<PAGE>

                                                                     Exhibit 3.2


                                PROGRESSIVE BANK, INC.

                                       BY-LAWS

                       AS AMENDED AND RESTATED ON JUNE 10, 1997



                                      ARTICLE I

                               MEETINGS OF SHAREHOLDERS

    SECTION 1.    PLACE OF MEETINGS.  Meetings of Shareholders shall be held at
the principal office of the Corporation or at such place within or without the
State of New York as may be fixed by the Board of Directors.

    SECTION 2.    ANNUAL MEETING.  The Annual Meeting of Shareholders shall be
held each year on a date to be fixed by the Board of Directors.  At each Annual
Meeting of Shareholders, the Shareholders shall elect the appropriate class of
Directors for the ensuing year and shall transact such other business as may
properly come before the Meeting.

    SECTION 3.    SPECIAL MEETINGS.  Special Meetings of the Shareholders may
be called at any time by the Board of Directors.  In the event of failure to
elect a sufficient number of Directors to conduct the business of the
Corporation (either by a failure to so elect at the Annual Meeting of
Shareholders or failure of such meeting to be held for any reason) and failure
of the Board of Directors to call or elect such Directors at a Special Meeting
within a period of one month after the scheduled date for such Annual Meeting of
Shareholders (or if no such date has been so fixed, a period of thirteen months
after the last Annual Meeting of Shareholders), the Secretary shall call a
Special Meeting for the election of such Directors upon demand, in writing, by
the holders of ten percent of the shares entitled to vote in an election of
Directors.

    SECTION 4.    ADJOURNMENT OF SHAREHOLDERS' MEETINGS.  If a quorum is not
present at any Annual of Special Meeting of Shareholders, the Shareholders
present, in person or by proxy, may be the affirmative vote of a majority of the
voting power of the shares represented at such Meeting and entitled to vote
thereat, adjourn to such future time as shall be agreed upon by them, and notice
of such adjournment shall be given to the Shareholders not present or
represented at the Meeting.

    SECTION 5.    NOTICE OF MEETINGS.  Notice, in writing, of the time and
place of each Meeting of Shareholders, the person or persons calling such
Meeting and the purpose thereof shall be given to each Shareholder of record
entitled to vote at such Meeting, not less than ten days nor more than fifty
days before such Meeting.  Such notice shall be given by, or at the direction
of, the President or Secretary or other person or persons calling such Meeting,
by leaving such notice with the Shareholder at his residence or his usual place
of business or by mailing a copy thereof to him at his last known post office
address as shown on the records of the Corporation.  No such notice need be
given to any Shareholder who attends such Meeting in person without protesting
prior to or at the 


                                          1

<PAGE>

commencement of such meeting or who waives such notice in writing executed and
filed with the Secretary of the Corporation either before or after the Meeting. 
The Secretary shall cause any such waiver to be filed with, or entered upon, the
records of the Meeting.

    SECTION 6.    QUORUM.  The holders of shares entitled to vote present in
person or by proxy at any meeting of Shareholders shall constitute a quorum for
such Meeting provided that in no event shall such quorum consist of less than
one-third of the shares eligible to vote at that Meeting.  If a specified item
of business is required to be voted on by a class or classes, the holders of the
shares of such class or classes shall constitute a quorum for the transaction of
such specified item of business, provided at least one-third of the shares of
any such class or classes, respectively, eligible to vote are represented at
that Meeting.

    SECTION 7.    VOTING.  Each holder of record of shares of Common Stock and
of any Serial Preferred Stock, which has been vested with voting power by the
Board of Directors of the Corporation, shall be entitled to one vote for each
share of such stock held.  At all elections of Directors, the voting shall be by
ballot.  The Board of Directors, or, if the Board shall not have made the
appointment, the Chairman presiding at any meeting of the Shareholders, shall
have power to appoint two or more persons to act as inspectors or tellers, to
receive, canvass, and report the votes cast by the Shareholders at such Meeting;
but no candidate for the office of Director shall be appointed as inspector or
teller at any meeting for the election of Directors.

    SECTION 8.    PROXIES.  All proxies shall be in writing and shall be filed
with the Secretary of the Corporation before being voted.  A proxy shall not be
valid after eleven months from its date of execution unless it specifies a
greater length of time for which it is to continue in force.  The attendance at
any Meeting by a Shareholder who shall have previously given a proxy applicable
thereto shall not, as such, have the effect of revoking the proxy.  The
Corporation may treat any duly executed proxy as not revoked and in full force
and effect until it receives a duly executed instrument revoking it, or a duly
executed proxy bearing a later date.

    SECTION 9.    NOTICE FOR NOMINATIONS AND PROPOSALS.

         (a)  Nominations for the election of  Directors and proposals for any
    new business to be taken up at any Annual or Special Meeting of
    stockholders may be made by the Board of Directors of the Corporation or by
    any stockholder of the Corporation entitled to vote generally in the
    election of Directors.  In order for a stockholder of the Corporation to
    make any such nominations and/or proposals, he or she shall give notice
    thereof in writing, delivered or mailed by first class United States mail,
    postage prepaid, to the Corporate Secretary of the Corporation not less
    than thirty days nor more than sixty days prior to the date of any such
    meeting; provided, however, that if less than forty days' notice of the
    meeting is given to stockholders, such written notice shall be delivered or
    mailed, as prescribed, to the Corporate Secretary of the Corporation not
    later than the close of business on the tenth day following the day on
    which notice of the meeting was mailed to stockholders.  Each such notice
    given by a stockholder with respect to nominations for the 


                                          2

<PAGE>

    election of directors shall set forth (i) the name, age, business address 
    and, if known, residence address of each nominee proposed in such notice, 
    (ii) the principal occupation or employment of each such nominee, and 
    (iii) the number of shares of stock of the Corporation which are 
    beneficially owned by each such nominee.  In addition, the stockholder 
    making such nomination shall promptly provide any other information 
    reasonably requested by the Corporation.

         (b)  Each such notice given by a stockholder to the Corporate
    Secretary with respect to business proposals to be brought before a meeting
    shall set forth in writing as to each matter:  (i)  a brief description of
    the business desired to be brought before the meeting and the reasons for
    conducting such business at the meeting; (ii)  the name and address, as
    they appear on the Corporation's books, of the stockholder proposing such
    business; (iii)  the class and number of shares of the Corporation which
    are beneficially owned by the stockholder; and (iv)  any material interest
    of the stockholder in such business.  Notwithstanding anything in the
    Certificate to the contrary, no new business shall be conducted at the
    meeting except in accordance with the procedures set forth in this Section.

         (c)  The Chairman of the Annual or Special Meeting of stockholders
    may, if the facts warrant, determine and declare to such meeting that a
    nomination or proposal was not made in accordance with the foregoing
    procedure, and, if he should so determine, he shall so declare to the
    meeting and the defective nomination or proposal shall be disregarded and
    laid over for action at the next succeeding Special or Annual Meeting of
    the stockholders taking place thirty days or more thereafter.  This
    provision shall not require the holding of any adjourned or Special Meeting
    of stockholders for the purpose of considering such defective nomination or
    proposal.


                                      ARTICLE II

                                        SHARES

    SECTION 1.    CERTIFICATES OF SHARES.  Certificates of shares shall be in a
form adopted by the Board of Directors and shall be signed by the President or a
Vice-President, and by the Secretary, or an Assistant Secretary and shall be
attested by the Corporate Seal.  Each Certificate shall set forth upon the face
thereof, (1) the name of the Corporation, (2) a statement that the Corporation
is organized under the laws of the State of New York, (3) the name of the person
or persons to whom issued, (4) the number, class and designation of series, if
any, of shares which such Certificate represents and (5) the par value of each
share represented by such Certificate.  If certificates are signed by a Transfer
Agent, acting on behalf of the Corporation, or a Registrar, the signatures of
the officers of the Corporation may be facsimile.

    SECTION 2.    TRANSFER AGENT.  The Board of Directors shall have power to
appoint one or more Transfer Agents and Registrars for the transfer and
registration of certificates of shares of any 


                                          3

<PAGE>

class, and may require that share certificates shall be countersigned and
registered by one or more of such Transfer Agents and Registrars.

    SECTION 3.    TRANSFER OF SHARES.  Shares of capital stock of the
Corporation shall be transferable on the books of the Corporation only by the
holder of record thereof in person or by a duly authorized attorney, upon
surrender and cancellation of certificates for a like number of shares.

    SECTION 4.    LOST CERTIFICATES.  In case any certificate for the shares of
the Corporation shall be lost, stolen, or destroyed, the Corporation may require
such proof of the fact and such indemnity to be given to it and to its Transfer
Agent and Registrar, if any, as shall be deemed necessary or advisable by it.

    SECTION 5.    HOLDER OF RECORD.  The Corporation shall be entitled to treat
the holder of record of any shares as the holder thereof in fact and shall not
be bound to recognize any equitable or other claim to or interest in such shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise expressly provided by law.

    SECTION 6.    CLOSING OF BOOKS.  The Board of Directors shall have the
power to close the share transfer books of the Corporation for a period not
exceeding fifty days preceding the date of any Meeting of Shareholders or the
date for payment of any dividend or the date for the allotment of rights or the
date when any change or conversion or exchange of shares shall go into effect;
provided that in lieu of closing the share transfer books, the Board of
Directors may fix in advance a date, not exceeding fifty days preceding the date
of any Meeting of Shareholders, or the date for the payment of any dividend or
the date for allotment or rights, or the date when any change or conversion or
exchange of shares shall go into effect, as a record date for the determination
of the Shareholders entitled to notice of and to vote at any such Meeting, or
entitled to receive payment of any such dividends, or any such allotment of
rights, or to exercise the rights in respect to any such change, conversion or
exchange of shares, and in such case only Shareholders of record on the date so
fixed shall be entitled to such notice of and to vote at such Meeting, or to
receive payment of such dividend, or allotment of rights, or exercise of such
rights, as the case may be, and notwithstanding any transfer of any shares on
the books of the Corporation after any such record date fixed as herein
provided.


                                          4

<PAGE>

                                     ARTICLE III

                                      DIRECTORS

    SECTION 1.    MANAGEMENT OF CORPORATION.  The property, business, and
affairs of the Corporation shall be managed and controlled by its Board of
Directors each of whom shall be at least 18 years of age and need not be a
Shareholder.

    SECTION 2.    NUMBER, ELECTION AND TERM OF OFFICE.  The Board of Directors
shall consist of not less than ten nor more than fifteen Directors.  The number
of Directors at any time within such maximum and minimum shall be either the
number fixed by resolution of the Board of Directors or, in the absence of such
a resolution, the number of Directors elected at the preceding Annual Meeting of
Shareholders; provided, however, that such number may be increased or decreased
at any time by vote of the Directors.  Reduction of the number of Directors
shall not, as such, cause the removal from office of any person then serving as
a Director of the Corporation or shorten the term of office of any such person. 
Directors shall hold office for the time for which they are elected and until
their successors are duly elected and qualified.  Any or all of the Directors
may be removed by the Shareholders at any time at any Annual or Special
Shareholders' Meeting with cause upon the affirmative vote of two-thirds of the
votes eligible to be cast at such Meeting.  Removal for cause shall include
removal only because of a Director's personal dishonesty, incompetence, willful
or grossly negligent misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties including failure to attend
three or more consecutive Meetings of the Board of Directors, or willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease and desist order.  In addition, any Director
may be removed by the Board of Directors at any time at any Regular or Special
Meeting of the Board of Directors if the Information Security Committee of the
Board of Directors has determined by a majority vote that such Director has
breached the Corporation's policy on confidential information in a manner which
justifies his removal from the Board of Directors, and not less than two-thirds
of all of the Directors, other than the Director in question, vote to so remove
the Director.  A notice of such proposed action shall be sent to each Director
at least three days prior to any such Meeting.  A Director shall not be elected
or re-elected who has reached the age of seventy (70).

    SECTION 3.    CLASSIFICATION OF BOARD.  The Board of Directors shall be
divided into three classes in respect of term of office, each class to contain,
as near as may be, one-third of the whole number of the Board.  Of the first
Board of Directors, the members of one class shall serve until the Annual
Meeting of Shareholders held in the year following their election, the members
of the second class shall serve until the Annual Meeting of Shareholders held
two years following their election, and the members of the third class shall
serve until the Annual Meeting of Shareholders held three years following their
election; provided, however, that in each case Directors shall continue to serve
until their successors shall be elected and shall qualify.  At each Annual
Meeting of Shareholders following election of the first Board of Directors, one
class of Directors shall be elected to serve until


                                          5

<PAGE>

the Annual Meeting of Shareholders held three years next following and until 
their successors shall be elected and shall qualify.

    SECTION 4.    VACANCIES.  Vacancies in the Board of Directors not exceeding
one-third of the entire Board shall be filled for the unexpired portion of the
term by vote of the Directors.  All other vacancies shall be filled by election
by the Shareholders.

    SECTION 5.    REGULAR MEETINGS.  Regular Meetings of the Board of Directors
shall be held at such time and place as may be specified from time to time by
resolution of the Board of Directors and notice thereof need not be given.  If
no such resolution shall be in effect, Regular Meetings of the Board of
Directors shall be called in the manner hereinafter provided with respect to
Special Meetings of the Board of Directors.

    SECTION 6.    SPECIAL MEETINGS.   Special Meetings of the Board of
Directors may be called by the Chairman of the Board or the President and shall
be called by the President upon written request of any two Directors.  If the
President shall not call such Meetings with fifteen days after receipt of such
written request, the Directors making such request may call the Meeting.  At
least two days oral or written notice of each Special Meeting stating the time
and place of the Meeting shall be given to each Director.  No notice of
Directors' Meeting need be given to any Director who attends such Meeting in
person without protesting prior to or at the commencement of such Meeting, or
who waives such notice in writing executed and filed with the Secretary of the
Corporation, either before or after the Meeting.  The Secretary shall cause any
such waiver to be filed with, or entered upon, the records of the Meeting.
 
    SECTION 7.    QUORUM AND VOTING REQUIREMENTS.  A majority of the Directors
shall constitute a quorum.  The affirmative vote of a majority of the Directors
present at a Meeting at which a quorum is present shall be required for action
by the Board of Directors on any matter.

    SECTION 8.    POWERS.  The property, business and affairs of the
Corporation shall be managed by the Board of Directors, who may exercise all the
powers and do all things which may be exercised by or done by the Corporation
subject to the provisions of the Statutes of the State of New York, the
Certificate of Incorporation, these By-laws and any vote by the Shareholders.

    SECTION 9.(a) COMMITTEES. The Board of Directors may designate three or
more Directors to constitute committees of the Board.  Each such Committee shall
have and may exercise all of the authority of the Board of Directors, except as
shall be provided in the resolution establishing such Committee.  Each such
Committee shall serve at the pleasure of the Board of Directors and shall keep
minutes of its proceedings which shall be reported to the Board of Directors.

    SECTION 9.(b) No such Committee shall have authority as to the following
matters:

    (i)     The submission to Shareholders of any action that needs
            Shareholders' approval.


                                          6

<PAGE>

    (ii)    The filling of vacancies in the Board of Directors or in any
            Committee.

    (iii)   The fixing of compensation of the Directors for serving on the
            Board or any Committee.

    (iv)    The amendment or repeal of the By-laws or the adoption of new
            By-laws.

    (v)     The amendment or repeal or any resolution of the Board which by its
            terms shall not be so amendable or repealable.

    (vi)    The adoption of a plan of merger or consolidation.

    (vii)   The recommendation to the Shareholders of the sale or other
            disposition of all or substantially all of the property and assets
            of the Corporation.

    (viii)  The recommendation to the Shareholders of a voluntary dissolution
            of the Corporation or a revocation of a dissolution.

    (ix)    The declaration of dividends or authorization of the issuance of
            stock.

    SECTION 10.   TRANSACTION OF BUSINESS WITHOUT MEETING.  Any corporate
action which can be authorized at a regularly constituted Meeting of the Board
of Directors or a Committee thereof may be authorized without such a Meeting,
provided that all of the Directors or all of the members of a Committee thereof,
as the case may be, consent in writing to such action.  The Secretary of the
Corporation shall file such consents with the Minutes of the Meeting of the
Board of Directors or the appropriate committee, whichever the case shall be.

    Members of the Board of Directors or any committee thereof may participate
in meetings by means of conference telephone or similar communications equipment
by which all persons participating in the meeting can hear and speak to each
other.  Such participation shall constitute presence in person but shall not
constitute attendance for the purpose of compensation pursuant to Section 13 of
Article III.

    SECTION 11.   INDEMNIFICATION AND REIMBURSEMENT.  The Corporation shall
indemnify a current or former Director, officer, employee or agent of the
Corporation or other person required or permitted to be indemnified under the
Corporation Law of New York, as now or hereafter amended, to the fullest extent
permitted by the provisions of such law.

    SECTION 12.   ADVISORY BOARDS.  The Boards of Directors may designate three
or more persons to constitute Advisory Boards of the Corporation.  Each such
Advisory Board shall undertake such projects as may be set forth in Board
resolutions and make recommendations to the Board with respect thereto.  Each
Advisory Board shall keep minutes of its proceedings which shall be reported to
the Board of Directors.  Each Advisory Board member may serve until the age of
75 


                                          7

<PAGE>

years, unless sooner removed for failure to attend five or more consecutive
Meetings or by action of the Advisory Board of which he is a member.

    SECTION 13.   COMPENSATION.  Directors, and members of any committee of the
Board of Directors, shall be entitled to such reasonable compensation for their
services as directors and members of any such committee as shall be fixed from
time to time by resolution of the Board of Directors, and shall also be entitled
to reimbursement for any reasonable expenses incurred in attending such
meetings.  The compensation of and expenses of directors may be paid on such
basis as is determined in resolutions of the Board of Directors.  Any director
receiving compensation under these provisions shall not be barred from serving
the Corporation in any other capacity and receiving reasonable compensation for
such other services.

    SECTION 14.   NOMINATING COMMITTEE.  The Board of Directors or a committee
appointed by the Board of Directors shall act as a nominating committee for
selecting the management nominees for election as Directors.  Except in the case
of a nominee substituted as a result of the death or other incapacity of a
management nominee, the nominating committee shall deliver written nominations
to the Secretary at least twenty days prior to the date of the Annual Meeting. 
Provided such committee makes such nominations, no nominations for Directors
except those made by the nominating committee shall be voted upon at the Annual
Meeting unless other nominations by stockholders are made in writing and
delivered to the Secretary of the Corporation in accordance with the provisions
of the Corporation's Certificate of Incorporation.


                                      ARTICLE IV

                                      OFFICERS 

    SECTION 1.    TITLES, ELECTION AND DUTIES.  At the first Meeting of the
Board of Directors held after the Annual Meeting of Shareholders the Directors
shall appoint from among their number a Chairman, a President, and shall appoint
a Treasurer and a Secretary.  The Board may also appoint, from time to time, a
Vice Chairman of the Board and one or more Vice-Presidents, Assistant Vice
Presidents, Assistant Treasurers, Assistant Secretaries, and such other officers
as the Directors deem expedient.  Any two or more offices may be held by the
same person except the office of President and Secretary.  The duties of the
officers of the Corporation shall be such as are imposed by these By-laws and,
from time to time, prescribed by the Directors.

    SECTION 2.    CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all Meetings of the Directors and Shareholders.  He shall have the
power to call Special Meetings of the Board of Directors at any time he may deem
it in the interest of the Corporation, and shall perform all other duties
usually pertaining to the Office of the Chairman of the Board.

    SECTION 3.    VICE CHAIRMAN OF THE BOARD.  The Vice Chairman of the Board,
if any, shall preside in the absence of the Chairman of the Board at all
Meetings of the Directors and 


                                          8

<PAGE>

Shareholders, and shall have such other duties as may be prescribed from time to
time by the Board of Directors or by the By-laws.

    SECTION 4.    PRESIDENT.  The President shall be the Chief Executive and
Administrative Officer of the Corporation.  In the absence of the Chairman of
the Board and the Vice Chairman of the Board, the President shall preside at all
Meetings of the Directors and Shareholders.

    SECTION 5.    VICE-PRESIDENTS.  The Vice-President, if any, or if there
shall be more than one, the Vice-Presidents in the order of seniority or in any
other order determined by the Board of Directors shall, in the event of the
absence or disability of the President, perform the duties and exercise the
powers of the President.  The Vice-President or Vice-Presidents shall assist the
President in the performance of his duties.

    SECTION 6.    TREASURER.  The Treasurer shall keep the fiscal accounts of
the Corporation, including an account of all moneys received or disbursed.  At
intervals of not more than twelve months, he shall prepare or have prepared for
the Corporation a balance sheet showing the financial condition of the
Corporation as of a date not more than fours months prior thereto, and a profit
and loss statement for the immediately preceding fiscal year, each of which
shall be deposited at the principal office of the Corporation and shall be kept
by the Corporation for at least ten years from such date.  In addition, within
sixty days after the preparation of each such balance sheet and profit and loss
statement, the Corporation shall mail a copy thereof to each Shareholder of
record.  The Treasurer may endorse, for and on behalf of the Corporation,
checks, notes and other obligations and shall deposit the same and all moneys
and valuables in the name of, and to the credit of, the Corporation in such
banks and depositories as the Board of Directors shall designate.  The Treasurer
shall have custody of and shall have the power to endorse for transfer on behalf
of the Corporation, securities and other investment instruments owned by the
Corporation.

    SECTION 7.    ASSISTANT TREASURERS.  The Assistant Treasurers, if any,
shall assist the Treasurer in the performance of his duties and shall carry out
the duties of the Treasurer whenever the Treasurer is unable to perform such
duties.

    SECTION 8.    SECRETARY.  The Secretary shall keep the minutes of the
Meetings of Shareholders and Directors and shall give notice of all such
Meetings as required in these By-laws.  The Secretary shall have custody of the
seal of the Corporation and all books, records and papers of the Corporation,
except those in the custody of the Treasurer or some other person authorized to
have custody and possession thereof by a resolution of the Board of Directors.

    SECTION 9.    ASSISTANT SECRETARIES.  The Assistant Secretaries, if any,
shall assist the Secretary in the performance of his duties and shall carry out
the duties of the Secretary whenever the Secretary is unable to perform such
duties.

    SECTION 10.   COMPENSATION.  The salaries of all officers shall be fixed by
the Human Resources Committee of the Board of Directors or by the Board of
Directors.


                                          9

<PAGE>

    SECTION 11.   TERMS OF OFFICE.  Each officer shall serve for the term for
which he is appointed and until his successor is duly appointed and qualified. 
Any officer may be removed by the Board of Directors at any time, but any such
removal shall be without prejudice to any contractual rights the person so
removed may have.  Vacancies among the officers by reason of death, resignation
or other causes shall be filled by the Board of Directors.


                                      ARTICLE V

                                         SEAL

    SECTION 1.    DESIGN.  The Corporate Seal of the Corporation shall be a
circular seal as follows:

                                       (Affix Corporate Seal Here)



                                      ARTICLE VI

                                      AMENDMENTS

    SECTION 1.    ADOPTION, AMENDMENT AND REPEAL.  By-laws may be amended,
repealed or adopted by the affirmative vote of three-quarters of all of the
votes eligible to be cast at a Meeting of Shareholders held to consider such
matter and new By-laws may also be adopted provided that the notice of any such
Meeting at which By-laws are to be adopted, amended or repealed shall include
notice of such proposed action.  Any By-law may be amended, repealed or adopted
by the Directors by the affirmative vote of a majority of the Directors then
elected and qualified; but any By-law adopted by the Board of Directors may be
amended or repealed by Shareholder vote.

    SECTION 2.    RECORD OF CHANGES.  Whenever a By-law is amended or repealed
or a new By-law is adopted, such action and the date on which it was taken shall
be noted on the original By-laws in the appropriate place or a new set of
By-laws shall be prepared incorporating such changes.


                                          10

<PAGE>

                                     ARTICLE VII

                                    MISCELLANEOUS

    SECTION 1.    INCONSISTENCIES WITH CERTIFICATE OF INCORPORATION.  In any
provision of these By-laws shall be found to be inconsistent with any provision
of the Certificate of Incorporation, as presently existing, or as from time to
time amended, the latter shall constitute the controlling authority.

    SECTION 2.    APPLICABLE GENDER.  Where the use of the female gender would
be appropriate in framing these By-laws, it shall be deemed to be intended
alternatively to or in conjunction with the male gender.


                                          11