SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C.  20549

                           FORM 10-KSB

(Mark One)

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [FEE REQUIRED]
     For the fiscal year ended December 31, 1996

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE  ACT OF 1934 [NO FEE REQUIRED]
     For the transition period from              to


                 Commission file number  0-18533

            LETCHWORTH INDEPENDENT BANCSHARES CORPORATION
        (Name of Small Business Registrant in Its Charter)

          New York                      16-1168175

(State or Other Jurisdiction            (I.R.S. Employer
 of Incorporation or Organization)       Identification Number)

50 North Main Street, Castile, New York           14427
(Address of Principal Executive Offices)      (Zip Code)

                    (716) 493-2577
        (Registrant's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Act:  None

Securities registered under Section 12(g) of the Act:

                  Common Stock, $1.00 par value
                         (Title of Class)

           Warrants to Purchase Shares of Common Stock
                         (Title of Class)

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

Yes   X             No

     Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-B is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.  [ X ]
<PAGE>
     State Registrant's revenues for its most recent fiscal year:
$19,309,196.

     The aggregate market value of the shares of Registrant's voting
stock held by non-affiliates of Registrant as of December 31, 1996 was
$21,442,498, based upon the average "Bid" and "Ask" price of Registrant's
common stock on said date.

     The number of shares outstanding of Registrant's common stock as of
March 17, 1997 was 943,172.

               Documents Incorporated by Reference

     None
<PAGE>
                              PART I

Item 1 -  Description of Business General

          Letchworth Independent Bancshares Corporation is a bank holding
company incorporated under the laws of the State of New York in 1981 (the
"Company").  The Company has only one banking subsidiary, The Bank of
Castile, a commercial bank formed in 1869 and incorporated under the laws
of the State of New York in 1917 (the "Bank").  The Bank is a full
service, community-oriented, commercial bank which offers a full range of
commercial banking and consumer banking services to businesses and
individuals.  The Bank, however, does not provide trust services.

Market Area

          The Bank conducts its operations through its main office
located in Castile, New York, and at its nine (9) branch offices in towns
situated in and around the areas commonly known as the Letchworth State
Park area and the Genesee Valley region of New York State.  Specifically,
the Bank has branch offices in the Towns of Avon, Batavia, Caledonia,
Gainesville, LeRoy, Perry, York(Retsof), and Warsaw in addition to its
main office in Castile. On December 2, 1994, the Bank purchased the
Caledonia and Avon offices of The Chase Manhattan Bank (National
Association) ("Chase Manhattan").  Chase Manhattan's Avon office was
combined with the Bank's existing Avon office and the Caledonia office
became the 9th branch of the Bank.  The Bank's primary market includes
the counties of Livingston, Wyoming, and Genesee.  In addition, adjoining
sections of the surrounding counties of Cattaraugus, Allegany, Monroe,
and Erie are also serviced.  The Bank continues to place emphasis on the
Route 5 Corridor just south of Monroe County and the City of Rochester.

Banking Services

          The Bank is engaged in the general commercial banking business
and provides a full scope of loan and deposit services related thereto.
All of the deposit accounts offered by the Bank are insured by the
Federal Deposit Insurance Corporation ("FDIC") up to $100,000 per
depositor.  The Bank also offers a wide range of retail services
including checking, savings, and money market accounts, as well as
various types of time deposit instruments. Mortgage lending activities
include a variety of commercial, industrial and residential loans secured
by real estate and the Bank's installment loan department makes direct
auto, home improvement, and personal loans to individuals.  The Bank also
offers safety deposit box services at all of its branches.  The Bank has
applied to the appropriate regulatory authorities to alter its charter to
allow the bank to offer trust and investment services.

          In addition, beginning in 1992, the Bank, through an
arrangement with Circuit Agency, Inc., an affiliate of the New York State
Bankers Association, enabled annuity products to be offered to its
customers.

          All of the Bank's lending is in its market area and
approximately twenty percent (20%) of its loans are concentrated in the
farming and agricultural or related industries.  The Bank has no foreign
loans.  No other single industry or group of related industries are
responsible for a significant portion of the Bank's loans.  The Bank has
no material concentrations of deposits from any single customer or group
of customers, nor does it rely on foreign sources of funds or brokered
deposits.  The Bank does not utilize off-balance sheet derivative
instruments.

Competition

          Management believes that the Company is a prominent financial
institution in its market area.  Although the Bank faces competition for
deposits from other bank and non-bank financial institutions, the Bank
has been able to compete effectively for deposits because of its image in
the community as a community-oriented bank and the loyalty of its local
customers.  The Bank has emphasized personalized banking services and the
advantage of local decision-making in its banking business, and this
emphasis appears to have been well received by the public in the Bank's
market area.

          The Bank competes for deposits principally by offering
depositors a wide variety of deposit programs, convenient branch
locations and hours, tax-deferred retirement programs, and other
services, as well as providing the personalized services and local
decision-making noted above.  The Bank also utilizes local advertising to
attract deposits.

          In addition, the Bank is a major provider of mortgage loans in
its market area.  Although the Bank faces competition for real estate
loans from mortgage banking companies, savings banks, savings and loans
associations, other commercial banks, insurance companies and other
institutional lenders, management believes that the Bank's image in the
community as a local bank gives the Bank a substantial competitive
advantage.  Factors which affect competition include the general
availability of lendable funds and credit, general and local economic
conditions, current interest rate levels and mobility in the mortgage
markets.

Regulation

          The Company is a bank holding company subject to the provisions
of the Bank Holding Company Act of 1956, as amended (the "Act").  As a
bank holding company, the Company is required to file annual reports and
such additional information as may be required by the Federal Reserve
Board pursuant to the Act.  The Federal Reserve Board has the authority
to examine the Company and its subsidiaries.

          The Bank is a stock form commercial bank chartered under the
laws of the State of New York, and its deposits are insured by the FDIC.
As such, the Bank is subject to the regulation, examination and
supervision of the Banking Department of the State of New York and the
FDIC.  Such supervision and regulation, intended primarily for the
protection of depositors, restricts or prohibits certain activities and
neither the Company nor the Bank may enter into certain transactions
without meeting applicable regulatory tests, or without notification to
or prior approval of certain regulatory agencies.  Although the Bank is
not a member of the Federal Reserve System, it is also subject to Federal
Reserve Board regulations that require it to maintain certain reserves
against its transaction accounts (primarily checking and NOW accounts).

Personnel

          As of December 31, 1996, the Company and its subsidiaries had
100 full-time employees and 47 part-time employees.  The employees are
not represented by any collective bargaining unit, and the Company's
management and the Bank's management considers its relationship with its
employees to be good.

Statistical Disclosure

     Distribution of Assets, Liabilities and Shareholders' Equity;
Interest Rates and Interest Differential

     The following table reflects the components of the Company's average
assets, liabilities and shareholders' equity, interest income earned and
interest expense paid, average rates earned and paid, and the net
interest margin for the years ended December 31, 1996, 1995, and 1994,
respectively.
<PAGE>
<TABLE>
<CAPTION>
                                        December 31, 1996

Assets
                                Average                       Average
Interest-earning assets         Balance        Interest       Yield
<S>                             <C>            <C>             <C>
Loans
     Loans (1)                  $135,755,218   $13,203,737      9.73%
Less allowance for
     possible loan losses       (  1,753,720)
          Net Loans              134,001,498

Investment securities
     Taxable                      55,895,608     3,530,028      6.32
     Tax-exempt                   22,296,911     1,116,078      5.01
          Total investment
          securities              78,192,519     4,646,106      5.94

Other interest-earning assets        792,892        50,552      6.38

Federal funds sold                 4,467,158       239,712      5.37
          Total interest-
          earning assets (2)     217,454,067    18,140,107      8.34

Cash and due from banks            7,814,223
Premises and equipment, net        5,168,999
Accrued interest receivable        1,793,965
Other assets                       2,445,885
          Total assets          $234,677,139

Liabilities and
  Shareholders' Equity

Interest-bearing liabilities
Interest-bearing demad depositS $ 29,025,668   $   378,156      1.30%
Savings deposits                  36,536,619       931,735      2.55
Money market deposits             11,545,345       289,357      2.51
Certificates of deposit          102,699,682     5,507,889      5.36
Total interest-bearing deposits  179,807,314     7,107,137      3.95

Federal funds purchased              107,514         6,131

Securities sold under agreement
to repurchase                      1,942,414       101,920      5.25

Advances from Federal Home Loan
 Bank and Other                    3,306,449       228,209      6.90
Total interest-bearing liablitieS185,163,691     7,443,397      4.02

Demand deposits                   23,213,560
Other liabilities                  2,090,407
Shareholders' equity              24,209,481

Total liaiblities and
  shareholders' equity          $234,677,139

Net interest income                             10,696,710
Net interest spread                                            4.32%
Net interest margin (3)                                        4.92%
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
                                        December 31, 1995

Assets
                                   Average                       Average
Interest-earning assets            Balance        Interest       Yield
Loans
<S>                             <C>             <C>              <C>
     Loans (1)                  $125,819,403   $12,788,697       10.16%
Less allowance for
     possible loan losses       (  1,586,241)
          Net Loans              124,233,162

Investment securities
     Taxable                      55,320,716     3,555,755        6.43
     Tax-exempt                   21,352,540     1,088,331        5.10
          Total investment
          securities              76,673,256     4,644,086        6.06

Other interest-earning assets        627,367        47,685        7.60

Federal funds sold                 6,639,348       397,103        5.98         
          Total interest
          -earning assets (2)    208,173,133    17,877,571        8.59

Cash and due from banks            6,921,269
Premises and equipment, net        4,459,641
Accrued interest receivable        1,828,432
Other assets                       2,645,883
          Total assets          $224,028,358

Liabilities and
  Shareholders' Equity

Interest-bearing liabilities
Interest-bearing demand deposits$ 26,285,775   $   479,590       1.82%
Savings deposits                  36,658,584     1,090,028       2.97
Money market deposits             11,990,156       332,510       2.77
Certificates of deposit          100,009,723     5,410,000       5.41
Total interest-bearing deposits  174,944,238     7,312,128       4.18

Federal funds purchased                   0             0           0

Securities sold under agreement
to repurchase                      1,164,094        66,160       5.68

Advances from Federal Home Loan
 Bank and Other                    3,210,917       232,073       7.23
Total interest-bearing liablities179,319,249     7,610,361       4.25

Demand deposits                   21,568,931
Other liabilities                  1,647,857
Shareholders' equity              21,492,321

Total liaiblities and
  shareholders' equity          $224,028,358

Net interest income                             10,267,210
Net interest spread                                              4.34%
Net interest margin (3)                                          4.93%
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
                                   December 31, 1994

Assets
                                  Average                       Average
Interest-earning assets            Balance        Interest       Yield
<S>                                   <C>
Loans
     Loans (1)                  $115,048,113   $10,665,418        9.27%
Less allowance for
     possible loan losses       (  1,459,494)
          Net Loans              113,588,619

Investment securities
     Taxable                      41,160,550     2,313,375        5.62
     Tax-exempt                   16,609,272       828,048        4.99
          Total investment
          securities              57,769,822     3,141,423        5.44

Other interest-earning assets        853,030        55,367        6.49

Federal funds sold                 4,379,110       173,644        3.97
          Total interest-
          earning assets (2)     176,590,581    14,035,852        7.95

Cash and due from banks            5,096,571
Premises and equipment, net        3,644,458
Accrued interest receivable        1,242,240
Other assets                       2,614,756
          Total assets          $189,188,606

Liabilities and
  Shareholders' Equity

Interest-bearing liabilities
Interest-bearing demand deposits$ 21,976,525   $   470,342       2.14%
Savings deposits                  33,089,354       911,799       2.76
Money market deposits             11,241,650       295,338       2.63
Certificates of deposit           77,945,692     3,425,509       4.39
Total interest-bearing deposits  144,253,221     5,102,988       3.54

Federal funds purchased              105,548         5,291       5.01

Securities sold under agreement
to repurchase                      1,087,949        36,048       3.31

Advances from Federal Home Loan
 Bank and Other                    1,487,759        87,659       5.89

Total interest-bearing liablities146,934,477     5,231,986       3.56

Demand deposits                   21,469,381
Other liabilities                  1,407,466
Shareholders' equity              19,377,282

Total liaiblities and
  shareholders' equity          $189,188,606

Net interest income                             8,803,866
Net interest spread                                              4.39%
Net interest margin (3)                                          4.99%
<PAGE>
</TABLE>
(1)  Average loans include non-accrual loans.  Interest on loans includes
loan fees of $231,243, $259,918, and $238,033 in fiscal 1996, 1995, and
1994, respectively.

(2)  Interest income on a portion of the Company's loans and investment
securities is exempt from income tax. If income from these assets had
been adjusted to a level comparable to fully taxable income before
application of income taxes, the interest income and average rate would
have been as follows:

                                         Year Ended December 31,
                             1996               1995               1994

                                Average            Average            Average
                      Interest    Rate    Interest   Rate   Interest   Rate

Loans................$13,213,553  9.73%  $12,796,041 10.17%  $10,672,614 9.28%
Investment securities -
  Tax exempt.......    1,691,027  7.48%    1,648,986  7.72%    1,254,618 7.55%


     The tax rate used to develop this taxable equivalent adjustment is
the federal statutory rate of 34%. The tax-equivalent adjustments do not
give effect to the disallowance for federal income tax purposes of
interest expense related to certain tax exempt assets, nor do they
reflect any benefit of interest being exempt from state income taxes, the
effect of which would be insignificant.

(3)  Net interest margin represents net interest income divided by total
interest-earning assets.
<PAGE>

Rate/Volume Variance Analysis

          The following table sets forth a summary of the changes in
interest earned and interest paid resulting from changes in volumes and
changes in interest rates for the Company for the years ended December
31, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
                                                       Change
                              Change       Change      Due to
                              Due to       Due to      Rate/          Net
1996 Compared to 1995         Volume       Rate        Volume        Change
                               (1)         (2)          (3)
Revenue Earned On:
      <S>                  <C>            <C>            <C>        <C>
      Loans............. $ 1,009,479     $ (541,023)    $(53,416)   $415,040
      Investment securities
       Taxable............... 36,966        (60,853)      (1,840)    (25,727)
       Tax-exempt............ 48,163        (19,217)      (1,199)     27,747
         Total investment
           securities...      85,129        (80,070)      (3,039)      2,020
      Other interest-earning
           assets......       12,580         (7,654)      (2,059)      2,867
      Federal funds sold.   (129,897)_      (40,500)      13,006    (157,391)
        Total interest-earning
           assets.........   977,291       (669,247)     (45,508)    262,536
      Interest Paid On:
      Interest-bearing demand
       deposits............   49,866       (136,686)     (14,614)    (101,434)
      Savings deposits......  (3,622)      (153,966)     (   705)    (158,293)
      Money market deposits. (12,321)      ( 31,174)          342     (43,153)
      Certificates of
       deposit.............. 145,527       ( 50,005)        2,367      97,889

      Federal funds purchased..                             6,131       6,131
      Securities sold under
      agreement to repurchase.44,209       (  5,006)       (3,443)     35,760
      Advances from Federal
       Home Loan Bank.......  31,037       ( 30,915)       (3,986)     (3,864)

         Total interest-bearing
          liabilities.....   254,696       (407,752)      (13,908)   (166,964)
     Net Interest Income.$   722,595      $(261,495)     $(31,600)  $ 429,500
</TABLE>
_________________________
(1) The volume variance reflects the change in the average balance
outstanding multiplied by the average rate during the prior period.

(2) The rate variance reflects the change in the average rate multiplied
by the average balance outstanding during the prior period.

(3) The rate/volume variance reflects the change in average rate multiplied by
the change in the average balance outstanding.







<PAGE>

Rate/Volume Variance Analysis

         The following table sets forth a summary of the changes in
interest earned and interest paid resulting from changes in volumes and
changes in interest rates for the Company for the years ended December
31, 1995 and 1994, respectively.

<TABLE>
<CAPTION>
                                                      Change
                              Change       Change      Due to
                              Due to       Due to      Rate/          Net
1995 Compared to 1994         Volume       Rate        Volume        Change
                               (1)         (2)          (3)
Revenue Earned On:
     <S>                 <C>             <C>           <C>         <C>
     Loans............. $   998,499     $1,023,928     $100,852   $2,123,279
      Investment securities
       Taxable...............795,801        333,400      113,179    1,242,380
       Tax-exempt............236,689         18,270        5,324      260,283
         Total investment
           securities...   1,032,490        351,670      118,503    1,502,663
      Other interest-earning
           assets......      (14,646)         9,469       (2,505)      (7,682)
      Federal funds sold.     89,731         88,020       45,708      223,459
        Total interest-earning
           assets......... 2,106,074      1,473,087      262,558    3,841,719
      Interest Paid On:
      Interest-bearing demand
       deposits............   92,218     (   70,325)    ( 12,645)       9,248
      Savings deposits......  98,511         69,488       10,230      178,229
      Money market deposits.  19,686         15,738        1,748       37,172
      Certificates of
       deposit.............. 968,611        795,046      220,834    1,984,491

      Federal funds purchased..                           (5,291)      (5,291)
      Securities sold under
      agreement to repurchase. 2,520         25,784        1,808       30,112
      Advances from Federal
       Home Loan Bank.......     -0-         90,206       54,208      144,414

         Total interest-bearing
          liabilities..... 1,181,546        925,937      270,892    2,378,375
     Net Interest Income.$   924,528      $ 547,150     $ (8,334)  $1,463,344
</TABLE>
_________________________
(1) The volume variance reflects the change in the average balance
outstanding multiplied by the average rate during the prior period.

(2) The rate variance reflects the change in the average rate multiplied
by the average balance outstanding during the prior period.

(3) The rate/volume variance reflects the change in average rate
multiplied by the change in the average balance outstanding.<PAGE>
Rate/Volume Variance Analysis

         The following table sets forth a summary of the changes in
interest earned and interest paid resulting from changes in volumes and
changes in interest rates for the Company for the years ended December
31, 1994 and 1993, respectively.
<TABLE>
<CAPTION>
                                                         Change
                              Change         Change       Due to
                              Due to         Due to       Rate/        Net
1994 Compared to 1993         Volume         Rate         Volume     Change
                                (1)           (2)            (3)
Revenue Earned On:
  <S>                      <C>              <C>          <C>        <C>
  Loans.................. $   868,731      $ 462,923    $ 39,067   $1,370,721
  Investment securities
  Taxable.................    546,771      ( 224,218)   ( 59,987)     262,566
  Tax-exempt..............    154,786      (  13,568)   (  3,677)     137,541
    Total investment
      securities..........    701,557      ( 237,786)   ( 63,664)     400,107
  Other interest-earning
    assets..............   (   32,527)        43,695    ( 21,612)   (  10,444)
  Federal funds sold...... (    1,558)        44,761    (    628)      42,575
    Total interest-earning
      assets..............  1,536,203        313,593    ( 46,837)   1,802,959
Interest Paid On:
  Interest-bearing demand
    deposits..............(    17,333)         6,839    (    959)  (   11,453)
   Savings deposits........   144,082          8,343       1,295      153,720
   Money market deposits. (    73,280)        32,879    (  7,961)  (   48,362)
   Certificates of deposit... 249,553         50,518       6,893      306,964

   Federal funds purchased..     -0-            -0-        5,291        5,291
   Securities sold under
     agreement to repurchase.  12,277          4,123       3,116       19,516
   Advances from Federal
     Home Loan Bank..........    -0-            -0-       87,659       87,659

       Total interest-bearing
         liabilities......... 315,299        102,702      95,334      513,335
   Net Interest Income....$ 1,220,904      $ 210,891   $(142,171)  $1,289,624

</TABLE>
_________________________
(1) The volume variance reflects the change in the average balance
outstanding multiplied by the average rate during the prior period.

(2) The rate variance reflects the change in the average rate multiplied
by the average balance outstanding during the prior period.

(3) The rate/volume variance reflects the change in average rate
multiplied by the change in the average balance outstanding.
<PAGE>
Investment Portfolio

    The following table summarizes the carrying values of the Company's
investment securities portfolio at the dates indicated. Investment
securities held to maturity are stated at cost, adjusted on a straight-
line basis for amortization of premiums and accretion of discounts.
Investment securities available for sale are carried at estimated market
value.

<TABLE>
                                              December 31,
                          1996                     1995                      1994

                     Held to    Available   Held to     Available  Held to   Available
                     Maturity   for Sale    Maturity    for Sale   Maturity  for Sale
<S>                <C>        <C>          <C>        <C>         <C>          <C>
U.S. Treasury securities
  and U.S. Government
  corporation and
  agencies........$12,203,294  26,923,000 $15,992,787 $32,380,800 $20,698,476 $17,050,000State and political
  subdivision
  obligations......24,413,840     505,200  21,674,732   1,070,000  20,166,690      -0-

Mortgage-backed
  securities........5,454,735   8,723,300   6,738,922   4,113,800   7,937,564   4,651,700

Total securities..$42,071,869 $36,151,500 $44,406,441 $37,564,600 $48,802,730 $21,701,700
</TABLE>
         The following table presents the book value of all
investment securities of a single issuer, excluding securities of the
United States Government and its agencies, whose aggregate carrying value
at December 31, 1996 exceeded ten percent (10%) of consolidated
shareholders' equity:


                                                   Estimated
                                       Carrying      Market
                                         Value       Value

Federal Home Loan Mortgage Corp. CMO  $4,503,506  $4,509,597
Federal Home Loan Bank                 3,439,998   3,441,185
Federal National Mortgage Association 11,120,509  11,140,770


         At December 31, 1996, the estimated market value of the
investment portfolio was more than the amortized cost by $896,831 for the
held to maturity category, and by $271,801 for the available for sale
category.
<PAGE>
    The accounts and maturities of debt securities held to maturity and
available for sale at December 31, 1996 and the weighted average yields
of such securities are shown below:

Held to Maturity:
<TABLE>

                      Under       1-5         5-10       Over
December 31, 1996    1 year      years       years      10 years      Total
<S>                <C>         <C>           <C>        <C>        <C>
U.S. Treasury
 securities and
 obligations of
U.S. Government
corporations and
agencies
 Carrying value.. $     -0-    $11,260,553   $  942,741   -0-      $12,203,294
 Average tax
   equivalent
   yield(1)........   0.00%         6.94%        6.80%     0.00%       6.40%
State and
 political
 subdivisions
Carrying value..  2,962,545      8,409,270    12,544,044  497,982   24,413,840
 Average tax
   equivalent
   yield(1)........   5.87%         7.30%        7.51%     8.21%       7.25%

Total carrying
 value excluding
 mortgage-backed
 securities..... $2,912,496    $19,719,872   $13,487,784 $496,982  $36,617,134
 Average tax
 equivalent
 yield excluding
 mortgage-backed
 securities......    5.87%          7.09%        7.46%      8.21%      6.97%

Mortgage-backed
securities....... $    859    $ 3,437,278    $  616,354 $1,400,244 $5,454,735
Carrying Value
 Average tax
 equivalent
 yield..........    9.75%          6.03%         7.75%      5.58%      6.11%

Total carrying
 value.......... $2,963,404   $23,107,100  $14,103,139  $1,898,226 $42,071,869

Average
 tax equivalent
 yield..........    5.87%         6.94%         7.47%      6.27%       7.01%


</TABLE>
(1) Rates of tax-exempt securities are shown assuming a 34% federal statutory
tax rate.  The actual average yield on tax-exempt securities was 4.86%.
<PAGE>

Available for Sale:
<TABLE>
                     Under       1-5         5-10         Over
December 31, 1996    1 year      years       years        10 years      Total
<S>                <C>        <C>          <C>           <C>        <C>
U.S. Treasury
 securities and
obligations of
U.S. Government
corporations and
agencies
 Carrying value.. $11,825,070 $15,097,930  $       0     $      0  $26,923,000
 Average tax
   equivalent
   yield(1).......    5.82%        6.46%       0.00%       0.00%        6.18%
State and
 political
 subdivisions
Carrying value..     505,200            0          0              0    505,200
 Average tax
   equivalent
   yield(1)........   7.46%        0.00%       0.00%        0.00%       7.46%

Total carrying
 value excluding
 mortgage-backed
 securities and
 FHLB stock...... $12,330,270  $15,097,930  $       0  $        0  $27,428,200
 Average tax
 equivalent
 yield excluding
 mortgage-backed
 securities and
 FHLB stock......     5.89%        6.46%         0.00%           0%     6.20%

Mortgage-backed
securities....... $   863,574  $ 1,144,604  $1,530,945  $ 5,195,884 $8,723,300
Carrying Value
 Average tax
 equivalent
 yield............    6.03%        5.91%        6.92%        6.11%      6.22%

Total carrying
 value........... $13,193,824  $16,230,847  $1,530,945  $5,195,884 $36,151,500

Average
 tax equivalent
 yield...........     5.90%       6.42%        6.92%       6.11%        6.21%

</TABLE>
(1) Rates of tax-exempt securities are shown assuming a 34% federal
statutory tax rate.  The actual average yield on tax-exempt securities
was 5.00%




<PAGE>
Loan Portfolio

          The following table sets forth the composition of the Company's
loan portfolio at the dates indicated.
<TABLE>
<CAPTION>
                                                  December 31,
                         1996           1995          1994          1993         1992
<S>                   <C>           <C>           <C>            <C>           <C>
Agricultural loans...$ 29,025,726  $ 25,168,552  $ 22,091,563   $ 17,141,043  $ 14,534,670
Commercial and
  industrial loans...  28,118,416    23,317,057    19,670,283    16,303,801     14,241,549
Residential Real Estate
  loans..............  45,656,220    41,120,730    40,353,744    41,299,434     37,234,082
Commercial Real Estate
  loans..............  33,852,371    33,917,880    27,971,189    24,631,305     22,301,728
Consumer loans.......   9,643,508     9,954,869    11,280,962    13,393,064     12,827,632
  Total loans........$146,296,241  $133,479,088  $121,367,741  $112,768,647   $101,139,661
</TABLE>


          Potential Problem Loans

          Potential problem loans consist of loans which are generally
secured and not currently considered nonperforming, but where information
about possible credit problems has caused management to have doubts as to
the ability of such borrowers to comply with present repayment terms.  As
of December 31, 1996, the Company considers $1,359,000 to be potentially
problem loans. Historically, however, only a very small portion of those
loans have resulted in actual losses for the Company.


          Non-performing Loans

          The following table summarizes the Company's non-performing
loans at the dates indicated.


                             December 31,
                                1996    1995      1994    1993     1992
Non-accruing loans.......... $492,000 $450,500 $254,800 $125,700  $213,704
Accruing loans past due
   90 days or more..........  371,800  291,200  215,600  480,800   333,749
Renegotiated loans...........    -0-      -0-       -0-      -0-     -0-

         For each period shown the gross interest income that would have
been recorded in such period if the loans had been current in accordance
with their original terms, and the amount of interest income on those
loans that was included in such period's net income, was negligible.

         Interest on loans is accrued from the date an advance is made.
The performance of loans other than real estate and installment loans is
evaluated primarily on the basis of a review of each customer's financial
position and relationship over a period of time and the judgment of
senior lending officers as to the ability of borrowers to conduct a
financially healthy business and to meet the repayment terms of the loan.
If there is reasonable doubt as to the repayment of a loan in accordance
with the agreed upon terms, even though the financial condition of the
borrower or the collateral may be sufficient ultimately to reduce or
satisfy the obligation, the loan may be placed on a non-accrual basis
pending the sale of any of the collateral or the determination that other
sources of repayment exist.  When a loan is placed on a non-accrual basis
all previously accrued but unpaid interest is reversed and charged
against current income.  Interest income is thereafter recognized only
when payments are received.

         Loans, including impaired loans, are placed on non-accrual
status in accordance with policies established by management.  Loans,
other than consumer loans, are generally transferred to non-accrual
status when principal or interest payment become ninety days past due.
Any accrued but uncollected interest previously recorded on such loans is
reversed in the current period and interest income is subsequently
recognized only when actually collected.  Past due consumer loans are
generally fully reserved or charged-off when they reach a 90-day
delinquency status.  Loans are returned to accrual status when management
determines that the circumstances have improved to the extent that both
principal and interest are deemed collectible and there has been a
sustained period of repayment performance.  The Company may continue to
accrue interest on loans past due ninety days or more which are well
secured and in the process of collection.

         Loans, principally residential real estate loans, are
periodically sold without recourse and servicing is generally retained.
Gains and losses on sales of loans are recognized at the time of
settlement and are determined by the difference between net sales
proceeds and the carrying value of the loans sold.  Fees related to the
servicing of loans for benefit of others are determined on the basis of
loans serviced and are recorded as income when payments are received.

          The average balance of impaired loans during 1996 was
approximately $409,900.  At December 31, 1996, the balance of impaired
loans and related reserve against that balance was $406,000 and $120,700,
respectively.  Interest income recognized on impaired loans and interest
income recognized on a cash basis was not significant.

         Residential mortgage loans are placed on non-accrual status when
they become 90 days past due, and the collection efforts of the Bank
continue in accordance with the Bank's collection policies and
procedures.

         Lending officers are responsible for the ongoing review and
administration of each particular loan.  As such, they make the initial
identification of loans which may present some difficulty in collection,
or where circumstances indicate that the probability of loss exists.  The
responsibilities of the lending officers include the initial collection
effort on a delinquent loan.  Unless other arrangements are made with the
lending officer and approved by the Board of Directors of the Bank, any
loan deficiencies more than 90 days past due are generally charged-off.
Senior management is informed of the status of delinquent and problem
loans weekly.  The Board of Directors and senior management reviews the
current allowance for possible loan losses monthly, and senior management
makes the final determination as to loan charge-offs.

   Summary of Loan Loss Experience

         The provision for possible loan losses represents
management's determination as to the amount necessary to be
transferred to the allowance for possible loan losses to bring it to a
level which is considered adequate in relationship to the risk of future
losses inherent in the loan portfolio.  While it is the Company's policy
to charge-off in the current period those loans in which a loss is
considered probable, there also exists the risk of future losses which
cannot be quantified precisely or attributed to particular loans or
classes of loans.  Because this risk is continually changing in response
to factors beyond the control of the Company, such as the state of the
economy, management's judgment as to the adequacy of the provision is
necessarily approximate and imprecise.

         In assessing adequacy, management relies on its ongoing review
of the loan portfolio, which is undertaken both to ascertain whether
there are probable losses which must be charged-off and to assess the
risk characteristics of the portfolio in the aggregate. This review takes
into consideration management's evaluation of individual loans, past loan
loss experience, the assessment of prevailing and anticipated economic
conditions, the estimated value of collateral and other relevant factors.
It is management's ongoing policy to maintain a conservative approach as
to the establishment of an adequate allowance for possible loan losses.

         In evaluating the allowance, management also considers the
Bank's loan loss experience, the amount of past due, non-performing and
impaired loans current and anticipated economic conditions, lender
requirements and other appropriate information.

         The allowance for possible loan losses is maintained as a
general reserve without any internal allocation to the specific loan
classes of the loan portfolio.  Based on a historical four-year average
of gross charge-offs, however, the allowance for possible loan losses
would be allocated by management to specific loan classes as follows:
<PAGE>


                              December 31, 1996


                                    Percent of          Percent of
                                    Allowance in        Loans in
                                    Category to         Category to
                          Amount    Total Allowance     Total Loans

Domestic Loans (1)
Agricultural loans.....$   10,127          .55%           19.84%
Commercial and
 industrial loans......   549,782         29.86           19.22
Residential & Commercial
  Real Estate loans....    66,836          3.63           54.35
Consumer loans......... 1,214,455         65.96            6.59
Totals                 $1,841,200        100.00%         100.00%



December 31, 1995


                                     Percent of          Percent of
                                     Allowance in        Loans in
                                     Category to         Category to
                          Amount    Total Allowance      Total Loans

Domestic Loans (1)
Agricultural loans.....$   37,930        2.21%              18.9%
Commercial and
 industrial loans......   357,334        20.82              17.5
Residential & Commercial
  Real Estate loans....    44,408         2.59              56.2
Consumer loans......... 1,276,628        74.38               7.4
Totals                 $1,716,300       100.0%             100.0%



                              December 31, 1994


                                    Percent of          Percent of
                                    Allowance in        Loans in
                                    Category to         Category to
                          Amount    Total Allowance     Total Loans

Domestic Loans (1)
Agricultural loans.....$   44,738        2.90%           18.2%
Commercial and
 industrial loans......   301,104        19.70           16.2
Residential & Commercial
  Real Estate loans.....   38,023         2.50           56.3
Consumer loans..........1,143,035        74.90            9.3
Totals                 $1,526,900       100.0%          100.0%



<PAGE>




                              December 31, 1993


                                    Percent of          Percent of
                                    Allowance in        Loans in
                                    Category to         Category to
                          Amount    Total Allowance     Total Loans

Domestic Loans (1)
Agricultural loans.....$   56,762         3.90%           15.2%
Commercial and
 industrial loans......   310,596        21.40            14.5
Residential & Commercial
  Real Estate loans....    34,276         2.40            58.4
Consumer loans......... 1,046,366        72.30            11.9
Totals                 $1,448,000       100.0%           100.0%



                              December 31, 1992


                                     Percent of          Percent of
                                     Allowance in         Loans in
                                     Category to         Category to
                           Amount    Total Allowance     Total Loans

Domestic Loans (1)
Agricultural loans.....$   53,876         4.30%           14.4%
Commercial and
 industrial loans......   309,367        24.40            14.1
Residential & Commercial
  Real Estate loans....    34,783         2.70            58.8
Consumer loans........ .  867,919        68.60            12.7
Totals                 $1,265,945       100.0%           100.0%


    (1)  The Company had no foreign loans
<PAGE>
         The following table sets forth certain information with respect
to the Company's loans and the allowance for possible loan losses.
<TABLE>
<CAPTION>
                                   For the Year Ended December 31,
                                     1996        1995        1994       1993     1992
<S>                               <C>         <C>         <C>        <C>        <C>
Balance at beginning of period....$1,716,300 $1,526,900  $1,448,000 $1,265,945 $1,100,641
Charge-offs:
  Agricultural loans..............      0    (    1,573) (    2,534)  ( 13,789)    12,000
  Commercial and industrial loans.(   77,378)(   69,607) (   47,816)  ( 39,657)    20,832
  Real estate mortgages...........(   25,621)        0           0          0          0
  Consumer loans..................(   82,600)(  145,435) (  238,642)  (190,850)   130,065
                                  (  185,599)(  216,615) (  288,992)  (244,296)   162,897
Recoveries:
  Agricultural loans..............       654      1,404       3,815      8,140      1,746
  Commercial and industrial loans.     3,435      8,035       6,069      6,189     18,053
  Real estate mortgages...........         0          0          0           0        0
  Consumer loans..................    23,900     72,213      45,283     50,573     21,005
                                      27,989     81,652      55,167     64,902     40,804
Net charge-offs...................  (157,610)  (134,963) (  233,825)  (179,394)  (122,093)
Additions charged to operations...   282,510    324,363     312,725)   361,449     287,397
Balance at end of period......... $1,841,200 $1,716,300  $1,526,900 $1,448,000  $1,265,945
Ratio of net charge-offs during
  the period to average loans
  outstanding during the period...     0.12%      0.11%       0.20%     0.17%       0.13%
</TABLE>

         Net loans charged-off in 1996 totaled $157,610, or 0.12% of
average loans.  The reserve for possible loan losses equalled 1.26% of
the total loan portfolio at December 31, 1996, compared to 1.29% at
December 31, 1995.  Management believes that the allowance for possible
loan losses of $1,841,200 at December 31, 1996 was adequate to absorb
anticipated risk in the portfolio based upon the
Company's historical experience.

         All segments of the Company's loan portfolio are subject to
continuous quality evaluation.  In the opinion of the management of the
Company, there are no credit risks relating to the loan portfolio, other
than what is already disclosed in this document, and the allowance for
possible loan losses is adequate to absorb anticipated loan losses in the
present loan portfolio of the Company.  It must be emphasized, however,
that the determination of allowance for possible loan losses using the
Company's procedures and methods rests upon various judgments and
assumptions about future economic conditions and other factors affecting
loans.  In addition, management reviews overall portfolio quality through
an analysis of current levels and trends and charge-offs, delinquency and
non-accruing loan data and reviews the overall banking environment.
These reviews are of necessity dependent upon estimates, appraisals and
judgments, which may change quickly because of changing economic
conditions and the Company's perception as to how these factors may
affect the financial condition of debtors.
<PAGE>


    Rate Sensitivity of Loans

         Presented below is a table which sets forth the maturity of the
Company's loans as of December 31, 1996.

                                  Maturities at December 31, 1996

                                     One Year
                         One Year    Through        After
                         or Less     5 Years        5 Years        Total

Agricultural loans....$21,675,532   $ 6,263,671   $ 1,086,523    $ 29,025,726
Commercial and
   industrial loans....18,635,166     3,428,753     6,054,497      28,118,416
Residential Real Estate
   loans...............   867,781     1,271,181    43,517,258      45,656,220
Commercial Real Estate
   loans............... 8,775,247     1,325,944    23,751,179      33,852,370
Consumer loans......... 1,867,241     6,918,639       857,628       9,642,508
   Total loans........$51,820,967   $19,208,188   $75,267,086    $146,296,241


         The following table sets forth the various maturity dates of the
above-mentioned loans with pre-determined interest rates and floating or
adjustable interest rates.

                         Maturities at December 31, 1996
                               One Year
                               Through          After
                               5 Years         5 Years
Loans with pre-determined
  interest rates.........    $11,518,647     $27,083,336
Loans with floating or
  adjustable interest rates    7,689,541      48,183,750

Totals...................    $19,208,188     $75,267,086


         The Company ensures safety of depositor funds and
relative balances between interest rate sensitive assets and
liabilities through its Asset/Liability Committee, which actively
monitors the maturity and repricing characteristics of interest rate
sensitive assets and liabilities on an ongoing basis.
<PAGE>
Deposits

    The following tables set forth the average amount of, and the average
rates paid on, major deposit categories for the years ended December 31,
1996, 1995, and 1994, respectively.

                                    Year Ended December 31,
                            1996               1995                 1994
                     Average   Average   Average   Average   Average   Average
                     Balance    Rate     Balance     Rate    Balance      Rate

Noninterest bearing
 demand deposits. $23,213,560    ---  $ 21,568,931   ---  $ 21,469,381   ---
Interest beariing
 demand deposits...29,025,668    1.30%  26,285,775   1.82%  21,976,525  2.14%
Savings deposits...36,536,619    2.55   36,658,584   2.97   33,089,354  2.76
Money market
  deposits.........11,545,345    2.51   11,990,156   2.77   11,241,650  2.63
Certificates of
 deposit..........102,699,682    5.36  100,009,723   5.41   77,945,692  4.39

  Total Deposits.$210,020,874         $196,513,169        $165,722,602

Securities sold under
 agreement to
 repurchase......$  1,942,414    5.25 $  1,164,094  5.68% $  1,087,949  3.31%
Total............$211,963,288         $197,677,263        $166,810,551


    The following table sets forth the amount of time certificates of
deposit of $100,000 or more of the Bank as of December 31, 1996 for
various dates of maturity.

  December 31, 1996 - Time Certificates of Deposit $100,000 or More

Three months or less......................    $14,971,167
Three months through six months...........      5,147,743
Six months through twelve months..........      2,025,339
Over twelve months........................      2,091,988
     Totals...............................    $24,236,237
<PAGE>
Return on Equity and Assets

    The following table sets forth selected financial ratios
of the Company on a consolidated basis for the periods indicated.


                                  For the Year Ended December 31,
                                    1996     1995      1994

Return on average assets......       1.22%    1.19%     1.19%
Return on average equity......      11.86    12.36     11.61
Dividends declared to net income    20.98    18.23     19.08
Loans to deposits.............      70.51    65.41     64.74
Loans to deposits and securities
  sold under agreement to
  repurchase..................      69.93    64.84     64.43
Non-performing loans to total
  loans.......................        .59      .56       .39
Net charge-offs to average
  total loans.................        .12      .11       .20
Allowance for possible loan
  losses to loans at year-end.       1.26     1.29      1.26
Average shareholders' equity
  to average total assets.....      10.32%    9.59%    10.24%

Short-Term Borrowings

    Not applicable.

Item 2 -     Properties

    The following table sets forth the location of the Bank's offices, as
well as certain information related to these offices, as of December 31,
1996:


  Location of Office             Owned or Leased

   50 North Main Street
   Castile, New York.........              Owned

   263 East Main Street
   Avon, New York............              Owned

   1 Main Street
   Gainesville, New York.....              Owned

   102 North Center Street
   Perry, New York...........              Owned

   2727 Genesee Street
   Retsof, New York..........              Leased

   445 North Main Street
   Warsaw, New York..........              Owned

   129 North Center Street
   Perry, New York...........              Owned

   29 Main Street
   LeRoy, New York...........              Owned

   604 West Main Street
   Arcade, New York..........              Owned

   408 East Main Street
   Batavia, New York.........              Owned

   3155 State Street
   Caledonia, New York.......              Owned

    Each of the foregoing properties is in generally good
condition and is appropriate for its intended uses.

    All owned offices are in the name of the Bank.  Prior to
March 10, 1995, two (2) offices were owned by Southern Wyoming Realty
Corp., a wholly-owned subsidiary of the Bank.  Effective March 10, 1995,
Southern Wyoming Realty Corp. was dissolved and all of its assets were
transferred and conveyed to the Bank.

    For information relating to the Company's investment
policies, see "Item 1- Description of Business -- Statistical Disclosure"
of this Annual Report on Form 10-KSB.

Item 3 -     Legal Proceedings

    The Company is not presently involved in any legal
proceedings which management or counsel to the Company believe to be
material to its financial condition or results of operations. As the
nature of the Bank's business involves the collection of loans and the
enforcement and validity of security interests, mortgages and liens, the
Bank is plaintiff or defendant in various legal proceedings which may be
considered as arising in the ordinary course of its business.  In the
opinion of management of the Bank, after consultation with its counsel
handling all such litigation, there are no legal proceedings now pending
by or against the Bank the outcome of which might have a material effect
on the Bank's business, business prospects or financial position.

Item 4 -     Submission of Matters to a Vote of Security Holders

    Not applicable.

                              PART II

Item 5 -     Market for the Registrants Common Equity and Related
Stockholder Matters

    During November of 1993, the Company completed a second
public offering of 200,000 shares of its common stock and 200,000
warrants to purchase additional shares of its common stock.  The offering
was very successful, increasing to approximately 800 the number of
shareholders of the Company.  On January 3, 1994, the Company listed its
common stock and warrants on the National Association of Securities
Dealers Quotation System (NASDAQ) Small Cap Market.  Although the market
for the Company's common stock has become more active since the initial
listing, as with many stocks of companies such as the Company, trading
remains limited.

    As of March 17, 1997, the "Bid" and "Ask" price of the
Company's common stock and warrants was $34.50 and $35.75 per share,
respectively, and $11.00 and $12.25, respectively, as reported on the
National Association of Securities Dealers Quotation System (NASDAQ)
Small Cap Market. The market price for the Company's common stock is
reflected daily on the National Association of Securities Dealers
Automated Quotation System (NASDAQ) Small Cap Market under the symbol
LEBC. The Company's warrants also trade on the NASDAQ Small Cap Market
under the symbol LEBCW. First Albany Corporation, Ryan, Beck & Company,
McConnell, Budd and Downes, and Tucker Anthony, Inc. all make a market in
the Company's common stock and warrants. All shareholders who own their
stock in their individual names are eligible to participate in the
Company's Dividend Reinvestment Plan which was introduced in November
1991 and 37% of those eligible participate.  These quotations represent
inter-dealer quotations without adjustment for retail mark-ups, mark-
downs, or commissions, and may not necessarily represent actual
quotations.  The following table sets forth the quarterly high and low
"Bid" quotations for the years ended December 31, 1996 and 1995,
respectively:

Quarterly Data           1996                        1995
Bid Price      4th    3rd    2nd    1st     4th    3th    2nd   1st
     High    $31.25 $30.50 $31.25 $31.75  $29.75 $28.00 $26.75 $21.00
     Low     $29.25 $29.00 $29.75 $30.00  $27.75 $26.50 $20.75 $19.50

    The Company declared dividends of $.66 per share to its
shareholders during the year ended December 31, 1996.  In 1995, the
Company declared annual dividends of $.54 per share.  Although the Board
of Directors of the Company has declared its intention to continue the
payment of cash dividends on the Company's common stock, no assurance can
be given that any dividends will be declared or, if declared, what the
amount of the dividends will be or whether such dividends, once declared,
will continue.  As a bank holding company, the Company's ability to pay
dividends is primarily a function of the dividend payments it receives
from the Bank, which are subject to certain limitations.  See Note 16 of
"Notes to Consolidated Financial Statements" included on this Annual
Report on Form 10-KSB on pages 54 and 55 . In determining the amount of
such dividends to be paid by the Company, if any, the Board of Directors
will consider such factors as the earnings and financial condition of the
Company, as well as regulatory requirements and the Bank's need to retain
capital to support its growth.

<PAGE>

Item 6 -     Management's Discussion and Analysis of Financial Condition
and Results of Operations

The purpose of this section is to focus on relevant business events and
information provided in this Annual Report. For a full understanding of
this discussion, reference should be made to the Consolidated Financial
Statements, and Notes thereto, and the Consolidated Financial Highlights
herein. The preceding Financial Statements have neither been audited nor
approved by the FDIC.

The  Company is a bank holding company with one subsidiary, The  Bank  of
Castile  (the  "Bank"). The Bank is a full-service,  community  oriented,
commercial  bank  which  offers a full range of commercial  and  consumer
banking  services  to municipalities, businesses and individuals.  During
1996, however, the Bank did not provide trust services.
The  Bank  conducts  its operations through its main  office  located  in
Castile,  New York, and at its nine (9) branch offices in towns  situated
in  and around the areas commonly known as the Letchworth State Park  and
the  Genesee Valley regions of New York state. Specifically, the Bank has
branch  offices  in  the  towns  of  Arcade,  Avon,  Batavia,  Caledonia,
Gainesville, LeRoy, Perry, York (Retsof), and Warsaw.
The  Company's  strategic  plan calls for the  continued  growth  of  its
banking  franchise  within the current market area  and  adjoining  areas
through  the acquisition and/or expansion of additional offices,  if  and
when opportunities occur.
The  Company's market area has remained reasonably healthy. As  evidenced
by the following chart, the average annual unemployment rate has remained
relatively constant in each of the three counties where the Bank does the
majority of its business.

       Genesee   Livingston   Wyoming
1996    5.1%        5.3%       6.4%
1995    5.1%        5.2%       6.6%

In  addition,  the  efforts of local development  agencies  are  yielding
moderate  results in the Bank's market area, with several  new  companies
relocating or expanding in the three county area during the past year.
FINANCIAL CONDITION
1996 Compared With 1995
The  total  assets  of the Company as of December 31, 1996  increased  by
$11.6  million to $245.1 million, representing a 4.95% increase from  the
$233.5  million  figure as of December 31, 1995.  This  growth  in  total
assets  occurred  in several areas, including the Bank's loan  portfolio,
which  increased  by 9.60% or $12.8 million and the Bank's  premises  and
equipment area, which increased by $.7 million or 13.02%, primarily as  a
result  of  the  purchase of a state of the art image  processing  system
which is located in the Bank's Operations Center in Perry, New York.
The  Company's commercial real estate loans remained virtually  unchanged
at $33.9 million. Commercial and industrial loan volume increased by $4.8
million  to  $28.1 million at year end 1996, representing an increase  of
20.59%  from the year ended December 31, 1995. In the view of management,
the  growth in commercial and industrial loans is at least partially  due
to the business development efforts of the Company's calling officers and
a  continuing  change in strategic focus of larger competing institutions
away  from this type of lending. This is also the primary reason for  the
$3.9  million,  or 15.33%, increase in our agricultural  loan  portfolio,
which  consists primarily of loans to the larger dairy farms and selected
cash crop farms. Deregulation in the dairy industry has and will continue
to  produce  volatile milk prices. The portfolio has shown no appreciable
depreciation in producer success due to this volatility. In fact,  during
1996,  the  returns on our large scale dairy operations show that  prices
have been favorable overall.
The  consumer loan portfolio decreased modestly by $.3 million, or 3.13%,
to  $9.6  million  at  December 31, 1996. The continued  decline  in  the
consumer loan area seems to have been reversed in 1996 by an upward trend
in  the second half of the year due to an increased focus on this type of
loan.
The  Company's residential real estate loans, including home equity lines
of  credit,  increased by $4.5 million, or 11.03%, to  $45.7  million  at
December 31, 1996. This increase resulted, in part, from the retention in
our   portfolio  of  many  of  the  fifteen  year,  fixed  rate  mortgage
originations.  Last  year, the majority of those originations  were  sold
into the secondary market. The volume of home equity lines of credit grew
to  $9.5  million at year end 1996, an increase of 3.06% from  the  prior
year. These loans are priced in an adjustable manner tied to the New York
Prime  rate  and  reprice  quarterly, and have  been  subject  to  fierce
marketplace competition.
Total  deposit  growth  in 1996 was $3.4 million,  or  1.68%,  to  $207.5
million at December 31, 1996. Changes during the year, by category,  were
as follows: an increase of $.6 million in noninterest-bearing deposits; a
decrease of $1.3 million in savings deposits; a $6.0 million increase  in
NOW  accounts;  a  decrease of $0.4 million in money market  accounts;  a
decrease  of $2.2 million in certificates of deposit under $100,000;  and
an  increase  of  $.7  million in certificates of  deposit  greater  than
$100,000.  At year end 1996, the Bank also had $1.7 million in securities
sold under agreements to repurchase, "deposit-like" instruments.
Noninterest-bearing deposits increased to $27.3 million at year end 1996,
a  2.40%  increase when compared to year end 1995. There were  no  branch
acquisitions during 1996, which means that all the growth detailed  above
was  internally generated. Average noninterest-bearing deposits increased
from  $21.6 million for the year ended 1995 to $23.2 million for the year
ended 1996. Average noninterest-bearing deposits as a percentage of total
average deposits increased from 10.98% at year end 1995 to 11.43% at year
end 1996.
The yield on the Company's interest-earning assets was 8.34% for the year
ended December 31, 1996, a decrease of 25 basis points from the yield  of
8.59% for the year ended December 31, 1995. During this same period,  the
rate for total interest-bearing liabilities decreased 23 basis points  to
4.02% from 4.25%. As a result, the net interest spread decreased slightly
to  4.32% for the year ended December 31, 1996, from 4.34% for the  prior
year.  The  net interest margin decreased slightly to 4.92% in 1996  from
4.93% in 1995.
The Company's shareholders' equity increased to $25.8 million at year end
1996,  up  13.05% from the $22.8 million figure at year  end  1995.  This
increase  was  primarily the result of the retention  of  79.02%  of  the
current  year's  earnings. Additionally, warrants and  options  exercised
during 1996 boosted the equity total.
The Company's return on average shareholders' equity was 11.86%, which is
consistent  with  industry averages. Although this  figure  represents  a
decrease  from  the 12.36% figure during 1995, much of this  decrease  is
attributable to the increase in capital during the year from the exercise
of warrants and options.
1995 Compared With 1994
The  total  assets  of the Company as of December 31, 1995  increased  by
$21.8 million to $233.5 million, representing a 10.29% increase from  the
$211.7  million  figure as of December 31, 1994.  This  growth  in  total
assets  occurred  in  several  areas,  including  the  Bank's  investment
securities portfolio which increased by 16.21% or $11.5 million, and  the
loan  portfolio, which increased by 9.98% or $12.1 million. The remaining
increase  in  total  assets  was primarily in  the  Bank's  premises  and
equipment area which increased by $.7 million or 17.37%.

Commercial and industrial loan volume increased by $3.6 million to  $23.3
million  at  year end 1995, representing an increase of 18.54%  from  the
year  ended December 31, 1994. The Company's commercial real estate loans
increased  by  $5.9 million to $33.9 million. Loans to the  larger  dairy
farms  and  selected  cash crop farms during 1995 resulted  in  the  $3.1
million, or 13.93%, increase in our agricultural loan portfolio.

The  consumer  loan portfolio decreased by $1.3 million,  or  11.76%,  to
$10.0  million  at December 31, 1995. This was primarily  the  result  of
decreased  demand for direct and indirect consumer loans in  all  of  our
markets, which follows a nationwide trend.

Due  to  the  sale  of $2.8 million of mortgage loans  during  1995,  the
Company's residential real estate loans, including home equity  lines  of
credit, increased by a modest $0.8 million, or 1.90%, to $41.1 million at
December  31,  1995. The mortgage loans that were sold  were  fixed  rate
loans;  adjustable rate mortgage loans and servicing  of  all  loans  are
retained by the Bank. The volume of home equity lines of credit  grew  to
$9.2 million at year end 1995, an increase of 4.32% from the prior year.

Total  deposit  growth in 1995 was $16.6 million,  or  8.86%,  to  $204.1
million at December 31, 1995. This growth was accomplished as follows: an
increase  of $3.6 million in noninterest-bearing deposits; a decrease  of
$2.1  million  in  savings  deposits; a  $1.0  million  decrease  in  NOW
accounts;  an  increase  of  $0.5 million in money  market  accounts;  an
increase  of $8.9 million in certificates of deposit under $100,000;  and
an  increase  of  $6.8  million in certificates of deposit  greater  than
$100,000.  At year end 1995, the Bank also had $1.8 million in securities
sold under agreements to repurchase.

The  growth  in noninterest-bearing deposits at year end is  due  to  the
timing  of  deposits in municipal accounts. Noninterest-bearing  deposits
increased  to  $26.7  million at year end 1995, a  15.41%  increase  when
compared to year end 1994. There were no branch acquisitions during 1995,
which  means that all the growth detailed above was internally generated.
Average  noninterest-bearing deposits is relatively unchanged from  $21.5
million for the year ended 1994 to $21.6 million for the year ended 1995.
Average  noninterest-bearing deposits as a percentage  of  total  average
deposits  decreased from 12.75% at year end 1994 to 10.98%  at  year  end
1995.

The yield on the Company's interest earning assets was 8.59% for the year
ended December 31, 1995, an increase of 64 basis points from the yield of
7.95% for the year ended December 31, 1994. During this same period,  the
rate for total interest-bearing liabilities increased 68 basis points  to
4.25% from 3.57%. As a result, the net interest spread decreased slightly
to  4.34% for the year ended December 31, 1995, from 4.38% for the  prior
year.  The  net interest margin decreased slightly to 4.93% in 1995  from
4.99% in 1994.

The Company's shareholders' equity increased to $22.8 million at year end
1995, up 15.27% from the $19.8 million figure at year end 1994.

The Company's return on average shareholders' equity was 12.36%, which is
consistent with industry averages.




RESULTS FROM OPERATIONS
Income  before  taxes increased by 6.99% to $4.22 million  in  1996  from
$3.95  million in 1995. Net income for the year ended December  31,  1996
was  a  record  $2.87 million, surpassing the previous  record  of  $2.66
million  for  the  prior  year, an 8.01% increase.  The  Company's  other
operating  income  for  the year ended December  31,  1996  increased  by
$60,492  or  5.46% from the prior year. This increase resulted  primarily
from  increased  service  charges  and  an  increase  in  the  number  of
transaction accounts.

The Company's other operating expenses increased to $7.4 million in 1996,
up  3.60%  from $7.1 million for the prior year. This reflects  a  modest
increase  in  salaries and benefits expense of $308,798,  due  to  normal
salary   increases,  increased  benefit  costs  and  several   additional
employees. The FDIC assessment for the year 1996 decreased by $49,020 due
to  the  decrease  of the FDIC premiums on the Bank Insurance  Fund.  The
total assessment to the Bank for 1996 was $50,000. The remaining $140,000
expense  was a one time fee paid to the FDIC to recapitalize the  Savings
Association Insurance Fund ("SAIF"). The deposits purchased in 1992  from
Anchor  Savings  Bank in LeRoy remain insured by SAIF.  The  increase  in
total  other operating expenses reflect increased occupancy and equipment
expense  categories. The increase in occupancy expense can be  attributed
to a full year of depreciation of the newly expanded Operations Center in
Perry,  New  York.  The increase in equipment expense resulted  from  the
depreciation  of  the  core processing system and  the  image  processing
system purchased in 1996.

The Company's net income was $2,870,341 for 1996, or $2.91 per common and
common equivalent share outstanding. This represents an increase of 8.01%
in net income and a 2.46% increase in earnings per share when compared to
the prior year's figures. Charges to expense for the provision for income
taxes  amounted to $1,351,000 for 1996, up from $1,288,150 in  1995.  The
increase  results from higher pre-tax income, as the Company's  effective
income  tax rate remained relatively constant at 32.00% in 1996, compared
to 32.60% in 1995.


RATE SENSITIVITY AND FUNDS LIQUIDITY MANAGEMENT

The  Company maintains adequate liquidity and ensures safety of depositor
funds  and a relative balance between interest rate sensitive assets  and
liabilities  through its asset/liability committee. As set  forth  above,
the  Company's net interest margin decreased by one basis point to  4.92%
in  1996  from  4.93%  in  1995. The net interest margin  remains  strong
compared to peer organizations. Management believes the Company  is  well
balanced in terms of the repricing of its assets and liabilities.

Liquidity  is  provided by the Company's investment portfolio,  including
the  federal funds position, which averaged 35.56% and 37.47% of  average
total assets in 1996 and 1995, respectively. The investment portfolio had
a  weighted  average  maturity of 30 months in 1996  versus  a  38  month
average  maturity in 1995, with $16.2 million of the investment portfolio
maturing  in  one  year  or  less. The size of the  investment  portfolio
decreased  modestly  during 1996, as more of the  Company's  funding  was
allocated to the loan portfolio.

Daily liquidity is provided by the purchase or sale of federal funds with
various institutions. During 1996, the Bank was a seller of federal funds
with  average daily sales of $4.5 million. Although employed for only  23
days  during  1996,  the Bank also has the ability  to  borrow  from  the
Federal  Reserve Bank of New York, a correspondent bank, or  the  Federal
Home  Loan Bank. Membership allows the Bank to borrow periodically  on  a
short-term or long-term basis at preferred rates. The Bank has borrowings
of  $8,144,797 on a long-term basis from the Federal Home  Loan  Bank  to
fund the ESOP and for other purposes. Included in the total borrowing  is
$5  million borrowed in December 1996 with variable interest rate  terms.
The  proceeds from these advances have been invested in longer term, tax-
exempt  municipal  bonds  to  help lower  the  Bank's  asset  sensitivity
position.  The  overall liquidity of the Company is supplemented  by  its
core  deposits which, as previously noted, have grown both in volume  and
in percentage of total deposits.

The  Bank  also  had secondary market sales and loan participations  with
other  institutions totaling $2.3 million in various commercial,  agricul
tural  or  residential mortgage loans during 1996. Management expects  to
continue such sales from time to time.


GAP Analysis
GAP  analysis  is one tool used by the Bank to assess the sensitivity  of
the earnings and overall capital to changes in market interest rates. The
chart  below  identifies the number of assets and liabilities  which  may
reprice  within the time periods shown. The asset/liability committee  of
the  Bank  meets  periodically  to assess  interest  sensitivity  and  to
formulate  management  strategies based on  what  is  discussed.  Certain
assumptions  are  necessary in establishing a  meaningful  GAP  analysis.
These  key  assumptions  are  discussed in this  section.  Floating  rate
securities  and  loans  are  categorized  according  to  their  repricing
frequency.  For  other investment securities that have ongoing  principal
reduction,  modified  duration  is  used  in  identifying  the  repricing
opportunities.  Contractual payment schedules are  used  for  fixed  rate
commercial loans. For consumer installment loans, an assumed maturity  of
36 months is used, and the dollars are pooled over this time period. Cash
and  due  from bank accounts are reflected entirely in the zero to  three
month  category. Other non-rate sensitive assets are shown  in  the  over
five years category. Deposits with no fixed maturity date are categorized
according to the way they have behaved historically, as well as how often
rate changes have been made. Money market deposit accounts are slotted in
the  90  day  time  band.  The other categories,  NOW  accounts,  savings
accounts, and noninterest-bearing accounts, are categorized with  30%  in
the  3-5  year  time band and 5% in the 5-10 year time  band.  All  other
categories  of  interest-earning assets and interest-bearing  liabilities
not  discussed  separately are classified according to their  contractual
agreements.
The  Company's  balance sheet was slightly asset sensitive  at  year  end
1996.  The  continued  upturn of rates is not expected  to  significantly
impact  earnings.  The Company is not involved in any  off-balance  sheet
derivative  products,  and its holding in mortgage-backed  securities  is
very stable.

<PAGE>

The  following  GAP  table  as of December 31, 1996  includes  all  major
categories of interest-earning assets and interest-bearing liabilities:
                             0-3       3-12      1-5       Over
                             Month    Months    Years      5 Years    Total
ASSETS: (In millions)
Securities and
  Federal Home Loan Bank stock
                        $ 21,765   $ 11,785    $ 32,675    $ 13,103  $ 79,328
Federal funds sold           450                                          450
Loans                     89,281     21,425      17,986      17,604   146,296
Allowance for possible loan losses                           (1,841)   (1,841)
    Net loans             89,281     21,425      17,986      15,763   144,455
Total interest-earning assets 
                         111,496     33,210      50,661      28,866   224,233
Other assets              11,116                              9,704    20,820
    Total assets        $122,612   $ 33,210    $ 50,661    $ 38,570  $245,053

LIABILITIES AND SHAREHOLDERS' EQUITY:
NOW accounts            $    0     $  3,183    $ 12,730    $ 15,914  $ 31,827
Money market deposit accounts        11,323                            11,323
Savings accounts             0        3,428      13,713      17,141    34,282
Certificates of deposit   41,056     49,598      12,064         0     102,718
Total interest-bearing deposits
                          41,056     67,532      38,507      33,055   180,150
Repurchase agreements      1,273        430                             1,703
Long-term debt             5,322        316       1,087       1,420     8,145
Total interest-bearing liabilities
                          47,651     68,278      39,594      34,475   189,998
Noninterest-bearing deposits 0        2,805      11,222      13,318    27,345
Other liabilities                                             1,904     1,904
    Total liabilities     47,651     71,083      50,816      49,697   219,247
Shareholders' equity                                         25,806    25,806
    Total liabilities and shareholders' equity
                        $ 47,651   $ 71,083    $ 50,816    $ 75,503  $245,053
GAP                     $ 74,961   $(37,873)   $   (155)  $ (36,933)
CUMULATIVE GAP          $ 74,961   $ 37,088    $ 36,933)


MEASURES OF PERFORMANCE
Various  measures  of  performance are available to  analyze  any  bank's
safety,  soundness,  and  financial health.  The  Consolidated  Financial
Highlights section of this Annual Report details common measures such  as
return  on  assets,  return  on  equity and  earnings  per  share.  Other
indicators are as follows:
1.   Banks  measure  how  they  covered  other  operating  expenses  with
noninterest  or  fee income. In 1996, 1995, and 1994,  the  Bank  covered
15.88%,  15.60%,  and  16.21%,  respectively,  of  such  other  operating
expenses with noninterest income or fees.
2.  The  capital  ratio  measures the ending  capital  of  a  bank  as  a
percentage of its ending assets. This ratio reflects a bank's ability  to
support  deposit  growth and provide a reserve for any  potential  future
deterioration  in asset quality. At year end 1996, the capital  ratio  of
the  Bank  was  10.53%, up from 9.78% at year end 1995. This  change  was
primarily a result of the retention of 79.02% of 1996 net earnings.
3.  The  loan  to deposit ratio is a secondary measure of liquidity.  The
Bank's  loan to deposit ratio increased to 70.51% at year end  1996  from
65.41%  in 1995. This ratio is within the 70-75% range set forth  in  the
Company's  strategic plan and indicates that the Bank maintains  adequate
liquidity and is actively serving the credit needs of its community.  The
ratio  was  clearly affected by the larger increase in the  loan  volume,
compared to the increase in deposits during 1996.
4.  Asset  quality  is  a critical measure of any  bank's  potential  for
continued performance. The net loan charge-offs of the Bank
were  $157,610, $134,963, and $233,825, for the years ended December  31,
1996, 1995, and 1994, respectively. During 1996, 1995 and 1994, the ratio
of  net  charge-offs to average loans outstanding was 0.12%,  0.11%,  and
0.20%,  respectively, which are very low percentages when  compared  with
our peer group. In 1996, net loan losses were spread among the commercial
and industrial, real estate, and consumer loan categories, with no losses
in the agricultural category.
5.  The allowance for possible loan losses as a percentage of total loans
outstanding  decreased slightly from 1.29% at year end 1995 to  1.26%  at
year end 1996. As a result of the growth of the loan portfolio and charge-
offs  during  1996  and 1995, $282,510 and $324,363,  respectively,  were
charged to the provision for loan losses.
With  the category of non-performing loans defined as non-accruing  loans
plus accruing loans past due 90 days or more, the Company had $863,800 in
non-performing  loans  at year end 1996, or 0.59%  of  total  loans,  and
$741,700  in  non-performing loans at year end 1995, or  0.56%  of  total
loans. This compares very favorably with peer group banks.
BANK FACILITIES AND SERVICES
The Company made significant investments in its core processing system in
1996.  Additionally, the Company was pleased to implement some innovative
new item processing equipment in 1996. This new technology will allow the
Company  to produce customer statements with images of cancelled  checks.
More  efficient  customer service and better statement  readability  will
result  from  this  process. The cost of this  system  was  approximately
$540,000  which  should be recovered in three years  through  savings  in
postage expense and more efficient use of labor. The Company was  one  of
the  first  financial institutions in the area to implement this  imaging
technology.

<PAGE>

Item 7 -     Financial Statements








Report of Independent Accountants







Price Waterhouse LLP





To the Board of Directors and Shareholders of
Letchworth Independent Bancshares Corporation


In our opinion, the accompanying consolidated statement of
condition and the related consolidated statements of income,
changes in shareholders' equity and cash flows present fairly, in
all material respects, the financial position of Letchworth
Independent Bancshares Corporation and its subsidiary at December
31, 1996 and 1995, and the results of their operations and their
cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted
accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is
to express an opinion on these financial statements based on our
audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP
Buffalo, New York
January 16, 1997
<PAGE>
<TABLE>
<CAPTION>
                                   CONSOLIDATED STATEMENT OF CONDITION
                                                                      
                                                                      
                                                                      
                                                            December 31,
                                                        1996            1995
     <S>                                             <C>             <C>
     ASSETS:
     Cash and due from banks                        $11,115,746     $7,752,080
     Federal funds sold                                 450,000      2,050,000
     Securities available for sale                   36,151,500     37,564,600
     Securities held to maturity (market value of
         $42,968,700 and $45,622,500, respectively)  42,071,869     44,406,441
     Loans, net of allowance for loan losses of
         $1,841,200 and $1,716,300, respectively    144,455,041    131,762,788
     Accrued interest receivable                      1,716,241      1,949,266
     Federal Home Loan Bank stock                     1,105,000        636,300
     Premises and equipment, net                      5,649,294      4,998,697
     Other assets                                     2,338,019      2,373,972
               Total assets                        $245,052,710   $233,494,144

     LIABILITIES AND SHAREHOLDERS' EQUITY:
     Deposits:
          Noninterest-bearing                      $ 27,344,602    $26,704,826
          Interest-bearing                          180,149,695    177,370,635
               Total deposits                       207,494,297    204,075,461
     Securities sold under agreements to repurchase   1,702,729      1,767,984
     Accrued interest payable                           708,380        747,351
     Accrued taxes and other liabilities              1,196,913        570,448
     Advances from Federal Home Loan Bank             8,144,797      3,507,020
               Total liabilities                    219,247,116    210,668,264
     Commitments and contingent liabilities
     Shareholders' equity:
          Common stock, $1.00 par value, 1,500,000
              shares authorized,939,386 and 899,970
              shares issued, respectively               939,386        899,970
          Capital surplus                            10,910,120     10,206,024
          Retained earnings                          14,046,314     11,778,164
     Unearned employee stock ownership plan shares     (253,095)      (365,678)
     Unrealized gain on investments, net                162,869        307,400
               Total shareholders' equity            25,805,594     22,825,880
                                                   $245,052,710   $233,494,144
</TABLE>


     The accompanying notes are an integral part of these financial
                               statements.


       <PAGE>
  
  
  
                      CONSOLIDATED STATEMENT OF INCOME
  
<TABLE>
<CAPTION>
    
                                               Year ended December 31,
                                             1996         1995        1994
     <S>                                  <C>          <C>          <C>
     INTEREST INCOME:
     Interest and fees on loans         $ 13,203,737 $ 12,788,697 $ 10,665,418
     Interest and dividends on investment securities -
          Taxable                          3,580,580    3,603,440    2,368,742
          Exempt from federal income taxes 1,116,078    1,088,331      828,048
     Interest on federal funds sold          239,712      397,103      173,644
               Total interest income      18,140,107   17,877,571   14,035,852
     Interest expense on deposits and advances
                                           7,443,397    7,610,361    5,231,986
     Net interest income                  10,696,710   10,267,210    8,803,866
     Provision for possible loan losses      282,510      324,363      312,725
     Net interest income after provision for possible loan losses
                                          10,414,200    9,942,847    8,491,141

     OTHER OPERATING INCOME:
     Service charges on deposit accounts     913,667      888,363      777,402
     Other charges and fees                   90,925       83,228       70,005
     Other operating income                  137,730      116,681      117,318
     Net gain on sales of loans and investment securities
                                              26,767       20,325       38,075
               Total other operating income
                                           1,169,089    1,108,597    1,002,800

     OTHER OPERATING EXPENSE:
     Salaries and employee benefits        4,060,834    3,752,036    3,184,568
     Occupancy expense                       505,532      449,478      370,600
     Printing and supplies                   252,491      323,182      319,195
     Equipment expense                       621,224      550,829      500,945
     FDIC assessment                         190,077      239,097      358,484
     Other operating expenses              1,731,790    1,791,221    1,454,317
               Total other operating expense
                                           7,361,948    7,105,843    6,188,109
     Income before income taxes            4,221,341    3,945,601    3,305,832
     Provision for income taxes            1,351,000    1,288,150    1,050,000
               Net income               $  2,870,341  $ 2,657,451  $ 2,255,832
     Earnings per common and common equivalent share
                                             $  2.91      $  2.84      $  2.49
                                    
</TABLE>
                                    
     The accompanying notes are an integral part of these financial
                               statements.
                                    
                                    
                                    
                                    
<PAGE>
<TABLE>
<CAPTION>
          Consolidated Statement of Changes in Shareholders' Equity


                                        Unearned
                                        employee                      Minimum
                                         stock         Unrealized     pension
        Common    Capital   Retained    ownership   gain (loss) on   liability
         stock    Surplus   earnings   plan shares   investments   adjustment
<S>  <C>        <C>          <C>         <C>           <C>           <C>      
BALANCE AT DECEMBER 31, 1993
     $896,720  $10,087,067  $ 7,779,849 $ (446,750)

Net income                    2,255,832
Payment of ESOP debt                       109,000
Net unrealized depreciation
  of securities available for sale                    $(389,976)
Minimum pension liability adjustment                                $(58,646)
Cash dividends declared
  ($.48 per share)             (430,426)

BALANCE AT DECEMBER 31, 1994
      896,720   10,087,067    9,605,255   (337,750)    (389,976)     (58,646)

Net income                    2,657,451
Exercise of stock warrants
        3,250       71,500
Payment of ESOP debt                       112,583
Additional debt incurred by ESOP          (140,511)
Excess of fair value over cost of ESOP
  shares released   47,457
Net unrealized appreciation
  of securities available for sale                     697,376
Minimum pension liability adjustment                                  58,646
Cash dividends declared
    ($.54 per share)          (484,542)
BALANCE AT DECEMBER 31, 1995
      899,970   10,206,024  11,778,164    (365,678)    307,400         - 0 -

Net income                   2,870,341
Exercise of stock options and warrants
       39,416      667,024
Payment of ESOP debt                       112,583
Excess of fair value over cost of ESOP
  shares released   37,072
Net unrealized depreciation
  of securities available for sale                    (144,531)
Cash dividends declared
     ($.66 per share)         (602,191)

 BALANCE AT DECEMBER 31, 1996
    $939,386   $10,910,120 $14,046,314   $(253,095)  $ 162,869)     $  - 0-
</TABLE>
                                    
                                    
                                    
     The accompanying notes are an integral part of these financial
                               statements.
  
  
  <PAGE>
<TABLE>
<CAPTION>
  CONSOLIDATED STATEMENT OF CASH FLOWS
                                                  Year ended December 31,
                                               1996       1995        1994
     <S>                                   <C>         <C>           <C>
     CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                          $  2,870,341 $  2,657,451  $2,255,832
     Adjustments to reconcile net income to net cash
       provided by operating activities -
         Depreciation and amortization        890,391      871,691     796,993
         Provision for possible loan loss     282,510      324,363     312,725
         ESOP compensation expense            149,655      168,720     122,788
         (Gain) loss on sales of investments  (12,924)                  20,685
         (Gain) on sales of loans             (13,843)     (20,325)    (58,760)
         Decrease (increase) in interest receivable
                                              233,025     (237,695)   (483,614)
         Increase in other assets             (40,940)    (162,116)   (627,549)
         (Decrease) increase in interest payable
                                              (38,971)     327,398)    155,333)
         Increase (decrease) in accrued taxes and other liabilities
                                              626,465      372,746    (355,562)
   Net cash provided by operating activities4,945,709    4,302,233   2,138,871

     CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from sales of securities available for sale
                                            4,519,219                5,026,718
     Proceeds from calls and maturities of securities -
         Held to maturity                  10,038,268    8,804,540   7,666,031
         Available for sale                 3,491,312    2,708,815   1,021,436
     Proceeds from sales of loans           1,281,775    2,806,959   6,262,318
     Purchase of securities held to maturity
                                          (10,440,504) (21,062,965)(29,541,871)
     Purchase of securities avail. for sale(4,726,907)  (1,043,450) (6,157,550)
     Net increase in loans                (14,242,695) (15,032,944)(15,036,503)
     Expenditures for capital assets       (1,198,118)  (1,193,167) (1,558,884)
  Net cash used in investing activities   (11,277,650) (24,012,212)(32,318,305)

     CASH FLOWS FROM FINANCING ACTIVITIES:
     Net increase (decrease) in savings, NOW,
       money market and noninterest-bearing deposits
                                            4,928,493      975,217    (632,758)
     Net (decrease) increase in time deposits
                                           (1,509,657)  15,642,303  14,090,814
     Assumption of deposits of acquired branch
                                                                    19,876,751
     Net (decrease) increase in securities sold
       under agreements to repurchase         (65,255)     867,984    (100,000)
     Proceeds from current borrowings        5,000,000     892,511   2,667,900
     Repayment of borrowings                  (362,223)   (320,514)   (277,282)
     Exercise of options and warrants          706,440      74,750      
     Cash dividends paid                      (602,191)   (484,542)   (430,426)
  Net cash provided by financing activities  8,095,607  17,647,709  35,194,999
     Net increase (decrease) in cash and cash equivalents
                                             1,763,666  (2,062,270)  5,015,565
     Cash and cash equivalents, beginning of year
                                             9,802,080  11,864,350   6,848,785
     Cash and cash equivalents, end of year$11,565,746 $ 9,802,080 $11,864,350)
     Interest paid                         $ 7,482,368 $ 7,282,963 $ 5,387,319
     Income taxes paid                     $ 1,617,000 $ 1,375,000 $ 1,118,150
</TABLE>
                                    
The accompanying notes are an integral part of these financial statements
  <PAGE>
  
  
  
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
  
  

    NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Description of operations
Letchworth  Independent Bancshares Corporation is a  bank  holding
company   headquartered  in  Castile,  New   York.   Through   its
subsidiary,  The Bank of Castile, it is engaged primarily  in  the
business  of  commercial and retail banking in the Genesee  Valley
region of western New York.
Basis of presentation
The  consolidated  financial statements include  the  accounts  of
Letchworth  Independent Bancshares Corporation and its subsidiary,
The  Bank of Castile (collectively, "the Company" or "LIBC").  All
significant  intercompany  accounts  and  transactions  have  been
eliminated.
The  accounting  policies of the Company  conform  with  generally
accepted accounting principles and prevailing practices within the
banking  industry.  The  preparation of  financial  statements  in
conformity with generally accepted accounting principles  requires
management  to  make  estimates and assumptions  that  affect  the
reported  amounts of assets and liabilities at  the  date  of  the
financial  statements  and the reported  amounts  of  revenue  and
expenses during the reporting period. Actual results could  differ
from those estimates.
Certain prior year balances have been reclassified to conform with
current year presentation.
Securities held to maturity
Debt securities for which the Company has the positive intent  and
ability  to  hold to maturity are reported at cost,  adjusted  for
premiums  and  discounts that are recognized  in  interest  income
using the interest method over the period to maturity.
Securities available for sale
Securities  available for sale consist of debt and certain  equity
securities   not  classified  as  securities  held  to   maturity.
Unrealized  holding  gains  and  losses  on  available  for   sale
securities are reported as a net amount in a separate component of
shareholders'  equity,  net of tax, until realized.  Premiums  and
discounts  are  recognized in interest income using  the  interest
method  over the period to maturity. Gains and losses on the  sale
of securities available for sale are determined using the specific-
identification method.
During   1995,  securities  with  an  amortized  cost   basis   of
$16,510,200  were reclassified from held to maturity to  available
for sale as permitted by the Financial Accounting Standards Board.
Other  than  this transaction, no securities have been transferred
between the available for sale and held to maturity categories  or
sold from the held to maturity category.

Loans
Loans  receivable that management has the intent  and  ability  to
hold  for the foreseeable future or until maturity or pay-off  are
reported  at their outstanding principal adjusted for any  charge-
offs,  the  allowance for loan losses, and any  deferred  fees  or
costs  on  originated  loans. Loan origination  fees  and  certain
direct  origination  costs are capitalized and  recognized  as  an
adjustment of the yield of the related loan.
Loans  are  placed  on  a  nonaccrual status  in  accordance  with
policies  established by management. Loans,  other  than  consumer
loans,  are  generally  transferred  to  nonaccrual  status   when
principal  or  interest  payments become 90  days  past  due.  Any
accrued but uncollected interest previously recorded on such loans
is  reversed  in the current period. Past due consumer  loans  are
generally fully reserved or charged-off when they reach a  90  day
delinquency  status.  Loans are returned to  accrual  status  when
management determines that the circumstances have improved to  the
extent that both principal and interest are collectible and  there
has been a sustained period of repayment performance in accordance
with the contractual terms of the loan.
While   a  loan  is  classified  as  nonaccrual  and  the   future
collectibility   of  the  recorded  loan  balance   is   doubtful,
collections of interest and principal are generally applied  as  a
reduction to principal outstanding. When the future collectibility
of  the recorded loan balance is expected, interest income may  be
recognized  on  a cash basis. In the case where a nonaccrual  loan
had  been partially charged-off, recognition of interest on a cash
basis  is limited to that which would have been recognized on  the
recorded  loan  balance  at the contractual  interest  rate.  Cash
interest  receipts  in  excess  of that  amount  are  recorded  as
recoveries  to  the allowance for loan losses until prior  charge-
offs have been fully recovered.
The  allowance for loan losses is increased by charges  to  income
and  decreased  by  charge-offs (net of recoveries).  Management's
periodic  evaluation of the adequacy of the allowance is based  on
the  Company's past loan 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, and current economic conditions.
In  1995,  the  Company adopted Statement of Financial  Accounting
Standards (SFAS) 114, "Accounting by Creditors for Impairment of a
Loan,"  as  amended  by  SFAS 118, "Accounting  by  Creditors  for
Impairment  of  a  Loan  -  Income Recognition  and  Disclosures,"
collectively referred to as SFAS 114. Under SFAS 114,  a  loan  is
considered impaired when, based on current information and events,
it  is  probable  that a creditor will be unable  to  collect  all
amounts  due according to the contractual terms of the loan.  SFAS
114  applies  to  all loans except large groups of smaller-balance
homogenous loans, which are collectively evaluated. SFAS 114  does
not  address  the  overall adequacy of the  allowance  for  credit
losses. When a loan is identified as impaired, accrual of interest
ceases  and  any  amounts  that are  recorded  as  receivable  are
reversed out of interest income. Adoption of these statements  did
not have a material impact on the financial statements.
The Company measures its impaired loans by using the fair value of
the collateral if the loan is collateral-dependent and the present
value  of the expected future cash flows, discounted at the loan's
effective  interest rate, if the loan is not collateral-dependent.
The difference between the recorded value of the impaired loan and
the fair value of the loan is defined as the impairment allowance.
Impairment  allowances  are  considered  by  the  Corporation   in
determining  the  overall  adequacy of the  allowance  for  credit
losses.
Premises and equipment
Land is carried at cost. Premises and equipment are stated at cost
less  accumulated depreciation and amortization.  Depreciation  is
computed  on  the  straight-line basis over the  estimated  useful
lives  of the related assets, generally ranging from three  to  40
years.  Amortization of leasehold improvements is  computed  on  a
straight-line  basis  over  the term of  the  lease.  Maintenance,
repairs and minor improvements are charged to operating expense as
incurred. Major improvements are capitalized.
Stock-based compensation
The  Company  accounts  for  stock-based  compensation  using  the
provisions  of Accounting Principles Board (APB) Opinion  No.  25,
"Accounting   for  Stock  Issued  to  Employees,"  which   require
compensation  cost  to be recognized based on the  difference,  if
any,  between  the quoted market price of the stock on  the  grant
date and the amount an employee must pay to acquire the stock.
Income taxes
The  Company  accounts  for  income  taxes  using  the  asset  and
liability  approach  which requires recognition  of  deferred  tax
liabilities and assets for the expected future tax consequences of
temporary  differences between the carrying amounts  and  the  tax
basis of such assets and liabilities. This method utilizes enacted
statutory  tax rates in effect for the year in which the temporary
differences are expected to reverse and gives immediate effect  to
changes  in  income tax rates upon enactment. Deferred tax  assets
are  recognized, net of any valuation allowances,  for  deductible
temporary  differences  and  net operating  loss  and  tax  credit
carryforwards.
Earnings per share
Earnings  per share are based upon the weighted average number  of
common  shares  outstanding during the year plus  the  incremental
number  of  shares  from the assumed exercise  of  dilutive  stock
options  and  warrants  less  ESOP  shares  not  committed  to  be
released.  The  weighted  average  number  of  common  and  common
equivalent  shares  outstanding was 987,269 in  1996,  942,386  in
1995, and 906,435 in 1994.
Statement of cash flows
For purposes of preparing the statement of cash flows, the Company
defines  cash and cash equivalents as cash and due from banks  and
federal funds sold.


New accounting pronouncements
SFAS  125,  "Accounting for Transfers and Servicing  of  Financial
Assets  and  Extinguishments of Liabilities," was issued  in  June
1996  and  is  effective for transfers and servicing of  financial
assets and extinguishments of liabilities occurring after December
31,  1996.  In  accordance  with SFAS 125,  an  entity  recognizes
financial and servicing assets it controls and liabilities it  has
incurred,  derecognizes financial assets  when  control  has  been
surrendered,   and  derecognizes  liabilities  when  extinguished.
Management  does  not anticipate that adoption of  this  Statement
will have a significant impact on the Company's financial position
or results of operations.

    NOTE 2 - RESTRICTIONS ON CASH AND DUE FROM BANKS:

The  Federal  Reserve  Board requires banks  to  maintain  certain
minimum cash balances consisting of vault cash and deposits in the
Federal  Reserve  Bank. The amount of such reserves  is  based  on
percentages  of  certain deposit types and totaled $2,356,000  and
$1,414,000 at December 31, 1996 and 1995, respectively.

    NOTE 3 - INVESTMENT SECURITIES:

The  amortized  cost  and  estimated market  value  of  securities
available for sale are as follows:
<TABLE>


                       Amortized       Gross         Gross          Estimated
                          cost       unrealized     unrealized    market value
                                       gains         losses
<S>                   <C>            <C>           <C>            <C>
December 31, 1996
U.S. Treasury securities and obligations of
    U.S. government corporations and agencies
                     $ 26,662,060  $  289,841   $  (28,901)      $ 26,923,000
State and political subdivision obligations
                          501,030       4,170                         505,200
Mortgage-backed securities
                        8,716,609      20,605      (13,914)         8,723,300
              Totals $ 35,879,699  $  314,616   $  (42,815)      $ 36,151,500

December 31, 1995
U.S. Treasury securities and obligations of
    U.S. government corporations and agencies
                    $ 31,907,710   $  580,506   $ (107,416)      $ 32,380,800
State and political subdivision obligations
                       1,054,794       15,206                       1,070,000
Mortgage-backed securities  
                       4,086,984       29,149       (2,333)         4,113,800
              Totals$ 37,049,488   $  624,861   $ (109,749)       $37,564,600
<PAGE>

The  amortized cost and estimated market value of securities  held
to maturity are as follows:



                       Amortized      Gross          Gross          Estimated
                          cost    unrealized      unrealized      market value
                                      gains         losses

December 31, 1996
U.S. Treasury securities and obligations of
    U.S. government corporations and agencies
                    $ 12,203,294   $  277,063   $  (14,557)      $ 12,465,800
State and political subdivision obligations
                      24,413,840      659,466      (34,006)        25,039,300
Mortgage-backed securities 
                       5,454,735       28,603      (19,738)         5,463,600
              Totals$ 42,071,869   $  965,132   $  (68,301)      $ 42,968,700

December 31, 1995
U.S. Treasury securities and obligations of
    U.S. government corporations and agencies
                    $ 15,992,787   $  502,574   $  (11,461)      $ 16,483,900
State and political subdivision obligations
                      21,674,732      760,214      (38,846)        22,396,100
Mortgage-backed securities
                       6,738,922       31,312      (27,734)         6,742,500
              Total $ 44,406,441  $ 1,294,100   $  (78,041)      $ 45,622,500
</TABLE>


The   market   values   of  securities  are  estimated   utilizing
independent  pricing  services and are based on  available  market
data.  The  market  values  of  state  and  political  subdivision
obligations  that  are  not  actively  traded  are  determined  by
independent  pricing  services based  on  market  transactions  in
comparable   securities   and   various   relationships    between
securities.
The  amortized cost and estimated market value of debt  securities
at  December  31, 1996, by contractual maturity, are shown  below.
Actual  maturities may differ from contractual maturities  because
borrowers may have the right to call or prepay obligations.

                               Available for sale         Held to maturity
                              Amortized  Estimated      Amortized   Estimated
                                cost     market value     cost    market value
Due within one year         $13,166,302  $13,193,824  $ 2,963,404 $ 2,976,169
Due after one year - five years    
                             15,990,810   16,230,847   23,107,100  23,539,078
Due after five years - ten years
                              1,514,257    1,530,945   14,103,139  14,546,242
Due after ten years           5,208,330    5,195,884    1,898,226   1,907,211
                            $35,879,699  $36,151,500  $42,071,869 $42,968,700

The total amortized cost and market value of securities pledged to
secure  public  deposits, as required by law, was $41,125,000  and
$42,076,000, respectively,  at December 31, 1996.

<PAGE>


 NOTE 4 - LOANS:

Loans consisted of the following:
                                                  December 31,
                                             1996         1995
    Residential real estate             $ 45,656,220  $ 41,120,730
    Commercial real estate                33,852,371    33,917,880
    Agricultural loans                    29,025,726    25,168,552
    Commercial and industrial loans       28,118,416    23,317,057
    Consumer loans                         9,643,508     9,954,869
                                        $146,296,241  $133,479,088
  Less - Allowance for loan losses        (1,841,200)   (1,716,300)
                                        $144,455,041  $131,762,788

Loans  serviced  for others, principally residential  real  estate
loans,amounting to $11,476,300 and $11,590,700
at  December 31, 1996 and 1995, respectively, are not included  in
the consolidated financial statements.
Impaired loans totalled $406,000 and $420,000 at December 31, 1996
and  1995,  respectively.  The  average  recorded  investment   in
impaired  loans  during 1996 and 1995 was $409,000  and  $162,500,
respectively. The total allowance for loan losses related to these
loans  was $120,700 and $171,900 at December 31 of 1996 and  1995,
respectively.   Interest  income  on  impaired   loans   was   not
significant.  Nonaccrual loans totalled $492,000 and  $450,500  at
December 31, 1996 and 1995, respectively. Accruing loans past  due
90  days  or  more totalled $371,800 and $291,200 at December  31,
1996 and 1995, respectively.
An  analysis of changes in the allowance for possible loan  losses
is as follows:
                                       Year ended December 31,
                                  1996          1995          1994
Balance, beginning of year     $1,716,300   $1,526,900   $1,448,000
    Provision expense             282,510      324,363      312,725
    Charge-offs                  (185,599)    (216,615)    (288,992)
    Recoveries                     27,989       81,652       55,167
Balance, end of year           $1,841,200   $1,716,300   $1,526,900

    NOTE 5 - PREMISES AND EQUIPMENT:

Premises  and  equipment,  net  of  accumulated  depreciation  and
amortization, consisted of the following:
                                                    December 31,
                                                 1996         1995
    Land and improvements                   $  320,976    $  320,976
    Premises                                 4,128,631     4,000,757
    Furniture, fixtures and equipment        3,714,634     2,681,308
    Leasehold improvements                     176,070       176,070
                                             8,340,311     7,179,111
    Less - Accumulated depreciation and amortization
                                            (2,691,017)   (2,180,414)
                                            $5,649,294    $4,998,697

Depreciation expense was approximately $547,500 in 1996,  $453,500
in 1995 and $425,500 in 1994.

<PAGE>


NOTE 6 - DEPOSITS:

         Deposits consisted of the following:
                                                   December 31,
                                                1996         1995
Noninterest-bearing deposits               $ 27,344,602 $ 26,704,826
Negotiable order of withdrawal deposits      31,826,528   25,827,144
Savings deposits                             34,282,225   35,545,073
Money market deposits                        11,323,102   11,770,921
Certificates of deposit less than $100,000   78,481,603   80,689,791
Certificates of deposit $100,000 or greater  24,236,237   23,537,706
                                           $207,494,297 $204,075,461

At  December 31, 1996, the scheduled maturities of certificates of
deposit  in  1997,  1998, 1999, 2000, 2001 and thereafter  are  as
follows:   $84,113,252,   $13,896,880,   $2,160,041,   $1,997,928,
$520,006   and  $29,733,  respectively.  Securities   sold   under
agreements to repurchase averaged approximately $1,942,000  during
1996,  and the maximum amount outstanding at any month-end  during
1996 was $2,192,000.

    NOTE 7 - ADVANCES FROM FEDERAL HOME LOAN BANK:

At  December  31,  1996,  the Company  has  advances,  secured  by
residential mortgage loans, from the Federal Home Loan Bank of New
York of $8,144,797. These borrowings have fixed and variable rates
of  interest ranging from 5.19% to 7.97%, with a weighted  average
interest rate of 6.24%, and mature at various dates through  2005.
Principal repayments required in 1997,
1998,  1999,  2000 and 2001 are as follows: $5,368,400,  $345,400,
$366,200,  $318,400 and $342,500, respectively.  At  December  31,
1996, the Company has an available line of credit with the Federal
Home  Loan  Bank  of  New  York  of  $23,266,700.  There  are   no
significant commitment fees associated with this line,  and  there
were no borrowings against this line during 1996.

    NOTE 8 - SHAREHOLDERS' EQUITY:

The  Company  has 100,000 shares reserved for issuance  under  its
fixed stock option plan. The options may be granted at prices  not
less  than  the fair market value at the date of grant, vest  over
periods up to nine years, and expire no later than 10 years  after
the  date  of  the grant. The fair value of each option  grant  is
estimated  on  the  date of grant using the  Black-Scholes  option
pricing  model and the following assumptions: a risk-free interest
rate   of  6.49%;  an  expected  life  of  seven  years;  expected
volatility of 14.89%; and an expected dividend yield of 2.62%. The
Company  did  not recognize any compensation cost associated  with
the  granting  of options during 1996. Had the Company  recognized
compensation  cost associated with these options, net  income  and
earnings   per  share  would  have  been  $2,866,950  and   $2.91,
respectively.




A  summary of the status of the Company's stock option plan as  of
December  31,  1996, 1995 and 1994 and changes  during  the  years
ending on those dates is as follows:

                   1996                 1995                  1994
                      Weighted                 Weighted            Weighted
                       average                  average            average
             Shares exercise price Shares exercise price Shares exercise price
Outstanding at beginning of year
             81,258      $15       81,258         $15      81,258     $15
Granted      17,000       29
Exercised   (25,016)      15
Forfeited    (1,750)      15
Outstanding at end of year
             71,492      $18       81,258         $15      81,258     $15
Options exercisable at year end
             35,991      $15       54,631         $15      46,505     $15
Fair value of options granted during the year    $7.99


At December 31, 1996, there are 54,492 options outstanding with an
exercise  price of $15 and a remaining contractual life  of  three
years,  and 17,000 options outstanding with an exercise  price  of
$29 and a remaining contractual life of ten years.
During  November  1993,  the Company sold 200,000  shares  of  its
common  stock  with  attached warrants to purchase  an  additional
200,000  shares. The warrants are exercisable at $23.00 per  share
and  expire  on December 31, 1997. Warrants for 14,400 shares  and
3,250  shares  were exercised during 1996 and 1995,  respectively.
Warrants  for  182,350 shares are outstanding as of  December  31,
1996.

    NOTE 9 - INCOME TAXES:


     The components of the provision for income taxes are as follows:

                                            Year ended December 31,
                                  1996         1995        1994
    Current:
        Federal                $1,021,500   $1,210,150   $  605,000
        State                     322,300      371,000      198,000
                                1,343,800    1,581,150      803,000
    Deferred:
        Federal                     6,000     (223,000)     185,000
         State                      1,200      (70,000)      62,000
                                    7,200     (293,000)     247,000
                               $1,351,000   $1,288,150   $1,050,000

    <PAGE>



 The components of deferred taxes are as follows:
                                                    December 31,
                                                 1996        1995
Deferred tax assets:
    Allowance for possible loan losses         $568,000    $505,600
    Deferred compensation                        85,700      79,200
    Deferred loan origination fees and costs     47,200      58,100
    Unrealized gains recognized for tax purposes             39,000
    Other                                        10,400
                                                711,300     681,900
 Deferred tax liabilities:
    Depreciation                                172,200     137,700
    Pension                                       3,700      21,000
    Unrealized investment gains                 109,000     208,000
    Unrealized losses recognized for tax purpose 20,900
                                                305,800     366,700
    Net deferred tax asset                     $405,500    $315,200

The  provision for income taxes is different from that which would
be  obtained by applying the statutory federal income tax rate  to
income  before  taxes. The items causing this  difference  are  as
follows:
<TABLE>
                                  Year ended December 31,
                           1996              1995              1994
                              % of pretax         % of pretax      % of pretax
                       Amount   income     Amount   income   Amount    income
<S>                   <C>       <C>     <C>       <C>      <C>          <C>
Expected tax at federal statutory rates
                     $1,435,000 34.00% $1,342,000 34.00%  $1,124,000    34.00%
Increases (decreases) resulting from:
  Tax exempt interest  (331,000)(7.80)   (320,000)(8.10)    (251,000)   (7.60)
  State income taxes, net of federal benefit
                        214,000  5.00     199,000  5.00      171,600     5.20
  Other, net             33,000   .80      67,150  1.70        5,400      .20
Provision for income taxes 
                     $1,351,000 32.00% $1,288,150 32.60%  $1,050,000   31.80%
</TABLE>



    NOTE 10 - EMPLOYEE BENEFIT PLANS:

The  Company  has a noncontributory defined benefit  pension  plan
covering substantially all employees. Benefits are based on 1%  of
career  average annual compensation multiplied by  the  number  of
years of service, up to 40 years. The Company's funding policy  is
to contribute annually an amount, based on actuarial computations,
which   would  satisfy  the  Internal  Revenue  Service's  funding
standards.

Net pension expense includes the following components:
                                            Year ended December 31,
                                            1996      1995      1994
Service cost - benefits earned during the period  
                                        $  83,041  $  62,704 $  88,666
Interest cost on projected benefit obligation         
                                           86,718     76,282    76,646
Actual return on plan assets             (194,835)  (168,603)   49,001
Net amortization and deferral              87,739     71,494  (137,755)
         Net pension expense            $  62,663  $  41,877  $ 76,558

<PAGE>

The funded status of the plan was as follows:
                                             December 31,
                                            1996      1995
Actuarial present value of benefit obligations:
    Vested benefit obligation           $1,037,994 $  931,924
    Accumulated benefit obligation      $1,137,158 $1,027,518
Projected benefit obligation for services rendered to date
                                        $1,381,795 $1,212,983
Plan assets at fair value                1,454,079  1,305,276
Excess of plan assets at fair value over
         projected benefit obligation       72,284     92,293
Unrecognized net (gain) loss from past experience different
from that assumed and effects of changes in assumptions
                                           (23,217)    26,538
Unrecognized prior service cost               (350)      (378)
Unrecognized net transition asset          (41,022)   (48,095)
Prepaid pension cost                     $   7,695  $  70,358

The projected benefit obligation at December 31, 1996 and 1995 was
determined  using a discount rate of 7.00% and an assumed  average
rate  of  increase  in future compensation levels  of  5.50%.  The
expected  long-term rate of return on plan assets was  7.75%.  The
plan  assets  consist  primarily of fixed income  securities.  The
unrecognized net transition asset as of January 1, 1989  is  being
amortized  over  the remaining service lives of  the  participants
which approximates 14 years.
The  Company also has an executive supplemental income plan  which
provides  for specified deferred compensation benefits payable  to
certain  officers in the event of death, disability or retirement.
The liability relating to this plan was approximately $214,000 and
$196,000  at  December  31, 1996 and 1995, respectively,  and  was
determined  using  a discount rate of 8% and an  assumed  rate  of
increase  in  future  compensation of 3%. There  were  charges  to
income  related  to  this plan in 1996 and 1995  of  approximately
$42,500  and $36,800, respectively. The Company is both owner  and
beneficiary  of  a  life insurance policy  on  the  life  of  each
participant, the proceeds from which can be used to fund the after-
tax  cost  of the promised benefits. The cash surrender  value  of
such  life  insurance  policies  was  approximately  $559,000  and
$536,000 as of December 31, 1996 and 1995, respectively.
The  Company  sponsors a leveraged employee stock  ownership  plan
(ESOP)  that  covers all employees with one year of  service,  who
work  at least 1,000 hours per year and who have attained the  age
of 21. The Company purchased 61,200 shares of common stock in 1986
for  $685,500, 15,050 shares in 1993 for $301,000 and 5,500 shares
in  1995  for  $140,500. The Company has financed the purchase  of
ESOP  shares  with borrowings from The Bank of Castile,  which  in
turn  borrows the amount from the Federal Home Loan  Bank  of  New
York. The Company makes annual contributions to the ESOP equal  to
the  ESOP's  debt  service.  As the debt  is  repaid,  shares  are
released from collateral and allocated to active employees,  based
on the proportion of debt service paid in the year.
The Company accounts for its ESOP in accordance with Statement  of
Position 93-6, "Employers' Accounting for Employee Stock Ownership
Plans." Accordingly, the debt of the ESOP is recorded as debt  and
the  shares  pledged as collateral are reported as  unearned  ESOP
shares  in  the  consolidated statement of  condition.  As  shares
purchased by the ESOP prior to December 31, 1992 are released from
collateral, the Company recognizes compensation expense  based  on
actual  cash  payments,  which approximated  or  exceeded  expense
required  to  be recognized using the share allocated  method.  At
December 31, 1994, there were approximately 2,500 shares that were
accounted  for using this method when released in 1995. As  shares
purchased by the ESOP subsequent to December 31, 1992 are released
from collateral, the Company recognizes compensation expense equal
to  the  current market price of the shares, and the shares become
outstanding  for  earnings  per share computations.  Dividends  on
allocated  ESOP  shares  are recorded as a reduction  of  retained
earnings;  dividends on unallocated ESOP shares are available  for
debt service. ESOP compensation expense was $149,700, $168,700 and
$122,800  for  the years ended December 31, 1996, 1995  and  1994,
respectively. The ESOP shares are as follows:
                                            December 31,
                                             1996          1995
    Allocated shares                         56,665       55,579
    Allocated shares withdrawn from plan     13,988       10,130
    Unreleased shares                        11,097       16,041
    Total ESOP shares                        81,750       81,750
    Fair value of unreleased shares        $341,200     $477,200

    NOTE 11 - RELATED PARTY TRANSACTIONS:

The  Company  has  entered into transactions  with  its  executive
officers,  directors,  principal shareholders,  and  companies  in
which  such  individuals  have  10%  or  more  ownership  (related
parties).  It  is  the  Company's policy that  all  related  party
transactions  are conducted at "arm's-length" and  all  loans  and
commitments  included in such transactions  are  made  on  substan
tially the same terms, including interest rates and collateral, as
those  prevailing  at  the time for comparable  transactions  with
other customers.
The  aggregate amount of loans to such related parties at December
31,  1996 was $5,647,900. During 1996, new loans and increases  in
existing loans to such related parties amounted to $11,099,300 and
principal  repayments  amounted to $10,767,900.  At  December  31,
1996,  there were approximately $1,388,800 in deposits  from  such
related parties.

    NOTE 12 - COMMITMENTS AND CONTINGENT LIABILITIES:

The  Company  operates  one branch office under  a  noncancellable
lease  agreement which expires in 2002. Two other  branch  offices
are  located on land which is being leased through 1999 and  2090,
respectively. These lease agreements contain various  renewal  and
purchase options at maturity.
Future  minimum  rentals under these leases are: 1997  -  $24,600;
1998  - $24,800; 1999 - $18,400 and 2000 and 2001 - $9,600.  Total
rental  expense  was approximately $23,000 in 1996  and  1995  and
$21,000 in 1994.

    NOTE 13 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND
CONCENTRATIONS OF CREDIT RISK:

The  Company  is  party to financial instruments with  off-balance
sheet  risk in the normal course of business in order to meet  the
financing  needs  of  its customers. These  financial  instruments
include commitments to extend credit and standby letters of credit
which  involve,  to varying degrees, elements of credit,  interest
rate  or liquidity risk in excess of the amount recognized in  the
consolidated  statement of condition. The  Company's  exposure  to
credit  loss in the event of nonperformance by the other party  to
the  financial  instrument for commitments to  extend  credit  and
standby  letters  of  credit  is represented  by  the  contractual
amounts  of those instruments. The Company has experienced minimal
credit  losses  to  date  on its financial instruments  with  off-
balance sheet risk.
The  Company  uses the same credit policies in making  commitments
and  conditional  obligations  as it  does  for  on-balance  sheet
instruments.  The Company controls the credit risk of  off-balance
sheet  instruments through credit approvals, limits and monitoring
procedures,  and  management  evaluates  each  customer's   credit
worthiness  on  a  case-by-case basis. The  amount  of  collateral
obtained  is  based  on  management's  credit  evaluation  of  the
customer.
Commitments   to  extend  credit,  which  generally   have   fixed
expiration dates or other termination clauses, are legally binding
agreements to lend to a customer (as long as there is no violation
of  any  condition established in the contract). At  December  31,
1996,   the   Company's  total  commitments   to   extend   credit
approximated  $28,858,000. Since a portion of the  commitments  is
expected  to expire without being drawn upon, the total commitment
amounts    do   not   necessarily   represent   future   liquidity
requirements.
The  Company has identified certain credit risk concentrations  in
relation  to  its on- and off-balance sheet financial instruments.
Credit  risk is defined as the possibility that a loss  may  occur
from  the  failure  of another party to perform according  to  the
terms  of  the contract. A credit risk concentration results  when
the Company has a significant credit exposure to an individual  or
a  group  engaged in similar activities or affected  similarly  by
economic conditions.
The  Company's customers are located primarily in the counties  of
Genesee,  Wyoming and Livingston in New York state. As Note  4  to
the consolidated financial statements indicates, approximately 20%
of  the  Company's  outstanding  loans  are  commercial  loans  to
customers  who are directly involved in the agriculture  industry,
primarily  dairy farmers. In addition, there are other  commercial
and  industrial  loans,  real  estate  loans  and  consumer  loans
outstanding  to  customers  who  are  indirectly  related  to  the
agriculture industry.

NOTE 14 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:

The  following methods and assumptions were used to  estimate  the
fair value of each class of financial instruments:

Cash and short-term instruments
For  those  short-term instruments, the carrying amount represents
an estimate of fair value.
Loan receivables
The  fair  value of loans is determined by utilizing a  discounted
cash  flow  model which considers scheduled maturities,  repricing
characteristics, prepayment assumptions and interest cash flows.
Deposit liabilities
The  fair value of demand deposits, savings accounts, and  certain
money  market  deposits is the amount payable  on  demand  at  the
reporting  date. The fair value of fixed-maturity certificates  of
deposit  is  determined by utilizing a discounted cash flow  model
which  considers  scheduled maturities, repricing  characteristics
and interest cash flows.
Borrowings
Rates  currently available to the bank for debt with similar terms
and  remaining  maturities  are used to  estimate  fair  value  of
existing debt.
Commitments to extend credit
Fees charged for commitments to extend credit and stand-by letters
of  credit are not significant and are offset by associated credit
risk  with  respect  to  certain amounts expected  to  be  funded.
Accordingly,  the  fair  value  of the  financial  instruments  is
immaterial.
The  estimated fair values of the Company's financial  instruments
are as follows:
<TABLE>
<CAPTION>
                               December 31, 1996         December 31, 1995
                             Carrying                  Carrying
                              amount     Fair value     amount     Fair value
<S>                          <C>          <C>          <C>         <C>
Financial assets:
    Cash and due from banks $ 11,115,746 $ 11,115,746 $ 7,752,080 $ 7,752,080
    Federal funds sold           450,000      450,000   2,050,000   2,050,000
    Investment securities     78,223,369   79,120,200  81,971,041  83,187,100
    Loans, net of allowance
         for possible loan losses
                             144,455,041  143,592,000 131,762,788 136,105,000
    Federal Home Loan Bank stock 
                               1,105,000    1,105,000     636,300     636,300

Financial liabilities:
    Deposits                 207,494,297  209,191,000 204,075,461 206,481,000
    Securities sold under agreements
            to repurchase      1,702,729    1,702,729   1,767,984   1,767,984
    Advances from the Federal
            Home Loan Bank     8,144,797    8,144,797   3,507,020   3,507,020
</TABLE>
The  reported fair values of financial instruments are based on  a
variety of factors. Accordingly, the fair values may not represent
actual  values of the financial instruments that could  have  been
realized as of year-end or that will be realized in the future.




    NOTE 15 - REGULATORY MATTERS:

The  Company is subject to various regulatory capital requirements
administered  by  the federal banking agencies.  Failure  to  meet
minimum  capital requirements can initiate certain mandatory  (and
possibly additional discretionary) actions by regulators that,  if
undertaken,  could have a direct material effect on the  Company's
financial  statements. Under capital adequacy guidelines  and  the
regulatory  framework for prompt corrective  action,  the  Company
must  meet  specific capital guidelines that involve  quantitative
measures  of  the Company's assets, liabilities, and certain  off-
balance-sheet  items  as  calculated under  regulatory  accounting
practices.  The  Company's capital amounts and classification  are
subject   to   qualitative  judgments  by  the  regulators   about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure  capital
adequacy  require  the  Company to maintain  minimum  amounts  and
ratios  (set forth in the table below) of total and Tier 1 capital
(as  defined  in  the  regulations) to  risk-weighted  assets  (as
defined), and of Tier 1 capital (as defined) to average assets (as
defined). Management believes, as of December 31, 1996,  that  the
Bank  meets  all  capital adequacy requirements  to  which  it  is
subject.
As  of  December 31, 1996, the most recent notification  from  the
Federal  Deposit Insurance Corporation categorized the Company  as
well   capitalized  under  the  regulatory  framework  for  prompt
corrective  action.  To  be categorized as  well  capitalized  the
Company  must maintain minimum total risk-based, Tier 1 risk-based
and  Tier  1  leverage  ratios as set  forth  in  the  table.  The
Company's actual capital amounts and ratios are also presented  in
the   table.  There  are  no  conditions  or  events  since   that
notification   that   management   believes   have   changed   the
institution's category.

                                   To be well capitalized
                                  For capital          under prompt corrective
                 Actual           adequacy purposes:     action provisions:
                 Amount   Ratio   > Amount  > Ratio     > Amount   > Ratio
 As of December 31, 1996
Total Capital (to risk-weighted assets):
     LIBC    $26,830,000  17.96% $11,948,600    8.0%      N/A
     The Bank of Castile
              25,931,000  17.63%  11,767,200    8.0%   $15,305,700     10.0%
Tier 1 Capital (to risk-weighted assets):
     LIBC     24,989,000  16.73%   5,974,300    4.0%      N/A
     The Bank of Castile
              24,090,000  16.38%   5,883,000    4.0%     9,183,400      6.0%

<PAGE>

Tier 1 Capital (to average assets):
     LIBC     24,989,000  10.55%   7,103,800    3.0%      N/A
     The Bank of Castile
              24,090,000  10.19%   7,093,700    3.0%    11,822,800      5.0%

 As of December 31, 1995
Total Capital (to risk-weighted assets):
     LIBC    $23,486,000  17.19% $10,927,000    8.0%      N/A
     The Bank of Castile
              23,375,000  17.24%  10,846,600    8.0%   $13,917,900     10.0%
Tier 1 Capital (to risk-weighted assets):
     LIBC     21,782,000  15.95%   5,463,500    4.0%       N/A
     The Bank of Castile
              21,659,000  15.97%   5,423,300    4.0%     8,350,700      6.0%
Tier 1 Capital (to average assets):
     LIBC     21,782,000   9.41%   6,946,900    3.0%       N/A
     The Bank of Castile
              21,659,000   9.72%   6,687,400    3.0%    11,145,600      5.0%

NOTE 16 - CONDENSED FINANCIAL INFORMATION:

The  Company's principal asset is its investment in  The  Bank  of
Castile  (the  Bank). The Bank is restricted by  law  and  related
regulations as to the amount of funds which can be transferred  to
the  Company.  Under such restrictions, approval  from  regulatory
agencies is required for the declaration of dividends in any  year
which  exceed  the  total of net income of the subsidiary  in  the
current  year,  plus  retained net income for  the  preceding  two
years.  At December 31, 1995, the Bank could declare dividends  of
approximately  $7,154,000 without prior approval  from  regulatory
agencies.
Condensed financial information of the Company follows:


   Statement of Condition
                                                      December 31,
                                                   1996         1995
      ASSETS
Cash and due from banks - The Bank of Castile  $   865,099  $   428,519
Investment in The Bank of Castile               25,022,418   22,460,114
Other assets                                        12,778
                                               $25,900,295  $22,888,633
      LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued expenses                               $     4,475  $     4,475
Employee stock ownership plan loan payable         253,095      365,678
         Total liabilities                         257,570      370,153
Common stock                                       939,386      899,970
Capital surplus                                 10,910,120   10,206,024
Retained earnings                               14,046,314   11,778,164
Unearned employee stock ownership plan shares     (253,095)    (365,678)
         Total shareholders' equity             25,642,725   22,518,480
                                               $25,900,295  $22,888,633

<PAGE>




Statement of Income
                                                Year ended December 31,
                                              1996       1995        1994
Dividends received - The Bank of Castile $  602,192  $  909,902 $  520,470
    Total income                            602,192     909,902    520,470
Operating expenses                          294,155     109,527
Loss on investment securities                                       25,000
Income before equity in undistributed income of subsidiary
                                            308,037     800,375    495,470
Equity in undistributed income of subsidiary - The Bank of Castile
                                          2,562,304   1,857,076  1,760,362
    Net income                           $2,870,341  $2,657,451 $2,255,832



  Statement of Cash Flows
                                                 Year ended December 31,
                                         1996          1995           1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                             $2,870,341    $2,657,451    $2,255,832
Adjustments to reconcile net income to net cash
   provided by operating activities -
    ESOP compensation expense             149,655
    Loss on investment securities                                      25,000
  Equity in income of subsidiaries     (3,164,496)   (2,766,978)   (2,357,940)
    Increase in other assets              (12,778)
    (Decrease) increase in accrued expenses             (12,964)       13,064
    Net cash used in operating activities
                                       $ (157,278)   $ (122,491)  $   (64,044)
CASH FLOWS FROM INVESTING ACTIVITIES:
  Dividends received - The Bank of Castile 
                                          602,192       909,902       520,470
    Net cash provided by investing activities   
                                          602,192       909,902       520,470
CASH FLOWS FROM FINANCING ACTIVITIES:
  Cash dividends paid                    (602,191)     (484,542)     (430,426)
  Payment of current borrowings          (112,583)                    (99,000)
  Proceeds from exercise of options and warrants
                                          706,440        74,750
    Net cash used in financing activities  (8,334)     (409,792)     (529,426)
Net increase (decrease) in cash and due from banks
                                          436,580       377,619       (73,000)
Cash and due from banks, beginning of year  
                                          428,519        50,900       123,900
Cash and due from banks, end of year     $865,099      $428,519      $ 50,900


Item 8 -     Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure

    Not applicable.

<PAGE>

                             PART III

Item 9 -     Directors, Executive Officers and Control Persons of the
Registrant

    In accordance with the Bylaws of the Company, three (3)
classes of directors are elected in three (3) staggered three-year terms.
Each director so elected serves for a term of three (3) years and until
his successor is duly elected and qualified.

    Executive officers serve until the next annual meeting of directors
and until their successors are appointed and qualified.

    Set forth below is certain information regarding the
executive officers and directors of the Company as of March 17, 1997.


                                      Positions
                                      Held With
Name                         Age     the Company         Address

James H. Van Arsdale, III    76      Chairman of        71 Park Road East
                                     the Board of       Castile, NY 14427
                                      Directors

James W. Fulmer              45      President, Chief   38 Wolcott Street
                                     Executive Officer, LeRoy, NY 14482
                                      and Director

Charles L. Van Arsdale       73      Director           5136 Park Road West
                                                        Castile, NY 14427

Stanley J. Harmon            76      Secretary and      4845 Luther Road
                                      Director          Silver Springs, NY
14550

Gunther K. Buerman           53      Director          1186 Lake Road
                                                        Webster, NY 14580

Steven C. Lockwood           37      Treasurer         34 N. Lyon Street
                                                        Batavia, NY 14020
__________________________________

    James W. Fulmer also serves as a director of the Bank.  The principal
occupation or employment of each director and each executive officer of
the Company and the year in which each such director became a director of
the Company and/or the Bank is set forth below.

    Mr. James H. Van Arsdale, III, a director of the Company
since 1981, was named Chairman of the Board of Directors of the Company
in 1981.  Prior to that time, Mr. Van Arsdale performed various
managerial functions for the Bank and held various executive offices of
the Bank.  He was the Chairman of the Board of Directors of the Bank
until 1992 when he retired.  Mr. Van Arsdale had also been a director of
the Bank since 1948.  Mr. Van Arsdale is the brother of Mr. Charles L.
Van Arsdale.

    Mr. James W. Fulmer has served as the President and Chief Executive
Officer of the Company since January 1, 1991, and as the Chief Executive
Officer of the Bank since January, 1996.  Before joining the Company as
the Executive Vice President in December, 1988, Mr. Fulmer held various
executive positions with Fleet Bank of New York (formerly known as
Security New York State Corporation and Norstar Bank) for approximately
twelve (12) years and with the
Genesee Valley Penny Saver for approximately one year.  Mr. Fulmer has
served as a director of the Bank since 1988 and as Vice Chairman of the
Board of Directors of the Bank since 1991.  Effective May 1, 1992, he
assumed the position of Chairman of the Board of Directors of the Bank,
and he currently serves as a member of the Board of Directors of the
Cherry Valley Cooperative Insurance Company, Mercy Health System of WNY,
St. Jerome's Hospital, the Genesee County Industrial Development Agency,
and is secretary of the Independent Bankers Association of New York
State.  He is also a member of the Board of Directors of the New York
State Bankers Association.

    Mr. Charles L. Van Arsdale was the President of the
Company from the date of its incorporation in 1981 until December 31,
1990.  In addition, Mr. Van Arsdale was a director of the Bank from 1949
until his retirement in 1996.  Prior to 1981, Mr. Van Arsdale performed
several managerial functions for the Bank and held various executive
offices of the Bank.  Mr. Van Arsdale is the brother of Mr. James H. Van
Arsdale, III.

    Mr. Stanley J. Harmon, the Secretary of the Company since 1981, is a
retired funeral director.  Mr. Harmon also served as a director of the
Bank from 1960 until April 30, 1993.

    Mr. Gunther K. Buerman has been a director of the Company since
January 25, 1990.  Mr. Buerman has been a partner in the law firm of
Harris Beach & Wilcox, LLP located in Rochester, New York, since 1982 and
has been the Managing Partner of the firm since March, 1984.

    Mr. Steven C. Lockwood, Treasurer of the Company since
1992, is also the Chief Financial Officer for the Company and the Bank.
Mr. Lockwood graduated from St. Bonaventure University in 1981, and
joined the Bank in 1982 as Internal Auditor.  Mr. Lockwood graduated from
the Bank Administration Institute School of Banking located in Madison,
Wisconsin in 1995.

    The following table sets forth the names and ages of the
principal officers and directors of the Bank and their current
positions with the Bank.

Name*                            Age       Position

James W. Fulmer                  45        Chief Executive Officer,
Chairman of the Board of
Directors, and  Director
Robert L. Brass                  59        Director
Joseph G. Bucci                  53        Director
Brenda L. Copeland               45        President and Director
Thomas E. Cushing                46        Director
Gary D. Gates                    60        Director
Benjamin C. Mancuso, Jr.         63        Director
John McClurg                     35        Director
Craig Yunker                     45        Director

  James W. Fulmer also serves as a director of the Company.  The
principal occupation or employment of all other directors and principal
officers of the Bank and the year in which each such director and
principal officer of the Bank became a director or principal officer of
the Bank, as the case may be, is set forth below.

    Mr. Robert L. Brass, a director of the Bank since 1992,
is President of L.R. Brass, Inc., a retail food market.

    Mr. Joseph G. Bucci, a director of the Bank since 1986,
is a self-employed real estate agent.

    Ms. Brenda L. Copeland became the President of the Bank
on January 1, 1991.  In addition, she has served as a director of the
Bank since 1988, and has been employed by the Bank since 1971.

    Mr. Thomas E. Cushing, a director since 1989, is the Vice President,
Secretary and Treasurer of J.O. Cook, Inc.

    Mr. Gary D. Gates, a director since 1986, is the President of Gary's
TV, Inc.

    Mr. Benjamin C. Mancuso, Jr., a director since 1992, is
President of Charles Mancuso and Son, Inc., a family-owned holding
company.

    Mr. Craig Yunker, a director of the Bank since 1991, is
a partner in CY Farms.

    John McClurg, a director since 1995, is President and owner of
McClurg Chrysler-Plymouth, Inc. and McClurg Chevrolet-Pontiac-Oldsmobile,
Inc., two automobile dealerships located in Perry, New York.
<PAGE>

Item 10 -    Executive Compensation

    The following tables show, for the years ended December
31, 1996, 1995, and 1994, the total cash compensation paid by the Company
and the Bank to executive officers who received total annual salary and
bonus in excess of $100,000 and to the Chief Executive Officer of the
Company.

                          SUMMARY COMPENSATION TABLE

                                   Annual Compensation

Name and                                      Other Annual
Principal                                        Compensation(2)
Position          Year   Salary($)1)  Bonus($)      ($)
James W. Fulmer     1996    $128,015    $17,500     $8,345
President, CEO      1995    $119,111    $17,500     $8,345
& Director of       1994    $105,122    $15,000     $8,345
the Company, and
Chairman of the
Board of the Bank

Brenda L. Copeland  1996    $105,601   $13,000       None
President of        1995    $ 98,775   $13,000       None
  the Bank          1994    $ 90,863   $10,000      $6,499

                              Long Term Compensation

                                   Awards
                                         Long Term
Name and                   Restricted    Options Incentive   All Other
Principal                  Stock Award(s) SARs    Payout  Compensation(3)
Position          Year       ($)         (#)      ($)        ($)
James W. Fulmer     1996      None      None      None     $ 7,349
President, CEO      1995      None      None      None      10,454
& Director of       1994      None      None      None       6,555
the Company, and
Chairman of the
Board of the Bank

Brenda L. Copeland  1996      None      None     None     $ 6,042
President of        1995      None      None     None       8,648
  the Bank          1994      None      None     None       5,599


1) Includes matching contributions under the Company's 401(k) plan in an
amount equal to $3,290.30, $3,050.32, and $2,553.88, respectively, for
James W. Fulmer, and $2,790.00, $2,624.96, and $2,394.80, respectively,
for Ms. Brenda L. Copeland, for the years ended December 31, 1996, 1995,
and 1994, respectively, as well as director's fees and certain fringe
benefits such as automobiles and group term life insurance.

(2) The amounts disclosed represent the Company's contribution pursuant
to the Executive Supplemental Income Agreements executed by and between
the Company and each of Mr. Fulmer and Ms. Copeland.  See "Executive
Compensation - Benefits --Executive Supplemental Income Agreements."

 (3) The amounts disclosed represent the portion of Company's
contribution to the Employee Stock Ownership Plan ("ESOP") allocated to
Mr. Fulmer and Ms. Copeland, respectively.

    During 1996, all directors of the Company received an
amount equal to $3,000 per year.  During 1996, the Board of
Directors of the Company met seven (7) times, and all of the
directors attended 75% or more of the meetings.

    During 1996, the directors of the Bank each received an
annual retainer of $7,300 in lieu of meeting attendance fees. During
1996, the Board of Directors of the Bank met thirteen (13) times. Two
(2) of the members of the Board of Directors of the Bank entered into a
certain Deferred Compensation Agreement relating to all amounts received
from the Bank during the period from 1986 until 1990.  Under these
agreements, all fees earned as a director during that period are deferred
until such director's death or retirement from the Board of Directors of
the Bank.
Payments of the fees so deferred, as well as all earnings on such
deferred amounts, are then paid to such director or his
beneficiary, as the case may be, in one hundred twenty (120) equal
monthly installments.  The Bank does not currently intend to offer such
agreements to other members of its Board of Directors.

    In addition, during 1996, one designated director of the
Board of Directors of the Bank received a weekly fee of $100 for his
services in connection with the Bank's Loan Committee.  Members of the
Examining Committee also receive a quarterly fee of $100 in lieu of
meeting attendance fees.

Employment Contracts

    On January 1, 1991, James W. Fulmer began to serve as the President
and Chief Executive Officer of the Company in accordance with his
employment agreement dated September 12, 1989, as amended, effective
January 1, 1991.  Subsequently, on May 1, 1992, Mr. Fulmer became the
Chairman of the Board of Directors of the Bank. Pursuant to the terms of
the agreement, as amended, each year the term of Mr. Fulmer's employment
agreement is automatically extended for an additional year so that the
term of the employment agreement
is always three (3) years.  In the event that the Company
terminates the employment agreement without cause, the Company is
required to pay Mr. Fulmer, as severance pay, his annual compensation
plus all fringe benefits for a period of three (3) years from the date of
such termination.  In addition, in the event of such termination without
cause or the sale, merger, or substantial reorganization of the Company
or the Bank, all of Mr. Fulmer's options to purchase common stock shall
become immediately exercisable.  See "Executive Compensation - Benefits -
- Stock Option Plan."

    Effective January 1, 1991, the Company entered into an
amended employment agreement with Ms. Brenda L. Copeland whereby Ms.
Copeland agreed to serve as the President of the Bank or in any other
capacity that the Board of Directors of the Company or the Bank may
reasonably request.  Each year the term of Ms. Copeland's employment
agreement is automatically extended for an additional year so that the
term of the employment agreement is always three (3) years.  In the event
that the Company terminates the employment agreement without cause, the
Company is required to pay Ms. Copeland, as severance pay, her annual
compensation plus all fringe benefits for a period of eighteen (18)
months from the date of such termination.  In addition, in the event that
the Company terminates the employment agreement as a result of a change
of "control" of the Company, the Company is required to pay Ms. Copeland,
as severance pay, her annual compensation plus all fringe benefits for a
period of three (3) years from the date of such termination.  For
purposes of the employment agreement, the term "control" is defined as
the possession of the power to elect a majority of the members of the
Board of Directors of the Company through the ownership of voting
securities in the Company.

Benefits

    Employee Stock Ownership Plan.  In 1986, the Board of
Directors of the Company adopted the Employee Stock Ownership Plan
("ESOP"), effective as of January 1, 1986.  Employees eligible to
participate in the ESOP are all employees who have met the eligibility
requirements on the effective date of adoption of the ESOP, and any
employees hired subsequent to that date who have completed one year of
service, work at least 1,000 hours per year, and have attained the age of
21 years. Contributions to the ESOP are discretionary, as determined by
the Board of Directors of the Bank.  All funds contributed are received,
held, invested and reinvested by the ESOP trustee.  Although the trustee
may invest the funds contributed to the ESOP in such prudent investments
as the trustee deems desirable, substantially all the trust funds are
invested in the common stock of the Company.

    Each participant is entitled to direct the trustee as to
the exercise of any voting rights attributable to the shares of common
stock allocated to such participant and if the trustee receives no voting
instructions, the shares of common stock are not voted.  All common stock
of the ESOP not allocated to the plan participants is voted by the
trustee in its sole discretion.  The ESOP also contains provisions
permitting the ESOP to borrow funds to purchase common stock and on June
16, 1986, the ESOP borrowed $500,000 pursuant to a certain loan and
pledge agreement with two (2) unaffiliated banks.  The proceeds of the
loan were used to purchase approximately 48,000 newly issued shares of
common stock, after giving effect to a 6-for-1 stock split of the
Company, with such shares pledged as security for the payment of
principal and interest as provided in the above-mentioned agreement.  All
amounts due and owing under this loan have been satisfied.

    In November of 1990, the Company borrowed $185,500 on behalf of the
ESOP pursuant to a loan and pledge agreement with an unaffiliated bank.
The loan proceeds were used to purchase 14,000 shares of the Company's
outstanding stock, with such shares pledged as security for the payment
of principal and interest as provided in said agreement.  In November of
1993, the Company borrowed $301,000 on behalf of the ESOP to purchase
15,050 shares of the Company's common stock and 15,050 warrants to
purchase additional shares of common stock as part of the public
offering.  All amounts due and owing under these loans were subsequently
refinanced with the Bank (with appropriate collateral granted to the
Bank), which in turn, borrowed the funds from the Federal Home Loan Bank
under an existing accommodation.  In 1995, the Company borrowed $140,511
on behalf of the ESOP to purchase 5,500 shares of common stock.

    Upon an ESOP participant's retirement, disability or
death, as those terms are defined in the ESOP, the participant shall be
fully vested in all amounts allocated to such participant under the ESOP,
as well as such participant's share in the allocation of all
contributions made by the Company during the "Plan Year" (as that term is
defined in the ESOP) in which such retirement, disability or death
occurs.  In the event a participant's service terminates for any reason
other than retirement, disability or death, such participant's account
becomes vested based upon the number of years of "Credited Service" of
such participant (as that term is defined in the ESOP) in accordance with
the following schedule, as amended so as to comply with the requirements
of the Tax Reform Act of 1986, as amended (the "1986 Act"):

    Credited Service             Vested Percentage

    Less than three years              0%
    Three years                       30%
    Four years                        40%
    Five years                       100%

    Contributions to the ESOP amounted to $150,000, $169,000, and
$123,000, for the years ended December 31, 1996, 1995, and 1994,
respectively.

    Defined Benefit Pension Plan.  The Company maintains a
defined benefit pension plan for the benefit of all employees covered
under the Company's prior pension plan and any other employees with at
least six (6) months of service who work at least 1,000 hours per year
and have attained the age of 21 years.  Amounts contributed to the
pension plan for each covered employee by the Company are determined on
an actuarial basis.  The discount rate used in determining the actuarial
present value of accumulated benefits was seven percent and seven percent
at December 31, 1996 and December 31, 1995, respectively.

    Under the plan, a participant is eligible for the "Normal Retirement
Pension Benefits" upon attainment of age 65 years. Vested employees who
terminate before attaining age 65 may elect optional early retirement
benefits (at reduced levels).

    The following table sets forth the current regular vesting schedule
for participants under the plan, as amended so as to comply with the
requirements of the 1986 Act:

    Years of Service        Vested Percentage

    Less than three years          0%
    Three years                   20%
    Four years                    40%
    Five years                    60%
    Six years                     80%
    Seven years                  100%





An employee's "Normal Retirement Pension" benefit under
the plan is an amount (payable monthly in the form of a life only
annuity) equal to the product of 1% of such employee's "Average
Compensation" and such employee's years of "Benefit Accrual Service" (not
to exceed forty (40) years), as those terms are defined in the plan.  The
following table sets forth the annual Normal Retirement Pension benefit
at age 65 to an employee covered by the plan for each of the following
Average Compensation amounts and periods of Benefit Accrual Service with
the Company.


                Normal Retirement Pension Benefit
               for Years of Benefit Accrual Service


Average
Compensation 15 Years  20 Years  25 Years  30 Years  35 Years  40 Years

$15,000   $ 2,250   $ 3,000   $ 3,750   $ 4,500   $ 5,250   $ 6,000

$30,000   $ 4,500   $ 6,000   $ 7,500   $ 9,000   $10,500   $12,000

$45,000   $ 6,750   $ 9,000   $11,250   $13,500   $15,750   $18,000

$60,000   $ 9,000   $12,000   $15,000`  $18,000   $21,000   $24,000

$75,000   $11,250   $15,000   $18,750   $22,500   $26,250   $30,000


The pension plan also provides for certain disability
retirement benefits and death benefits as well as optional forms of
payment of benefits which a covered employee may elect.  The benefits
provided for under the plan are in addition to and separate from the
benefits available to the participants under the Social Security Act.

    The pension plan was adopted in 1986, to be effective as
of January 1, 1986, the date in which the Company terminated its former
defined benefit pension plan.  There were no contributions made in 1996 
or 1995, and a contribution of  approximately $50,000 was made in
1994.

    401(k) Plan. The Bank maintains a qualified 401(k) plan,
entitled "The Bank of Castile Salary Savings Plan", to encourage the
accumulation of savings for retirement or other purposes. Employees of
the Bank who have attained the age of 20-1/2 years are eligible to join
the plan following the completion of three (3) months of service.

    Under the terms of the plan, participants may elect to
contribute from 1% to 6% of their eligible salary and the Bank
contributes an amount equal to 50% of this participant contribution for
employees.  Employees may elect to contribute up to an additional 9% of
eligible salary without any matching Bank contribution.

    All amounts contributed into the plan are invested with
the Principal Mutual Life Insurance Company (formerly known as Bankers
Life Company), with its principal office located at 711 High Street, Des
Moines, Iowa.  Pursuant to the plan, contributions by and for employees
are held in trust by the Bank.

    Participants are immediately fully vested in all
contributions to the plan.  Withdrawals of contributions are
subject to limitations and generally not permitted, except in the event
of hardship, until termination of employment, or the participant's
attainment of "Normal Retirement Age", as that term is defined in the
plan.  During 1996, the Company contributed a total of $3,290.30 as a
matching contribution for James W. Fulmer, and $2,790.00 as a matching
contribution for Brenda L. Copeland, which amounts are included in the
Summary Compensation Table set forth on page 62 of this Form 10-KSB.

    Executive Supplemental Income Agreements.  The Bank has
also entered into certain executive supplemental income agreements which
provide for specified deferred compensation benefits payable to certain
highly compensated officers and members of a select management group of
the Bank in the event of death, disability or retirement.  The Board of
Directors, in its sole discretion, determines who is eligible to
participate in this arrangement. Although the Bank is not under any
obligation whatsoever to fund its obligations under the above-mentioned
agreements, the Bank is both the owner and beneficiary of a life
insurance policy on the life of each participant, the proceeds from which
can be used to fund the after-tax cost of the promised benefits.  Charges
to income related to these agreements were approximately $42,500,
$37,000, and $8,000 for the years ended December 31, 1996, 1995, and
1994, respectively.

    Under these agreements, a participant who has reached
"Normal Retirement Age," as that term is defined in the agreements, and
has attained twenty (20) continuous years of service with the Bank
(including periods of disability and authorized leaves of absence)
receives an annual amount equal to the difference between (i) 75% of such
officer's average "Annual Compensation," as that term is defined in the
agreements, during his final five (5) calendar years of employment with
the Bank, and (ii) the sum of all social security benefits paid to such
officer and any amounts paid to such officer under the Company's defined
benefit pension plan.  Participants may retire after age 55 with the
approval of the Board of Directors and in the event that there has been a
buy-out, merger, or substantial change in ownership of the Bank, an
officer may retire at any time after attaining the age of 55 years
without approval of the Board of Directors.  In either case, the benefits
available on early retirement are equal to the benefits available at
"Normal Retirement Age," actuarially reduced.  The agreements also
contain certain provisions for the payment of pre-"Normal Retirement Age"
death benefits.

    Stock Option Plan.  At the Annual Meeting of Shareholders of the
Company on April 26, 1990, the shareholders approved the Letchworth
Independent Bancshares Corporation Stock Option Plan of 1990 (the "Option
Plan").  The purpose of the Option Plan is to increase the incentive and
to encourage the continued employment and services of key employees of
the Company and the Bank by facilitating their purchase of a stock
interest in the Company. Management believes that the implementation of
the Option Plan is in the best interests of the Company and its
shareholders since it will enhance the Company's ability to continue to
attract and retain qualified directors, officers and other key employees.

        Under the Option Plan, the Board of Directors may grant incentive
stock options as well as options that do not qualify as incentive stock
options ("non-statutory stock options").  The Board of Directors
determines the individuals to receive grants and the number of shares to
be awarded, subject to certain federal tax regulations in the case of
incentive stock options granted under the Option Plan.  The Option Plan
provides that the exercise price under each incentive stock option shall
be no less than 100% of the "Fair Market Value" (as defined in the Option
Plan) of the common stock on the date the option is granted.  The
exercise price for each non-statutory stock option granted under the
Option Plan is the price established by the Board of Directors of the
Company, which normally is expected to be no less than 100% of the "Fair
Market Value" (as defined in the Option Plan) on the date the option is
granted.

    On May 3, 1990, the Company issued options to acquire
81,258 shares of its common stock at a purchase price of $15.00 per
share. On July 16, 1996, the Company granted options to acquire 17,000
shares of its common stock at a purchase price of $29.00 per share.

     As of December 31, 1996, 25,016 stock options have been exercised
under the Option Plan.  All such options were exercised during 1996, and
James W. Fulmer and Brenda L. Copeland exercised 10,000 options and 8,400
options, respectively.  The following table shows the aggregate number of
options outstanding as of March 17,1997 for each of James W. Fulmer and
Brenda L. Copeland, and for all executive officers as a group.

                         Number of Options   Average Per
                         Outstanding         Share Price*

James W. Fulmer             23,576              $15.00
Brenda L. Copeland          16,782              $15.00
All Other Executive
 Officers as a Group        42,858              $15.82**

* This price represents the "Fair Market Value," as that term is defined
in the Option Plan, of the common stock of the Company on the date that
the options were granted.

** This price represents a weighted average of the exercised price of all
options currently outstanding to all executive officers of the Company.

 The following table shows the number of options exercised, and the value 
of the "in-the-money" options exercised, by each of James W. Fulmer and 
Brenda L. Copeland during 1996, as well as the breakdown between options
granted to Mr. Fulmer and Ms. Copeland that were exercisable and
unexercisable as of December 31, 1996, and the potential value of "in-the-
money" options, both exercisable and unexercisable, as of December 31, 1996.
"In-the-money" options are those options where the fair
market value of the Company's common stock as of the close of the fiscal
year was in excess of the exercise price established on the grant date.
This value is only realized by the executive when the option is exercised
and will fluctuate with changes in the price for the Company's common
stock after the close of the fiscal year.
<PAGE>

                Shares           No. of Unexercised   Value of "In-the-Money"
               Acquired   Value     Options at        Unexercised Options at
              on Exercise Realized* December 31, 1996  December31, 1996
Name                                (Exercisable/        (Exercisable/
                                     Unexercisable)       Unexercisable)**

James W. Fulmer    10,000   $157,500   13,503/10,073     $415,217/$309,745
Brenda L. Copeland  8,400    132,300    9,227/ 7,555     $283,730/$232,316


*  Represents the value of "in-the money" options exercised by Mr. Fulmer
and Ms. Copeland during 1996.

** Assumes that the "Bid" price of $30.75 at December 31, 1996 represents
a reasonable valuation of the Company's common stock.

  No assurances can be given relating to the dilutive effect
that the Option Plan or options granted thereunder may have on the
outstanding common stock.
<PAGE>

Item 11 -    Security Ownership of Certain Beneficial Owners and
Management

    Based upon information made available to the Company, the following
table sets forth certain information as of March 21, 1997, with respect
to the beneficial ownership of common stock by the only persons or
entities known to the Company to be the beneficial owner of more than 5%
of the Company's outstanding common stock, each director of the Company,
and as to all executive officers and directors as a group:

                            Amount and
                            Nature of      Percent of
                            Beneficial     Common Stock
Name and Address            Ownership(1)   Outstanding (2)


Charles L. Van Arsdale       76,620 (3)         7.66%
5136 Park Road West
Castile, NY  14427

James H. Van Arsdale, III    46,283 (4)         4.63%
71 Park Road East
Castile, NY 14427

James W. Fulmer              37,941 (5)         3.80%
38 Wolcott Street
LeRoy, New York  14482

Stanley J. Harmon             9,594             1.00%
Luther Road
Silver Springs, New York 14550

Brenda L. Copeland           34,069 (6)         3.41%
130 South Main Street
Gainesville, New York  14066

Gunther K. Buerman            4,200 (7)          .42%
1186 Lake Road
Webster, New York  14580

Steven C. Lockwood            1,533(8)          .15%
34 North Lyon Street
Batavia, New York 14020

Letchworth Independent Bancshares 
 Corporation Employee Stock
     Ownership Plan          87,949 (9)         8.80%
50 North Main Street
Castile, New York  14427

Executive officers and
directors, as a group
(7 persons)                 210,240 (10)       21.03%
___________________________________


(1) Except for the shares of common stock beneficially owned by the
Letchworth Independent Bancshares Corporation Employee Stock Ownership
Plan (the "ESOP"), all such shares are owned with sole investment and
voting power.

(2) These percentages have been calculated based upon 999,630 shares of
the Company's common stock outstanding, which amount includes the shares
of common stock that Mr. Fulmer and Ms. Copeland have the right to
acquire pursuant to the exercise of certain options granted under the
Option Plan that are exercisable within sixty (60) days of the date of
this Annual Report on Form 10-KSB, as well as the shares of common stock
that Ms. Copeland, Mr. Buerman, Mr. Lockwood, and the ESOP have the right
to acquire by the exercise of certain warrants.

(3) Includes 18,668 shares of common stock owned by Mr. Van Arsdale's
wife.

(4) Includes 4,851 shares of common stock owned by Mr. Van Arsdale's
wife.

(5) Includes 23,576 shares of common stock that Mr. Fulmer has the right
to acquire by the exercise of certain stock options granted under the
Option Plan that are exercisable within sixty (60) days of the date of
this Annual Report on Form 10-KSB, as well as 2,847 shares of common
stock allocated to Mr. Fulmer under the ESOP and 202 shares of common
stock owned by Mr. Fulmer's wife.

(6) Includes 16,782 shares of common stock that Ms. Copeland has the
right to acquire by the exercise of certain stock options granted under
the Option Plan that are exercisable within sixty (60) days of the date
of this Annual Report on Form 10-KSB, as well as 554 shares of common
stock that Ms. Copeland has or would have voting control as custodian
under the New York Uniform Gift to Minors Act, 3,237shares of common
stock allocated to Ms. Copeland under the ESOP, 400 shares of common
stock that Ms. Copeland has the right to acquire by the exercise of
certain warrants, and 222 shares of common stock owned by Ms. Copeland's
husband.

(7) Includes 600 shares of common stock that Mr. Buerman has the right to
acquire by the exercise of certain warrants.

(8) Includes 1,374shares of common stock allocated to Mr. Lockwood under
the ESOP, as well as 50 shares of common stock that Mr. Lockwood has the
right to acquire by the exercise of certain warrants.

(9) Includes the shares of common stock allocated to Mr. Fulmer, Ms.
Copeland and Mr. Lockwood in accordance with footnotes (3), (4), and (6)
above, as well as 15,050 shares of common stock that the ESOP has the
right to acquire by the exercise of certain warrants.  The participants
in the ESOP have the sole power to vote shares and dispositive powers for
shares which have been allocated to participant accounts.  Only 11,113
shares of common stock in the ESOP have not been allocated to participant
accounts.  See    "Item 11 - Executive Compensation -- Benefits ---
Employee Stock Ownership Plan."

(10)    Includes all of the shares of common stock referenced in
footnotes (3),(4), (5), (6), (7) and (8) above.

<PAGE>
Item 12 -    Certain Relationships and Related Transactions

    Certain of the directors and officers of the Company and
the Bank, members of their families and companies or firms with which
they are associated, were customers of and had banking transactions with
the Bank in the ordinary course of business during 1996.  All loans and
commitments to loan included in such transactions were made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other
persons and, in the opinion of management, did not involve more than a
normal risk of collectibility or present other unfavorable features.
None of such loans outstanding to directors or officers of the Company,
members of their families or companies or firms with which directors or
officers of the Company are associated were non-performing as of December
31, 1996.  Total loans outstanding to all directors and executive
officers of the Company and the Bank amounted to $5,647,800 at December
31, 1996.

    In addition, other than those sales made pursuant to the
Company's initial public offering or the offering in November, 1993,
there have been no sales of common stock to the officers, directors,
promoters or other affiliated persons of the Company during the past five
(5) years.  All such transactions were specifically approved in writing
by the Board of Directors and were made on terms no less favorable to the
Company than similar transactions made to other persons unaffiliated with
the Company.
<PAGE>



Item 13 - Exhibits, Financial Statements, Schedules and Reports on Form 8-
K

(a)(1) Financial Statements and Report of Independent Accountants:

          The following financial statements and accountant's report are
included in this Annual Report 10KSB on the following pages:

                                                   Page

     Report of Independent Accountants.........     36

     Consolidated Statement of Condition
     as of December 31, 1996 and 1995..........     37

     Consolidated Statement of Income for
     the Years Ended December 31, 1996, 1995
     and 1994..................................     38

     Consolidated Statement of Changes in
     Shareholders' Equity for the Years Ended
     December 31, 1996, 1995, and 1994........      39

     Consolidated Statement of Cash Flows
     for the Years Ended December 31, 1996 and
     1995 and 1994.............................     40

     Notes to Consolidated Financial
     Statements................................     41-56

(2)  Financial Statement Schedules:

          All financial statement schedules have been omitted as they are
not applicable, not required, or the information is included in the
Consolidated Financial Statements or notes thereto.

(3)  Exhibits:

     3(a)           Certificate of Incorporation of Registrant filed
                    by the New York Department of State on July 17,
                    1981, incorporated by reference to
                    the Registrant's Registration Statement
                    on Form S-18 (Reg. No. 33-31149-NY),
                    filed with the Commission on September 2, 1989,
                    and wherein such Exhibit is designated Exhibit
                    3(a).

     3(b)           Certificate of Amendment to Certificate
                    of Incorporation of Registrant filed by
                    the New York Department of State on July
                    26, 1989, incorporated by reference to 
                    the Registrant's Registration Statement
                    on Form S-18 (Reg. No.33-31149-NY), filed with
                    the Commission on September 2, 1989, and
                    wherein such Exhibit is designated Exhibit 3(b).

     3(c)           Certificate of Amendment to Certificate
                    of Incorporation of Registrant filed by the
                    New York Department of State on May 2, 1990,
                    incorporated by reference to the
                    Registrant's Quarterly Report on Form 10-
                    Q for the quarter ended June 30, 1990 and
                    filed with the Commission on August 9,
                    1990, and wherein such
                    Exhibit is designated Exhibit (4)-b.

     3(d)           Bylaws of Registrant, as amended by the
                    stockholders of the Registrant at a
                    special meeting of stockholders on July 11,
                    1989,incorporated by reference to the
                    Registrant's Registration Statement on Form
                    S-18 (Reg. No. 33-31149-NY), filed with
                    the Commission on September 2, 1989, and
                    wherein such Exhibit is designated Exhibit 3(c).

     4(a)           Form of Common Stock Certificate of
                    Registrant, incorporated by reference to
                    the Registrant's Amendment No. 1 to Form S-
                    18 Registration Statement (Reg. No. 33-
                    31149-NY), filed with the Commission on
                    October 31, 1989, and wherein such
                    Exhibit is designate Exhibit 4.

     4(b)           Letchworth Independent Bancshares
                    Corporation Stock Option Plan of 1990 and
                    form of Stock Option Agreement,
                    incorporated by reference to the
                    Registrant's Quarterly Report on Form
                    10-Q for the quarter ended June 30, 1990 and
                    filed  with the Commission on August 9, 1990,
                    and wherein such Exhibit is designated
                    Exhibit 19.

     4(c)           Form of Warrant of Registrant, and
                    Warrant Agreement, dated as of September 27,
                    1993, by and between Registrant and Mellon
                    Securities Trust Company,
                    incorporated by reference the
                    Registrant's Annual Report on From 10-KSB
                    for the year ended December 31, 1994,
                    filed with the Commission on March 31,
                    1995, and wherein such Exhibit is
                    designated Exhibit 4(c).

     10(a)          Employment Agreement, dated September
                    12, 1989, by and between Registrant and
                    James W. Fulmer, incorporated by
                    reference to the Registrant's Amendment No.
                    1 to Form S-18 Registration
                    Statement (Reg. No. 33-31149-NY), filed
                    with the Commission on October 31, 1989,
                    and wherein such Exhibit is designated
                    Exhibit 10(a).

     10(b)          Employment Agreement, dated as of
                    January 1,1991, by and between
                    Registrant and Brenda L.Copeland,
                    incorporated by reference to the
                    Registrant's Annual Report on Form 10-K for
                    the year ended December 31, 1991, filed
                    with the Commission on March 30, 1992,
                    and wherein such Exhibit is designated Exhibit 10(b).

     10(c)          Employee Stock Ownership Plan ofRegistrant,
                    incorporated by reference to the
                    Registrant's Registration Statement on Form
                    S-18 (Reg. No. 33-31149-NY), filed with
                    the Commission on September 2, 1989, and
                    wherein such Exhibit is designated Exhibit 10(c).

     10(d)          Defined Benefit Pension Plan of
                    Registrant, incorporated by reference to the
                    Registrant's Registration Statement on Form
                    S-18 (Reg. No.33-31149-NY), filed with
                    the Commission on September 2, 1989, and
                    wherein such Exhibit is designated Exhibit 10(d).

     10(e)          Form of Executive Supplemental Income
                    Agreement, as amended, incorporated by
                    reference to the Registrant's Annual
                    Report on Form 10-K for the year ended
                    December 31, 1991 and filed with the
                    Commission on March 30, 1992, and
                    wherein such Exhibit is designated Exhibit 19.

     10(f)          Form of Director Deferred Compensation
                    Agreement, incorporated by reference to
                    the Registrant's Registration Statement on
                    Form S-18 (Reg. No. 33-31149-NY), filed
                    with the Commission on September 2, 1989,
                    and wherein such Exhibit is designated Exhibit 10(f).

     10(g)          Loan and Pledge Agreement, dated June
                    16, 1986, by and between Employee Stock
                    Ownership Trust of Registrant and
                    Salamanca Trust Company, incorporated by
                    reference to the Registrant's
                    Registration Statement on Form S-18
                    (Reg. No. 33-31149-NY), filed with the
                    Commission on September 2, 1989, and
                    wherein such Exhibit is designated Exhibit 10(g).

     10(h)          Loan and Pledge Agreement, dated June
                    16, 1986, by and between Employee Stock
                    Ownership Trust of Registrant and
                    Community National Bank, incorporated by
                    reference to the Registrant's Registration
                    Statement on Form S-18 (Reg. No. 33-31149-NY),
                    filed with the Commission on September 2, 1989,
                    and wherein such Exhibit is designated Exhibit 10(h).

     10(i)          Lease Agreement, dated March 1, 1982, by
                    and between Registrant and Herald Ford,
                    Inc., incorporated by reference to the
                    Registrant's Registration Statement on
                    Form S-18 (Reg. No. 33-31149-NY), filed
                    with the Commission on September 2,
                    1989, and wherein such Exhibit is
                    designated Exhibit 10(i).

     10(j)          Lease Agreement, dated April 12, 1982,
                    and an Addendum thereto, dated January 25,
                    1973, by and between Registrant and 15 South
                    Center Street, Inc., incorporated
                    by reference to the Registrant's Registration
                    Statement on Form S-18 (Reg. No. 33-31149-NY),
                    filed with the Commission on September 2,
                    1989, and wherein such Exhibit is
                    designated Exhibit 10(j).

     10(k)          Lease Agreement, dated August 1, 1974,
                    by and  between The Citizen Bank, Attica and
                    Fred Glickstein, which Lease Agreement was
                    assumed by Registrant on December 7, 1984,
                    incorporated by reference to the Registrant's
                    Registration Statement on Form S-18
                    (Reg. No. 33-31149-NY), filed with the
                    Commission on September 2, 1989, and
                    wherein such Exhibit is designated Exhibit 10(k).

     10(l)          Salary Savings Plan (401(k) Plan) of
                    Registrant, incorporated by reference to
                    the Registrant's Amendment No. 1 to Form S-
                    18 Registration Statement (Reg. No. 33-
                    31149-NY), filed with the Commission on
                    October 31, 1989, and wherein such 
                    Exhibit is designated Exhibit 10(l).

     10(m)          Loan Agreement, dated November 6, 1990,
                    by and between Registrant and Alden
                    State Bank, incorporated by reference to the
                    Registrant's  Annual Report on Form  10-K for
                    the year-ended December 31, 1990 and
                    filed with the Commission on April 1,
                    1991, and wherein such Exhibit is designated
                    Exhibit 10(m).

     10(n)          Sales Contract, dated September 10,
                    1991, by and between John Piraino, Jr.
                    ("Piraino") and the Bank, incorporated by
                    reference to the Registrant's Annual Report
                    on Form 10-K for the year ended December
                    31, 1992 and filed with the Commission on
                    March 30, 1992, and wherein such Exhibit is
                    designated Exhibit 10(n).

     10(o)          Indenture of Lease, dated September 10,
                    1991,by and between Piraino and the
                    Bank, incorporated by reference to the
                    Registrant's Annual Report on Form 10-K for
                    the year ended December 31, 1992 and filed
                    with the Commission on March 30, 1992,
                    and wherein such Exhibit is designated Exhibit 10(o).

     10(p)          Purchase and Assumption Agreement, dated
                    as of January 10, 1991, by and between the
                    Registrant, The Bank of Castile, and Anchor
                    Savings Bank FSB, incorporated by reference to
                    the Registrant's Report on Form 8 amending
                    the Registrant's Current Report on Form 8-K
                    dated January 31, 1992, and which Form 8
                    was filed with the Commission on April 3, 1992,
                    and wherein such Exhibit is designated Exhibit 10(a).

     10(q)          Sales Contract, dated as of January 10,
                    1991,by and between The Bank of Castile and
                    Anchor Savings Bank FSB, incorporated by referenced
                    to the Registrant's Report on Form 8 amending
                    the Registrant's Current Report on Form
                    8-K dated January 31, 1992, and which
                    Form 8 was filed with the Commission on
                    April 3, 1992, and wherein such Exhibit is
                    designated Exhibit 10(b).

     10(r)          Purchase and Assumption Agreement, dated
                    as of May 11, 1994, by and between The
                    Bank of Castile and The Chase Manhattan
                    Bank (National Association),
                    incorporated by reference to the
                    Registrant's Report on Form 8-K, dated
                    December 12, 1994, and which Form 8-K
                    was filed with the Commission on
                    December 19, 1994, and wherein such
                    Exhibit is designated Exhibit 2.1.

     10(s)          Sales Contract, dated as of May 11,
                    1994, by and between The Bank of Castile and 
                    The Chase Manhattan Bank (National
                    Association), incorporated by reference to
                    the Registrant's Report on Form 8-K, dated
                    December 12, 1994, and which Form 8-K was filed
                    with the Commission on December 19, 1994,
                    and wherein such Exhibit is designated
Exhibit 2.2.

     11             Computation of Earnings Per Share for
                    the year ended December 31, 1996.

     13             Annual Report to Shareholders of
                    Registrant for the year ended December 31,
                    1996, incorporated by reference.

     21             Subsidiaries of Registrant.

     23             Consent of Price Waterhouse LLP for the
                    Annual  Report on Form 10-KSB for the
                    fiscal year ended December 31, 1996.

     24             Power of Attorney, included with the
                    Signature  Page of this Annual Report on
                    Form 10-KSB.

(b)  Reports on Form 8-K.  The Company did not file any Current Reports
on Form 8-K during the fiscal year ended December 31, 1996.
<PAGE>

                            SIGNATURES

          In accordance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report
on Form 10-KSB to be signed on its behalf by the undersigned, thereunto
duly authorized.

Date:     March 26, 1997      LETCHWORTH INDEPENDENT
                              BANCSHARES CORPORATION

                              By: /s/ James W. Fulmer
                                 James W. Fulmer, President
                                 and Chief Executive Officer


                        POWER OF ATTORNEY

          KNOW ALL MEN BY THESE PRESENTS that each individual whose
signature appears below constitutes and appoints JAMES W. FULMER his true
and lawful attorney-in-fact and agent with full power of substitution and
re-substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Annual Report on Form
10-KSB, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute,
may lawfully do or cause to be done by virtue thereof.

          In accordance with the Securities Exchange Act of 1934, this
Annual Report on Form 10-KSB has been signed below on March 26, 1997 by
the following persons on behalf of the Registrant and in the capacities
indicated.

      Signatures                         Title


 /s/ James W. Fulmer             President, Chief Executive
     James W. Fulmer              Officer and Director

 /s/ Charles L. Van Arsdale      Director
     Charles L. Van Arsdale

/s/ James H. Van Arsdale, III    Chairman of the Board
    James H. Van Arsdale, III     of Directors

 /s/ Stanley J. Harmon           Secretary and Director
     Stanley J. Harmon

 /s/ Steven C. Lockwood          Treasurer and Chief
     Steven C. Lockwood           Financial Officer

 /s/ Gunther K. Buerman          Director
     Gunther K. Buerman
<PAGE>


                                                       EXHIBIT 11



          LETCHWORTH INDEPENDENT BANCSHARES CORPORATION

                         AND SUBSIDIARIES

                COMPUTATION OF EARNINGS PER SHARE

                        DECEMBER 31, 1996

Net Income                                    $2,870,341
Add: Adjustment due to assumed interest
savings on debt reduction                          7,360
Adjusted Net Income                           $2,877,701

Weighted average shares outstanding              912,805
Add: Common stock equivalent shares due
to assumed exercise of options and warrants       87,843
Less: ESOP shares accounted for in
accordance with SOP 93-6 not committed
to be released                                   (13,379)
Adjusted common and common equivalent shares     987,269

Net Income per common and common equivalent share $ 2.91




Notes

There was a dilutive effect on earnings per share relating to stock
options as the year end market price of the common stock exceeded the
exercise price of the stock options.  However, fully diluted earnings per
share is immaterially different than primary earnings per share.
<PAGE>

LIST OF SUBSIDIARIES                                        EXHIBIT 21



     As of December 31, 1996, the only subsidiary of Letchworth
Independent Bancshares Corporation (the "Company") was The Bank of
Castile (the "Bank").

<PAGE>
                                                       EXHIBIT 23


                CONSENT OF INDEPENDENT ACCOUNTANTS



We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 of Letchworth Independent
Bancshares Corporation (Reg. No. 333-01263), of our report dated January
16, 1997, appearing on page 36 of this Annual Report on Form 10-KSB.


PRICE WATERHOUSE LLP

Buffalo, New York
March 26, 1997