EXHIBIT 10
                              EMPLOYMENT AGREEMENT


         THIS EMPLOYMENT AGREEMENT  ("Agreement") is made and entered into as of
this 3rd day of July, 1998, by and between Peekskill Financial  Corporation (the
"Holding Company"), and Scott Nogles (the "Employee").

         WHEREAS, the Employee is currently serving as Vice President of Finance
of the Holding  Company and Vice  President of Finance of the Holding  Company's
wholly-owned subsidiary, First Federal Savings Bank (the "Bank"); and

         WHEREAS,  the board of directors of the Holding  Company (the "Board of
Directors")  recognizes  that, as is the case with  publicly  held  corporations
generally,  the possibility of a change in control of the Holding Company and/or
the Bank may exist and that such possibility,  and the uncertainty and questions
which it may raise among management,  may result in the departure or distraction
of key management  personnel to the detriment of the Bank,  the Holding  Company
and their respective stockholders; and

         WHEREAS, the Board of Directors believes it is in the best interests of
the Holding  Company to enter into this  Agreement with the Employee in order to
assure  continuity  of  management  of the  Holding  Company and the Bank and to
reinforce and encourage the continued  attention and  dedication of the Employee
to the Employee's assigned duties without distraction in the face of potentially
disruptive  circumstances arising from the possibility of a change in control of
the Holding  Company or the Bank,  although no such change is now  contemplated;
and

         WHEREAS,  the  Board of  Directors  has  approved  and  authorized  the
execution  of this  Agreement  with the  Employee  to take  effect  as stated in
Section 2 hereof;

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:

         1.  Definitions.

                  (a) The  term  "Change  in  Control"  means  (1) an event of a
nature  that (i)  results  in a change  in  control  of the Bank or the  Holding
Company  within the meaning of the Home  Owners'  Loan Act of 1933 and 12 C.F.R.
Part 574 as in  effect  on the date  hereof;  or (ii)  would be  required  to be
reported in  response to Item 1 of the current  report on Form 8-K, as in effect
on the date hereof,  pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934  (the  "Exchange  Act");  (2)  any  person  (as the  term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange  Act),  directly or  indirectly  of
securities of the Bank or the Holding  Company  representing  20% or more of the
Bank's or the Holding Company's outstanding securities;  (3) individuals who are
members of the board of directors of the Bank or the Holding Company on the date
hereof (the  "Incumbent  Board")  cease for any reason to  constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least  three-quarters of
the directors  comprising the Incumbent  Board, or whose nomination for election
by the Holding Company's  stockholders was approved by the nominating  committee
serving under an Incumbent

                                        1

<PAGE>



Board,  shall  be  considered  a  member  of  the  Incumbent  Board;  or  (4)  a
reorganization,  merger, consolidation,  sale of all or substantially all of the
assets of the Bank or the Holding Company or a similar  transaction in which the
Bank or the Holding  Company is not the  resulting  entity.  The term "Change in
Control" shall not include an  acquisition of securities by an employee  benefit
plan of the Bank or the Holding  Company.  In the application of 12 C.F.R.  Part
574 to a determination of a Change in Control,  determinations to be made by the
OTS or its  Director  under  such  regulations  shall  be made by the  Board  of
Directors.

                  (b) The term "Commencement Date" means July 3, 1998.

                  (c) The term "Date of  Termination"  means the  earlier of (1)
the date upon which the Holding Company or the Bank gives notice to the Employee
of the termination of the Employee's  employment with the Holding Company or the
Bank or (2) the date upon which the  Employee  ceases to serve as an employee of
either the Holding Company or the Bank.

                  (d) The term "Involuntarily  Termination" means termination of
the employment of Employee by either the Holding Company or the Bank without the
Employee's express written consent,  and shall include a material  diminution of
or interference  with the Employee's  duties,  responsibilities  and benefits as
Vice  President  of Finance of the Holding  Company  and of the Bank,  including
(without limitation) any of the following actions unless consented to in writing
by the Employee:  (1) a change in the  principal  workplace of the Employee to a
location outside of a 30 mile radius from the Bank's  headquarters  office as of
the date  hereof;  (2) a  material  demotion  of the  Employee;  (3) a  material
reduction in the number or seniority of other Holding Company and Bank personnel
reporting to the Employee or a material  reduction in the frequency  with which,
or in the nature of the matters with  respect to which,  such  personnel  are to
report to the  Employee,  other than as part of a Bank- or Holding  Company-wide
reduction in staff;  (4) a material  adverse  change in the  Employee's  salary,
perquisites, benefits, contingent benefits or vacation, other than as part of an
overall  program applied  uniformly and with equitable  effect to all members of
the senior  management  of the Bank or the Holding  Company;  and (5) a material
permanent  increase  in the  required  hours  of  work  or the  workload  of the
Employee.  The term "Involuntary  Termination" does not include  Termination for
Cause or  termination  of employment  due to  retirement,  death,  disability or
suspension  or temporary  or permanent  prohibition  from  participation  in the
conduct of the Bank's affairs under Section 8 of the Federal  Deposit  Insurance
Act ("FDIA") and shall not include a material diminution of or interference with
the Employee's duties, responsibilities and benefits unless the Employee submits
to the  Holding  Company  within  120 days  after the  occurrence  of such event
written notice of his determination  that such material  diminution  constitutes
Involuntary Termination.

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


                                        2

<PAGE>



         2. Term.  The term of this  Agreement  shall be a period of three years
commencing on the Commencement Date, subject to earlier  termination as provided
herein.  Beginning on the day following the  Commencement  Date, and on each day
thereafter, the term of this Agreement shall be extended for a period of one day
in addition to the  then-remaining  term,  provided that the Holding Company has
not given  notice to the  Employee in writing at least 90 days prior to such day
that the term of this  Agreement  shall not be extended  further;  and  provided
further  that the term  this  Agreement  shall  expire  on the date on which the
Employee  reaches age 65.  Reference  herein to the term of this Agreement shall
refer to both such initial term and such extended terms.

         3. Employment. The Employee is employed as Vice President of Finance of
the  Holding  Company  and of the  Bank.  As such,  the  Employee  shall  render
administrative and management  services as are customarily  performed by persons
situated in similar executive  capacities,  and shall have such other powers and
duties  of an  officer  of the  Holding  Company  or the  Bank as the  Board  of
Directors  or the board of directors of the Bank,  respectively,  may  prescribe
from time to time.

         4.  Compensation.

                  (a) Salary.  The Holding  Company  agrees to pay the  Employee
during the term of this Agreement the salary payable by the Bank  established by
the Bank's board of  directors,  which shall be at least the  Employee's  salary
payable  by the  Bank in  effect  as of the  Commencement  Date,  and  shall  be
increased in accordance with salary increases approved by the Board of Directors
and such additional  salary,  if any, as the Board of Directors may determine to
pay the Employee from time to time.  Adjustments in salary or other compensation
shall not limit or reduce any other obligation of the Holding Company under this
Agreement.  The Employee's salary in effect from time to time during the term of
this Agreement  shall not thereafter be reduced other than as part of an overall
program applied uniformly and with equitable effect on all members of the senior
management of the Bank and the Holding Company. To the extent that the Bank pays
salary and  provides  other  compensation  to the  Employee  provided for in any
section of this Agreement, to the Employee, the Holding Company's obligations to
pay salary and provide other  compensation  under this Agreement shall be deemed
satisfied.

                  (b)  Benefits.   While  employed  under  this  Agreement,  the
Employee shall receive the same health  insurance  benefits as the Bank provides
generally from time to time during the term of this Agreement ("Health Insurance
Benefits").

         5.  Termination of Employment.

                  (a)  Involuntary  Termination.  The  Board  of  Directors  may
terminate  the  Employee's  employment at any time,  but,  except in the case of
Termination  for  Cause,  termination  of  employment  shall not  prejudice  the
Employee's right to compensation or other benefits under this Agreement.  In the
event of  Involuntary  Termination  other than in  connection  with or within 12
months after a Change in Control and subject to the provisions of Sections 6 and
7 of this  Agreement,  (1) the Holding  Company shall pay to the Employee during
the remaining term of this Agreement the Employee's salary at the rate in effect
immediately  prior to the Date of Termination,  in such manner and at such times
as such salary would have been payable to the Employee under

                                        3

<PAGE>



Section 4 of this Agreement,  if the Employee had continued to be employed,  and
(2) the Holding  Company shall provide to the Employee during the remaining term
of this  Agreement  benefits  substantially  the  same as the  Health  Insurance
Benefits as of the Date of  Termination  on terms as favorable to him as applied
as of the Date of  Termination.  The total of salary  payments  to the  Employee
under this  Section  7(a) shall not exceed  three times his average  annual cash
compensation  from the  Holding  Company  and the Bank over the five most recent
taxable  years (or if employed by the Bank or the Holding  Company for a shorter
period, over such period of his employment).

                  (b)  Termination  for Cause.  In the event of Termination  for
Cause, the Holding Company shall pay the Employee the Employee's  salary through
the  Date of  Termination,  and  the  Holding  Company  shall  have  no  further
obligation to the Employee under this Agreement.

                  (c) Voluntary  Termination.  The Employee's  employment may be
voluntarily  terminated by the Employee at any time upon 90 days' written notice
to the Board of Directors  or such shorter  period as may be agreed upon between
the  Employee  and the  Board  of  Directors.  In the  event  of such  voluntary
termination,  the Holding  Company  shall be obligated to continue to pay to the
Employee  the   Employee's   salary  and  benefits  only  through  the  Date  of
Termination,  at the time such  payments are due, and the Holding  Company shall
have no further obligation to the Employee under this Agreement.

                  (d) Change in Control. In the event of Involuntary Termination
in connection with or within 12 months after a Change in Control which occurs at
any time while the  Employee  is  employed  under this  Agreement,  the  Holding
Company  shall,  subject to Sections 6 and 7 of this  Agreement,  (1) pay to the
Employee  in a lump  sum in cash  within  25  business  days  after  the Date of
Termination an amount equal to 299% of the  Employee's  "base amount" as defined
in Section 280G of the Internal  Revenue Code of 1986,  as amended (the "Code");
and (2) provide to the Employee during the remaining term of this Agreement such
health benefits as are substantially  the same as the Health Insurance  Benefits
as of the Date of Termination on terms as favorable to him as applied as of Date
of Termination.

                  (e)  Death;  Disability.  In the  event  of the  death  of the
Employee while  employed  under this  Agreement and prior to any  termination of
employment,  the  Employee's  estate,  or such person as the  Employee  may have
previously designated in writing,  shall be entitled to receive from the Holding
Company the salary of the Employee through the last day of the calendar month in
which the Employee died. If the Employee becomes disabled as defined in the then
current  disability plan, if any, of the Holding Company (or of the Bank, if, in
the  absence  of the  such a plan of the  Holding  Company,  the Bank has such a
plan),  or if the  Employee is  otherwise  unable to serve as Vice  President of
Finance of the Holding  Company and the Bank,  the Employee shall be entitled to
receive  group and other  disability  income  benefits of the type, if any, then
provided for executive officers. However, the Holding Company shall be obligated
only to pay the  Employee's  salary  pursuant to Section 4(a) of this  Agreement
only to the extent the  Employee's  salary,  in the absence of such  disability,
would exceed (on an after tax basis) the  disability  income  benefits  received
pursuant to this  paragraph.  In addition,  the Holding  Company  shall have the
right, upon resolution of the Board of Directors,  to discontinue  paying salary
pursuant to Section 4(a) beginning six months following a determination that the
Employee qualifies for the foregoing disability income benefits.

                                        4

<PAGE>



                  (f) Temporary  Suspension or  Prohibition.  If the Employee is
suspended and/or temporarily prohibited from participating in the conduct of the
Bank's  affairs by a notice served under Section  8(e)(3) or (g)(1) of the FDIA,
12 U.S.C. ss.  1818(e)(3) and (g)(1),  the Holding  Company's  obligations under
this  Agreement  shall be suspended as of the date of service,  unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the Holding
Company  may  in its  discretion  (i)  pay  the  Employee  all  or  part  of the
compensation  withheld while its obligations under this Agreement were suspended
and  (ii)  reinstate  in  whole or in part  any of its  obligations  which  were
suspended.

                  (g) Permanent  Suspension or  Prohibition.  If the Employee is
removed and/or  permanently  prohibited from participating in the conduct of the
Bank's  affairs by an order issued under Section  8(e)(4) or (g)(1) of the FDIA,
12 U.S.C.  ss.  1818(e)(4) and (g)(1),  all  obligations of the Holding  Company
under this Agreement shall terminate as of the effective date of the order,  but
vested rights of the contracting parties shall not be affected.

                  (h) Default of the Bank. If the Bank is in default (as defined
in Section  3(x)(1) of the FDIA),  all  obligations  under this Agreement  shall
terminate  as of the date of default,  but this  provision  shall not affect any
vested rights of the contracting parties.

         6.  Certain Reductions of Payments.

                  (a) Notwithstanding any other provision of this Agreement,  if
the value and amounts of benefits under this Agreement,  together with any other
amounts and the value of benefits  received or to be received by the Employee in
connection  with a Change in Control would cause any amount to be  nondeductible
by the Bank or the Holding  Company for federal income tax purposes  pursuant to
Section 280G of the Code,  then amounts and benefits under this Agreement  shall
be  reduced  (not less than  zero) to the  extent  necessary  so as to  maximize
amounts and the value of benefits to the Employee  without causing any amount to
become nondeductible by the Bank or the Holding Company pursuant to or by reason
of such Section  280G.  The Employee  shall  determine  the  allocation  of such
reduction among payments and benefits to the Employee.

                  (b)  Any  payments  made  to the  Employee  pursuant  to  this
Agreement,  or otherwise,  are subject to and conditioned  upon their compliance
with 12 U.S.C. 1828(k) and any regulations promulgated thereunder.

7.       Mitigation.

         (a) Reduction of Salary Payments.  The Holding Company's obligations to
pay salary under Section 5(a) of this Agreement shall be reduced by the amounts,
if any, of cash income (as defined  below) earned by the Employee from providing
services  during the  remaining  term of this  Agreement.  For  purposes of this
Section 7, the term "cash income" shall include the amounts of salary, wages and
fees paid to the  Employee  in cash,  but shall not include  bonuses,  incentive
compensation,  shares of stock, stock, stock options,  stock appreciation rights
or other benefits or earned income not paid to the Employee in cash.


                                        5

<PAGE>



         (b) Reduction of Health Insurance  Benefits.  The Bank's obligations to
provide  benefits under Section 5(a) of this  Agreement  shall be reduced to the
extent,  if any, of substantially  the same benefits provided to the Employee on
no less favorable  terms by another  employer  during the remaining term of this
Agreement.

         (c)  Reporting by Employee.  The Employee  agrees that, in the event he
becomes  entitled to payment of salary and to benefits  pursuant to Section 5(a)
of this Agreement during the remaining term of this Agreement, he shall promptly
inform the Holding Company of the nature and amounts of cash income and benefits
of the same or similar  nature which he earns or receives from another  employer
during the remaining term of this Agreement and shall provide such documentation
concerning  such cash income and benefits as the Holding  Company may reasonably
request  from time to time.  Changes in such cash income and  benefits  shall be
reported within 10 days following each change.

         8. Attorneys Fees. In the event the Holding Company exercises its right
of  Termination  for  Cause,  but  it is  determined  by a  court  of  competent
jurisdiction  or by an arbitrator  pursuant to Section 16 of this Agreement that
cause as  contemplated  by Section 1(e) of this Agreement did not exist for such
termination, or if in any event it is determined by any such court or arbitrator
that the Holding  Company has failed to make timely  payment of any amounts owed
to the  Employee  under  this  Agreement,  the  Employee  shall be  entitled  to
reimbursement for all reasonable costs,  including  attorneys' fees, incurred in
challenging  such  termination or collecting  such amounts.  Such  reimbursement
shall be in addition to all rights to which the Employee is  otherwise  entitled
under this Agreement.

         9.  Confidential Information; Loyalty; Noncompetition

                  (a) During the term of the Employee's employment hereunder and
thereafter,  the  Employee  shall not except as may be  required  to perform his
duties  hereunder  or as  required by law,  disclose  to others or use,  whether
directly or indirectly,  any Confidential Information;  provided,  however, that
this  prohibition  shall not apply to  requests  for  information  from  federal
banking  regulators.  "Confidential  Information"  means  information  about the
clients and customers of the Bank and the Holding Company which is not available
to the general  public and was or shall be learned by the Employee in the course
of his  employment  by the  Bank  and the  Holding  Company,  including  without
limitation  any  data,  formulae,  information,   proprietary  knowledge,  trade
secrets, and credit reports and analyses owned, developed and used in the course
of the  business  of the  Bank or the  Holding  Company,  including  client  and
customer lists and  information  related  thereto;  and all papers,  records and
other   documents  (and  all  copies  thereof)   containing  such   Confidential
Information.  The Employee  acknowledges that such  Confidential  Information is
specialized,  unique in nature  and of great  value to the Bank and the  Holding
Company.  The Employee agrees that upon the  termination of his employment,  the
Employee will promptly  deliver to the Bank or the Holding Company all documents
(and all copies thereof) containing any Confidential Information.

                  (b) The Employee shall devote his full time to the performance
of his employment under this Agreement; provided, however, that the Employee may
serve, without compensation, as a director of charitable, community and industry
organizations and continue to serve, with

                                        6

<PAGE>



compensation,  as a  director  of  the  business  corporations  of  which  he is
currently  a director  to the  extent  such  directorships  do not  inhibit  the
performance  of his duties  hereunder or conflict  with the business of the Bank
and the Holding Company.  While employed by the Bank or the Holding Company, the
Employee  shall not engage in any business or activity  contrary to the business
affairs or interests of the Bank or the Holding Company.

                  (c)  Upon  the  expiration  of  the  term  of  the  Employee's
employment  hereunder  or in  the  event  the  Employee's  employment  hereunder
terminates prior thereto for any reason whatsoever,  the Employee shall not, for
a period of one year after the occurrence of such event, for himself,  or as the
agent of, on behalf of, or in conjunction with, any person or entity, solicit or
attempt to solicit, whether directly or indirectly: (i) any employee of the Bank
or the Holding  Company or any subsidiary  thereof to terminate such  employee's
employment  relationship  with the Bank or the Holding Company or any subsidiary
thereof;  or (ii) any  savings  and loan,  banking or either  business  from any
person or entity that is or was a client,  employee,  or customer of the Bank or
the Holding Company or any subsidiary thereof and had dealt with the Employee or
any other employee of the Bank or the Holding Company or any subsidiary  thereof
under the supervision of the Employee.

                  (d)  In  the  event  that  the  Employee  voluntarily  resigns
pursuant to Section 7(c) of this Agreement,  the Employee shall not for a period
of one year from the  effective  date of such  resignation,  or in the event the
Employee's employment hereunder is terminated for cause, the Employee shall not,
for a period of one year from the date of  termination,  directly or indirectly,
own, manage,  operate or control,  or participate in the ownership,  management,
operation or control of, or be employed by or connected in any manner with,  any
financial  institution  having an office located within five miles of any office
of the Bank as of the date of termination of employment.

                  (e) The  provisions  of this  Section 9 shall not  prevent the
Employee from  purchasing,  solely for investment,  not more five percent of any
financial  institution's  stock or other  securities  which  are  traded  on any
national  or  regional  securities  exchange  or  are  actively  traded  in  the
over-the-counter  market and  registered  under Section 12(g) of the  Securities
Exchange Act of 1934.

                  (f)  The  provisions  of this  Section  9  shall  survive  the
termination of the Employee's  employment hereunder whether by expiration of the
term hereof or otherwise.

         10.  No Assignments.

                  (a) This Agreement is personal to each of the parties  hereto,
and  neither  party may  assign or  delegate  any of its  rights or  obligations
hereunder  without  first  obtaining  the  written  consent of the other  party;
provided,  however,  that the Holding  Company  shall  require any  successor or
assign  (whether  direct or indirect,  by  purchase,  merger,  consolidation  or
otherwise)  to all or  substantially  all of the business  and/or  assets of the
Holding  Company or the Bank, by an  assumption  agreement in form and substance
satisfactory  to the  Employee,  to  expressly  assume and agree to perform this
Agreement  in the same manner and to the same  extent  that the Holding  Company
would be required to perform it if no such  succession or  assignment  had taken
place.  Failure of the Holding  Company to obtain such an  assumption  agreement
prior to the  effectiveness  of any such  succession  or  assignment  shall be a
breach of this Agreement and shall entitle the Employee to compensation

                                        7

<PAGE>



from the  Holding  Company  in the  same  amount  and on the  same  terms as the
compensation  pursuant to Section 5(d) hereof.  For purposes of implementing the
provisions of this Section 10(a), the date on which any such succession  becomes
effective shall be deemed the Date of Termination.

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

         11. Notice.  For the purposes of this Agreement,  notices and all other
communications  provided for in the  Agreement  shall be in writing and shall be
deemed to have been duly given when  personally  delivered  or sent by certified
mail, return receipt requested,  postage prepaid,  to the Holding Company at its
principal  office, to the attention of the Board of Directors with a copy to the
Secretary of the Holding Company, or, if to the Employee,  to such home or other
address as the  Employee  has most  recently  provided in writing to the Holding
Company or the Bank.

         12.  Amendments.  No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.

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

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

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

         16.  Arbitration.  Any  dispute  or  controversy  arising  under  or in
connection  with this Agreement  shall be settled  exclusively by arbitration in
accordance  with  the  rules of the  American  Arbitration  Association  then in
effect.  Judgment may be entered on the  arbitrator's  award in any court having
jurisdiction.


                                        8

<PAGE>



         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
day and year first above written.

         THIS AGREEMENT  CONTAINS A BINDING  ARBITRATION  PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.

Attest:                                       Peekskill Financial Corporation

---------------------                         ---------------------------
Secretary
                                              By:
                                              Its:


                                              Employee

                                              ----------------------------
                                              Scott Nogles
















                                       9