180,000 at December 31, 1997 and
1996, respectively.

5.  LOANS

Loans, net at December 31 are summarized as follows:
<TABLE>
<CAPTION>
(In thousands)                                   1997     1996
<S>                                           <C>       <C>
First mortgage loans:
Principal balances:
One-to four-family                             $802,766  552,968
Multi-family                                    143,559  105,341
Commercial                                      148,745  127,956
Construction                                      2,263    4,227
Partially guaranteed by VA or insured by FHA      2,924    3,850
                                              ---------  -------
                                              1,100,257  794,342
Less net deferred loan origination fees,
  unearned discounts and unamortized premiums    (1,363)    (786)
                                              ---------  -------
Total first mortgage loans                    1,098,894  793,556
                                              ---------  -------
Cooperative apartment loans, net                 19,596   19,936
                                              ---------  -------
Other loans:
Consumer loans                                   14,413   15,938
Home equity loans                                15,449   15,677
Other                                             2,429    2,479
                                              ---------  -------
Total other loans                                32,291   34,094
                                              ---------  -------
                                              1,150,781  847,586
Less allowance for loan losses                  (12,528) (10,704)
                                              ---------  -------
Total                                        $1,138,253  836,882
                                              =========  =======
</TABLE>

Included in total loans are loans on which interest is not being
accrued and loans which have been restructured with the result
that interest has been reduced or foregone. The principal
balances of these loans at December 31 are summarized as follows:

(In thousands)                          1997         1996
Non-accrual loans                    $ 10,396       10,733
Restructured loans                      2,136        3,160
Total                                $ 12,532       13,893

If interest income on non-accrual loans had been current in
accordance with the original terms, approximately $736,000,
$688,000 and $889,000 of interest income would have been recorded
for the years ended December 31, 1997, 1996 and 1995,
respectively. Approximately $146,000, $220,000 and $280,000 of
interest income was recognized on non-accrual loans for the years
ended December 31, 1997, 1996 and 1995, respectively. The Bank
has no obligation to fund any additional monies on these loans.

The amount of interest income that would have been recorded if
restructured loans had been performing in accordance with their
original terms (prior to being restructured) was approximately
$197,000, $305,000 and $714,000 for the years ended December 31,
1997, 1996 and 1995, respectively.

The Bank services for investors first mortgage loans which are
not included in the accompanying consolidated statements of
financial condition. The unpaid principal balances of such loans
were approximately $174.9 million and $197.0 million at December
31, 1997 and 1996, respectively.

The geographical location of the Bank's loan portfolio is
primarily within the New York metropolitan area.

During 1996, $10.6 million of cooperative apartment loans
previously transferred to loans held for sale were returned to
the loan portfolio at their estimated market value.

Accrued interest receivable on loans amounted to approximately
$6,443,000 and $4,826,000 at December 31, 1997 and 1996,
respectively.

6.  ALLOWANCES FOR LOAN AND REAL ESTATE OWNED LOSSES

Impaired loans and related reserves have been identified and
calculated in accordance with the provisions of SFAS No. 114. The
total allowance for loan losses has been determined in accordance
with the provisions of SFAS No. 5, "Accounting for
Contingencies."

As such, the Company has provided amounts for anticipated losses
that exceed the immediately identified losses associated with
loans that have been deemed impaired. Provisions have been made
and reserves established accordingly, based upon experience and
expectations, for losses associated with the general population
of loans, specific industry and loan types, including residential
and consumer loans which are not subject to the provisions of
SFAS No. 114.

The following table summarizes information regarding the
Company's impaired loans at December 31:
<TABLE>
<CAPTION>
                                                 1997                            1996
                                                  Related                         Related
                                                  Allowance                       Allowance
                                        Recorded  for Loan     Net      Recorded  for Loan     Net
(In thousands)                         Investment  Losses   Investment Investment  Losses   Investment
<S>                                    <C>        <C>       <C>        <C>        <C>       <C>
Residential loans:
Without a related allowance             $ 4,232       -        4,232      4,423       -        4,423
                                         ------      ---      ------     ------      ---      ------
Total residential loans                   4,232       -        4,232      4,423       -        4,423
                                         ------      ---      ------     ------      ---      ------
Multi-family and non-residential
  loans:
With a related allowance                    970      207         763        981      321         660
Without a related allowance               5,194       -        5,194      5,329       -        5,329
                                         ------      ---      ------     ------      ---      ------
Total multi-family and non-residential
  loans                                   6,164      207       5,957      6,310      321       5,989
                                         ------      ---      ------     ------      ---      ------
Total impaired loans                    $10,396      207      10,189     10,733      321      10,412
                                         ======      ===      ======     ======      ===      ======
</TABLE>

The Company's average recorded investment in impaired loans for
the years ended December 31, 1997 and 1996 was $10.3 million and
$9.8 million, respectively. Interest income recognized on
impaired loans, which was not materially different from cash-
basis interest income, amounted to approximately $146,000,
$220,000 and  $280,000 for the years ended December 31, 1997,
1996 and 1995, respectively.

Activity in the allowance for loan losses for the years ended
December 31 is as follows:
<TABLE>
<CAPTION>
(In thousands)                        1997    1996     1995
<S>                                  <C>     <C>      <C>
Balance at beginning of year        $10,704   8,573   10,847
Charge-offs:
One-to four-family                     (964)   (771)    (472)
Cooperative                            (370)   (524)  (2,142)
Multi-family                           -        (30)  (1,299)
Non-residential and other              (352)   (560)  (1,541)
                                     ------  ------   ------
Total charge-offs                    (1,686) (1,885)  (5,454)
Recoveries                              760     891      405
                                     ------  ------   ------
Net charge-offs                        (926)   (994)  (5,049)
Provision for loan losses             2,750   3,125    2,775
                                     ------  ------   ------
Balance at end of year              $12,528  10,704    8,573
                                     ======  ======   ======
</TABLE>

Activity in the allowance for REO for the years ended December 31
is as follows:
<TABLE>
<CAPTION>
(In thousands)                        1997    1996     1995
<C>                                   <C>     <C>      <C>
Balance at beginning of year          $  81     178      717
Provision charged to operations         251     291      750
Charge-offs                            (275)   (450)  (1,414)
Recoveries                               30      62      125
                                       ----    ----     ----
Balance at end of year                $  87      81      178
                                       ====    ====     ====
</TABLE>

7.  DEPOSITS

Deposits at December 31 are summarized as follows:
<TABLE>
<CAPTION>
                                                       Weighted
                                                       average
(Dollars in thousands)              Amount    Percent   rates
<S>                               <C>         <C>       <C>
1997
Passbook accounts                 $ 378,745    27.7%     2.58%
Money market                         51,128     3.7      3.44
NOW                                  98,108     7.2      1.40
Demand                               55,448     4.1       -
                                  ---------   -----
                                    583,429    42.7      2.21
Certificates of deposit             781,583    57.3      6.05
                                  ---------   -----
Total                            $1,365,012   100.0%     4.41%
                                  =========   =====      ====
1996
Passbook accounts                $  361,707    31.8%     2.58%
Money market                         55,010     4.8      3.51
NOW                                 111,516     9.8      0.90
Demand                                8,456     0.8       -
                                  ---------   -----
                                    536,689    47.2      2.28
Certificates of deposit             601,099    52.8      5.40
                                  ---------   -----
Total                            $1,137,788   100.0%     3.93%
                                  =========   =====      ====
</TABLE

The aggregate amount of certificates of deposit in denominations
of $100,000 or more amounted to approximately $64,544,000
and $41,691,000 at December 31, 1997 and 1996, respectively.

Scheduled maturities of certificates of deposit at December 31
are summarized as follows:

</TABLE>
<TABLE>
<CAPTION
                                 1997               1996
(Dollars in thousands)     Amount    Percent  Amount    Percent
<C>                        <C>       <C>      <C>       <C>
Within six months         $345,302    44.2%  $305,641    50.8%
Six months to one year     250,405    32.0    140,529    23.4
One to two years           105,903    13.6    116,982    19.5
Over two years              79,973    10.2     37,947     6.3
                           -------   -----    -------   -----
Total                     $781,583   100.0%  $601,099   100.0%
                           =======   =====    =======   =====
</TABLE>

The deposits of the Bank are insured up to $100,000 per depositor
(as defined by law and regulation) by the Savings Association
Insurance Fund ("SAIF") which is administered by the FDIC.
Deposits of certain other financial institutions are insured by
the Bank Insurance Fund ("BIF"). On September 30, 1996, Congress
passed and the President signed legislation that recapitalized
the SAIF.  The legislation required SAIF-insured institutions to
pay a special one-time assessment to recapitalize the SAIF. The
Bank's special one-time insurance assessment amounted to $6.8
million. Beginning January 1, 1997, the schedule of SAIF
assessment rates became the same as the schedule of BIF
assessment rates. The Act also required BIF-insured institutions
to pay a portion of the interest due on Financial Corporation
("FICO") bonds beginning  January 1, 1997. Beginning January 1,
2000, or the date at which no thrift institution continues to
exist, BIF-insured institutions will be required to pay their
full pro rata share of FICO payments.




8.  BORROWED FUNDS

Borrowed funds at December 31 are summarized as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)                            1997     1996
<C>                                             <C>      <C>
Fixed-rate advances from the FHLB of New York:
5.55% to 7.125% due in 1997                    $   -     138,450
5.74% to 6.188% due in 1998                     227,000   20,000
5.355% due in 1999                               20,000   20,000
                                                -------  -------
                                                247,000  178,450
                                                -------  -------
Securities sold under agreements to repurchase:
Fixed rate agreements:
5.50% to 6.250% due in 1997                        -     108,106
5.72% to 6.25% due in 1998                      176,628   34,800
6.27% due in 2002                                16,400     -
                                                -------  -------
                                                193,028  142,906
                                                -------  -------
Holding Company Obligated Mandatorily
  Redeemable CapitalSecurities of Haven
  Capital Trust I at 10.46% due 02/01/27         24,984     -
                                                -------  -------
Debt of Employee Stock Ownership Plan
  (note 11)                                       1,782    2,092
                                                -------  -------
Other secured borrowings:
Collateralized mortgage obligation at
  9.00% maturing through 2016, secured by
  mortgage-backed securities with a carrying
  value of$12,214 in 1996 (notes 2 and 4)          -       2,985
                                                -------  -------
                                               $466,794  326,433
                                                =======  =======
</TABLE>

At December 31, 1997 and 1996, pursuant to a physical pledge
collateral agreement, advances from the FHLB of New York were
collateralized by MBSs with an estimated fair value of
approximately $231,131,000 and $90,814,000, respectively. At
December 31, 1997 and 1996, advances from the FHLB of New York
were also collateralized by U.S. Government and agency
obligations with an estimated fair value of approximately
$81,446,000 and $126,826,000, respectively.  At December 31, 1997
the Bank has unused lines of credit totalling $3,900,000 with the
FHLB of New York.

At December 31, 1997, all securities sold under agreements to
repurchase were delivered to primary dealers who arranged the
transactions. The securities will remain registered in the name
of the Bank and will be returned at maturity. During the years
ended December 31, 1997 and 1996, securities sold under
agreements to repurchase averaged $172,310,000 and $128,677,000,
respectively. The maximum amounts outstanding at any month-end
were $229,280,000 and $142,906,000, respectively. The average
interest rate paid during the years ended December 31, 1997 and
1996 were 5.68% and 5.65%, respectively. MBSs with an estimated
fair value of approximately $194,227,000 and $151,700,000 were
pledged as collateral at December 31, 1997 and 1996,
respectively.

On February 12, 1997, Haven Capital Trust I, a trust formed under
the laws of the State of Delaware (the "Trust") issued $25
million of 10.46% capital securities.  The Holding Company is the
owner of all the beneficial interests represented by common
securities of the Trust.  The Trust exists for the sole purpose
of issuing the Trust securities (comprised of the capital
securities and the common securities) and investing the proceeds
thereof in the 10.46% junior subordinated deferrable interest
debentures issued by the Holding Company on February 12, 1997
which are scheduled to mature on February 1, 2027.  Interest on
the capital securities is payable in semiannual installments,
commencing on August 2, 1997. The Trust securities are subject to
mandatory redemption (i) in whole, but not in part upon repayment
in full, at the stated maturity of the junior subordinated
debentures at a redemption price equal to the principal amount
of, plus accrued interest on, the junior subordinated debentures,
(ii) in whole but not in part, at any time prior to February 1,
2007, contemporaneously with the occurrence and continuation of a
special event, defined as a tax event or regulatory capital
event, at a special event redemption price equal to the greater
of 100% of the principal amount of the junior subordinated
debentures or the sum of the present values of the principal
amount and premium payable with respect to an optional redemption
of the junior subordinated debentures on the initial optional
repayment date to and including the initial optional prepayment
date, discounted to the prepayment date plus accrued and unpaid
interest thereon, and (iii) in whole or in part, on or after
February 1, 2007, contemporaneously with the optional prepayment
by the Corporation of the junior subordinated debentures at a
redemption price equal to the optional prepayment price. Subject
to prior required regulatory approval, the junior subordinated
debentures are redeemable during the 12-month periods beginning
on or after February 1, 2007 at 105.230% of the principal amounts
outstanding, declining ratably each year thereafter to 100%, plus
accrued and unpaid interest thereon to the date of redemption.
Deferred issuance costs are being amortized over ten years.

9.  FEDERAL, STATE AND LOCAL TAXES

FEDERAL INCOME TAXES

The Company and its subsidiaries file a consolidated Federal
income tax return on a calendar-year basis.  Under Section 593 of
the Internal Revenue Code of 1986, as amended ("Code"), prior to
January 1, 1996 thrift institutions such as the Bank which met
certain definitional tests primarily relating to their assets and
the nature of their business, were permitted to establish a tax
reserve for bad debts.  Such thrift institutions were also
permitted to make annual additions to the reserve, to be deducted
in arriving at their taxable income within specified limitations.
The Bank's deduction was computed using an amount based on the
Bank's actual loss experience ("experience method"), or a
percentage equal to 8% of the Bank's taxable income ("PTI
method").  Similar deductions for additions to the Bank's bad
debt reserve were also permitted under the New York State Bank
Franchise Tax and the New York City Banking Corporation Tax;
however, for purposes of these taxes, the effective allowable
percentage under the PTI method was 32% rather than 8%.

Under the Small Business Job Protection Act of 1996 ("1996 Act"),
signed into law in August 1996, Section 593 of the Code was
amended.  The Bank will be unable to make additions to the tax
bad debt reserves but will be permitted to deduct bad debts as
they occur.  Additionally, the 1996 Act required institutions 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 will be frozen for 1997 since the Bank satisfies
specified mortgage origination tests.  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;
(iii) the Bank uses the bad debt reserves for any purpose other
than to absorb bad debt losses; and (iv) there is a change in
Federal tax law.  Management is not aware of the occurrence of
any such event.

In response to the Federal legislation, the New York State and
New York City tax law has 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 State and City tax liability.

The components of the net deferred tax assets at December 31 are as follows:
<TABLE>
<CAPTION>
(In thousands)                                   1997    1996
<S>                                            <C>      <C>
Deferred tax assets:
Difference between financial statement credit
  loss provision and tax bad-debt deduction    $ 5,872   4,874
Non-accrual interest and non-performing loan
  expense                                        1,268   1,002
Securities marked to market for financial
  statement purposes                              -        582
Other                                            1,211   1,235
                                                ------  ------
Total deferred tax assets                        8,351   7,693
                                                ------  ------
Deferred tax liabilities:
Recapture of Tax Bad Debt Reserve                 (937) (1,241)
Securities marked to market for financial
  statement purposes                              (942)   -
Basis difference of fixed assets                  (145)   (143)
Other                                             (126)   (124)
                                                ------  ------
Total deferred tax liabilities                  (2,150) (1,508)
                                                ------  ------
Net deferred tax assets                        $ 6,201   6,185
                                                ======  ======
</TABLE>

Income tax expense for the years ended December 31 are summarized
as follows:
<TABLE>
<CAPTION>
                               1997        1996       1995
(In thousands)
<S>                           <C>         <C>        <C>
Current:
Federal                      $ 6,433       3,391      1,273
State and local                1,245       2,813        725
                               -----       -----      -----
                               7,678       6,204      1,998
                               -----       -----      -----
Deferred:
Federal                         (760)        906      3,302
State and local                 (780)       (676)     1,930
                               -----       -----      -----
                              (1,540)        230      5,232
                               -----       -----      -----
Total income tax expense     $ 6,138       6,434      7,230
                               =====       =====      =====
</TABLE>

The following is a reconciliation of statutory Federal income tax
expense to the combined effective tax expense for the years ended
December 31:

<TABLE>
<CAPTION>
(In thousands)                                      1997    1996    1995
<S>                                               <C>     <C>     <C>
Statutory Federal income tax expense              $ 6,027   5,392   5,363
State and local income taxes, net of Federal
  income tax benefit                                  301   1,410   1,752
Change in deferred tax asset valuation allowance      -      (800)   (300)
Tax bad debt reserve                                  -      (780)    -
Other, net                                           (190)  1,212     415
                                                   ------  ------  ------
Total income tax expense                          $ 6,138   6,434   7,230
                                                   ======  ======  ======
</TABLE>

The Company had an $800,000 valuation allowance for its deferred
tax asset as of December 31, 1995, related to potential New York
State and New York City deferred tax assets.  Upon review of the
Company's deferred tax assets as of December 31, 1996, the
Company determined that the valuation allowance was no longer
required.  The Company will continue to review the recognition
criteria as set forth in SFAS No. 109, "Accounting for Income
Taxes" on a quarterly basis and determine the need for a
valuation allowance accordingly.

STATE AND LOCAL TAXES

The Company and subsidiaries file combined New York State
franchise tax and New York City financial corporation tax returns
on a calendar-year basis.  The Company's annual tax liability for
each year is the greater of a tax on (I) allocated entire net
income; (ii) located alternative entire net income; (iii)
allocated assets to New York State and/or New York City; or (iv)
a minimum tax.  Operating losses cannot be carried back or
carried forward for New York State or New York City tax purposes.

The Company expects to determine its 1997 New York State and New
York City tax liability based on entire net income.  The Company
has provided for New York State and New York City taxes based on
entire net income for the year ended December 31, 1996 and based
on assets for the year ended December 31, 1995.

10.  EMPLOYEE BENEFIT PLANS AND POST-RETIREMENT BENEFITS
     RETIREMENT PLAN

The Company has a qualified, non-contributory defined benefit
pension plan covering substantially all of its eligible
employees. The Company's policy is to fund pension costs in
accordance with the minimum funding requirements of the Employee
Retirement Income Security Act of 1974, and to provide the plan
with sufficient assets with which to pay pension benefits to plan
participants. Contributions are intended to provide not only for
benefits attributed to service to date but also for those
expected to be earned in the future. Based on an evaluation of
the Retirement Plan in 1996, the Bank concluded that future
benefit accruals under the Retirement Plan would cease or
"freeze" effective July 1, 1996. The Bank recognized a
curtailment gain of approximately $266,000 as of July 1, 1996.
The Bank made a cash contribution of $352,000 to the plan in
1997.

The following is a reconciliation of the funded status of the
Plan and the amount of accrued pension cost as determined by the
Plan's actuary in accordance with SFAS No. 87, based upon
actuarial information as of December 31, 1997 and July 1, 1996,
respectively:
<TABLE>
<CAPTION>
(In thousands)                                                                  1997    1996
<S>                                                                            <C>     <C>
Actuarial present value of benefit obligations:
Vested                                                                        $ 8,287   7,800
Non-vested                                                                        232     356
                                                                                -----   -----
Accumulated benefit obligation                                                  8,519   8,156
                                                                                =====   =====
Projected benefit obligation for service rendered to date                       8,519   8,156
Estimated plan assets, at fair value                                            8,819   7,832
                                                                                -----   -----
Excess (deficiency) of plan assets over (under) projected benefit obligation      300    (324)
Unrecognized net loss from past experience different from that assumed
  and effects of changes in assumptions                                            (4)    -
                                                                                -----   -----
Prepaid (accrued) pension cost                                                $   296    (324)
                                                                                =====   =====
</TABLE>

The amount of accrued pension cost recognized in the Company's
consolidated statements of financial condition at December 31,
1996 was $101,000.

The components of net pension expense, exclusive of the
aforementioned 1996 curtailment gain, for the years ended
December 31 are as follows:

<TABLE>
<CAPTION>
(In thousands)                                     1997  1996  1995
<S>                                                <C>   <C>   <C>
Service cost (benefits earned during the period)  $  -    211   338
Interest cost on projected benefit obligation       557   597   626
Expected return on plan assets                     (746) (714) (652)
Net amortization and deferral                        -      2   (20)
                                                    ---   ---   ---
Net pension expense (benefit)                     $(189)   96   292
                                                    ===   ===   ===
</TABLE>

Assumptions used to develop the actuarial present value of
benefit obligations at December 31 were:

                                          1997   1996   1995
Discount rate                             6.75%  7.00%  8.25%
Expected long-term rate of return         9.00   9.00   9.00
Rate of increase in compensation levels    N/A   5.00   6.00

THRIFT INCENTIVE SAVINGS PLAN
The Bank maintains a 401(k) thrift incentive savings plan which
provides for employee contributions on a pre-tax basis up to a
maximum of 16% of total compensation, with matching contributions
to be made by the Bank equal to 50% of employee contributions,
not to exceed employee contributions greater than 6% of total
compensation. During the year ended December 31, 1995, the Bank
elected not to match employee contributions. In connection with
the Retirement Plan freeze, the Bank resumed matching employee
contributions which totaled $199,000 and $120,000 for the year
ended December 31, 1997 and the period from July 1, 1996 through
December 31, 1996, respectively.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In 1996, the Bank implemented a non-qualified defined benefit
supplemental executive retirement plan ("SERP") for the President
and Chief Executive Officer. The SERP is an unfunded plan. During
1997 and 1996, the Bank accrued $50,000 and $132,000,
respectively, for the SERP.  At January 1, 1997 and 1996, the
accumulated benefit obligation was $245,000 and $80,000,
respectively. At January 1, 1997 and 1996, the projected benefit
obligation of the plan was $1,233,000 and $890,000, respectively.

The Bank also maintains a non-qualified defined benefit SERP for
the Chairman of the Board. The SERP is an unfunded plan. The SERP
provides for an annual retirement benefit of $120,000 for 10
years after retirement which occurred in 1995. The SERP also
provides for a lump sum benefit of $1.2 million payable to the
estate of the Chairman of the Board in the event of his death
prior to retirement, or in the event of a hostile change in
control after retirement but prior to the payment of the entire
benefit; any unpaid benefit shall be paid in a lump sum. The
Company had accrued the entire $1.2 million liability under the
unfunded plan through December 31, 1995.

POST-RETIREMENT LIFE INSURANCE BENEFITS
The Company provides life insurance coverage to retirees under
two separate insurance plans. The first plan provides life
insurance coverage equal to one-half of annual pay at retirement,
subject to a maximum of $10,000 and a minimum of $2,000. The
second plan provides life insurance coverage equal to two times
annual pay reduced by 10% per year for each of the first five
years following retirement.

The following table sets forth the components of post-retirement
life insurance benefits expense for the years ended December 31:

                                            1997   1996   1995
Service cost                               $  55     29     18
Interest cost                                 77     59     46
Amortization of transition obligation
  (from adoption of SFAS No. 106)
  being amortized over 20 years               25     25     25
Net amortization and deferral                 24      9     -
                                             ---    ---    ---
Net post-retirement benefits expense       $ 181    122     89
                                             ===    ===    ===
Assumptions used to develop the accumulated
  post-retirement benefit obligation were:
Discount rate                               6.75%  7.50%  8.25%
Rate of increase in compensation levels     4.50   5.00   6.00
At December 31, 1997 and 1996, the accumulated post-retirement
benefit obligation totaled $1,268,000 and $824,000, respectively.
The accrued post-retirement benefit liability at those dates was
$516,000 and $360,000, respectively.

11.  STOCK PLANS

EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
The Bank established for eligible employees an Employee Stock
Ownership Plan ("ESOP") in connection with the Conversion.
The ESOP borrowed $3.5 million from an unrelated third party
lender and purchased 694,312 common shares issued in the
Conversion. The Bank is expected to make scheduled cash
contributions to the ESOP sufficient to service the amount
borrowed over a period not to exceed 10 years. The unpaid balance
of the ESOP loan is included in borrowed funds and the
unamortized balance of unearned compensation is shown as
unallocated common stock held by the ESOP reflected as a
reduction of stockholders' equity. As of December 31, 1997, total
contributions to the ESOP which were used to fund principal and
interest payments on the ESOP debt totaled approximately
$2,526,000. At December 31, 1997, the loan had an outstanding
balance of $1,782,000 and an interest rate of 8.70%. The loan, as
amended on December 29, 1995, is payable in thirty-two equal
quarterly installments beginning December 1995 and ending
September 2003. The loan bears interest at a floating rate based
on the federal funds rate plus 250 basis points. Dividends
declared on common stock held by the ESOP which have been
allocated to the account of a participant are allocated to the
account of such participant. Dividends declared on common stock
held by the ESOP and not allocated to the account of a
participant are used to repay the ESOP loan. The Company recorded
$1,184,000, $983,000 and $1,246,000 of ESOP expense for the years
ended December 31, 1997, 1996 and 1995, respectively. For the
years ended December 31, 1997, 1996 and 1995, ESOP expense was
based on the fair market value of the shares allocated in
accordance with the AICPA SOP 93-6 which was adopted on January
1, 1994. At December 31, 1997, there were 370,790 shares
remaining for future allocation, of which 64,980 shares will be
allocated for the 1997 year in the first quarter of 1998.

RECOGNITION AND RETENTION PLANS
The Bank has established several Recognition and Retention Plans
("RRPs") which purchased in the aggregate 297,562 shares of
common stock in the Conversion. The Bank contributed $1.5 million
to fund the purchase of the RRP shares. In 1995, the RRP for
officers and other key employees was amended to increase the
number of shares of common stock which may be granted by 19,836
shares and such shares were contributed to the RRP from treasury
stock. During 1996, the remaining previously unallocated shares
totaling 17,202 were awarded to directors and officers. In 1997,
the RRP for directors was amended to increase the number of
shares of common stock which may be granted by 9,916 shares and
such shares were contributed to the RRP from treasury stock. The
fair market value of these shares at the dates of the awards will
be amortized as compensation expense as participants become
vested. The unamortized cost, which is comparable to deferred
compensation, is reflected as a reduction of stockholders'
equity. For the years ended December 31, 1997, 1996 and 1995,
respectively, $168,000, $409,000 and $490,000 of expense has been
recognized.

STOCK OPTION AND INCENTIVE PLANS
In 1993, the Holding Company adopted stock option plans for the
benefit of directors (the "1993 Directors Plan") and for officers
and other key employees (the "1993 Stock Plan") of the Bank. The
number of shares of common stock reserved for issuance under the
stock option plans was equal to 10% of the total number of shares
of common stock issued pursuant to the Bank's Conversion to the
stock form of ownership. In 1995, the 1993 Stock Plan was amended
to increase the number of shares for which stock options may be
granted by 69,430 shares. All options awarded to employees vest
over a three year period beginning one year from the date of
grant. The option exercise price cannot be less than the fair
market value of the underlying common stock as of the date of the
option grant, and the maximum option term cannot exceed ten
years. The stock options awarded to directors become exercisable
one year from the date of grant. In 1996, the remaining 11,770
options were granted from the 1993 Stock Plan and the remaining
37,204 options were granted from the 1993 Directors Plan.  In
1997, the 1993 Directors Plan was amended to increase the number
of shares for which stock options may be granted by 39,670
shares.

In 1996, the Holding Company adopted the 1996 Stock Incentive
Plan which provided 420,000 shares for the grant of options and
restricted stock awards. On April 24, 1996, an aggregate of 3,952
shares of restricted stock was granted to directors which vested
six months from the date of grant and an aggregate of 55,978
shares was granted to officers and employees on May 23, 1996,
which vest over a three year period beginning one year from the
date of grant. In addition, an aggregate of 232 shares was
granted to two new directors on October 1, 1996 which vested on
December 31, 1996.  In 1997, an aggregate of 3,648 shares of
restricted stock was granted to directors which vested six months
from the date of grant and an aggregate of 5,340 shares was
granted to officers and employees which vest over a three year
period beginning one year from the date of grant.  Such shares
were recorded as unearned compensation at their fair market value
on the date of the award (which is reflected as a reduction of
stockholders' equity), to be amortized to expense over the
vesting period. During 1997 and 1996, an aggregate of 34,100 and
321,700 options, respectively, were granted to directors and
officers under the 1996 Stock Incentive Plan, which vest over a
three year period beginning one year from the date of grant.  In
1997, the 1996 Stock Incentive Plan was amended to increase the
number of shares for which options and restricted stock awards
may be granted by 41,998 shares.
The following table summarizes certain information regarding the
stock option plans:
<TABLE>
<CAPTION>
                                                     Number of shares of
                                                       Non-      Non-     Weighted
                                           Incentive Statutory Qualified  Average
                                             Stock     Stock   Options to Exercise
                                            Options   Options  Directors   Price
<S>                                         <C>      <C>       <C>        <C>
Balance outstanding at December 31, 1994    293,886   378,088   260,358    5.14
Granted                                        -       80,000      -       8.47
Forfeited                                      -         -         -        -
Exercised                                   (41,650)   (9,756)     -       5.00
                                            -------   -------   -------   -----
Balance outstanding at December 31, 1995    252,236   448,332   260,358    5.42
Granted                                     194,340    38,900   149,204   12.92
Forfeited                                      -         -         -        -
Exercised                                   (18,812)     -         -       5.00
                                            -------   -------   -------   -----
Balance outstanding at December 31, 1996    427,764   487,232   409,562    7.54
Granted                                      14,100      -       20,000   17.09
Forfeited                                      -         -      (12,000)  12.14
Exercised                                   (16,594)     -      (98,388)   6.61
                                            -------   -------   -------   -----
Balance outstanding at December 31, 1997    425,270   487,232   319,174    7.90
                                            =======   =======   =======   =====
Shares exercisable at December 31, 1997     254,830   434,630   223,705    6.34
                                            =======   =======   =======   =====
</TABLE>

The fair value of each share grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for grants in 1997,
1996 and 1995, respectively: dividend yield of 1.45% in 1997,
1.93% in 1996 and 1995; expected volatility of 26.95% in 1997 and
16.85% in 1996 and 1995; risk-free interest rates of 5.68% to
5.81% in 1997 and 5.89% to 6.38% in 1996 and 6.29% in 1995; and
expected lives of 3 years for the 1993 Stock Plan, 8 years for
the 1993 Directors Plan and 3 years for grants to officers and
employees under the 1996 Stock Incentive Plan and 8 years for
grants to directors under that plan.

Had compensation cost for the Company's three stock-based
compensation plans been determined consistent with SFAS No. 123
for awards made after January 1,1995, the Company's net income
and net income per common share would have been reduced to the
pro forma amounts indicated below for the years ended December
31:
<TABLE>
<CAPTION
(In thousands, except per share data)    1997   1996   1995
<C>                                     <C>     <C>    <C>
Net income:  As reported               $11,083  9,425  8,544
             Pro forma                  10,557  9,135  8,364
Net income per common share:
Basic        As reported               $  1.32   1.13   0.99
             Pro forma                    1.25   1.10   0.97
Diluted      As reported               $  1.24   1.08   0.96
             Pro forma                    1.18   1.05   0.94
</TABLE>


12.  EARNINGS PER SHARE

Effective December 31, 1997, the Company adopted SFAS No. 128,
"Earnings Per Share," which establishes new standards for
computing and presenting earnings per share (EPS).  All earnings
per share amounts have been restated to conform to the new
requirements. Refer to Note 1, "Summary of Significant Accounting
Policies" " Net income (loss) per common share.

Basic EPS is computed by dividing income available to common
stockholders by the weighted-average number of common shares
outstanding. Diluted EPS includes the determinants of basic EPS
and, in addition, gives effect to dilutive potential common
shares that were outstanding during the period.

The computation of basic and diluted EPS for the years ended
December 31 are presented in the following table.
(Dollars in thousands, except
 share data)                            1997      1996      1995
Numerator for basic and diluted
  earnings per share-net income     $  11,083 $   9,425 $   8,544
                                    --------- --------- ---------
Denominator for basic earnings per
  share-weighted average shares     8,420,321 8,310,178 8,627,536
Effect of dilutive options            493,437   378,502   295,104
                                    --------- --------- ---------
Denominator for diluted earnings
  per share " weighted-average
  number of common shares and
  dilutive potential common shares  8,913,758 8,688,680 8,922,640
                                    --------- --------- ---------
Basic earnings per share                $1.32     $1.13     $0.99
Diluted earnings per share              $1.24     $1.08     $0.96

13.  COMMITMENTS AND CONTINGENCIES LEASE COMMITMENTS

At December 31, 1997, the Company was obligated under several
noncancelable operating leases on property used for office space
and banking purposes. Several of the leases contain escalation
clauses which provide for increased rentals, primarily based upon
increases in real estate taxes. Rent expense under these leases
was approximately $1,742,000 , $404,000 and $379,000 for the
years ended December 31, 1997, 1996 and 1995, respectively.
The projected minimum rental payments under the terms of the
noncancelable leases at December 31, 1997 are as follows:

     Years ending December 31,          (In thousands)
     1998                                  $  2,419
     1999                                     2,227
     2000                                     2,032
     2001                                     1,991
     2002                                       962
     Thereafter                                  65
                                              -----
                                           $  9,696
                                              =====

In September 1996, the Bank 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 mid-1998.  In September, 1997, the Bank
announced that it had entered into licensing agreements with
ShopRite Stores under which it may open as many as 12 in-store
supermarket branches in New Jersey and Connecticut. Thirty-two
supermarket branches have opened through December 31, 1997, and
the leases related thereto are reflected in the table above.

In December, 1997, the Bank purchased an office building in
Westbury, Long Island, New York for $7.3 million and entered into
a lease agreement and Payment-in-Lieu-of-Tax ("PILOT") agreement
with the Town of Hempstead Industrial Development Agency ("IDA").
Under the agreements, the Bank assigned the building to the IDA
and is subleasing it for $1 per year for a 10 year period and
will repurchase the building for $1 upon expiration of the lease
term in exchange for IDA financial assistance. The building will
be used for the Bank's headquarters, and occupancy is expected to
occur in mid 1998.

LOAN COMMITMENTS
The Company had outstanding commitments totaling $77.4 million to
originate loans at December 31, 1997 of which  $24.1 million were
fixed-rate loans and  $53.3 million were variable rate loans. For
fixed-rate loan commitments at December 31, 1997, the interest
rates on mortgage loans ranged from 6.25 % to 10.25 %. The
standard commitment term for these loans is 45 days. For other
consumer fixed-rate loan commitments, interest rates ranged from
9.00 % to 10.50 % with the standard term of the commitment of 30
days. Loan commitments are made at current rates and no material
difference exists between book and market values of such
commitments.

For commitments to originate loans, the Company's maximum
exposure to credit risk is represented by the contractual amount
of those instruments. Those commitments represent ultimate
exposure to credit risk only to the extent that they are
subsequently drawn upon by customers. The Company uses the same
credit policies and underwriting standards in making loan
commitments as it does for on-balance-sheet instruments. For loan
commitments, the Company would generally be exposed to interest
rate risk from the time a commitment is issued with a defined
contractual interest rate.

In connection with the securitization and sale of $48.6 million
of cooperative apartment loans in 1994, a letter of credit
totaling $6.8 million was established with the FHLB. The letter
of credit provides a level of protection of approximately 14% to
the buyer against losses on the cooperative apartment loans sold
behind a pool insurance policy the Bank purchased which provides
a level of protection of approximately 20%. The letter of credit
totalled  $6.8 million at December 31, 1997.

INTEREST RATE CAPS
During the year ended December 31, 1995, the Company, in order to
hedge a portion of the borrowings to fund a $75 million leverage
transaction, purchased an interest rate cap on a $25.0 million
notional principal amount on which it will receive a payment,
based on the notional principal amount, equal to the three month
LIBOR rate in excess of 8% on any reset date for a three year
period. The premium paid for the cap, $133,000, which is carried
in other assets is being amortized to interest expense over the
term of the contract. As of December 31, 1997, 1996 and 1995,
three month LIBOR was 5.81%, 5.56% and 5.63%, respectively.
Interest expense on borrowed funds was increased by approximately
$44,000, $44,000 and $11,000 during the years ended December 31,
1997, 1996 and 1995, respectively, as a result of this agreement.

LITIGATION AND LOSS CONTINGENCY
In February, 1983, a burglary of the contents of safe deposit
boxes occurred at a branch office of the Bank. At December 31,
1997, 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 of 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 these actions and has and
will continue to defend its position. Accordingly, no provision
for any liability that may result upon adjudication 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.

14.   STOCKHOLDERS' EQUITY
At the time of its conversion to a stock savings bank, the Bank
established a liquidation account in an amount equal to its total
retained earnings as of June 30, 1993. The liquidation account
will be maintained for the benefit of eligible account holders
who continue to maintain their accounts at the Bank, after the
conversion. The liquidation account will be reduced annually to
the extent that eligible account holders have reduced their
qualifying deposits. Subsequent increases will not restore an
eligible account holder's interest in the liquidation account. In
the event of a complete liquidation, each eligible account holder
will be entitled to receive a distribution from the liquidation
account in an amount proportionate to the current adjusted
qualifying balances for accounts then held. The balance of the
liquidation account was approximately $17.7 million at December
31, 1997.

Subsequent to the conversion, the Bank may not declare or pay
cash dividends on or repurchase any of its shares of common
stock, if the effect would cause stockholders' equity to be
reduced below the amount required for the liquidation account,
applicable regulatory capital maintenance requirements or if such
declaration and payment would otherwise violate regulatory
requirements. Office of Thrift Supervision ("OTS") regulations
provide that an institution that exceeds all fully phased-in
capital requirements, before and after a proposed capital
distribution could, after prior notice but without prior approval
of the OTS, make capital distributions during the calendar year
up to 100% of net income 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 period. Any
additional capital distributions would require prior regulatory
approval. Unlike the Bank, the Company is not subject to these
regulatory restrictions on the payment of dividends to its
stockholders. However, the source of future dividends may depend
upon dividends from the Bank.

STOCK SPLIT
The Company declared a 2-for-1 common stock split which was
distributed on November 28, 1997 in the form of a stock dividend
to holders of record as of October 23, 1997.

TREASURY STOCK TRANSACTIONS
During the year ended December 31, 1996, the Company repurchased
451,074 shares under its third repurchase program that was
completed March 11, 1996. During the year ended December 31,
1995, the Company repurchased 151,140 shares under its second
repurchase program that was completed June 28, 1995.

REGULATORY CAPITAL
As required by regulation of the OTS, savings institutions are
required to maintain regulatory capital in the form of a
"tangible capital requirement," a "core capital requirement,"
and a "risk-based capital requirement."

The Bank must meet specific capital guidelines that involve
quantitative measures of the Bank's assets, liabilities, and
certain off-balance sheet items  as calculated under regulatory
accounting practices. The Bank's capital amounts are also subject
to qualitative judgments by the regulators about components, risk
weightings, and other factors.

As of December 31, 1997, the Bank has been categorized as "well
capitalized" by the OTS under the regulatory framework for prompt
corrective action. There are no conditions or events since that
notification that management believes have changed the
institution's category.  The following table sets forth the
required ratios and amounts and the Bank's actual capital amounts
and ratios at December 31:
<TABLE>
<CAPTION>
                                                              To Be Well Capitalized
                                               For Capital    Under Prompt Corrective
                               Actual       Adequacy Purposes    Action Provisions
(Dollars in thousands)     Amount  Ratio(3)   Amount  Ratio        Amount  Ratio
<S>                      <C>       <C>       <C>       <C>         <C>     <C>
1997
Tangible Capital         $125,573   6.42%    $29,333   1.50%         N/A      N/A
Core Capital (1)          125,573   6.42      58,667   3.00        $97,778   5.00%
Risk-based Capital (2)    136,860  14.04      77,964   8.00         97,455  10.00
1996
Tangible Capital         $ 97,201   6.14%   $ 23,743   1.50%         N/A      N/A
Core Capital (1)           97,201   6.14      47,487   3.00        $79,144   5.00%
Risk-based Capital (2)    106,555  13.22      64,479   8.00         80,599  10.00
</TABLE>

(1)  Under the OTS's prompt corrective action regulations, the
core capital requirement was effectively increased to 4.00% since
OTS regulations stipulate that as of that date an institution
with less than 4.00% core capital will be deemed to be classified
as "undercapitalized."
(2)  The OTS adopted a final regulation which incorporates an
interest rate risk component into its existing risk-based
capital standard. The regulation requires certain institutions
with more than a "normal level" of interest rate risk to maintain
capital in addition to the  8.0% risk-based capital requirement.
The Bank does not anticipate that its risk-based capital
requirement will be materially affected as a result of the new
regulation.
(3)  For tangible and core capital, the ratio is to adjusted
total assets. For risk-based capital, the ratio is to total risk-
weighted assets.

STOCKHOLDER RIGHTS PLAN
On January 26, 1996, the Board of Directors of the Holding
Company adopted a Stockholder Rights Plan (the "Rights Plan").
Under the Rights Plan, which expires in February, 2006, the Board
declared a dividend of one right on each outstanding share of the
Holding Company's common stock, which was paid on February 5,
1996 to stockholders of record on that date (the "Rights"). Until
it is announced that a person or group has acquired 10% or more
of the outstanding common stock of the Holding Company (an
"Acquiring Person") or has commenced a tender offer that could
result in their owning 10% or more of such common stock, the
Rights are initially redeemable for $.01 each, are evidenced
solely by the Holding Company's common stock certificates,
automatically trade with the Holding Company's common stock and
are not exercisable. Following any such announcement, separate
Rights would be distributed, with each Right entitling its owner
to purchase participating preferred stock of the Holding Company
having economic and voting terms similar to those of one share of
the Holding Company's common stock for an exercise price of $45.

Upon announcement that any person or group has become an
Acquiring Person and unless the Board acts to redeem the Rights,
then twenty business days thereafter (the "Flip-in Date"), each
Right (other than Rights beneficially owned by any Acquiring
Person or transferee thereof, which become void) will entitle the
holder to purchase, for the $45 exercise price, a number of
shares of the Holding Company's common stock having a market
value of $90. In addition, if after an Acquiring Person gains
control of the Board, the Holding Company is involved in a merger
or sells more than 50% of its assets or assets generating more
than 50% of its operating income or cash flow, or has entered
into an agreement to do any of the foregoing (or an Acquiring
Person is to receive different treatment than all other
stockholders), each Right will entitle its holder to purchase,
for the $45 exercise price, a number of shares of common stock of
the Acquiring Person having a market value of $90. If any person
or group acquires more than 50% of the outstanding common stock
of the Holding Company, the Board may, at its option, exchange
one share of such common stock for each Right. The Rights may
also be redeemed by the Board for $0.01 per Right prior to the
Flip-in Date.

15.        FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments" requires the Company to disclose estimated fair
values for substantially all of its financial instruments. The
fair value of a financial instrument is the amount at which the
asset or obligation could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation
sale. Fair value estimates are made at a specific point in time
based on relevant market information and information about the
financial instrument. These estimates do not reflect any premium
or discount that could result from offering for sale at one time
the entire holdings of a particular financial instrument. Because
no market value exists for a significant portion of the financial
instruments, fair value estimates are based on judgments
regarding future expected loss experience, current economic
conditions, risk characteristics of various financial
instruments, and other factors. These estimates are subjective in
nature, involve uncertainties and matters of judgment and,
therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.

Fair value estimates are determined for on and off-balance sheet
financial instruments, without attempting to estimate the value
of anticipated future business and the value of assets and
liabilities that are not considered financial instruments.
Additionally, tax consequences related to the realization of the
unrealized gains and losses can have a potential effect on fair
value estimates and have not been considered in many of the
estimates.

The following table summarizes the carrying values and estimated
fair values of the Company's on-balance-sheet financial
instruments at December 31:
<TABLE>
<CAPTION>

                                                       1997                  1996
                                                          Estimated             Estimated
                                                Carrying    Fair      Carrying    Fair
(In thousands)                                   Value      Value      Value      Value
<S>                                            <C>        <C>        <C>        <C>
Financial Assets:
Cash and cash equivalents                      $  40,306     40,306     35,717     35,717
Securities available for sale                    499,380    499,380    370,105    370,105
Debt securities held to maturity                  66,404     66,372     97,307     96,324
FHLB-NY stock                                     12,885     12,885      9,890      9,890
Mortgage-backed securities held to maturity      163,057    163,326    197,940    195,682
Loans, net                                     1,138,253  1,152,100    836,882    850,513
Accrued interest receivable                       12,429     12,429     12,172     12,172
Financial Liabilities:
Deposits                                       1,365,012  1,368,782  1,137,788  1,138,385
Borrowed funds                                   466,794    467,565    326,433    326,341
Mortgagors' escrow balances                        3,234      3,234      4,621      4,621
Due to broker                                     10,000     10,000      1,000      1,000
Accrued interest payable                           1,645      1,645      1,002      1,002
</TABLE>

The methods and significant assumptions used to estimate fair
values for different categories of financial instruments are as
follows:

Cash and cash equivalents - The estimated fair values of cash and
cash equivalents are assumed to equal the carrying values as
these financial instruments are either due on demand or mature
within 90 days.

Securities available for sale, Debt Securities and Mortgage-
Backed Securities Held to Maturity - Estimated fair value for
substantially all of the Company's bonds, notes and equity
securities, both available for sale and held to maturity are
based on market quotes as provided by an independent pricing
service. For MBSs, the Company obtains bids from broker dealers
to estimate fair value. For those occasional securities for which
a market price cannot be obtained, market prices of comparable
securities are used.

FHLB-NY stock - The estimated fair value of the Company's
investment in FHLB-NY stock is deemed to be equal to its carrying
value which represents the price at which it may be redeemed.

Residential loans - Residential loans include one-to four-family
mortgages and individual cooperative apartment loans. Estimated
fair value is based on discounted cash flow analysis. The
residential loan portfolio is segmented by loan type (fixed
conventional, adjustable products, etc.) with weighted average
coupon rate, remaining term, and other pertinent information for
each segment. A discount rate is determined based on the U.S.
Treasury yield curve plus a pricing spread. Expected principal
prepayments, consistent with empirical evidence and management's
future expectations, are used to modify the future cash flows.
For potential problem loans, the present value result is
separately adjusted downward consistent with management's
assumptions in evaluating the adequacy of the allowance for loan
losses.

Commercial real estate and other loans - Estimated fair value is
based on discounted cash flow analysis which take into account
the contractual coupon rate and maturity date of each loan. A
discount rate is determined based on the U.S. Treasury yield
curve plus a pricing spread. For potential problem loans, the
present value result is separately adjusted downward consistent
with management's assumptions regarding the value of any
collateral underlying the loans.

Deposits - Certificates of deposit are valued by performing a
discounted cash flow analysis of the remaining contractual
maturities of outstanding certificates. The discount rates used
are wholesale secondary market rates as of the valuation date.
For all other deposits, fair value is deemed to be equivalent to
the amount payable on demand as of the valuation date.
Borrowed funds - Borrowings are fair valued based on rates
available to the Company in either public or private markets for
debt with similar terms and remaining maturities.
Accrued interest receivable, accrued interest payable,
mortgagors' escrow balances and due to broker - The fair values
are estimated to equal the carrying values of short-term
receivables and payables, including accrued
interest, mortgage escrow funds and due to broker.

Off-balance sheet financial instruments - The fair value of the
interest rate cap was obtained from dealer quotes and represents
the cost of terminating the agreement. The estimated fair value
of open off-balance sheet financial instruments results in an
unrealized loss of  $31,000 and  $62,000 at December 31, 1997 and
1996, respectively.

The estimated fair value of commitments to extend credit is
estimated using the fees charged to enter into similar
agreements, taking into account the remaining terms of the
agreements and the present credit worthiness of the
counterparties. Generally, for fixed-rate loan commitments, fair
value also considers the difference between current levels of
interest rates and the committed interest rates. The fair value
of commitments to purchase debt securities and MBSs is based on
the estimated cost to terminate them or otherwise settle the
obligations with the counterparties. The estimated fair value of
these off-balance sheet financial instruments resulted in no
unrealized gain or loss at December 31, 1997 and 1996.

16.        PARENT COMPANY ONLY CONDENSED FINANCIAL STATEMENTS

The condensed financial statements of the Holding Company (parent
company only) are as follows:








  Parent Company Condensed Statements of Financial Condition

<TABLE>
<CAPTION
                                                     December 31,
(In thousands)                                       1997     1996
<S>                                                <C>      <C>
Assets:
Cash                                              $    656       38
Money market investments                             4,561    1,869
Securities available for sale                        4,123     -
Accrued interest receivable                             42        2
Accrued income taxes receivable                      3,781      359
Investment in net assets of Bank                   128,522   97,789
Investment in net assets of Haven Capital Trust I      790     -
                                                   -------  -------
Total assets                                       142,475  100,057
                                                   =======  =======
Liabilities:
Junior subordinated debt issued to Haven
  Capital Trust I                                   25,774     -
Other liabilities                                    3,836      673
                                                   -------  -------
Total liabilities                                   29,610      673
                                                   -------  -------
Stockholders' equity:
Common stock                                           100      100
Additional paid-in capital                          50,065   48,794
Retained earnings, substantially restricted         73,567   65,092
Unrealized gain (loss) on securities available
  for sale, net of tax effect                        1,671     (840)
Treasury stock, at cost                            (10,246) (11,049)
Unallocated common stock held by ESOP               (1,529)  (1,854)
Unearned common stock held by RRPs                    (364)    (267)
Unearned compensation                                 (399)    (592)
                                                   -------  -------
Total stockholders' equity                         112,865   99,384
                                                   -------  -------
Total liabilities and stockholders' equity        $142,475  100,057
                                                   =======  =======














     Parent Company Only Condensed Statements of Operations

</TABLE>
<TABLE>
<CAPTION>
                                         Years Ended December 31,
(In thousands)                               1997   1996   1995
<C>                                        <C>    <C>     <C>
Dividend from Bank                        $   -    2,000    -
Dividend from Trust                            72    -      -
Interest income                               514    178    571
Interest expense                           (2,389)   -      -
Other operating expenses                     (935)  (961)  (788)
                                           ------  -----  -----
(Loss) income before income tax expense
  (benefit) and equity in undistributed
  net income of Bank                       (2,738) 1,217   (217)
Income tax (benefit) expense               (1,277)  (360)  (100)
                                           ------  -----  -----
Net (loss) income before equity in
  undistributed net income of Bank         (1,461) 1,577   (117)
Equity in undistributed net income of Bank 12,544  7,848  8,661
                                           ------  -----  -----
Net income                                $11,083  9,425  8,544
                                           ======  =====  =====
</TABLE>

    Parent Company Only Condensed Statements of Cash Flows
<TABLE>
<CAPTION
    Years Ended December 31,
(In thousands)                                          1997     1996     1995
<S>                                                    <C>      <C>      <C>
Operating activities:
Net income                                            $11,083    9,425    8,544
Less equity in undistributed net income of the Bank   (12,544)  (7,848)  (8,661)
(Increase) decrease in accrued interest receivable        (40)      23        8
(Increase) decrease in accrued income tax receivable   (3,422)    (175)     774
Increase (decrease) in other liabilities                3,189      219     (841)
                                                       ------   ------   ------
Net cash provided by (used in) operating activities    (1,734)   1,644     (176)
                                                       ------   ------   ------
Investing activities:
Purchases of securities available for sale             (4,095)     -        -
Additional investment in the Bank                     (14,007)     -        -
                                                       ------   ------   ------
Net cash used in investing activities                 (18,102)     -        -
                                                       ------   ------   ------
Financing activities:
Proceeds from issuance of debt                         24,984      -        -
Purchase of treasury stock                               -      (5,516)  (1,360)
Payment of common stock dividends                      (2,598)  (2,475)    (454)
Exercise of stock options                                 760       95      257
                                                       ------   ------   ------
Net cash provided by (used in) financing activities    23,146   (7,896)  (1,557)
                                                       ------   ------   ------
Net increase (decrease) in cash                         3,310   (6,252)  (1,733)
Cash at beginning of year                               1,907    8,159    9,892
                                                       ------   ------   ------
Cash at end of year                                   $ 5,217    1,907    8,159
                                                       ======   ======   ======
</TABLE>





17.  QUARTERLY FINANCIAL DATA (Unaudited)

The following table is a summary of financial data by quarter for
the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
                                               1997                                        1996
(Dollars in thousands,         1st        2nd        3rd        4th        1st        2nd        3rd        4th
  except for share data)     Quarter    Quarter    Quarter    Quarter    Quarter    Quarter    Quarter    Quarter
<S>                         <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Interest income             $  28,797     31,616     32,575     33,318     25,905     27,013     27,963     28,372
Interest expense               16,372     18,234     19,345     20,449     14,566     15,001     15,972     15,829
                              -------    -------    -------    -------    -------    -------    -------    -------
Net interest income before
  provision for loan losses    12,425     13,382     13,230     12,869     11,339     12,012     11,991     12,543
Provision for loan losses         700        750        700        600        650      1,125        700        650
                              -------    -------    -------    -------    -------    -------    -------    -------
Net interest income after
  provision for loan losses    11,725     12,632     12,530     12,269     10,689     10,887     11,291     11,893
Non-interest income             2,327      2,827      3,211      5,547      2,153      2,784      2,251      2,366
Non-interest expense            9,069     11,538     12,014     13,226      7,445      8,015     14,024      8,971
                              -------    -------    -------    -------    -------    -------    -------    -------
Income (loss) before income
  tax expense (benefit)         4,983      3,921      3,727      4,590      5,397      5,656       (482)     5,288
Income tax expense (benefit)    1,678      1,621      1,276      1,563      2,539      2,630       (559)     1,824
                              -------    -------    -------    -------    -------    -------    -------    -------
Net income                  $   3,305      2,300      2,451      3,027      2,858      3,026         77      3,464
                              =======    =======    =======    =======    =======    =======    =======    =======
Net income per common share:
Basic                       $    0.40       0.28       0.29       0.36       0.34       0.37       0.01       0.42
Diluted                     $    0.38       0.26       0.27       0.34       0.33       0.35       0.01       0.40
                              =======    =======    =======    =======    =======    =======    =======    =======
Weighted average number of
shares outstanding: Basic   8,301,766  8,357,213  8,445,829  8,382,509  8,408,464  8,199,713  8,254,862  8,276,541
                    Diluted 8,770,901  8,816,488  8,960,366  8,973,295  8,764,808  8,587,078  8,669,118  8,690,553
</TABLE>













Independent Auditors' report


The Board of Directors
Haven Bancorp, Inc.:

We have audited the accompanying consolidated statements of
financial condition of Haven Bancorp, Inc. (the "Company") as of
December 31, 1997 and 1996, and the related consolidated
statements of income, changes in stockholders' equity and cash
flows for each of the years in the three-year period ended
December 31, 1997. These consolidated financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of the Company at December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 1997 in
conformity with generally accepted accounting principles.



January 22, 1998
Jericho, New York
















Directors and officers and Directory

Directors
Haven Bancorp, Inc.
and CFS Bank

George S. Worgul
Chairman of the Board

Philip S. Messina
Chief Executive Officer, President

Robert L. Koop
President, Haven Chevrolet

Robert M. Sprotte
President, Schmelz Bros., Inc.
President, RDR Realty Corp.
President, Three Rams Realty

Joseph A. Ruggiere
President, Ohlert-Ruggiere, Inc.

Michael J. Fitzpatrick
C.P.A., Financial Consultant
Retired, Vice President, National Thrift Director,
E.F. Hutton & Co.

William J. Jennings II
Managing Director, Salomon Smith Barney, Inc.

Michael J. Levine
President, Norse Realty Group, Inc. & Affiliates
Partner, Levine & Schmutter, CPAs

Msgr. Thomas J. Hartman
President and Chief Executive Officer of Radio and Television for
the Diocese of Rockville Centre for Telicare Television Studios

Executive Officers
Haven Bancorp, Inc.
and CFS Bank

Philip S. Messina
Chief Executive Officer, President

Gerard H. McGuirk
Executive Vice President, Chief Lending Officer

Thomas J. Seery
Executive Vice President, Operations

Catherine Califano
Senior Vice President, Chief Financial Officer
Joseph W. Rennhack
Senior Vice President, Secretary


DIRECTORY

Administrative Headquarters
Haven Bancorp, Inc.
93-22 Jamaica Avenue
Woodhaven, NY 11421
(718) 850-2500

Stockholder Information
Corporate Offices
Haven Bancorp, Inc.
93-22 Jamaica Avenue
Woodhaven, NY 11421

Annual Meeting
The annual meeting of stockholders will be held on Wednesday,
April 22, 1998 at 9:00 A.M., at the Holiday Inn Crowne Plaza,
104-04 Ditmars Blvd., East Elmhurst, New York. A notice of the
meeting, a proxy statement and a proxy form are included with
this mailing to stockholders of record
as of March 4, 1998.

Common Stock Information
Haven Bancorp common stock is traded on the Nasdaq National
Market under the symbol HAVN. The table below shows the reported
high and low sales prices of the common stock during the periods
indicated in 1997 and 1996. Such prices reflect the 2-for-1 stock
split effective November 1997.
                            1997              1996
                        High     Low     High      Low
     First Quarter     18 3/16 13 7/8   12 5/8   11 1/8
     Second Quarter    19 1/8  15 1/4   14 3/8   11 3/16
     Third Quarter     21 7/8  17 13/16 14 11/16 12 5/8
     Fourth Quarter    23      19 1/8   14 3/4   12 3/4

As of March 4, 1998, the Company had approximately 428
stockholders of record, not including the number of persons or
entities holding stock in nominee or street name through various
brokers and banks. At December 31, 1997, there were 8,784,700
shares of common stock outstanding.

Transfer Agent and Registrar
Inquiries regarding stockholder administration and
services should be directed to:
ChaseMellon Shareholder Services, L.L.C.
Overpeck Center
85 Challenger Road
Ridgefield Park, NJ 07660
1-800-851-9677
** World Wide Web Site: http://www.chasemellon.com
Independent Auditors
KPMG Peat Marwick LLP
1 Jericho Plaza
Jericho, NY 11753

Legal Counsel
Thacher Proffitt & Wood
Two World Trade Center
New York, NY 10048

Investor Relations
Inquiries regarding Haven Bancorp, Inc.
should be directed to:
Catherine Califano
Haven Bancorp, Inc.
93-22 Jamaica Avenue
Woodhaven, NY 11421
(718) 850-1203

Annual Report on Form 10-K
A copy of the annual report on Form 10-K for the year ended
December 31, 1997, as filed with the Securities and Exchange
Commission, is available to stockholders (excluding exhibits) at
no charge, upon written requests to:
Investor Relations
Haven Bancorp, Inc.
93-22 Jamaica Avenue
Woodhaven, NY 11421
** World Wide Web Site: http://www.cfsb.com