EXHIBIT 10.9



                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT  ("Agreement") is made and entered into as of
this 1st day of August,  1998,  by and between  Catskill  Savings  Bank, a stock
savings bank  organized  and  operating  under the laws of the United States and
having  its  executive  office  at 341 Main  Street,  Catskill,  New York  12414
(hereinafter  referred to as the "Bank"),  and David J.  DeLuca,  residing at 15
Rudder Lane, Latham, New York 12110.

         WHEREAS,  Mr. DeLuca is currently  serving as Vice  President and Chief
Financial  Officer of the Bank; and WHEREAS,  the Board of Directors of the Bank
(the  "Board")  believes it is in the best  interests  of the Bank to enter into
this  Agreement  with Mr. DeLuca in order to assure  continuity of management of
the Bank and reinforce and encourage the continued  attention and  dedication of
Mr. DeLuca to his assigned duties without distraction; and

         WHEREAS,  the Board has approved and  authorized  the execution of this
Agreement and Mr. DeLuca is agreeable thereto.

         NOW,   THEREFORE,   in   consideration  of  the  mutual  covenants  and
obligations  of the  parties  hereto  hereinafter  set  forth,  it is  agreed as
follows:

         1.       Definitions.

         (a) The term "Change in Control"  means:  (1) an event of a nature that
(i)  results  in a  change  in  control  of the  Bank or of  Catskill  Financial
Corporation,  the Delaware  corporation  which owns all of the Bank's stock (the
"Holding Company"), within the meaning of the Home Owners' Loan Act and 12 C. F.
R. Part 574 as in effect on the date  hereof;  or (ii) would be  required  to be
reported in  response to Item 1 of the current  report on Form 8-K, as in effect
on the date hereof,  pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934  (the  "Exchange  Act");  (2)  any  person  (as the  term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner
(as  defined in Rule 13d-3  promulgated  under the  Exchange  Act),  directly or
indirectly of securities of the Bank or the Holding Company  representing 25% or
more of the Bank's or the Holding  Company's then  outstanding  securities;  (3)
individuals who are members of the board of directors of the Bank or the Holding
Company on the date hereof (each the "Incumbent  Board") cease,  for any reason,
to constitute at least a majority  thereof,  provided that any person becoming a
director  subsequent to the date hereof whose election was approved by a vote of
at least  three-quarters  of the directors  comprising the Incumbent  Board,  or
whose nomination for election by the Holding Company's stockholders was approved
by  the  nominating  committee  serving  under  an  Incumbent  Board,  shall  be
considered a member of the Incumbent  Board;  or (4) a  reorganization,  merger,
consolidation, sale of all or substantially all of the assets of the Bank or the
Holding  Company  or a  similar  transaction  in which  the Bank or the  Holding
Company is not the  resulting  entity.  The term  "Change in Control"  shall not
include an acquisition of securities by: (1) the trustee of an employee  benefit
plan of the Bank or the Holding Company;  (2) a corporation  owned,  directly or
indirectly, by the stockholders of the Holding Company in substantially the same
proportions  as their  ownership  of stock of the  Holding  Company;  or (3) Mr.
DeLuca,  or any group  otherwise  constituting a person in which Mr. DeLuca is a
member.

         (b) The term "Commencement Date" means August 1, 1998.

         (c) The term "Date of Termination" means the date upon which Mr. DeLuca
ceases to serve as Vice President and Chief Financial Officer of the Bank.

         (d)  The  term  "Voluntary   Termination"   means  termination  of  the
employment by Mr. DeLuca by  resignation  upon 90 days written  notice but shall
not include  resignation  following a Change in Control (see  subparagraph  1(e)
below),  or material breach of this Agreement (see  subparagraph  1(e) below) or
disability.

         (e)  The  term  "Involuntary  Termination"  means  termination  of  the
employment  of Mr.  DeLuca by the Bank for any reason  other than those  reasons
which  constitute   Termination  for  Cause  (see   subparagraph   1(f),(below).
Involuntary  Termination shall also include termination of the employment by Mr.
DeLuca as a result of his resignation,  upon 30 days written notice, following a
Change in  Control  or  material  breach of this  Agreement  such as a  material
diminution or  interference  with his duties,  responsibilities  and benefits as
Vice  President  and Chief  Financial  Officer of the Bank,  including  (without
limitation) any of the following  actions unless  consented to in writing by Mr.
DeLuca:  (1) a material demotion of Mr. DeLuca;  (2) a material reduction in the
number  or  seniority  of other  Bank  personnel  reporting  to Mr.  DeLuca or a
material  reduction in the number or frequency  with which,  or in the nature of
the matters with respect to which,  such  personnel are to report to Mr. DeLuca,
other than as part of a Bank- or Holding Company-wide  reduction in staff; (3) a
material  adverse  change  in  Mr.  DeLuca's  salary,   perquisites,   benefits,
contingent  benefits  or  vacation,  other  than as part of an  overall  program
applied  uniformly  and with  equitable  effect  to all  members  of the  senior
management of the Bank or the Holding Company.

         (f)  The  term   "Termination  for  Cause"  means  termination  of  the
employment  of Mr.  DeLuca  because of his  personal  dishonesty,  incompetence,
willful  misconduct,  breach of a  fiduciary  duty  involving  personal  profit,
intentional  failure to perform  stated  duties,  willful  violation of any law,
rule, or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.

         2.  Term.  The term of this  Agreement  shall be a period  of two years
commencing on the Commencement Date, subject to earlier  termination as provided
herein. Beginning on the first anniversary of the Commencement Date, and on each
anniversary  thereafter,  the term of this  Agreement  shall be  extended  for a
period of one year in addition to the then-remaining term, provided that (1) the
Bank has not given  notice in  writing  to Mr.  DeLuca at least 90 days prior to
such anniversary that the term of this Agreement shall not be extended  further;
and (2) prior to such anniversary,  the Board of the Bank explicitly reviews and
approves the extension.  Reference  herein to the term of this  Agreement  shall
refer to both such initial term and such extended terms.

         3.       Employment.

                  (a) Mr.  DeLuca  is  employed  as  Vice  President  and  Chief
Financial  Officer  of  the  Bank  and,  except  to  the  extent  allowed  under
subparagraph  3(b), below,  shall devote his full business time and attention to
the  business  and affairs of the Bank and the Holding  Company and use his best
efforts to advance  their  interests.  He shall render such  administrative  and
management  services  under the  supervision of the President of the Bank as are
customarily performed by persons situated in similar executive  capacities,  and
shall have such other  powers and duties,  not  inconsistent  with his title and
office, as the Board may prescribe from time to time.

         (b)  Mr.  DeLuca  may  engage  in  personal   business  and  investment
activities  for his own account and serve as a member of the board of  directors
of such business,  community and charitable organizations as he may disclose, in
advance,  to the Board from time to time so long as such activities and services
do not  materially  interfere  with the  performance  of his  duties  under this
Agreement  or involve  entities  which  either  compete  with the Bank or may be
reasonably  expected to negatively  impact on the Bank's standing and reputation
in the community it serves.

         4.       Compensation.

         (a) Salary.  The Bank agrees to pay Mr.  DeLuca during the term of this
Agreement,  not less  frequently  than monthly,  the salary  established  by the
Board,  which shall be at least equal to Mr. DeLuca's salary in effect as of the
Commencement  Date. The amount of Mr.  DeLuca's  salary shall be reviewed by the
Board, at least annually  beginning not later than the first  anniversary of the
Commencement  Date.  Adjustments in salary or other compensation shall not limit
or reduce any other  obligation of the Bank under this  Agreement.  Mr. DeLuca's
salary in effect from time to time during the term of this  Agreement  shall not
thereafter be reduced.  At each anniversary of the commencement date following a
Change  in  Control,  Mr.  DeLuca's  salary  shall  be  increased  at  least  by
multiplying it by the greater of: (1) the quotient of (i) the U.S. Department of
Labor Consumer Price Index for all Urban Consumers  (N.Y.-Northeastern N.J.) for
January of the then current calendar year divided by (ii) the U.S. Department of
Labor Consumer Price Index for all Urban Consumers  (N.Y.-Northeastern N.J.) for
January of the immediately  preceding calendar year; and (2) the quotient of (i)
the average  annual rate of salary,  determined as of the first  business day of
such calendar  year, of the officers of the Bank (other than Mr. DeLuca) who are
assistant  vice president or more senior  officers,  divided by (ii) the average
annual  rate  of  salary,  determined  as of  the  first  business  day  of  the
immediately preceding calendar year, of the officers of the Bank (other than Mr.
DeLuca) who are assistant vice presidents or more senior officers.

         (b) Discretionary  Bonuses. Mr. DeLuca shall be entitled to participate
in an  equitable  manner with all other  executive  officers of the Bank in such
discretionary  bonuses  as are  authorized  and  declared  by the  Board  to its
executive employees.  No other compensation provided for in this Agreement shall
be deemed to substitute  for Mr.  DeLuca's  right to participate in such bonuses
when and as declared by the Board.

         (c)  Expenses.   Mr.  DeLuca  shall  be  entitled  to  receive   prompt
reimbursement for all reasonable expenses incurred by him in performing services
under this Agreement in accordance  with the policies and procedures  applicable
to executive  officers of the Bank,  provided that he accounts for such expenses
as required under such policies and procedures.

         5.       Benefits.

         (a)  Participation in Retirement and Employee Benefit Plans. Mr. DeLuca
shall be  entitled to  participate  in all plans  relating  to pension,  thrift,
profit-sharing,   group  life  and  disability  insurance,  medical  and  dental
coverage,  education, cash bonuses, and other retirement or employee benefits or
combinations thereof, in which the Bank's executive officers participate.

         (b) Fringe  Benefits.  Mr. DeLuca shall be eligible to participate  in,
and receive  benefits  under,  any fringe  benefit plans which are or may become
applicable to the Bank's executive officers.

         6.  Vacations;  Leave.  Mr.  DeLuca  shall be  entitled  to annual paid
vacation in accordance with the policies  established by the Board for executive
officers and to voluntary  leaves of absence,  with or without pay, from time to
time,  at such times and upon such  conditions as the Board may determine in its
discretion.

         7.       Termination of Employment.

         (a)  Involuntary  Termination.  The Board may  terminate  Mr.  DeLuca's
employment at any time. In the event of  Involuntary  Termination  other than in
connection with a Change in Control,  the Bank shall,  during  remaining term of
this  Agreement,  (1) pay to Mr.  DeLuca,  his  salary  at the  rate  in  effect
immediately prior to the Date of Termination, payable in such manner and at such
times as such salary would have been payable  under  Section 4 if Mr. DeLuca had
continued to be employed by the Bank,  (2) provide to Mr.  DeLuca  substantially
the same life, health and disability  insurance  benefits as the Bank maintained
for its executive officers  immediately prior to the Date of Termination reduced
by the  amount  of any such  insurance  benefits  provided  to Mr.  DeLuca  by a
subsequent employer,  and (3) provide to Mr. DeLuca such other benefits, if any,
to which he and his family and  dependents  would have been entitled as a former
officer or the  family or  dependents  of a former  officer  under the  employee
benefit plans and programs  maintained for the benefit of the Bank's officers in
accordance with the terms of such plans and programs in effect immediately prior
to the Date of Termination.

         (b) Termination  for Cause. In the event of Termination for Cause,  the
Bank  shall (1) pay Mr.  DeLuca  his salary  and  benefits  through  the Date of
Termination,  (2) pay him for  unused  vacation  days,  and (3) have no  further
obligations to him under this Agreement.

         (c) Voluntary  Termination.  Mr. DeLuca's employment may be voluntarily
terminated  by him at any time by  resignation.  In the event of such  Voluntary
Termination, the Bank shall be obligated to (1) pay to Mr. DeLuca his salary and
benefits through the Date of Termination,  (2) pay him for unused vacation days,
and (3) have no further obligations to him under this Agreement.

         (d)  Change in  Control.  In the event of  Involuntary  Termination  in
connection  with or within 12 months after a Change in Control,  the Bank shall,
subject to paragraph 8 of this Agreement,  (1) pay to Mr. DeLuca an amount equal
to 200% of his "base amount" as defined in 26 U.S.C.  Section 28OG which payment
shall be made in three equal  installments,  the first  within 10 days after the
Date of Termination, the second on the fifth business day of January of the next
succeeding  calendar year and the third on the fifth  business day of January of
the second  succeeding  calendar  year,  (2)  provide to Mr.  DeLuca  during the
remaining  term of this  Agreement  substantially  the  same  life,  health  and
disability  insurance benefits as the Bank maintained for its executive officers
immediately prior to the Date of Termination, and (3) provide to Mr. DeLuca such
other  benefits,  if any, to which he and his family and  dependents  would have
been  entitled  as a former  officer  or the  family or  dependents  of a former
officer under the employee benefit plans and programs maintained for the benefit
of the Bank's  officers in accordance  with the terms of such plans and programs
in effect immediately prior to the Date of Termination.

         (e) Death; Disability. If Mr. DeLuca becomes disabled as defined in the
Bank's then current  disability  plan,  if any, or if he is otherwise  unable to
serve as Vice  President  and Chief  Financial  Officer,  this  Agreement  shall
continue  in full force and effect,  except  that the salary paid to Mr.  DeLuca
shall be reduced by any disability insurance payments made to him on policies of
insurance  maintained by the Bank at its expense.  In addition,  in the event of
the death or disability of Mr.  DeLuca  during the term of this  Agreement,  Mr.
DeLuca and his family and dependents (in the event of disability) and his family
and  dependents  (in the event of death) shall be provided with such benefits as
they would have been  entitled  to receive as a former  officer or the family or
dependents  of a former  officer  under the employee  benefit plans and programs
maintained for the benefit of the Bank's  officers in accordance  with the terms
of such  plans  and  programs  in  effect  immediately  prior  to the  death  or
disability.

         (f)  Temporary  Suspension or  Prohibition.  If Mr. DeLuca is suspended
and/or  temporarily  prohibited from  participating in the conduct of the Bank's
affairs by a notice  served  under  Section  8(e)(3)  or (g)(1) of the FDIA,  12
U.S.C.  Section  1818(e)(3)  and  (g)(1),  the  Bank's  obligations  under  this
Agreement, other than those which have vested, shall be suspended as of the date
of service,  unless  stayed by  appropriate  proceedings.  If the charges in the
notice are  dismissed,  the Bank may in its discretion (1) pay Mr. DeLuca all or
part of the  compensation  withheld while its  obligations  under this Agreement
were  suspended  and (2)  reinstate  in whole or in part any of its  obligations
which were suspended.
         
         (g)  Permanent  Suspension  or  Prohibition.  If Mr.  DeLuca is removed
and/or  permanently  prohibited from  participating in the conduct of the Bank's
affairs by an order  issued  under  Section  8(e)(4)  or (g)(1) of the FDIA,  12
U.S.C.  Section  1818(e)(4) and (g)(1),  all  obligations of the Bank under this
Agreement  shall  terminate as of the  effective  date of the order,  but vested
rights of the contracting parties shall not be affected.
         
         (h)  Default  of the Bank.  If the Bank is in  default  (as  defined in
Section  3(x)(1) of the  FDIA),  all  obligations  under  this  Agreement  shall
terminate  as of the date of default,  but this  provision  shall not affect any
vested rights of the contracting parties.

         (i)  Termination by Regulators.  All  obligations  under this Agreement
shall be terminated,  except to the extent  determined that continuation of this
Agreement is necessary for the  continued  operation of the Bank by the Director
of the Office of Thrift Supervision (the "Director") or his or her designee,  at
the time: (1) the Federal Deposit Insurance Corporation enters into an agreement
to provide assistance to or on behalf of the Bank under the authority  contained
in  Section  13(c)  of the  FDIA;  or (2) the  Director  or his or her  designee
approves a supervisory  merger to resolve  problems  related to operation of the
Bank; or (3) the Director or his or her designee determines the Bank to be in an
unsafe or unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by any such action.

         8. Certain Reduction of Payments by the Bank. Notwithstanding any other
provision of this Agreement, if payments under this Agreement, together with any
other  payments  received or to be received by Mr. DeLuca in  connection  with a
Change in Control  would  cause any amount to be  nondeductible  by the Bank for
federal income tax purposes  pursuant to 26 U.S.C.  Section 28OG,  then benefits
under  this  Agreement  shall be  reduced  (not  less than  zero) to the  extent
necessary so as to maximize payments to Mr. DeLuca without causing any amount to
become  nondeductible  by the Bank. Mr. DeLuca shall determine the allocation of
such reduction among payments to him.

         9. No  Mitigation.  Mr.  DeLuca  shall not be required to mitigate  the
amount of any salary or other payment or benefit  provided for in this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation  earned by
Mr.  DeLuca as the result of employment by another  employer  unless  explicitly
stated  herein,  by  retirement  benefits  after  the  Date  of  Termination  or
otherwise.

         10.  Attorneys  Fees.  In the  event  the Bank  exercises  its right of
Termination for Cause, but it is determined by a court of competent jurisdiction
or by an  arbitrator  pursuant to Paragraph 18 that cause did not exist for such
termination,  or if it is determined by a court or arbitrator  that the Bank has
failed  to meet any of its  obligations  or  abide  by any of the  terms of this
Agreement,  Mr.  DeLuca shall be entitled to  reimbursement  for all  reasonable
costs,  including  attorneys' fees,  incurred in challenging such termination or
enforcing such obligations or terms. Such reimbursement  shall be in addition to
all rights to which Mr. DeLuca is otherwise entitled under this Agreement.

         11.      No Assignments.

         (a) This  Agreement  is  personal to each of the  parties  hereto,  and
neither party may assign or delegate any of its rights or obligations  hereunder
without  first  obtaining  the  written  consent of the other  party;  provided,
however,  that the Bank shall require any successor or assign (whether direct or
indirect,   by  purchase,   merger,   consolidation  or  otherwise)  to  all  or
substantially  all of the business  and/or  assets of the Bank, by an assumption
agreement in form and substance  satisfactory to Mr. DeLuca, to expressly assume
and agree to perform  this  Agreement  in the same manner and to the same extent
that  the  Bank  would  be  required  to  perform  it if no such  succession  or
assignment  had taken  place.  Failure of the Bank to obtain such an  assumption
agreement prior to the  effectiveness of any such succession or assignment shall
be a breach of this Agreement and shall entitle Mr. DeLuca to compensation  from
the Bank in the same amount and on the same terms as the  compensation  pursuant
to Paragraph 7(d) hereof.  For purposes of  implementing  the provisions of this
Paragraph 11(a), the date on which any such succession  becomes  effective shall
be deemed the Date of Termination.

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

         12. Notice.  For the purposes of this Agreement,  notices and all other
communications  provided for in the  Agreement  shall be in writing and shall be
deemed to have been duly given when  personally  delivered  or sent by certified
mail, return receipt requested, postage prepaid, if to the Bank at its executive
office,  to the attention of the Board with a copy to the Secretary of the Bank,
or, if to Mr. DeLuca, to his home at the address stated above,  unless notice of
a change of address has been given pursuant hereto.

         13. Entire  Agreement;  Amendments.  This Agreement:  i) sets forth the
entire  understanding  of the parties  with  respect to its  subject  matter and
supersedes  all prior oral and written  agreements  between them,  including the
"Change in Control Severance Agreement" entered into on August 13, 1996; and ii)
may be amended only by a writing signed by both parties.

         14.  Headings.  The headings used in this Agreement are included solely
for  convenience  and shall  not  affect,  or be used in  connection  with,  the
interpretation of this Agreement.

     15.  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of  which  will be  deemed  an  original,  but all of  which
together will constitute one and the same instrument.

         16.  Severability.  The  provisions of this  Agreement  shall be deemed
severable and the  invalidity  or  unenforceability  of any provision  shall not
affect the validity or enforceability of the other provisions hereof.

         17. Waiver.  Failure,  by either party, to insist on strict  compliance
with any of the terms or conditions  hereof shall not be deemed a waiver of such
term or condition.

         18.  Governing Law. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of the State of
New York.

         19.  Arbitration.  Any  dispute  or  controversy  arising  under  or in
connection  with this Agreement  shall be settled  exclusively by arbitration in
Albany,  New York in  accordance  with the  rules  of the  American  Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction.
<PAGE>
         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
day and year first above written.

Attest:                                            CATSKILL SAVINGS BANK



/s/ David L. Guldenstern                            By:  /s/ Allan D. Oren
------------------------                                 -----------------------
SECRETARY                                                     DIRECTOR


WITNESS:



/s/ Wilbur J. Cross                                      /s/ David J. DeLuca
------------------------                                 -----------------------
PRESIDENT                                                    DAVID J. DELUCA