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 September 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 November 15, 1999
-----------------------------                -----------------------------------
Common Stock, $.01 Par Value                              4,965,890

<PAGE>


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



                                      Table of Contents


Part I.   FINANCIAL INFORMATION

Item 1.        Consolidated Interim Financial Statements (unaudited):

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

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

               Consolidated Interim Statements of Cash Flows for the nine
               months ended September 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)          Sept. 30,    Dec. 31,
                                                             1999        1998
                   Assets                                 ---------    ---------
Cash and due from banks ...............................   $  13,365   $   9,225
Interest-bearing deposits .............................       1,154       3,390
Federal funds sold ....................................         --       30,200
                                                          ---------    ---------
     Cash and cash equivalents ........................      14,519      42,815
                                                          ---------    ---------
Securities available for sale, at fair value ..........     224,013     244,241
Federal Home Loan Bank of New York stock, at cost .....       7,539       7,215
Loans receivable, net of unamortized fees and costs ...     461,272     425,824
     Allowance for loan losses ........................      (5,580)     (4,891)
                                                          ---------    ---------
     Loans receivable, net ............................     455,692     420,933
                                                          ---------    ---------
Accrued interest receivable ...........................       4,700       4,115
Premises and equipment, net ...........................       5,270       4,537
Real estate owned and repossessed assets ..............         335         399
Goodwill ..............................................       7,524       7,923
Other assets ..........................................       5,523       3,294
                                                          ---------    ---------
     Total assets .....................................   $ 725,115   $ 735,472
                                                          =========    =========
                 Liabilities and Shareholders' Equity
Liabilities:
   Deposits ...........................................   $ 452,947   $ 461,413
   Federal Home Loan Bank advances-short term .........      28,500        --
   Federal Home Loan Bank advances-long term ..........      21,077      21,410
   Securities sold under agreements to repurchase .....     132,810     152,400
   Advances from borrowers for taxes and insurance ....       4,623       2,436
   Accrued interest payable ...........................       1,213       1,426
   Accrued expenses and other liabilities .............       6,883       4,494
   Due to brokers .....................................        --         6,000
                                                          ---------    ---------
     Total liabilities ................................     648,053     649,579
                                                          ---------    ---------
Shareholders' equity:
   Preferred stock $.01 par value. Authorized 5,000,000
    shares; none outstanding at September 30, 1999 and
    December 31, 1998 .................................         --          --
   Common stock $.01 par value. Authorized 15,000,000
    shares; 5,432,245  shares issued  at  September 30,
    1999 and December 31, 1998 ........................          54          54
   Additional paid in capital .........................      63,279      63,019
   Retained earnings,substantially restricted .........      28,458      26,356
   Treasury stock, at cost (467,355 shares at September
      30, 1999 and 23,908 shares at December 31, 1998)       (7,521)       (329)
   Unallocated common stock held by ESOP ..............      (2,468)     (2,818)
   Unearned RRP shares issued .........................        (553)       (759)
   Accumulated other comprehensive (loss) income ......      (4,187)        370
                                                          ---------    ---------
     Total shareholders' equity .......................      77,062      85,893
                                                          ---------    ---------
     Total liabilities and shareholders' equity .......   $ 725,115   $ 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>
                                                                Nine months          Three Months
                                                             Ended September 30,   Ended September 30,
                                                             1999        1998        1999       1998
                                                            --------   --------    --------   --------
<S>                                                         <C>        <C>         <C>        <C>
Interest and dividend income:
   Loans ................................................   $ 23,970   $ 17,473    $  8,350   $  6,321
   Securities available for sale ........................     11,488     10,082       3,830      3,349
   Federal funds sold and interest-bearing deposits .....        429        262          27        172
   Federal Home Loan Bank stock .........................        368        242         127        113
                                                            --------   --------    --------   --------
     Total interest and dividend income .................     36,255     28,059      12,334      9,955
                                                            --------   --------    --------   --------
Interest expense:
   Deposits .............................................     12,587     10,072       4,185      3,268
   Borrowings ...........................................      6,877      6,192       2,257      2,602
                                                            --------   --------    --------   --------
     Total interest expense .............................     19,464     16,264       6,442      5,870
                                                            --------   --------    --------   --------
     Net interest income ................................     16,791     11,795       5,892      4,085

Provision for loan losses ...............................        670        675         175        225
                                                            --------   --------    --------   --------
     Net interest income after provision
       for loan losses ..................................     16,121     11,120       5,717      3,860
                                                            --------   --------    --------   --------
Non-interest income:
   Service charges on deposit accounts ..................      1,030        714         347        250
   Net losses on securities transactions ................        --        (165)        --         (60)
   Other ................................................        349        223         170         49
                                                            --------   --------    --------   --------
     Total non-interest income ..........................      1,379        772         517        239
                                                            --------   --------    --------   --------
Non-interest expense:
   Salaries, wages and benefits .........................      5,835      4,728       2,075      1,564
   Non-recurring termination benefits ...................       --          399         --         --
   Occupancy and equipment ..............................      1,733      1,197         549        386
   Data processing ......................................        985        941         359        328
   Real estate owned and repossessed assets expenses, net         46         19          26         (2)
   Professional fees ....................................        289        507         113        147
   Amortization of goodwill .............................        399        --          133        --
   Other ................................................      2,329      2,345         779        897
                                                            --------   --------    --------   --------
     Total non-interest expenses ........................     11,616     10,136       4,034      3,320
                                                            --------   --------    --------   --------
Income  before taxes ....................................      5,884      1,756       2,200        779
Income tax expense ......................................      2,500        735         943        301
                                                            --------   --------    --------   --------
     Net income .........................................   $  3,384   $  1,021    $  1,257   $    478
                                                            ========   ========    ========   ========

Basic earnings per share                                    $   0.68   $   0.27    $   0.26    $   0.13
Diluted earnings per share                                  $   0.68   $   0.27    $   0.26    $   0.13
</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)                                          Nine months
                                                            ended September 30,
                                                              1999        1998
                                                           --------    --------
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
     Net income                                            $3,384       $1,021
     Adjustments to reconcile net income  to net
     cash provided by operating activities:
       Depreciation and amortization                        1,076          504
       Provision for loan losses                              670          675
       Provision for losses and writedowns on
         real estate owned and repossessed assets               6            7
       Net loss (gain) on sale of real estate
         owned and repossessed assets                           7           (7)
       ESOP compensation expense                              561          635
       RRP expense                                            321          338
       Net losses on securities transactions                ----           165
       Net amortization of premium on securities              688          827
       Decrease (increase) in accrued interest
         receivable and other assets                          281         (556)
       Increase in accrued interest payable, accrued
         expenses and other liabilities                     2,176        1,050
                                                       ------------  ----------
            Net cash provided by
                 operating activities                       9,170        4,659
                                                       ------------  ----------
  Cash flows from investing activities:
       Proceeds from sales and redemptions of
         securities available for sale                     12,000      119,301
       Purchases of securities available for sale         (60,140)    (142,641)
       Proceeds from principal paydowns and
          maturities of securities available for sale      54,085       36,655
       Purchase of FHLB stock                                (324)      (3,359)
       Net increase in loans made to customers            (35,700)     (18,256)
       Loans purchased                                      ----       (31,888)
       Purchases of premises and equipment                 (1,446)        (105)
       Proceeds from sale of real estate owned
         and repossessed assets                               322          262
                                                       ------------  ----------
           Net cash used in investing activities         (31,203)     (40,031)
                                                       ------------  ----------
                                                                    (Continued)















                                       5
<PAGE>
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued (unaudited)
(dollars in thousands)                                          Nine months
                                                            ended September 30,
                                                              1999        1998
                                                           --------    --------
  Cash flows from financing activities:
      Net decrease in deposits                            (8,466)      (19,032)
      Net increase (decrease)in FHLB
         short term advances                              28,500       (12,300)
      Proceeds from FHLB long-term advances                ----         20,000
      Repayment of FHLB long-term advances                  (333)        ----
      Proceeds from repurchase agreements                  2,810       161,845
      Repayments of repurchase agreements                (22,400)     (105,645)
      Increase (decrease) in advances from
         borrowers for taxes and insurance                 2,187        (1,002)
      Purchase of treasury stock                          (7,438)       (3,976)
      Excercise of stock options                             139            56
      Dividends paid                                      (1,262)         (748)
                                                       ------------  ----------
      Net cash (used in) provided by
        financing activities                              (6,263)       39,198
                                                       ------------  ----------

  Net (decrease)increase in cash and cash equivalents    (28,296)        3,826
  Cash and cash equivalents at beginning of period        42,815        10,259
                                                       ------------  ----------
  Cash and cash equivalents at end of period             $14,519       $14,085
                                                       ============  ==========


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

  Interest                                               $19,678       $15,563
                                                       ============  ==========

  Income taxes                                            $1,952          $838
                                                       ============  ==========

Noncash investing and financing activities:
  Net transfer of loans to real estate owned and
   repossessed assets                                       $271          $218
                                                       ============  ==========

  Adjustment of securities available for sale to
   fair value, net of tax                                ($4,557)       $1,494
                                                       ============  ==========

  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 included herein, 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 nine month periods  ended  September 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  1999  interim  periods  are  not  necessarily
indicative  of the results of operations to be expected for the full fiscal year
ending 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 (RRP shares) 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:

                                             Net          Weighted
                                           Income          Average     Per Share
                                       (in thousands)      Shares       Amount
                                        ------------     ----------    ---------
For the nine months ended September 30, 1999

Basic EPS
Net Income available to common shareholders  $3,384       4,946,378        $0.68
                                             ======                        =====
Effect of Dilutive Securities:
Stock Options                                                42,431
Unvested RRP shares                                          14,961
                                                          ---------
Diluted EPS
Net Income available to common shareholders
  plus assumed conversions                   $3,384       5,003,770        $0.68
                                             ======       =========        =====
For the nine months ended September 30, 1998

Basic EPS
Net Income available to common shareholders  $1,021       3,762,432        $0.27
                                             ======                        =====
Effect of Dilutive Securities:
Stock Options                                                54,833
Unvested RRP shares                                          27,455
                                                          ---------
Diluted EPS
Net Income available to common shareholders
  plus assumed conversions                   $1,021       3,844,720        $0.27
                                             ======       =========        =====

                                       7
<PAGE>
                                             Net          Weighted
                                           Income          Average     Per Share
                                       (in thousands)      Shares       Amount
                                        ------------     ----------    ---------
For the quarter ended September 30, 1999

Basic EPS
Net Income available to common shareholders  $1,257       4,838,482        $0.26
                                             ======                        =====
Effect of Dilutive Securities:
Stock Options                                                47,339
Unvested RRP shares                                           8,476
                                                          ---------
Diluted EPS
Net Income available to common shareholders
  plus assumed conversions                   $1,257       4,894,297        $0.26
                                             ======       =========        =====
For the quarter ended September 30, 1998

Basic EPS
Net Income available to common shareholders    $478       3,701,018        $0.13
                                             ======                        =====
Effect of Dilutive Securities:
Stock Options                                                31,083
Unvested RRP shares                                          13,663
                                                          ---------
Diluted EPS
Net Income available to common shareholders
  plus assumed conversions                     $478       3,745,764        $0.13
                                             ======       =========        =====


(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 gains or losses 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 nine-month periods ended September 30, 1999
and 1998 was ($1.2) million and $2.5 million, respectively. Comprehensive income
(loss) for the three-month periods September 30, 1999 and 1998 was $435 thousand
and $1.7 million, respectively. The decreases from the 1998 to 1999 periods were
due to the increases in the net  unrealized  losses on the Company's  securities
available  for sale  portfolio  as a result of a general  increase  in  interest
rates.










                                       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 September 30, 1999, the loans  receivable,  net, to
assets ratio was 62.8%,  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 86.2% at September
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
regulatory  agencies,  fluctuations in interest  rates,  demand for loans in the



                                   9
<PAGE>

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 less 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 advise readers that the factors listed above could
affect the Company's financial  performance and could cause the Company's actual
results for future periods to differ  materially from any opinions or statements
expressed with respect to future periods in any current statements.

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


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  1,337,081  shares of common  stock in the
merger. Of the 1,337,081 shares issued in the merger, 1,327,086 were issued from
the Company's treasury stock and 9,995 were newly-issued  shares.  Cash was paid
in lieu of 126 fractional 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  statements of income
from the date of acquisition.

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.


Financial Condition

Comparison  of Financial  Condition at September 30, 1999 and December 31, 1998.
Total assets  decreased by $10.4 million or 1.4% to $725.1  million at September
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 $28.3 million and
$20.2 million,  respectively,  offset by increases in loans receivable,  net and
other assets of $34.8 million and $2.2 million, respectively.

                                       10
<PAGE>

Cash and cash equivalents decreased $28.3 million, or 66.1%, to $14.5 million at
September 30, 1999 from $42.8 million at December 31, 1998. Likewise, securities
available  for sale  decreased  $20.2  million,  or 8.3%,  to $224.0  million at
September 30, 1999 from $244.2 million at December 31, 1998 resulting  primarily
from the  maturities and calls of securities.  Loans  receivable,  net increased
$34.8  million from $420.9  million at December 31, 1998,  to $455.7  million at
September 30, 1999, an increase of 8.3% due to increased loan activity primarily
in  residential  mortgage  and home  equity  loans.  The  shift in  assets  from
lower-yielding   federal  funds  sold  and  securities  available  for  sale  to
higher-yielding  loans is consistent  with the Company's  strategy to attempt to
increase its interest rate spread and net interest  margin,  while  limiting its
interest rate risk.

In addition,  other assets increased $2.2 million,  or 67.7%, to $5.5 million at
September 30, 1999 due primarily to the deferred tax consequences related to the
adjustment of securities available for sale to fair value.


Deposits decreased by $8.5 million,  or 1.8%, to $452.9 million at September 30,
1999 from $461.4 million at December 31, 1998. Likewise,  securities  repurchase
agreements decreased $19.6 million, or 12.9%, to $132.8 million at September 30,
1999 from $152.4  million at December 31, 1998, due primarily to the maturity of
repurchase agreements.  In addition, due to brokers decreased $6.0 million to $0
at September 30, 1999, resulting from the payment of amounts due to brokers from
purchases of securities  outstanding on December 31, 1998.  Partially offsetting
these  decreases  was an increase in  short-term  advances from the Federal Home
Loan Bank of $28.5 million.  Accrued  expenses and other  liabilities  increased
$2.4 million, or 53.2%, to $6.9 million at September 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 $8.8 million,  or 10.3%,  from $85.9 million at
December 31, 1998 to $77.1 million at September  30, 1999,  due primarily to the
purchases  of treasury  stock  totaling  $7.4  million,  and the decrease in net
unrealized gains or losses on securities available for sale, net of tax, of $4.6
million.  In addition  the Company paid cash  dividends  of 1.3  million.  These
decreases  were offset by net income of $3.4  million for the nine months  ended
September 30, 1999.  Other  significant  items  impacting  shareholders'  equity
during the first nine months of 1999 were the release of 34,992 ESOP shares, and
the continued amortization of the unearned RRP shares.
















                                       11
<PAGE>


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

Net Income.  Net income for the three months ended  September  30, 1999 was $1.3
million compared to $478 thousand for the three months ended September 30, 1998.
Net income for the three months ended September 30, 1999 increased  primarily as
a result of increased net interest income and non-interest income,  coupled with
a decrease in the  provision  for loan losses,  offset in part by an increase in
non-interest  expenses  and  income tax  expense.  These and other  changes  are
discussed in more detail below.

Net Interest Income.  Net interest income  increased $1.8 million,  or 44.2%, to
$5.9 million for the three months ended September 30, 1999 from $4.1 million for
the three months ended  September 30, 1998. The increase in net interest  income
was primarily  due to an increase of $139.2  million,  or 25.0%,  in the average
balance of earning  assets  (primarily  due to the  acquisition  of AFSALA),  in
addition  to an increase  in the  interest  rate spread from 2.20% for the three
months ended  September  30, 1998 to 2.70% for the three months ended  September
30,  1999,  offset by an  increase in the  average  balance of  interest-bearing
liabilities of $112.5 million  (primarily due to the acquisition of AFSALA),  or
23.6%.

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 2.70% for the three months ended  September 30, 1999 from 2.20% for the three
months ended  September  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. As noted  previously,  during the three months ended September 30, 1999,
the Company has  redeployed  assets from  lower-yielding  federal funds sold and
securities  available for sale to the higher-yielding  loan portfolio.  This has
resulted  in an  increase  in both the  interest  rate  spread and net  interest
margin.


Interest  and  Dividend  Income.  Interest  and  dividend  income  increased  by
approximately  $2.4  million,  or 23.9%,  to $12.3  million for the three months
ended September 30, 1999 from $10.0 million for the three months ended September
30, 1998. The increase was largely the result of an increase of $139.2  million,
or 25.0%,  in the average  balance of earning  assets to $695.5  million for the
three months ended  September  30, 1999,  as compared to $556.3  million for the
three months ended  September 30, 1998.  The increase in the average  balance of
earning assets consisted  primarily of increases in the average balance of loans
receivable of $119.3 million, or 36.1%,  securities  available for sale of $30.6
million, or 14.9%, and FHLB of New York stock of $1.0 million, or 16.2 %, offset
in part  by a  decrease  in the  average  balance  of  federal  funds  sold  and
interest-bearing  deposits of $11.7 million,  or 85.0%. In addition,  offsetting
the effects of the  increase in the  average  balance of earning  assets was a 6
basis point decrease in the average yield on total earning assets.  The yield on
the average  balance of earning  assets was 7.04% and 7.10% for the three months
ended September 30, 1999 and 1998, respectively.


                                       12
<PAGE>

Interest and fees on loans increased $2.0 million, or 32.1%, to $8.4 million for
the three months ended  September  30, 1999.  This  increase was  primarily  the
result of an  increase  in the  average  balance of loans  receivable  of $119.3
million offset by a 23 basis point decrease in the average yield.


Interest and dividend  income on securities  available for sale  increased  $481
thousand,  or 14.4%,  to $3.8 million for the three months ended  September  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 $30.6 million  offset by a 3 basis point  decrease in the
average yield on these securities.


Interest Expense. Total interest expense increased by $572 thousand, or 9.7%, to
$6.4 million for the three months ended September 30, 1999 from $5.9 million for
the three  months  ended  September  30, 1998.  Total  average  interest-bearing
liabilities  increased by $112.5  million,  or 23.6%,  to $588.2 million for the
third  quarter of 1999  compared  to $475.7  million  for the same period of the
previous   year.   During  the  same   periods,   the   average   rate  paid  on
interest-bearing liabilities decreased by 56 basis points to 4.34% from 4.90%.

Total interest  expense for the three months ended  September 30, 1999 increased
primarily  due to  increased  interest  expense  relative  to savings  accounts,
certificates  of deposits,  and money market  accounts  primarily as a result of
increases in the average  balances on these deposit  accounts as a result of the
acquisition  of AFSALA.  Offsetting the effects of the increase in these average
balances  was a decrease in the  average  balance of total  borrowed  funds from
$183.3 million to $165.6 million,  in addition to a decrease of 22 basis points,
to 5.41%, in the average rate paid for these funds during the period.


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 September 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                              $449,850     $ 8,350     7.36%       $330,541      $ 6,321     7.59%
  Securities available for sale                  236,345       3,830     6.48%        205,753        3,349     6.51%
  Federal Home Loan Bank Stock                     7,232         127     7.02%          6,224          113     7.20%
  Federal Funds Sold &
     interest-bearing deposits                     2,062          27     5.12%         13,742          172     4.90%
                                          --------------   ---------  --------   ------------   ----------  ----------
      Total earning assets                       695,489      12,334     7.04%        556,260        9,955     7.10%
                                          --------------   ---------  --------   ------------   ----------  ----------
Allowance for Loan Losses                         (5,437)                              (4,242)
Unrealized Gain/(Loss)-AFS Securities             (5,623)                                 380
Other Assets                                      33,052                               13,568
                                          ---------------                         ------------
Total Assets                                    $717,481                             $565,966
                                          ===============                         ============

Interest-Bearing Liabilities
  Savings deposits                               138,366       1,023     2.93%        100,181          764     3.03%
  NOW  deposits                                   36,182         142     1.56%         23,187          135     2.31%
  Certificates of deposit                        222,597       2,773     4.94%        162,516        2,323     5.67%
  Money Market Accounts                           25,405         247     3.86%          6,507           46     2.80%
  Borrowed Funds                                 165,604       2,257     5.41%        183,312        2,602     5.63%
                                          --------------   ---------  --------   ------------   ----------  ----------
      Total interest-bearing liabilities         588,154       6,442     4.34%        475,703        5,870     4.90%
                                          --------------   ---------  --------   ------------   ----------- ----------
Demand Deposits                                   37,382                               25,761
Other Liabilities                                 11,990                                5,602
                                          ---------------                         ------------
Total Liabilities                                637,526                              507,066
                                          ---------------                         ------------
Shareholders' Equity                              79,955                               58,900
                                          ---------------                         ------------
Total Liabilities & Equity                      $717,481                             $565,966
                                          ===============                         ============

    Net interest income                                      $ 5,892                                $4,085

    Interest rate spread                                                 2.70%                                 2.20%

    Net earning assets                          $107,335                              $80,557

    Net interest margin                                                  3.36%                                 2.91%

    Average Earning Assets/Average
     Interest-Bearing Liabilities                118.25%                              116.93%

</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  provision  for loan  losses  for the  three  months  ended
September  30, 1999  decreased  $50 thousand to $175 thousand from $225 thousand
for the three months ended September 30, 1998. The decrease was due primarily to
a decrease in net charge-offs,  partially offset by the impact of an increase in
non-performing loans.

Non-Interest  Income.  Total non-interest income increased by $278 thousand,  or
116.3%, to $517 thousand for the three months ended September 30, 1999 from $239
thousand for the three  months  ended  September  30,  1998.  This  increase was
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
$60 thousand  during the quarter  ended  September 30, 1998.  Also,  included in
other  non-interest  income for the third quarter of 1999 was  approximately $70
thousand  representing  interest received from IRS tax refunds, as well as a $20
thousand gain on the sale of assets which were fully depreciated.

Non-Interest Expenses.  Non-interest expenses increased $714 thousand, or 21.5%,
to $4.0 million for the three months ended  September 30, 1999 from $3.3 million
for the three  months  ended  September  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 amortization of goodwill
as a result of the acquisition of AFSALA. Also impacting  non-interest  expenses
during the current  quarter,  were costs  associated  with the  relocation  of a
branch. These and other changes are discussed in more detail below.

Salaries, wages and benefits increased by $511 thousand, or 32.7%, due primarily
to increased  costs as a result of the  acquisition of AFSALA,  the opening of a
new branch in February  1999, 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. The fluctuation in the expense related to the ESOP for the quarters
ended September 30, 1999 and September 30, 1998 was not significant.

Occupancy and equipment increased $163 thousand,  or 42.2%, to $549 thousand for
the three months ended  September 30, 1999, from $386 thousand in 1998 primarily
due to the increased rent and maintenance  expense as a result of the opening of
a new branch in February 1999 and the four additional AFSALA branches  acquired,
in addition  to costs  associated  with the  relocation  of a branch  during the
quarter.

Data processing  increased $31 thousand,  or 9.5%, from $328 thousand in 1998 to
$359 thousand for the three months ended  September 30, 1999 primarily due to an
increase in the number of deposit and loan  accounts due to the  acquisition  of
AFSALA.

Non-interest expenses for the three months ended September 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.


                                       15
<PAGE>

Professional  fees  decreased  $34  thousand,  or 23.1%,  from the quarter ended
September 30, 1998 to the quarter ended  September 30, 1999 due primarily to $57
thousand in legal  expenses  incurred by the  Company  during the quarter  ended
September 30, 1998 to defend against litigation initiated by a shareholder.

Other non-interest  expense decreased $118 thousand,  or 13.2%, to $779 thousand
for the three months ended  September  30, 1999 from $897 thousand for the three
months ended  September 30, 1998.  this decrease was due primarily from expenses
related to the  settlement  of a  shareholder  action and a charge  related to a
repurchase modification of $75 thousand and $67 thousand,  respectively,  during
the three months ended September 30, 1998.

Income Tax  Expense.  Income tax  expense  increased  by $642  thousand  to $943
thousand for the three months ended  September  30, 1999 from $301  thousand for
the three months ended September 30, 1998. The increase was primarily the result
of the increase in income before taxes.



Comparison of Operating Results for the Nine Months Ended September 30, 1999 and
1998.

Net Income.  Net income  increased  by $2.4  million  for the nine months  ended
September  30, 1999 to $3.4  million from $1.0 million for the nine months ended
September  30,  1998.  Net income for the nine months ended  September  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
income tax expense. These and other changes are discussed in more detail below.

Net Interest Income.  Net interest income  increased $5.0 million,  or 42.4%, to
$16.8  million for the nine months ended  September  30, 1999 from $11.8 million
for the nine months  ended  September  30,  1998.  The  increase in net interest
income was  primarily  due to an increase of $178.5  million,  or 34.4%,  in the
average balance of earning assets  (primarily due to the acquisition of AFSALA),
in addition to an increase in the  interest  rate spread from 2.29% for the nine
months ended September 30, 1998 to 2.56% for the nine months ended September 30,
1999,  offset  by  an  increase  in  the  average  balance  of  interest-bearing
liabilities of $152.8 million  (primarily due to the acquisition of AFSALA),  or
34.7%. As noted previously, during the nine months ended September 30, 1999, the
Company  has  redeployed  assets  from  lower-yielding  federal  funds  sold and
securities  available for sale to the higher-yielding  loan portfolio.  This has
resulted  in an  increase  in both the  interest  rate  spread and net  interest
margin.


Interest  and  Dividend  Income.  Interest  and  dividend  income  increased  by
approximately $8.2 million, or 29.2%, to $36.3 million for the nine months ended
September  30, 1999 from $28.1  million for the nine months ended  September 30,
1998. The increase was largely the result of an increase of $178.5  million,  or
34.4%,  in the average  balance of earning assets to $697.5 million for the nine
months  ended  September  30, 1999,  as compared to $519.0  million for the nine
months ended  September 30, 1998. The increase in the average balance of earning
assets  consisted  primarily  of  increases  in the  average  balance  of  loans
receivable of $131.4 million, or 43.3%,  securities  available for sale of $39.5
million,  or  19.4%,  FHLB of New  York  stock of $2.8  million,  or 63.6 %, and
federal funds sold and interest-bearing deposits of $4.8 million. Offsetting the
effects of the increase in the average  balance of earning assets was a 28 basis
point  decrease in the average yield on total earning  assets.  The yield on the
average  balance of earning assets was 6.95% and 7.23% for the nine months ended
September 30, 1999 and 1998, respectively.


                                       16
<PAGE>

Interest and fees on loans  increased $6.5 million,  or 37.2%,  to $24.0 million
for the nine months ended  September  30, 1999.  This increase was primarily the
result of an increase in the average  balance of net loans  receivable of $131.4
million offset by a 33 basis point decrease in the average yield.



Interest and dividend  income on securities  available for sale  increased  $1.4
million, or 13.9%, to $11.5 million for the nine months ended September 30, 1999
from $10.1  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 $39.5 million  offset by a 30 basis point  decrease in the
average yield on these securities.



Interest Expense. Total interest expense increased by $3.2 million, or 19.7%, to
$19.5  million for the nine months ended  September  30, 1999 from $16.3 million
for the nine months ended  September 30, 1998.  Total  average  interest-bearing
liabilities  increased by $152.8  million,  or 34.7%,  to $593.3 million for the
first nine months of 1999 compared to $440.4  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 4.39% from 4.94%.

Total  interest  expense for the nine months ended  September 30, 1999 increased
primarily due to an increase in the average  balance of total  borrowed funds to
$168.4 million from $142.5 million,  partially  offset by a decrease of 35 basis
points, to 5.46%, 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>
                                                                  Nine months ended September 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                              $434,766     $23,970     7.37%       $303,348      $17,473     7.70%
  Securities available for sale                  243,340      11,488     6.29%        203,883       10,082     6.59%
  Federal Home Loan Bank Stock                     7,221         368     6.81%          4,413          242     7.33%
  Federal Funds Sold &
     interest-bearing deposits                    12,151         429     4.66%          7,365          262     4.69%
                                          --------------   ---------  --------   ------------   ----------  ----------
      Total earning assets                       697,478      36,255     6.95%        519,009       28,059     7.23%
                                          --------------   ---------  --------   ------------   ----------  ----------
Allowance for Loan Losses                         (5,223)                              (4,040)
Due from Brokers                                     805                                6,153
Unrealized Gain/(Loss)-AFS Securities             (1,881)                                 (53)
Other Assets                                      32,161                               15,091
                                          ---------------                         ------------
Total Assets                                    $723,340                             $536,160
                                          ===============                         ============

Interest-Bearing Liabilities
  Savings deposits                               139,089       3,034     2.91%         98,439        2,231     3.03%
  NOW  deposits                                   36,969         441     1.59%         22,485          407     2.42%
  Certificates of deposit                        225,294       8,439     5.01%        170,390        7,289     5.72%
  Money Market Accounts                           23,492         673     3.83%          6,656          145     2.91%
  Borrowed Funds                                 168,414       6,877     5.46%        142,457        6,192     5.81%
                                          --------------   ---------  --------   ------------   ----------  ----------
      Total interest-bearing liabilities         593,258      19,464     4.39%        440,427       16,264     4.94%
                                          --------------   ---------  --------   ------------   ----------- ----------
Demand Deposits                                   34,541                               24,325
Other Liabilities                                 12,140                               11,622
                                          ---------------                         ------------
Total Liabilities                                639,939                              476,374
                                          ---------------                         ------------
Shareholders' Equity                              83,401                               59,786
                                          ---------------                         ------------
Total Liabilities & Equity                      $723,340                             $536,160
                                          ===============                         ============

    Net interest income                                      $16,791                               $11,795

    Interest rate spread                                                 2.56%                                 2.29%

    Net earning assets                          $104,220                              $78,582

    Net interest margin                                                  3.22%                                 3.04%

    Average Earning Assets/Average
     Interest-Bearing Liabilities                117.57%                              117.84%

</TABLE>





                                       18
<PAGE>

Provision for Loan Losses.  The provision for loan losses  decreased $5 thousand
to $670 thousand for the nine months ended September 30, 1999 from $675 thousand
for the nine months ended  September 30, 1998. The decrease was primarily due to
a decrease in net charge-offs,  partially offset by the impact of an increase in
non-performing loans.


Non-Interest  Income. Total non-interest income increased during the nine months
ended  September  30, 1999 to $1.4 million  compared  with $772 thousand for the
nine months ended  September 30, 1998. An increase in service charges on deposit
accounts of $316 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 nine months of 1998 of $165 thousand, are
the primary reasons for the increase from the previous period. Also, included in
other  non-interest  income for the third quarter of 1999 was  approximately $70
thousand  representing  interest  received from IRS tax refunds as well as a $20
thousand gain on the sale of assets which were fully depreciated.


Non-Interest  Expenses.  Non-interest expenses increased $1.5 million, or 14.6%,
to $11.6 million for the nine months ended September 30, 1999 from $10.1 million
for the nine  months  ended  September  30,  1998.  Non-interest  expenses  were
impacted  by  increased  salaries,  wages  and  benefits  primarily  due  to the
additional  AFSALA  branches  acquired,  and the  amortization  of goodwill as a
result of the acquisition of AFSALA. Also impacting  non-interest  expenses were
the  acceleration  of depreciation  and  amortization of equipment and leasehold
improvements,  and costs  associated with the relocation of a branch.  These and
other changes are discussed in more detail below.

Salaries,  wages and benefits  increased  by $1.1  million,  or 23.4%,  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, as well as general cost
of living and merit raises to employees.  The fluctuation in the expense related
to the ESOP for the nine months ended  September 30, 1999 and September 30, 1998
was not significant.

Also, impacting non-interest expenses during the nine months ended September 30,
1998 were $399 thousand of expenses  incurred in connection with the termination
and consulting agreements entered into with the former President and CEO.

Occupancy and equipment  increased $536 thousand,  or 44.8%, to $1.7 million for
the nine months ended  September 30, 1999,  from $1.2 million in 1998  primarily
due to increased rent and  maintenance  expense  resulting from the opening of a
new branch in February 1999 and the four additional  AFSALA  branches  acquired.
Also  contributing to this increase was the  acceleration  of  depreciation  and
amortization of equipment and leasehold improvements on a branch being closed as
a result of the acquisition,  as well as costs associated with the relocation of
a branch during the third quarter of 1999.











                                       19
<PAGE>

Professional fees decreased $218 thousand,  or 43.0%, from the nine months ended
September 30, 1998 to the nine months ended  September 30, 1999 due primarily to
$216 thousand in legal  expenses  incurred by the Company during the nine months
ended  September  30,  1998  to  defend  against   litigation   initiated  by  a
shareholder.

Non-interest  expenses for the nine months ended September 30, 1999 included the
amortization of goodwill totaling  approximately $399 thousand.  The goodwill is
being amortized to expense over fifteen years using the straight-line method.

As previously  mentioned,  included in other  non-interest  expense for the nine
months  ended  September  30,  1998 were  expenses  incurred  in  relation  to a
settlement  of a  shareholder  action and a  modification  charge on  repurchase
agreements totaling $142 thousand.

Income Tax Expense. Income tax expense increased by $1.8 million to $2.5 million
for the nine months  ended  September  30, 1999 from $735  thousand for the nine
months ended  September  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.

                                              Sept. 30,   Dec.31,
                                                1999      1998
                                               ------    ------
                                            (Dollars in thousands)
Non-accruing loans:
   One-to four-family (1)...................   $1,481    $1,018
   Multi-family ............................     --        --
   Commercial real estate ..................      235        20
   Consumer ................................      508       342
   Commercial Business .....................      236       230
                                               ------    ------
     Total .................................    2,460     1,610
                                               ------    ------
Accruing loans delinquent more than 90 days:
   One-to four-family (1)...................      169       358
   Multi-family ............................     --        --
   Commercial real estate ..................      757       215
   Consumer ................................        2         7
   Commercial Business .....................     --        --
                                               ------    ------
     Total .................................      928       580
                                               ------    ------
Troubled debt restructured loans:
   One-to four-family (1)...................       84        85
   Multi-family ............................     --        --
   Commercial real estate ..................      479       537
   Consumer ................................     --        --
   Commercial Business .....................       72        92
                                               ------    ------
     Total .................................      635       714
                                               ------    ------
Total non-performing loans .................    4,023     2,904
                                               ------    ------
Foreclosed and reposessed assets:
   One-to four-family (1) ..................      158       313
   Multi-family ............................     --        --
   Commercial real estate ..................      142        30
   Consumer ................................       35        56
   Commercial Business .....................     --        --
                                               ------    ------
     Total .................................      335       399
                                               ------    ------
Total non-performing assets ................   $4,358    $3,303
                                               ======    ======
Non-performing loans as a percentage
   of total loans ..........................     0.87%     0.68%

Non-performing assets as a percentage
   of total assets .........................     0.60%     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 nine months
                                          ended September 30,
                                           1999         1998
                                          -------     -------
                                         (Dollars in thousands)

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

Charge-offs:
     One- to four-family ..............       (87)        (13)
     Multi-family .....................      --            (4)
     Commercial real estate ...........      --          (161)
     Consumer .........................      (104)       (194)
     Commercial business ..............       (49)       (188)
                                          -------     -------
        Total charge-offs .............      (240)       (560)
                                          -------     -------
Recoveries:
     One- to four-family ..............         4           1
     Multi-family .....................      --          --
     Commercial real estate ...........       147          59
     Consumer .........................        84          43
     Commercial business ..............        24         174
                                          -------     -------
        Total recoveries ..............       259         277
                                          -------     -------
Net recoveries (charge-offs) ..........        19        (283)
Provisions charged to operations ......       670         675
                                          -------     -------
Balance at end of period ..............     5,580       4,199
                                          =======     =======

Ratio of allowance for loan
losses to total loans (period end) ....      1.21%       1.26%

Ratio of allowance for loan losses
to non-performing loans (at period end)    138.70%     127.55%

Ratio of net (recoveries) charge-offs
during the period to average loans out-
standing during the period (annualized)     (0.01%)      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
4% 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 26.92% and 31.97% at
September 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 September  30, 1999 and December 31, 1998,  the Company had $49.6 million and
$21.4 million,  respectively, in outstanding borrowings from the FHLB and $132.8
million and $152.4 million, respectively, in securities repurchase agreements.

As of September 30, 1999 and December 31, 1998,  the Company had $224.0  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
outflows.

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 September 30, 1999,  the Bank's  capital  exceeded each of the
regulatory  capital  requirements of the OTS. The Bank was "well capitalized" at
September 30, 1999  according to regulatory  definition.  At September 30, 1999,
the Bank's consolidated tangible and core capital levels were both $66.4 million
(9.24% of total  adjusted  assets) and its total  risk-based  capital  level was
$70.6 million (20.93% 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.

The Board of Directors  previously  authorized the  repurchase of  approximately
543,000  shares,  or 10%, of its common  stock.  During the first nine months of
1999, the Company  repurchased 459,000 shares of its common stock in open-market
transactions at a total cost of $7.4 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 ensure  resolution  of any Y2K  problems.  The federal  banking
agencies  have  stated  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.  Because  the  majority of the
Company's  mission  critical  systems are  dependent  upon third  party  service
providers or vendors,  contingency  plans  include  using or reverting to manual
systems until system problems can be corrected, or a new vendor can be selected.
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 Year 2000 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 $181 thousand,  of which $135
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  $40 thousand in additional  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  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 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 September 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:  November 15, 1999



/s/ James J. Alescio

James J. Alescio
Senior Vice President, CFO and Treasurer
(Principal Financial and Accounting Officer)
Date:  November 15, 1999



































                                       27
<PAGE>

                                 EXHIBITS INDEX




Exhibit 27     Financial Data Schedule











































                                        28