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, 1998
                                         -------------- 
                                       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, 1998
-----------------------------                -----------------------------------
Common Stock, $.01 Par Value                             4,105,164

<PAGE>


AMBANC HOLDING CO., INC. AND SUBSIDIARIES
FORM 10-Q
June 30, 1998



                                      Table of Contents


Part I.   FINANCIAL INFORMATION

Item 1.        Consolidated Interim Financial Statements (unaudited):

               Consolidated Interim Statements of Income for the three months
               and six months ended June 30, 1998 and 1997.................... 3

               Consolidated Interim Statements of Financial Condition at
               June 30, 1998 and December 31, 1997............................ 4

               Consolidated Interim Statements of Cash Flows for the six  
               months ended June 30, 1998 and 1997............................ 5

               Summarized Notes to Consolidated Interim Financial Statements.. 7

Item 2.        Management's Discussion and Analysis of Financial Condition
               and Results of Operations......................................11

Item 3.        Quantitative and Qualitative Disclosures About Market Risk.....22

Part II.   OTHER INFORMATION..................................................22

Item 1.        Legal Proceedings..............................................22

Item 4.        Submission of Matters to a Vote of Security Holders............22
  
Item 6.        Exhibits and Reports on Form 8-K...............................23

SIGNATURES....................................................................24

EXHIBITS INDEX................................................................25


<PAGE>
Part I.   Financial Information

Item 1.  Financial Statements
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Interim Statements of Income (unaudited)
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>                                                       Six Months          Three Months
                                                               Ended June 30,       Ended June 30,
                                                              1998       1997       1998      1997
                                                              ----------------     ----------------
Interest and dividend income:
<S>                                                          <C>       <C>       <C>        <C>    
   Loans ................................................   $11,152    $ 9,944   $ 5,646    $ 5,053
   Securities available for sale ........................     6,733      7,157     3,328      3,498
   Federal funds sold ...................................        90        258        55        170
   Federal Home Loan Bank stock .........................       129         89        66         52
                                                            -------    -------   -------    -------
     Total interest and dividend income .................    18,104     17,448     9,095      8,773
                                                            -------    -------   -------    -------
Interest Expense:
   Deposits .............................................     6,804      6,451     3,338      3,348
   Borrowings ...........................................     3,590      2,969     1,909      1,417
                                                            -------    -------   -------    -------
     Total interest expense .............................    10,394      9,420     5,247      4,765
                                                            -------    -------   -------    -------
     Net interest income ................................     7,710      8,028     3,848      4,008
Provision for loan losses ...............................       450        638       225        275
                                                            -------    -------   -------    -------
     Net interest income after provision
       for loan losses ..................................     7,260      7,390     3,623      3,733
                                                            -------    -------   -------    -------
Non-interest income:
   Service charges on deposit accounts ..................       464        376       252        195
   Net gains (losses) on securities transactions ........      (105)       177      (112)       178
   Other ................................................       177        150        71         96
                                                            -------    -------   -------    -------
     Total non-interest income ..........................       536        703       211        469
                                                            -------    -------   -------    -------
Non-interest expense:
   Salaries, wages and benefits .........................     3,155      2,891     1,570      1,545
   Occupancy and equipment ..............................       811        711       398        377
   Data processing ......................................       489        457       238        225
   Federal deposit insurance premium ....................        21         19        11         10
   Correspondent bank processing fees ...................        67         64        37         30
   Real estate owned and repossessed assets expenses, net        21        243        13        133
   Professional fees ....................................       360        256       222        147
   Consulting and termination cost of former executive ..       399          0       399          0
   Other ................................................     1,496      1,487       777        846
                                                            -------    -------   -------    -------
     Total non-interest expenses ........................     6,819      6,128     3,665      3,313
                                                            -------    -------   -------    -------
Income  before taxes ....................................       977      1,965       169        889
Income tax expense ......................................       434        741        72        317
                                                            -------    -------   -------    -------
     Net income .........................................   $   543    $ 1,224   $    97    $   572
                                                            -------    -------   -------    -------
Net income per common share - basic .....................   $  0.14    $  0.30   $  0.03    $  0.14
Net income per common share - diluted ...................   $  0.14    $  0.30   $  0.03    $  0.14
</TABLE>
See accompanying notes to consolidated interim financial statements.

                                       3
<PAGE>
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Interim Statements of Financial Condition (unaudited)
(dollars in thousands)                                    June 30,  December 31,
                                                            1998       1997
                                                           -------------------- 
                      Assets

Cash and due from banks ............................... $   6,039   $  10,225
Federal funds sold ....................................       --         --
                                                            -----      ------
     Cash and cash equivalents ........................     6,039      10,225

Securities available for sale, at fair value ..........   223,456     205,842
Loans receivable, net of unamortized fees .............   325,283     284,930
     Allowance for loan losses ........................    (4,090)     (3,807)
                                                          -------     -------
     Loans receivable, net ............................   321,193     281,123
                                                          -------     -------
Accrued interest receivable ...........................     3,433       3,734
Premises and equipment, net ...........................     2,879       3,121
Federal Home Loan Bank of New York stock, at cost .....     4,440       3,291
Real estate owned and repossessed assets ..............        63         143
Other assets ..........................................     3,884       2,965
                                                        ---------   ---------
     Total assets ..................................... $ 565,387   $ 510,444
                                                        =========   =========

               Liabilities and Shareholders' Equity

Liabilities:
   Deposits ........................................... $ 321,664   $ 333,265
   Advances from borrowers for taxes and insurance ....     2,500       1,902
   Advances from FHLB .................................    38,800      12,300
   Other borrowed funds ...............................   140,970      99,250
   Accrued interest payable ...........................       782         819
   Accrued expenses and other liabilities .............     2,301       1,706
                                                        ---------    --------
     Total liabilities ................................   507,017     449,242
                                                        ---------    --------
Shareholders' equity:
   Preferred stock $.01 par value. Authorized 5,000,000
    shares; none outstanding at June 30, 1998 and
    December 31, 1997..................................       --         --
   Common stock $.01 par value. Authorized 15,000,000
    shares; 5,422,250  shares issued  at  June 30,
    1998 and December 31, 1997 ........................        54          54
   Additional paid in capital .........................    52,668      52,385
   Retained earnings, substantially restricted ........    26,499      26,458
   Treasury Stock, at cost (1,317,086 shares at June
    30, 1998  and  1,115,832 at December 31, 1997) ....   (16,510)    (12,585)
   Common stock acquired by ESOP ......................    (3,058)     (3,303)
   Unearned RRP shares issued .........................    (1,308)     (1,533)
   Accumulated other comprehensive income .............        25        (274)
                                                           ------      ------
     Total shareholders' equity .......................    58,370      61,202
                                                           ------      ------
     Total liabilities and shareholders' equity ....... $ 565,387   $ 510,444
                                                        =========   =========

See accompanying notes to consolidated interim financial statements.

                                       4
<PAGE>


AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Interim Statements of Cash Flows (unaudited)
(dollars in thousands)                                       For the six months
                                                               ended June 30,
                                                              1998        1997
                                                             -------------------

Increase (decrease) in cash and cash equivalents:
 Cash flows provided by operating activities:   
  Net income ........................................... $     543   $   1,224
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and Amortization ......................       353         288
    Provision for loan losses ..........................       450         638
    Provision for losses and writedowns on
     real estate owned and repossessed assets ..........         4         147
    ESOP compensation expense ..........................       446         352
    RRP Expense ........................................       226          48
    Net (gains) losses on securities transactions ......       105        (177)
    Net loss on sale of other real estate owned
     and other repossessed assets ......................         4          10 
    Net amortization on securities .....................       568         159
    (Increase) decrease in accrued interest
     receivable and other assets .......................      (760)      1,364
    Increase (decrease) in accrued interest
     payable, and other liabilities ....................       558       3,778
    Increase (decrease) in advances from
     borrowers for taxes and insurance .................       598         387
                                                         ---------   ---------
      Net cash provided by operating activities ........     3,095       8,218
                                                         ---------   ---------
Cash flows from investing activities:
 Proceeds from sales and redemptions of
  securities available for sale ........................    94,126      48,468
 Purchases of securities available for sale ............  (138,635)    (44,979)
 Proceeds from principal paydowns and
  maturities of securities available for sale ..........    26,721      12,461
 Purchase of FHLB stock ................................    (1,149)     (1,262)
 Net (increase) decrease in loans made to customers ....    (8,768)    (20,423)
Loans purchased ........................................   (31,888)       ---   
 Capital expenditures ..................................       (92)       (704)
 Proceeds from sale of other real estate owned and
  other repossessed assets .............................       207         399
                                                           -------      ------ 
 Net cash used by investing
  activities ...........................................   (59,478)     (6,040)
                                                           -------      ------  
(Continued)


                                       5
<PAGE>


AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Interim Statements of Cash Flows, Continued (unaudited)
(dollars in thousands)                                     For the six months
                                                             ended June 30,
                                                            1998        1997
                                                           ------------------   

Cash flows from financing activities:
 Exercise of stock options ..........................          56        --
 Purchase of Treasury Stock .........................      (3,976)       --
 Dividends paid .....................................        (502)       --
 Net increase (decrease) in deposits ................     (11,601)     28,057
 Advances from (repayments on) FHLB
  borrowings, net ...................................      26,500      (6,000)
 Increase (decrease) in other borrowed funds, net ...      41,720     (14,950)
                                                        ---------   ---------
Net cash provided by financing activities ...........      52,197       7,107
                                                        ---------   ---------
Net increase (decrease) in cash and cash equivalents       (4,186)      9,285
Cash and cash equivalents at beginning of year ......      10,225      10,887
                                                        ---------   ---------
Cash and cash equivalents at end of period ..........   $   6,039   $  20,172
                                                        =========   =========


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

     Interest .......................................   $  10,432   $   9,480
                                                        =========   =========

     Income Taxes ...................................   $     838   $     880
                                                        =========   =========


Noncash investing activity:
 Reduction in loans receivable resulting from 
  the transfer to real estate owned and other
  repossessed assets ................................        $135        $131
                                                        =========   =========
                                                                         
 Net increase (decrease) in net unrealized 
  gain (loss) on securities available for 
  sale, net of deferred tax effect ..................        $299       ($339)
                                                        =========   =========

Noncash operating activity:
 Tax benefit from vesting of RRP shares .............         $76       ----
                                                        =========   =========

See accompanying notes to consolidated interim financial statements.
           
                                       6
<PAGE>


     SUMMARIZED 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
six month  periods  ended June 30,  1998 and June 30,  1997 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) 1997 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, 1998.

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

(3)  Earnings per share

     On December 31, 1997,  the Company  adopted the provisions of SFAS No. 128,
"Earnings  Per Share".  The statement  supersedes  Accounting  Principles  Board
Opinion No. 15, "Earnings Per Share" and related  interpretations.  SFAS No. 128
requires  dual  presentation  of Basic  EPS and  Diluted  EPS on the face of the
consolidated  income statement for all entities with complex capital  structures
and  specifies  additional  disclosure  requirements.  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.  Unvested  restricted  stock awards are  considered  outstanding  common
shares and included in the computation of basic EPS as of the date that they are
fully vested.  Diluted EPS reflects the  potential  dilution that could occur if
securities or other  contracts to issue common stock were  exercised into common
stock or resulted in the issuance of common stock. All prior period EPS data has
been restated to conform to the  provisions of this  Statement.  The adoption of
this  Statement  did not have a material  effect on the  Company's  consolidated
financial position or results of operations.

     Calculations  of basic earnings per share (basic EPS) and diluted  earnings
per share (diluted EPS) are as follows:

                                                           Weighted
                                               Net         Average     Per Share
                                          Income (loss)    Shares        Amount
                                                   (Dollars in thousands,
                                                  except per share amounts)

For the six months ended June 30, 1998:  

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


                                       7
<PAGE>


For the six months ended June 30, 1997:

Basic EPS
Income available to common shareholders    $   1,224      4,017,979    $   0.30
                                               =====                       ====
Effect of Dilutive Securities
Stock Options                                                 1,617
RRP shares                                                    1,122
                                                              -----   
Diluted EPS
Income available to common shareholders
  plus assumed conversions                      1224      4,020,718        0.30
                                                ====      =========        ==== 


For the three months ended June 30, 1998:

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


For the three months ended June 30, 1997:

Basic EPS
Income available to common shareholders    $     572      4,024,536    $   0.14
                                                 ===                       ==== 
Effect of Dilutive Securities
Stock Options                                                 3,233
RRP shares                                                    2,244
                                                              -----
Diluted EPS
Income available to common shareholders
  plus assumed conversions                       572      4,030,013        0.14
                                                 ===      =========        ==== 

(4)  Comprehensive Income

     On January 1, 1998,  the Company  adopted the  provisions  of  Statement of
Financial Accounting Standards No. 130, "Reporting  Comprehensive  Income." This
statement  establishes  standards  for  reporting  and display of  comprehensive
income and its components. Comprehensive income includes the reported net income
of a company  adjusted  for items  that are  currently  accounted  for as direct
entries to equity, such as the mark to market adjustment on securities available
for sale, foreign currency items and minimum pension liability  adjustments.  At
the Company, comprehensive income represents net income plus other comprehensive
income,  which  consists  of the net  change  in  unrealized  gains or losses on
securities  available for sale,  net of tax, for the period.  Accumulated  other
comprehensive income represents the net unrealized gains or losses on securities
available for sale as of the balance sheet dates.


                                       8
<PAGE>


     Comprehensive income (loss) for the three-month periods ended June 30, 1998
and 1997 was $491,000 and $1.8 million, respectively.

     Comprehensive  income (loss) for the six-month  periods ended June 30, 1998
and 1997 was $842,000 and $885,000,  respectively.  The following summarizes the
components of other comprehensive income:


AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Notes to Financial Statement
Consolidated Interim Statements of Comprehensive Income  (unaudited)

                                                            The six months ended
                                                                   June 30,
                                                               1998       1997
                                                              ----------------  
                                                          (Dollars in thousands)
Unrealized gains (losses) on Securities:
Unrealized net holding gains (losses) arising during
  the six months ended June 30, 1998 and 1997,
  respectively, net of tax (pre-tax amount of $393
  and ($388), respectively) ...........................    $   236   ($  233)
Reclassification adjustment for net (gains) losses
  realized in net income during the six months ended
  June 30, 1998 and 1997, net of tax (pre-tax amount
  of $105 and ($177), respectively) ...................         63      (106)
                                                             -------   -------
Other comprehensive income (loss) during the six
  months ended June 30, 1998 and 1997, respectively ...    $   299   ($  339)
                                                             =======   =======

                                                         The three months ended
                                                                  June 30,
                                                             1998        1997
                                                           ------------------
                                                         (Dollars in thousands)
Unrealized gains (losses) on Securities:                     
Unrealized net holding gains (losses) arising during
  the three months ended June 30, 1998 and 1997,
  respectively, net of tax (pre-tax amount of $545
  and $2,148, respectively) ...........................   $   327      $ 1,289
Reclassification adjustment for net (gains) losses
  realized in net income during the three months ended
  June 30, 1998 and 1997, net of tax (pre-tax amount
  of $112 and ($178), respectively) ...................        67         (107)
                                                          -------       -------
Other comprehensive income during the three months
  ended June 30, 1998 and 1997, respectively ..........   $   394      $ 1,182
                                                          =======      =======

(5)  SFAS 125

     Effective  January 1, 1998 the Company adopted the remaining  provisions of
SFAS No. 125,  "Accounting  for Transfers and Servicing of Financial  Assets and
Extinguishments  of Liabilities,"  which relate to the accounting for securities
lending,  repurchase agreements,  and other secured financing activities.  These
provisions,  which were  delayed for  implementation  by SFAS No.  127,  are not


                                       9
<PAGE>


expected to have a material  impact on the  Company.  In  addition,  the FASB is
considering  certain  amendments and  interpretations  of SFAS No. 125 which, if
enacted in the future, could affect the accounting for transactions within their
scope.

(6)  SFAS 131

     In June 1997, the FASB issued SFAS No. 131,  "Disclosure  about Segments of
an Enterprise and Related  Information".  SFAS No. 131 establishes standards for
reporting  by  public  companies  of  operation  segments  within  the  company,
disclosures  about products and services,  geographic areas and major customers.
This statements is effective for the Company's 1998 annual financial  reporting.
Management believes that the adoption of SFAS No. 131 will not have an impact on
the Company's consolidated financial statements.

(7)  SFAS 132

     In February  1998,  the FASB issued SFAS No. 132,  "Employers'  Disclosures
about Pension and Other  Postretirement  Benefits,"  which amends the disclosure
requirements of SFAS No. 87, "Employers' Accounting for Pensions,  "SFAS No. 88,
"Employers'  Accounting for  Settlements  and  Curtailments  of Defined  Benefit
Pension  Plans and for  Termination  Benefits,"  and SFAS No.  106,  "Employers'
Accounting for Postretirement  Benefits Other Than Pensions."  Statement No. 132
standardizes the disclosure requirements of Statements No. 87 and No. 106 to the
extent  practicable and recommends a parallel format for presenting  information
about pensions and other postretirement  benefits.  This statement is applicable
to all entities and addresses disclosure only. The Statement does not change any
of the measurement or recognition  provisions  provided for in Statement No. 87,
No. 88, or No. 106. The Statement is effective for fiscal years  beginning after
December 15, 1997. Management  anticipates providing the required disclosures in
the December 31, 1998 consolidated financial statements.

(8)  SFAS 133

     In June 1998,  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.  This  Statement  is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
Management is currently evaluating the impact of this Statement on the Company's
consolidated financial statements.

(9)  Acquisition

     On April 23, 1998, the Company signed an agreement to merge AFSALA Bancorp,
Inc.  (AFSALA) with the Company.  Under the terms of the agreement,  each AFSALA
share will be converted  into 1.07 shares of the Company in a tax-free stock for
stock exchange,  for a total value of approximately $30 million. The acquisition
is  expected to be  completed  in the fourth  quarter of 1998.  AFSALA had total
assets of $166 million and  deposits of $139  million as of March 31, 1998.  The
acquisition  will be  accounted  for under the  purchase  method of  accounting.
Accordingly,  the results of  operations  of AFSALA  will be  included  with the
Company's, beginning with the date of acquisition. Consummation of the merger is
subject to  satisfaction  of a number of  conditions,  including,  amoung  other
things, stockholders' and regulatory approval.


                                       10
<PAGE>

Item 2


   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                                   OPERATIONS

     The following  discussion and analysis  should be read in conjunction  with
the unaudited  consolidated  interim financial  statements and related notes and
with the statistical  information and  consolidated  financial data appearing in
this report as well as the Company's 1997 Annual Report on Form 10-K.


Forward Looking Statements

     When used in this quarterly Report on Form 10-Q, 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  --  including,  changes in economic  conditions  in the Company's
market  area,  changes in  policies  by  regulatory  agencies,  fluctuations  in
interest rates,  demand for loans in the Company's  market area and competition,
that could cause actual results to differ materially from historical earnings or
losses and those  presently  anticipated  or  projected.  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

     On April 23, 1998, the Company signed an agreement to merge AFSALA Bancorp,
Inc.  (AFSALA) with the Company.  Under the terms of the agreement,  each AFSALA
share will be converted  into 1.07 shares of the Company in a tax-free stock for
stock exchange,  for a total value of approximately $30 million. The acquisition
is  expected to be  completed  in the fourth  quarter of 1998.  AFSALA had total
assets of $166 million and  deposits of $139  million as of March 31, 1998.  The
acquisition  will be  accounted  for under the  purchase  method of  accounting.
Accordingly,  the results of  operations  of AFSALA  will be  included  with the
Company's, beginning with the date of acquisition. Consummation of the merger is
subject to  satisfaction  of a number of  conditions,  including,  amoung  other
things,  stockholders'  and  regulatory  approval.  The special  meetings of the
shareholders  of Ambanc and AFSALA will be held on September 1 and  September 3,
respectively. Closing is expected to occur early in the fourth quarter.

     A Form S-4 was filed  electronically  with the SEC on July 23, 1998 and can
be accessed at  www.sec.gov,  under EDGAR  Database.  The Form S-4 contains more
detailed information pertaining to the pending merger.


                                       11
<PAGE>


Settlement With Shareholder

     On August 11, 1998, the Company and AFSALA  announced that they had reached
an agreement with Seymour Holtzman,  a stockholder of both companies,  regarding
the pending merger of the two companies.

     Mr. Holtzman has agreed to drop all litigation against Ambanc, refrain from
any future  litigation  against both  companies  until at least January 1, 2000,
fully support and vote for the pending  merger of Ambanc and AFSALA and vote for
Ambanc's  nominees  for  director  and avoid  becoming  involved  with any other
hostile action at the annual meeting of Ambanc stockholders to be held in 1999.

     In return,  Ambanc has agreed to retain Sandler  O'Neill & Partners,  L.P.,
its  regular  investment  banker,  to seek ways to  maximize  shareholder  value
following  completion  of the  merger,  including  the  possible  merger  of the
combined  companies with a third party.  If Ambanc has not entered into a merger
or acquisition agreement with a third party acquiror on or before April 1, 1999,
or a merger or  acquistion is not  consummated,  Ambanc has agreed to appoint to
the Ambanc board two persons  from a list of at least four  persons  selected by
Mr. Holtzman.  Finally,  Ambanc and AFSALA have agreed to reimburse Mr. Holtzman
$80,000 for a portion of his expenses incurred in the litigation with Ambanc and
his actions with respect to the merger.

     
Year 2000 ("Y2K") Issues

     Year 2000 issues are the result of computer  programs  having been  written
using two digits  rather  than four to define the  applicable  year.  Any of the
Company's  programs that have time sensitive software may recognize a date using
"00" as the year 1900 rather than year 2000. This could result in a major system
failure or  miscalculations.  The  Company is also aware of these risks to third
parties,  including  vendors  (and to the  extent  appropriate,  depositors  and
borrowers),  and the potential  adverse  impact on the Company that could result
from failures by these parties to adequately address the Year 2000 issues.

     The Company has  established  a Y2K  Committee  to conduct a  comprehensive
review of its computer systems to identify the systems that could be affected by
the Y2K problem.  The Y2K  Committee  reports on a monthly basis to the Board of
Directors as to the Company's status in resolving any Year 2000 issues.

     To  date,   the  Y2K   Committee   has   received   Year  2000   compliance
certifications/progress  forms from  approximately 70% of the Company's vendors.
Of the responses  received,  60% of the vendors have certified that they are Y2K
compliant  with the remaining  40%  informing the Company of their  progress and
anticipated  compliance  dates;  however,  no  assurance  can be given as to the
adequacy of such plans or to the timeliness of their  implementation.  Responses
have been received from all mission  critical  vendors and periodic updates will
be requested.
                                       
     Final  versions of the  Company's  Y2K  customer  evaluation  forms and the
associated risk analysis have been  completed.  Mission  critical  borrowers are
being  contacted to ensure that they complete the  evaluation and risk analysis.
The  assessment  of the  Company's  commercial  borrowers'  Y2K  readiness has a
targeted completion date of September 30, 1998.


                                       12
<PAGE>


     The Company will be conducting  its Y2K test with its primary  outside data
processing service bureau in August 1998. However,  due to the Company's pending
merger with AFSALA and certain  issues  pertaining to software and vendors to be
retained post-merger, the Company will complete a limited testing program during
the remainder of 1998 on other software applications.

     The Y2K Committee has initiated the  development  of  contingency  plans to
address the actions that may be needed to be taken by the Company  under various
"what  if"  scenarios,  e.g.  "what  if"  the  Company's  primary  outside  data
processing  service  bureau failed to be Y2K  compliant on January 1, 2000.  The
target date for  completion  of the  contingency  plans is December 31, 1998. In
addition,  the Company's  contingency plans will be modified as appropriate when
decisions pertaining to the pending merger with AFSALA are finalized.

     Based on the Company's current knowledge and investigations, the expense of
the year 2000 problem as well as the related  potential  effect on the Company's
earnings is not expected to have a material  effect on the  Company's  financial
position  or  results  of  operations.  Furthermore,  the  Company  expects  any
corrective  measures required to be prepared for the Year 2000 to be implemented
on a timely basis.

     
General

     The results of operations of the  Company's  subsidiary  Bank are dependent
primarily on net interest  income,  which is the  difference  between the income
earned on its  loans and  securities  and its cost of funds,  consisting  of the
interest  paid on  deposits  and  borrowings.  Results  of  operations  are also
affected by the Bank's  provision  for loan losses,  net expenses on  foreclosed
assets and by general economic and competitive conditions,  particularly changes
in interest rates,  government  policies and actions of regulatory  authorities.
Future  changes in  applicable  law,  regulations  or  government  policies  may
materially  impact the  financial  condition  and results of  operations  of the
Company and the Bank.

     The Company recorded net income of $97,000, or $0.03 per diluted share, for
the quarter ended June 30, 1998 and $543,000,  or $0.14 per diluted  share,  for
the six months ended June 30, 1998. In the  corresponding  periods in 1997,  the
Company  had net  income of  $572,000,  or $0.14  per  diluted  share,  and $1.2
million, or $0.30 per diluted share, respectively.

     The decline in net income for the three and six months  ended June 30, 1998
as compared to the corresponding periods in 1997 was attributable primarily to a
$399,000  charge  against  operating  results  related  to the  termination  and
consulting  agreements  entered  into  with  the  former  President  and CEO and
$159,000 in legal fees  incurred by the Company to defend  against legal actions
initiated by a shareholder.  Also  contributing  to the decline in earnings were
losses on securities  transactions  of $112,000 and $105,000 for the quarter and
year-to-date periods, respectively, compared to gains on securities transactions
of $178,000 and $177,000 in the same 1997  periods.  Core income  before  taxes,
which  excludes  these  items,  for the three  months  ended  June 30,  1998 was
approximately  $839,000 compared to $711,000 in the prior year's quarter and for
the six months  ended June 30, 1998,  core income  before taxes was $1.6 million
compared to $1.8 million in 1997.


                                       13
<PAGE>

                             RESULTS OF OPERATIONS


Comparison of Operating Results for the Quarters Ended June 30, 1998 and 1997.


Net Interest Income

     Net interest income before  provision for loan losses for the quarter ended
June 30,  1998 was $3.8  million,  a decrease  of  $160,000  or 4.0%,  from $4.0
million in 1997.  Total interest and dividend income increased by $322,000 while
total interest expense increased by $482,000.

     The increase in total  interest and dividend  income  resulted  mainly from
growth  by $34.2  million,  or  13.2%,  in the  average  volume of loans for the
quarter  ended  June 30,  1998 as  compared  to the same  quarter  in 1997.  The
increase in average loan volume is primarily related to the purchase of $31.9 of
residential  loans located  outside of the Bank's  primary market area. See also
"Liquidity  and  Funding."  The  positive  effect  derived  from the increase in
average loan volume was slightly offset by a decline of 10 basis points to 7.72%
in the average  rate  earned on loans  resulting  in a net  increase in interest
income from loans of  $593,000,  or 11.7%.  The decline in the yield on loans is
partially due to the  amortization of the premiums paid for the previously noted
purchased  loans.  The  increase  in loan  interest  was  partially  offset by a
decrease of $171,000 in interest income earned on securities  available for sale
("securities")  and a net decline of $99,000 from other interest earning assets,
primarily federal funds sold.

     The decrease in interest  income on securities was mainly due to a 75 basis
points  decrease in the average rate earned to 6.49%,  the result of the general
decline in market  interest  rates  from June 1997 to June 1998.  The lower rate
environment  produced an acceleration in mortgage prepayments on mortgage backed
securities  (approximately  74% of total securities) and redemptions on callable
securities.  The  reinvestments of the cash flows generated from securities were
made at the lower  prevailing  interest rates that were in effect on the date of
the reinvestment.

     The increase in total interest expense was due mainly to an increase in the
interest paid on borrowered  funds (advances from FHLB and other borrowed funds)
of $491,000. The increase in the interest paid on borrowered funds resulted from
an  increase  in the  average  volume of $38.1  million,  partially  offset by a
decline in the average  rate paid to 5.84% for the  quarter  ended June 30, 1998
from 6.11% in the  comparable  1997  quarter.  The increase in average  borrowed
funds was  primarily  used to fund the above  noted  purchased  loans.  See also
"Liquidity and Funding."

     Ambanc Holding Co., Inc. operates in an environment of intense  competition
for  deposits  and  loans and due to this  heightened  level of  competition  to
attract and retain  customers,  the Company must  continue to offer  competitive
interest  rates on loans and  deposits.  As a consequence  of these  competitive
pressures, from time-to-time, the relative spreads between interest rates earned
and interest rates paid will tighten, exerting downward pressure on net interest
income.  However,  management  does not want to curtail  growth in the Company's
customer base for loans and deposits, especially core deposits, and the positive
benefits to be derived  from them by offering  non-competitive  interest  rates.
Management  believes that the longer-term  benefits that should be realized from
this strategy will outweigh the  shorter-term  costs associated with attracting,
cross-selling and retaining an expanding customer base.


                                       14
<PAGE>


     Between  June  30,  1997 and  1998,  the  number  of  transaction  accounts
(comprised of commercial  and retail demand deposit  accounts,  NOW accounts and
money market fund  accounts)  increased by 1200  accounts,  or 5.20%,  to 24,283
accounts and the balances in these  accounts  increased  by  approximately  $6.6
million, or 12.89% to $57.4 million.  The number of commercial and retail demand
deposits grew by 999 accounts,  or 5.59%, and the related balances  increased by
$4.2 million, or 17.98%, to $27.7 million at June 30, 1998 from $23.5 million at
June 30, 1997. The Company's  growing core deposit customer base provides Ambanc
with the potential for future,  profitable customer relationships,  which should
enhance shareholder value.


Provision for loan losses

     The provision for loan losses  declined by $50,000,  or 18.2%,  to $225,000
for the three months ended June 30, 1998,  from $275,000 in 1997.  The reduction
in the provision was primarily  attributable to the improved quality of the loan
portfolio,  as reflected by a reduction of $102,000 in net loan  charge-offs  to
$87,000  during the three months ended June 30, 1998, as compared to $189,000 in
the same period in 1997.


Non-interest income

     Total  non-interest  income  decreased  by  $258,000  due to net  losses on
securities  transactions  during the  quarter  ended June 30,  1998 of  $112,000
compared to net gains on securities transaction of $178,000 in the corresponding
quarter of 1997.

     Service  charges on deposit  accounts  increased  by $57,000  due mainly to
price increases in certain service charges. Partially offsetting the increase in
service  charges  was a decrease  in other  non-interest  income of $25,000  due
primarily  to the  receipt  in April  1997 of  $25,000  from the New York  State
Superintendent  of Banks in partial payment of a claim against Nationar compared
to the final payment  received  against the claim of $9,000 in April 1998.  Also
contributing  to the  decrease  in other  non-interest  income  was a decline of
$11,000 in commissions received on the sale of mutual funds and annuities by the
Company's subsidiary, ASB Insurance Agency, Inc.


Non-interest expense

     Total non-interest expense for the quarter ended June 30, 1998, as compared
to the corresponding  quarter in 1997, increased by $352,000 attributable to the
previously  mentioned  $399,000  incurred in connection with the termination and
consulting  agreements  entered into with the former  President  and CEO and the
$159,000 in legal expenses incurred by the Company to defend against  litigation
initiated  by a  shareholder.  While  it is  anticipated  that the  legal  costs
associated  with defending  against legal action  initiated by this  shareholder
will continue into the third quarter of 1998, the Company announced a settlement
with  this   shareholder  on  August  11,  1998.  See  also   "Settlement   with
Shareholder".

     Excluding the above mentioned charges,  total adjusted non-interest expense
decreased by $205,000,  or 6.19%, to $3.1 million for the quarter ended June 30,
1998,  from $3.3  million  the prior year.  The  improvement  in total  adjusted
non-interest  expense was  attributable  primarily  to a decrease by $120,000 in
real estate owned and repossessed assets expenses, net.


                                       15
<PAGE>


Income Taxes

     Income tax expense  decreased by $245,000 to $72,000  primarily  due to the
decline in income before taxes to $169,000  from $889,000 in the second  quarter
of 1997.


Comparison of Operating Results for the Six Months Ended June 30, 1998 and 1997.


Net Interest Income

     Net interest  income  before  provision  for loan losses for the six months
ended June 30,  1998 was $7.7  million,  a decline of  $318,000,  or 4.0%,  when
compared to the comparable  period in 1997.  Total interest and dividend  income
increased by $656,000 while total interest expense increased by $974,000.

     The increase in total  interest and  dividend  income was due  primarily to
growth of $34.6  million,  or 13.6%,  in the average volume of loans for the six
months  ended June 30, 1998 as compared to the like 1997  period.  The  positive
effect derived from the increase in the average loan volume was offset  slightly
by a decrease of 10 basis  points to 7.77% in the  average  rate earned on loans
resulting in a net increase in interest  income from loans of $1.2  million.  As
discussed  above,  the  growth in  average  loans was  primarily  related to the
purchase of loans.  The  increase in loan  interest  was  partially  offset by a
decrease of $424,000 in interest income earned on securities  available for sale
("securities")  mainly due to a decline of 61 basis  points in the average  rate
earned to 6.64%, the result of the general decline in market interest rates from
June 1997 to 1998.  The lower  rate  environment  produced  an  acceleration  in
mortgage   prepayments   on  mortgage   backed   securities   (which   represent
approximately 74% of the total securities portfolio) and redemptions on callable
securities.  The  reinvestments of the cash flows generated from securities were
made  at  the  lower  interest  rates  that  were  in  effect  on  the  date  of
reinvestment.

     The increase in total interest  expense was primarily due to an increase in
the interest paid on borrowed funds by $621,000 to $3.6 million, the result of a
$22.9 million  increase in the average volume of borrowed  funds  (advances from
FHLB and other borrowed funds) partially offset by a decrease of 11 basis points
in the average rate paid to 5.95% from 6.06%.  The increase in average  borrowed
funds was  primarily  used to fund the above  noted  purchased  loans.  Interest
expense on certificates of deposit  increased by $386,000 the result of an $11.1
million increase in the average volume of certificates of deposit accompanied by
an  increase in the average  rate paid to 5.74%,  an increase of 8 basis  points
over the average rate paid for the six months ended June 30, 1997.


Provision for loan losses

     The provision for loan losses decreased by $188,000 to $450,000 for the six
months  ended June 30,  1998,  as compared to 1997,  the result of the  improved
quality of the Company's loan  portfolio,  as reflected in the reduction in loan
charge-offs  during the six months ended June 30, 1998,  as compared to the same
period in 1997. See also "Asset Quality."


                                       16
<PAGE>


Non-interest income

     Total non-interest  income for the six months ended June 30, 1998, compared
to 1997,  declined by $167,000 to $536,000.  The decrease in total  non-interest
income was primarily  attributable  to net losses on securities  transactions of
$105,000 in 1998 compared to net gains in 1997 of $177,000.

     Service charges on deposit  accounts  increased by $88,000,  or 23.4%,  due
mainly to price increases in certain service charges.


Non-interest expense

     Total non-interest expense for the six months ended June 30, 1998 increased
to $6.8  million  compared  to $6.1  million  for the same  period  in 1997,  an
increase  of  $691,000  or 11.3%.  This  increase  resulted  primarily  from the
previously  mentioned  $399,000 cost incurred in connection with the termination
and consulting agreements entered into with the former President and CEO and the
$159,000 in legal expenses incurred by the Company to defend against  litigation
initiated by a shareholder.

     Salaries,  wages and payroll  taxes  increased by $108,000 to $2.2 million.
Salaries  and wages  related  to the  three  branch  offices  opened in May 1997
accounted for approximately $43,000 of the total increase in salaries and wages.
The  remainder  of the increase was  attributable  to other  additions to staff,
salary  increases  related to  promotions,  and normal  merit and cost of living
adjustments.

     Expenses related to employee benefits  increased by $155,000,  or 20.0%, to
$927,000  for  the  six  months  ended  June  30,  1998,  when  compared  to the
corresponding  period in 1997. This increase was primarily  related to increased
costs associated with stock based  compensation  plans partially offset by a net
decline in all other employee benefit costs.

     Total occupancy and equipment expense  increased by $100,000,  or 14.1%, to
$811,000 for the six months ended June 30, 1998, when compared to the six months
ended June 30, 1997. The opening of three branch offices during the three months
ended June 30, 1997, was the primary reason for the increase.


Income Taxes

     Income tax expense for the  six-months  ended June 30,  1998,  decreased by
$307,000 to $434,000  primarily  due to the  decline in income  before  taxes to
$977,000 from $2.0 million in the comparable 1997 period.


                               FINANCIAL CONDITION

     The  Company's  total  assets at June 30,  1998,  were $565.4  million,  an
increase of $54.9 million, or 10.8%,  compared to total assets of $510.4 million
at December 31, 1997. The growth in total assets was primarily  attributable  to
increases in loans and securities  available for sale,  which increased by $40.4
million and $17.6 million, respectively. See also "Liquidity and Funding."

     Total deposits at June 30, 1998, were $321.7  million,  a decrease of $11.6
million,  or 3.5%,  from $333.3  million at December 31,  1997.  The decrease in
total deposits was attributable primarily to a $18.8 million, or 10.2%, decrease
in certificates of deposit.

                                       17
<PAGE>


     Total  shareholders'  equity  decreased  $2.8  million  to  $58.4  million,
primarily due to the  repurchase  of common stock  totaling $4.0 million and the
payment of a cash  dividends  of  $502,000  partially  offset by net income from
operations  of  $543,000  for the six  months  ended  June 30,  1998.  Including
unallocated ESOP shares and unvested  restricted RRP shares as outstanding,  the
book value per share was $14.22 at June 30, 1998  compared to $14.21 at December
31, 1997. Additionally,  excluding the tax-effected unrealized gains (losses) on
securities  available  for sale,  the book value per share at June 30,  1998 was
$14.21 compared to $14.28 at December 31, 1997.


Liquidity and Funding

     The Company's primary sources of funds for operations are deposits from its
market area,  principal and interest payments on loans and securities  available
for sale, proceeds from the sale and maturity of securities  available for sale,
advances  from the FHLB of New York,  and  securities  sold under  agreements to
repurchase.  While maturities and scheduled amortization of loans and securities
are  generally   predictable  sources  of  funds,  deposit  flows  and  mortgage
prepayments  are  greatly   influenced  by  general  interest  rates,   economic
conditions, and competition.

     The primary  investing  activities  of the Company are the  origination  of
loans and the purchase of securities,  and to a lesser  extent,  the purchase of
loans.  During the six months ended June 30, 1998, the Bank's loan  originations
totaled $36.0 million.  The Company purchased  securities  available for sale of
$138.6 million and also  purchased  whole loans of  approximately  $31.9 million
during the same six month period.  The purchased  loans consisted of residential
loans generally located outside of the Bank's primary market area.

     The primary  financing  activity of the Bank is the attraction of deposits.
However,  during  the six  months  ended  June 30,  1998,  the  Bank's  deposits
decreased by $11.6 million from  December 31, 1997,  primarily  certificates  of
deposit  (CDs),  which  decreased  $18.8 million.  Management  believes that the
decrease  in CDs during the six months  ended June 30, 1998  resulted  primarily
from the  holders  of  maturing  certificates  of deposit  pursuing  alternative
investments to obtain better returns.

     In the  event the  attraction  of  deposits  is not  sufficient  to fund an
expansion in interest earnings assets or when the level of market interest rates
for CDs is higher than the cost of borrowed funds, the Bank may utilize advances
from the Federal Home Loan Bank  ("FHLB")  and other types of borrowed  funds to
fund interest  earning asset growth.  During the six months ended June 30, 1998,
the Bank increased its borrowed  funds by $68.2 million.  Advances from the FHLB
increased by $26.5 million and  securities  sold under  agreements to repurchase
("repos")  increased  by $41.7  million.  The Bank has added  $50.0  million  in
callable repos with the FHLB to its borrowed funds. The FHLB repos all mature in
10 years with call dates  ranging  from one year to three  years and fixed rates
that  range  from a low of 5.01% to a high of 5.33%.  The FHLB  repos  were used
primarily to fund the purchase of whole loans.

     The Bank is required to maintain minimum levels of liquid assets as defined
by OTS regulations.  This requirement,  which may be varied by the OTS depending
upon  economic  conditions  and deposit  flows,  is based upon a  percentage  of
deposits and short-term  borrowings.  The required  minimum  liquidity  ratio is
currently  4%. The Bank's  average daily  liquidity  ratio for the month of June
1998 was 16.3%.


                                       18
<PAGE>

     The Bank's most liquid assets are cash and cash equivalents,  which include
federal funds sold and bank deposits.  The level of these assets is dependent on
the Bank's  operating,  financing,  and  investing  activities  during any given
period.  At June 30,  1998,  cash and cash  equivalents  totaled  $6.0  million,
compared to $10.2  million at December 31, 1997.  The decrease  resulted  from a
decline of $4.2 million in cash and bank deposits.

     The Bank  anticipates  that it will have sufficient funds available to meet
its current commitments. At June 30, 1998, the Bank had commitments to originate
loans of $11.4  million as well as undrawn  commitments  of $6.3 million on home
equity  and other  lines of  credit.  The Bank has no  commitments  to  purchase
additional loans at June 30, 1998. Certificates of deposit that are scheduled to
mature in one year or less at June 30, 1998, totaled $105.6 million.  Management
believes that a significant  portion of such deposits will remain with the Bank.
However,  if the Bank is not able to maintain its  historical  retention rate on
maturing  certificates of deposit,  it may consider employing one or more of the
following strategies: increase its borrowed funds position to compensate for the
deposit  outflows;  increase  the rates it offers on these  deposits in order to
maintain or increase  the  retention  rate on maturing CDs and/or to attract new
deposits;  or, attempt to increase  certificates  of deposit  through the use of
deposit  brokers.  Depending  on the  level of market  interest  rates at the CD
renewal dates,  the  implementation  of one or a combination of these strategies
could result in higher or lower levels of net interest income and net earnings.

     The Company  also has a need for, and sources of,  liquidity.  Liquidity is
required  to fund its  operating  expenses,  as well as for the  payment  of any
dividends to  shareholders.  The primary source of liquidity on an ongoing basis
is dividends from the Bank. The Bank paid its first cash dividend to the Company
on March 31, 1998, in the amount of $5.0 million.


Capital

     Federally  insured savings  institutions are required to maintain a minimum
level  of  regulatory  capital.  The  OTS  has  established  capital  standards,
including a tangible  capital  requirement,  a leverage  ratio (or core capital)
requirement  and a risk-based  capital  requirement  applicable  to such savings
associations.  These capital  requirements must be generally as stringent as the
comparable  capital  requirements for national banks. The OTS is also authorized
to  impose  capital  requirements  in excess of these  standards  on  individual
associations on a case-by-case basis.

     At June 30, 1998,  the Bank had $45.8 million of tangible and core capital,
respectively,  or 8.21% of adjusted total assets,  which was approximately $37.5
million  and $29.1  million  above the  minimum  requirements  of 1.5% and 3.0%,
respectively,  of the adjusted  total assets in effect on that date. On June 30,
1998, the Bank had risk-based  capital of $48.8 million (including $45.8 million
in core capital and $3.0 million in qualifying  supplementary  capital) or 20.6%
of risk-weighted assets of $237.6 million. The Bank's risk-weighted  capital was
$29.8 million above the 8.0% requirement in effect on that date.


ASSET QUALITY

Non-Performing Assets

     The table  below sets forth the amounts and  categories  of  non-performing
assets at the dates indicated. Generally, loans are placed on non-accrual status
when the loan is 90 days or more  delinquent or when  management  has determined
that the collection of principal  and/or  interest in full has become  doubtful.

                                       19
<PAGE>


When loans are  designated as  non-accrual,  all accrued but unpaid  interest is
reversed  against  current  period  income and,  as long as the loan  remains on
non-accrual  status,  interest is recognized only when received.  Accruing loans
delinquent 90 days or more include FHA insured loans, VA guaranteed  loans,  and
loans that are in the  process of  negotiating  a  restructuring  with the Bank,
excluding troubled debt  restructurings  (TDRs), or where the Bank believes that
the  outstanding  loan  balance  plus  accrued  interest  and late  fees will be
paid-in-full within a relatively short period of time. Foreclosed assets include
assets acquired in settlement of loans.
    
                                                June 30,        December 31,
                                                 1998               1997
                                               --------           --------
                                                       (In thousands)
Non-accruing loans:                                    
   One-to four-family ......................   $  899             $  843
   Multi-family ............................      153                 28
   Commercial real estate ..................      290                265
   Consumer ................................      146                293
   Commercial Business .....................      201                447
                                               ------             ------
     Total .................................    1,689              1,876
                                               ------             ------
Accruing loans delinquent more than 90 days:
   One-to four-family ......................      359                280
   Multi-family ............................      --                 --
   Commercial real estate ..................      109                 13
   Consumer ................................      --                   2
   Commercial Business .....................      --                 156
                                               ------             ------
     Total .................................      468                451
                                               ------             ------
Troubled debt restructured loans:
   One-to four-family ......................       86                 86
   Multi-family ............................      --                  34
   Commercial real estate ..................      752                761
   Consumer ................................      --                 --
   Commercial Business .....................      339                 50
                                               ------             ------
     Total .................................    1,177                931
                                               ------             ------
Total non-performing loans .................    3,334              3,258
                                               ------             ------    
Foreclosed assets:
   One-to four-family ......................        3                 69
   Multi-family ............................      --                 --
   Commercial real estate ..................      --                 --
   Consumer ................................       60                 74
   Commercial Business .....................      --                 --
                                               ------             ------
     Total .................................       63                143
                                               ------             ------
Total non-performing assets ................   $3,397             $3,401
                                               ======             ======
Total as a percentage of total assets ......     0.60%             0.67%

     There were no material changes in non-performing  assets since December 31,
1997.

                                       
                                       20
<PAGE>


Allowance for Loan Losses

     The  allowance  for loan losses is increased  through a provision  for loan
losses  based on  management's  evaluation  of the  risks  inherent  in its loan
portfolio and changes in the nature and volume of its loan  activity,  including
those  loans  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. Management believes that the allowance for loan losses is adequate to
absorb  losses that are inherent in the loan  portfolio  at June 30,  1998.  The
following  table sets forth an  analysis  of the  Company's  allowance  for loan
losses.
                                                 For the six months
                                                    ended June 30,
                                                  1998         1997
                                                ---------   ---------
                                                    (In thousands)
Balance at beginning of period .............    $ 3,807      $ 3,438

Charge-offs:
     One- to four-family ...................         (6)          (5)
     Multi Family ..........................        --           (12)
     Commercial Real Estate ................        --           (50)
     Consumer ..............................       (176)        (193)
     Commercial Business ...................        (25)         (66)
                                                -------      -------
        Total Charge offs ..................       (207)        (326)

Recoveries:
     One- to four-family ...................          1          --
     Multi Family ..........................        --           --
     Commercial Real Estate ................        --             4
     Consumer ..............................         28           31
     Commercial Business ...................         11           13
                                                -------       -------
        Total Recoveries ...................         40           48

Net Charge-offs ............................       (167)        (278)

Provisions charged to operations............        450          638
                                                -------       -------
Balance at end of period ...................    $ 4,090      $ 3,798
                                                =======       =======
Ratio of net charge-offs during
 the period to average loans
 outstanding during period .................       0.06%        0.11%

Ratio of allowance for loan losses ("ALL")
 to total loans at period end ..............       1.26%        1.40%

Ratio of ALL to non-performing loans 
 at period end .............................     122.68%      137.01%


                                       21
<PAGE>

                                                                 
Item 3.

Quantitative And Qualitative Disclosures About Market Risk

     The composition of the Bank's balance sheet results in maturity mis-matches
between interest-earning assets and interest-bearing  liabilities. The scheduled
maturities of the Bank's fixed rate interest-earning  assets are longer than the
scheduled  maturities  of its  fixed  rate  interest-bearing  liabilities.  This
mis-match exposes the Bank to interest rate risk. In a rising rate scenario,  as
measured by the Office of Thrift Supervision ("OTS") interest rate risk exposure
simulation  model,  the estimated market or portfolio value ("PV") of the Bank's
assets would  decline in value to a greater  degree than the change in the PV of
the Bank's  liabilities,  thereby  reducing net  portfolio  value  ("NPV"),  the
estimated market value of its shareholders' equity.
     
     As of  December  31,  1997,  under a rate shock  scenario of plus 200 basis
points ("bp"),  the Bank's pre-shock NPV ratio (NPV as of % of PV of assets) was
estimated in the OTS model to be 10.89%.  The post-shock NPV ratio was estimated
to be 6.78%,  a decline of 411 bp. As of March 31, 1998,  the most recent report
available,  the Bank's sensitivity to interest rate changes increased  slightly.
The post-shock  ratio for a 200 bp increase in market interest rates as of March
31, 1998 was estimated to be 5.33%,  a decrease of 439 bp from the pre-shock NPV
ratio estimate of 9.72%.

     In order to  lessen  its  exposure  to  interest  rate  risk,  the Bank has
initiated   a  program   to   lengthen   the   maturities   of  its  fixed  rate
interest-bearing  liabilities  through the use of callable  repos with the FHLB.
See "Liquidity and Funding," herein.

     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 1.  Legal Proceedings

     In the ordinary course of business, the Company and the Bank are subject to
legal actions which involve  claims for monetary  relief.  Management,  based on
advice of counsel,  does not believe  that any  currently  known legal  actions,
individually or in the aggregate will have a material effect on its consolidated
financial condition or results of operation.

     The  Company  has  incurred  significant  legal  costs in  connection  with
defending  against  legal  actions  initiated by a  shareholder,  and will incur
additional  legal expenses in the third quarter of 1998. See also  "Non-interest
expense for the quarters ended June 30, 1998 and 1997." The Company  announced a
settlement  with the shareholder on August 11, 1998. See also  "Settlement  with
Shareholder."


                                       22
<PAGE>


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

     Ambanc Holding Co.,  Inc.'s Annual Meeting of  Shareholders  was originally
scheduled for May 22, 1998 but was reconvened on June 12, 1998.

     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:  Lauren T.
Barnett,  For -  2,181,681,  Withheld -  582,919;  Charles  S.  Pedersen,  For -
2,235,634,  Withheld - 528,966; Robert J. Brittain, For - 2,228,837,  Withheld -
535,763.

     Proxies were also solicited at the annual meeting for the  ratification  of
the appointment of KPMG Peat Marwick LLP as independent auditors of the Company.
The proposal was adopted,  with  2,502,878  shares  voting For,  244,687  shares
voting Against, and 16,635 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

            Current reports on Form 8-K were filed April 29, May 14, June 8,
            June 12, and July 1, July 1, July 7, and August 11, 1998.
            
      (i)   April 29, 1998, press release regarding Ambanc Holding Co., Inc.
            to Merge with AFSALA Bancorp.

      (ii)  May 14, 1998, press release regarding Ambanc Holding Co., Inc. 
            First Quarter Earnings.

      (iii) June 8, 1998, press release regarding Ambanc Holding Co., Inc.
            Quarterly Cash Dividend.

      (iv)  June 12, 1998, press release regarding Ambanc Holding Co., Inc.
            Second Favorable Court Decision.

      (v)   July 1, 1998, press release regarding Ambanc Holding Co., Inc.
            Retirement of President and CEO.
       
      (vi)  July 1, 1998, press release regarding Ambanc Holding Co., Inc.
            Change in Directors' Compensation. 

      (vii) July 7, 1998 press release regarding Ambanc Holding Co., Inc. 
            Freeze on Executive Managers' Compensation.
 
     (viii) August 11, 1998, press release regarding Ambanc Holding Co., Inc.  
            settlement with Seymour Holtzman.        


                                       23
<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/ Lauren T. Barnett


Lauren T. Barnett
President and Chief Executive Officer
(Principal Executive Officer)
Date:        , 1998


/s/ Harold A. Baylor, Jr.


Harold A. Baylor, Jr.
Vice President, CFO and Treasurer
(Principal Financial and Accounting Officer)
Date:        , 1998


           
                                       24

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