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EXHIBIT 10.12

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the 1st day of May, 1997, by and between GSB Financial Corporation, a
corporation organized and operating under the laws of the State of Delaware and
having an office at 1 South Church Street, Goshen, New York 10924 (the
"Company"), and Jenny M. Ford, residing at 272 N. Plank Road, Newburgh, New York
12550.


         WHEREAS, Ms. Ford currently serves the Company as Vice
President and Secretary; and


         WHEREAS, in order to secure Ms. Ford's continued services for the
period hereof, the Board of Directors of the Company (the "Board") has approved
and authorized the execution of this Agreement; and


         WHEREAS, Ms. Ford is willing to continue to make her
services available to the Company on the terms and conditions set
forth herein; and

         WHEREAS, on or about May 1, 1997 Ms. Ford and Goshen Savings
Bank (the "Bank") entered into an Employment Agreement (the "Bank
Employment Agreement"); and

         WHEREAS, it is contemplated that on or about June 30, 1997, the Company
will become a savings and loan holding company of which the Bank will be a
wholly owned subsidiary.




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         NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto hereby agree as follows:

         1. Employment. The Company hereby continues the employment of Ms. Ford
as its Vice President and Secretary, and Ms. Ford hereby accepts such continued
employment, during the period and upon the terms and conditions set forth in
this Agreement.

         2. Employment Period, Terms and Conditions. The employment period,
terms and conditions of this Agreement shall be identical to those in the Bank
Employment Agreement unless explicitly superseded or expanded upon by this
Agreement.

         3. Compensation and Benefits. The compensation and benefits payable to
Ms. Ford under this Agreement and under the Bank Employment Agreement shall not
be duplicative but, rather, the Bank shall be primarily responsible for the
payments called for in the Bank's Employment Agreement and the Company hereby
guarantees performance of such obligations by the Bank.


         4. Excise Tax Indemnification.
           (a) This section 4 shall apply if Ms. Ford's employment is terminated
in circumstances giving rise to liability for excise taxes under section 4999 of
the Internal Revenue Code of 1986 (the "Code"). If this Section 4 applies, then,
if for any taxable year, Ms. Ford shall be liable for the payment of an excise
tax under section 4999 of the Code with respect to any

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payment in the nature of compensation made by the Company or the Bank to (or for
the benefit of) Ms. Ford, the Company shall pay to Ms. Ford an amount equal to X
determined under the following formula:

                  E x P
X =______________________________
   1-[(FI x (1 - SLI) + SLI + EM]

where
         E  = the rate at which the excise tax is assessed under section 4999 of
            the Code;

         P  = the amount with respect to which such excise tax is assessed,
            determined without regard to this section 4;

         FI = the highest marginal rate of income
            tax applicable to Ms. Ford under the
            Code for the taxable year in question;

        SLI = the sum of the highest marginal rates of income tax applicable to
            Ms. Ford under all applicable state and local laws for the taxable
            year in question; and

         M  = the highest marginal rate of Medicare tax applicable to Ms. Ford
            under the Code for the taxable year in question.

With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Ms. Ford under the terms of this Agreement, or otherwise,
and on which an excise tax under section 4999 of the Code will be assessed, the
payment determined under this section 4(a) shall be made to Ms. Ford on the
earlier of (i) the date the Company or the Bank is required to withhold such
tax, or (ii) the date the tax is required to be paid by Ms. Ford.

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           (b) Notwithstanding anything in this section 4 to the contrary, in
the event that Ms. Ford's liability for the excise tax under section 4999 of the
Code for a taxable year is subsequently determined to be different than the
amount determined by the formula (X + P) x E, where X, P and E have the meanings
provided in section 4(a), Ms. Ford or the Company, as the case may be, shall pay
to the other party at the time that the amount of such excise tax is finally
determined, an appropriate amount, plus interest, such that the payment made
under section 4(a), when increased by the amount of the payment made to Ms. Ford
under this section 4(b) by the Company, or when reduced by the amount of the
payment made to the Company under this section 4(b) by Ms. Ford, equals the
amount that should have properly been paid to Ms. Ford under section 4(a). The
interest paid under this section 4(b) shall be determined at the rate provided
under section 1274(b)(2)(B) of the Code. To confirm that the proper amount, if
any, was paid to Ms. Ford under this section 4, Ms. Ford shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.

           (c) The provisions of this section 4 are designed to reflect the
provisions of applicable federal, state and local tax laws in effect on the date
of this Agreement. If, after the date hereof, there shall be any change in any
such laws, this section

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4 shall be modified in such manner as Ms. Ford and the Company may mutually
agree upon if and to the extent necessary to assure that Ms. Ford is fully
indemnified against the economic effects of the tax imposed under section 4999
of the Code or any similar federal, state or local tax.

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and Ms. Ford has hereto set her hand, all as of the day and year first
above written.

                                          /s/ Jenny M. Ford
                                          -------------------
                                          JENNY M. FORD


WITNESS:



/s/ Diane D. King
---------------------


                                           GSB FINANCIAL CORPORATION



                                           By /s/ Clifford E. Kelsey, Jr.
                                              ---------------------------

ATTEST:



/s/ Diane D. King
---------------------
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