UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X] ANNUAL  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
    ACT OF 1934
            For the fiscal year ended December 31, 1999
                                       OR
[ ] TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15 (d) OF THE  SECURITIES
    EXCHANGE ACT OF 1934 For the transition  period  from_______ to  __________.
    Commission file number: 0-27036

                            AMBANC HOLDING CO., INC.
------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                  14-1783770
-------------------------------------     -------------------------------------
  (State or other jurisdiction of         (I.R.S. Employer Identification No.)
    incorporation or organization)

11 Division Street, Amsterdam, New York                          12010-4303
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(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code:       (518)842-7200
                                                    ---------------------------
         Securities Registered Pursuant to Section 12(b) of the Act:

                                      None
         -----------------------------------------------------------
         Securities Registered Pursuant to Section 12(g) of the Act:

                          Common Stock, $.01 par value
         -----------------------------------------------------------
                                (Title of class)

      Indicate by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was required to file such  reports) and (2) has been subject to such
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-K 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-K or any amendment to this
Form 10-K. [X]

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant,  computed by reference to the closing price of such stock on the
Nasdaq  National  Market as of March 23, 2000, was  $65,586,561.  (The exclusion
from such amount of the market value of the shares owned by any person shall not
be deemed an admission by the registrant that such person is an affiliate of the
registrant.)

     As of March 23, 2000, there were issued and outstanding 4,926,690 shares of
the Registrant's Common Stock.
<PAGE>
                       DOCUMENTS INCORPORATED BY REFERENCE


     Parts  II  and  IV of  Form  10-K  -  Portions  of  the  Annual  Report  to
Shareholders for the year ended December 31, 1999.


     Part III of Form 10-K -  Portions  of the Proxy  Statement  for the  Annual
Meeting of Shareholders for the year ended December 31, 1999.


                                     PART I


Item 1.  Description of Business


General


     Ambanc  Holding  Co.,  Inc.  (the  "Company")  was  formed  as  a  Delaware
corporation in June 1995 to act as the holding company for Mohawk Community Bank
(formerly known as Amsterdam Savings Bank, FSB) (the "Bank") upon the completion
of the  Bank's  conversion  from  mutual to stock form (the  "Conversion").  The
Company received  approval from the Office of Thrift  Supervision (the "OTS") to
acquire all of the common stock of the Bank to be outstanding upon completion of
the Conversion. The Conversion was completed on December 26, 1995. The Company's
Common Stock trades on The Nasdaq National  Market under the symbol "AHCI".  All
references to the Company, unless otherwise indicated, at or before December 26,
1995 refer to the Bank.

     On November 16, 1998, the Company acquired AFSALA Bancorp.  Inc. ("AFSALA")
and its wholly owned  subsidiary,  Amsterdam  Federal  Bank.  At the date of the
merger,  AFSALA had  approximately  $167.1 million in assets,  $144.1 million in
deposits,  and $19.2  million in  shareholders'  equity.  Pursuant to the merger
agreement,  AFSALA was merged with and into the Company,  and Amsterdam  Federal
Bank was merged  with and into the  former  Amsterdam  Savings  Bank,  FSB.  The
combined bank now operates as one institution  under the name "Mohawk  Community
Bank".  Upon  consummation of the merger,  each share of AFSALA common stock was
converted into the right to receive 1.07 shares of Ambanc common stock. Based on
the 1,249,727  shares of AFSALA common stock issued and outstanding  immediately
prior to the merger,  the Company issued 1,337,081 shares of common stock in the
merger  and paid out 126  fractional  shares in cash.  Of the  1,337,081  shares
issued in the merger,  1,327,086  were issued from the Company's  treasury stock
and 9,995 were newly-issued shares. In addition, under the merger agreement, the
Company assumed unexercised,  fully-vested options to purchase 144,118 shares of
AFSALA  common  stock  which  converted  into  fully-vested  options to purchase
154,203 shares of Ambanc common stock.


     At  December  31,  1999,  the  Company  had  $740.7  million  of assets and
shareholders' equity of $75.6 million or 10.2% of total assets.


     The  Bank,  organized  in  1886,  is a  federally  chartered  savings  bank
headquartered  in  Amsterdam,  New  York.  The  principal  business  of the Bank
consists of attracting  retail  deposits from the general public and using those
funds,  together with borrowings and other funds, to originate primarily one- to
four-family  residential  mortgage loans,  home equity loans and consumer loans,
and to a lesser extent,  commercial and multi-family real estate, and commercial
business  loans in the Bank's  primary  market area. See "Market Area." The Bank
also  invests  in  mortgage-backed   securities,   U.S.  Government  and  agency
obligations and other  permissible  investments.  Revenues are derived primarily
from interest on loans, mortgage-backed and related securities and investments.


     The Bank  offers a  variety  of  deposit  accounts  having a wide  range of
interest  rates and terms.  The Bank is a member of the Bank Insurance Fund (the
"BIF"), which is administered by the Federal Deposit Insurance  Corporation (the
"FDIC").  Its deposits are insured up to  applicable  limits by the FDIC,  which
insurance  is  backed  by  the  full  faith  and  credit  of the  United  States
Government.  The Bank primarily solicits deposits in its primary market area and
currently does not have brokered  deposits.  The Bank is a member of the Federal
Home Loan Bank (the "FHLB") System.


     The  Company's  and the Bank's  executive  office is located at 11 Division
Street,  Amsterdam,  New York,  12010-4303,  and its  telephone  number is (518)
842-7200.


Forward-looking Statements

     When used in this  Annual  Report on Form  10-K,  in future  filings by the
Company with the  Securities  and Exchange  Commission,  in the Company's  press
releases or other public or shareholder  communications,  and in oral statements
made with the approval of an authorized  executive officer, the words or phrases
"will likely  result",  "are expected to", "will  continue",  "is  anticipated",
"estimate",   "project"  or  similar   expressions   are  intended  to  identify
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation  Reform Act of 1995. Such statements are subject to certain risks and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
historical results and those presently anticipated or projected,  including, but
not limited to,  changes in economic  conditions in the  Company's  market area,
changes in policies by  regulatory  agencies,  fluctuations  in interest  rates,
demand for loans in the  Company's  market  area and  competition.  The  Company
wishes  to  caution   readers   not  to  place   undue   reliance  on  any  such
forward-looking  statements,  which speak only as of the date made.  The Company
wishes  to advise  readers  that the  factors  listed  above  could  affect  the
Company's financial performance and could cause the Company's actual results for
future periods to differ  materially  from any opinions or statements  expressed
with respect to future periods in any current statements.

     The Company does not undertake - and specifically  disclaims any obligation
- to  publicly  release  the  result of any  revisions  which may be made to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.


Market Area


     The  Company's  primary  market area is comprised  of Albany,  Schenectady,
Saratoga,  Montgomery,  Fulton,  Chenango,  Schoharie and Otsego Counties in New
York, which are serviced  through the Bank's main office,  sixteen other banking
offices and its operations center.

     The  Company's  primary  market area consists  principally  of suburban and
rural communities but also includes the capital of New York State,  Albany.  The
economy  of  the  Company's   primary   market  area  is  highly   dependent  on
manufacturing,  state government services (including the State University of New
York at Albany),  and private  higher  education  services.  These three sectors
provide the basis for the  region's  economy and the  principal  support for its
remaining  sectors,  such  as  retail  trade,  finance,  and  medical  services.
Significant  reductions in two of the region's main sectors,  manufacturing  and
state  government,  from  completed,  announced,  and  anticipated  layoffs  and
relocations are expected to continue to have a negative effect on the economy in
the Company's primary market area.
<PAGE>

Lending Activities


     General


     The  Company  primarily  originates  fixed- and  adjustable  rate,  one- to
four-family  mortgage  loans.  The  Company's  general  policy  is to  originate
mortgages with terms between 15 and 30 years for retention in its portfolio. The
Company also originates  fixed and adjustable  rate consumer  loans.  Adjustable
rate mortgage ("ARM"), home equity and consumer loans are originated in order to
maintain loans with more frequent terms to repricing or shorter  maturities than
fixed-rate,   one-  to  four-family   mortgage  loans.  See  "-  Loan  Portfolio
Composition"  and "- One- to Four-Family  Residential  Real Estate  Lending." In
addition,  the Company  originates  commercial  and  multi-family  real  estate,
construction  and commercial  business  loans in its primary  market area.  Loan
originations  are generated by the Company's  marketing  efforts,  which include
print and radio advertising,  lobby displays and direct contact with local civic
and  religious  organizations,  as well as by the Company's  present  customers,
walk-in  customers and referrals from real estate agents,  brokers and builders.
At December 31, 1999, the Company's net loan portfolio totaled $465.5 million.

     Loan  applications are initially  considered and approved at various levels
of authority, depending on the type, amount and loan-to-value ratio of the loan.
Bank employees with lending  authority are  designated,  and their lending limit
authority  defined,  by the Board of Directors of the Bank.  The approval of the
Bank's Board of Directors is required for all loan relationships whose aggregate
borrowings  are in excess of $2,000,000.  The Bank also has an  Officer/Director
Loan  Committee  which has  authority to approve loans  between  $1,250,000  and
$2,000,000 and meets as needed to approve loans between Board meetings.

     The  aggregate  amount of loans  that the Bank is  permitted  to make under
applicable federal regulations to any one borrower,  including related entities,
or the aggregate amount that the Bank could have invested in any one real estate
project is  generally  the greater of 15% of  unimpaired  capital and surplus or
$500,000.  See  "Regulation - Federal  Regulation of Savings  Associations."  At
December  31, 1999,  the maximum  amount which the Bank could have loaned to any
one  borrower  and the  borrower's  related  entities  was  approximately  $10.2
million.  At such  date,  the Bank did not have any  loans or series of loans to
related borrowers with an outstanding balance in excess of this amount.


<PAGE>

     Loan Portfolio Composition.


     The following table presents information  concerning the composition of the
Company's loan portfolio in dollar amounts and in percentages  (before  deferred
costs, net of deferred fees and discounts, and the allowance for loan losses) as
of the dates indicated.
<TABLE>
<CAPTION>
                                                                                December 31,
                                       ---------------------------------------------------------------------------------------------
                                             1999               1998               1997               1996               1995
                                        Amount  Percent    Amount  Percent    Amount  Percent    Amount  Percent    Amount  Percent
                                       --------  ------   --------  ------   --------  ------   --------  ------   -------  -------
                                                                                             (Dollars in thousands)
<S>                                    <C>        <C>     <C>        <C>     <C>        <C>     <C>        <C>     <C>        <C>
Real Estate Loans:
     One- to four-family                $306,665  65.43%   $273,523  64.53%  $189,666   66.88%   158,182   63.15%  $133,468   53.20%
     Home Equity                          92,605  19.76      83,949  19.80     30,246   10.67     22,817    9.11     17,519    6.98
     Multi-family                          3,881   0.83       4,165   0.98      4,152    1.46      4,724    1.88      8,176    3.26
     Commercial                           27,910   5.96      23,506   5.55     26,585    9.38     29,947   11.96     41,929   16.71
     Construction                          4,924   1.05       3,600   0.85      2,081    0.73      2,234    0.89      1,073    0.43
                                        --------  -----    --------  -----   --------  ------   --------  ------   --------  ------
        Total Real Estate                435,985  93.03     388,743  91.71    252,730   89.12    217,904   86.99    202,165   80.58
                                        --------  -----    --------  -----   --------  ------   --------  ------   --------  ------
Other Loans:
 Consumer Loans
     Auto Loans                           11,641   2.48      14,146   3.34     16,237    5.73     12,417    4.96      9,337    3.72
     Recreational Vehicles                 3,551   0.76       4,990   1.18      6,775    2.39      9,416    3.76     12,881    5.13
     Manufactured Homes                      249   0.05         385   0.09        494    0.17        620    0.25     13,484    5.37
     Other Secured                         4,697   1.00       6,289   1.48      1,781    0.63      1,866    0.74      2,020    0.81
     Unsecured                             5,918   1.26       3,712   0.88      1,847    0.65      1,445    0.58      1,299    0.52
                                        --------  -----    --------  -----    -------  ------   --------  ------   --------  ------
        Total Consumer Loans              26,056   5.56      29,522   6.96     27,134    9.57     25,764   10.29     39,021   15.55
                                        --------  -----    --------  -----    -------  ------   --------  ------   --------  ------
Commercial Business Loans:
     Secured                               5,562   1.19       5,101   1.20      3,233    1.14      6,199    2.47      9,346    3.73
     Unsecured                             1,063   0.23         508   0.12        471    0.17        620    0.25        350    0.14
                                        --------  -----    --------  -----    -------  ------   --------  ------   --------  ------
        Total Commercial
        Business Loans                     6,625   1.41       5,609   1.32      3,704    1.31      6,819    2.72      9,696    3.87
                                        --------  -----    --------  -----    -------  ------   --------  ------   --------  ------
Total Loan Portfolio, Gross              468,666 100.00%    423,874 100.00%   283,568  100.00%   250,487  100.00%   250,882  100.00%
                                                 ======             ======             ======             ======             ======
 Deferred costs, net of deferred
     fees and discounts
 Allowance for Loan Losses                 2,320              1,950             1,362              1,045              1,756
                                          (5,509)            (4,891)           (3,807)            (3,438)            (2,647)
Total Loans Receivable, Net             --------           --------          --------           --------           --------
                                        $465,477           $420,933          $281,123           $248,094           $249,991
                                        ========           ========          ========           ========           ========
</TABLE>

<PAGE>

     The following  table shows the  composition of the Company's loan portfolio
by fixed- and adjustable-rate at the dates indicated.
<TABLE>
<CAPTION>
                                                                              December 31,
                                   ------------------------------------------------------------------------------------------------
                                          1999               1998                1997                1996                1995
                                   ------------------------------------------------------------------------------------------------
                                    Amount   Percent   Amount   Percent    Amount   Percent    Amount   Percent    Amount   Percent
                                   --------  -------  --------  -------   --------  -------   --------  -------   --------  -------
                                                                                            (Dollars in thousands)
<S>                                <C>        <C>     <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>
Fixed Rate Loans:
Real Estate:
     One- to four-family            $254,438   54.29%  $204,184   48.17%  $124,457   43.89%   $111,841   44.65%   $ 91,528   36.48%
     Home Equity                      86,596   18.48     77,553   18.30     23,099    8.14      15,234    6.08       8,405    3.35
     Commercial and Multi-family      12,212    2.60      6,201    1.46      2,723    0.96       2,590    1.03       2,633    1.05
     Construction                      4,924    1.05      2,867    0.68      2,081    0.73       1,840    0.73         633    0.25
                                    --------  ------   --------  ------   --------  -------   --------  -------   --------  -------
Total Real Estate                    358,170   76.42    290,805   68.61    152,360   53.72     131,505   52.49     103,199   41.13
Consumer                              26,009    5.55     28,771    6.79     26,260    9.26      25,110   10.03      33,343   13.29
Commercial Business                    4,579    0.98      3,501    0.83      1,415    0.50       3,124    1.24       4,476    1.79
                                    --------  ------   --------  ------   --------  -------   --------  -------   --------  -------
Total fixed-rate loans               388,758   82.95    323,077   76.22    180,035   63.48     159,739   63.76     141,018   56.21
                                    --------  ------   --------  ------   --------  -------   --------  -------   --------  -------

Adjustable Rate Loans:
Real Estate:
     One- to four-family              52,227   11.14     69,339   16.36     65,209   23.00      46,341   18.50      41,940   16.72
     Home Equity                       6,009    1.28      6,396    1.51      7,147    2.52       7,583    3.03       9,114    3.63
     Commercial and Multi-family      19,579    4.18     21,470    5.07     28,014    9.88      32,081   12.81      47,472   18.92
     Construction                        --      --         733    0.17        ---    ----         394    0.16         440    0.18
                                    --------  ------   --------  ------   --------  -------   --------  -------   --------  -------
Total Real Estate                     77,815   16.60     97,938   23.10    100,370   35.40      86,399   34.50      98,966   39.45
Consumer                                  47    0.01        751    0.18        874    0.31         654    0.26       5,678    2.26
Commercial Business                    2,046    0.44      2,108    0.17      2,289    0.81       3,695    1.48       5,220    2.08
                                    --------  ------   --------  ------   --------  -------   --------  -------   --------  -------
Total adjustable-rate loans           79,908   17.05    100,797   23.78    103,533   36.52      90,748   36.24     109,864   43.79
                                    --------  ------   --------  ------   --------  -------   --------  -------   --------  -------
Total Loan Portfolio, Gross          468,666  100.00%   423,874  100.00%   283,568  100.00%    250,487  100.00%    250,882  100.00%
                                              ======             ======             ======              ======              ======
Deferred costs, net of deferred
     fees and discounts                2,320              1,950              1,362               1,045               1,756
Allowance for Loan Losses             (5,509)            (4,891)            (3,807)             (3,438)             (2,647)
                                    --------           --------           --------            --------            --------
Total Loans Receivable, Net         $465,477           $420,933           $281,123            $248,094            $249,991
                                    ========           ========           ========            ========            ========
</TABLE>

<PAGE>


     The  following  table  illustrates  the  maturity  of  the  Company's  loan
portfolio at December  31, 1999.  Loans which have  adjustable  or  renegotiable
interest  rates are shown as maturing in the period  during  which the  interest
rate changes.  The schedule does not reflect the effects of possible prepayments
or enforcement of due-on-sale clauses.
<TABLE>
<CAPTION>
                                       Real Estate
                    --------------------------------------------------
                      One- to            Multi-
                     Four-Family        Family and                                            Commercial
                    and Home Equity     Commercial       Construction        Consumer          Business           Total
                    --------------    --------------    --------------    --------------    --------------    --------------
<S>                    <C>                <C>               <C>              <C>              <C>                <C>
                                                           (In thousands)
Due During Periods
Ending December 31,
2000 (1)                $34,486            $ 6,730           $  773           $3,388           $3,268             $48,645
2001 to 2004             46,505             14,558              ---           17,788            1,634              80,485
2005 and beyond         318,279             10,503            4,151            4,915            1,688             339,536
                        -------            -------           ------          -------          -------             -------
Totals                 $399,270            $31,791           $4,924          $26,091           $6,590            $468,666
                        =======            =======           ======          =======          =======             =======
<FN>
---------------------

(1)  Includes demand loans, loans having no stated maturity and overdraft loans.

</FN>
</TABLE>
     As of December 31, 1999,  the total amount of loans due after  December 31,
2000 which have fixed interest rates was $361.6 million,  while the total amount
of loans due after such date which have  floating or adjustable  interest  rates
was $58.4 million.


One- to Four-Family Residential Real Estate Lending


     The Company's residential first mortgage loans consist primarily of one- to
four-family,  owner-occupied  mortgage  loans.  At  December  31,  1999,  $306.7
million,  or 65.4%,of the Company's gross loans consisted of one- to four-family
residential first mortgage loans.  Approximately  83.0% of the Company's one- to
four-family residential first mortgage loans provide for fixed rates of interest
and for repayment of principal  over a fixed period not to exceed 30 years.  The
Company's  fixed-rate one- to four-family  residential mortgage loans are priced
competitively with the market. Accordingly,  the Company attempts to distinguish
itself from its competitors based on quality of service.

     The Company  generally  underwrites  its  fixed-rate,  one- to four-family,
residential,  first mortgage loans using Federal National  Mortgage  Association
("FNMA") secondary market standards.  The Company generally holds for investment
all one- to four-family  residential  first  mortgage  loans it  originates.  In
underwriting  one- to four-family  residential first mortgage loans, the Company
evaluates both the borrower's  ability to make monthly payments and the value of
the property  securing the loan.  Properties  securing real estate loans made by
the Company are appraised by independent fee appraisers approved by the Board of
Directors.  The Company requires  borrowers to obtain title insurance,  and fire
and property  insurance  (including flood insurance,  if necessary) in an amount
not less than the amount of the loan.

     The Company  currently  offers one, three,  five and seven year residential
ARM loans with an interest rate that adjusts  annually in the case of a one-year
ARM loan, and every three,  five or seven years in the case of a three,  five or
seven year ARM loan, respectively,  based on the change in the relevant Treasury
constant maturity index. These loans provide for up to a 2.0% periodic cap and a
lifetime cap of 6.0% over the initial rate. As a consequence  of using caps, the
interest  rates on these loans may not be as rate  sensitive as is the Company's
cost of funds.  Borrowers  of  one-year  residential  ARM  loans  are  generally
qualified  at a rate  2.0%  above  the  initial  interest  rate.  The  Company's
residential ARM loans may be modified into fixed-rate loans. ARM loans generally
pose greater credit risks than fixed-rate  loans,  primarily because as interest
rates rise, the required periodic payment by the borrower rises,  increasing the
potential  for default.

     The Company's one- to four-family  mortgage loans do not contain prepayment
penalties and do not permit  negative  amortization  of  principal.  Real estate
loans  originated  by the  Company  generally  contain  a "due on  sale"  clause
allowing  the  Company to declare the unpaid  principal  balance due and payable
upon the sale of the security  property.  The Company has waived the due on sale
clause on loans held in its portfolio from time to time to permit assumptions of
the loans by qualified borrowers.

     The Company does not currently originate  residential mortgage loans if the
ratio of the loan amount to the value of the  property  securing the loan (i.e.,
the "loan-to-value"  ratio) exceeds 95%. If the loan-to-value ratio exceeds 90%,
the Company requires that borrowers obtain private mortgage insurance in amounts
intended  to reduce the  Company's  exposure  to 80% or less of the lower of the
appraised value or the purchase price of the real estate security.


     The Company makes construction loans to individuals for the construction of
their  residences.  The Company has occasionally  made loans to builders for the
construction of residential homes,  provided the builder has a sales contract to
sell the home upon completion.  No construction loan is approved unless there is
evidence  of a  commitment  for  permanent  financing  upon  completion  of  the
residence,  whether  through  the  Company  or  another  financial  institution.
Construction loans generally will require  construction stage inspections before
funds may be released to the borrower.  Such inspections are generally performed
by outside fee appraisers.

     At December 31, 1999, the Company's  construction  loan  portfolio  totaled
$4.9 million,  or 1.1% of its gross loan portfolio.  Substantially  all of these
construction  loans were to individuals  intending to occupy such residences and
were  secured by property  located  within the  Company's  primary  market area.
Although no construction  loans were classified as non-performing as of December
31, 1999, these loans do involve a higher level of risk than  conventional  one-
to four-family  residential  mortgage  loans.  For example,  if a project is not
completed  and the  borrower  defaults,  the  Company  may have to hire  another
contractor to complete the project at a higher cost.


Home Equity Lending


     The  Company's  home equity loans and lines of credit are secured by a lien
on the borrower's  residence and generally do not exceed  $300,000.  The Company
uses the same  underwriting  standards for home equity loans as it uses for one-
to  four-family  residential  mortgage  loans.  Home equity loans are  generally
originated in amounts which, together with all prior liens on such residence, do
not exceed 90% of the  appraised  value of the property  securing the loan.  The
interest  rates for home  equity  loans  and lines of credit  adjust at a stated
margin  over the prime rate or, in the case of loans (but not lines of  credit),
have  fixed  interest  rates.  Home  equity  lines of credit  generally  require
interest  only payments on the  outstanding  balance for the first five years of
the  loan,  after  which  the  outstanding  balance  is  converted  into a fully
amortizing,  adjustable-rate  loan with a term not in excess of 15 years.  As of
December 31, 1999,  the Company had $92.6 million in home equity loans and lines
of credit  outstanding,  with an  additional  $3.0 million of unused home equity
lines of credit.


Commercial and Multi-Family Real Estate Lending


     The Company has engaged in commercial and multi-family  real estate lending
secured  primarily  by apartment  buildings,  small  office  buildings,  motels,
warehouses,  nursing homes,  strip shopping  centers and churches located in the
Company's  primary  market area.  At December  31,  1999,  the Company had $27.9
million and $3.9 million of commercial real estate and multi-family  real estate
loans,  respectively,  which  represented  6.0% and 0.8%,  respectively,  of the
Company's  gross loan portfolio at that date.


     The Bank's  commercial and  multi-family  real estate loans  generally have
adjustable  rates  and  terms to  maturity  that do not  exceed  20  years.  The
Company's current lending guidelines  generally require that the multi-family or
commercial  income-producing property securing a loan generate net cash flows of
at least  125% of debt  service  after the  payment of all  operating  expenses,
excluding  depreciation,  and a loan-to-value  ratio not exceeding 65%. Prior to
September 1990, the Company  originated  commercial and multi-family  loans with
loan-to-value  ratios  of up to  75%.  Due to  declines  in the  value  of  some
properties  as a result of the  economic  conditions  in the  Company's  primary
market area,  however,  the current  loan-to-value  ratio of some commercial and
multi-family real estate loans in the Company's portfolio may exceed the initial
loan-to-value  ratio.  Adjustable rate commercial and  multi-family  real estate
loans  provide for interest at a margin over a designated  index,  with periodic
adjustments at frequencies of up to five-years.  The Company generally  analyzes
the financial  condition of the borrower,  the borrower's  credit  history,  the
reliability  and  predictability  of the cash flows  generated  by the  property
securing the loan and the value of the property  itself.  The Company  generally
requires  personal  guarantees  of the  borrowers  in addition  to the  security
property  as  collateral  for such  loans.  Appraisals  on  properties  securing
commercial  and  multi-family  real estate loans  originated  by the Company are
performed by independent fee appraisers approved by the Board of Directors.


     Multi-family  and commercial real estate loans  generally  present a higher
level of risk than loans secured by one- to four-family residences. This greater
risk is due to several  factors,  including the  concentration of principal in a
limited number of loans and borrowers, the effect of general economic conditions
on income  producing  properties and the increased  difficulty of evaluating and
monitoring these types of loans. Furthermore,  the repayment of loans secured by
multi-family  and  commercial  real  estate  is  typically  dependent  upon  the
successful  operation of the related real estate project.  If the cash flow from
the project is reduced (for example, if leases are not obtained or renewed, or a
bankruptcy  court  modifies a lease term, or a major tenant is unable to fulfill
its lease obligations), the borrower's ability to repay the loan may be impaired
and the value of the  property  may be reduced.  The  balances of these types of
loans have declined  over the past five years with a  significant  decrease from
$50.1  million at December 31, 1995 to $31.8  million at December 31, 1999,  due
primarily to the bulk sale of certain  performing  and  non-performing  loans in
1996. At December 31, 1999,  $1.4 million or 4.5% of the Company's  multi-family
and commercial real estate loan portfolio was non-performing.


Consumer Lending


     The Company offers a variety of secured  consumer  loans,  including  loans
secured by automobiles and  recreational  vehicles  ("RV's").  In addition,  the
Company offers other secured and unsecured consumer loans. The Company currently
originates  substantially  all of its consumer loans in its primary market area.
The Company originates  consumer loans on a direct basis only, where the Company
extends  credit  directly to the  borrower.  At December 31, 1999 the  Company's
consumer  loan  portfolio  totaled  $26.1  million,  or 5.6% of the  gross  loan
portfolio.  At December 31, 1999,  99.8% of the  Company's  consumer  loans were
fixed-rate loans and 0.2% were adjustable-rate loans.

     Consumer  loan terms vary  according  to the type and value of  collateral,
length of contract and creditworthiness of the borrower. Terms to maturity range
up to 15 years for  manufactured  homes and certain RV's and up to 60 months for
other secured and unsecured  consumer  loans.  The Company offers both open- and
closed-end credit.  Open-end credit is extended through lines of credit that are
generally tied to a checking account. These credit lines currently bear interest
up to 18% and are generally limited to $10,000.

     The  underwriting  standards  employed by the Company  for  consumer  loans
include,  a determination of the applicant's  payment history on other debts and
an  assessment  of ability to meet  existing  obligations  and  payments  on the
proposed  loan.  Although   creditworthiness  of  the  applicant  is  a  primary
consideration,  the underwriting process also includes a comparison of the value
of the security, if any, in relation to the proposed loan amount.

     At December 31, 1999,  automobile  loans and RV loans (such as motor homes,
boats,  motorcycles,  snowmobiles  and  other  types of  recreational  vehicles)
totaled $11.6 million and $3.6 million or 44.7% and 13.6% of the Company's total
consumer  loan  portfolio,  and  2.5%  and  0.8% of its  gross  loan  portfolio,
respectively.

     Originations  are  generated   primarily  through   advertising  and  lobby
displays.  The Company has also maintained  relationships  with local automobile
dealerships in order to further enhance  automobile  originations  through their
referrals.  The Company's maximum loan-to-value ratio on new automobiles is 100%
of the  borrower's  cost  including  sales tax, and on used  automobiles up to 5
years old, 100% of the vehicle's average retail value,  based on NADA  (National
Auto  Dealers  Association)  valuation.  Non-performing  automobile  loans as of
December  31,  1999  totaled  $32,000  or 0.1% of the  Company's  consumer  loan
portfolio.

     Of the RV loan  balance,  approximately  $2.6 million and $1.0 million were
secured by new and used RVs, respectively. Approximately 75% of the RV portfolio
consists of loans that were originated  through the Company's  relationship with
Alpin Haus,  Inc.,  a retail RV dealer  formerly  owned by one of the  Company's
directors. The Company's maximum loan-to-value ratio on new and used RV loans is
the lesser of (i) 85% of the borrower's cost, which includes such items as sales
tax and dealer  options or (ii) 115% of either the factory  invoice for a new RV
or the wholesale value, plus sales tax, for a used RV. In the case of used RV's,
the wholesale  value is determined  using published guide books. At December 31,
1999,  RV  loans  totaling  $147,000  or 4.1% of the  total  RV  portfolio  were
non-performing.


     Consumer  loans may entail greater  credit risk than  residential  mortgage
loans,  particularly  in the case of consumer  loans which are  unsecured or are
secured by rapidly depreciable assets, e.g. RVs and automobiles.  In such cases,
any  repossessed  collateral  for a defaulted  consumer  loan may not provide an
adequate source of repayment of the outstanding loan balance as a result of high
initial loan-to-value ratios,  repossession,  rehabilitation and carrying costs,
and the greater  likelihood of damage,  loss or  depreciation  of the underlying
collateral.  In  addition,  consumer  loan  collections  are  dependent  on  the
borrower's  continuing  financial  stability,  and thus are  more  likely  to be
affected by adverse  personal  circumstances.  Furthermore,  the  application of
various federal and state laws,  including  bankruptcy and insolvency  laws, may
limit the amount which can be recovered on these loans. In the case of RV loans,
which  tend  to  have  loan  balances  in  excess  of the  resale  value  of the
collateral, borrowers may abandon the collateral property making repossession by
the Company and subsequent losses more likely.

     During 1996, the Company sold certain performing and  non-performing  loans
as part of a bulk sale,  including  a  majority  of its  manufactured  home loan
portfolio,  as well as  certain RV loans,  thereby  significantly  reducing  its
credit risk exposure on these types of loans.  However,  management expects that
delinquencies  in its consumer loan  portfolio may increase as RV loans continue
to season. At December 31, 1999, a total of $445,000,  or 1.7%, of the Company's
consumer  loan  portfolio  was  non-performing   (including  the  non-performing
automobile and RV loans previously  discussed).  There can be no assurances that
additional delinquencies will not occur in the future.


Commercial Business Lending


     The  Company  also  originates  commercial  business  loans.  Although  the
origination of these types of loans had been  de-emphasized by the Bank prior to
the merger with  AFSALA,  management  intends to actively  originate  commercial
loans with a  particular  emphasis on small  business  lending.  At December 31,
1999, commercial business loans comprised $6.6 million, or 1.4% of the Company's
gross loan portfolio.  Most of the Company's commercial business loans have been
extended to finance local  businesses and include  primarily short term loans to
finance machinery and equipment purchases and, to a lesser extent, inventory and
accounts  receivable.  Loans made to finance  inventory and accounts  receivable
will only be made if the borrower  secures such loans with the inventory  and/or
receivables plus additional collateral acceptable to the Company, generally real
estate.  Commercial  loans also involve the extension of revolving  credit for a
combination  of  equipment   acquisitions   and  working  capital  in  expanding
companies.

     The terms of loans  extended on machinery  and  equipment  are based on the
projected  useful life of such machinery and equipment,  generally not to exceed
seven years.  Secured,  non-mortgage  lines of credit are available to borrowers
provided that the outstanding balance is paid in full (i.e., the credit line has
a zero  balance) for at least 30  consecutive  days every year. In the event the
borrower does not meet this 30 day requirement,  the line of credit is generally
terminated and the outstanding balance is converted into an amortizing loan.

     Unlike residential mortgage loans, which generally are made on the basis of
the  borrower's  ability to make  repayment from his or her employment and other
income and which are  secured by real  property,  the value of which tends to be
more easily  ascertainable,  commercial business loans typically are made on the
basis of the  borrower's  ability  to make  repayment  from the cash flow of the
borrower's business. As a result, the availability of funds for the repayment of
commercial  business loans may be substantially  dependent on the success of the
business itself (which,  in turn, is often  dependent upon the general  economic
environment).  The  Company's  commercial  business  loans are usually,  but not
always,  secured by business assets.  However, the collateral securing the loans
may  depreciate  over time,  may be difficult  to appraise and may  fluctuate in
value based on the success of the business.  As part of its commercial  business
lending  policy,  the Company  generally  requires all borrowers with commercial
business loans to submit annual financial statements to the Company.

     The Company's  commercial  business  lending  policy  includes  credit file
documentation  and analysis of the borrower's  character,  capacity to repay the
loan,  the  adequacy  of the  borrower's  capital and  collateral  as well as an
evaluation of conditions affecting the borrower. Consideration of the borrower's
cash flows is also an important aspect of the Company's current credit analysis.
The Company  generally  obtains personal  guarantees on its commercial  business
loans.  Nonetheless,  such loans are believed to carry  higher  credit risk than
more traditional thrift institution  investments,  such as residential  mortgage
loans.



Loan Originations and Sales


     Loan  originations  are developed from continuing  business with depositors
and borrowers, soliciting realtors, dealerships and mortgage brokers, as well as
walk-in customers.  Loans are originated by the Company's staff of salaried loan
officers.

     While the Company  originates both fixed- and  adjustable-rate  loans,  its
ability to  originate  loans is  dependent  upon demand for loans in its market.
Demand is  affected by the local  economy and  interest  rate  environment.  The
Company currently retains  fixed-rate and  adjustable-rate  real estate loans it
originates in its portfolio. As a regular part of its business, the Company does
not sell loans and,  with the  exception  of the  purchase  of $31.9  million of
residential real estate loans in 1998, has not purchased a significant amount of
loans since 1989.  During 1996,  the Company  completed the bulk sale of certain
performing and nonperforming loans in order to improve the credit quality of its
loan portfolio.

     For the year ended December 31, 1999, the Company originated $138.7 million
of loans  compared  to  $120.9  million  and  $91.5  million  in 1998 and  1997,
respectively.  The Company also purchased $31.9 million in residential  mortgage
loans during 1998. These loans were located in Ohio and New Jersey.  The current
balance of the loans purchased in 1998 is $17.0 million.  The Company  currently
has no plans or intentions to purchase  additional loans.  During 1999, 1998 and
1997 the Company  increased its  originations  of one- to four-family  mortgages
through the referrals of several local brokers.

     In periods of economic  uncertainty,  the  Company's  ability to  originate
large  dollar  volumes  of  real  estate  loans  with  acceptable   underwriting
characteristics  may be  substantially  reduced or  restricted  with a resultant
decrease in operating earnings.



Delinquency Monitoring


     Generally,  when a  borrower  fails to make a  required  payment  on a loan
secured by residential real estate or consumer  products,  the Company initiates
collection  procedures by mailing a  delinquency  notice after the account is 15
days delinquent.  At 30 days delinquent,  a personal letter is generally sent to
the  customer  requesting  him or her to make  arrangements  to  bring  the loan
current.  If the  delinquency  is not cured by the 45th  day,  the  customer  is
generally  contacted by telephone and another  personal letter is sent, with the
same procedure being repeated if the loan becomes 60 days delinquent. At 90 days
past due, a demand letter is generally  sent.  If there is no response,  a final
demand  letter for payment in full is sent,  and unless  satisfactory  repayment
arrangements  are  made  subsequent  to  the  final  demand  letter,   immediate
repossession or foreclosure procedures are commenced.

     Similar collection  procedures are employed for loans secured by commercial
real estate and commercial  business  collateral,  except when such loans are 60
days  delinquent,  a letter is generally sent  requesting  rectification  of the
delinquency within seven days, otherwise foreclosure or repossession procedures,
as applicable, are commenced.


Non-Performing  Assets


     The table  below sets forth the amounts and  categories  of  non-performing
assets at the dates indicated.  Loans are generally placed on non-accrual status
when the loan is more than 90 days  delinquent  (except  for FHA  insured and VA
guaranteed  loans) or when the collection of principal  and/or  interest in full
becomes  doubtful.  When loans are  designated as  non-accrual,  all accrued but
unpaid  interest is reversed  against  current period income and, as long as the
loan remains on non-accrual  status interest is recognized  using the cash basis
method of income  recogntion.  Accruing loans delinquent 90 days or more include
FHA insured  loans,  VA guaranteed  loans,  and loans that are in the process of
negotiating a refinancing or  restructuring  with the Bank,  excluding  troubled
debt restructurings  (TDRs), or where the Bank has been notified by the borrower
that the  outstanding  loan balance plus accrued  interest and late fees will be
paid-in-full  within a  relatively  short  period  of time from the date of such
notification. Foreclosed assets includes assets acquired in settlement of loans.


<PAGE>
<TABLE>
<CAPTION>
                                                              December 31,
                                         1999        1998        1997        1996        1995
                                       -------     -------     -------     -------     -------
                                                        (Dollars in thousands)
<S>                                       <C>         <C>        <C>         <C>         <C>
Non-accruing loans:
   One- to four-family (1)              $1,570      $1,018       $843      $  259      $1,525
   Multi-family                            ---         ---         28         ---          77
   Commercial real estate                  274          20        265         339       1,549
   Consumer                                434         342        293         256         605
   Commercial business                     298         230        447       2,269         743
                                       -------    --------    -------     -------     -------
     Total                               2,576       1,610      1,876       3,123       4,499
                                       -------    --------    -------     -------     -------
Accruing loans delinquent
 more than 90 days:
   One- to four-family (1)                 372         358        280         151         261
   Commercial real estate                  685         215         13         568         ---
   Consumer                                 11           7          2           6         ---
   Commercial business                     ---         ---        156         ---         ---
                                       -------    --------    -------     -------     -------
     Total                               1,068         580        451         725         261
                                       -------    --------    -------     -------     -------
Troubled debt restructured loans:
   One- to four-family (1)                  84          85         86          88          89
   Multi-family                            ---         ---         34          38       1,626
   Commercial real estate                  475         537        761         781       2,185
   Consumer                                ---         ---         --          56          84
   Commercial business                       7          92         50          68          51
                                       -------    --------    -------     -------     -------
     Total                                 566         714        931       1,031       4,035
                                       -------    --------    -------     -------     -------
Total non-performing loans               4,210       2,904      3,258       4,879       8,795
                                       -------    --------    -------     -------     -------
Foreclosed assets:
   One- to four-family (1)                 126         313         69         194         459
   Multi-family                            ---         ---        ---         282         926
   Commercial real estate                  142          30        ---         ---       1,503
   Consumer                                 54          56         74         239         281
                                       -------    --------    -------     -------     -------
     Total                                 322         399        143         715       3,169
                                       -------    --------    -------     -------     -------
Total non-performing assets             $4,532      $3,303     $3,401      $5,594     $11,964
                                       =======    ========    =======     =======     =======
Total as a percentage of total assets     0.61%       0.45%      0.67%       1.18%       2.72%
<FN>
--------------------------------------
(1)  Includes home equity loans
</FN>
</TABLE>


<PAGE>
     For the year ended  December 31, 1999,  gross  interest  income which would
have  been  recorded  had the year end  non-performing  loans  been  current  in
accordance  with their  original  terms  amounted  to  $498,000  ($404,000  from
non-accruing  loans and $94,000 from  restructured  loans).  The amount that was
included  in  interest  income  on  such  loans  was  $304,000   ($254,000  from
non-accruing  loans and $50,000  from  restructured  loans),  which  represented
actual receipts.  Consequently,  $194,000  ($150,000 from non-accruing loans and
$44,000 from restructured loans) was not recognized in gross interest income for
the period.



Non-Accruing Loans


     At December 31, 1999, the Company had $2.6 million in  non-accruing  loans,
which  constituted 0.5% of the  Company's  gross loan  portfolio.  There were no
non-accruing loans or aggregate non-accruing  loans-to-one-borrower in excess of
$500,000.


Accruing Loans Delinquent More than 90 Days


     As of December  31, 1999,  the Company had $1.1  million of accruing  loans
delinquent  more than 90 days.  Of these loans,  $345,000 were FHA insured or VA
guaranteed  one-to   four-family   residential  loans.  The  remaining  $723,000
represented one (1) one-to four-family real estate loan, six (6) commercial real
estate loans, and four (4) consumer loans for which management believes that all
contractual  payments are collectible.


Restructured Loans


     As of December 31, 1999,  the Company had  restructured  loans of $566,000.
The  Company's  restructured  loans at that  date  consisted  of one (1) one- to
four-family  residential  mortgage loan, three (3) commercial real estate loans,
and one (1) commercial business loans.


Foreclosed and Reposessed Assets


     As of December  31,  1999,  the Company had  $322,000 in carrying  value of
foreclosed and repossessed  assets.  One-to  four-family real estate represented
39.1% of the Company's foreclosed and repossessed property,  consisting of three
(3)  properties.  Commercial  real  estate  represented  44.1% of the  Company's
foreclosed  and  repossessed   assets  and  consisted  of  two  (2)  properties.
Repossessed  consumer assets  represented 16.8% of the Company's  foreclosed and
repossessed  properties,  consisting of six (6) recreational vehicles (including
automobiles).



Other Loans of Concern


     As of  December  31,  1999,  there  were $2.5  million  of other  loans not
included  in the table or  discussed  above where  known  information  about the
possible credit problems of borrowers caused management to have doubts as to the
ability of the borrower to comply with present loan repayment  terms.  Set forth
below is a description of other loans of concern in excess of $500,000.

     The largest  other loan of concern at  December  31,  1999  consisted  of a
commercial real estate loan secured by a one story educational  facility located
in the Bank's  market  area.  This loan was  originated  in  December  1995 as a
$1,000,000 line of credit with a loan to value ratio of 25%. The loan matured on
December 31, 1998 with a principal balance of $892,000.  After the borrower made
a principal payment of approximately  $192,000 the remaining balance of the loan
was rewritten in February 1999 as a fully amortizing  commercial mortgage in the
amount  of  $700,000  with a 15 year  term.  The  value  of the  collateral  was
reaffirmed by an independent  appraisal.  Continued concern regarding the source
of the  loan's repayment  has  resulted  in its  continued  status  as a loan of
concern.  At December 31, 1999, the loan was current and had a principal balance
of $665,000.

     The second  largest other loan of concern at December 31, 1999 consisted of
a multi-family real estate loan secured by a 32 unit apartment  building located
outside of the Bank's primary market area.  This loan was originated in December
1989 with a loan to value ratio of 72.2%. Although the property was 91% occupied
based on the latest rent roll,  the cashflow  generated  was not  sufficient  to
service  the  debt.  The  borrower  has been  able to keep the loan  current  by
utilizing  other  sources  of  funds.  Current  financial  information  has been
requested  from the  guarantors for this loan to confirm the amount of resources
available to keep this loan current.  The principal balance of this loan matured
on March 1,  2000.  The  borrower  is  currently  in the  process  of  obtaining
financing  at another  financial  institution,  which  would  result in the full
repayment of the Bank's loan. At December 31, 1999, the loan was current and had
a principal balance of $617,000.

     There  were no other  loans  with a balance  in excess  of  $500,000  being
specially  monitored  by the Company as of  December  31,  1999.  Other loans of
concern with balances  less than  $500,000 at December 31, 1999  consisted of 10
commercial and multi-family  real estate loans totaling  $789,000,  4 commercial
business  loans  totaling  $250,000  and 5  one-to  four-family  mortgage  loans
totaling $165,000. These loans have been considered by management in conjunction
with the analysis of the adequacy of the allowance for loan losses.


 Allowance for Loan Losses


     The  allowance  for loan losses is increased  through a provision  for loan
losses  based on  management's  evaluation  of the  risks  inherent  in its loan
portfolio and changes in the nature and volume of its loan  activity,  including
those  loans  which  are  being  specifically  monitored  by  management.   Such
evaluation,  which includes a review of loans for which full  collectability may
not be reasonably  assured,  considers  among other matters,  the estimated fair
value,  less estimated  disposal costs, of the underlying  collateral,  economic
conditions,  historical  loan loss  experience,  and other  factors that warrant
recognition in providing for an adequate loan loss allowance.

     Real estate  properties  acquired through  foreclosure are recorded at fair
value,  less estimated  disposal costs. If fair value at the date of foreclosure
is lower than the carrying  value of the related loan,  the  difference  will be
charged to the allowance for loan losses at the time of transfer.  Valuations of
the property are  periodically  updated by management and if the value declines,
the asset's recorded value is written down by a charge to income.


     Although management believes that it uses the best information available to
determine the allowance  for loan losses,  unforeseen  market  conditions  could
result in  adjustments  and net  earnings  could be  significantly  affected  if
circumstances  differ substantially from the assumptions used in determining the
level of the allowance.  Future  additions to the Company's  allowance  for loan
losses will be the result of periodic loan,  property and collateral reviews and
thus cannot be predicted in advance. In addition,  federal regulatory  agencies,
as an  integral  part  of  the  examination  process,  periodically  review  the
Company's  allowance  for loan losses.  Such agencies may require the Company to
recognize   additions  to  the  allowance  based  upon  their  judgment  of  the
information available to them at the time of their examination.  At December 31,
1999,  the  Company  had a total  allowance  for loan  losses  of $5.5  million,
representing  130.9% of non-performing  loans at that date.
<PAGE>

     The following table sets forth an analysis of the activity in the Company's
allowance for loan losses.
<TABLE>
<CAPTION>
                                                 For the year ended December 31,
                                      1999        1998        1997        1996        1995
                                   ----------- ----------- ----------- ----------- ---------
                                                     (Dollars in thousands)
<S>                                    <C>         <C>         <C>         <C>         <C>
Balance at beginning of period       $4,891      $3,807      $3,438     $2,647      $2,235

Charge-offs:
     One- to four-family (1)           (103)        (69)        (15)      (530)        (31)
     Multi-family                        --        (129)        (51)    (1,174)       (171)
     Commercial real estate              --        (437)       (372)    (2,564)       (568)
     Consumer                          (311)       (275)       (316)    (1,834)       (400)
     Commercial business                (49)       (316)       (460)    (2,616)        (46)
                                 ----------- ----------- ----------- ----------- -----------
        Total charge-offs              (463)     (1,226)     (1,214)    (8,718)     (1,216)
                                 ----------- ----------- ----------- ----------- -----------
Recoveries:
     One- to four-family (1)             10           6            1         10         ---
     Multi-family                        --          --           --         --          64
     Commercial real estate             147          59           26         --           1
     Consumer                            88          56           76         49          41
     Commercial business                 46         174          392         --         ---
                                 ----------- ----------- ----------- ----------- -----------
        Total recoveries                291         295          495         59         106
                                 ----------- ----------- -----------------------------------
Net Charge-offs                        (172)       (931)        (719)    (8,659)     (1,110)
Allowance acquired from
   AFSALA Bancorp. Inc.                  --       1,115           --         --          --
Provisions charged to operations        790         900        1,088      9,450       1,522
                                 -----------  ----------  ----------- ----------- ----------
Balance at end of period             $5,509      $4,891       $3,807     $3,438      $2,647
                                 ===========  ==========  =========== =========== ==========
Ratio of allowance for loan
losses to total loans
(at period end)                        1.17%       1.15%        1.34%      1.37%       1.05%
                                     ======      ======       ======     ======      ======
Ratio of allowance for loan
losses to non-performing loans
(at period end)                      130.86%     168.42%      116.85%     70.47%      30.10%
                                     ======      ======       ======     ======      ======
Ratio of net charge-offs during
the period to average loans
outstanding during period              0.04%       0.29%        0.27%      3.30%       0.42%
                                     ======      ======       ======     ======      ======
<FN>
-------------------------------------
(1)  Includes home equity loans.
</FN>
</TABLE>
<PAGE>

     No portion of the  allowance is  restricted  to any loan or group of loans,
and the entire allowance is available to absorb realized losses.  The amount and
timing of realized losses and future allowance allocations may vary from current
estimates.  The following  table  summarizes the  distribution  of the Company's
allowance for loan losses at the dates indicated:
<TABLE>
<CAPTION>
                                                                           December 31,
                           ---------------------------------------------------------------------------------------------------------
                                   1999                  1998                 1997                 1996                 1995
                           --------------------- --------------------- -------------------- -------------------- -------------------
                                        Percent               Percent              Percent             Percent              Percent
                              Amount    of loans    Amount    of loans   Amount    of loans   Amount   of loans   Amount    of loans
                                of      in each       of      in each      of      in each      of     in each      of      in each
                               Loan     category     Loan     category    Loan     category    Loan    category    Loan     category
                               Loss     to total     Loss     to total    Loss     to total    Loss    to total    Loss     to total
                            Allowance    loans    Allowance    loans   Allowance    loans   Allowance   loans   Allowance    loans
                            ---------   --------  ---------   -------- ---------   -------- ---------  -------- ---------   --------
                                                                         (Dollars in thousands)
<S>                           <C>        <C>        <C>        <C>         <C>       <C>        <C>     <C>        <C>       <C>
One- to four-family (1)        $2,205   85.19%       $1,661   84.33%     $897       77.55%    $  157      72.26%     $268     60.18%
Multi-family and
   commercial real estate       1,153    6.79         1,383    6.53     1,818       10.84%     1,599      13.84%    1,097     19.97%
Construction                      ---    1.05           ---    0.85       ---        0.73%       ---       0.89%      ---      0.43%
Consumer                          466    5.56           397    6.96       449        9.57%       355      10.29%      718     15.55%
Commercial business               488    1.41           666    1.32       483        1.31%     1,327       2.72%      268      3.87%
Unallocated                     1,197    ----           784    ----       160        ----        ---       ----       296      ----
                               ------   ------       ------   ------   ------      -------    ------     -------   ------    -------
          Total                $5,509   100.00%      $4,891   100.00%  $3,807      100.00%    $3,438     100.00%   $2,647    100.00%
                               ======   =======      ======   =======  ======      =======    ======     =======   ======    =======
<FN>
-------------------------------
(1)  Includes home equity loans.
</FN>
</TABLE>

Investment Activities


     The Bank must maintain minimum levels of investments that qualify as liquid
assets under OTS regulations.  Liquidity may increase or decrease depending upon
the  availability of funds and comparative  yields on investments in relation to
the return on loans.  Historically,  the Bank has  maintained  liquid  assets at
levels above the minimum  requirements  imposed by the OTS regulations and above
levels  believed  adequate  to  meet  the  requirements  of  normal  operations,
including potential deposit outflows. At December 31, 1999, the Bank's liquidity
ratio (liquid assets as a percentage of net  withdrawable  savings  deposits and
current  borrowings) was 28.7%.


     Generally,  the  investment  policy of the Company is to invest funds among
various  categories of investments and maturities  based upon the Company's need
for liquidity, to achieve the proper balance between its desire to minimize risk
and maximize  yield,  to provide  collateral  for  borrowings and to fulfill the
Company's  asset/liability   management  objectives.  The  Company's  investment
strategy  has  been  directed  primarily  toward  high-quality   mortgage-backed
securities,  as well as U.S. Government and agency securities and collateralized
mortgage obligations.


     All of the  mortgage-backed  securities  owned by the  Company  are issued,
insured or guaranteed  either  directly or indirectly  by a federal  agency.  At
December 31, 1999, all of the Company's  securities were classified as available
for  sale.  The  fair  value  and  amortized  cost of the  Company's  securities
(excluding  FHLB  stock) at December  31,  1999 were  $212.1  million and $222.8
million,  respectively.  For additional information on the Company's securities,
see Note 5 of the  Notes to  Consolidated  Financial  Statements  in the  Annual
Report  to  Shareholders  filed as  Exhibit  13 to this  document  (the  "Annual
Report).

     At December 31, 1999,  the fair value and  amortized  cost of the Company's
collaterized mortgage obligations ("CMOs") were $42.0 million and $44.2 million,
respectively. CMOs owned by the Company consisted of either AAA rated securities
or securities  issued,  insured or guaranteed either directly or indirectly by a
federal agency.

     Mortgage-backed  securities and CMOs generally  increase the quality of the
Company's  assets by virtue of the insurance or guarantees  that back them. Such
securities  are more liquid than  individual  mortgage  loans and may be used to
collateralize  borrowings or other  obligations of the Company.  At December 31,
1999,  $74.6 million or  60.2% of the Company's  mortgage-backed  securities and
CMOs were pledged to secure various obligations of the Company.

     While  mortgage-backed  securities  and CMOs carry a reduced credit risk as
compared  to whole  loans,  such  securities  remain  subject to the risk that a
fluctuating  interest  rate  environment,  along with other  factors such as the
geographic  distribution  of  the  underlying  mortgage  loans,  may  alter  the
prepayment rate of such mortgage loans and so affect both the prepayment  speed,
and  value,   of  such   securities.   The  prepayment   risk   associated  with
mortgage-backed  securities  is  monitored  periodically,  and  prepayment  rate
assumptions  adjusted as  appropriate  to update the  Company's  mortgage-backed
securities  accounting  and  asset/liability  reports.   Classification  of  the
Company's mortgage-backed securities and CMOs portfolio as available for sale is
designed to minimize that risk.

     At  December  31,  1999,  the  contractual  maturity of 96.0% of all of the
Company's  mortgage-backed  securities and CMOs were in excess of ten years. The
actual maturity of a mortgage-backed  security or CMO is typically less than its
stated maturity due to prepayments of the underlying mortgages. Prepayments that
are different than anticipated  will affect the yield to maturity.  The yield is
based upon the interest  income and the  amortization of any premium or discount
related to the  mortgage-backed  security or CMO. In accordance  with  generally
accepted accounting  principles,  premiums and discounts are  amortized/accreted
over the estimated lives of the securities, which decrease and increase interest
income,   respectively.   The  prepayment  assumptions  used  to  determine  the
amortization/accretion  period for  premiums  and  discounts  can  significantly
affect  the  yield of a  mortgage-backed  security,  and these  assumptions  are
reviewed  periodically to reflect actual  prepayments.  Although  prepayments of
underlying  mortgages  depend on many factors,  including the type of mortgages,
the coupon rate,  the age of the  mortgages,  the  geographical  location of the
underlying  real estate  collateralizing  the  mortgages  and general  levels of
market  interest  rates,  the  difference  between  the  interest  rates  on the
underlying mortgages and the prevailing mortgage interest rates generally is the
most  significant  determinant  of the rate of  prepayments.  During  periods of
falling mortgage interest rates, if the coupon rate of the underlying  mortgages
exceeds  the  prevailing  market  interest  rates  offered for  mortgage  loans,
refinancing generally increases and accelerates the prepayment of the underlying
mortgages and the related security. Under such circumstances, the Company may be
subject  to  reinvestment   risk  because  to  the  extent  that  the  Company's
mortgage-backed  securities  amortize  or prepay  faster than  anticipated,  the
Company  may  not be able to  reinvest  the  proceeds  of  such  repayments  and
prepayments at a comparable rate.

<PAGE>
     The following table sets forth the composition of the Company's  securities
portfolio and FHLB stock at the dates indicated.
<TABLE>
<CAPTION>
                                                                            December 31,
                                       ---------------------------------------------------------------------------------
                                                1999                       1998                         1997
                                       -------------------------------------------------------------------------------
                                        Carrying                   Carrying                    Carrying
                                        Value (1)    %of Total     Value (1)    %of Total      Value (1)     %of Total
                                       -----------    --------    -----------    --------    ------------     --------
                                                                 (Dollars in Thousands)
<S>                                   <C>                <C>      C>                <C>        <C>             <C>
Securities:
 U.S. Government and agency            $  85,033         38.50%   $  84,000         33.41%   $   63,145        30.19%$
 State and political subdivisions            907          0.41%       1,837          0.73%          766         0.37%
Corporate bonds                            2,240          1.01%          --            --            --           --
Mortgage-backed securities                81,941         37.10%      96,256         38.28%      131,986        63.11%
 Collateralized mortgage
    obligations                           42,024         19.02%      62,148         24.71%        9,911         4.74%
                                       ---------       -------    ---------       -------    ----------      ------- -
 Total debt securities                   212,145         96.04%     244,241         97.13%      205,808        98.41%
FHLB stock                                 8,748          3.96%       7,215          2.87%        3,291         1.57%
                                       ---------       -------    ---------       -------    ----------      ------- -
 Total securities and FHLB stock       $ 220,893        100.00%   $ 251,456        100.00%    $ 209,133       100.00%
                                       =========       =======    =========       =======    ==========      =======

<FN>
     -------------------------------------

(1)Debt  securities are classified as available for sale and are carried at fair
value. The FHLB stock is non-marketable and accordingly is carried at cost.
</FN>
</TABLE>


<PAGE>

     The composition and contractual maturities of the securities portfolio (all
of which are  categorized  as available  for sale),  excluding  FHLB stock,  are
indicated in the following table. The Company's securities portfolio at December
31, 1999,  contained no securities of any issuer with an aggregate book value in
excess of 10% of the  Company's  equity,  excluding  those  issued by the United
States  Government or its agencies.  Securities are stated at their  contractual
maturity  date   (mortgage-backed   securities   and   collateralized   mortgage
obligations are included by final contractual maturity). Expected maturities may
differ from contractual  maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
                                                                     December 31, 1999
                               ---------------------------------------------------------------------------------------
                                                Over One       Over Five
                                   One Year    Year through   Years through    Over
                                    or less    Five Years      Ten Years    Ten Years          Total Securities
                               -------------- -------------- -------------- -------------- ---------------------------
                               Amortized Cost Amortized Cost Amortized Cost Amortized Cost Amortized Cost Fair Value
                               -------------- -------------- -------------- -------------- -------------- ------------
                                                                 (Dollars in thousands)
<S>                              <C>            <C>            <C>            <C>            <C>            <C>
U.S. Government and agency       $    ---       $ 15,755       $ 54,691       $ 19,530       $ 89,976       $ 85,033
State and political subdivisions      ---            911            ---            ---            911            907
Corporate bonds                       ---            ---            ---          2,538          2,538          2,240
Mortgage-backed securities            281          2,473            681         81,739         85,174         81,941
Collateralized mortgage
  obligations                         ---            ---          1,699         42,267         44,166         42,024
                                  -------        -------        -------        -------        -------        -------
Total securities                 $    281       $ 19,139       $ 57,071       $146,274       $222,765       $212,145
                                  =======        =======        =======        =======        =======        =======
Weighted average yield               5.92%          5.97%          6.44%          7.01%          6.77%
                                  =======        =======        =======        =======        =======
</TABLE>

Sources of Funds


     General


     The  Company's   primary   sources  of  funds  are  deposits,   borrowings,
amortization  and  prepayment of loan and  mortgage-backed  security  principal,
maturities  of  securities,  short-term  investments,  and funds  provided  from
operations.

<PAGE>

     Deposits


     The Company offers a variety of deposit products having a range of interest
rates and terms.  The  Company's  deposits  consist of savings  accounts,  money
market  accounts,  transaction  accounts,  and  certificate  accounts  currently
ranging in terms  from 91 days to 60  months.  The  Company  primarily  solicits
deposits  from its primary  market area and at December 31,  1999,  did not have
brokered deposits. The Company relies primarily on competitive pricing policies,
advertising  and  customer  service to attract and retain  these  deposits.  The
Company  has  utilized  premiums  and  promotional  gifts  for new  accounts  in
connection with the opening of new branches or with club accounts.  At times the
Company also uses small advertising give-aways in the aisles of the supermarkets
where it maintains branches. For information regarding average balances and rate
information on deposit accounts,  see  "Management's  Discussion and Analysis of
Financial  Condition  and Results of  Operations"  in the Annual  Report and for
information  on the dollar  amount of  deposits  in the  various  deposit  types
offered  by the  Company,  see  Note 9 of the  Notes to  Consolidated  Financial
Statements in the Annual Report.


     The flow of  deposits  is  influenced  significantly  by  general  economic
conditions,   changes  in  money  market  and  prevailing  interest  rates,  and
competition.  The variety of deposit products offered by the Company has allowed
it to be  competitive  in  obtaining  funds and to respond with  flexibility  to
changes  in  consumer  demand.  The  Company  has  become  more  susceptible  to
short-term fluctuations in deposit flows, as customers have become more interest
rate conscious.  The Company manages the pricing of its deposits in keeping with
its asset/liability management, liquidity and profitability objectives. Based on
its experience,  the Company  believes that its savings accounts and transaction
accounts are relatively stable sources of deposits.  However, the ability of the
Company to attract and  maintain  money  market  accounts  and  certificates  of
deposit and the rates paid on these  deposits  have been and will continue to be
significantly affected by market conditions.


     At December 31, 1999, the Company's  certificates of deposit totaled $220.3
million.  These  certificates  of deposit  were issued at interest rates ranging
from  3.21% to 7.36%.  (For  additional  information  regarding  certificate  of
deposit  interest  rates,  see  Note 9 of the  Notes to  Consolidated  Financial
Statements in the Annual Report.)
<PAGE>

     The following table  indicates the amount of the Company's  certificates of
deposit by time remaining until maturity as of December 31, 1999.


                                               Maturity
                                -------------------------------------
                                           Over     Over
                                 3 Months  3 to 6  6 to 12    Over
                                  or Less  Months   Months  12 Months    Total
                                --------- -------- --------  --------   --------
                                            (In thousands)
Certificates of deposit
less than $100,000                $43,906  $40,337  $50,047   $55,613   $189,903

Certificates of deposit
of $100,000 or more                 8,862    8,193    7,902     5,476     30,433
                                --------- -------- --------  --------   --------

Total certificates of deposit     $52,768  $48,530  $57,949   $61,089   $220,336
                                ========= ======== ========  ========   ========

     Borrowings


     Although  deposits are the Company's primary source of funds, the Company's
policy  generally  has been to utilize  borrowings  when they are a less  costly
source of funds, can be invested at a positive  interest rate spread or when the
Company needs additional funds to satisfy loan demand.

     The Company's borrowings prior to 1996 primarily consisted of advances from
the FHLB of New York.  Such advances can be made  pursuant to several  different
credit  programs,  each  of  which  has its  own  interest  rate  and  range  of
maturities.  At  December  31,  1999,  the  Company  had $92.2  million  in FHLB
advances. During 1996, the Company significantly increased its other borrowings.
These borrowings were used to purchase  various  investments  including  Federal
agency  obligations and  mortgage-backed  securities  which were  simultaneously
pledged as securities sold under agreements to repurchase. At December 31, 1999,
securities  repurchase  agreements totaled $112.7 million. The positive interest
rate spread between the volume of pledged  securities and the related borrowings
has produced an increase in net interest  income but at an interest  rate spread
that is less than the Company has earned  historically.  For further information
regarding the  Company's  borrowings,  see Note 10 of the Notes to  Consolidated
Financial Statements contained in the Annual Report.


Subsidiary and Other Activities


     As a federally chartered savings association,  the Bank is permitted by OTS
regulations  to invest up to 2% of its assets,  or $14.5 million at December 31,
1999, in the stock of, or in loans to, service corporation  subsidiaries.  As of
such date, the Bank had no investments in service corporation subsidiaries.  The
Bank may invest an  additional  1% of its assets in service  corporations  where
such additional funds are used for inner-city or community  development purposes
and up to 50% of its total capital in conforming  loans to service  corporations
in which it owns more than 10% of the capital stock.  Federal  associations also
are permitted to invest an unlimited  amount in operating  subsidiaries  engaged
solely in activities which a federal association may engage in directly.

     The Bank organized a single service  corporation in 1984, which is known as
ASB Insurance  Agency,  Inc.  ("ASB  Insurance").  In November 1996, the Company
purchased the service corporation from the Bank for $1,000. ASB Insurance offers
mutual funds, annuity and brokerage services through a registered  broker-dealer
to the  Company's  customers  and members of the general  public.  ASB Insurance
recognized  gross  revenues of $122,800 and $63,800 for the years ended December
31, 1999 and 1998, respectively.


Regulation


     General


     The Bank is a federally  chartered  savings bank, the deposits of which are
federally  insured  by the FDIC (up to  certain  limits)  and backed by the full
faith and  credit of the  United  States  Government.  Accordingly,  the Bank is
subject to broad  federal  regulation  and oversight by the OTS extending to all
its  operations.  The Bank is a member of the FHLB of New York and is subject to
certain  limited  regulation  by the Board of Governors  of the Federal  Reserve
System  ("Federal  Reserve Board").  As a savings and loan holding company,  the
Company  also is subject  to federal  regulation  and  oversight.  The Bank is a
member of the Bank  Insurance  Fund (the "BIF"),  which is  administered  by the
FDIC. Its deposits are insured up to applicable limits by the FDIC. As a result,
the FDIC also has certain regulatory and examination authority over the Bank.

     As a  result  of the  acquisition  of  AFSALA  and its  subsidiary  savings
association,  a portion of the  deposits  of the Bank are insured by the Savings
Association Insurance Fund (the "SAIF"). The rules and regulations governing the
SAIF are similar in many ways to those for the BIF.


     Certain of these  regulatory  requirements  and  restrictions are discussed
below or elsewhere in this document.



     Federal Regulation of Savings Associations


     The  OTS  has   extensive   authority   over  the   operations  of  savings
associations.  As part of this authority,  the Bank is required to file periodic
reports  with the OTS and is subject to periodic  examinations  by the OTS,  its
primary  federal  banking  regulator,   and  the  FDIC.  The  last  regular  OTS
examination of the Bank was as of March 31, 1999.  When these  examinations  are
conducted by the OTS and the FDIC, the examiners, if they deem appropriate,  may
require the Bank to provide for higher  general or specific loan loss  reserves.
All savings associations are subject to a semi-annual assessment, based upon the
savings  association's  total  assets,  to fund the  operations  of the OTS. The
Bank's OTS assessment for the fiscal year ended December 31, 1999, was $136,300.

     The OTS also has extensive  enforcement authority over savings associations
and  their  holding  companies,   including  the  Bank  and  the  Company.  This
enforcement authority includes,  among other things, the ability to assess civil
money  penalties,  to issue  cease-and-desist  or removal orders and to initiate
injunctive actions.

     In addition, the investment, lending and branching authority of the Bank is
prescribed by federal law. For instance,  no savings  institution  may invest in
non-investment  grade corporate debt  securities.  In addition,  the permissible
level of investment by federal  associations in loans secured by non-residential
real property may not exceed 400% of total capital,  except with approval of the
OTS.  Federal  savings  associations  are also  generally  authorized  to branch
nationwide. The Bank is in compliance with the noted restrictions.

     The Bank's general permissible lending limit for  loans-to-one-borrower  is
equal to the  greater of  $500,000  or 15% of  unimpaired  capital  and  surplus
(except for loans fully secured by certain  readily  marketable  collateral,  in
which case this limit is increased to 25% of unimpaired capital and surplus). At
December 31, 1999,  the Bank's  lending limit was $10.2 million.  The Bank is in
compliance with the loans-to-one-borrower limitation.



     Insurance of Accounts and Regulation by the FDIC


     The  Bank is a member  of the  BIF,  which  is  administered  by the  FDIC.
Deposits are insured up to applicable  limits by the FDIC and such  insurance is
backed by the full faith and credit of the United States Government. As insurer,
the FDIC  imposes  deposit  insurance  premiums  and is  authorized  to  conduct
examinations of and to require reporting by FDIC-insured  institutions.  It also
may prohibit any FDIC-insured institution from engaging in any activity the FDIC
determines,  by  regulation  or order,  to pose a serious risk to the  insurance
fund. The FDIC also has the authority to initiate  enforcement  actions  against
savings  associations,  after giving the OTS an opportunity to take such action,
and may terminate  deposit  insurance if it determines  that the institution has
engaged in unsafe or unsound practices, or is in an unsafe or unsound condition.

     The FDIC's  deposit  insurance  premiums are assessed  through a risk-based
system under which all insured  depository  institutions  are placed into one of
nine  categories  and  assessed  insurance  premiums,  based upon their level of
capital and supervisory evaluation. Under the system, institutions classified as
well  capitalized  (i.e., a core capital ratio of at least 5%, a ratio of Tier 1
or core capital to  risk-weighted  assets  ("Tier 1  risk-based  capital") of at
least 6% and a risk-based  capital ratio of at least 10%) and considered healthy
pay the  lowest  premium,  while  institutions  that  are less  than  adequately
capitalized (i.e., core or Tier 1 risk-based capital ratios of less than 4% or a
risk-based  capital  ratio  of  less  than  8%)  or  considered  of  substantial
supervisory concern pay the highest premium.  Risk classification of all insured
institutions is made by the FDIC semi-annually.

     The FDIC is authorized to adjust the insurance premium rates for banks that
are insured by the BIF, such as the Bank, in order to maintain the reserve ratio
of the BIF at 1.25% of BIF insured deposits.  The ranges of BIF premium rates in
effect during 1999 was 0% to 0.27%. In addition,  BIF insured  institutions  are
required  to  contribute  to the cost of  financial  bonds  that were  issued to
finance  the cost of  resolving  the  thrift  failures  in the 1980s  (the "FICO
Premium").

         A portion of the insurance premium paid by the Bank is assessed for the
SAIF because a portion of the deposits of the Bank are insured by the SAIF.  For
these deposits, the FDIC assesses a premium to maintain the reserve ratio of the
SAIF at 1.25% of SAIF  insured  deposits.  During the past  several  years,  the
insurance  premium rates for SAIF members were higher than those for BIF members
and SAIF members  were also  required to pay a special  assessment  to the SAIF.
SAIF members must also pay the FICO Premium.

     In general,  the FDIC limits the insurance  that may be paid to a person or
entity  through all of that person's or entity's  deposit  accounts to $100,000.
The  FDIC is  considering  whether  to  propose  an  increase  in this  limit to
$200,000.  Any increase in insurance could result in an increase in the premiums
paid by all BIF and SAIF members.  The FDIC is  authorized  to increase  deposit
insurance  rates on a  semi-annual  basis if it  determines  that this action is
necessary  to cause  the  balance  in the SAIF or BIF to  reach  the  designated
reserve ratio of 1.25% of insured  deposits within a reasonable  period of time.
The FDIC may impose  special  assessments  on SAIF or BIF members for any reason
deemed necessary by the FDIC.


     Regulatory Capital Requirements


     All  federally  insured  savings  institutions  are  required to maintain a
minimum level of regulatory capital.  The OTS has established capital standards,
including a tangible  capital  requirement,  a leverage  ratio (or core capital)
requirement  and a risk-based  capital  requirement  applicable  to such savings
associations.  The OTS is also  authorized  to impose  capital  requirements  in
excess of these  standards on a  case-by-case  basis.  At December 31, 1999, the
Bank was in compliance with its regulatory capital requirements.  See Note 16 of
the Notes to Consolidated Financial Statements contained in the Annual Report.

     The OTS and the  FDIC  are  authorized  and,  under  certain  circumstances
required, to take certain actions against savings associations that fail to meet
their  capital  requirements.  The OTS is  generally  required to take action to
restrict the activities of an "undercapitalized  association" (generally defined
to be  one  with  less  than  either  a 4%  core  capital  ratio,  a 4%  Tier  1
risked-based  capital  ratio  or an  8%  risk-based  capital  ratio).  Any  such
association  must  submit a  capital  restoration  plan and  until  such plan is
approved by the OTS may not increase its assets,  acquire  another  institution,
establish a branch or engage in any new  activities,  and generally may not make
capital   distributions.   The  OTS  is  authorized  to  impose  the  additional
restrictions that are applicable to significantly undercapitalized associations.



     As a condition to the approval of the capital restoration plan, any company
controlling an undercapitalized association must agree that it will enter into a
limited  capital  maintenance   guarantee  with  respect  to  the  institution's
achievement of its capital requirements.

     Any savings  association  that fails to comply with its capital  plan or is
"significantly undercapitalized" (i.e., Tier 1 risk-based or core capital ratios
of less  than 3% or a  risk-based  capital  ratio of less  than 6%) must be made
subject  to  one  or  more  of  additional   specified   actions  and  operating
restrictions  which may cover all aspects of its operations and include a forced
merger  or  acquisition  of  the   association.   An  association  that  becomes
"critically  undercapitalized" (i.e., a tangible capital ratio of 2% or less) is
subject to further mandatory restrictions on its activities in addition to those
applicable to significantly  undercapitalized associations. In addition, the OTS
must appoint a receiver (or conservator  with the concurrence of the FDIC) for a
savings  association,  with certain limited exceptions,  within 90 days after it
becomes critically  undercapitalized.  Any undercapitalized  association is also
subject to the general enforcement  authority of the OTS and the FDIC, including
the appointment of a conservator or a receiver.

     The OTS is also generally  authorized to reclassify an  association  into a
lower capital category and impose the  restrictions  applicable to such category
if the institution is engaged in unsafe or unsound  practices or is in an unsafe
or unsound condition.

     The  imposition by the OTS or the FDIC of any of these measures on the Bank
or the Company may have a substantial adverse effect on the Company's operations
and  profitability.  Company  shareholders  do not have preemptive  rights,  and
therefore, if the Company is directed by the OTS or the FDIC to issue additional
shares  of  Common  Stock,  such  issuance  may  result  in  the  dilution  of a
shareholder's percentage ownership of the Company.


     Limitations on Dividends and Other Capital Distributions


     OTS regulations  impose various  restrictions on savings  associations with
respect  to their  ability  to make  distributions  of  capital,  which  include
dividends,  stock  redemptions  or  repurchases,   cash-out  mergers  and  other
transactions  charged to the capital  account.  OTS regulations  also prohibit a
savings  association from declaring or paying any dividends or from repurchasing
any of its stock if, as a result, the retained earnings of the association would
be reduced  below the  amount  required  to be  maintained  for the  liquidation
account  established  in  connection  with its mutual to stock  conversion.  For
additional  information  on the  limitations  on  dividends  and  other  capital
distributions,  see Notes 3 and 16 of the consolidated  financial  statements in
the Annual Report.


     Qualified  Thrift  Lender Test


     All  savings  associations,  including  the Bank,  are  required  to meet a
qualified  thrift  lender  ("QTL") test to avoid certain  restrictions  on their
operations. This test requires a savings association to have at least 65% of its
portfolio assets (as defined by regulation) in qualified thrift investments on a
monthly  average  for nine out of every 12  months  on a  rolling  basis.  As an
alternative,  the savings  association  may  maintain 60% of its assets in those
assets  specified under Section  7701(a)(19) of the Internal Revenue Code. Under
either test, such assets primarily consist of residential  housing related loans
and investments.  At December 31, 1999, the Bank met the test and has always met
the test since its effectiveness.

     Any savings  association  that fails to meet the QTL test must convert to a
national bank charter,  unless it requalifies as a QTL and thereafter  remains a
QTL. If such an association  has not yet  requalified or converted to a national
bank, its new  investments  and activities are limited to those  permissible for
both a savings  association  and a national  bank, and it is limited to national
bank  branching  rights in its home  state.  In  addition,  the  association  is
immediately  ineligible  to receive  any new FHLB  borrowings  and is subject to
national  bank  limits for payment of  dividends.  If such  association  has not
requalified  or  converted  to a national  bank  within  three  years  after the
failure,  it must  divest  of all  investments  and  cease  all  activities  not
permissible  for a  national  bank.  In  addition,  it must repay  promptly  any
outstanding FHLB borrowings,  which may result in prepayment  penalties.  If any
association  that fails the QTL test is  controlled by a holding  company,  then
within one year after the failure,  the holding  company must register as a bank
holding  company  and  become  subject  to  all  restrictions  on  bank  holding
companies.

     Community Reinvestment Act


     Under  the  Community   Reinvestment   Act  ("CRA"),   every  FDIC  insured
institution has a continuing and affirmative obligation consistent with safe and
sound banking  practices to help meet the credit needs of its entire  community,
including low and moderate  income  neighborhoods.  The CRA requires the OTS, in
connection with the examination of the Bank, to assess the institution's  record
of meeting  the  credit  needs of its  community  and to take such  record  into
account  in its  evaluation  of  certain  applications,  such as a merger or the
establishment of a branch, by the Bank. An unsatisfactory  rating may be used as
the basis for the denial of an application by the OTS.

     The Bank was last  examined for CRA  compliance in June 1999 and received a
rating of "satisfactory".


     Holding  Company  Regulation


     The  Company  is a unitary  savings  and loan  holding  company  subject to
regulatory  oversight  by the OTS.  The Company is required to register and file
reports with the OTS and is subject to regulation and examination by the OTS. In
addition, the OTS has enforcement authority over the Company and its non-savings
association  subsidiaries,  which  authority  permits  the  OTS to  restrict  or
prohibit  activities  that are determined to be a serious risk to the subsidiary
savings association.

     As a unitary savings and loan holding company, the Company generally is not
subject  to many  activity  restrictions.  If the  Company  acquires  control of
another savings association as a separate subsidiary, it would become a multiple
savings and loan holding  company,  and the activities of the Company and any of
its  subsidiaries  (other  than  the  Bank  or any  savings  association)  would
generally become subject to additional restrictions.

     If the Bank fails the QTL test, the Company must obtain the approval of the
OTS prior to  continuing  after such  failure,  directly  or  through  its other
subsidiaries,  any  business  activity  other than those  approved  for multiple
savings and loan holding companies or their  subsidiaries.  In addition,  within
one year of such failure the Company must  register as, and will become  subject
to, the  restrictions  applicable  to bank  holding  companies.  The  activities
authorized  for a bank holding  company are more limited than are the activities
authorized  for a unitary or multiple  savings  and loan  holding  company.

     Federal  banking  law  was  materially  affected  by  the  passage  of  the
Gramm-Leach-Bliley  Act. However, this act may not materially impact the Company
or the Bank unless the Company  chooses to become a financial  holding  company.
This act, effective in March 2000, allows,  among other things,  qualifying bank
holding  companies to become financial  holding  companies and thereby affiliate
with  securities  firms and insurance  companies and engage in other  activities
that are financial in nature or incidental to a financial activity. In addition,
the act enacts a number of consumer  protections,  including provisions intended
to protect  privacy of bank  customers'  financial  information  and  provisions
requiring  disclosure  of ATM fees imposed by banks on customers of other banks.
Other  parts  of the act, affecting  newly  created  savings  and  loan  holding
companies, do not impact existing savings and loan holding companies such as the
Company.


     Federal Taxation


     Savings  associations such as the Bank that meet certain definitional tests
relating to the  composition  of assets and other  conditions  prescribed by the
Internal  Revenue  Code of 1986,  as amended  (the  "Code"),  are  permitted  to
establish reserves for bad debts and to make annual additions thereto which may,
within specified  formula limits,  be taken as a deduction in computing  taxable
income for  federal  income  tax  purposes.  The amount of the bad debt  reserve
deduction is computed under the experience method.  Under the experience method,
the bad debt reserve  deduction is an amount  determined  under a formula  based
generally upon the bad debts actually sustained by the savings  association over
a period of years.

     In addition to the regular  income  tax,  corporations,  including  savings
associations  such as the Bank,  generally  are  subject  to a minimum  tax.  An
alternative  minimum tax is imposed at a minimum tax rate of 20% on  alternative
minimum  taxable  income,  which is the sum of a  corporation's  regular taxable
income (with certain  adjustments) and tax preference  items, less any available
exemption.  The alternative  minimum tax is imposed to the extent it exceeds the
corporation's  regular  income tax and net  operating  losses can offset no more
than 90% of alternative  minimum  taxable  income.

     To the extent prior years earnings  appropriated to a savings association's
bad debt reserves for "qualifying  real property loans" and deducted for federal
income tax purposes exceed the allowable amount of such reserves  computed under
the  experience  method  and to the  extent  of the  association's  supplemental
reserves for losses on loans  ("Excess"),  such Excess may not,  without adverse
tax  consequences,  be  utilized  for the  payment  of cash  dividends  or other
distributions   to  a  shareholder   (including   distributions  on  redemption,
dissolution or  liquidation) or for any other purpose (except to absorb bad debt
losses).

     The Company  and its  subsidiaries  file  consolidated  federal  income tax
returns on a calendar year basis  using the  accrual  method of  accounting.

     The Bank and its  consolidated  subsidiaries  have been  audited by the IRS
with respect to  consolidated  federal income tax returns  through  December 31,
1996.  With respect to years examined by the IRS, either all  deficiencies  have
been satisfied or sufficient  reserves have been established to satisfy asserted
deficiencies.


     New York Taxation


     The Bank and its subsidiaries  are subject to New York State taxation.  The
Bank is subject to the New York State  Franchise Tax on Banking  Corporations in
an annual  amount equal to the greater of (i) 9% (being scaled down to 7.5% over
a number of years) of the Bank's "entire net income" allocable to New York State
during the taxable year,  or (ii) the  applicable  alternative  minimum tax. The
alternative  minimum tax is  generally  the greater of (a) 0.01% of the value of
the Bank's assets allocable to New York State with certain modifications, (b) 3%
of the Bank's  "alternative  entire net income"  allocable to New York State, or
(c) $250.  Entire net income is similar to federal  taxable  income,  subject to
certain  modifications  (including the fact that net operating  losses cannot be
carried back or carried  forward) and alternative  entire net income is equal to
entire net income without certain  modifications.  The Bank and its consolidated
subsidiaries  have been audited by the New York State Department of Taxation and
Finance  through  December 31, 1998. With respect to years examined by the State
Department of Taxation and Finance,  either all deficiencies have been satisfied
or sufficient reserves have been established to satisfy asserted deficiencies.



     Delaware Taxation


     As a Delaware  holding  company,  the  Company is  exempted  from  Delaware
corporate  income tax but is required  to file an annual  report with and pay an
annual fee to the State of  Delaware.  The Company is also  subject to an annual
franchise tax imposed by the State of Delaware.


Competition


     The Company faces strong  competition,  both in originating real estate and
other loans and in attracting  deposits.  Competition in originating real estate
loans comes primarily from other savings institutions,  commercial banks, credit
unions and mortgage  brokers  making loans secured by real estate located in the
Company's  primary market area. Other savings  institutions,  commercial  banks,
credit  unions and  finance  companies  also  provide  vigorous  competition  in
consumer lending.

     The Company attracts  substantially  all of its deposits through its branch
offices,  primarily  from the  communities  in which  those  branch  offices are
located;  therefore,  competition for those deposits is principally  from mutual
funds and other savings  institutions,  commercial banks and credit unions doing
business in the same  communities.  The Company  competes for these  deposits by
offering a variety of deposit products at competitive rates, convenient business
hours, and convenient  branch locations with interbranch  deposit and withdrawal
privileges. Automated teller machine facilities are also available.


Employees


     At December 31, 1999, the Company had a total of 247  employees,  including
45 part-time  employees.  The  Company's  employees are not  represented  by any
collective  bargaining group.  Management considers its employee relations to be
good.

<PAGE>


Executive Officers of the Company and the Bank Who Are Not Directors


     The following  information  as to the business  experience  during the past
five years is supplied with respect to the executive officers of the Company and
the Bank who do not serve on the  Company's  or the Bank's  Board of  Directors.
There are no arrangements or  understandings  between such persons named and any
persons pursuant to which such officers were selected.

     Benjamin  Ziskin,  age 41, is the Senior Vice  President of the Company and
the Bank since  November  1998.  Mr.  Ziskin  served as  Treasurer  of Amsterdam
Federal  Bank from 1985 to 1993 and was  appointed  Vice  President of Amsterdam
Federal Bank in 1989 and of AFSALA upon its formation in 1996.

     James J. Alescio, age 38, is Senior Vice President, Chief Financial Officer
and the  Treasurer  of the Company and the Bank,  positions he has held with the
Company  since  November  1998.  Mr.  Alescio  served as Assistant  Treasurer of
Amsterdam  Federal Bank from 1984 to 1987 and was appointed  Treasurer and Chief
Financial  Officer  of  Amsterdam  Federal  Bank in 1993 and of AFSALA  upon its
formation.

     Thomas  Nachod,  age 58, is Senior  Vice  President  of the Company and the
Bank.  Mr.  Nachod  joined the Company in December  1998.  Between  July 1997 to
November  1998,  he held the position of Senior Vice  President at ALBANK.  From
November 1990 to June 1997,  Mr. Nachod worked in a variety of rolls at KeyBank.
In  addition,  Mr.  Nachod  served  as Chief  Executive  Officer  of two  banks,
Connecticut Community Bank in Greenwich, CT and Fidelity Bank of Scottsdale, AZ.

     Robert Kelly,  age 52, is Vice President,  Secretary and General Counsel to
the Company,  positions he has held with the Company since its  incorporation in
June 1995.  Mr. Kelly has been Vice  President  and General  Counsel to the Bank
since July 1994. In January 1995 he was appointed  Secretary of the Bank.  Prior
to joining the Bank in 1994, Mr. Kelly was self-employed in the general practice
of law in the State of New York.


Item 2.    Description of Property


     The Company conducts its business at its main office, sixteen other banking
offices and an operations  office in its primary  market area.  The Company owns
its Main Office,  its operations  center and three branch offices and leases the
remaining  thirteen branch offices.  The Company also owns a parking lot located
at 18-22 Division Street, Amsterdam, New York, which is used to service the main
office.  The net book value of the Company's  premises and equipment  (including
land,  buildings  and  leasehold   improvements  and  furniture,   fixtures  and
equipment)  at  December  31,  1999  was  $5.6  million.  See Note 8 of Notes to
Consolidated  Financial  Statements in the Annual Report.  The Company  believes
that its current  facilities  are  adequate to meet the present and  foreseeable
needs of the Bank and the Company, subject to possible future expansion.


Item 3.   Legal Proceedings


     The Company is involved as plaintiff or defendant in various  legal actions
arising in the normal  course of its  business.  While the  ultimate  outcome of
these  proceedings  cannot be  predicted  with  certainty,  it is the opinion of
management,  after  consultation  with counsel  representing  the Company in the
proceedings, that the resolution of these proceedings should not have a material
effect on the Company's  financial  position or results of operations.

<PAGE>
Item 4.   Submission of Matters to a Vote of Security Holders


     No  matter  was  submitted  to a vote  of  security  holders,  through  the
solicitation  of proxies or  otherwise,  during the quarter  ended  December 31,
1999.


                                     PART II


Item 5.   Market for the Registrant's Common Stock and Related Security Holder
          Matters

               The  information  required herein is incorporated by reference to
               the section  entitled  "Stock  Price  Information"  in the Annual
               Report

Item 6.   Selected Financial Data


               The  information  required herein is incorporated by reference to
               the   section   entitled   "Selected    Consolidated    Financial
               Information" in the Annual Report


Item 7.   Management's   Discussion  and  Analysis of  Financial  Condition  and
          Results of Operations


               The  information  required herein is incorporated by reference to
               the indentically captioned section in the Annual Report


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk


               The  information  required herein is incorporated by reference to
               the section entitled "Market Risk" in the Annual Report


Item 8.   Financial Statements and Supplementary Data


               Financial statements and supplementary data listed in response to
               Item 14 of this report are herein incorporated by reference.

Item 9.   Changes in and  Disagreements  With  Accountants on  Accounting  and
          Financial Disclosure


                None

<PAGE>
                                    PART III

Item 10.     Directors and Executive Officers of the Registrant


Directors
---------


     Information  concerning  Directors of the Registrant is incorporated herein
by  reference  from the  Company's  definitive  Proxy  Statement  for the Annual
Meeting  of  Shareholders  scheduled  to be  held on May 26,  2000,  except  for
information  contained  under  the  heading  "Compensation  Committee  Report on
Executive  Compensation" and "Shareholder  Return Performance  Presentation",  a
copy of which  will be filed  not  later  than 120 days  after  the close of the
fiscal year.


Executive Officers
------------------


     Information concerning executive officers of the Company is set forth under
the  caption  "Executive  Officers  of the  Company  and  the  Bank  who are not
Directors" contained in Part 1 of this Form 10-K.


Compliance with Section 16(a)
-----------------------------


     Section  16(a) of the Exchange Act requires  the  Company's  directors  and
executive  officers,  and persons who own more that 10% of a registered class of
the Company's equity  securities,  to file with the SEC reports of ownership and
reports of changes in ownership of common stock and other equity  securities  of
the Company. Officers,  directors and greater than 10% shareholders are required
by SEC  regulation to furnish the Company with copies of all Section 16(a) forms
they file.

     To the Company's  knowledge,  based soley on a review of the copies of such
reports  furnished  to the  Company and  written  representations  that no other
reports  were  required  during the fiscal year ended  December  31,  1999,  all
Section 16(a) filing  requirements  applicable  to its  officers,  directors and
greater than 10 percent beneficial owners were complied with.


Item 11.     Executive Compensation


     Information  concerning  executive  compensation is incorporated  herein by
reference from the Company's  definitive  Proxy Statement for the Annual Meeting
of  Shareholders  scheduled to be held on May 26, 2000,  except for  information
contained  under  the  heading  "Compensation   Committee  Report  on  Executive
Compensation" and "Shareholder Return Performance Presentation", a copy of which
will be filed not later than 120 days after the close of the fiscal year.
<PAGE>


 Item 12.     Security  Ownership of Certain  Beneficial  Owners and Management


     Information  concerning security ownership of certain beneficial owners and
management is  incorporated  herein by reference  from the Company's  definitive
Proxy Statement for the Annual Meeting of  Shareholders  scheduled to be held on
May 26, 2000, except for information  contained under the heading  "Compensation
Committee Report on Executive  Compensation" and "Shareholder Return Performance
Presentation",  a copy of which  will be filed not later than 120 days after the
close of the fiscal year.


Item 13.     Certain Relationships and Related Transactions


     Information   concerning   certain   relationships   and   transactions  is
incorporated  herein by reference from the Company's  definitive Proxy Statement
for the Annual  Meeting of  Shareholders  scheduled  to be held on May 26, 2000,
except for  information  contained  under the  heading  "Compensation  Committee
Report  on  Executive   Compensation"   and  "Shareholder   Return   Performance
Presentation",  a copy of which  will be filed not later than 120 days after the
close of the fiscal year.


                                     PART IV


Item 14.     Exhibits,  Financial  Statement  Schedules, and Reports on Form 8-K


     (a) (1) Financial Statements:


     The following  information  appearing in the Annual Report (Exhibit 13), is
incorporated by reference:

        -  Independent Auditors' Report
        -  Consolidated Statements of  Financial  Condition  as of  December 31,
                1999 and 1998
        -  Consolidated Statements of Income  for the years  ended  December 31,
                1999, 1998 and 1997
        -  Consolidated Statements of Changes in  Shareholders'  Equity for  the
                years ended December 31, 1999, 1998 and 1997
        -  Consolidated Statements of Cash  Flows for the  years ended  December
                31, 1999, 1998 and 1997
<PAGE>


     (a) (2)  Financial Statement Schedules:


     All financial  statement  schedules have been omitted as the information is
not required under the related instructions or is inapplicable.


     (a) (3)  Exhibits:

                                Index to Exhibits

Exhibit
Number                                Document
------              ------------------------------------------------------------

3(i)                Registrants's  Certificate of  Incorporation as currently in
                    effect,  filed as an exhibit to  Registrants's  Registration
                    Statement of Form S-1 (File No.  33-96654),  is incorporated
                    herein by reference.

3(ii)               Registrants's  Bylaws as  amended on  October  22,  1999 and
                    currently in effect,  filed as an exhibit to Current  Report
                    on Form 8-K,  filed on  February  8, 2000,  is  incorporated
                    herein by reference.

4                   Registrant's Specimen Stock Certificate, filed as an exhibit
                    to Registrant's Registration Statement on Form S-1 (File No.
                    33-96654), is incorporated herein by reference.

10.1                Employment  Agreement  between  the  Registrant  and  Robert
                    Kelly, filed as  an exhibit  to  Registrant's   Registration
                    Statement on Form S-1 (File No.  33-96654),  is incorporated
                    herein by reference.

10.2                Forms of Employment  Agreements  between the  Registrant and
                    John M. Lisicki,  James J. Alescio,  and Benjamin W. Ziskin,
                    filed as exhibits to the Registrant's Registration Statement
                    on Form S-4 (File No. 333-59721).

10.3                Supplemental  Retirement  Benefit  agreement  with  John  M.
                    Lisicki and  Benjamin W. Ziskin,  filed as Exchibit  10.3 to
                    Registrant's December 31, 1998 Form 10-K.

10.4                Registrant's  1997 Stock Option and Incentive Plan, Filed as
                    Exhibit A to  Registrant's  Proxy  Statement  filed with the
                    Commission  on March 26, 1997,  pursuant to Section 14(a) of
                    the  Securities  Exchange Act of 1934,  as amended (File No.
                    0-27036), is incorporated herein by reference.

10.5                Registrant's   Recognition  and  Retention  Plan,  filed  as
                    Exhibit B to  Registrant's  Proxy  Statement  filed with the
                    Commission  on March 26, 1997,  pursuant to Section 14(a) of
                    the  Securities  Exchange Act of 1934,  as amended (File No.
                    0-27036), is incorporated herein by reference.

10.6                AFSALA  Bancorp,  Inc.  1997  Stock  Option  Plan,  filed as
                    Exhibit  10.4 to the 1997  Annual  Report on Form  10-KSB of
                    AFSALA Bancorp, Inc. (file number 0-2113), and the amendment
                    to the Plan,  filed as an appendix to the  definitive  proxy
                    statement filed with the Commision by AFSALA  Bancorp,  Inc.
                    on January 8, 1998, are incorporated herein by reference.

10.7                Settlement and Standstill Agreement with S. Holtzman,  filed
                    as Exhibit 99.1 to the Current  Report on Form 8-K, filed on
                    August 12, 1998, is incorporated herein by reference.

10.8                Standstill agreement with L. Seidman.

11                  Statement re:  computation  of per share earnings (see Notes
                    1(n)  and  13  of  the  Notes  to   Consolidated   Financial
                    Statements  contained in the Annual  Report to  Shareholders
                    filed as Exhibit 13 herein).

13                  Portions of Annual  Report to Security  Holders  (only those
                    portions  incorporated  by  reference  in this  document are
                    deemed filed).

21                  Subsidiaries of the Registrant

23                  Consent of Independent Certified Public Accountants

27                  Financial Data Schedule


     (b) Reports on Form 8-K:

     No current  reports on Form 8-K were filed  during the last  quarter of the
period covered by this report.


<PAGE>


                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                          AMBANC HOLDING CO., INC.



Date: March 24, 2000                      By: /s/ John M. Lisicki
      ------------------------------          ----------------------
                                              John M. Lisicki, President
                                              and Chief Executive Officer
                                              (Duly Authorized Representative)




<PAGE>
      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on March 24, 2000:

/s/ John M. Lisicki                       /s/ James J. Alescio
-----------------------------------       -------------------------------------
John M. Lisicki, President                James J. Alescio, Senior Vice
and Chief Executive Officer               President, Chief Financial Officer
(Principal Executive Officer)             (Principal Financial and Accounting
     `                                     officer)


/s/ Lauren T. Barnett                     /s/ James J. Bettini
-----------------------------------       -------------------------------------
Lauren T. Barnett, Director               James J. Bettini, Director



/s/ John J. Daly                          /s/ Lionel H. Fallows
-----------------------------------       -------------------------------------
John J. Daly, Director                    Lionel H. Fallows, Director



/s/ Dr. Daniel J. Greco                   /s/ Seymour Holtzman
-----------------------------------       -------------------------------------
Dr. Daniel J. Greco, Director             Seymour Holtzman, Director



/s/ Marvin R. LeRoy, Jr.                  /s/ Allan R. Lyons
-----------------------------------       -------------------------------------
Marvin R. LeRoy, Jr., Director            Allan R. Lyons, Director



/s/ Charles S. Pedersen                   /s/ William L. Petrosino
-----------------------------------       -------------------------------------
Charles S. Pedersen, Director             William L. Petrosino, Director


/s/ Lawrence B. Seidman
-----------------------------------
Lawrence B. Seidman


/s/ Dr. Ronald S. Tecler                  /s/ John A. Tesiero
-----------------------------------       -------------------------------------
Dr. Ronald S. Tecler, Director            John A. Tesiero, Jr., Director



/s/ William A. Wilde, Jr.                 /s/ Charles E. Wright
-----------------------------------       -------------------------------------
William A. Wilde, Jr., Director           Charles E. Wright, Director