UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q



(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT 1934. For the quarterly period ended June 30, 1999
                                         --------------
                                       or

[ ] TRANSITION  REPORT  PURSUANT TO  SECTION 13 OR 15(d) OF THE  SECURITIES  AND
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
--------------------------------------------------------------------------------
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code:       (518)842-7200
                                                    -----------------------

     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
filing requirements for the past 90 days. [X] Yes [ ] No

     Indicate the number of shares  outstanding of each of the issuer's class of
common stock, as of the latest practicable date.


           Class                                Outstanding at August 13, 1999
-----------------------------                -----------------------------------
Common Stock, $.01 Par Value                              5,155,060

<PAGE>


AMBANC HOLDING CO., INC. AND SUBSIDIARIES
FORM 10-Q
June 30, 1999



                                      Table of Contents


Part I.   FINANCIAL INFORMATION

Item 1.        Consolidated Interim Financial Statements (unaudited):

               Consolidated Interim Statements of Financial Condition at
               June  30, 1999 and December 31, 1998........................... 3

               Consolidated Interim Statements of Income for the three months
               and six months ended June  30, 1999 and 1998................... 4

               Consolidated Interim Statements of Cash Flows for the six
               months ended June  30, 1999 and 1998........................... 5

               Notes to Unaudited Interim Consolidated Financial Statements... 7

Item 2.        Management's Discussion and Analysis of Financial Condition
               and Results of Operations.......................................9

Item 3.        Quantitative and Qualitative Disclosures About Market Risk.....26

Part II.   OTHER INFORMATION..................................................26

Item 6.    Exhibits and Reports on Form 8-K...................................26

SIGNATURES....................................................................27

EXHIBITS INDEX................................................................28


<PAGE>
Part I.   Financial Information
Item 1.  Financial Statements
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Interim Statements of Financial Condition  (unaudited)
(dollars in thousands, except per share amounts)           June 30,    Dec. 31,
                                                             1999        1998
                                                          ---------    ---------
                               Assets
Cash and due from banks ...............................   $  12,825    $  9,225
Interest-bearing deposits .............................       1,114       3,390
Federal funds sold ....................................       4,900      30,200
                                                          ---------    ---------
     Cash and cash equivalents ........................      18,839      42,815
                                                          ---------    ---------
Securities available for sale, at fair value ..........     235,610     244,241
Federal Home Loan Bank of New York stock, at cost .....       7,215       7,215
Loans receivable, net of unamortized fees and costs....     434,750     425,824
     Allowance for loan losses ........................      (5,352)     (4,891)
                                                          ---------    ---------
     Loans receivable, net ............................     429,398     420,933
                                                          ---------    ---------
Accrued interest receivable ...........................       4,316       4,115
Premises and equipment, net ...........................       4,879       4,537
Real estate owned and repossessed assets ..............         210         399
Goodwill ..............................................       7,657       7,923
Other assets ..........................................       5,605       3,294
                                                          ---------    ---------
     Total assets .....................................   $ 713,729    $735,472
                                                          =========    =========

                Liabilities and Shareholders' Equity
Liabilities:
   Deposits ...........................................   $ 460,166    $461,413
   Federal Home Loan Bank term advances ...............      21,188      21,410
   Securities sold under agreements to repurchase .....     138,000     152,400
   Advances from borrowers for taxes and insurance ....       3,522       2,436
   Accrued interest payable ...........................       1,292       1,426
   Accrued expenses and other liabilities .............       5,886       4,494
   Due to brokers .....................................       1,000       6,000
                                                          ---------    ---------
     Total liabilities ................................     631,054     649,579
                                                          ---------    ---------
Shareholders' equity:
   Preferred stock $.01 par value. Authorized 5,000,000
    shares; none outstanding at June 30, 1999 and
    December 31, 1998 .................................         --          --
   Common stock $.01 par value. Authorized 15,000,000
    shares; 5,432,371  shares issued  at  June 30,
    1999 and December 31, 1998 ........................          54          54
   Additional paid in capital .........................      63,239      63,019
   Retained earnings,substantially restricted .........      27,666      26,356
   Treasury Stock, at cost (105,811 shares at June 30,
      1999 and 23,908 shares at December 31, 1998) ....      (1,672)       (329)
   Unallocated common stock held by ESOP ..............      (2,583)     (2,818)
   Unearned RRP shares issued .........................        (664)       (759)
   Accumulated other comprehensive (loss) income ......      (3,365)        370
                                                          ---------    ---------
     Total shareholders' equity .......................      82,675      85,893
                                                          ---------    ---------
     Total liabilities and shareholders' equity .......   $ 713,729    $735,472
                                                          =========    =========

See accompanying notes to unaudited interim consolidated financial statements.

                                       3
<PAGE>
<TABLE>
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Interim Statements of Income (unaudited)
(dollars in thousands, except per share amounts)
<CAPTION>
                                                                Six Months            Three months
                                                               Ended June 30,         Ended June 30,
                                                               1999      1998         1999      1998
                                                              ------    ------       ------    ------
Interest and dividend income:
<S>                                                           <C>      <C>         <C>         <C>
   Loans ................................................     15,620   $ 11,152    $  7,839    $  5,646
   Securities available for sale ........................      7,658      6,733       3,866       3,328
   Federal Funds sold and interest-bearing deposits......        402         90         130          55
   Federal Home Loan Bank stock .........................        241        129         122          66
                                                            --------   --------    --------    --------
     Total interest and dividend income..................     23,921     18,104      11,957       9,095
                                                            --------   --------    --------    --------
Interest Expense:
   Deposits .............................................      8,402      6,804       4,190       3,338
   Borrowings ...........................................      4,620      3,590       2,261       1,909
                                                            --------   --------    --------    --------
     Total interest expense .............................     13,022     10,394       6,451       5,247
                                                            --------   --------    --------    --------
     Net interest income ................................     10,899      7,710       5,506       3,848
Provision for loan losses ...............................        495        450         240         225
                                                            --------   --------    --------    --------
     Net interest income after provision
       for loan losses ..................................     10,404      7,260       5,266       3,623
                                                            --------   --------    --------    --------
Non-interest income:
   Service charges on deposit accounts ..................        683        464         350         252
   Net losses on securities transactions ................         --       (105)         --        (112)
   Other ................................................        179        174          88          68
                                                            --------   --------    --------    --------
     Total non-interest income ..........................        862        533         438         208
                                                            --------   --------    --------    --------
Non-interest expense:
   Salaries, wages and benefits .........................      3,728      3,155       1,904       1,570
   Non-recurring termination benefits ...................       --          399          --         399
   Occupancy and equipment ..............................      1,184        811         555         398
   Data processing ......................................        626        613         391         304
   Correspondent bank processing fees ...................        109         67          55          37
   Real estate owned and repossessed assets expenses, net         20         21          (6)         13
   Professional fees ....................................        176        360          88         222
   Amortization of goodwill .............................        266         --         133          --
   Other ................................................      1,473      1,390         716         719
                                                            --------   --------    --------    --------
     Total non-interest expenses ........................      7,582      6,816       3,836       3,662
                                                            --------   --------    --------    --------
Income  before taxes ....................................      3,684        977       1,868         169
Income tax expense ......................................      1,557        434         776          72
                                                            --------   --------    --------    --------
     Net income .........................................      2,127   $    543    $  1,092    $     97
                                                            --------   --------    --------    --------

Basic earnings per share                                    $   0.43   $   0.14    $   0.22    $   0.03
Diluted earnings per share                                  $   0.42   $   0.14    $   0.22    $   0.03
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.

                                       4
<PAGE>
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Interim Statements of Cash Flows (unaudited)
(dollars in thousands)                                          Six months
                                                               ended June 30,
                                                              1999        1998
                                                           --------    --------
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
     Net income                                            $2,127         $543
     Adjustments to reconcile net income  to net
     cash provided by operating activities:
       Depreciation and amortization                          711          353
       Provision for loan losses                              495          450
       Provision for losses and writedowns on
         real estate owned and repossessed assets               3            4
       Net (gain) loss on sale of real estate
         owned and repossessed assets                          (6)           4
       ESOP compensation expense                              375          446
       RRP expense                                            210          226
       Net loss on sale securities transactions             ----           105
       Net amortization of premium on securities              551          568
       Increase in accrued interest receivable
         and other assets                                      (3)        (760)
       Increase in accrued interest payable, accrued
         expenses and other liabilities                     1,258          558
                                                       ------------  ----------
            Net cash provided by
                 operating activities                       5,721        2,497
                                                       ------------  ----------
  Cash flows from investing activities:
       Proceeds from sales and redemptions of
         securities available for sale                     10,500       94,126
       Purchases of securities available for sale         (53,140)    (138,635)
       Proceeds from principal paydowns and
          maturities of securities available for sale      39,494       26,687
       Purchase of FHLB stock                               ----        (1,149)
       Net increase in loans made to customers             (9,023)     (40,656)
       Purchases of premises and equipment                   (782)         (92)
       Proceeds from sale of real estate owned
         and repossessed assets                               254          207
                                                       ------------  ----------
           Net cash used in investing activities         (12,697)     (59,512)
                                                       ------------  ----------
                                                                    (Continued)
                                       5
<PAGE>
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued (unaudited)
(dollars in thousands)                                          Six months
                                                               ended June 30,
                                                              1999        1998
                                                           --------    --------
  Cash flows from financing activities:
      Net decrease in deposits                            (1,247)      (11,601)
      Net proceeds in FHLB overnight advances              ----         26,500
      Repayment of FHLB term advances1                      (222)        ----
      Proceeds from repurchase agreements                  ----         44,320
      Repayments of repurchase agreements                (14,400)       (2,600)
      Increase in advances from borrowers
         for taxes and insurance                           1,086           598
      Purchase of Treasury Stock                          (1,557)       (3,976)
      Excercise of stock options                             139            56
      Dividends paid                                        (799)         (502)
                                                       ------------  ----------
      Net cash (used in) provided by
        financing activities                             (17,000)       52,795
                                                       ------------  ----------

  Net decrease in cash and cash equivalents              (23,976)       (4,220)
  Cash and cash equivalents at beginning of period        42,815        10,259
                                                       ------------  ----------
  Cash and cash equivalents at end of period             $18,839        $6,039
                                                       ============  ==========


Supplemental disclosures of cash flow information -
  cash paid during the year for:

  Interest                                               $13,157       $10,432
                                                       ============  ==========

  Income Taxes                                            $1,167          $838
                                                       ============  ==========

Noncash investing and financing activities:
  Net transfer of loans to real estate owned and
   repossessed assets                                        $62          $135
                                                       ============  ==========

  Increase in amounts due to brokers from
   purchases of securities available for sale             $1,000        ----
                                                       ============  ==========

  Adjustment of securities available for sale to
   fair value, net of tax                                ($3,735)         $299
                                                       ============  ==========

  Tax benefit related to vested RRP shares                   $21           $76
                                                       ============  ==========


See accompanying notes to unaudited interim consolidated financial statements.


                                       6
<PAGE>
          NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS


(1) In  management's  opinion,  the financial  information,  which is unaudited,
reflects all adjustments,  consisting  solely of normal  recurring  adjustments,
necessary for a fair presentation of the financial information as of and for the
three month and six month  periods  ended June 30,  1999 and 1998 in  conformity
with generally accepted  accounting  principles.  These  consolidated  financial
statements  should be read in conjunction  with Ambanc Holding Co., Inc.'s ("the
Company"  herein) 1998 Annual Report on Form 10-K. The results of operations for
the interim periods are not necessarily  indicative of the results of operations
to be expected for the full fiscal year ended December 31, 1999.

(2)  Amounts in the prior periods' consolidated interim financial statements are
reclassified whenever necessary to conform to current period presentations.

(3)  Earnings per Share

     Basic  earnings per share  excludes  dilution and is calculated by dividing
net income  available to common  shareholders by the weighted  average number of
shares outstanding during the period. Unallocated ESOP shares are not considered
outstanding for purposes of computing  earnings per share.  Shares of restricted
stock are considered  outstanding  common shares and included in the computation
of basic EPS when they become fully  vested.  Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
(such as the  Company's  stock  options and unvested RRP shares) were  exercised
into common stock or resulted in the issuance of common stock.

     The  calculation  of basic  earnings  per  share  (basic  EPS) and  diluted
earnings per share (diluted EPS) is as follows:

                                                          Weighted
                                             Net           Average     Per Share
                                           Income          Shares       Amount
                                        ------------     ----------    ---------
For the six months ended June 30, 1999

Basic EPS
Net Income available to common shareholders  $2,127       5,001,220        $0.43
                                             ======                        =====
Effect of Dilutive Securities:
Stock Options                                                39,978
Unvested RRP shares                                          18,203
                                                          ---------
Diluted EPS
Net Income available to common shareholders
  plus assumed conversions                   $2,127       5,059,401        $0.42
                                             ======       =========        =====
For the six months ended June 30, 1998

Basic EPS
Net Income available to common shareholders    $543       3,793,648        $0.14
                                             ======                        =====
Effect of Dilutive Securities:
Stock Options                                                66,709
Unvested RRP shares                                          34,351
                                                          ---------
Diluted EPS
Net Income available to common shareholders
  plus assumed conversions                     $543       3,894,708        $0.14
                                             ======       =========        =====

                                       7
<PAGE>
For the quarter ended June 30, 1999

Basic EPS
Net Income available to common shareholders  $1,092       4,993,494        $0.22
                                             ======                        =====
Effect of Dilutive Securities:
Stock Options                                                48,352
Unvested RRP shares                                          16,204
                                                          ---------
Diluted EPS
Net Income available to common shareholders
  plus assumed conversions                   $1,092       5,058,050        $0.22
                                             ======       =========        =====
For the quarter ended June 30, 1998

Basic EPS
Net Income available to common shareholders    $ 97       3,759,045        $0.03
                                             ======                        =====
Effect of Dilutive Securities:
Stock Options                                                70,918
Unvested RRP shares                                          31,933
                                                          ---------
Diluted EPS
Net Income available to common shareholders
  plus assumed conversions                     $ 97       3,861,896        $0.03
                                             ======       =========        =====


(4)  Comprehensive Income

     The Company has adopted  SFAS No. 130,  "Reporting  Comprehensive  Income,"
which  establishes  standards  for the  reporting  and display of  comprehensive
income  and  its  components  in  financial  statements.   Comprehensive  income
represents  the sum of net  income  and items of "other  comprehensive  income,"
which are reported  directly in  shareholders'  equity,  net of tax, such as the
change in the net  unrealized  gain or loss on  securities  available  for sale.
While SFAS No. 130 does not require a specific reporting format, it does require
that an enterprise display an amount representing total comprehensive income for
each  period  for which an income  statement  is  presented.  Accumulated  other
comprehensive  income,  which is included in shareholders'  equity,  net of tax,
represents the net unrealized gain or loss on securities available for sale.

     Comprehensive  income (loss) for the six-month  periods ended June 30, 1999
and 1998 was  ($1.6)  million  and $842  thousand,  respectively.  Comprehensive
income  (loss) for the  three-month  periods  June 30,  1999 and 1998 was ($2.1)
million and $491 thousand, respectively.










                                       8
<PAGE>
ITEM 2.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General


     Ambanc Holding Co., Inc.  ("Ambanc" or the "Company") is a savings and loan
holding  company.  Ambanc  was formed as a  Delaware  corporation  to act as the
holding company for the former Amsterdam  Savings Bank, FSB (now known as Mohawk
Community Bank) upon the completion of Amsterdam  Savings Bank's conversion from
the mutual to stock form on December 26, 1995 (the "Conversion").


     On November 16, 1998, the Company acquired AFSALA Bancorp,  Inc. ("AFSALA")
and its wholly owned subsidiary,  Amsterdam Federal Bank. Pursuant to the merger
agreement,  AFSALA  was merged  with and into  Ambanc  Holding  Co.,  Inc.,  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" (the "Bank"). See "Acquisition of AFSALA Bancorp, Inc."


     The  Bank's  results  of  operations  are  primarily  dependent  on its net
interest  income,  which is the  difference  between the  interest  and dividend
income earned on its assets,  primarily loans and  securities,  and the interest
expense on its  liabilities,  primarily  deposits and  borrowings.  Net interest
income  may be  affected  significantly  by  general  economic  and  competitive
conditions and policies of regulatory agencies,  particularly those with respect
to market  interest  rates.  The results of  operations  are also  significantly
influenced by the level of non-interest expenses,  such as employee salaries and
benefits,  other  income,  such  as fees on  deposit-related  services,  and the
provision for loan losses.


     The Bank has been,  and  intends to  continue  to be, a  community-oriented
financial  institution  offering a variety of financial  services.  Management's
strategy has been to try to achieve a high loan to asset ratio with  emphasis on
originating traditional one- to four-family residential mortgage and home equity
loans in its primary market area. At June 30, 1999, the loan receivable, net, to
assets ratio was 60.2%,  up from 57.2% at December 31,  1998.  In addition,  the
portfolio of loans secured by one- to four-family  residential mortgage and home
equity loans as a percentage  of the total loan  portfolio was 86.6% at June 30,
1999, up from 84.3% at December 31, 1998.



Forward-Looking Statements


     When used in this Form  10-Q,  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

                                       9
<PAGE>

regulatory  agencies,  fluctuations in interest  rates,  demand for loans in the
Company's  market area and  competition,  the  possibility  that  expected  cost
savings from the merger with AFSALA cannot be fully realized or realized  within
the expected time frame, the possibility  that costs or difficulties  related to
the intergration of the businesses of the Company and AFSALA may be greater than
expected and the possibility that revenues  following the merger with AFSALA may
be greater than  expected.  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 advice  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 disclaim 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.


Acquisition Of AFSALA Bancorp, Inc.

     On November 16, 1998, the Company  acquired  AFSALA  Bancorp,  Inc. 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 Ambanc Holding Co., Inc., 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 1,337,207 shares of common stock in the
merger. Of the 1,337,207 shares issued in the merger, 1,327,086 were issued from
the Company's  treasury stock and 10,121 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 154,206 shares of Ambanc common stock.

     The acquisition  was accounted for using purchase  accounting in accordance
with APB Opinion No. 16,  "Business  Combinations"  (APB No. 16). Under purchase
accounting,  the purchase price is allocated to the respective  assets  acquired
and liabilities assumed based on their estimated fair values. The acquisition of
AFSALA resulted in approximately  $8.0 million in excess of cost over net assets
acquired  ("goodwill").  Goodwill is being amortized to expense over a period of
fifteen  years using the  straight-line  method.  The results of  operations  of
AFSALA have been included in the Company's consolidated statement of income from
the date of acquisition.


Financial Condition

Comparison of Financial  Condition at June 30, 1999 and December 31, 1998. Total
assets  decreased  by $21.7  million or 3.0% to $713.7  million at June 30, 1999
from $735.5 million at December 31, 1998, primarily due to decreases in cash and
cash  equivalents  and  securities  available for sale of $24.0 million and $8.6
million,  respectively,  offset by increases in loans receivable,  net and other
assets of $8.5 million and $2.3 million, respectively.

                                       10
<PAGE>

     Cash  and  cash  equivalents  decreased  $24.0  million,  or 56.0% to $18.8
million at June 30, 1999 from $42.8  million at  December  31,  1998.  Likewise,
securities available for sale decreased $8.6 million, or 3.5%, to $235.6 million
at June 30, 1999 from $244.2  million at December 31, 1998  resulting  primarily
from the  maturities and calls of securities.  Loans  receivable,  net increased
$8.5 million from $420.9 million at December 31, 1998, to $429.4 million at June
30,  1999,  an increase of 2.0% due to  increased  loan  activity  primarily  in
residential mortgage and home equity loans. In addition,  other assets increased
$2.3 million,  or 70.2%,  to $5.6 million at June 30, 1999, due primarily to the
deferred tax consequences  related to the adjustment of securities available for
sale to fair value.

     Deposits decreased by $1.2 million,  or 0.3%, to $460.2 million at June 30,
1999 from  $461.4  million  at  December  31,  1998.  Likewise,  borrowed  funds
decreased $14.6 million, or 8.4%, to $159.2 million at June 30, 1999 from $173.8
million at December 31,  1998,  due to the  maturity of  repurchase  agreements.
Also,  due to brokers  decreased  $5.0 million to $1.0 million at June 30, 1999,
resulting  from  the  payment  of  amounts  due to  brokers  from  purchases  of
securities outstanding on December 31, 1998. However, accrued expenses and other
liabilities  increased $1.4 million, or 31.0%, to $5.9 million at June 30, 1999.
This increase was the result of a change in processing whereby teller drafts and
money orders are now drawn upon the Bank and ultimately  paid through the Bank's
Federal Reserve Bank correspondent  account and are included in accrued expenses
and  other   liabilities.   Previously,   these  items  were  drawn   against  a
correspondent bank account.

     Shareholders' equity decreased $3.2 million, or 3.7%, from $85.9 million at
December  31,  1998 to $82.7  million at June 30,  1999,  due  primarily  to the
decrease in net unrealized gain or loss on securities available for sale, net of
tax, of $3.7 million,  in addition to, the  purchases of treasury  stock and the
payment of cash dividends of $1.6 million and $800 thousand, respectively. These
decreases  were offset by net income of $2.1  million  for the six months  ended
June 30, 1999. Other significant items impacting shareholders' equity during the
first six  months of 1999  were the  release  of  23,419  ESOP  shares,  and the
continued amortization of the unearned RRP shares.



Comparison  of  Operating  Results for the Three  Months Ended June 30, 1999 and
1998.

     Net Income.  Net income for the three  months  ended June 30, 1999 was $1.1
million  compared to $97 thousand for the three months ended June 30, 1998.  Net
income for the three months ended June 30, 1999 increased  primarily as a result
of increased net interest income and non-interest  income,  offset in part by an
increase in non-interest  expenses and provision for loan losses.  As previously
noted, on November 16, 1998, the Company  acquired AFSALA Bancorp,  Inc. and its
wholly owned subsidiary,  Amsterdam Federal Bank. Many of the fluctuations noted
below,  including increases in average balances and certain income and expenses,
are the result of AFSALA's  operations being included in the 1999 period but not
in the 1998 period. These and other changes are discussed in more detail below.

                                       11
<PAGE>

     Net Interest Income. Net interest income increased $1.7 million,  or 43.1%,
to $5.5  million for the three  months ended June 30, 1999 from $3.8 million for
the three months ended June 30,  1998.  The increase in net interest  income was
primarily due to an increase of $188.8 million, or 37.2%, in the average balance
of earning assets  (primarily due to the acquisition of AFSALA),  in addition to
an increase in interest  rate spread from 2.28% for the three  months ended June
30,  1998 to 2.51%  for the  three  months  ended  June 30,  1999,  offset by an
increase  in the  average  balance  of  interest-bearing  liabilities  of $163.4
million (primarily due to the acquisition of AFSALA), or 38.2%.

     Earning assets primarily consist of loans receivable,  securities available
for sale,  federal  funds  sold,  FHLB of New York stock,  and  interest-bearing
deposits.  Interest-bearing  liabilities  primarily consist of  interest-bearing
deposits, FHLB advances and securities repurchase agreements.

     The interest  rate  spread,  which is the  difference  between the yield on
average  earning  assets and the cost of average  interest-bearing  liabilities,
increased  to 2.51% for the three  months ended June 30, 1999 from 2.28% for the
three months ended June 30,  1998.  The increase in the interest  rate spread is
primarily  the result of the  decrease in the average  cost of  interest-bearing
liabilities  being  greater  than the  decrease in the average  yield on earning
assets.

     Interest and Dividend  Income.  Interest and dividend  income  increased by
approximately  $2.9  million,  or 31.5%,  to $12.0  million for the three months
ended June 30, 1999 from $9.1  million for the three months ended June 30, 1998.
The increase was largely the result of an increase of $188.8 million,  or 37.2%,
in the average  balance of earning assets to $695.9 million for the three months
ended June 30,  1999,  as compared to $507.1  million for the three months ended
June 30, 1998. The increase in the average  balance of earning assets  consisted
primarily  of  increases in the average  balance of loans  receivable  of $135.6
million,  or 46.2%,  securities  available for sale of $43.9 million,  or 21.4%,
FHLB of New York stock of $3.7  million,  or 103.4 %, and federal funds sold and
interest-bearing  deposits  of  $5.6  million.  Offsetting  the  effects  of the
increase in the average  balance of earning assets was a 30 basis point decrease
in the average yield on total earning  assets.  The yield on the average balance
of earning  assets was 6.89% and 7.19% for the three  months ended June 30, 1999
and 1998, respectively.

     Interest  and fees on loans  increased  $2.2  million,  or  38.8%,  to $7.8
million for the three months ended June 30, 1999.  This  increase was  primarily
the result of an increase in the average  balance of loans  receivable of $135.6
million offset by a 39 basis point decrease in the average yield.

     Interest and dividend  income on securities  available  for sale  increased
$538  thousand,  or 16.2%,  to $3.9  million for the three months ended June 30,
1999 from $3.3 million for the same period of the previous  year.  This increase
is  primarily  the result of an increase in the  average  balance of  securities
available for sale of $43.9 million  offset by a 28 basis point  decrease in the
average yield on these securities.


     Interest  Expense.  Total interest  expense  increased by $1.2 million,  or
22.9%,  to $6.5  million  for the three  months  ended  June 30,  1999 from $5.2
million for the three months ended June 30, 1998. Total average interest-bearing
liabilities  increased by $163.4  million,  or 38.2%,  to $591.3 million for the
second quarter of 1999  compared  to $427.9  million  for the same period of the
previous   year.   During  the  same   periods,   the   average   rate  paid  on
interest-bearing liabilities decreased by 54 basis points to 4.38% from 4.92%.

                                       12
<PAGE>

     Total  interest  expense for the three months ended June 30, 1999 increased
primarily due to an increase in the average  balance of total  borrowed funds to
$166.0 million from $131.1 million,  partially  offset by a decrease of 38 basis
points, to 5.46%, in the average rate paid for these funds during the period. In
addition,  interest  expense  relative  to  savings  accounts,  certificates  of
deposits, and money market accounts increased primarily as a result of increases
in the average balances on these deposit accounts as a result of the acquisition
of AFSALA.




Consolidated Average Balances, Interest Rates & Yields

     The  following  table  presents for the periods  indicated the total dollar
amount of interest and dividend  income earned on average earning assets and the
resultant  yields,  as well as the  total  dollar  amount  of  interest  expense
incurred on average interest-bearing liabilities and the resultant rates. No tax
equivalent  adjustments  were  made.  All  average  balances  are daily  average
balances.  Non-accruing  loans  have been  included  in the table as loans  with
interest earned on a cash basis only. Securities available for sale are included
at amortized cost.



















                                       13
<PAGE>
<TABLE>
<CAPTION>
                                                                    Three months ended June 30,
                                                              1999                                   1998
                                          ------------------------------------   -------------------------------------
                                                Average     Interest    Yield/        Average     Interest    Yield/
                                                Balance     Inc./Exp.    Rate         Balance     Inc./Exp.    Rate
<S>                                             <C>           <C>        <C>         <C>            <C>        <C>
Earning Assets                                                        (Dollars in thousands)
  Loans receivable                              $429,013     $ 7,839     7.33%       $293,388      $ 5,646     7.72%
  Securities available for sale                  249,045       3,866     6.21%        205,109        3,328     6.49%
  Federal Home Loan Bank Stock                     7,215         122     6.78%          3,548           66     7.46%
  Federal Funds Sold &
     interest-bearing deposits                    10,648         130     4.83%          5,056           55     4.30%
                                          --------------   ---------  --------   ------------   ----------  ----------
      Total earning assets                       695,921      11,957     6.89%        507,101        9,095     7.19%
                                          --------------   ---------  --------   ------------   ----------  ----------
Allowance for Loan Losses                         (5,245)                              (4,000)
Due from Brokers                                   1,912                               16,726
Unrealized Gain/(Loss)-AFS Securities               (311)                                (389)
Other Assets                                      33,371                               16,826
                                          ---------------                         ------------
Total Assets                                    $725,648                             $536,264
                                          ===============                         ============

Interest-Bearing Liabilities
  Savings deposits                               140,076       1,015     2.91%         98,439          744     3.03%
  NOW  deposits                                   36,967         155     1.68%         22,710          138     2.44%
  Certificates of deposit                        225,599       2,808     4.99%        168,997        2,407     5.71%
  Money Market Accounts                           22,637         212     3.76%          6,666           49     2.95%
  Borrowed Funds                                 165,982       2,261     5.46%        131,073        1,909     5.84%
                                          --------------   ---------  --------   ------------   ----------  ----------
      Total interest-bearing liabilities         591,261       6,451     4.38%        427,885        5,247     4.92%
                                          --------------   ---------  --------   ------------   ----------- ----------
Demand Deposits                                   34,963                               25,062
Other Liabilities                                 14,701                               23,448
                                          ---------------                         ------------
Total Liabilities                                640,925                              476,395
                                          ---------------                         ------------
Shareholders' Equity                              84,723                               59,869
                                          ---------------                         ------------
Total Liabilities & Equity                      $725,648                             $536,264
                                          ===============                         ============

    Net interest income                                      $ 5,506                                $3,848

    Interest rate spread                                                 2.51%                                 2.28%

    Net earning assets                          $104,660                              $79,216

    Net interest margin                                                  3.17%                                 3.04%

    Average Earning Assets/Average
     Interest-Bearing Liabilities                117.70%                              118.51%

</TABLE>
                                       14
<PAGE>

     Provision for Loan Losses. The Company's provision for loan losses is based
upon  its  analysis  of the  adequacy  of the  allowance  for loan  losses.  The
allowance is increased by a charge to the provision for loan losses,  the amount
of which  depends  upon an analysis of the changing  risks  inherent in the loan
portfolio.  Management  determines the adequacy of the allowance for loan losses
based upon its analysis of risk  factors in the loan  portfolio.  This  analysis
includes evaluation of credit risk, historical loss experience, current economic
conditions,  estimated fair value of underlying collateral,  delinquencies,  and
other factors.  The ratio of  non-performing  loans to total loans  increased to
0.73% at June 30, 1999 from 0.68% at December 31, 1998.  Non-performing loans at
June 30, 1999 were $3.2 million,  or 9.7% greater than  non-performing  loans at
December 31, 1998 of $2.9  million.  The provision for loan losses for the three
months ended June 30, 1999  increased  $15 thousand to $240  thousand  from $225
thousand for the three months ended June 30, 1998.

     Non-Interest  Income. Total non-interest income increased by $230 thousand,
or 110.6%,  to $438  thousand for the three months ended June 30, 1999 from $208
thousand for the three months ended June 30, 1998  primarily due to the increase
in service  charges on deposit  accounts  attributable to the  restructuring  of
service charges on certain deposit  products,  in addition to an increase in the
number of deposit  accounts due to the  acquisition of AFSALA,  coupled with net
losses on securities transactions of $112 thousand during the quarter ended June
30, 1998.


     Non-Interest  Expenses.  Non-interest  expenses increased $174 thousand, or
4.8%, to $3.8 million for the three months ended June 30, 1999 from $3.7 million
for the three months ended June 30, 1998. Non-interest expenses were impacted by
increased  salaries,  wages and benefits  primarily due to the additional AFSALA
branches  acquired,   in  addition  to  the  acceleration  of  depreciation  and
amortization of equipment and leasehold  improvements,  and the  amortization of
goodwill as a result of the  acquisition of AFSALA.  These and other changes are
discussed in more detail below.

     Salaries,  wages and benefits  increased by $334  thousand,  or 21.3%,  due
primarily  to  increased  costs as a result of the  acquisition  of AFSALA,  the
opening of a new branch in February 1999,  increased  costs  associated with the
Company's ESOP, as well as general cost of living and merit raises to employees.
Management  believes that  salaries,  wages and benefits may fluctuate in future
periods as a result of the costs related to the  Company's  ESOP, as the expense
related to the ESOP is dependent on the Company's average stock price.

     Also impacting  expenses  during the quarter ended June 30, 1998 were costs
incurred in connection with the termination  and consulting  agreements  entered
into with the former President and CEO totaling $399 thousand.

     Occupancy and equipment increased $157 thousand, or 39.4%, to $555 thousand
for the three months ended June 30, 1999,  from $398 thousand in 1998  primarily
due to the  acceleration  of  depreciation  and  amortization  of equipment  and
leasehold  improvements on a branch being closed as a result of the acquisition.
In addition,  rent and maintenance  expense increased as a result of the opening
of a new  branch  in  February  1999 and the  four  additional  AFSALA  branches
acquired.

     Data  processing  increased $87 thousand,  or 28.6%,  from $304 thousand in
1998 to $391 thousand for the three months ended June 30, 1999  primarily due to
an increase in the number of deposit and loan accounts due to the acquisition of
AFSALA.

                                       15
<PAGE>

     Non-interest expenses for the three months ended June 30, 1999 included the
amortization of goodwill totaling  approximately  $133 thousand,  which is being
amortized to expense over fifteen  years using the  straight-line  method.

     Professional fees decreased $134 thousand, or 60.4%, from the quarter ended
June 30, 1998 to the quarter ended June 30, 1999 due primarily to legal expenses
incurred by the Company during the quarter ended June 30, 1998 to defend against
litigation  initiated by a shareholder totaling $159 thousand.

     Income Tax Expense.  Income tax expense  increased by $704 thousand to $776
thousand  for the three  months  ended June 30, 1999 from $72  thousand  for the
three months ended June 30, 1998.  The increase was  primarily the result of the
increase in income before taxes.


Comparison of Operating Results for the Six Months Ended June 30, 1999 and 1998.

     Net Income.  Net income  increased by $1.6 million for the six months ended
June 30, 1999 to $2.1 million  from $543  thousand for the six months ended June
30, 1998. Net income for the six months ended June 30, 1999 increased  primarily
as a result of increased net interest income and non-interest income,  offset in
part by an increase in non-interest  expenses and provision for loan losses.  As
previously  noted,  on November 16, 1998, the Company  acquired  AFSALA Bancorp,
Inc.  and its wholly  owned  subsidiary,  Amsterdam  Federal  Bank.  Many of the
fluctuations  noted below,  including  increases in average balances and certain
income and expenses, are the result of AFSALA's operations being included in the
1999 period but not in the 1998 period. These and other changes are discussed in
more detail below.

     Net Interest Income. Net interest income increased $3.2 million,  or 41.4%,
to $10.9  million for the six months  ended June 30, 1999 from $7.7  million for
the six months  ended June 30, 1998.  The  increase in net  interest  income was
primarily due to an increase of $198.4 million, or 39.7%, in the average balance
of earning assets  (primarily due to the acquisition of AFSALA),  in addition to
an increase in interest rate spread from 2.34% for the six months ended June 30,
1998 to 2.50% for the six months ended June 30,  1999,  offset by an increase in
the average balance of interest-bearing liabilities of $173.4 million (primarily
due to the acquisition of AFSALA), or 41.0%.


     Interest and Dividend  Income.  Interest and dividend  income  increased by
approximately $5.8 million,  or 32.1%, to $23.9 million for the six months ended
June 30, 1999 from $18.1  million for the six months  ended June 30,  1998.  The
increase was largely the result of an increase of $198.4  million,  or 39.7%, in
the average balance of earning assets to $698.5 million for the six months ended
June 30, 1999,  as compared to $500.1  million for the six months ended June 30,
1998. The increase in the average balance of earning assets consisted  primarily
of increases in the average balance of loans  receivable of $137.6  million,  or
47.5%,  securities  available for sale of $44.0 million,  or 21.7%,  FHLB of New
York  stock  of  $3.7   million,   or  106.6  %,  and  federal  funds  sold  and
interest-bearing  deposits  of $13.2  million.  Offsetting  the  effects  of the
increase in the average  balance of earning assets was a 39 basis point decrease
in the average yield on total earning  assets.  The yield on the average balance
of earning assets was 6.91% and 7.30% for the six months ended June 30, 1999 and
1998, respectively.

                                       16
<PAGE>

     Interest  and fees on loans  increased  $4.5  million,  or 40.1%,  to $15.6
million for the six months ended June 30, 1999.  This increase was primarily the
result of an increase in the average  balance of net loans  receivable of $137.6
million offset by a 39 basis point decrease in the average yield.


     Interest  income on securities  available for sale increased $925 thousand,
or 13.7%,  to $7.7  million  for the six months  ended  June 30,  1999 from $6.7
million for the same period of the previous year. This increase is primarily the
result of an increase in the average balance of securities available for sale of
$44.0 million  offset by a 44 basis point decrease in the average yield on these
securities.


     Interest  Expense.  Total interest  expense  increased by $2.6 million,  or
25.3%,  to $13.0  million  for the six  months  ended  June 30,  1999 from $10.4
million for the six months ended June 30, 1998.  Total average  interest-bearing
liabilities  increased by $173.4  million,  or 41.0%,  to $595.9 million for the
first six months of 1999  compared to $422.5  million for the same period of the
previous   year.   During  the  same   periods,   the   average   rate  paid  on
interest-bearing liabilities decreased by 55 basis points to 4.41% from 4.96%.

     Total  interest  expense for the six months  ended June 30, 1999  increased
primarily due to an increase in the average  balance of total  borrowed funds to
$169.8 million from $121.7 million,  partially  offset by a decrease of 46 basis
points, to 5.49%, in the average rate paid for these funds during the period. In
addition,  interest expense relative to savings,  certificates of deposits,  and
money  market  accounts  increased  primarily  as a result of  increases  in the
average  balances on these deposit  accounts as a result of the  acquisition  of
AFSALA.


Consolidated Average Balances, Interest Rates & Yields

     The  following  table  presents for the periods  indicated the total dollar
amount of interest and dividend  income earned on average earning assets and the
resultant  yields,  as well as the  total  dollar  amount  of  interest  expense
incurred on average interest-bearing liabilities and the resultant rates. No tax
equivalent  adjustments  were  made.  All  average  balances  are daily  average
balances.  Non-accruing  loans  have been  included  in the table as loans  with
interest earned on a cash basis only. Securities available for sale are included
at amortized cost.





                                       17
<PAGE>
<TABLE>
<CAPTION>
                                                                      Six months ended June 30,
                                                              1999                                   1998
                                          ------------------------------------   -------------------------------------
                                                Average     Interest    Yield/        Average     Interest    Yield/
                                                Balance     Inc./Exp.    Rate         Balance     Inc./Exp.    Rate
<S>                                             <C>           <C>        <C>         <C>            <C>        <C>
Earning Assets                                                        (Dollars in thousands)
  Loans receivable                              $427,099     $15,620     7.38%       $289,526      $11,152     7.77%
  Securities available for sale                  246,897       7,658     6.20%        202,932        6,733     6.64%
  Federal Home Loan Bank Stock                     7,215         241     6.74%          3,493          129     7.45%
  Federal Funds Sold &
     interest-bearing deposits                    17,279         402     4.63%          4,124           90     4.34%
                                          --------------   ---------  --------   ------------   ----------  ----------
      Total earning assets                       698,490      23,921     6.91%        500,075       18,104     7.30%
                                          --------------   ---------  --------   ------------   ----------  ----------
Allowance for Loan Losses                         (5,115)                              (3,938)
Due from Brokers                                   1.216                                9,281
Unrealized Gain/(Loss)-AFS Securities                 20                                 (272)
Other Assets                                      31,708                               15,865
                                          ---------------                         ------------
Total Assets                                    $726,319                             $521,011
                                          ===============                         ============

Interest-Bearing Liabilities
  Savings deposits                               139,457       2,007     2.90%         97,554        1,467     3.03%
  NOW  deposits                                   37,369         299     1.61%         21,127          273     2.49%
  Certificates of deposit                        226,665       5,670     5.04%        174,393        4,966     5.74%
  Money Market Accounts                           22,520         426     3.81%          6,732           98     2.94%
  Borrowed Funds                                 169,843       4,620     5.49%        121,691        3,590     5.95%
                                          --------------   ---------  --------   ------------   ----------  ----------
      Total interest-bearing liabilities         595,854      13,022     4.41%        422,497       10,394     4.96%
                                          --------------   ---------  --------   ------------   ----------- ----------
Demand Deposits                                   33,096                               23,595
Other Liabilities                                 12,216                               14,683
                                          ---------------                         ------------
Total Liabilities                                641,166                              460,775
                                          ---------------                         ------------
Shareholders' Equity                              85,153                               60,238
                                          ---------------                         ------------
Total Liabilities & Equity                      $726,319                             $521,011
                                          ===============                         ============

    Net interest income                                      $10,899                                $7,710

    Interest rate spread                                                 2.50%                                 2.34%

    Net earning assets                          $102,636                              $77,578

    Net interest margin                                                  3.15%                                 3.11%

    Average Earning Assets/Average
     Interest-Bearing Liabilities                117.23%                              118.36%

</TABLE>
                                       18
<PAGE>

     Provision for Loan Losses. The Company's provision for loan losses is based
upon  its  analysis  of the  adequacy  of the  allowance  for loan  losses.  The
allowance is increased by a charge to the provision for loan losses,  the amount
of which  depends  upon an analysis of the changing  risks  inherent in the loan
portfolio.  Management  determines the adequacy of the allowance for loan losses
based upon its analysis of risk  factors in the loan  portfolio.  This  analysis
includes evaluation of credit risk, historical loss experience, current economic
conditions,  estimated fair value of underlying collateral,  delinquencies,  and
other factors.  The ratio of  non-performing  loans to total loans  increased to
0.73% at June 30, 1999 from 0.68% at December 31, 1998.  Non-performing loans at
June 30, 1999 were $3.2 million,  or 9.7% greater than  non-performing  loans at
December 31, 1998 of $2.9  million.  The  provision  for loan losses for the six
months ended June 30, 1999  increased  $45 thousand to $495  thousand  from $450
thousand for the six months ended June 30, 1998.


     Non-Interest  Income.  Total  non-interest  income increased during the six
months ended June 30, 1999 to $862 thousand  compared with $533 thousand for the
six months  ended  June 30,  1998.  An  increase  in service  charges on deposit
accounts of $219 thousand  attributable to the  restructuring of service charges
on certain deposit products, in addition to an increase in the number of deposit
accounts due to the  acquisition  of AFSALA along with net losses on  securities
transactions  recorded  during  the  first six  months of 1998 of $105  thousand
comprise the increase from the previous period.


     Non-Interest  Expenses.  Non-interest  expenses increased $766 thousand, or
11.2%,  to $7.6 million for the six months ended June 30, 1999 from $6.8 million
for the six months ended June 30, 1998.  Non-interest  expenses were impacted by
increased  salaries,  wages and benefits  primarily due to the additional AFSALA
branches  acquired,   in  addition  to  the  acceleration  of  depreciation  and
amortization of equipment and leasehold  improvements,  and the  amortization of
goodwill as a result of the  acquisition of AFSALA.  These and other changes are
discussed in more detail below.

     Salaries, wages and benefits increased by $573 thousand, or 18.2%, from the
previous  period due primarily to increased costs as a result of the acquisition
of AFSALA,  the  opening  of a new  branch in  February  1999,  increased  costs
associated  with the Company's ESOP, as well as general cost of living and merit
raises to employees.  Management believes that salaries,  wages and benefits may
fluctuate in future  periods as a result of the costs  related to the  Company's
ESOP, as the expense  related to the ESOP is dependent on the Company's  average
stock price.

     Also  impacting  expenses  during the six months  ended June 30,  1998 were
costs incurred in connection  with the  termination  and  consulting  agreements
entered into with the former President and CEO totaling $399 thousand.

     Occupancy and equipment increased $373 thousand,  or 46.0%, to $1.2 million
for the six months ended June 30, 1999, from $811 thousand in 1998 primarily due
to the  acceleration of depreciation and amortization of equipment and leasehold
improvements  on a branch  being  closed  as a  result  of the  acquisition.  In
addition, rent and maintenance expense increased as a result of the opening of a
new branch in February 1999 and the four additional AFSALA branches acquired.

     Non-interest  expenses for the six months ended June 30, 1999  included the
amortization of goodwill totaling  approximately  $266 thousand,  which is being
amortized  to  expense  over  fifteen  years  using  the  straight-line  method.


                                       19
<PAGE>
     Professional  fees decreased $184 thousand,  or 51.1%,  from the six months
ended June 30, 1998 to the six months ended June 30, 1999 due primarily to legal
expenses  incurred by the Company  during the six months  ended June 30, 1998 to
defend against litigation  initiated by a shareholder totaling $159 thousand.

     Other non-interest  expenses increased  approximately $83 thousand, or 6.0%
to $1.5  million  for the six months  ended June 30,  1999 when  compared to the
previous period.  This increase was primarily due to the replacement of supplies
related to the new bank,  additional  courier  services for check processing and
telephone expense due to the added AFSALA branches.

     Income Tax  Expense.  Income tax expense  increased by $1.1 million to $1.6
million for the six months  ended June 30, 1999 from $434  thousand  for the six
months  ended  June 30,  1998.  The  increase  was  primarily  the result of the
increase in income before taxes.

                                       20
<PAGE>

ASSET QUALITY

Non-Performing Assets

     The table  below sets forth the amounts and  categories  of  non-performing
assets at the dates indicated.

                                              June 30,   Dec.31,
                                                1999      1998
                                               ------    ------
                                            (Dollars in thousands)
Non-accruing loans:
   One-to four-family (1) ..................   $1,431    $1,018
   Multi-family ............................     --        --
   Commercial real estate ..................       64        20
   Consumer ................................      422       342
   Commercial Business .....................      315       230
                                               ------    ------
     Total .................................    2,232     1,610
                                               ------    ------

Accruing loans delinquent more than 90 days:
   One-to four-family (1) ..................      170       358
   Multi-family ............................     --        --
   Commercial real estate ..................      110       215
   Consumer ................................       22         7
   Commercial Business .....................     --        --
                                               ------    ------
     Total .................................      302       580
                                               ------    ------

Troubled debt restructured loans:
   One-to four-family (1) ..................       85        85
   Multi-family ............................     --        --
   Commercial real estate ..................      483       537
   Consumer ................................     --        --
   Commercial Business .....................       84        92
                                               ------    ------
     Total .................................      652       714
                                               ------    ------
Total non-performing loans .................    3,186     2,904
                                               ------    ------

Real estate owned and repossessed assets:
   One-to four-family (1) ..................      139       313
   Multi-family ............................     --        --
   Commercial real estate ..................       30        30
   Consumer ................................       41        56
   Commercial Business .....................     --        --
                                               ------    ------
     Total .................................      210       399
                                               ------    ------

Total non-performing assets ................   $3,396    $3,303
                                               ======    ======

Non-performing loans as a percentage
   of total loans ..........................     0.73%     0.68%

Non-performing assets as a percentage
   of total assets .........................     0.48%     0.45%

(1)  Includes home equity loans.



                                       21
<PAGE>
Allowance for Loan Losses


     The allowance for loan losses is  established  through a provision for loan
losses  based on  management's  evaluation  of the  risks  inherent  in the loan
portfolio and changes in the nature and volume of its loan  activity,  including
those  loans  that  are  being  specifically   monitored  by  management.   Such
evaluation,  which includes a review of loans for which full  collectibility may
not be reasonably assured,  considers,  among other matters,  the estimated fair
value of the  underlying  collateral  for collateral  dependent  loans,  the net
present  value of  estimated  future  cash  flows if the loan is not  collateral
dependent,  economic  conditions,  historical  loan loss  experience,  and other
factors  that  warrant  recognition  in  providing  for an  adequate  loan  loss
allowance. The following table sets forth a summary of activity in the Company's
allowance for loan losses.

                                          For the six months
                                             ended June 30,
                                           1999         1998
                                          -------     -------
                                             (In thousands)

Balance at beginning of period ........   $ 4,891     $ 3,807

Charge-offs:
     One- to four-family ..............      (55)          (6)
     Multi-family .....................     --           --
     Commercial real estate ...........     --           --
     Consumer .........................      (51)        (176)
     Commercial business ..............      (49)         (25)
                                          ------       ------
        Total charge-offs .............     (155)        (207)

Recoveries:
     One- to four-family ..............     --              1
     Multi-family .....................     --           --
     Commercial real estate ...........       35         --
     Consumer .........................       71           28
     Commercial business ..............       15           11
                                          ------       ------
        Total recoveries ..............      121           40

Net charge-offs .......................      (34)        (167)
Provisions charged to operations ......      495          450
                                          ------       ------
Balance at end of period ..............    5,352        4,090
                                          ======       ======

Ratio of allowance for loan
losses to total loans (period end) ....     1.23%        1.26%

Ratio of allowance for loan losses
to non-performing loans (at period end)   167.98%      122.68%

Ratio of net charge-offs during the
period to average loans outstanding
during period (annualized) ............    0.02%        0.12%


                                       22
<PAGE>

Liquidity and Capital Resources


     The Bank is required by OTS  regulations  to  maintain,  for each  calendar
month, a daily average  balance of cash and eligible  liquid  investments of not
less than 5% of the average  daily balance of its net  withdrawable  savings and
borrowings (due in one year or less) during the preceding  calendar month.  This
liquidity  requirement may be changed from time to time by the OTS to any amount
within the range of 4% to 10%. The Bank's average liquidity ratio was 31.24% and
31.97% at June 30, 1999 and December 31, 1998, respectively.

     The  Company's  sources of liquidity  include  cash flows from  operations,
principal  and  interest  payments  on  loans,  mortgage-backed  securities  and
collateralized mortgage obligations,  maturities of securities, deposit inflows,
borrowings  from the FHLB of New York and proceeds  from the sale of  securities
sold under agreements to repurchase.

     While maturities and scheduled amortization of loans and securities are, in
general, a predictable  source of funds,  deposit flows and prepayments on loans
and  securities  are greatly  influenced  by general  interest  rates,  economic
conditions  and  competition.  In  addition,  the Bank  invests  excess funds in
overnight deposits which provide liquidity to meet lending requirements.

     In addition to deposit  growth,  the Company borrows funds from the FHLB of
New York or may utilize  other types of borrowed  funds to  supplement  its cash
flows.  At June 30, 1999 and December 31, 1998,  the Company had $21.2 and $21.4
million,  respectively,  in outstanding term borrowings from the FHLB and $138.0
million and $152.4 million, respectively, in securities repurchase agreements.

     As of June 30, 1999 and December 31, 1998,  the Company had $235.6  million
and $244.2  million,  respectively,  of  securities  classified as available for
sale. The liquidity of the securities  available for sale portfolio provides the
Company  with  additional  potential  cash flows to meet loan growth and deposit
flows.

     Liquidity  may  be  adversely  affected  by  unexpected  deposit  outflows,
excessive interest rates paid by competitors,  adverse publicity relating to the
saving and loan industry,  and similar matters.  Management  monitors  projected
liquidity  needs  and  determines  the  level  desirable,  based  in part on the
Company's commitments to make loans and management's assessment of the Company's
ability to generate funds.



     The Bank is subject to federal  regulations  that  impose  certain  minimum
capital requirements.  At June 30, 1999, the Bank's capital exceeded each of the
regulatory  capital  requirements of the OTS. The Bank is "well  capitalized" at
June 30, 1999 according to regulatory  definition.  At June 30, 1999, the Bank's
consolidated  tangible and core capital levels were both $66.3 million (9.41% of
total adjusted assets) and its total risk-based  capital level was $70.3 million
(21.89% of total  risk-weighted  assets).  The minimum  regulatory capital ratio
requirements of the Bank are 1.5% for tangible  capital,  4.0% for core capital,
and 8.0% for total risk-based capital.

     During the first six months of 1999, the Company  repurchased 95,500 shares
of stock in open-market transactions at a total cost of $1.6 million.


                                       23
<PAGE>

Impact of the Year 2000

     The  Year  2000  issue  confronting  the  Company,  its  vendors,  and  its
customers,  centers on the inability of some  computer  systems to recognize the
year  2000.  Many  existing  computer  programs  and  systems   originally  were
programmed  with six digit dates that  provided  only two digits to identify the
calendar  year in the date  field.  With the  impending  new  millennium,  these
programs and computers will recognize "00" as the year 1900 rather than the year
2000.

     Financial  institution  regulators recently have increased their focus upon
Y2K compliance issues and have issued guidance  concerning the  responsibilities
of  senior  management  and  directors.   The  Federal   Financial   Institution
Examination  Council has issued  several  interagency  statements on Y2K project
management awareness.  These statements require financial institutions to, among
other things,  examine the Y2K  implications  of their  reliance on vendors with
respect  to data  exchange  and the  potential  impact of the Y2K issue on their
customers, suppliers and borrowers. These statements also require each federally
regulated  financial  institution  to survey its exposure,  measure its risk and
plan to address the Y2K issue. In addition,  the federal banking regulators have
issued  safety and  soundness  guidelines  to be followed by insured  depository
institutions  to assure  resolution  of any Y2K  problems.  The federal  banking
agencies  have  assured that Y2K testing and  certification  is a key safety and
soundness  issue  in  conjunction  with  regulatory  exams  and  thus,  that  an
institution's  failure to address  appropriately  the Y2K issue could  result in
supervisory  action,  including the reduction of the  institution's  supervisory
ratings,  the denial of application  for approval of mergers or  acquisitions or
the imposition of civil money penalties.

     The Company has formulated a plan  addressing the Y2K issue and established
a  seven member  steering  committee.  The Company's  steering  committee  meets
monthly  and reports on a quarterly  basis to the Board of  Directors  as to the
Company's  progress in resolving  any Y2K  problems.  The  committee  created an
action  plan  that  includes  milestones,  budget,  estimates,  strategies,  and
methodologies  to track and  report the  status of the  project.  Members of the
committee  attended  conferences  to gain  more  insight  into the Y2K issue and
potential  strategies for addressing it. These strategies were further developed
with respect to how the objectives of the Y2K plan would be achieved,  and a Y2K
business  risk  assessment  was made to quantify the extent of the Company's Y2K
exposure.  A Company  inventory  was  developed  to  identify  and  monitor  Y2K
readiness for information systems, including hardware, software, and vendors, as
well as environmental  systems,  including security systems and facilities.  The
Company  inventory  revealed  that Y2K upgrades  were  available  for all vendor
supplied  mission  critical  systems,  and these  Y2K-ready  versions  have been
delivered,  installed and have entered the  validation  process.  The validation
phase is designed to test the ability of  hardware  and  software to  accurately
process date sensitive data.  During the validation  testing process to date, no
significant  Y2K  problems  have been  identified  relating  to any  modified or
upgraded mission critical systems.

     During the  assessment  phase,  the  Company  began to  develop  back-up or
contingency plans for each of its mission critical systems.  The majority of the
Company's  mission  critical  systems are  dependent  upon third  party  service
providers or vendors, therefore, contingency plans include using or reverting to
manual systems until system problems can be corrected or selecting a new vendor.
In the event a current vendor's system fails during the validation phase, and it
is determined that the vendor is unable or unwilling to correct the failure, the
Company will convert to a new system from a list of prospective vendors.


                                       24
<PAGE>

     The  Company  has  identified  a worst case  scenario  that  envisions  the
possibility of the lack of power or communication  services for a period of time
in excess of a day.  Contingency  planning is an integral  part of the Company's
Y2K readiness plan. Key operating personnel are actively analyzing services that
will be  supported  during  extended  outages and  preparing  written  plans and
procedures to train Bank personnel.

     There can be no assurance that Year  2000-related  problems will not occur.
Despite the  Company's  efforts to identify and address  Year 2000 issues,  such
issues  presents  risks  to the  Company,  including  business  disruptions  and
financial losses.

     Since the  inception of the Year 2000  project,  the costs  incurred by the
Company to address Year 2000 compliance  were  approximately  $142 thousand,  of
which $99 thousand were hardware and software  upgrades  which were  capitalized
and will be amortized over their estimated  useful lives of three to five years.
The Company estimates it will incur up to approximately  $200 thousand in direct
costs,  primarily  as capital  expenditures,  during  fiscal 1999 to support its
compliance initiatives. Although the Company expects its systems to be Year 2000
compliant on or before  December 31, 1999, it cannot  predict the outcome or the
success of its Year 2000  program,  or that third  party  systems are or will be
Year 2000 complaint,  or that the costs required to address the Year 2000 issue,
or that the  impact of a failure to achieve  substantial  Year 2000  compliance,
will not have a material  adverse  effect on the Company's  business,  financial
condition or results of operations.


Effect of Inflation and Changing Prices


     The Company's  consolidated financial statements and related data presented
herein have been  prepared in  accordance  with  generally  accepted  accounting
principles,  which require the  measurement of financial  position and operating
results  in terms of  historical  dollars,  without  considering  changes in the
relative purchasing power of money over time due to inflation. Unlike industrial
companies,   virtually  all  of  the  assets  and  liabilities  of  a  financial
institution  are  monetary in nature.  As a result,  interest  rates have a more
significant impact on a financial institution's  performance than the effects of
general levels of inflation.  Interest rates do not necessarily move in the same
direction or with the same magnitude as the prices of goods and services.



 Recent Accounting Pronouncements



     In June 1999,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging Activities," which establishes  accounting and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts,  and for hedging  activities.  As recently amended,
this  Statement is effective for all fiscal  quarters of fiscal years  beginning
after June 15,  2000.  Management  is  currently  evaluating  the impact of this
Statement on the Company's consolidated financial statements.



                                       25
<PAGE>

Item 3.


     Quantitative And Qualitative Disclosures About Market Risk


     There have been no material  changes in the  Company's  interest  rate risk
position  since December 31, 1998.  Other types of market risk,  such as foreign
exchange rate risk and  commodity  price risk, do not arise in the normal course
of the Company's business activities.



Part II - Other Information

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

     Ambanc Holding Co., Inc.'s Annual Meeting of  Shareholders  was convened on
May 28, 1999.

     Proxies for the meeting were solicited pursuant to Regulation 14A under the
Securities  Exchange  Act of 1934,  as  amended.  There was no  solicitation  in
opposition to management's  nominees as listed in the proxy  statement,  and all
such nominees were elected.

     With  respect to  management's  nominees,  voting was as follows:  James J.
Bettini,  Sr,  For -  4,890,209,  Withheld  - 34,906;  Seymour  Holtzman,  For -
4,884,409,  Withheld  - 40,706;  Allan R.  Lyons,  For -  4,889,690,  Withheld -
35,425;  Charles R.  Wright,  For -  4,890,355,  Withheld  - 34,760;  William L.
Petrosino, For - 4,890,143, Withheld - 34,972.

     Proxies were also solicited at the annual meeting for the  ratification  of
the appointment of KPMG LLP as independent auditors of the Company. The proposal
was adopted, with 4,898,016 shares voting For, 13,422 shares voting Against, and
13,677 shares Abstaining.


Item 6.  Exhibits and Reports on Form 8-K

      (a)   Exhibits as required by Item 601 of Regulation S-K.

            Financial data schedule, Exhibit #27

      (b)   Reports on Form 8-K:

               No current reports on Form 8-K were filed during the quarter
               ended June 30, 1999.



                                       26
<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.



/s/ John M. Lisicki

John M. Lisicki
President and Chief Executive Officer
(Principal Executive Officer)
Date:  August  13, 1999



/s/ James J. Alescio

James J. Alescio
Senior Vice President, CFO and Treasurer
(Principal Financial and Accounting Officer)
Date:  August 13, 1999























                                       27

<PAGE>

                                 EXHIBITS INDEX




Exhibit 27     Financial Data Schedule




































                                       28