SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-K

 [ X ]  ANNUAL  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
        FOR THE FISCAL YEAR ENDED JUNE 30, 1997

 [   ]  TRANSITION REPORT PURSUANT  TO  SECTION  13 OR 15(d) OF
        THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

   For the transaction period from__________to_________

                           Commission file Number 0-27782

                            DIME COMMUNITY BANCORP, INC.
               (Exact Name of registrant as specified in its charter)

            Delaware                               11-3297463
   (State or other jurisdiction                    (I.R.S. employer 
   of incorporation or                             idntification number)
   organization)                                              

    209 Havemeyer Street, Brooklyn, NY                            11211
   (Address of principal executive offices)                     (Zip Code)

         Registrant's telephone number, including area code: (718) 782-6200

      Securities Registered Pursuant to Section 12(b) of the Act:
                                 NONE

      Securities Registered Pursuant to Section 12(g) of the Act:
                COMMON STOCK, PAR VALUE $.01 PER SHARE
                           (Title of Class)

   Indicate  by  check  mark whether the Company  (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 twelve months  (or  for  such shorter period that the
Registrant  was  required to file reports) and (2) has  been  subject  to  such
requirements for the past 90 days.
YES    X    NO

   Indicate by check  mark  if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not  contained  herein,  and will not be contained, to
the best of Company's knowledge, in definitive proxy  or information statements
incorporated by reference in Part III of this Form 10-K  or  any  amendments to
this Form 10-K.   [ X ]

   As  of  September  22,  1997,  there were 12,624,750 shares of the Company's
common stock, $0.01 par value, outstanding.   The aggregate market value of the
voting stock held by non-affiliates of the Company as of September 22, 1997 was
$209,268,766.   This  figure  is based upon the closing  price  on  the  NASDAQ
National Market for a share of  the  Company's  common  stock  on September 22,
1997, which was $20.125 as reported in the Wall Street Journal on September 23,
1997.

                      DOCUMENTS INCORPORATED BY REFERENCE
(1) The Annual Report to Shareholders for the fiscal year ended June 30, 1997
(Item 1 of Part I, and Items 5 through 8 of Part II) and (2) the definitive
Proxy Statement dated October 6, 1997 to be distributed on behalf of the Board
of Directors of Registrant in connection with the Annual Meeting of
Shareholders to be held on November 13, 1997 and any adjournment thereof and
which is expected to be filed with the Securities and Exchange Commission on or
about October 7, 1997
(Part III).

                            TABLE OF CONTENTS
                                                           PAGE
                                    PART I
ITEM 1.  BUSINESS
      GENERAL.............................................    3
      ACQUISITION OF CONESTOGA BANCORP,INC................    4
      MARKET AREA AND COMPETITION..........................   4
      LENDING ACTIVITIES...................................   5
      ASSET QUALITY........................................   12
      ALLOWANCE FOR LOANLOSSES.............................   16
      INVESTMENT ACTIVITIES................................   19
      SOURCES OF FUNDS.....................................   23
      SUBSIDIARY ACTIVITIES................................   26
      PERSONNEL............................................   26
      FEDERAL , STATE AND LOCAL TAXATION
            FEDERAL TAXATION...............................   27
            STATE AND LOCAL TAXATION.......................   28
      REGULATION
            GENERAL........................................   29
            REGULATION OF FEDERAL SAVINGS ASSOCIATIONS.....   29
            REGULATION OF HOLDING COMPANY..................   36
            FEDERAL SECURITIES LAWS........................   37
ITEM 2. PROPERTIES.........................................   38
ITEM 3. LEGAL PROCEEDINGS..................................   39
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS   39
                                    
                               PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
            MATTERS.........................................  39
ITEM 6. SELECTED FINANCIAL
DATA........................................................  39
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......... 39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                FINANCIAL DISCLOSURE......................... 40
                                  
                                PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY....  40
ITEM 11. EXECUTIVE COMPENSATION.............................  40
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT.......................................  40
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....  40
                                   
                                 PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
           FORM 8-K.......................................... 40
SIGNATURES................................................... 43
PAGE 2

   Statements contained in this Annual Report on Form 10-K relating  to  plans,
strategies, economic performance and trends, and other statements that are  not
descriptions  of  historical facts may be forward-looking statements within the
meaning of Section  27A  of  the  Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934.  Forward  looking  information  is  inherently
subject  to  various  factors  which  could  cause  actual  results  to  differ
materially  from  these estimates.  These factors include:  changes in general,
economic and market  conditions, or the development of an adverse interest rate
environment that adversely  affects  the  interest  rate spread or other income
anticipated from the Company's operations and investments.   The Company has no
obligation to update these forward looking statements.

                                    PART I

ITEM 1. BUSINESS

General

   Dime  Community  Bancorp,  Inc.  (the  "Company") is a Delaware  corporation
organized in December, 1995 at the direction  of  the Board of Directors of The
Dime Savings Bank of Williamsburgh (the "Bank")  for  the  purpose of acquiring
all of the capital stock of the Bank issued in the conversion  of  the Bank, on
June  26,  1996, from a federal mutual savings bank to a federal stock  savings
bank (the "Conversion").  In connection with the Conversion, the Company issued
14,547,500 shares  (par  value  $0.01) of common stock at a price of $10.00 per
share to certain of the Bank's eligible  depositors  who  subscribed for shares
and to an Employee Stock Ownership Plan ("ESOP") established  by  the  Company.
The Company realized net proceeds of $141.4 million from the sale of its common
stock and utilized approximately $76.4 million of the proceeds to purchase 100%
of the Bank's common stock and $11.6 million to fund a loan to the ESOP for its
purchase  of  1,163,800  shares,  or  8%,  of  the Company's common stock.  The
remaining proceeds of $53.4 million were retained by the Company.

   The  primary business of the Company is the operation  of  its  wholly-owned
subsidiary,  the  Bank. In addition to directing, planning and coordinating the
business activities of the Bank, the Company retained proceeds of $53.4 million
in connection with  the Conversion, which are invested in federal funds, short-
term, investment grade  marketable  securities  and mortgage-backed securities.
The Company also holds a note evidencing the  loan  that it made to the ESOP to
purchase 8% of its common stock issued in the Conversion.   See  "-Regulation -
Regulation of the Holding Company."

   The  Company  is  a  unitary savings and loan holding company, which,  under
existing  law,  is generally  not  restricted  as  to  the  types  of  business
activities in which  it  may  engage,  provided that the Bank continues to be a
qualified thrift lender.  Under regulations of the Office of Thrift Supervision
("OTS") the Bank is a qualified thrift lender  if its ratio of qualified thrift
investments to portfolio assets ("QTL Ratio") is  65%  or  more,  on  a monthly
average basis in nine of every twelve months.  At June 30, 1997, the Bank's QTL
Ratio  was  94.4%,  and  the Bank has maintained more that 65% of its portfolio
assets in qualified thrift investments in at least nine of the preceding twelve
months.

   In the future, the Company  may  organize  or  acquire,  through  merger  or
otherwise,  other  subsidiaries,  including  other  financial  institutions, or
branches thereof, or other financial services related companies, although there
are  no current arrangements, understandings or agreements regarding  any  such
acquisition or expansion.

   The  Company  neither  owns  nor  leases  any  property but instead uses the
premises and equipment of the Bank.  At the present  time, the Company does not
employ any persons other than certain officers of the  Bank  who do not receive
any  extra compensation as officers of the Company.  The Company  utilizes  the
support  staff  of the Bank from time to time, as needed.  Additional employees
may be hired as deemed appropriate by the management of the Company.

PAGE 3

   Unless otherwise  disclosed,  the  information  presented  in this Form 10-K
reflect  the financial condition and results of operations of the  Company  and
the Bank on  a  consolidated  basis.   At  June 30, 1996, the Company had total
consolidated assets of $1.37 billion, which  included  $131.1 million of excess
proceeds  resulting from the oversubscription to the Company's  initial  public
offering, which   was  refunded  on  July  1,  1996.  Certain information which
discloses percentages of total assets will include parenthetical disclosure for
"Adjusted Assets," which represents total assets  adjusted  for  the  refund of
excess proceeds on July 1, 1996.

   The  Bank's  principal  business  has  been,  and continues to be, gathering
deposits from customers within its market area, and  investing  those deposits,
primarily  in multi-family and one- to four-family residential mortgage  loans,
mortgage-backed   securities,  and  obligations  of  the  U.S.  Government  and
Government  Sponsored  Entities  ("GSEs").  The  Bank's  revenues  are  derived
principally from  interest  on  its  loan and securities portfolios. The Bank's
primary  sources of funds are: deposits;  loan  amortization,  prepayments  and
maturities;  amortization,  prepayments  and  maturities of mortgage-backed and
investment securities; and borrowings, and, to  a  lesser  extent,  the sale of
fixed-rate mortgage loans to the secondary market.  The Bank is also  a  member
of the Federal Home Loan Bank of New York ("FHLBNY").

ACQUISITION OF CONESTOGA BANCORP, INC.

On  June  26,  1996  the  Bank completed the acquisition (the "Acquisition") of
Conestoga Bancorp, Inc. ("Conestoga"),  resulting  in the merger of Conestoga's
wholly-owned subsidiary, Pioneer Savings Bank, F.S.B. ("Pioneer") with and into
the Bank, with the Bank as the resulting financial institution.

   The Acquisition was accounted for in the financial statements using the
purchase method of accounting. Under purchase accounting, the acquired assets
and liabilities of Conestoga are recognized at their fair value as of the date
of the Acquisition.  Shareholders of Conestoga were paid approximately $101.3
million in cash, resulting in goodwill of $28.4 million, which is being
amortized on a straight line basis over a twelve year period.

   Since the Acquisition occurred on June 26, 1996, its impact upon the
Company's consolidated results of operations for the fiscal year ended June 30,
1996 was minimal  The full effect of the Acquisition is reflected in the
Company's consolidated results of operations for the fiscal year ended June 30,
1997, as well the consolidated statements of financial condition as of June 30,
1997 and 1996.

MARKET AREA AND COMPETITION

   The  Bank  has  been,  and intends to continue to be,  a  community-oriented
financial institution providing financial services and loans for housing within
its market areas. The Bank  maintains  its  headquarters  in  the Williamsburgh
section of the borough of Brooklyn. Fourteen additional offices  are located in
the boroughs of Brooklyn, Queens, and the Bronx, and in Nassau County. The Bank
gathers  deposits  primarily  from the communities and neighborhoods  in  close
proximity to its branches. The  Bank's  primary  lending  area  is  larger, and
includes  much of New York City and Nassau County. Most of the Bank's  mortgage
loans are secured by properties located in its primary lending area.

   The New York City metropolitan area has historically benefited from having a
large number  of  corporate  headquarters and a diversity of financial services
industries. However, due to (1)  the  lingering  effects  of the decline of the
stock market in 1987, (2) the resulting decline in the regional economy and (3)
layoffs and corporate relocations in the financial services  industry,  the New
York  City  metropolitan  area experienced reduced levels of employment and  an
overall decline in the underlying values of local properties from 1987 to 1993.

   Since then, the local economy  has improved significantly.  Unemployment has
remained low, home sales have increased,  residential  apartment and commercial
property vacancy rates have declined considerably, and local real estate values
have  stabilized.   The  rise  and  decline of the Bank's non-performing  asset
portfolio closely parallels the trend  of the local economy during this period.
See "- Asset Quality."  A strong local economy existed throughout the Company's
entire fiscal year ended June 30, 1997.   Despite these encouraging trends, the
outlook for the local economy remains uncertain.
PAGE 4

   The  Bank  faces  significant  competition  both  in  making  loans  and  in
attracting deposits. The Bank's market area has  a  high  density  of financial
institutions, many of which have greater financial resources than the Bank, and
all  of  which  are  competitors  of  the  Bank  to varying degrees. The Bank's
competition for loans comes principally from commercial  banks,  savings banks,
savings  and  loan  associations,  mortgage  banking  companies  and  insurance
companies.   The   Bank  has  recently  faced  increased  competition  for  the
origination of multi-family loans, which comprised 66.15% Bank's loan portfolio
at June 30, 1997. Management anticipates that competition for both multi-family
and one- to four-family loans will continue to increase in the future. Thus, no
assurances can be made that the Bank will be able to maintain its current level
of such loans. The Bank's most direct competition for deposits has historically
come from savings and  loan  associations,  savings banks, commercial banks and
direct  purchases  of  government  securities.  The   Bank   faces   additional
competition for deposits from short-term money market funds and other corporate
and government securities funds, and from other financial institutions  such as
brokerage  firms  and  insurance companies. Competition may also increase as  a
result of the lifting of  restrictions  on  the overall operations of financial
institutions.

LENDING ACTIVITIES

   LOAN PORTFOLIO COMPOSITION.   The Bank's loan  portfolio  consists primarily
of   multi-family  loans  secured  by  apartment  buildings  (including   loans
underlying  apartment  buildings organized under cooperative form of ownership,
"underlying cooperatives"), conventional first mortgage loans secured primarily
by  one-  to four-family residences,  including  condominiums  and  cooperative
apartment share loans, and non-residential (commercial) property loans. At June
30, 1997, the  Bank's  loan  portfolio  totaled $753.7 million. Within the loan
portfolio, $498.5 million or 66.15% were  multi-family loans, $191.7 million or
25.44% were loans to finance the purchase of one- to four-family properties and
cooperative  apartment  share loans, $43.2 million  or   5.73%  were  loans  to
finance  the  purchase  of  commercial  properties,  primarily  small  shopping
centers, warehouses and nursing homes, and $14.2 million or 1.88% were loans to
finance multi-family and residential  properties  with  either  full or partial
credit  guarantees  provided  by  either  the  Federal  Housing  Administration
(''FHA'') or the Veterans' Administration (''VA''). Of the total mortgage  loan
portfolio  outstanding  at  that  date, 23.48% were fixed-rate loans and 76.52%
were adjustable-rate loans (''ARMs''),  of  which  78.16%  are multi-family and
non-residential  property  loans  which carry a maturity of 10  years,  and  an
amortization period of no longer than  25  years.  These  loans  have  a  fixed
interest  rate  that  adjusts after the fifth year indexed to the 5-year FHLBNY
advance rate, but may not  adjust  below the initial interest rate of the loan.
At  June 30, 1997, the Bank's loan portfolio  also  included  $2.8  million  in
passbook  loans,  $1.2  million  in home improvement loans, and $2.0 million in
other consumer loans.

   The types of loans that the Bank  may  originate  are subject to federal and
state laws and regulations. Interest rates charged by  the  Bank  on  loans are
affected  principally  by  the  demand  for  such  loans,   the supply of money
available for lending purposes, and the rates offered by its competitors. These
factors  are,  in  turn, affected by general and economic conditions,  and  the
fiscal and monetary policy of the federal government.
PAGE 5

The following table sets forth the composition of the Bank's mortgage and other
loan portfolios in dollar amounts and percentages at the dates indicated.

AT June 30,
- ------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      
                                     Percent               Percent             Percent             Percent             Percent
                                       of                    of                  of                  of                  of
                             1997     Total     1996   Total      1995      Total      1994     Total      1993     Total 
                           -------    ------     -------    -----     ------    -----     -------    -----    ------     -----
                                                                  (Dollars In Thousands)                    (Dollars In Thousands)

Mortgage loans: 
One-to-four family         140,798    18.68%    $170,182    29.05%   $58,291    13.52%    $59,461    13.74%  $75,248     16.26%
Multi-family and
  underlying cooperative   498,536    66.15      296,630    50.63    252,436    58.56     242,088    55.92   243,803     52.67
Non-residential             43,180     5.73       37,708     6.44     26,972     6.26      26,896     6.21    25,873      5.59
FHA/VA insured              14,153     1.88       16,686     2.85     22,061     5.12      27,264     6.30    33,421      7.22
Cooperative apartment       50,931     6.76       59,083    10.08     67,524    15.67      73,250    16.92    80,469     17.39
                           -------    ------     -------    -----     ------    -----     -------    -----    ------     -----
Total mortgage loans       747,598    99.20      580,289    99.05    427,284    99.13     428,959    99.09   458,814     99.13
                           -------    ------     -------    -----     ------    -----     -------    -----    ------     -----
Other loans:
Student loans                1,005     0.13        1,307     0.22      1,431     0.33       1,506     0.35     1,696      0.37
Passbook savings (secured
  by savings and time        
  deposits)                  2,801     0.37        3,044     0.52      1,510     0.35       1,516     0.35     1,375      0.30
Home improvement loans       1,243     0.16          891     0.15        475     0.11         550     0.13       665      0.14
Consumer installment and     
  other                      1,027     0.14          323     0.06        336     0.08         362     0.08       302      0.06
                           -------    ------     -------    -----     ------    -----     -------    -----    ------     -----
Total other loans            6,076     0.80        5,565     0.95      3,752     0.87       3,934     0.91     4,038      0.87
                           -------    ------     -------    -----     ------    -----     -------    -----    ------     -----
Gross loans                753,674   100.00%     585,854   100.00%   431,036   100.00%    432,893   100.00%  462,852    100.00%
                           -------    ======     -------    ======    ------   ======     -------   ======    ------     =====
Less:
Unearned discounts and net
  deferred loan fees         3,090                 2,168               1,182                1,300              1,434
Allowance for loan losses   10,726                 7,812               5,174                3,633              2,996
                           -------               -------              ------              -------             ------
Loans, net                $739,858              $575,874            $424,680             $427,960           $458,422
                           =======               =======             =======              =======            =======
Loans serviced for others:
One-to-four family and
  cooperative apartment    $60,242               $63,360             $63,192              $65,063            $59,403
Multi-family and underlying                                  
  cooperative                9,406                27,690              30,264               34,396             44,079
                           -------                ------             -------              -------             ------
Total loans serviced for   
  others                   $69,648               $91,050             $93,456              $99,459           $103,482
                           =======                ======             =======              =======            =======

 Includes acquisition  of  $113.1  million loans from Conestoga on June 26,
     1996, substantially all of which were one-to-four family loans.
 Includes loans held for sale.

PAGE 6

LOAN  ORIGINATIONS,  PURCHASES, SALES AND  SERVICING.    The  Bank
originates  both ARMs and  fixed-rate  loans,  which  activity  is
dependent upon  customer  demand and market rates of interest, and
generally  does  not  purchase   whole   mortgage  loans  or  loan
participations. Generally, the Bank sells  all  originated one- to
four-family fixed-rate mortgage loans in the secondary  market  to
the  Federal National Mortgage Association (''FNMA''), the Federal
Home Loan  Mortgage Corporation (''FHLMC''), the State of New York
Mortgage Agency  (''SONYMA'')  and  other private secondary market
purchasers.  ARMs, including adjustable-rate  multi-family  loans,
and fixed-rate  multi-family  and  non-residential  mortgage loans
with  maturities  up  to  15  years,  are retained for the  Bank's
portfolio. For the fiscal year ended June  30, 1997 origination of
ARMs  totaled $198.1 million  or 75.5% of all  loan  originations.
Originations  of  fixed-rate mortgage loans totaled $64.1 million,
while sales of fixed-rate  loans  totaled  $4.2  million. The Bank
generally sells all fixed-rate loans without recourse  and retains
the servicing rights. As of June 30, 1997, the Bank was  servicing
$69.6  million of loans for others. The Bank generally receives  a
loan servicing  fee  equal  to  0.25% of the outstanding principal
balance for servicing loans sold.

   On  April  9,  1996,  the  Bank  entered   into   a   Community
Reinvestment  Banking  Agreement  (the  ''CRB Agreement'') with  a
local, Bronx-based community group. In the CRB Agreement, the Bank
has agreed to use its best efforts, consistent with safe and sound
banking practices, to increase its dollar  volume  of  lending  in
certain  low  and  moderate income neighborhoods to at least $46.8
million and a maximum  of $86.0 million over the three-year period
ending December 31, 1998.  Pursuant to the CRB Agreement, the Bank
also has agreed to use its best  efforts  to  open three automated
teller machines (''ATMs'') in the neighborhoods  of East Brooklyn,
Upper Manhattan and the South Bronx in New York City.   Consistent
with  the  CRB  Agreement,  the  Bank  has  expanded its Community
Reinvestment  Act  service territory to include  the  entirety  of
Brooklyn, Manhattan and the Bronx.  The Bank is in compliance with
all currently applicable provisions of the CRB Agreement.

   The following table  sets  forth  the Bank's loan originations,
loan sales and principal repayments for the periods indicated.

                                                                      For the Years Ended June 30,
                                                           -----------------------------------------------
                                                             1997                 1996               1995
                                                                               
                                                           --------            --------            -------
                                                                             (In Thousands)
Loans (gross):
At beginning of period                                     $585,854           $431,036            $432,893
Mortgage loans originated:
  One-to-four family                                          4,279              6,087               5,509
  Multi-family and underlying cooperative                   245,324             94,379              36,326
  Non-residential                                            11,055             11,764               2,563
  Cooperative apartment                                       1,582                568                 888
                                                           --------           --------            --------
Total mortgage loans originated                             262,240            112,798              45,286
Other loans originated                                        2,549              2,122               2,115
                                                           --------           --------            --------
Total loans originated                                      264,789            114,920              47,401
                                                           --------           --------            --------
Loans acquired from Conestoga                                -             113,140                  -
Less:
Principal repayments                                         91,405             67,308              45,988
Loans sold                                                4,157              5,740               2,791
Loans  transferred  from  real  estate  pending              
  foreclosure                                                    -                (875)             (2,316)
Mortgage loans transferred to Other Real Estate              
  Owned                                                       1,407              1,069               2,795
                                                           --------           --------            --------
Unpaid principal balance at end of period                  $753,674           $585,854            $431,036
                                                           ========           ========            ========

  Substantially all of these mortgage loans are one-to-four family mortgage
       loans.
  Includes fixed-rate mortgage loans and student loans.

PAGE 7

   LOAN MATURITY AND REPRICING.   The following table shows the earlier of
maturity or repricing period of the Bank's loan portfolio at June 30, 1997.
Loans that have adjustable rates are shown as being due in the period during
which the interest rates are next subject to change. The table does not include
prepayments or scheduled principal amortization. Prepayments and scheduled
principal amortization on the Bank's loan portfolio totaled $91.4 million for
the year ended June 30, 1997.

                                                                      At June 30, 1997
                                    --------------------------------------------------------------------------------------------
                                                             Mortgage Loans
                                  ----------------------------------------------------------------------
                                                    Multi-
                                                    family and
                                       One-to-      Underlying         Non-        FHA/VA    Cooperative      Other        Total
                                     Four-Family   Cooperative    Residential      Insured     Apartment       Loans       Loans
                                                                                                  
                                         ------    ----------     -----------     --------    ----------      ------       ------ 
                                                                     (In Thousands)
Amount due:
One year or less                        $44,285      $29,814          $6,577          $-         $39,395       $5,055     $125,126
                                         ------     --------        --------       -------       --------      ------      -------
After one year:
One to three years                       18,864      101,529           7,052        6,947         11,027        1,021      146,440
More than three years to five             2,565      252,905          23,562           -             477           -       279,509
years
More than five years to ten years        16,728       81,880           4,309          152             32           -       103,101
More than ten years to twenty            29,554       32,408           1,159        7,054             -            -        70,175
years
Over twenty years                        28,802          -               521           -              -            -        29,323
                                         ------     --------         --------      -------       --------       ------     -------
Total due or repricing after one          
  year                                   96,513      468,722          36,603       14,153         11,536        1,021      628,548
                                         ------     --------         --------      -------       --------       ------     -------
Total amounts due or repricing,        
  gross                                $140,798     $498,536         $43,180      $14,153        $50,931       $6,076     $753,674
                                        =======     ========         ========      =======       ========       ======     =======

   The  following  table sets forth the dollar amounts in each loan category at
June 30, 1997 that are  due  after  June  30, 1998, and whether such loans have
fixed or adjustable-interest rates.

                                     Due after June 30, 1998
                                   ------------------------------------
                                   Fixed         Adjustable          Total
                                 ---------       ---------         ---------
                                              (In Thousands)
Mortgage loans:
   One-to-four family             $76,311         $20,202            $96,513
   Multi-family and underlying
     cooperative                   76,363         392,359            468,722
   Non-residential                  8,416          28,187             36,603
   FHA/VA insured                  14,153              -              14,153
   Cooperative apartment              179          11,357             11,536
Other loans                            -            1,021              1,021
                                 ---------       ---------         ---------
Total loans                      $175,422        $453,126           $628,548
                                 =========       =========         =========

   Multi-family and Non-residential Lending.   The Bank originates adjustable-
rate and fixed-rate multi-family (five or more units) and non-residential loans
which are secured primarily by apartment buildings, underlying cooperatives,
mixed-use (residential combined with commercial) and other non-residential
properties, generally located in the Bank's primary lending area. The main
competitors for loans in this market tend to be other small- to medium-sized
local savings institutions. Multi-family and non-residential loans in the
Bank's portfolio generally range in amount from $100,000 to $9.0 million, and
have an average loan size of approximately $672,000. Residential multi-family
loans in this range generally have between 5 and 100 apartments per building.
The Bank had a total of $439.4 million of multi-family loans in its portfolio
on buildings with under 100 units as of June 30, 1997. Mostly as a result of
rent control and rent stabilization, the associated rent rolls for buildings of
this type indicate a rent range that would be considered affordable for low- to
moderate-income households. In addition, at June 30, 1997, the Bank had a total
of $50.9 million in loans secured by mortgages on underlying cooperative
apartment buildings.
PAGE 8

   The Bank originated multi-family loans totaling $245.3 million during the
fiscal year ended June 30, 1997, versus $94.4 million during the year ended
June 30, 1996.  At June 30, 1997,  the Bank had $115.1 million of commitments
outstanding to originate mortgage loans, which included $6.4 million of
commitments to refinance existing mortgage loans. This compares to $81.2
million of commitments outstanding at June 30, 1996. All the mortgage
commitments outstanding at June 30, 1997 were issued to borrowers within the
Bank's service area, $114.5 million of which are secured by multi-family and
underlying cooperative apartment buildings.

   The Bank's current lending policy requires loans in excess of $500,000 to be
approved by the Board of Directors.  The Bank also considers the financial
resources and income level of the borrower, the borrower's experience in owning
or managing similar properties, the market value of the property and the Bank's
lending experience with the borrower. The typical adjustable-rate multi-family
loan carries a maturity of 10 years, and an amortization period of no longer
than 25 years. These loans have a fixed interest rate that adjusts after the
fifth year indexed to the 5-year FHLBNY advance rate, but may not adjust below
the initial interest rate of the loan. Prepayment penalties are assessed
throughout the life of the loans.  The Bank also offers fixed-rate, self-
amortizing, multi-family and non-residential loans with maturities of up to 15
years.

   At June 30, 1997, the Bank had multi-family loans totaling $498.5 million in
its portfolio, comprising 66.2% of the gross  loan  portfolio. The underwriting
standards for new loans generally require (1) a maximum  loan-to-value ratio of
75%  based  on  an  appraisal  performed  by  an  independent,  state-certified
appraiser  and  (2)  sufficient  cash  flow  from  the  underlying property  to
adequately  service  the debt, represented by a debt service  ratio  not  below
1.15.  Of the Bank's multi-family  loans,  $434.3  million,  or  87.1  %,  were
secured  by  apartment  buildings, and $64.2 million, or 12.9 % were secured by
underlying cooperatives at  June  30,  1997.  Multi-family  loans are generally
viewed as exposing the Bank to a greater risk of loss than one-  to four-family
residential loans and typically involve higher loan principal amounts.  At June
30,  1997,  the  Bank  had  141  multi-family  and  non-residential  loans with
principal  balances  of  $1.0 million or more, totaling $276.4 million.   These
loans, while underwritten  to  the same standards as all other multi-family and
non-residential loans, tend to expose  the  Bank to a higher degree of risk due
to the potential impact of losses from any one loan relative to the size of the
Bank's capital position.  As of June 30, 1997,  none  of  these  loans  were in
arrears nor in the process of foreclosure.  See ''- Asset Quality.''

    Loans secured by apartment buildings and other multi-family residential
properties are generally larger and involve a greater degree of risk than
one-to-four family mortgage loans.  Repayment  of  multi-family loans is
dependent, in large part, on sufficient cash flow from the  property  to  cover
operating  expenses  and debt service. Economic  events  and  government
regulations, such as rent control  and  rent stabilization laws, which are
outside  the control of the borrower or the Bank, could impair the value of the
security for  the loan or the future cash flow of such properties. As a result,
rental income might  not  rise  sufficiently over time to meet increases in the
loan rate at repricing, or increases  in overhead expenses  (I.E.,  utilities,
taxes).  During  the last five fiscal years,  the Bank's  charge-offs  related
to its multi-family loan  portfolio  totaled  $6.2 million. As of June 30,
1997,  the  Bank  had  $1.6  million of non-performing multi-family loans.
See "- Asset Quality and - Allowance  for  Loan Losses" for discussions of  the
Bank's  underwriting  procedures  utilized in originating multi-family loans.

   The Bank's loan portfolio also includes $43.2 million in non-residential
real estate mortgage loans which represented 5.73% of gross loans at June 30,
1997.  This portfolio is comprised of commercial and industrial properties, and
shopping centers. The Bank utilizes, where appropriate, rent or lease income,
business receipts, the borrowers' credit history and business experience, and
comparable appraisal values when underwriting non-residential applications. As
of June 30, 1997, there were no non-performing non-residential loans in the
Bank's portfolio.  Like multi-family loans, the repayment of non-residential
real estate mortgage loans is dependent, in large part, upon sufficient  cash
flows from the property to cover operating expenses and debt service.  For this
reason, non-residential real estate mortgage loans are considered to include
greater risk than one-to-four family residential loans.
PAGE 9

   The Bank's three largest loans at June 30, 1997, consisted of a $9.0 million
loan secured by a first mortgage on a 276 unit apartment building located in
midtown Manhattan originated in May, 1997; an $8.5 million first mortgage loan,
originated in June, 1997, secured by a 631 unit apartment building located in
the Forest Hills section of Queens; and a $7.2 million first mortgage loan,
originated in February, 1997, secured by a 306 unit apartment building located
in the Borough Park section of Brooklyn.  As of June 30, 1997, all of these
loans were performing in accordance with their terms.  See "-Regulation of
Federal Savings Associations - Loans to One Borrower."  While the loans are
current, their large loan balance does subject the Bank to a greater potential
loss in the event of non-compliance by the borrower.

   The Bank also currently services a total of $9.4 million in multi-family
loans for various private investors. These loans were sold in the late 1980s,
without recourse.

   ONE- TO FOUR-FAMILY MORTGAGE AND COOPERATIVE APARTMENT LENDING.  The Bank
offers residential first mortgage loans secured primarily by owner-occupied,
one-to four-family residences, including condominiums, and cooperative
apartment share loans. Lending is primarily confined to an area covered by a
50-mile radius from the Bank's Main Office in Brooklyn. The Bank offers
conforming and non-conforming fixed-rate mortgage loans and adjustable-rate
mortgage loans with maturities of up to 30 years and a maximum loan amount of
$500,000. The Bank's residential mortgage loan originations are generally
obtained from existing or past loan customers, depositors of the Bank, members
of the local community and referrals from attorneys, realtors and independent
mortgage brokers who refer members of the communities located in the Bank's
primary lending area. The Bank is a participating seller/servicer with several
government-sponsored mortgage agencies: FNMA,  FHLMC, and SONYMA, and generally
underwrites its one- to four-family residential mortgage loans to conform with
standards required by these agencies.  Although the collateral for cooperative
apartment loans is comprised of shares in a cooperative corporation (a
corporation whose primary asset is the underlying real estate), cooperative
apartment loans generally are treated as one- to four-family loans.  The Bank's
portfolio of such loans is $50.9 million, or 6.76% of total loans as of June
30, 1997. The recent market for cooperative apartment loan financing has
improved with the support of certain government agencies, particularly SONYMA
and FNMA, who are insuring and purchasing, respectively, cooperative apartment
share loans in qualifying buildings. The Bank adheres to underwriting
guidelines established by SONYMA and FNMA for all fixed-rate cooperative
apartment loans which are originated for sale.  Adjustable-rate cooperative
apartment loans continue to be originated both for portfolio and for sale.

  At June 30, 1997, $191.7 million, or 25.44%, of the Bank's loans consisted of
one-to four- family and cooperative apartment mortgage loans. ARMs represented
60.89% of total one- to four-family and cooperative apartment loans, while
fixed-rate mortgages comprised 39.11% of the total.  A large portion of these
fixed rate mortgages were acquired from Conestoga. See "- Acquisition of
Conestoga."  The Bank currently offers one- to four-family and cooperative
apartment mortgage ARMs secured by residential properties with rates that
adjust every one or three years. One- to four-family ARMs are offered with
terms of up to 30 years. The interest rate at repricing on one- to four-family
ARMs currently offered fluctuates based upon a spread above the average yield
on United States Treasury securities, adjusted to a constant maturity which
corresponds to the adjustment period of the loan (the ''U.S. Treasury constant
maturity index'') as published weekly by the Federal Reserve Board.
Additionally, one- and three-year one- to four-family ARMs are generally
subject to limitations on interest rate increases of 2% and 3%, respectively,
per adjustment period, and an aggregate adjustment of 6% over the life of the
loan. For the year ended June 30, 1997, the Bank originated $2.6 million of
one- to four-family and cooperative apartment mortgage ARMs.

   The volume and types of ARMs originated by the Bank have been affected by
such market factors as the level of interest rates, competition, consumer
preferences and availability of funds. During fiscal 1997, demand for one- to
four-family ARMs was relatively weak due to the prevailing low interest rate
environment and consumer preference for fixed-rate loans. Accordingly, although
the Bank will continue to offer one- to four-family ARMs, there can be no
assurance that in the future the Bank will be able to originate a sufficient
volume of one- to four-family ARMs to increase or maintain the proportion that
these loans bear to total loans.
PAGE 10

   The retention of one- to four-family and cooperative apartment mortgage
ARMs, as opposed to fixed-rate residential mortgage loans, in the Bank's loan
portfolio helps reduce the Bank's exposure to increases in interest rates.
However, one- to four-family ARMs generally pose credit risks different from
the risks inherent in fixed-rate loans, primarily because as interest rates
rise, the underlying payments of the borrower rise, thereby increasing the
potential for default. At the same time, the marketability of the underlying
property may be adversely affected. In order to minimize risks, applicants for
one- to four-family ARMs are qualified at the highest rate which would be in
effect after the first interest rate adjustment, if rates were to rise. The
Bank has not in the past, nor does it currently, originate one- to four-family
ARMs which provide for negative amortization.

   The Bank currently offers fixed-rate mortgage loans with terms of 10 to 30
years secured by one- to four-family residences and cooperative apartments.
Interest rates charged on fixed-rates loans are competitively priced based on
market conditions. The Bank generally originates fixed-rate loans for sale in
amounts up to the maximum allowed by FNMA, FHLMC and SONYMA, with private
mortgage insurance required for loans with loan-to-value ratios in excess of
80%. For the year ended June 30, 1997, the Bank originated $3.3 million of
fixed-rate, one- to four-family residential mortgage and cooperative apartment
loans.

   The Bank generally sells its newly originated conforming fixed-rate mortgage
loans in the secondary market to federal and state agencies such as FNMA, FHLMC
and SONYMA, and its non-conforming fixed-rate mortgage loans to various private
sector secondary market purchasers. With few exceptions, such as SONYMA, the
Bank retains the servicing rights on all such loans sold. For the year ended
June 30, 1997, the Bank sold mortgage loans totaling $3.3 million. As of June
30, 1997, the Bank's portfolio of one-to four-family fixed-rate mortgage loans
serviced for others totaled $60.2 million. The Bank intends to continue to sell
all of its newly-originated fixed-rate mortgage loans to conform to its
interest-rate risk policy. No assurances can be made, however, that the Bank
will be able to do so.

   Originated mortgage loans in the Bank's one-to-four family portfolio
generally include due-on-sale clauses which provide the Bank with the
contractual right to deem the loan immediately due and payable in the event
that the borrower transfers ownership of the property without the Bank's
consent. It is the Bank's policy to enforce due-on-sale provisions within the
applicable regulations and guidelines imposed by New York law and secondary
market purchasers.

   Home equity loans currently are originated to a maximum of $250,000. When
combined with the balance of the first mortgage lien, the home equity loan may
not exceed 75% of the appraised value of the property at the time of the loan
commitment. The Bank's home equity loans outstanding at June 30, 1997, totaled
$1.2 million against total available credit lines of $1.8 million.

   OTHER LENDING.   The Bank also originates other loans, primarily student and
passbook loans. Total other loans outstanding at June 30, 1997, amounted to
$6.1 million, or 0.80%, of the Bank's loan portfolio. Passbook loans, totaling
$2.8 million, and home improvement loans, totaling $1.2 million, comprise the
majority of the Bank's other loan portfolio.

   LOAN APPROVAL AUTHORITY AND UNDERWRITING.   The Board of Directors
establishes lending authorities for individual officers as to its various types
of loan products. For multi-family and one- to four-family mortgage loans,
including cooperative apartment and condominium loans, the Loan Operating
Committee, which is comprised of the Chief Executive Officer, President, and
Executive Vice President, and the heads of both the residential loan and multi-
family loan origination departments, has the authority to approve loans in
amounts up to $500,000. Any loan in excess of $500,000, however, must be
approved by the Board of Directors. In addition, regulatory restrictions
imposed on the Bank's lending activities limit the amount of credit that can be
extended to any one borrower to 15% of total capital. See ''- Regulation -
Regulation of Federal Savings Associations - Loans to One Borrower.''

   For all one- to four-family loans originated by the Bank, upon receipt of a
completed loan application from a prospective borrower, a credit report is
ordered, income, assets and certain other information are verified by an
independent credit agency, and if necessary, additional financial information
is required to be submitted by the borrower. An appraisal of the real estate
intended to secure the proposed loan is required, which currently is performed
by an independent appraiser designated and approved by the Board of Directors.
In certain cases, the Bank may also require certain environmental hazard
reports on multi-family properties.  It is the Bank's policy to require
appropriate insurance protection, including title and hazard insurance, on all
real estate mortgage loans prior to closing. Borrowers generally are required
to advance funds for certain items such as real estate taxes, flood insurance
and private mortgage insurance, when applicable.
PAGE 11

ASSET QUALITY

   DELINQUENT LOANS AND FORECLOSED ASSETS.   Management does not expect to
incur significant losses on its current portfolio of delinquent mortgage loans.
Loans in the process of foreclosure and other non-accrual loans, 88 loans in
all, totaled $3.2 million at June 30, 1997 versus $6.6 million at June 30,
1996. The largest loan in this group is a $672,000 foreclosure on an underlying
cooperative apartment building located in Manhattan. The Bank believes that its
allowance for loan losses as of June 30, 1997 is adequate. The Bank had 33
loans totaling $603,000 delinquent 60-89 days at June 30, 1997, as compared to
33 such delinquent loans totaling $2.3 million at June 30, 1996.

   The Bank's real estate loan servicing policies and procedures require that
the Bank initiate contact with a delinquent borrower as soon after the tenth
day of delinquency as possible. Generally, the policy calls for a late notice
to be sent 10 days after the due date of the late payment. If payment has not
been received within 30 days of the due date, a letter is sent to the borrower.
Thereafter, periodic letters and phone calls are placed to the borrower until
payment is received. In addition, Bank policy calls for the cessation of
interest accruals on loans delinquent 60 days or more. When contact is made
with the borrower at any time prior to foreclosure, the Bank will attempt to
obtain the full payment due, or work out a repayment schedule with the borrower
to avoid foreclosure. Generally, foreclosure proceedings are initiated by the
Bank when a loan is 90 days past due. If a foreclosure action is instituted and
the loan is not brought current, paid in full, or refinanced before the
foreclosure sale, the real property securing the loan is generally sold at
foreclosure or by the Bank as soon thereafter as practicable.

   Management reviews delinquent loans on a continuous basis and reports
monthly to the Board of Directors regarding the status of all delinquent and
non-accrual loans in the Bank's portfolio. The Bank retains outside counsel
experienced in foreclosure and bankruptcy procedures to institute foreclosure
and other actions on the Bank's delinquent loans. It is the policy of the Bank
to initiate foreclosure proceedings after a loan becomes 90 days past due.  As
soon as practicable after initiating foreclosure proceedings on a loan, the
Bank prepares an estimate of the fair value of the underlying collateral.  It
is the Bank's general policy to dispose of properties acquired through
foreclosure or deeds in lieu thereof as quickly and as prudently as possible in
consideration of market conditions, the physical condition of the property, and
any other mitigating conditions.

   The continued adherence to these procedures, as well as a strong local real
estate market resulted in a significant drop in problem loans in the Bank's
portfolio during the fiscal year ended June 30, 1997. Evidence of this is
reflected in declines in both non-performing loans and loans delinquent 60-89
days.  Non-performing loans totaled $3.2 million at June 30, 1997 as compared
to $6.6 million at June 30, 1996. The Bank had 33 loans totaling $603,000
million delinquent 60-89 days at June30, 1997, as compared to 33 such
delinquent loans totaling $2.3 million at June 30, 1996.

  Under Generally Accepted Accounting Principles ("GAAP"), the Bank is required
to account for certain loan modifications or restructurings as ''troubled-debt
restructurings.'' In general, the modification or restructuring of a debt
constitutes a troubled-debt restructuring if the Bank, for economic or legal
reasons related to the borrower's financial difficulties, grants a concession
to the borrower that the Bank would not otherwise consider. Debt restructurings
or loan modifications for a borrower do not necessarily always constitute
troubled-debt restructurings, however, and troubled-debt restructurings do not
necessarily result in non-accrual loans. The Bank had four loans classified as
troubled-debt restructurings at June 30, 1997, totaling $4.7 million, and all
are currently performing according to their restructured terms. The largest
restructured debt, a $2.7 million loan secured by a mortgage on an underlying
cooperative apartment building located in Forest Hills, New York, was
originated in 1987. The loan was first restructured in 1988, and again in 1994.
The current regulations of the Office of Thrift Supervision require that
troubled-debt restructurings remain classified as such until either the loan is
repaid or returns to its original terms.  The Bank did not incur any new loan
restructurings during the fiscal year ended June 30, 1997.  All four troubled-
debt restructurings as of June 30, 1997 are on accrual status as they have been
performing in accordance with the restructuring terms for over one year.
PAGE 12

Effective July 1, 1995, the Bank adopted SFAS 114, which established guidelines
for determining and measuring impairment in loans. In the event the carrying
balance of the loan, including all accrued interest, exceeds the estimate of
fair value, the loan is considered to be impaired and a reserve is established
pursuant to SFAS 114. Generally, the Bank considers non-performing loans to be
impaired loans.  The recorded investment in loans deemed impairment under the
guidance of SFAS 114 was approximately $4.3 million as of June 30, 1997,
compared to $7.4 million at June 30, 1996, and the average balance of impaired
loans was $4.7 million for the year ended June 30, 1997 compared to $6.7
million for the year ended June 30, 1996. The impaired portion of these loans
is represented by specific reserves totaling $122,000 allocated within the
allowance for loan losses at June 30, 1997. At June 30, 1997, one loan totaling
$2.7 million, was deemed impaired for which no reserves have been provided.
This loan, which is included in troubled-debt restructurings at June 30, 1997,
has performed in accordance with the provisions of the restructuring agreement
signed in October, 1995.  The loan has been retained on accrual status at June
30, 1997. At June 30, 1997, approximately $1.6 million of one-to-four family
and cooperative apartment loans on nonaccrual status are not deemed impaired
under SFAS 114.  All of these loans have outstanding balances less than
$203,000, and are considered a homogeneous loan pool not covered by SFAS 114.
PAGE 13

   NON-PERFORMING ASSETS AND TROUBLED-DEBT RESTRUCTURINGS.   The following
table sets forth information regarding the Bank's non-performing assets and
troubled-debt restructurings at the dates indicated.

                                                                   At June 30,
                                            ----------------------------------------------------------------------------------
                                               1997              1996                1995              1994              1993
                                                                                                   
                                            ---------         ---------          ---------         ---------         --------
                                                                    (Dollars In Thousands)
Non-performing loans:
   One-to-four family                         $1,123             $1,149               $572            $1,276            $3,449
   Multi-family and underlying               
     cooperative                               1,613              4,734              3,978             4,363             7,265
   Non-residential                                -                  -                  -                 -                 -
   Cooperative apartment                         415                668                523               609               918
   Other loans                                    39                 -                  -                 -                 -
                                              ---------        ---------          ---------         ---------         ---------
Total non-performing loans                     3,190              6,551              5,073             6,248            11,632
Total Other Real Estate Owned                  1,697              1,946              4,466             8,200             7,981
                                            ---------          ---------          ---------         ---------         ---------
Total non-performing assets                   $4,887             $8,497             $9,539           $14,448           $19,613
                                            =========          =========          =========         =========         =========
Troubled-debt restructurings                  $4,671             $4,671             $7,651            $7,421            $5,219
Total non-performing assets and
  troubled-debt restructurings                $9,558            $13,168            $17,190           $21,869           $24,832
                                            =========          =========          =========         =========         =========
Impaired loans                            $4,294             $7,419                $-                 $-               $-
Total non-performing loans to total            
  loans                                        0.43%              1.12%               1.18%             1.45%             2.52%
Total non-performing assets to total           
  assets                                   0.37               0.62                1.44              2.23              3.04
Total non performing assets and
troubled-debt restructurings to                
total assets <3>                               0.73               0.96                2.59              3.38              3.84

 The Bank adopted SFAS 114 effective July 1, 1995.  Impaired loans were not
     measured prior to this date.
  Total non-performing assets to total Adjusted Assets were 0.68% at June
    30, 1996.
  Total non-performing assets and troubled-debt restructurings to total
    Adjusted Assets were 1.06% at June 30, 1996.

   The Bank recorded $188,000 and $357,000 of interest income on non-performing
loans and troubled-debt restructurings, respectively, for  the  year ended June
30,  1997,  and $47,000 and $344,000, respectively, for the fiscal  year  ended
June  30,  1996.   If   the   Bank's  non-performing  loans  and  troubled-debt
restructurings had been performing  in  accordance  with  their terms, the Bank
would  have  recorded  additional  interest  income  of  $247,000   and   $114,
respectively,  for  the  year  ended  June 30, 1997, and $410,000 and $127,000,
respectively, for the fiscal year ended June 30, 1996.

   OTHER REAL ESTATE OWNED ("OREO"). Property  acquired by the Bank as a result
of a foreclosure on a mortgage loan is classified  as  OREO  and is recorded at
the lower of the recorded investment in the related loan or the  fair  value of
the  property at the date of acquisition, with any resulting write down charged
to the  allowance  for  loan  losses.  The  Bank obtains an appraisal on a real
estate owned property as soon as practicable  after  it takes possession of the
real  property. The Bank will generally reassess the value  of  OREO  at  least
annually thereafter. At June 30, 1997, the Bank had $1.7 million in OREO.

   CLASSIFIED  ASSETS. The Bank's Loan Loss Reserve Committee meets every other
month to review  all  problem  loans  in the portfolio to determine whether any
loans  require  reclassification  in  accordance   with  applicable  regulatory
guidelines. Recommendations are reported by the Loan  Loss Reserve Committee to
the Board of Directors on a quarterly basis. The Loan Loss  Reserve  Committee,
subject  to  Board  approval,  establishes  policy  relating  to  the  internal
classification  of  loans  and  believes  that  its classification policies are
consistent  with regulatory policies. All non-performing  loans  and  OREO  are
considered to  be  classified  assets. In addition, the Bank maintains a "watch
list" comprised of 25 loans totaling $4.9 million at June 30, 1997 which, while
performing, are characterized by  weaknesses  which  require  special attention
from management and are considered to be potential problem loans.  All loans on
the  watch  list  are  considered  to  be  classified  assets  or are otherwise
categorized  as "Special Mention" as discussed below. As a result  of  its  bi-
monthly review  of  the  loan  portfolio,  the  Loan Loss Reserve Committee may
decide to reclassify one or more of the loans on the watch list.

PAGE 14

   Federal  regulations and Bank policy require that  loans  and  other  assets
considered  to   be   of  lesser  quality  be  classified  as  ''Substandard,''
''Doubtful'' or ''Loss''  assets.  An asset is considered ''Substandard'' if it
is inadequately protected by the current  net  worth and paying capacity of the
obligor  or of the collateral pledged, if any. ''Substandard''  assets  have  a
well-defined  weakness  or  weaknesses  and  are  characterized by the distinct
possibility that the Bank will sustain ''some loss''  if  deficiencies  are not
corrected.  Assets  classified  as  ''Doubtful''  have  all  of  the weaknesses
inherent in those classified ''Substandard'' with the added characteristic that
the weaknesses present make ''collection or liquidation in full,'' on the basis
of  current  existing facts, conditions, and values, ''highly questionable  and
improbable.''    Assets   classified   as   ''Loss''   are   those   considered
''uncollectible''  and  of  such  little value that their continuance as assets
without the establishment of a specific  loss  reserve is not warranted. Assets
which do not expose the Bank to sufficient risk  to  warrant  classification in
one  of  the  aforementioned  categories but possess potential weaknesses  that
deserve  management's  attention   are   designated   ''Special   Mention''  by
management.  At  June  30,  1997  the Bank had $7.7 million of loans designated
Special Mention.

   When  an insured institution classifies  one  or  more  assets,  or  portion
thereof, as  Substandard  or  Doubtful,  it  is required to establish a general
valuation allowance for loan losses in an amount  deemed prudent by management.
Generally, federally-insured institutions must maintain  an  allowance for loan
losses  at  a  level  that  is  ''adequate  to  absorb estimated credit  losses
associated with the loan portfolio.'' The general valuation allowance, which is
a regulatory term, represents a loss allowance which  has  been  established to
recognize  the  inherent  risk  associated with lending activities, but  which,
unlike the specific allowance, has  not  been  allocated  to particular problem
assets.  When  an  insured  institution  classifies  one  or  more  assets,  or
proportions  thereof,  as  ''Loss,''  it  is  required to establish a  specific
allowance for losses equal to 100% of the amount  of the asset so classified or
to charge-off such amount.

   At  June  30,  1997,  the  Bank  had  $4.5  million  of  assets   classified
Substandard,  consisting  of  55  loans, no assets classified as doubtful,  and
$89,000 of assets classified as Loss, consisting of 2 loans.
PAGE 15

   The  following  table sets forth at  June  30,  1997  the  Bank's  aggregate
carrying value of the  assets  classified  as  Substandard, Doubtful or Loss or
designated as Special Mention.

                                  Special Mention             Substandard               Doubtful                      Loss
                                -------------------       -------------------       -------------------       ------------------
                                Number       Amount       Number       Amount       Number       Amount       Number       Amount
                                                                                               
                                ------       ------       ------       ------       ------       ------         ------     ------
                                                                       (Dollars In Thousands)
Mortgage Loans:
   One-to-four family               6          $738          14        $1,640          -           $-             -          $-
   Multi-family and
     underlying                    
     cooperative                   15         6,321           2           642          -            -              2          89
   Non-residential                 -             -            2            78          -            -             -           -
   Cooperative apartment           10           593           5           394          -            -             -           -
                                ------       ------       ------       ------       ------       ------         ------     ------
Total Mortgage Loans               31         7,652          23         2,754          -            -              2          89
                                ------       ------       ------       ------       ------       ------         ------     ------
Other Real Estate Owned:
   One-to-four family              -             -            1           328          -            -             -           -
   Multi-family and                                                                                               -           -
     underlying cooperative        -             -            1           713          -            -
   Non-residential                 -             -           -             -           -            -             -           -
   Cooperative apartment           -             -           20           656          -            -             -           -
                                ------       ------       ------       ------       ------       ------         ------     ------
Total Other Real Estate            
  Owned                            -             -           22         1,697          -            -             -           -
                                ------       ------       ------       ------       ------       ------         ------     ------
Total                              31        $7,652          55        $4,451          -           $-              2         $89
                                ======       ======       ======       ======       ======       ======         ======     ======

ALLOWANCE FOR LOAN LOSSES

   The Bank has established a Loan Loss Reserve Committee and has charged it
with, among other things, specific responsibility for monitoring the adequacy
of the loan loss reserve. The Loan Loss Reserve Committee's findings, along
with recommendations for additional loan loss reserve provisions, if any, are
reported directly to senior management of the Bank, and to the Board of
Directors. The Allowance for Loan Losses is supplemented through a periodic
provision for loan losses based on the Loan Loss Reserve Committee's evaluation
of several variables, including the level of non-performing loans, the ratio of
reserves to total performing loans, the level and composition of new loan
activity, and an estimate of future losses determinable at the date the
portfolio is evaluated. Such evaluation, which includes a review of all loans
on which full collectibility may not be reasonably assured, considers among
other matters, the fair value of the underlying collateral, economic
conditions, historical loan loss experience and other factors that warrant
recognition in providing for an adequate loan loss allowance. In addition,
various regulatory agencies, as an integral part of their examination process,
periodically review the Bank's allowance for loan losses, its valuation of
OREO, and both the level of loans in foreclosure and pending foreclosure. Based
on their judgments about information available to them at the time of their
examination, the regulators may require the Bank to recognize additions to the
allowance.

   Loan loss reserves are established based upon a review of the two components
of the Bank's loan portfolio, performing loans and non-performing loans.
Performing loans are reviewed based upon the premise that, over time, the loan
portfolio will generate losses and that some portion of the loan portfolio
which is currently performing will default. The evaluation process is thus
based upon the Bank's historical loss experience.

   Non-performing loans are reviewed individually to determine if the
liquidation value of the underlying collateral is sufficient to pay off the
existing debt. Should the bank determine that a non-performing loan is likely
to result in  a principal loss, the loan is then placed into one of four
classifications. The particular classification assigned to any one loan, or
proportion thereof, (loss, doubtful, substandard or special mention) is based
upon the actual level of loss attributable to that loan, as determined by the
Loan Loss Reserve Committee. The Bank will then increase its general valuation
allowance in an amount established by the Loan Loss Reserve Committee to
appropriately reflect the anticipated loss from each loss classification
category.
PAGE 16

   Specific reserves are established against loans classified as ''loss.''
Rather than an estimation of potential loss, the establishment of a specific
reserve represents the identification of an actual loss which will result in a
charge-off. This loss amount will be set aside on the Bank's balance sheet as a
specific reserve and will serve to reduce the carrying value of the associated
loan. The Bank's determination as to the classification of its assets and the
amount of its valuation allowances is subject to review by various regulatory
agencies which can order the establishment of additional general or specific
loss allowances.

   The Bank has increased its allowance for loan losses to a level which
management believes is adequate to absorb possible losses that may be incurred
within the Bank's loan portfolio. The Bank provided $4.2 million  to its
allowance for loan losses for the fiscal year ended June 30, 1997.  At June 30,
1997, the total allowance was $10.7 million, which amounted to 336.24% of non-
performing loans and 1.43% of total loans. The increase in the allowance
reflects management's assessment of the risks inherent in its loan portfolio,
including those risks associated with the Bank's emphasis on multi-family
mortgage loans, which are considered to be at greater risk of loss than one- to
four-family loans.  The Bank will continue to monitor and modify the level of
its allowance for loan losses in order to maintain such allowance at a level
which management considers adequate to provide for loan losses. For the fiscal
year ended June 30, 1997, the Bank had charge-offs, net of recoveries, of $1.3
million against the allowance. Since 1985, total principal losses attributable
to the Bank's loan portfolio have averaged 0.18% of the average outstanding
loan balance.
PAGE 17

   The following table sets forth activity in the Bank's allowance for loan
losses at or for the dates indicated.

                                                               At or for the Year Ended June 30,
                                                 ------------------------------------------------------
                                                 1997              1996             1995                1994            1993
                                                                                                    
                                                 --------          --------         --------          --------          --------
                                                                           (Dollars In Thousands)
Total loans outstanding at end of period    $750,584           $583,686        $429,854           $431,593            $461,418
                                                 ========          ========         ========          ========            ========
Average total loans outstanding             $648,357           $449,063        $430,845           $455,705             474,362
                                                 ========          ========         ========          ========            ========
ALLOWANCE FOR LOAN LOSSES:
Balance at beginning of period                    $7,812             $5,174          $3,633             $2,996              $2,094
Provision for loan losses                          4,200              2,979           2,950              4,105               3,395
Charge-offs
   One-to-four family                               (104)               (21)           (146)              (224)               (272)
   Multi-family and underlying cooperative          (985)              (553)         (1,081)            (2,203)             (1,355)
   Non-residential                                    -                (274)            (92)                -                  (19)
   FHA/VA insured                                     -                  -               (9)                -                  (13)
   Cooperative apartment                            (276)              (170)           (328)            (1,109)               (876)
   Other                                             (23)                (5)             -                  -                  -
                                                 --------           --------         --------          --------            -------
Total charge-offs                                 (1,388)            (1,023)         (1,656)            (3,536)             (2,535)
                                                 --------           --------         --------          --------            -------
Recoveries                                           102                 14             247                 68                  42
                                                 --------           --------         --------          --------            -------
Reserve acquired in purchase of Conestoga             -                 668              -                  -                    -
                                                 --------           --------         --------          --------            -------
Balance at end of period                         $10,726             $7,812          $5,174             $3,633              $2,996
                                                 ========           ========         ========          ========            =======
Allowance for loan losses to total loans
   at end of period                                 1.43%              1.34%           1.20%              0.84%               0.65%
Allowance for loan losses to total non- 
   performing loans at end of period          336.24             119.25          101.99              58.15               25.76
Ratio of net charge-offs to average
  loans outstanding during the period               0.20               0.22            0.33               0.76                0.53

ALLOWANCE FOR LOSSES ON OTHER REAL ESTATE
OWNED:
Balance at beginning of period                      $114                $-              $-                 $-                  $-
Provision charged to operations                      450                586              -                  -                   -
Charge-offs, net of recoveries                      (377)              (472)             -                  -                   -
                                                 --------           --------         --------          --------            --------
Balance at end of period                            $187               $114             $-                 $-                  $-
                                                 ========           ========         ========          ========            ========

 Total loans represents loans, net, plus the allowance for loan losses.
     Total loans at June 30, 1996 includes $113.1 million of loans acquired
     from Conestoga.
 The Bank adopted SFAS No. 114 on July 1, 1995. See ''Management's
     Discussion and Analysis of Financial Condition and Results of Operations-
     Impact of Accounting Standards.''

PAGE 18

   The following table sets forth the Bank's allowance for loan losses
allocated by loan category and the percent of loans in each category to total
loans at the dates indicated.

                                            At June 30,
        --------------------------------------------------------------------------------------------------------------------------
                  1997                     1996                      1995                   1994                       1993
        -----------------------   ---------------------   ----------------------   ----------------------     --------------------
                          Percent                 Percent                Percent                 Percent                 Percent
                          of Loans                of Loan                of Loans                 of Loan                of Loans
                           in Each                in Each                 in Each                 in Each                in Each
                          Category                Category               Category                Category                 Category
             Allowance    to Total    Allowance   to Total    Allowance   to Total    Allowance   to Total    Allowance   to Total
             Amount      Loans    Amount     Loans    Amount      Loans     Amount    Loans    Amount     Loans
                                                                                         
             -------      ------      -------     ------      -------     ------       -------      ------     -------     -------
                                                               (Dollars In thousands)
Impaired
  loans    $122       0.58%         $955        1.30%       $-           -%           $-           -%         $-           -%
One-to-four                                                                                                                  
  family        820      19.04         1,171       29.90        556       14.25           398        14.66        391       17.52
Multi-family
  and
  underlying  7,398      66.83         3,808       50.81      3,372       61.72         2,267        59.68      1,773       56.77
  cooperative
Non-
  residential   862       5.84           605        6.63        103        6.60            72         6.63         54        6.02
Cooperative
  apartment   1,355       6.89         1,085       10.38      1,031       16.51           784        18.06        669       18.75
Other           169       0.82           188        0.98        112        0.92           112         0.97        109        0.94
           --------     ------        -------     ------     -------     ------       -------       ------     -------     ------
Total       $10,726     100.00%       $7,812      100.00%    $5,174      100.00%       $3,633       100.00%    $2,996      100.00%
            =======     ======        =======     ======     =======     ======       =======       ======     =======     ======

  Total loans represent gross loans less FHA and VA loans, which are
     government guaranteed loans.
 The Bank adopted SFAS 114 effective July 1, 1995.  Prior to this date,
     impaired loans were not measured.  At June 30, 1997 and 1996, impaired
     loans represent 0.57% and 1.27% of total loans.

INVESTMENT ACTIVITIES

   INVESTMENT STRATEGIES OF THE COMPANY - The Company's
principal asset is its investment in the Bank's common
stock, which amounted to $152.2 million at June 30, 1997
The Company's other investments at that date totaled $28.4
million, which are invested primarily in U.S. agency
obligations which will be utilized for general business
activities which may include, but are not limited to: (1)
repurchases of Common Stock, (2) acquisition of other
companies, (3) subject to applicable limitations, the
payment of dividends, and/or (4) investments in the equity
securities of other financial institutions and other
investments not permitted for federally-insured
institutions.  There can be no assurance that the Company
will engage in any of these activities in the future.

   Otherwise, the investment policy of the Company calls
for investments in relatively short-term, liquid securities
similar to such securities defined in the securities
investment policy of the Bank.

   INVESTMENT POLICY OF THE BANK.   The securities
investment policy of the Bank, which is established by its
Board of Directors, is designed to help the Bank achieve
its overall asset/liability management objectives.
Generally, the policy calls for management to emphasize
principal preservation, liquidity, diversification, short
maturities and/or repricing terms, and a favorable return
on investment when selecting new investments for the Bank's
portfolio. The Bank's current securities investment policy
permits investments in various types of liquid assets
including obligations of the U.S. Treasury and federal
agencies, investment grade corporate obligations, various
types of mortgage-backed securities, commercial paper,
certificates of deposit, and federal funds sold to select
financial institutions periodically approved by the Board
of Directors.
PAGE 19

   Investment strategies are implemented by the Asset and
Liability Management Committee ("ALCO") comprised of the
Chief Executive Officer, President, Executive Vice
President and other senior management officers.  The
strategies take into account the Bank's overall balance
sheet, including loans and deposits, and are intended to
protect and enhance the Company's earnings and market
value.  The strategies are reviewed monthly by the ALCO and
reported regularly to the Board of Directors.

   The Bank currently does not participate in hedging
programs, interest rate swaps, or other activities
involving the use of off-balance sheet derivative financial
instruments. These activities are prohibited by the Bank's
securities investment policy. Similarly, the Bank has not
and does not invest in mortgage-backed securities which are
deemed to be ''high risk,'' or purchase bonds which are not
rated investment grade.

   MORTGAGE-BACKED SECURITIES.   In its securities
investment activities over the past few years the Company
has increased its purchases of  mortgage-backed securities,
which provide the portfolio with investments consisting of
desirable repricing, cash flow and credit quality
characteristics. Mortgage-backed securities generally yield
less than the loans that underlie the securities because of
the cost of payment guarantees and credit enhancements that
reduce credit risk to the investor. While mortgage-backed
securities backed by federally sponsored agencies carry a
reduced credit risk as compared to whole loans, such
securities remain subject to the risk that fluctuating
interest rates, along with other factors such as the
geographic distribution of the underlying mortgage loans,
may alter the prepayment rate of such mortgage loans and so
affect both the prepayment speed, and value, of such
securities.  However, mortgage-backed securities are more
liquid than individual mortgage loans and may be used to
collateralize borrowings of the Company. Approximately
98.40% of the Company's $308.5 million mortgage-backed
securities portfolio, which represented 23.46% of the
Company's total assets at June 30, 1997, was comprised of
securities backed by either the Governmental National
Mortgage Association (''GNMA''), FHLMC, or FNMA.  In
addition to the superior credit quality provided by the
agency backing, the mortgage-backed securities portfolio
also provides the Company with important interest rate risk
management features. One year adjustable-rate mortgage-
backed securities, which total $86.9 million, are the
single largest component of the Company's mortgage-backed
securities portfolio. These securities are structured so
that the interest rate received by the Company adjusts
annually in tandem with changes in other short-term market
interest rates, a feature which reduces the Company's
exposure to interest rate risk. The Company also has a
$85.6 million  investment in fixed-rate balloon mortgage-
backed securities which provide a return of principal and
interest on a monthly basis, and have original maturities
of between five to seven years, at which point the entire
remaining principal balance is repaid (the ''balloon''
payment).  The remainder of the Company's mortgage-backed
securities portfolio is split between a $15.5 million
investment in seasoned pass-through certificates backed by
GNMA, FNMA or FHLMC, with an average remaining maturity of
7 years, $43.6 million in 15 or 30 year fixed rate FNMA or
GNMA securities, and an $76.9 million of  Collateralized
Mortgage Obligations ("CMOs") comprised entirely of fixed
rate, short-term classes with relatively little cash flow
volatility or floating rate classes which reprice
periodically.

   At June 30, 1997, the Bank has $72.5 million in CMOs and
REMICSs.  All of the securities are undewritten by U.S
agency obligations or highly reputable financial
institutions.  In addition, none of these securities have
stripped principal and interest components and the Bank is
positioned in priority tranches in all securities.  The
majority of these securities have been purchased from
short-term borrowings as part of securities sold under
agreement to repurchase transactions, in which these
securities act as collateral for the borrowed funds.  As of
June 30, 1997, the fair value of these securities equal or
exceed their cost basis.

   The Bank adopted SFAS 115 effective July 1, 1994.  SFAS
115 requires that investments in equity securities that
have readily determinable fair values and all investments
in debt securities be classified in one of the following
three categories and accounted for accordingly:  trading
securities, securities available for sale, or securities
held to maturity.  The Company  had no securities
classified as trading securities during the year ended
June 30, 1996, and does not intend to trade securities.
Unrealized gains and losses on available for sale
securities are excluded from earnings and are reported as a
separate component of stockholders' equity, net of deferred
taxes.  At June 30, 1997, the Company had $288.8 million of
securities classified as available for sale which
represented 21.96% of total assets at June 30, 1997. Given
the size of the available for sale portfolio, future
fluctuations in market values of these securities could
result in fluctuations in the Company's stockholders'
equity.
PAGE 20

   The maturities on the Bank's fixed-term mortgage-backed
securities (balloons, seasoned GNMAs and FHLMCs) are
relatively short as compared to the final maturities on its
ARMs and CMO portfolios. Except for fixed rate mortgage
backed securities acquired from Conestoga, which were
generally classified as available for sale, the Company
typically classifies purchased fixed rate mortgage-backed
securities as held-to-maturity, and carries the securities
at amortized cost.  The Company is confident of its ability
to hold these securities to final maturity.  The Company
typically classifies purchased ARMs and CMOs as available
for sale, in recognition of the greater prepayment
uncertainty associated with these securities, and carries
these securities at fair market value.

The following table sets forth activity in the Company's
mortgage-backed securities portfolio for the periods
indicated.

                                                   For the Year Ended June 30,
                                             -----------------------------------
                                                  1997       1996         1995
                                              ---------    ---------   ---------
                                                           (In Thousands)
Amortized cost at beginning of period          $209,542      $90,543    $94,356
Purchases/ Sales (net)                          137,889       20,743     10,067
Principal repayments                            (41,021)     (25,871    (13,595)
Premium and discount amortization, net             (246)        (282       (285)
Securities acquired in purchase of Conestoga(1)      -       124,409          -
                                               ---------   ---------   ---------
Amortized cost at end of period                 306,164     $209,542    $90,543
                                               =========   =========   =========

(1)   Amount comprised of $9.9 million of FHLMC securities, $38.4 million of
      FNMA securities, $70.1 of GNMA securities, and $6.0 million of CMOs.

The following table sets forth the amortized cost and fair
value of the Company's securities at the dates indicated.

                                                                        At June 30,
                              --------------------------------------------------------------------------------------------------
                                            1997                                 1996                         1995
                              ----------------------------      -----------------------------       ------------------------
                                                                       
                              Amortized Cost    Fair Value       Amortized Cost    Fair Value       Amortized Cost    Fair Value
                                                                                                 
                               ---------         ---------        ---------        ---------          ---------        ---------
                                                                      (In Thousands)
Mortgage-backed securities:
GNMA                             $103,974         $106,431          $88,133          $88,562            $24,402          $24,960
FNMA                               71,621           71,745           56,721           56,653              7,417            7,599
FHLMC                              58,226           58,536           56,122           56,153             54,888           55,382
CMOs                               72,343           72,500            8,566            8,589              3,836            3,964
                                ---------        ---------        ---------        ---------          ---------        ---------
Total mortgage-backed
  securities                      306,164          309,212          209,542          209,957             90,543           91,905
                                ---------        ---------        ---------        ---------          ---------        ---------
Investment securities:
U.S. treasury and agency          119,742          120,226          297,993          297,906             25,834           25,694
Other                          34,271           34,596           83,700           83,611             67,991           67,909
                                ---------        ---------        ---------        ---------          ---------        ---------
Total investment securities       154,013          154,822          381,693          381,517             93,825           93,603
Equity securities                   4,912            5,889            2,977            3,205              3,304            3,070
Net unrealized gain             3,710               -               575               -                 770               - 
                                ---------        ---------        ---------        ---------          ---------        ---------
Total securities, net            $468,799         $469,923         $594,787         $594,679           $188,442         $188,578
                                =========        =========        =========        =========          =========        =========

 Includes $9.9 million of FHLMC securities, $38.4 million of FNMA
     securities, $70.1 million in GNMA securities, $6.0 million in CMOs,
     $119.1 million in agency obligations, and $51.7 million in corporate
     obligations acquired from Conestoga.
 The net unrealized gain at June 30, 1997, 1996  and 1995 relates to
     available for sale securities in accordance with SFAS No. 115. The
     net unrealized gain is presented in order to reconcile the
     ''Amortized Cost'' of the Company's securities portfolio to the
     recorded value  reflected in the Consolidated Statements of
     Condition.

PAGE 21

   CORPORATE DEBT OBLIGATIONS.   The Company
invests in the short-term investment grade
debt obligations of various corporations.
Corporate debt obligations generally carry
both a higher rate of return and a higher
degree of credit risk than U.S. Treasury
securities with comparable maturities. In
addition, corporate securities are generally
less liquid than comparable U.S. Treasury
securities. In recognition of the additional
risks associated with investing in these
securities, the Company's investment policy
limits new investments in corporate
obligations to those companies which are
rated single ''A'' or better by one of the
nationally recognized rating agencies, and
limits investments in any one corporate
entity to the lesser of 1% of total assets
or 15% of the Company's equity. At June 30,
1997, the Company's portfolio of corporate
debt obligations totaled $31.1 million, or
6.63% of total assets.

The following table sets forth the amortized
cost and fair value of the Company's
securities, by accounting classification and
by type of security, at the dates indicated.

                                                                        At June 30,
                              --------------------------------------------------------------------------------------------------
                                            1997                                 1996                         1995
                              ----------------------------           -----------------------------       ------------------------
                                                                       
                                 Amortized Cost    Fair Value       Amortized Cost    Fair Value       Amortized Cost    Fair Value
                                                                                                    
                                  ---------         ---------        ---------        ---------          ---------        ---------
                                                                           (In Thousands)
Held-to-Maturity:
Mortgage-backed securities:
Pass through securities           $78,388             $79,075          $52,580          $52,596           $53,815          $54,172
                                 --------            ---------       ---------        ---------         ---------        ---------
Total mortgage-backed
       securities                  78,388              79,075          $52,580          $52,596           $53,815          $54,172
Investment securities         101,587             102,024           43,552           43,428            51,475           51,254
                                 --------            ---------        ---------        ---------        ---------        ---------
Total Held-to Maturity           $179,975            $181,099          $96,132          $96,024          $105,290         $105,426
                                 ========            =========        =========        =========        =========        =========
Available-for-Sale:
Mortgage-backed securities:
Pass through securities          $155,433            $157,637         $148,396         $148,772           $32,892          $33,769
CMOs                               72,343              72,500            8,566            8,589             3,836            3,964
                                 --------            ---------        ---------        ---------        ---------        ---------
Total mortgage-backed
  securities                      227,776             230,137          156,962          157,361            36,728           37,733
Investment securities      52,426              52,798          338,141          338,089            42,350           42,349
Equity securities                   4,912               5,889            2,977            3,205             3,304            3,070
Net unrealized gain             3,710                  -               575               -                770              -
                                 --------            ---------        ---------        ---------        ---------        ---------
Total Available-for-Sale         $288,824            $288,824         $498,655         $498,655           $83,152          $83,152
                                 ========            =========        =========        =========        =========        =========
Total securities, net            $468,799            $469,923         $594,787         $594,679          $188,442         $188,578
                                 ========            =========        =========        =========        =========        =========
     
 Includes  $118.4  million of mortgage-backed  pass-
     through  securities,  $6.0  million  in  CMOs,  and
     $170.8 million  in  investment  securities acquired
     from  Conestoga.   Except,  for  $10.7  million  of
     investment  securities  which  were  classified  as
     held-to-maturity,  all  securities  acquired   were
     classified as available for sale.
 Mortgage-backed  securities  include investments in
     CMOs and REMICs.
 Includes corporate debt obligations.
 The net unrealized gain at June 30, 1997, 1996  and
     1995 relates to available for  sale  securities  in
     accordance  with  SFAS  No. 115. The net unrealized
     gain  is  presented  in  order   to  reconcile  the
     ''Amortized  Cost''  of  the  Company's  securities
     portfolio to the recorded value   reflected  in the
     Consolidated Statements of Condition.
 Amount   includes   $125.0  million  of  investment
     securities (short-term  agency  obligations)  which
     matured  on  July 1, 1996 in order to coincide with
     the refund of excess subscription proceeds received
     in the Company's initial public offering.

PAGE 22

   The following table  sets forth
certain information regarding  the
amortized  cost,  fair  value  and
weighted   average  yield  of  the
Company's debt  securities at June
30, 1997, by remaining  period  to
contractual maturity. With respect
to mortgage-backed securities, the
entire  amount is reflected in the
maturity  period that includes the
final security  payment  date and,
accordingly,  no  effect has  been
given  to  periodic repayments  or
possible prepayments.  Other  than
obligations  of  federal  agencies
and   GSEs,  the  Company  has  no
investments  in  securities issued
by any one entity in excess of 10%
of  stockholders' equity  at  June
30, 1997.

                                                 At June 30, 1997
                            ------------------------------------------------------------
                                         Held-to-Maturity       Available-for Sale
                            ------------------------------------------------------------
                                                                          Weighted                                        Weighted
                                        Amortized                         Average        Amortized                        Average
                                          Cost           Fair Value        Yield           Cost           Fair Value      Yield
                                                                                                    
                                        --------         --------         ------         --------         --------        ------
                                                                    (Dollars In Thousands)
Mortgage-backed securities:
Due within 1 year                        $7,536           $7,541           6.07%              $-              $-             -%
Due after 1 year but within 5 years      32,295           32,295           6.42            25,441           25,513         6.67
Due  after  5  years  but within 10    
  years                                  28,803           29,105           6.93             7,338            7,330         6.70
Due after ten years                       9,754           10,134           7.95           194,997          197,295         7.06
                                        --------         --------                        --------         --------
Total                                    78,388           79,075           6.77           227,776          230,137         7.00
                                        --------         --------                        --------         --------
U.S. Treasury and Agency:
Due within 1 year                            -                -              -              4,000            3,999         5.72
Due after 1 year but within 5 years      75,133           75,509           6.89            25,461           25,506         6.31
Due  after  5  years  but within 10     
  years                                  10,903           10,909           8.06             4,245            4,302         7.33
Due after ten years                          -                -              -                 -                -            -
                                        --------         --------                        --------         --------
Total                                    86,036           86,418           7.03            33,706           33,807         6.37
                                        --------         --------                        --------         --------
Corporate and Other
Due within 1 year                         5,248            5,255           6.30             6,490            6,528         6.83
Due after 1 year but within 5 years       8,829            8,858           6.26            10,981           11,215         7.05
Due  after  5  years  but within 10         
  years                                     229              248           5.81             1,249            1,247         7.68
Due after ten years                       1,245            1,245           7.50                -                -            -
                                        --------         --------                        --------         --------
Total                                    15,551           15,606           6.37            18,720           18,990         7.01
                                        --------         --------                        --------         --------
Total:
Due within 1 year                        12,784           12,796           6.16            10,490           10,527         6.41
Due after 1 year but within 5 years     116,257          116,662           6.71            61,883           62,234         6.59
Due  after  5  years  but within 10      
  years                                  39,935           40,262           7.28            12,832           12,879         7.00
Due after ten years                      10,999           11,379           7.50           194,997          197,295         7.06
                                        --------         --------                        --------         --------
Total                                  $179,975         $181,099           6.78%         $280,202         $282,935         6.93%
                                        ========         ========                        ========         ========

SOURCES OF FUNDS

   GENERAL.     Deposits,   repayments  of
loans   and   mortgage-backed  securities,
investment   security    maturities    and
redemptions,  and  short-  to  medium-term
borrowings from the FHLBNY, which  include
both  advances  and  repurchase agreements
treated  as  financings,   are  the  Bank's
primary sources of funding for its lending
and  investment activities.  The  Bank  is
also  active  in  the  secondary  mortgage
market,  selling  substantially all of its
new   long-term,  fixed-rate   residential
mortgage product to either FNMA, FHLMC, or
SONYMA.

PAGE 23

   DEPOSITS.    The  Bank offers a variety
of  deposit  accounts having  a  range  of
interest  rates   and   terms.   The  Bank
presently  offers savings accounts,  money
market accounts,  checking  accounts,  NOW
and  Super  NOW accounts, and certificates
of  deposit.  The   flow  of  deposits  is
influenced   significantly    by   general
economic conditions, changes in prevailing
interest rates, and competition from other
financial   institutions   and  investment
products. The Bank has not used brokers to
attract   and  retain  deposits,   relying
instead on  customer  service, convenience
and   long-standing   relationships   with
customers. Consequently,  the  communities
in which the bank maintains branch offices
have  historically provided the Bank  with
nearly  all  of  its deposits. At June 30,
1997, the Bank had  deposit liabilities of
$963.4 million, up $13.3 million from June
30,  1996.  Within total  deposits,  $40.1
million,    or    4.2%,    consisted    of
certificates  of  deposit with balances of
$100,000 or greater. Individual Retirement
Accounts   (''IRA's'')    totaled    $98.0
million, or 10.3% of total deposits.

The  following  table presents the deposit
activity  of  the  Bank  for  the  periods
indicated.

                                                       For the Year Ended June 30,
                                              --------------------------------------------------
                                                 1997                 1996                 1995
                                                                           
                                              ---------            ---------            ---------
                                                                   (In thousands)
Deposits                                      $1,702,024             $696,881            $699,479
Withdrawals                                    1,729,025              718,534             709,317
                                               ---------            ---------            ---------
Withdrawals in excess of deposits                (27,001)             (21,653)             (9,838)
Deposits acquired in purchase of                      -               394,250                  -
Conestoga 
Interest credited                                 40,282               22,676              17,918
                                               ---------            ---------            ---------
Total increase in deposits                       $13,281             $395,273              $8,080
                                               =========            =========            =========

 Amount comprised of $216.3 million in certificate of deposits,
     $129.2 in savings accounts, $16.9 million in checking accounts,
     $30.8 million in money market accounts, and $954,000 in NOW and
     Super NOW accounts.

At June 30, 1997  the  Bank  had  $46.8 million in certificate of 
deposit accounts over $100,000 maturing as follows:
                                                             Weighted 
                                                              Average
                                               Amount           Rate
                                               ---------     ---------
                                                 (Dollars In Thousands)
Maturity Period
Within three months                              $9,568           5.33%
After three but within six months                 7,157           5.25
After six but within twelve months               10,572           5.66
After 12 months                                  19,509           6.21
                                               ---------
Total                                           $46,806           5.76%
                                               =========

   The following table sets forth the distribution of
the  Bank's deposit accounts and the related weighted\
average interest rates at the dates indicated.

                                                            At June 30,
                       ------------------------------------------------------------------------------------------------------------
                                  1997                                         1996                              1995              
                       ------------------------------------    ----------------------------------      ----------------------------
                                       Percent    Weighted                  Percent     Weighted               Percent of  Weighted
                                      of Total    Average                   of Total     Average                  Total     Average
                          Amount      Deposits      Rate        Amount      Deposits      Rate       Amount     Deposits     Rate
                                                                                              
                          ------       ------        ------     ------       ------       ------     ------     ------      ------
                                                               (Dollars In Thousands)
Checking accounts        $27,391        2.84%          - %      $27,684        2.91%           - %   $10,219      1.85%         -%
NOW accounts              15,817        1.64         1.24        15,029        1.58        1.50       13,877      2.50        1.50
Super NOW accounts           507        0.05         1.24           552        0.06        1.50          674      0.12        1.50
Money market accounts     33,530        3.48         2.96        45,948        4.84        3.04       16,698      3.01        2.65
Savings accounts         344,377       35.75         2.27       365,146       38.43        2.50      238,217     42.93        2.50
Certificates          
  of deposit             541,773       56.24         5.61       495,755       52.18        5.50      275,156     49.59        5.72
                          ------       ------                   -------       ------                  ------     ------
Totals                  $963,395      100.00%                  $950,114      100.00%                $554,841    100.00%
                         =======       ======                   =======       ======                  ======     ======

PAGE 24

   The  following  table  presents,  by  interest rate ranges, the
amount of certificate accounts outstanding  at the dates indicated
and the period to maturity of the certificate accounts outstanding
at June 30, 1997.

                            
                                  Period  to  Maturity  at June 30, 1997              Total  at June 30,
                            -----------------------------------------------       --------------------------------------    
                            Less than          One to           Four to Five      
Interest Rate Range          One Year        Three Years          Years           1997             1996           1995
                                                                                         
- ---------------             ---------         ---------         ---------         ---------      ---------     ---------
                                                                (In Thousands)
4.00% and below                  $11                $1               $-                $12          $3,300       $20,646
4.01% to 5.00%                82,249             2,605                -             84,854         204,826        45,135
5.01% to 6.00%               210,580            63,386             8,099           282,065         144,331        86,389
6.01% to 7.00%                16,786           135,198             6,544           158,528         116,545       112,929
7.01% and above                3,828            12,409                77            16,314          26,753        10,057
                            ---------         ---------         ---------         ---------       ---------     ---------
Total                       $313,454          $213,599           $14,720          $541,773        $495,755      $275,156
                            =========         =========         =========         =========       =========     =========

   BORROWINGS.   The Bank has been a member and shareholder of the FHLBNY since
February  14,  1980.  One of the privileges accorded FHLBNY shareholders is the
ability  to  borrow money  under  various  lending  (''Advance'')  programs  at
competitive interest  rates.  The Bank's total borrowing capacity at the FHLBNY
at June 30, 1997 is in excess of  $166.4 million. Included as part of the total
borrowing capacity at the FHLBNY, the Bank has been approved for an ''Overnight
Line of Credit'' of $50.0 million,  and  a  $50.0 million ''One-Month Overnight
Line of Credit,'' both priced at 0.125% over the prevailing federal funds rate.

        The Bank had borrowings (''Advances'') from the Federal Home Loan Bank
of New York totaling $63.2 million and $15.7 million at June 30, 1997 and 1996,
respectively. The average cost of FHLB advances was 5.79% and 5.40%,
respectively, during the years ended June 30, 1997 and 1996, and the average
interest rate on outstanding FHLB advances was 6.18% and 5.40%, respectively,
at June 30, 1997 and 1996.  At June 30, 1997, in accordance with the Advances,
Collateral Pledge and Security Agreement, the Bank maintained in excess of
$69.5 million of qualifying collateral (principally bonds and mortgage-backed
securities), as defined, to secure such advances.

   Securities sold with agreement to repurchase totaled $76.3 million at June
30, 1997.  The mortgage-backed securities sold with agreement to repurchase
mature at various periods beginning in May, 2001.  Borrowings under such
reverse repurchase agreements involve the delivery of securities to broker-
dealers who arrange the transactions. The securities remain registered in the
name of the Bank, and are returned upon the maturities of the agreements. Funds
to repay the Bank's securities sold with agreement to repurchase at maturity
will be provided primarily by cash received from the maturing securities.

PAGE 25

   Presented below is information concerning securities sold with agreement to
repurchase and FHLB Advances for the years ended June 30, 1997, 1996 and 1995:

Securities sold Under Agreement to Repurchase:

                                                             At or For the Year Ended June 30,
                                                            ------------------------------------
                                                       1997                 1996                 1995
                                                                                 
                                                    ---------            ---------            ---------
                                                                (Dollars In Thousands)
Balance outstanding at end of period                $76,333                $11,998              $2,110
Average interest cost at end of period                 5.69%                  6.00%               7.50%
Average balance outstanding                          32,374                 $2,148               2,212
Average interest cost during the year                  5.73%                  7.13%               7.25%
Carrying value of underlying collateral             $83,778                $13,433              $2,767
Estimated market value of underlying collateral      84,172                $13,660              $2,843
Maximum balance outstanding at month end
  during period                                      76,333                 11,998               2,164

FHLB Advances:

                                                             At or For the Year Ended June 30,
                                                            ------------------------------------
                                                       1997                 1996                 1995
                                                                                 
                                                    ---------            ---------            ---------
                                                                  (Dollars In Thousands)
Balance outstanding at end of period                $63,210                $15,710             $15,710
Average interest cost at end of period                 6.18%                  5.40%               5.40%
Average balance outstanding                         $20,121                $15,710             $15,710
Average interest cost during the year                  5.79%                  5.40%               5.40%
Maximum balance outstanding at month end
  during period                                     $63,210                $15,710             $15,710

SUBSIDIARY ACTIVITIES

The Company's only subsidiary is the Bank.  The  Bank was originally founded in
1864 as a New York State-chartered mutual savings  bank.   On November 1, 1995,
the  Bank converted to a federal mutual savings bank.  On June  26,  1996,  the
Bank converted  from the mutual to the stock form of ownership, and 100% of its
outstanding shares  were acquired by the Company.  The operation of the Bank is
the primary business of the Company.

   The Bank has three wholly-owned subsidiary corporations. Havemeyer Brokerage
Corporation (''HBC''),  prior  to  April,  1997,  was  engaged  in  the sale of
insurance and annuity products primarily to the Bank's customers and members of
the  local  community. Effective April 1, 1997, HBC, with the approval  of  the
OTS, was redesignated as an operating subsidiary, whose primary function is the
management of  a  securities  portfolio.   In  May,  1997, the Bank transferred
approximately $139.0 million in investment securities  to HBC and HBC began its
new  form  of  operations.   As  of June 30, 1997,  HBC had $140.7  million  in
consolidated assets, and for the year  ended  June 30, 1997, had pre-tax income
of $1.5 million. Havemeyer Equities Corporation (''HEC'') and Boulevard Funding
Corporation (''BFC'') are currently inactive. As of June 30, 1997, HEC had $902
and  BFC  had  $1,464  of  consolidated  assets. The  Bank  has  formed  a  new
subsidiary, Havemeyer Investment Inc. ("HII"),  whose  primary operations will
be  sales  of insurance and annuity products to the Bank's  customers,  and  is
currently awaiting final approval from the OTS for HII to begin operations.

PERSONNEL

   As of June  30,  1997,  the Company had 209 full-time employees and 80 part-
time employees.  The employees  are  not represented by a collective bargaining
unit, and the Company considers its relationship with its employees to be good.

FEDERAL, STATE AND LOCAL TAXATION

PAGE 26

FEDERAL TAXATION

   General.  The following is a discussion of material tax matters and does not
purport to be a comprehensive description  of  the  tax rules applicable to the
Bank  or  the  Company. The Bank was last audited for its  taxable  year  ended
December 31, 1988  For  federal  income  tax purposes, the Company and the Bank
will file separate income tax returns and  report  their  income  on  a June 30
fiscal year basis using the accrual method of accounting and will be subject to
federal  income  taxation  in  the  same manner as other corporations with some
exceptions,  including particularly the  Bank's  tax  reserve  for  bad  debts,
discussed below.

   Tax Bad Debt  Reserves.   The Small Business Job Protection Act of 1996 (the
"1996 Act"), which was enacted  on August 20, 1996, made significant changes to
provisions of the Internal Revenue  Code  of  1986  (the  "Code") relating to a
savings institution's use of bad debt reserves for federal  income tax purposes
and requires such an institution to recapture (i.e., take into  income) certain
portions of its accumulated bad debt reserves. The effect of the  1996  Act  on
the  Bank  is discussed below. Prior to the enactment of the 1996 Act, the Bank
was permitted  to  establish  tax  reserves  for  bad  debts and to make annual
additions  thereto,  which  additions,  within specified formula  limits,  were
deducted in arriving at the Bank's taxable  income.  The  Bank's deduction with
respect  to  "qualifying loans," which are generally loans secured  by  certain
interests in real  property, was permitted to be computed using an amount based
on a six-year moving  average  of the Bank's charge-offs for actual losses (the
"Experience Method"), or an amount  equal  to  8%  of the Bank's taxable income
(the  "PTI  Method"),  computed  without  regard  to this  deduction  and  with
additional modifications and reduced by the amount of any permitted addition to
the non-qualifying reserve. Use of the PTI Method had  the  effect  of reducing
the  marginal  rate of federal tax on the Bank's income to 32.2%, exclusive  of
any minimum or environmental  tax,  as  compared  to  the  generally applicable
maximum  corporate  federal income tax rate of 35%. The Bank's  deduction  with
respect  to  non-qualifying  loans  was  required  to  be  computed  under  the
Experience Method.  Each  year  the  Bank  reviewed  the  most favorable way to
calculate  the  deduction  attributable  to  an addition to the  tax  bad  debt
reserves.

   THE 1996 ACT.  Under the 1996 Act, for its current and future taxable years,
the Bank is not permitted to make additions to  its  tax bad debt reserves. The
Bank will be allowed to deduct bad debts as incurred.  In addition, the Bank is
required  to  recapture  (i.e., take into income) over a six  year  period  the
excess of the balance of its  tax  bad debt reserves as of  July 1, 1996 (other
than its supplemental reserve for losses  on  loans)  over  the balance of such
reserves  as  of  June  30,  1988 (or over a lesser amount if the  Bank's  loan
portfolio decreased since June  30,  1988).  As a result of such recapture, the
Bank will pay additional federal tax of  approximately $1.1 million.  Since the
Bank had already provided a deferred income tax liability for this amount prior
to  the  enactment of the 1996 Act, the enactment  of  the  1996  Act  did  not
adversely  impact  the  Bank's  financial  condition  or results of operations.
Moreover,  such  recapture  will be suspended for each of  the  two  successive
taxable years, beginning July  1,  1996, in which the Bank originates a minimum
of certain residential loans based upon the average of the principal amounts of
such loans made by the Bank during its  six taxable years preceding its current
taxable year.  The recapture was suspended  based  upon  the Bank's origination
levels during the tax year ended June 30, 1997.

   Distributions.   Under  the  1996  Act,  if  the  Bank  makes  "non-dividend
distributions"  to the Company, such distributions will be considered  to  have
been made from the  Bank's unrecaptured tax bad debt reserve balance as of June
30, 1988, to the extent  thereof, and then from the Bank's supplemental reserve
for losses on loans, to the  extent  thereof, and an amount based on the amount
distributed (but not in excess of the amount of such reserves) will be included
in  the  Bank's  income. Non-dividend distributions  include  distributions  in
excess  of  the  Bank's  current  and  accumulated  earnings  and  profits,  as
calculated for federal  income  tax  purposes,  distributions  in redemption of
stock, and distributions in partial or complete liquidation. Dividends paid out
of  the  Bank's  current  or  accumulated earnings and profits will not  be  so
included in the Bank's income.

PAGE 27

   The  amount  of  additional  taxable  income  created  from  a  non-dividend
distribution is an amount that, when  reduced  by  the  tax attributable to the
income, is equal to the amount of the distribution. Thus, approximately one and
one-half times the amount of such distribution (but not in excess of the amount
of  such  reserves)  would  be  includable  in  income for federal  income  tax
purposes, assuming a 35% federal corporate income  tax  rate.  See "Regulation"
and "Dividend Policy" for limits on the payment of dividends by  the  Bank. The
Bank does not intend to pay dividends that would result in a recapture  of  any
portion of its tax bad debt reserves.

   CORPORATE  ALTERNATIVE  MINIMUM  TAX.  The  Code  imposes  a  tax ("AMT") on
alternative  minimum  taxable  income ("AMTI") at a rate of 20%. AMTI  is  also
adjusted by determining the tax  treatment  of  certain  items in a manner that
negates  the  deferral of income resulting from the regular  tax  treatment  of
those items. Thus,  the  Bank's  AMTI is increased by an amount equal to 75% of
the  amount by which the Bank's adjusted  current  earnings  exceeds  its  AMTI
(determined  without  regard  to this adjustment and prior to reduction for net
operating losses).

STATE AND LOCAL TAXATION

    STATE OF NEW YORK. The Bank  and  the Company are subject to New York State
franchise tax on one of several alternative  bases,  whichever  results  in the
highest tax, and will file combined returns for purposes of this tax. The basic
tax  is  measured  by "entire net income," which is federal taxable income with
adjustments. For New  York State tax purposes, so long as the Bank continues to
meet certain definitional  tests  relating  to its assets and the nature of its
business, it will be permitted deductions, within specified formula limits, for
additions to its bad debt reserves for purposes  of  computing  its  entire net
income.  The  Bank's  deduction  with respect to "qualifying loans," which  are
generally loans secured by certain  interests in real property, may be computed
using an amount based on the Bank's actual  loss  experience  (the  "Experience
Method")  or  an amount equal to 32% of the Bank's entire net income (the  "PTI
Method"), computed  without  regard to this deduction and reduced by the amount
of any permitted addition to the Bank's reserve for non-qualifying loans.

   On July 30, 1996, New York State (the "State") enacted legislation,
effective January 1, 1996, which generally retains the percentage of taxable
income method for computing allowable bad debt deductions and does not require
the Bank to recapture into income State tax bad debt reserves unless one of the
following events occur: 1) the Bank's retained earnings represented by the
reserve is used for purposes other than to absorb losses from bad debts,
including dividends in excess of the Bank's earnings and profits or
distributions in liquidation or in redemption of stock; 2) the Bank fails to
qualify as a thrift as provided by the State tax law, or 3) there is a change
in state tax law. The Bank had a deferred tax liability of approximately $1.9
million recorded for the excess of State tax bad debt reserves over its reserve
at December 31, 1987 in accordance with SFAS 109. In December, 1996 after
evaluating the State tax legislation, as well as relevant accounting literature
and industry practices, management of the Bank concluded that this liability
was no longer required to be recorded, and recovered the full deferred tax
liability.  This recovery resulted in a reduction of income tax expense during
the year ended June 30, 1997 for the full amount of the recovered deferred tax
liability.

   The Bank's deduction with respect  to  non-qualifying loans must be computed
under the Experience Method which is based  on  the  Bank's actual charge-offs.
Each  year  the  Bank  will  review  the most favorable way  to  calculate  the
deduction attributable to an addition to the tax bad debt reserves.

   The  New York State tax rate for the  1997  calendar  year  is 10.755%
(including  commuter  transportation  and  other  surcharges) of net income. In
general,  the  Company  will  not  be required to pay New  York  State  tax  on
dividends and interest received from the Bank.

   CITY OF NEW YORK. The Bank and the  Company  are also subject to a similarly
calculated New York City banking corporation tax  of  9% on income allocated to
New York City.

   On March 11, 1997, New York City enacted legislation, effective January 1,
1996,  which conformed its tax law regarding bad debt deductions to New York
State's tax law.  As a result of this legislation, the Bank, in March, 1997,
recovered a deferred tax liability of approximately $1.0 million previously
recorded for the excess of New York City tax bad debt reserves over its base
year reserve at December 31, 1987. This recovery resulted in a reduction of
income tax expense during the year ended June 30, 1997 for the full amount of
the recovered deferred tax liability.

   STATE  OF  DELAWARE.  As a Delaware holding company not  earning  income  in
Delaware, the Company is exempted  from  Delaware  corporate income tax, but is
required to file an annual report and pay an annual  franchise tax to the State
of Delaware.

PAGE 28

REGULATION

GENERAL

   The Bank is subject to extensive regulation, examination, and supervision by
the OTS, as its chartering agency, and the FDIC, as its  deposit  insurer.  The
Bank's  deposit  accounts  are  insured  up  to  applicable  limits by the Bank
Insurance  Fund  ("BIF")   and  Savings  Association  Insurance  Fund  ("SAIF")
administered by the FDIC, and it is a member of the FHLBNY. The Bank  must file
reports  with  the  OTS  and  the  FDIC concerning its activities and financial
condition,  and it must obtain regulatory  approvals  prior  to  entering  into
certain  transactions,   such  as  mergers  with,  or  acquisitions  of,  other
depository institutions. The  OTS and the FDIC conduct periodic examinations to
assess  the  Bank's  compliance  with  various  regulatory  requirements.  This
regulation and supervision establishes  a comprehensive framework of activities
in which a savings association can engage  and  is  intended  primarily for the
protection  of the insurance fund and depositors.  The Company,  as  a  unitary
savings and loan holding company, is required to file certain reports with, and
otherwise comply  with,  the  rules  and  regulations  of  the  OTS  and of the
Securities  and  Exchange Commission (the ''SEC'') under the federal securities
laws.

   The OTS and the  FDIC  have  significant discretion in connection with their
supervisory  and enforcement activities  and  examination  policies,  including
policies with  respect to the classification of assets and the establishment of
adequate loan loss  reserves  for  regulatory  purposes.  Any  change  in  such
policies,  whether  by the OTS, the FDIC or the Congress, could have a material
adverse impact on the Company, the Bank, and the operations of both.

   The following discussion  is  intended  to  be  a  summary  of  the material
statutes  and regulations applicable to savings associations, and it  does  not
purport to be a comprehensive description of all such statutes and regulations.

REGULATION OF FEDERAL SAVINGS ASSOCIATIONS

   BUSINESS  ACTIVITIES.    The  Bank derives its lending and investment powers
from the Home Owner's Loan Act, as  amended  (''HOLA''), and the regulations of
the OTS thereunder. Under these laws and regulations,  the  Bank  may invest in
mortgage  loans  secured  by residential and commercial real estate, commercial
and consumer loans, certain types of debt securities, and certain other assets.
The Bank may also establish  service corporations that may engage in activities
not otherwise permissible for  the  Bank,  including certain real estate equity
investments and securities and insurance brokerage. These investment powers are
subject  to  various  limitations,  including (a)  a  prohibition  against  the
acquisition of any corporate debt security that is not rated in one of the four
highest rating categories; (b) a limit  of  400% of an association's capital on
the aggregate amount of loans secured by non-residential  real estate property;
(c) a limit of 20% of an association's assets on commercial  loans; (d) a limit
of 35% of an association's assets on the aggregate amount of consumer loans and
acquisitions of certain debt securities; (e) a limit of 5% of  assets  on  non-
conforming loans (loans in excess of the specific limitations of HOLA); and (f)
a  limit  of the greater of 5% of assets or an association's capital on certain
construction  loans made for the purpose of financing what is or is expected to
become residential property.

   LOANS TO ONE  BORROWER.    Under  HOLA,  savings  associations are generally
subject to the same limits on loans to one borrower as  are imposed on national
banks. Generally, under these limits, a savings association may not make a loan
or extend credit to a single or related group of borrowers  in excess of 15% of
the  association's unimpaired capital and surplus. Additional  amounts  may  be
lent,  not in excess of 10% of unimpaired capital and surplus, if such loans or
extensions  of  credit are fully secured by readily-marketable collateral. Such
collateral is defined  to  include  certain  debt  and  equity  securities  and
bullion,  but  generally  does  not  include real estate. At June 30, 1997, the
Bank's limit on loans to one borrower  was $22.8 million. At June 30, 1997, the
Bank's largest aggregate amount of loans  to one borrower was $13.0 million and
the second largest borrower had an aggregate balance of $9.0 million.

PAGE 29

   QTL  TEST.  HOLA requires a savings association  to  meet  a  QTL  test.   A
savings association may satisfy the QTL test by maintaining at least 65% of its
''portfolio  assets''  in  certain ''qualified thrift investments'' in at least
nine months of the most recent twelve-month period. ''Portfolio assets'' means,
in general, an association's  total assets less the sum of (a) specified liquid
assets up to 20% of total assets,  (b)  certain intangibles, including goodwill
and credit card and purchased mortgage servicing  rights,  and (c) the value of
property  used  to  conduct  the  association's  business.  ''Qualified  thrift
investments'' includes various types of loans made for residential  and housing
purposes,  investments  related  to  such purposes, including certain mortgage-
backed  and  related securities, small business  loans,  education  loans,  and
credit card loans. At June 30, 1997, the Bank maintained  94.4%  of  its
portfolio assets in qualified thrift investments. The Bank had also satisfied
the  QTL  test in each of the prior 12 months and, therefore, was a qualified
thrift lender.   A  savings  association may  also  satisfy the QTL test by
qualifying as a "domestic building and  loan association" as defined in the
Internal Revenue Code of 1986.

   A savings  association  that  fails  the  QTL test must either operate under
certain  restrictions  on its activities or convert  to  a  bank  charter.  The
initial restrictions include  prohibitions  against  (a)  engaging  in  any new
activity  not  permissible  for  a  national  bank,  (b)  paying  dividends not
permissible  under  national bank regulations, (c) obtaining new advances  from
any  FHLB, and (d) establishing  any  new  branch  office  in  a  location  not
permissible  for  a national bank in the association's home state. In addition,
within one year of  the date a savings association ceases to meet the QTL test,
any company controlling  the  association  would  have  to  register under, and
become subject to the requirements of, the Bank Holding Company Act of 1956, as
amended.  If  the  savings association does not requalify under  the  QTL  test
within the three-year period after it failed the QTL test, it would be required
to terminate any activity  and to dispose of any investment not permissible for
a national bank and would have to repay as promptly as possible any outstanding
advances from an FHLB. A savings  association  that has failed the QTL test may
requalify under the QTL test and be free of such  limitations, but it may do so
only once.

   CAPITAL REQUIREMENTS.   The OTS regulations require  savings associations to
meet three minimum capital standards: a tangible capital  ratio  requirement of
1.5%  of  total assets as adjusted under the OTS regulations, a leverage  ratio
requirement  of  3%  of core capital to such adjusted total assets, and a risk-
based capital ratio requirement  of  8%  of  core  and supplementary capital to
total risk-based assets. In determining the amount of  risk-weighted assets for
purposes  of  the  risk-based capital requirement, a savings  association  must
compute its risk-based assets by multiplying its assets and certain off-balance
sheet items by risk-weights,  which  range  from  0%  for  cash and obligations
issued  by the United States Government or its agencies, to 100%  for  consumer
and commercial  loans,  as  assigned by the OTS capital regulation based on the
risks OTS believes are inherent in the type of asset.

   Tangible  capital is defined,  generally,  as  common  stockholders'  equity
(including retained  earnings), certain noncumulative perpetual preferred stock
and  related  earnings,   minority   interests  in  equity  accounts  of  fully
consolidated  subsidiaries,  less  intangibles  other  than  certain  purchased
mortgage servicing rights and investments  in and loans to subsidiaries engaged
in activities not permissible for a national  bank.  Core  capital  is  defined
similarly   to  tangible  capital,  but  core  capital  also  includes  certain
qualifying   supervisory   goodwill   and   certain   purchased   credit   card
relationships.  Supplementary  capital  currently includes cumulative preferred
stock, long-term perpetual preferred stock,  mandatory  convertible securities,
subordinated  debt  and  intermediate  preferred stock, and the  allowance  for
possible loan losses. The allowance for  loan  and  lease  losses includable in
supplementary capital is limited to a maximum of 1.25% of risk-weighted assets,
and the amount of supplementary capital that may be included  as  total capital
cannot exceed the amount of core capital.

   The  OTS  regulations  require  a  savings association with ''above normal''
interest rate risk to deduct a portion  of  such capital from its total capital
to account for the ''above normal'' interest rate risk. A savings association's
interest rate risk is measured by the decline in the net portfolio value of its
assets  (I.E., the difference between incoming  and  outgoing  discounted  cash
flows from  assets, liabilities and off-balance sheet contracts) resulting from
a hypothetical  2% increase or decrease in market rates of interest, divided by
the estimated economic  value  of  the  association's  assets, as calculated in
accordance with guidelines set forth by the OTS. At the  times when the 3-month
Treasury bond equivalent yield falls below 4%, an association  may  compute its
interest  rate  risk  on  the  basis  of  a  decrease equal to one-half of that
Treasury  rate  rather than on the basis of 2%.  A  savings  association  whose
measured interest  rate  risk  exposure  exceeds 2% would be considered to have
''above normal'' risk. The interest rate risk  component  is an amount equal to

PAGE 30

one-half  of  the difference between the association's measured  interest  rate
risk and 2%, multiplied  by  the  estimated economic value of the association's
assets. That dollar amount is deducted  from  an association's total capital in
calculating compliance with its risk-based capital  requirement.  Any  required
deduction for interest rate risk becomes effective on the last day of the third
quarter  following  the  reporting date of the association's financial data  on
which the interest rate risk  was  computed.  The OTS has indefinitely deferred
the implementation of the intrest rate  risk component in the computation of an
institution's risk-based capital requirements.   The  OTS  continues to monitor
the  interest  rate risk of individual institutions and retains  the  right  to
impose additional capital requirements on individual institutions.

      The table below presents the Bank's regulatory capital as compared to the
OTS regulatory capital requirements at June 30, 1997:
                                Actual            Minimum Capital Requirement
                       -----------------------     ---------------------------
                         Amount         Ratio            Amount         Ratio
                       ---------      ---------        ----------    ----------
As of June 30, 1997:                   (Dollars In Thousands)
   Tangible             $124,118           9.86%           $18,873         1.5%
   Core Capital          124,182           9.87             37,748         3.0%
   Risk-based capital    132,465          19.99             53,009         8.0%

The following is a reconciliation of generally accepted accounting principles
(GAAP) capital to regulatory capital for the Bank:
 
                                                At June 30, 1997
                                  Tangible           Core           Risk-Based
                                   Capital           Capital          Capital
                                 ---------           ---------       ---------
                                                  (In Thousands)
GAAP capital                      $152,198             $152,198      $152,198
                                 ---------           ---------      ---------
Non-allowable assets:
Core deposit intangible                (64)                  -              -
Unrealized gain on available for
   sale securities                  (1,583)             (1,583)         (1,583)
Goodwill                           (26,433)            (26,433)        (26,433)
General valuation allowance              -                   -           8,283
                                  ---------           ---------      ---------
Regulatory capital                 124,118             124,182         132,465
Minimum capital requirement         18,873              37,748          53,009
                                  ---------           ---------      ---------
Regulatory capital excess         $105,245             $86,434         $79,456
                                  =========           =========      =========

   LIMITATION ON  CAPITAL  DISTRIBUTIONS.    OTS  regulations  currently impose
limitations upon capital distributions by savings associations,  such  as  cash
dividends, payments to repurchase or otherwise acquire its shares, payments  to
shareholders   of   another   institution  in  a  cash-out  merger,  and  other
distributions charged against capital.  At least 30-days written notice must be
given to the OTS of a proposed capital distribution  by  a savings association,
and  capital  distributions  in  excess  of specified earnings  or  by  certain
institutions  are  subject to approval by the  OTS.  An  association  that  has
capital in excess of all fully phased-in regulatory capital requirements before
and after a proposed  capital distribution and that is not otherwise restricted
in making capital distributions,  could,  after  prior  notice  but without the
approval of the OTS, make capital distributions during a calendar year equal to
the  greater  of (a) 100% of its net earnings to date during the calendar  year
plus the amount  that  would  reduce  by one-half its ''surplus capital ratio''
(the  excess  capital over its fully phased-in  capital  requirements)  at  the
beginning of the calendar year, or (b) 75% of its net earnings for the previous
four quarters.  Any  additional  capital  distributions would require prior OTS
approval. In addition, the OTS can prohibit  a  proposed  capital distribution,
otherwise permissible under the regulation, if the OTS has  determined that the
association is in need of more than normal supervision or if it determines that
a proposed distribution by an association would constitute an unsafe or unsound
practice. Furthermore, under the OTS prompt corrective action  regulations, the
Bank  would  be prohibited from making any capital distribution if,  after  the
distribution,  the  Bank  failed  to  meet its minimum capital requirements, as
described above. See '' - Prompt Corrective Regulatory Action.''

PAGE 31

   LIQUIDITY.   The Bank is required to  maintain  an  average daily balance of
liquid  assets  (cash,  certain time deposits, bankers' acceptances,  specified
United States Government,  state  or  federal  agency  obligations,  shares  of
certain  mutual  funds  and  certain  corporate  debt securities and commercial
paper) equal to a monthly average of not less than  a  specified  percentage of
its   net  withdrawable  deposit  accounts  plus  short-term  borrowings.  This
liquidity requirement may be changed from time to time by the OTS to any amount
within  the  range  of  4%  to  10%  depending upon economic conditions and the
savings flows of member institutions, and is currently 5%. OTS regulations also
require each savings association to maintain an average daily balance of short-
term liquid assets at a specified percentage (currently 1%) of the total of its
net withdrawable deposit accounts and  borrowings  payable in one year or less.
Monetary  penalties  may  be  imposed  for  failure  to  meet  these  liquidity
requirements. The Bank's average liquidity ratio for the month  ended  June 30,
1997 was 14.98%, which exceeded the applicable requirements. The Bank has never
been   subject  to  monetary  penalties  for  failure  to  meet  its  liquidity
requirements.

   ASSESSMENTS.    Savings  associations  are required by OTS regulation to pay
assessments  to  the  OTS  to  fund the operations  of  the  OTS.  The  general
assessment,  paid  on  a  semi-annual  basis,  is  computed  upon  the  savings
association's total assets, including consolidated subsidiaries, as reported in
the  association's  latest  quarterly  Thrift  Financial  Report.   The  Bank's
assessment expense during the year ended June 30, 1997 totaled $423,000.

   BRANCHING.   Subject to certain  limitations,  HOLA  and the OTS regulations
permit federally chartered savings associations to establish  branches  in  any
state  of  the  United  States.  The  authority  to  establish such a branch is
available  (a)  in  states  that  expressly  authorize  branches   of   savings
associations  located  in  another  state and (b) to an association that either
satisfies the QTL test for a "qualified  thrift  lender,"  or  qualifies  as  a
''domestic  building  and loan association'' under the Internal Revenue Code of
1986,  which  imposes  qualification   requirements  similar  to  those  for  a
''qualified thrift lender'' under HOLA.  See  ''QTL Test.'' The authority for a
federal  savings association to establish an interstate  branch  network  would
facilitate  a  geographic diversification of the association's activities. This
authority under  HOLA and the OTS regulations preempts any state law purporting
to regulate branching by federal savings associations.

   COMMUNITY REINVESTMENT.    Under the CRA, as implemented by OTS regulations,
a savings association has a continuing  and  affirmative  obligation consistent
with its safe and sound operation to help meet the credit needs  of  its entire
community,  including  low and moderate income neighborhoods. The CRA does  not
establish specific lending  requirements or programs for financial institutions
nor does it limit an institution's  discretion to develop the types of products
and services that it believes are best  suited  to  its  particular  community,
consistent  with  the  CRA.  The  CRA requires the OTS, in connection with  its
examination of a savings association,  to  assess  the  association's record of
meeting the credit needs of its community and to take such  record into account
in  its evaluation of certain applications by such association.  The  CRA  also
requires  all  institutions to make public disclosure of their CRA ratings. The
Bank received a ''Satisfactory'' CRA rating in its most recent examination.

   In April 1995,  the  OTS  and  the  other  federal  banking agencies adopted
amendments revising their CRA regulations. Among other things,  the amended CRA
regulations  substitute  for the prior process-based assessment factors  a  new
evaluation  system  that  would   rate  an  institution  based  on  its  actual
performance in meeting community needs.  In  particular,  the  proposed  system
would  focus  on three tests: (a) a lending test, to evaluate the institution's
record of making  loans  in  its  service  areas;  (b)  an  investment test, to
evaluate  the  institution's  record  of  investing  in  community  development
projects,  affordable  housing, and programs benefiting low or moderate  income
individuals  and  businesses;   and   (c)  a  service  test,  to  evaluate  the
institution's  delivery  of services through  its  branches,  ATMs,  and  other
offices. The amended CRA regulations  also  clarify  how  an  institution's CRA
performance would be considered in the application process.

PAGE 32

   TRANSACTIONS  WITH  RELATED  PARTIES.    The Bank's authority to  engage  in
transactions with its ''affiliates'' is limited  by  the OTS regulations and by
Sections  23A  and  23B of the Federal Reserve Act (''FRA'').  In  general,  an
affiliate of the Bank  is  any  company  that  controls  the  Bank or any other
company that is controlled by a company that controls the Bank,  excluding  the
Bank's  subsidiaries other than those that are insured depository institutions.
The OTS regulations  prohibit  a savings association (a) from lending to any of
its affiliates that is engaged in  activities that are not permissible for bank
holding companies under Section 4(c)  of  the  Bank  Holding Company Act (''BHC
Act'')  and (b) from purchasing the securities of any affiliate  other  than  a
subsidiary.  Section  23A  limits the aggregate amount of transactions with any
individual  affiliate  to 10%  of  the  capital  and  surplus  of  the  savings
association and also limits  the  aggregate  amount  of  transactions  with all
affiliates  to 20% of the savings association's capital and surplus. Extensions
of credit to  affiliates  are required to be secured by collateral in an amount
and of a type described in  Section 23A, and the purchase of low quality assets
from affiliates is generally  prohibited.  Section  23B  provides  that certain
transactions with affiliates, including loans and asset purchases, must  be  on
terms   and   under   circumstances,   including  credit  standards,  that  are
substantially the same or at least as favorable  to  the  association  as those
prevailing   at   the  time  for  comparable  transactions  with  nonaffiliated
companies. In the absence  of  comparable  transactions,  such transactions may
only occur under terms and circumstances, including credit  standards,  that in
good faith would be offered to or would apply to nonaffiliated companies.

   The  Bank's authority to extend credit to its directors, executive officers,
and 10% shareholders,  as  well  as  to entities controlled by such persons, is
currently governed by the requirements  of  Sections 22(g) and 22(h) of the FRA
and Regulation O of the Federal Reserve Board (''FRB'') thereunder. Among other
things, these provisions require that extensions  of  credit to insiders (a) be
made  on  terms  that  are  substantially  the  same  as,  and  follow   credit
underwriting procedures that are not less stringent than, those prevailing  for
comparable  transactions with unaffiliated persons and that do not involve more
than the normal risk of repayment or present other unfavorable features and (b)
not exceed certain  limitations  on  the  amount  of  credit  extended  to such
persons, individually and in the aggregate, which limits are based, in part, on
the  amount of the association's capital. In addition, extensions of credit  in
excess  of  certain  limits  must  be  approved  by  the association's board of
directors.

   ENFORCEMENT.   Under the Federal Deposit Insurance  Act  (''FDI  Act''), the
OTS  has primary enforcement responsibility over savings associations  and  has
the authority  to bring enforcement action against all ''institution-affiliated
parties,'' including  any controlling stockholder or any shareholder, attorney,
appraiser and accountant  who  knowingly  or  recklessly  participates  in  any
violation  of  applicable  law  or  regulation  or  breach of fiduciary duty or
certain other wrongful actions that causes or is likely  to cause a more than a
minimal  loss  or  other  significant  adverse  effect  on  an insured  savings
association. Civil penalties cover a wide range of violations  and  actions and
range  from  $5,000  for  each day during which violations of law, regulations,
orders, and certain written  agreements  and  conditions  continue,  up  to  $1
million  per  day  for  such  violations  if  the person obtained a substantial
pecuniary gain as a result of such violation or  knowingly or recklessly caused
a substantial loss to the institution. Criminal penalties for certain financial
institution crimes include fines of up to $1 million and imprisonment for up to
30  years.  In  addition,  regulators  have  substantial   discretion  to  take
enforcement  action  against  an  institution  that  fails to comply  with  its
regulatory requirements, particularly with respect to its capital requirements.
Possible enforcement actions range from the imposition  of  a  capital plan and
capital  directive  to  receivership,  conservatorship,  or the termination  of
deposit insurance. Under the FDI Act, the FDIC has the authority  to  recommend
to  the  Director  of  OTS  that enforcement action be taken with respect to  a
particular savings association.  If  action is not taken by the Director of the
OTS, the FDIC has authority to take such action under certain circumstances.

PAGE 33

   STANDARDS FOR SAFETY AND SOUNDNESS.    The FDI Act, as amended by FDICIA and
the  Riegle  Community  Development  and Regulatory  Improvement  Act  of  1994
(''Community Development Act''), requires  the  OTS,  together  with  the other
federal  bank  regulatory  agencies, to prescribe standards, by regulations  or
guidelines, relating to internal  controls,  information  systems  and internal
audit  systems,  loan  documentation,  credit underwriting, interest rate  risk
exposure,  asset  growth,  asset  quality,  earnings,   stock   valuation,  and
compensation,  fees  and  benefits  and  such  other operational and managerial
standards  as  the agencies deem appropriate. The  OTS  and  the  federal  bank
regulatory agencies have adopted, effective August 9, 1995, a set of guidelines
prescribing safety  and soundness standards pursuant to FDICIA, as amended. The
guidelines establish  general  standards  relating  to  internal  controls  and
information   systems,  internal  audit  systems,  loan  documentation,  credit
underwriting, interest  rate exposure, asset growth, and compensation, fees and
benefits. In general, the  guidelines  require, among other things, appropriate
systems and practices to identify and manage  the risks and exposures specified
in the guidelines. The guidelines prohibit excessive  compensation as an unsafe
and unsound practice and describe compensation as excessive  when  the  amounts
paid  are  unreasonable  or  disproportionate  to  the services performed by an
executive officer, employee, director or principal shareholder. The OTS and the
other agencies determined that the adoption of stock  valuation  standards  was
not  appropriate.  In  addition,  the  OTS  adopted  regulations  pursuant that
authorize,  but do not require, the OTS to order an institution that  has  been
given notice  by  the  OTS  that  it  is  not satisfying any of such safety and
soundness standards to submit a compliance  plan.  If, after being so notified,
an institution fails to submit an acceptable compliance  plan  or  fails in any
material  respect to implement an accepted compliance plan, the OTS must  issue
an order directing  action  to  correct  the  deficiency and may issue an order
directing other actions of the types to which an  undercapitalized  association
is subject under the ''prompt corrective action'' provisions of FDICIA.  If  an
institution  fails  to  comply  with such an order, the OTS may seek to enforce
such  order  in judicial proceedings  and  to  impose  civil  money  penalties.
Effective October  1,  1996,  the  OTS and the federal bank regulatory agencies
adopted guidelines for identifying and  monitoring  asset  quality and earnings
standards.

   REAL  ESTATE  LENDING  STANDARDS.    The  OTS and the other federal  banking
agencies adopted regulations to prescribe standards  for  extensions  of credit
that  (a)  are  secured  by  real  estate  or  (b)  are made for the purpose of
financing the construction of improvements on real estate.  The OTS regulations
require  each  savings  association to establish and maintain written  internal
real estate lending standards  that  are consistent with safe and sound banking
practices and appropriate to the size  of  the  association  and the nature and
scope  of  its  real  estate  lending  activities. The standards also  must  be
consistent with accompanying OTS guidelines, which include loan-to-value ratios
for the different types of real estate loans.  Associations  are also permitted
to make a limited amount of loans that do not conform to the proposed  loan-to-
value  limitations  so  long  as  such  exceptions  are  reviewed and justified
appropriately. The guidelines also list a number of lending situations in which
exceptions to the loan-to-value standards are justified.

   PROMPT  CORRECTIVE  REGULATORY  ACTION.    Under  the OTS prompt  corrective
action regulations, the OTS is required to take certain,  and  is authorized to
take other, supervisory actions against undercapitalized savings  associations.
For  this  purpose,  a  savings  association  would  be  placed  in one of five
categories based on the association's capital. Generally, a savings association
is  treated  as  ''well  capitalized''  if its ratio of total capital to  risk-
weighted assets is at least 10.0%, its ratio  of  core capital to risk-weighted
assets is at least 6.0%, its ratio of core capital  to total assets is at least
5.0%, and it is not subject to any order or directive  by  the  OTS  to  meet a
specific  capital  level. A savings association will be treated as ''adequately
capitalized'' if its ratio of total capital to risk-weighted assets is at least
8.0%, its ratio of core  capital  to risk-weighted assets is at least 4.0%, and
its ratio of core capital to total  assets  is  at  least  4.0%  (3.0%  if  the
association  receives  the  highest  rating on the CAMEL financial institutions
rating system). A savings association  that  has  a total risk-based capital of
less than 8.0% or a leverage ratio or a Tier 1 capital  ratio that is less than
4.0% (3.0% leverage ratio if the association receives the highest rating on the
CAMEL   financial   institutions   rating   system)   is   considered   to   be
''undercapitalized.'' A savings association that has a total risk-based capital
of less than 6.0% or a Tier 1 risk-based capital ratio or a  leverage  ratio of
less  than  3.0%  is  considered  to  be  ''significantly undercapitalized.'' A
savings association that has a tangible capital  to  assets  ratio  equal to or
less  than 2% is deemed to be ''critically undercapitalized.'' The elements  of
an  association's   capital  for  purposes  of  the  prompt  corrective  action
regulations are defined generally as they are under the regulations for minimum
capital requirements.  As  of  the  most recent notification from the Office of
Thrift  Supervision  categorized  the  Bank   as  well  capitalized  under  the
regulatory framework for prompt corrective action.   There are no conditions or
events  since  that  notification  that management believes  have  changed  the
institution's category.  See ''- Capital Requirements.''

   The severity of the action authorized  or  required  to  be  taken under the
prompt  corrective  action  regulations  increases as an association's  capital
deteriorates within the three undercapitalized categories. All associations are
prohibited  from  paying dividends or other  capital  distributions  or  paying
management fees to  any controlling person if, following such distribution, the
association  would be  undercapitalized.  An  undercapitalized  association  is
required to file  a  capital  restoration  plan  within 45 days of the date the
association receives notice that it is within any of the three undercapitalized
categories.  The  OTS  is  required  to monitor closely  the  condition  of  an
undercapitalized association and to restrict  the  asset  growth, acquisitions,
branching,  and  new  lines  of business of such an association.  Significantly
undercapitalized associations  are  subject  to restrictions on compensation of
senior executive officers; such an association  may  not,  without OTS consent,
pay any bonus or provide compensation to any senior executive officer at a rate
exceeding the officer's average rate of compensation (excluding  bonuses, stock

PAGE 34

options and profit-sharing) during the 12 months preceding the month  when  the
association   became   undercapitalized.   A   significantly   undercapitalized
association may also be subject, among other things, to forced changes  in  the
composition  of  its  board  of  directors  or  senior  management,  additional
restrictions  on  transactions  with affiliates, restrictions on acceptance  of
deposits from correspondent associations, further restrictions on asset growth,
restrictions on rates paid on deposits,  forced  termination  or  reduction  of
activities  deemed  risky,  and  any  further  operational  restrictions deemed
necessary by the OTS.

   If one or more grounds exist for appointing a conservator or receiver for an
association,  the OTS may require the association to issue additional  debt  or
stock, sell assets,  be acquired by a depository association holding company or
combine with another depository  association. The OTS and the FDIC have a broad
range of grounds under which they  may appoint a receiver or conservator for an
insured depository association. Under  FDICIA, the OTS is required to appoint a
receiver (or with the concurrence of the  FDIC, a conservator) for a critically
undercapitalized  association  within 90 days  after  the  association  becomes
critically undercapitalized or,  with the concurrence of the FDIC, to take such
other action that would better achieve  the  purposes  of the prompt corrective
action provisions. Such alternative action can be renewed for successive 90-day
periods.   However,   if   the   association   continues   to   be   critically
undercapitalized  on  average during the quarter that begins 270 days after  it
first became critically  undercapitalized, a receiver must be appointed, unless
the OTS makes certain findings  with which the FDIC concurs and the Director of
the OTS and the Chairman of the FDIC certify that the association is viable. In
addition, an association that is critically undercapitalized is subject to more
severe  restrictions  on  its activities,  and  is  prohibited,  without  prior
approval of the FDIC from,  among  other things, entering into certain material
transactions or paying interest on new  or  renewed  liabilities at a rate that
would significantly increase the association's weighted average cost of funds.

   When  appropriate,  the  OTS  can  require corrective action  by  a  savings
association holding company under the ''prompt  corrective  action'' provisions
of FDICIA.

   INSURANCE OF DEPOSIT ACCOUNTS - Savings associations are subject to a  risk-
based assessment system for determining the deposit insurance assessments to be
paid by insured  depository  institutions.   Under  the  risk-based  assessment
system,  which  began in 1993, the FDIC assigns an institution to one of  three
capital categories  based  on the institution's financial information as of the
reporting period ending seven  months  before the assessment period.  The three
capital categories consist of (a) well capitalized, (b) adequately capitalized,
or (c) undercapitalized.  The FDIC also  assigns  an  institution to one of the
three  supervisory  subcategories within each capital group.   The  supervisory
subgroup to which an  institution  is  assigned  is  based  upon  a supervisory
evaluation  provided to the FDIC by the institutions primary federal  regulator
and information  that  the  FDIC determines to be relevant to the institution's
financial condition and the risk  posed  to  the  deposit  insurance funds.  An
institution's assessment rate depends on the capital category  and  supervisory
category  to  which  it  is  assigned.   Under  the  regulation, there are nine
assessment  risk  classifications  (i.e., combinations of  capital  groups  and
supervisory  subgroups)  to  which  different  assessment  rates  are  applied.
Assessment rates currently range from  0.0%  of  deposits for an institution in
the  highest category (i.e., well-capitalized and financially  sound,  with  no
more than  a  few  minor weaknesses) to 0.27% of deposits for an institution in
the  lowest  category   (i.e.,  undercapitalized  and  substantial  supervisory
concern).  The FDIC is authorized to raise the assessment rates as necessary to
maintain the required reserve  ratio  of  1.25%.   As  a  result of the Deposit
Insurance Funds Act of 1996 (the "Funds Act"). Both the BIF  and SAIF currently
satisfy  the  reserve ratio requirement.  See "Recent Development  -  Insurance
Expense - SAIF  Recapitalization."   If  the  FDIC  determines that assessment
rates  should  be  increased,  institutions  in  all risk categories  could  be
affected.  The FDIC has exercised this authority several  times in the past and
could raise insurance assessment rates in the future.  If such action is taken,
it could have an adverse effect upon the earnings of the Bank.

   The Funds Act also amended the FDIA to recapitalize the  SAIF  and to expand
the assessment base for the payments of FICO bonds.  Beginning January 1, 1997,
the  assessment  base  included  the  deposits  of  both  BIF  and SAIF-insured
institutions.   See   "Recent   Development   -   Insurance   Expense  -  DSAIF
Recapitalization."  Until December 31, 1999, or such earlier date  on which the
last  savings  association  ceases  to  exist, the rate of assessment for  BIF-
assessable deposits shall be one-fifth of  the  rate imposed on SAIF-assessable
deposits.  The annual rate of assessments for the  payments  of  FICO bonds for
the semi-annual period beginning January 1, 1997 was 0.0130% for BIF-assessable
deposits and 0.0648% for SAIF-assessable deposits.  For the semi-annual  period
beginning  on  July 1, 1997, the rates of assessment for FICO bonds are 0.0126%
for BIF-assessable deposits and 0.0630% for SAIF-assessable deposits.

PAGE 35

   FEDERAL HOME LOAN  BANK  SYSTEM.  The Bank is a member of the FHLBNY, which
is one of the regional FHLBs composing the FHLB  System.  Each FHLB provides a
central credit facility primarily for its member institutions. The  Bank,  as a
member  of  the FHLBNY, is required to acquire and hold shares of capital stock
in the FHLB in  an  amount at least equal to the greater of 1% of the aggregate
principal  amount  of  its   unpaid  residential  mortgage  loans  and  similar
obligations at the beginning of  each  year  or one-twentieth{ }of its advances
(borrowings) from the FHLBNY. The Bank was in  compliance with this requirement
with an investment in FHLB stock at June 30, 1997, of $8.3 million. Any advances
from a FHLB must be secured by specified types of collateral, and all long-term
advances  may  be  obtained  only  for  the  purpose  of  providing  funds  for
residential housing finance.  The FHLBNY paid dividends on the capital stock of
$503,027, $332,964, and $367,131 and during the years ended June 30, 1997, 1996
and 1995, respectively. If dividends were reduced, or interest  on  future FHLB
advances  increased,  the  Bank's  net  interest  income  would likely also  be
reduced. Further, there can be no assurance that the impact  of  FDICIA and the
Financial   Institutions   Reform,   Recovery   and  Enforcement  Act  of  1989
(''FIRREA'') on the FHLBs will not also cause a decrease  in  the  value of the
FHLB stock held by the Bank.

   FEDERAL RESERVE SYSTEM.   The Bank is subject to provisions of the  FRA  and
the FRB's regulations pursuant to which depository institutions may be required
to  maintain  non-interest-earning  reserves against their deposit accounts and
certain  other liabilities. Currently,  reserves  must  be  maintained  against
transaction  accounts  (primarily  NOW  and regular checking accounts). The FRB
regulations generally require that reserves  be  maintained in the amount of 3%
of the aggregate of transaction accounts up to $49.3  million.  The  amount  of
aggregate transaction accounts in excess of $49.3 million are currently subject
to  a  reserve ratio of 10%, which ratio the FRB may adjust between 8% and 12%.
The FRB  regulations  currently  exempt  $4.4  million  of otherwise reservable
balances from the reserve requirements, which exemption is  adjusted by the FRB
at  the end of each year. The Bank is in compliance with the foregoing  reserve
requirements.  Because  required  reserves  must  be  maintained in the form of
either vault cash, a non-interest-bearing account at a Federal Reserve Bank, or
a  pass-through  account  as  defined by the FRB, the effect  of  this  reserve
requirement  is  to reduce the Bank's  interest-earning  assets.  The  balances
maintained to meet  the  reserve requirements imposed by the FRB may be used to
satisfy liquidity requirements imposed by the OTS. FHLB System members are also
authorized to borrow from  the  Federal  Reserve  ''discount  window,'' but FRB
regulations  require  such  institutions  to  exhaust  all FHLB sources  before
borrowing from a Federal Reserve Bank.

REGULATION OF HOLDING COMPANY

   The Company is a non-diversified unitary savings association holding company
within  the meaning of HOLA, as amended. As such, the Company  is  required  to
register  with  the  OTS  and  is  subject  to  OTS  regulations, examinations,
supervision and reporting requirements. In addition, the  OTS  has  enforcement
authority  over  the  Company and its non-savings association subsidiaries,  if
any. Among other things, this authority permits the OTS to restrict or prohibit
activities that are determined  to  be  a serious risk to the financial safety,
soundness, or stability of a subsidiary savings association.

   HOLA  prohibits  a  savings  association  holding   company,   directly   or
indirectly, or through one or more subsidiaries, from acquiring another savings
association  or  holding company thereof, without prior written approval of the
OTS; acquiring or  retaining,  with  certain exceptions, more than 5% of a non-
subsidiary savings association, a non-subsidiary  holding  company,  or  a non-
subsidiary company engaged in activities other than those permitted by HOLA; or
acquiring  or retaining control of a depository institution that is not insured
by the FDIC.  In  evaluating  an  application by a holding company to acquire a
savings  association,  the  OTS  must consider  the  financial  and  managerial
resources and future prospects of the company and savings association involved,
the  effect  of  the  acquisition on the  risk  to  the  insurance  funds,  the
convenience and needs of the community, and competitive factors.

PAGE 36

   As a unitary savings  and loan holding company, the Company generally is not
restricted under existing  laws as to the types of business activities in which
it may engage, provided that  the  Bank  continues to satisfy the QTL test. See
''- Regulation of Federal Savings Associations - QTL Test'' for a discussion of
the QTL requirements. Upon any non-supervisory  acquisition  by  the Company of
another savings association or of a savings bank that meets the QTL test and is
deemed  to  be  a  savings  association by the OTS and that will be held  as  a
separate subsidiary, the Company  will  become  a  multiple savings association
holding company and will be subject to limitations on  the  types  of  business
activities  in  which  it  can engage. HOLA limits the activities of a multiple
savings  association  holding   company   and   its   non-insured   association
subsidiaries  primarily  to  activities  permissible for bank holding companies
under Section 4(c)(8) of the BHC Act, subject to the prior approval of the OTS,
and to other activities authorized by OTS regulation.

   The OTS is prohibited from approving any  acquisition that would result in a
multiple savings association holding company controlling  savings  associations
in more than one state, subject to two exceptions: an acquisition of  a savings
association in another state (a) in a supervisory transaction, and (b) pursuant
to authority under the laws of the state of the association to be acquired that
specifically  permit  such acquisitions. The conditions imposed upon interstate
acquisitions by those states  that  have  enacted authorizing legislation vary.
Some  states  impose  conditions  of reciprocity,  which  have  the  effect  of
requiring  that the laws of both the  state  in  which  the  acquiring  holding
company is located  (as  determined  by  the location of its subsidiary savings
association) and the state in which the association  to be acquired is located,
have each enacted legislation allowing its savings associations  to be acquired
by out-of-state holding companies on the condition that the laws of  the  other
state  authorize  such  transactions  on  terms  no more restrictive than those
imposed on the acquiror by the state of the target  association.  Some of these
states  also  impose regional limitations, which restrict such acquisitions  to
states within a  defined  geographic region. Other states allow full nationwide
banking without any condition  of  reciprocity.  Some  states  do not authorize
interstate acquisitions of savings associations.

   Transactions  between  the  Company  and  the  Bank,  including any  of  its
subsidiaries, and any of its affiliates are subject to various  conditions  and
limitations.  See  '' Regulation of Federal Savings Associations - Transactions
with Related Parties.''  The  Bank  must give 30-days written notice to the OTS
prior to any declaration of the payment  of  any  dividends  or  other  capital
distributions   to   the   Company.  See  ''-  Regulation  of  Federal  Savings
Associations - Limitation on Capital Distributions.''

FEDERAL SECURITIES LAWS

   The Company's Common stock is registered with the SEC under Section 12(g) of
the Securities Exchange Act  of  1934,  as  amended  (the "Exchange Act").  The
Company  is  subject  to the information, proxy solicitation,  insider  trading
restrictions and other requirements under the Exchange Act.

PAGE 37

ITEM 2 - PROPERTIES
   The  Bank  conducts  its  business  through  fifteen  full-service  offices,
including eight offices acquired  from Conestoga in June, 1996. The Bank's Main
Office and headquarters is located at 209 Havemeyer Street, Brooklyn, New York.
The Bank believes that its current  facilities are adequate to meet the present
and immediately foreseeable needs of the Bank and the Company.

                                                                                                     
                                                                                             
                                           Leased or          Date Leased or     Lease Expiration           Net Book Value
                                              Owned            or Acquired            Date                 at June 30, 1997
                                                                                        
                                           --------           --------           ------------                 ------------
ADMINISTRATIVE OFFICE                      Owned                1989               -                             $3,985,014
        275 South 5th Street
       Brooklyn. New York  11211
MAIN OFFICE                                Owned                1906               -                               $358,939
       209 Havemeyer Street
       Brooklyn, New York  11211
AVENUE M BRANCH                            Owned                1993               -                               $467,368
        1600  Avenue  M at East 16{th}
Street
       Brooklyn, New York  11230
BAYSIDE BRANCH                             Leased               1974               May, 2004                        $48,882
       61-38 Springfield Boulevard
       Bayside, New York  11364
BELLMORE BRANCH                            Owned                1973               -                               $499,146
       2412 Jerusalem Avenue
       Bellmore, New York  11710
BENSONHURST BRANCH                         Owned                1978               -                             $1,097,205
        1545 86th Street
       Brooklyn, New York  11228
BRONX BRANCH                            Leased              1965               October, 2006                    $31,102
       1931 Turnbull Avenue
       Bronx, New York  10473
GATES AVENUE BRANCH                        Owned                1905               -                               $273,994
       1012 Gates Avenue
       Brooklyn, New York  11221
HILLCREST BRANCH                           Leased               1971               May, 2001                        $52,285
       176-47 Union Turnpike
       Flushing, New York  11366
KINGS HIGHWAY BRANCH                       Owned                1976               -                               $810,201
       1902-1904 Kings Highway
       Brooklyn, New York  11229
MARINE PARK BRANCH                     Owned                1993               -                               $815,842
       2172 Coyle Street
       Brooklyn, NY  11229
MERRICK BRANCH                             Owned                1960               -                               $233,059
       1775 Merrick Avenue                                      
       Merrick, New York  11566
PORT WASHINGTON BRANCH                     Owned                1971               -                               $470,284
       1000 Port Washington Boulevard
         Port   Washington,  New  York
11050
ROSLYN BRANCH                          Owned                1990               -                             $2,967,444
        1075 Northern Boulevard
       Roslyn, NY  11576
WESTBURY BRANCH                                         1994               -                               $552,277
       622 Old Country Road
       Westbury, New York  11590
WHITESTONE BRANCH                          Owned                1979               -                               $807,409
       24-44 Francis Lewis Boulevard
       Whitestone, New York  11357

  The  Bank  has  an option to extend this lease for an additional ten year
      term at fair market  rent,  as determined by the agreement of the parties
      or, if the parties cannot agree, by arbitration.
  Prior to October 2, 1993, this branch office was located at 2161 Coyle
      Street, Brooklyn, New York.
  This branch office opened April 29, 1995.
  Building owned, land leased.   Lease expires in October, 2003.
  Includes premises utilized by Help Center Service and Havemeyer Brokerage
      Corp.

PAGE 38

ITEM 3 - LEGAL PROCEEDINGS

On December 5, 1996, Dime Bancorp,  Inc.  and its wholly-owned subsidiary, Dime
Savings Bank of New York, FSB (together "Dime  of New York,") filed a complaint
in the United States District Court, Southern District  of New York against the
Company and the Bank.  Dime of New York alleges violations  of  New  York State
and  federal trademark law and unfair competition law.  Dime of New York  seeks
injunctive  relief  in  the form of an order requiring the Bank to use its full
name with identical type-size  and  type-style  in  marketing  and  advertising
materials, or in the alternative requiring the Bank to change its name,  due to
alleged  inequitable conduct.  The complaint also seeks an order requiring  the
Company to change its corporate name and change its Nasdaq Stock Market trading
symbol "DIME."  Dime of New York does not seek monetary damages.

The Company and the Bank have answered the complaint and filed counterclaims in
which they  seek  to  enjoin  the Dime of New York from employing service marks
that are confusingly similar to  the  Company's  and  the Bank's service marks.
The action is in the preliminary stages of discovery.  The Company and the Bank
intend  to defend vigorously these claims made against them  and  pursue  their
counterclaims.

The Bank  is  involved  in  various other legal actions arising in the ordinary
course of its business which,  in  the  aggregate,  involve  amounts  which are
believed  to be immaterial to the financial condition and results of operations
of the Bank.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

                                    PART II

ITEM 5- MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Information regarding the market for the Company's common stock and related
stockholder matters appears in the 1997 Annual Report under the caption "Market
for the Company's Common Stock and Related Stockholder Matters," and is
incorporated herein by this reference.

ITEM 6. - SELECTED FINANCIAL DATA

Information regarding selected financial data appears in the 1997 Annual Report
to Shareholders for the year ended June 30, 1997 ("1997 Annual Report") under
the caption "Financial Highlights," and is incorporated herein by this
reference.

ITEM 7. -MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Information regarding management's discussion and analysis of financial
condition and results of operations  appears in the 1997 Annual Report under
the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and is incorporated herein
by this reference.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Information regarding market risk appears in the 1997 Annual Report to
Shareholders under the caption "Discussion of Market Risk" and is incorporated
herein by reference.

PAGE 39

ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information regarding financial statements and supplementary data, including
the Independent Auditors' Report appears in the 1997 Annual Report under the
captions:
"Independent Auditors' Report," "Consolidated Statements of Financial Condition
at June 30, 1997 and 1996,"
"Consolidated Statements of Operations for each of the years in the three year
period ended June 30, 1997,"
"Consolidated Statements of Stockholders' Equity  for each of the years in the
three year period ended
June 30, 1997," "Consolidated Statements of Cash Flows for each of the years in
the three year period ended
June 30,1997,"and "Notes to Consolidated Financial Statements," and is
incorporated herein by this reference.

ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

                                   PART III

ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

   Information regarding directors and executive officers of the Company is
presented under the headings "Proposal 1 - Election of Directors - General, "-
Information as to Nominees and Continuing Directors,""- Nominees for Election
as Director," "-Continuing Directors," "-Meetings and Committees of the Board
of Directors,"  "-Executive Officers," "-Directors' Compensation," "-Executive
Compensation," and "-Section 16(a) Beneficial Ownership Reporting Compliance"
in the Company's definitive Proxy Statement for its Annual Meeting of
Shareholders to be held on November 13, 1997 (the "Proxy Statement") which will
be filed with the SEC within 120 days of June 30, 1997, and is incorporated
herein by reference.

ITEM 11. - EXECUTIVE COMPENSATION

   Information regarding executive and director compensation  is presented
under the headings "Election of Directors - Directors' Compensation," "-
Executive Compensation," "-Summary Compensation Table," "Employment
Agreements," "- Employee Retention Agreements," "-Employee Severance
Compensation Plan," and "- Benefits," in the Proxy Statement and is
incorporated herein by reference.

ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   Information regarding security ownership of certain beneficial owners and
management is included under the headings "Security Ownership of Certain
Beneficial Owners and Management" in the Proxy Statement and is incorporated
herein by reference.

ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

   Information regarding certain relationships and related transactions is
included under the heading "Transactions with Certain Related Persons" in the
Proxy Statement and is incorporated herein by reference.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,  AND REPORTS ON FORM 8-K

(a) 1. Financial Statements

      The following consolidated financial statements and schedules of the
      Company, and the independent auditors' report thereon are included in
      the Company's Annual Report to Shareholders for the year
      ended June 30, 1997, and are incorporated herein by reference:

      Independent Auditors' Report
      Consolidated Statements of Financial Condition at June 30, 1997 and 1996
      Consolidated Statements of Operations for each of the years in the three
        year period ended June 30, 1997

PAGE 40

      Consolidated Statements of Stockholders' Equity  for each of the years in
        the three year period ended June 30, 1997
      Consolidated Statements of Cash Flows for each of the years in the three
        year period ended June 30,1997
      Notes to Consolidated Financial Statements
      Quarterly Results of Operations (Unaudited) for each of the years in the
        two year period ended June 30, 1997

      The remaining information appearing in the 1997 Annual Report is not
      deemed to be filed as a part of this report, except as expressly
      provided herein.

  2. Financial Statement Schedules

   Financial Statement Schedules have been omitted because they are not
applicable or the required information is shown in the Consolidated Financial
Statements or Notes thereto.

(b) Reports on Form 8-K filed during the quarter ended June 30, 1997
      On May 16, 1997, the Company filed a Current Report on Form 8-K regarding
      the death of James M. Fox, director.

(c) Exhibits  Required  by  Item  601  of  Securities  and  Exchange Commission
      Regulation S-K:

EXHIBIT
NUMBER
- ------------
3.1    Certificate of Incorporation of Dime Community Bancorp, Inc. (1)
3.2    Bylaws of Dime Community Bancorp, Inc. (2)
4.1    Certificate of Incorporation of Dime Community Bancorp, Inc. (1)
4.2    Bylaws of Dime Community Bancorp, Inc. (2)
4.3    Draft Stock Certificate of Dime Community Bancorp, Inc. (1)
10.1   Agency Agreement, by and among Dime Community Bancorp, Inc., The Dime
       Savings Bank of Williamsburgh and Sandler O'Neill & Partners, L.P. (1)
10.2   Agreement and Plan of Merger dated as of the 2nd day of November, 1995
       by and between The Dime Savings Bank of Williamsburgh and Conestoga
       Bancorp, Inc. (3)
10.3   Stock Option Agreement dated as of the 2nd day of November, 1995 by and
       between The Dime Savings Bank of Williamsburgh and Conestoga Bancorp,
       Inc. (3)
10.4   Engagement Letter, dated September 11, 1995 between The Dime Savings
       Bank of Williamsburgh and Ryan Beck & Co., Inc. (1)
10.5   Amended and Restated Employment Agreement between The Dime Savings Bank
       of Williamsburgh and Vincent F. Palagiano (4)
10.6   Amended and Restated Employment Agreement between The Dime Savings Bank
       of Williamsburgh and Michael P. Devine (4)
10.7   Amended and Restated Employment Agreement between The Dime Savings Bank
       of Williamsburgh and Kenneth J. Mahon (4)
10.8   Employment Agreement between Dime Community Bancorp, Inc. and Vincent F.
       Palagiano (4)
10.9   Employment Agreement between Dime Community Bancorp, Inc. and Michael P.
       Devine (4)
10.10  Employment Agreement between Dime Community Bancorp, Inc. and Kenneth J.
       Mahon (4)
10.11  Form of Employee Retention Agreements by and among The Dime Savings Bank
       of Williamsburgh, Dime Community Bancorp, Inc. and certain executive
       officers (4)
10.12  Employee Stock Ownership Plan of Dime Community Bancorp, Inc. and
       certain affiliates (1)
10.13  First Amendment to Employee Stock Ownership Plan of Dime Community
       Bancorp, Inc. and Certain Affiliates (4)
10.14  ESOP Loan Commitment Letter and ESOP Loan Documents (4)
10.15  The Dime Savings Bank of Williamsburgh 401(k) Savings Plan in RSI
       Retirement Trust (1)

PAGE 41

10.18  Seventh, Eighth and Ninth Amendments to The Dime Savings Bank of
       Williamsburgh 401(k) Savings Plan
       in RSI Retirement Trust (4)
10.16a Tenth and Eleventh Amendments to The Dime Savings Bank of Williamsburgh
401(k) Savings Plan in RSI
       Retirement Trust
10.17  The Benefit Maintenance Plan of Dime Community Bancorp, Inc.
10.18  Severance Pay Plan of The Dime Savings Bank of Williamsburgh (4)
10.19  Retirement Plan for Board Members of Dime Community Bancorp, Inc. (4)
10.20  Dime Community Bancorp, Inc. Stock Option Plan for Outside Directors,
       Officers and Employees, as
       amended by amendments number 1 and 2.
10.21  Recognition and Retention Plan for Outside Directors, Officers and
       Employees of Dime Community
       Bancorp, Inc., as amended by amendments number 1 and 2.
10.22  Form of stock option agreement for Outside Directors under Dime
       Community Bancorp, Inc. 1996 Stock
       Option Plan for Outside Directors, Officers and Employees
10.23  Form of stock option agreement for officers and employees under Dime
       Community Bancorp, Inc. 1996
       Stock Option Plan for Outside Directors, Officers and Employees
10.24  Form of award notice for outside directors under the Recognition and
       Retention Plan for Outside Directors,
       Officers and Employees of Dime Community Bancorp, Inc.
10.25  Form of award notice for officers and employees under the Recognition
       and Retention Plan for Outside
       Directors, Officers and Employees of Dime Community Bancorp, Inc.
11.0   Statement Re:  Computation of Per Share Earnings
13.1   1997 Annual Report to Shareholders
21.1   Subsidiaries of the Registrant (1)
27.1   Financial Data Schedule (EDGAR filing only)

(1) Incorporated  by reference to Exhibits to the Registration  Statement  on
    Form S-1, No. 33-80735 filed on December 22, 1995, as amended.
(2) Incorporated by reference to the registrant's 10-Q dated December 31, 1996.
(3) Incorporated by  reference to the Schedule 13D of The Dime Savings Bank of
    Williamsburgh, filed with the Commission on November 23, 1995.
(4) Incorporated by reference  to  Exhibits  to the Annual Report on Form 10-K
    for the fiscal year ended June 30, 1996 filed on September 27, 1996.

PAGE 42

SIGNATURES

   Pursuant to the requirements of Section 13 or  15 of the Securities Exchange
Act of 1934, as amended, the Registrant certifies that  it has duly caused this
report  to  be  signed  on  its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of New York, State of New York, on September 26, 1997.

                  Dime Community Bancorp, Inc.

                By:  /S/ VINCENT F. PALAGIANO
                     ----------------------------------
                     Vincent F. Palagiano
                     Chairman of the Board
                       and Chief Executive Officer

   Pursuant  to  the  requirements of the Securities Exchange Act of  1934,  as
amended, this report has been signed by the following persons in the capacities
and on the dates indicated.

              NAME                              TITLE                           DATE

 /S/ VINCENT F. PALAGIANO
Vincent F. Palagiano              Chairman of the Board and Chief         September 26,1997
                                  Executive Officer (Principal
                                  executive officer)
 /S/ MICHAEL P. DEVINE
Michael P. Devine                 President and Chief Operating          September 26, 1997
                                  Officer and Director
 /S/ KENNETH J. MAHON
Kenneth J. Mahon                  Executive Vice President,              September 26, 1997
                                  Secretary and Chief Financial
                                  Officer (Principal financial
                                  officer)
 /S/ ANTHONY BERGAMO
Anthony Bergamo                   Director                               September 26, 1997
 /S/ GEORGE L. CLARK, JR.
George L. Clark, Jr.              Director                               September 26, 1997
 /S/ STEVEN D. COHN
Steven D. Cohn                    Director                               September 26, 1997
 /S/ PATRICK E. CURTIN
Patrick E. Curtin                 Director                               September 26, 1997
 /S/ JOSEPH H. FARRELL
Joseph H. Farrell                 Director                               September 26, 1997
 /S/ FRED P. FEHRENBACH
Fred P. Fehrenbach                Director                               September 26, 1997
 /S/ JOHN J. FLYNN
John J. Flynn                     Director                               September 26, 1997
 /S/ MALCOLM T. KITSON
Malcolm T. Kitson                 Director                               September 26, 1997
 /S/ STANLEY MEISELS
Stanley Meisels                   Director                               September 26, 1997
 /S/ LOUIS V. VARONE
Louis V. Varone                   Director                               September 26, 1997

PAGE 44

                             AMENDMENT NUMBER TEN

                                      TO
                    THE DIME SAVINGS BANK OF WILLIAMSBURGH

                              401(k) SAVINGS PLAN

                            IN RSI RETIREMENT TRUST

Pursuant to Section 11.1 of The Dime Savings Bank of Williamsburgh 401 (k)
Savings Plan in RSI Retirement Trust ("Plan"), the Plan is amended effective
as of March 1, 1997:

1.  INTRODUCTION  -  Introduction  of  the  Plan shall be amended by adding the
following paragraph immediately prior to the last paragraph to read as follows:

Elfective March 1, 1997, the Pioneer Savings  Bank,  FSB  Tax  Deferral Savings
Plan  in  RSI  Retirement Trust shall be merged with and into The Dime  Savings
Bank of Williamsburgh 401(k) Savings Plan in RSI Retirement Trust. The accounts
of employees of  Pioneer Savings Bank, FSB and Conestoga Bancorp, Inc. shall be
merged into the Accounts maintained on behalf of each Participant in accordance
with Section 1.1 of the Plan.

2. ARTICLE I - The  definition  of  Accounts,  Section  1.1 shall be amended by
adding the following sentence to the end thereof:

Effective  March  1, 1997, Accounts shall also include accounts  maintained  on
behalf of employees of the Acquired Company, acquired on June 26, 1996.

3. ARTICLE I - The  definition of Bank Contribution Account, Section 1.10 shall
be amended by adding the following sentence to the end thereof:

Effective March 1, 1997,  Bank  Contribution  Account  shall also mean matching
contribution accounts maintained on behalf of Employees of the Acquired Company
under the former Pioneer Plan, as in effect on and prior to February 28, 1997.

4. ARTICLE I - The definition of Basic Contribution Account, Section 1.12 shall
be amended by adding the following sentence to the end thereof:

Effective  March  1,  1997, Basic Contribution Account shall  also  mean  basic
contribution accounts maintained on behalf of Employees of the Acquired Company
under the former Pioneer Plan, as in effect on and prior to February 28, 1997.

(717)                              (1 of 2)

5. ARTICLE I - The definition  of  Early Retirement Date, Section 1.22 shall be
amended by adding the following sentence to the end thereof:

Effective  March 1, 1997, for Employees  who  were  employed  by  the  Acquired
Company as of  the  date  of  acquisition, June 26, 1996, Early Retirement Date
shall also mean the first day of  any  month  coincident with or following such
Employee's attainment of age fifty-five, (55).

6. ARTICLE I - The following definition shall be added immediately prior to the
definition of Plan, Section 1.48, all sections  following  shall  be renumbered
accordingly and all cross-references thereto shall be renumbered accordingly:

    1.48 PIONEER PLAN means Pioneer Savings Bank, FSB Tax Deferral Savings Plan
in RSI
Retirement Trust as in effect on and prior to February 28, 1997.

7.  ARTICLE  I - The definition of Rollover Contribution Account, Section  1.58
prior to its renumbering  hereunder,  shall  be amended by adding the following
sentence to the end thereof:

Effective March 1, 1997, Rollover Contribution Account shall also mean rollover
contribution accounts maintained on behalf of Employees of the Acquired Company
under the former Pioneer Plan as in effect on and prior to February 28, 1997.

                            AMENDMENT NUMBER ELEVEN

                                      TO
                    THE DIME SAVINGS BANK OF WILLIAMSBURGH

                              401(k) SAVINGS PLAN

                            IN RSI RETIREMENT TRUST

Pursuant to Section 11.1 of the Dime Savings Bank of Williamsburgh 401(k)
Savings Plan in RSI Retirement Trust ("Plan"), the Plan is amended as follows,
effective September 11, 1997:

1.   ARTICLE VIII - Section 8.2 shall be amended by adding the following as the
second sentence thereof and the former second sentence shall follow
accordingly:

     Commencing September 11, 1997, a Borrower may request a loan from his
     Accounts,in an amount up to the lesser of (a) fifty percent (50%) of
     the Net Value as of the close of business on the date the loan is
     processed of: his Basic Contribution Account , vested Bank Contribution
     Account, Participant Contribution Account and Rollover Contribution
     Account, or (b)$50,000, reduced by the highest outstanding loan balance
     during the preceding twelve (12) months.

2.   ARTICLE VIII - Section 8.4(b) shall be amended by deleting the words "and
one hundred percent (100%) vested" and by adding the word "vested" in the
beginning of Section 8.4(b)(iv).

                     BENEFIT MAINTENANCE PLAN

                           OF

              DIME COMMUNITY BANCORP, INC.

                 ________________________________

             Adopted Effective As Of November 1, 1992
      As Amended and Restated To and Including June 10, 1997

                         TABLE OF CONTENTS
                                                            Page

                                ARTICLE I

                               DEFINITIONS
Section 1.1 Actuarial Equivalent                                 1
Section 1.2 Affiliated Employer                                  1
Section 1.3 Applicable Limitation                                1
Section 1.4 Bank                                                 2
Section 1.5 Beneficiary                                          2
Section 1.6 Board                                                2
Section 1.7 Change in Control                                    2
Section 1.8 Code                                                 3
Section 1.9 Committee                                            3
Section 1.10 Company                                             3
Section 1.11 Eligible Employee                                   3
Section 1.12 Employee                                            3
Section 1.13 Employer                                            3
Section 1.14 Employer Contributions                              3
Section 1.15 ERISA                                               4
Section 1.16 ESOP                                                4
Section 1.17 Exchange Act                                        4
Section 1.18 Fair Market Value of a Share                        4
Section 1.19 Former Participant                                  4
Section 1.20 Savings Plan                                        4
Section 1.21 Participant                                         4
Section 1.22 Plan                                                4
Section 1.23 Retirement Plan                                     5
Section 1.24 Share                                               5
Section 1.25 Stock Unit                                          5
Section 1.26 Termination of Service                              5

     ARTICLE II PARTICIPATION

Section 2.1 Eligibility for Participation                        5
Section 2.2 Commencement of Participation                        6
Section 2.3 Termination of Participation                         6

PAGE (i)

     ARTICLE III BENEFITS TO PARTICIPANTS

Section 3.1 Supplemental Retirement Benefit                      6
Section 3.2 Supplemental Savings Benefit                         7
Section 3.3 Supplemental ESOP Benefits                           8

     ARTICLE IV DEATH BENEFITS
Section 4.1 Supplemental Retirement Plan Death Benefits          10
Section 4.2 Supplemental Savings Plan Death Benefits             10
Section 4.3 Supplemental ESOP Death Benefits                     10
Section 4.4 Beneficiaries                                        11

          ARTICLE V TRUST FUND
Section 5.1 Establishment of Trust.                              11
Section 5.2 Contributions to Trust.                              12
Section 5.3 Unfunded Character of Plan.                          12

          ARTICLE VI ADMINISTRATION
Section 6.1 The Committee                                        12
Section 6.2 Liability of Committee Members and their Delegates   13

PAGE (ii)

Section 6.3 Plan Expenses                                        13
Section 6.4 Facility of Payment                                  14

          ARTICLE VII AMENDMENT AND TERMINATION
Section 7.1 Amendment by the Company.                            14
Section 7.2 Termination.                                         14
Section 7.3 Amendment or Termination by Other Employers          14

          ARTICLE VIII   MISCELLANEOUS PROVISIONS
Section 8.1 Construction and Language                            15
Section 8.2 Headings                                             15
Section 8.3 Non-Alienation of Benefits                           15
Section 8.4 Indemnification                                      16
Section 8.5 Severability                                         16
Section 8.6 Waiver                                               16
Section 8.7 Governing Law                                        16
Section 8.8 Taxes.                                               16
Section 8.9 No Deposit Account                                   17
Section 8.10 No Right to Continued Employment                    17
Section 8.11 Status of Plan Under ERISA                          17

PAGE iii

                                BENEFIT MAINTENANCE PLAN

                                OF

                         DIME COMMUNITY BANCORP, INC.

                             ARTICLE I

                            DEFINITIONS

Wherever appropriate to the purposes of the Plan, capitalized terms shall
have  the  meanings  assigned  to them under the Retirement Plan, Savings
Plan  or  ESOP,  as applicable; provided,  however,  that  the  following
special definitions  shall  apply  for  purposes  of  the  Plan, unless a
different meaning is clearly indicated by the context:

Section  1.1  Actuarial  Equivalent  means  a  benefit of equivalent  value
determined  on  the  basis  of  interest  rate and mortality  assumptions
prescribed  under  the  Retirement Plan.  If it  shall  be  necessary  to
determine an Actuarial Equivalent in any case for which interest rate and
mortality assumptions shall not have been prescribed under the Retirement
Plan, the Actuarial Equivalent  shall  be  determined  using the interest
rate and mortality assumptions prescribed by the Commissioner of Internal
Revenue pursuant to section 417(e) of the Code for the month in which the
determination is being made.

Section 1.2  Affiliated Employer means any corporation which is a member of
a controlled group of corporations (as defined in section  414(b)  of the
Code)  that  includes  the Company; any trade or business (whether or not
incorporated) that is under  common control (as defined in section 414(c)
of  the  Code)  with  the  Company;  any  organization  (whether  or  not
incorporated) that is a member of an affiliated service group (as defined
in section 414(m) of the Code)  that  includes  the  Company; any leasing
organization  (as defined in section 414(n) of the Code)  to  the  extent
that any of its  employees are required pursuant to section 414(n) of the
Code to be treated as employees of the Company; and any other entity that
is required to be  aggregated  with  the  Company pursuant to regulations
under section 414(o) of the Code.

 Section 1.3 Applicable Limitation means any  of  the  following:  (a) the
limitation  on  annual  compensation  that may be recognized under a tax-
qualified  plan  for benefit computation  purposes  pursuant  to  section
401(a)(17) of the  Code;  (b)  the  maximum limitation on annual benefits
payable  by  a tax-qualified defined benefit  plan  pursuant  to  section
415(b) of the  Code;  (c) the maximum limitation on annual additions to a
tax-qualified defined contribution plan pursuant to section 415(c) of the
Code; (d) the maximum limitation  on aggregate annual benefits and annual
additions  under  a  combination  of tax-qualified  defined  benefit  and
defined contribution plans maintained  by  a  single employer pursuant to
section 415(e) of the Code; (e) the maximum limitation on annual elective
deferrals to a qualified cash or deferred arrangement pursuant to section
402(g) of the Code; (f) the annual limitation on elective deferrals under
a qualified cash or deferred arrangement by highly  compensated employees
pursuant to section 401(k) of the Code; and (g) the annual  limitation on
voluntary  employee contributions by, and employer matching contributions
for, highly compensated employees pursuant to section 401(m) of the Code.

PAGE 2
Section 1.4 Bank  means  The Dime Savings Bank of Williamsburgh, a federal
stock savings bank, and its successors or assigns.

Section 1.5 Beneficiary means  any  person,  other  than a Partic-ipant or
Former Participant, who is determined to be entitled  to  benefits  under
the terms of the Plan.

Section 1.6 Board means the Board of Directors of the Company.

Section 1.7 Change in Control means any of the following events:

(a)the  occurrence of any event upon which any "person" (as such term  is
used in sections  13(d)  and 14(d) of the Exchange Act), other than (i) a
trustee or other fiduciary  holding  securities under an employee benefit
plan  maintained for the benefit of employees  of  the  Company;  (ii)  a
corporation  owned,  directly  or  indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of  the  Company;  or  (iii) any group constituting  a  person  in  which
employees of the Company are substantial members, becomes the "beneficial
owner" (as defined in Rule  13d-3  promulgated  under  the Exchange Act),
directly or indirectly, of securities issued by the Company  representing
25%  or  more  of the combined voting power of all of the Company's  then
outstanding securities; or

(b)the occurrence  of  any  event  upon  which  the  individuals who were
members of the Board on November 1, 1992, together with individuals whose
election  by  the  Board  or  nomination  for  election by the  Company's
stockholders was approved by the affirmative vote  of at least two-thirds
of the members of the Board then in office who were either members of the
Board  on the date this Plan is adopted or whose nomination  or  election
was previously so approved, cease for any reason to constitute a majority
of the members  of  the  Board, but excluding, for this purpose, any such
individual whose initial assumption  of  office  is in connection with an
actual  or  threatened  election  contest  relating to  the  election  of
directors  of  the Company (as such terms are  used  in  Rule  14a-11  of
Regulation 14A promulgated under the Exchange Act); or

(c)       the shareholders of the Company approve either:

(i)a merger or consolidation  of  the Company with any other corporation,
other  than  a  merger  or consolidation  following  which  both  of  the
following conditions are satisfied:

(A)either (1) the members  of  the Board of the Company immediately prior
to such merger or consolidation  constitute  at  least  a majority of the
members  of  the  governing body of the institution resulting  from  such
merger or consolidation;  or  (2)  the  shareholders  of  the Company own
securities of the institution resulting from such merger or consolidation
representing  80%  or  more  of  the  combined  voting power of all  such
securities  then  outstanding in substantially the  same  proportions  as
their ownership of voting securities of the Company before such merger or
consolidation; and

PAGE 3

(B)the entity which  results  from such merger or consolidation expressly
agrees in writing to assume and  perform  the Company's obligations under
the Plan; or

(ii)a plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or  substantially  all  of  its
assets; and

(d)any  event  that  would  be described in section 1.7(a), (b) or (c) if
"the Bank" were substituted for "the Company" therein.

Section 1.8 Code means the Internal  Revenue  Code  of 1986 (including the
corresponding provisions of any prior law or succeeding law).

Section 1.9 Committee means the Compensation Committee  of  the  Board  of
Directors of the Company, or such other person, committee or other entity
as shall be designated by or on behalf of the Board to perform the duties
set forth in Article IV.

Section  1.10 Company  means,  Dime  Community  Bancorp,  Inc., a Delaware
corporation, any successor thereto.

Section  1.11 Eligible  Employee  means  an Employee who is eligi-ble  for
participation in the Plan in accordance with  the  pro-visions of Article
II.

Section  1.12 Employee  means  any person, including an  officer,  who  is
employed by the Employer.

Section  1.13 Employer  means  Dime   Community  Bancorp,  Inc.,  and  any
successor thereto and The Dime Savings  Bank  of  Williamsburgh  and  any
successor  thereto  and  any  Affiliated  Employer  which, with the prior
written  approval  of  the Board of Directors of Dime Community  Bancorp,
Inc. and subject to such  terms  and  conditions as may be imposed by the
Board  of Directors of Dime Community Bancorp,  Inc.,  shall  adopt  this
Plan.

Section 1.14 Employer Contributions means contributions by any Employer to
the Savings Plan or the ESOP.

PAGE 4
 
Section  1.15 ERISA  means the Employee Retirement Income Security Act of
l974,  as  amended from  time  to  time  (in-cluding  the  corre-sponding
provisions of any succeeding law).

Section  1.16 ESOP  means  the  Employee  Stock  Ownership  Plan  of  Dime
Community  Bancorp,  Inc. and Certain Affiliates, as amended from time to
time (including the corresponding  provisions  of any successor qualified
employee stock ownership plan adopted by the Company).

Section 1.17 Exchange Act means the Securities Exchange  Act  of  1934, as
amended from time to time (including the corresponding provisions  of any
succeeding law).

Section  1.18 Fair  Market Value of a Share means, with respect to a Share
on a specified date:

(a)the final reported sales price on the date in question (or if there is
no reported sale on  such  date,  on the last preceding date on which any
reported  sale  occurred)  as  reported  in  the  principal  consolidated
reporting system with respect to securities listed or admitted to trading
on the principal United States securities  exchange  on  which the Shares
are listed or admitted to trading; or

(b)if  the  Shares  are  not  listed or admitted to trading on  any  such
exchange, the closing bid quotation  with respect to a Share on such date
on the National Association of Securities  Dealers  Automated  Quotations
System, or, if no such quotation is provided, on another similar  system,
selected by the Committee, then in use; or

(c)if sections 1.18(a) and (b) are not applicable, the fair market  value
of a Share as the Committee may determine.

Section 1.19 Former Participant means a person whose participa-tion in the
Plan has terminated as provided under section 1.26

Section  1.20 Savings  Plan  means  the  401(k)  Savings  Plan of The Dime
Savings  Bank  of Williamsburgh, as amended from time to time  (including
the provisions of  any  successor  qualified  defined  contribution  plan
adopted by the Company).

Section  1.21 Participant  means  any  person who is par-ticipating in the
Plan in accordance with its terms.

Section 1.22 Plan means the Benefit Maintenance  Plan  of  Dime  Community
Bancorp,  Inc., as amended from time to time (including the corresponding
provisions of any successor plan adopted by the Company).

PAGE 5 

Section 1.23 Retirement  Plan  means  the  Retirement  Plan  of  The Dime
Savings  Bank  of  Williamsburgh, as amended from time to time (including
the corresponding provisions  of  any successor qualified defined benefit
plan adopted by the Bank).

Section 1.24 Share  means a share of  common  stock,  par  value  $.01 per
share, of Dime Community Bancorp., Inc.

Section  1.25 Stock  Unit   means a  right to receive a payment under  the
Plan in an amount equal, on the date as of which such payment is made, to
the Fair Market Value of a Share.

Section 1.26 Termination of Service  means an Employ-ee's sepa-ration from
service  with  all  Employers as an Employee,  whether  by  resigna-tion,
discharge, death, disability, retirement or other-wise.

                            ARTICLE II

                           PARTICIPATION

Section 2.1       Eligibility for Participation.

Only Eligible Employees may be or become Participants.  An Employee shall
become an Eligible Employee if:

(a)he holds the office of Senior Vice President, or a more senior office,
of the Employer, or he  has  been  designated  an  Eligible  Employee  by
resolution of the Committee; and

(b)he  is  a  Participant in the Retirement Plan, the Savings Plan or the
ESOP, or any combination  thereof,  and  the  benefits  to  which  he  is
entitled  thereunder  are  limited  by  one  or  more  of  the Applicable
Limitations;

provided,  however,  that no person shall be named an Eligible  Employee,
nor shall any person who  has  been  an  Eligible Employee continue as an
Eligible  Employee, to the extent that such  person's  participation,  or
continued participation,  in  the Plan would cause the Plan to fail to be
considered  maintained  for the primary  purpose  of  providing  deferred
compensation for a select group
of management or highly compensated employees for purposes of ERISA.

PAGE 6

Section 2.2       Commencement of Participation.

An Employee shall become  a Participant on the date when he first becomes
an  Eligible  Employee,  unless   the  Committee  shall,  by  resolution,
establish  an earlier or later effective  date  of  participation  for  a
Participant.

Section 2.3        Termination of Participation.

Participation  in  the Plan shall cease on the earlier of (a) the date of
the Participant's Termination  of  Service  or  (b)  the date on which he
ceases to be an Eligible Employee.

                            ARTICLE III

                     BENEFITS TO PARTICIPANTS

Section 3.1    Supplemental Retirement Benefit.

(a)A Participant whose benefits under the Re-tirement Plan are limited by
one or more of the Applicable Limitations shall be eligible  for  a  sup-
plemental  retirement  benefit  under this Plan in an amount equal to the
excess of:

(i)the  retirement  benefit to which  he  would  be  entitled  under  the
Retirement Plan in the absence of the Applicable Limitations; over

(ii)the actual retirement  benefit  to  which  he  is  entitled under the
Retirement Plan;

in  each  case  computed  as of the date on which his benefit  under  the
Retirement Plan is scheduled  to commence and on the basis of the benefit
form selected by him under the  Retirement  Plan; provided, however, that
if  the  Participant  dies  before  the   payment  of  such  supplemental
retirement benefit begins, no benefit shall be payable under this section
3.1  and the survivor benefit, if any, which  may  be  payable  shall  be
determined under section 4.1.

(b)  The supplemental retirement benefit provided for in this section 3.1
shall  be  paid  in  the form of a single life annuity commencing  on the
first  day  of  the  month   coincident   with   or  next  following  the
Participant's Termination of Service or, if later,  the  earliest date on
which  benefits under the Retirement Plan could, with a proper  election,
begin to  be  paid.   Notwithstanding  the  foregoing, a Participant may,
within thirty (30) days after first becoming  eligible  to participate in
the  Plan  for  purposes of receiving a supplemental retirement  benefit,
elect that such supplemental  retirement  benefit  be paid in a different
form or commencing at a different time by filing a written  election,  in
such  form  and  manner  as the Committee may provide, within such thirty
(30) day period, and the amount  of  such  benefit shall be the Actuarial
Equivalent of the benefit payable in the absence of such an election.

PAGE 7

Section 3.2      Supplemental Savings Benefit.

(a)A Participant whose benefits under the Savings Plan are limited by one
or  more  of  the  Applicable  Limitations  shall   be   eligible  for  a
supplemental savings benefit under this Plan in an amount equal to:

(i)the   aggregate  amount  of  Employer  Contributions  (including   any
reallocation  of  amounts forfeited upon the termination of employment of
others participating  in  the Savings Plan) that would have been credited
to the Participant's account under the Savings Plan in the absence of the
Applicable Limitations if for  all  relevant  periods  he  had  made  the
maximum  amount of elective deferrals under section 402(g) of the Code or
voluntary  employee  contributions  under  section  401(a)  of  the  Code
required  to  qualify  for  the  maximum  possible allocation of Employer
Contributions (and without regard to the amount  of elective deferrals or
voluntary employee contributions actually made); over

(ii)the  aggregate  amount  of  Employer  Contributions   (including  any
reallocation  of amounts forfeited upon the termination of employment  of
others participating  in  the  Savings  Plan)  actually  credited  to the
Participant's account under the Savings Plan for such periods;

adjusted  for  earnings  and losses as provided section 3.2(b); provided,
however,  that  if  the Participant  dies  before  the  payment  of  such
supplemental savings  benefit  begins,  no benefit shall be payable under
this section 3.2 and the survivor benefit,  if  any, which may be payable
shall be determined under section 4.2.

(b)The  Committee shall cause to be maintained a bookkeeping  account  to
reflect   all  Employer  Contributions  (including  any  reallocation  of
amounts   forfeited   upon   the  termination  of  employment  of  others
participating in the Savings Plan) that cannot be made to a Participant's
account under the Savings Plan  due  to  the  Applicable  Limitations and
shall  cause  such  bookkeeping  account  to  be  credited with all  such
Employer   Contributions   as   of  the  date  on  which  such   Employer
Contributions would have been credited  to  the  Participant's account in
the  Savings  Plan  in  the absence of the Applicable  Limitations.   The
balance  credited to such  bookkeeping  account  shall  be  adjusted  for
earnings or losses as follows:

(i)except as provided in section 3.2(b)(ii), the balance credited to such
bookkeeping account shall be credited with interest as of the last day of
each calendar  month at a rate for such month equal to one-twelfth of the
annualized yield  on  30-year  Treasury  Securities, Constant Maturities,
prescribed  by  the  Commissioner  of Internal  Revenue  for  such  month
pursuant to section 417(e) of the Code; or

PAGE 8

(ii)if  and to the extent permitted by  the  Committee,  as  though  such
Employer Contributions had been contributed to a trust fund and invested,
for the benefit  of  the Participant, in such investments at such time or
times as the Participant shall have designated in such form and manner as
the Committee shall prescribe.

(c)The supplemental savings  benefit  payable  to a Participant hereunder
shall be paid  in a single lump sum as soon as practicable  following the
last  day of the calendar year in which the Participant's Termination  of
Service  occurs  and  shall  be  equal  to  the  balance  credited to his
bookkeeping account as of the last day of the last calendar  month to end
prior  to  the  date  of  payment.   Notwithstanding  the  foregoing,   a
Participant may, within thirty (30) days after first becoming eligible to
participate  in the Plan for purposes of receiving a supplemental savings
benefit, specify  that  such  supplemental  savings  benefit be paid in a
different  form  or  commencing at a different time by filing  a  written
election, in such form  and manner as the Committee may prescribe, within
such thirty (30) day period.

Section 3.3       Supplemental ESOP Benefits.

(a)A Participant whose benefits under the ESOP are limited by one or more
of the Applicable Limitations  shall  be eligible for a supplemental ESOP
benefit under this Plan in an amount equal to the sum of:

(i)a  number of Stock Units equal to the  excess  (if  any)  of  (A)  the
aggregate   number  of  Shares  (including  any  reallocation  of  Shares
forfeited upon  the  termination of employment of others participating in
the ESOP) that would have  been  credited  to  the  Participant's account
under the ESOP in the absence of the Applicable Limitations  over (B) the
number of Shares actually credited to his account under the ESOP; plus

(ii)if  and to the extent that Employer Contributions to the ESOP  result
in allocations  to the Participant's account of assets other than Shares,
an amount equal to  the  excess  (if  any) of (A) the aggregate amount of
Employer Contributions (including any reallocation  of  amounts forfeited
upon the termination of employment of others participating  in  the ESOP)
that would have been credited to the Participant's account under the ESOP
in  the  absence  of  the  Applicable  Limitations over (B) the aggregate
amount of Employer Contributions (including  any  reallocation of amounts
forfeited upon the termination of employment of others  participating  in
the ESOP) actually credited to the Participant's account under the ESOP;

adjusted  for  earnings  and losses as provided section 3.3(b); provided,
however,  that  if  the Participant  dies  before  the  payment  of  such
supplemental ESOP benefit  begins, no benefit shall be payable under this
section 3.3 and the survivor  benefit, if any, which may be payable shall
be determined under section 4.3.

PAGE 9

(b)The Committee shall cause to  be  maintained  a bookkeeping account to
reflect    all   Shares   and   Employer  Contributions  (including   any
reallocation of amounts forfeited  upon  the termination of employment of
others  participating  in  the  ESOP)  that  cannot  be  allocated  to  a
Participant's  account under the ESOP due to the  Applicable  Limitations
and shall cause  such  bookkeeping  account  to  be  credited  with  such
Employer  Contributions  and Stock Units reflecting such Shares as of the
date on which such Employer Contributions and Shares, respectively, would
have been credited to the  Participant's  account  in  the  ESOP  in  the
absence  of  the  Applicable  Limitations.   The balance credited to such
bookkeeping account shall be adjusted for earnings or losses as follows:

(i)all Stock Units shall be adjusted from time  to time so that the value
of a Stock Unit on any date is equal to the Fair Market Value of Share on
such date, and the number of Stock Units shall be  adjusted  as  and when
appropriate  to  reflect  any  stock dividend, stock split, reverse stock
split,  exchange, conversion, or  other  event  generally  affecting  the
number of Shares held by all holders of Shares; and

(ii) (A)  except  as provided in section 3.3(b)(ii)(B), the balance credited
 to such bookkeeping accountthat does not consist of Stock Units shall be
credited with  interest  as of the last day of each calendar month at a rate
for such month equal  to  one-twelfth  of  the  annualized yield on 30-year
Treasury Securities,Constant  Maturities,  prescribed  by  theCommissioner
of Internal Revenue forsuch month pursuant to section 417(e) of the Code; or

(B)if and to the extent permitted by the  Committee, the balance credited
to such bookkeeping account that does not consist of Stock Units shall be
adjusted as though such Employer Contributions  had been contributed to a
trust  fund  and  invested, for the benefit of the Participant,  in  such
investments  at  such  time  or  times  as  the  Participant  shall  have
designated in such form and manner as the Committee shall prescribe;

provided, however,  that to the extent that the Participant shall receive
on a current basis any  dividend  paid with respect to Shares credited to
his account under the ESOP, the bookkeeping  account  established for him
under  this  Plan  shall  not  be adjusted to reflect such dividend  and,
instead, the Participant shall be  paid an amount per Stock Unit equal to
the dividend par Share received by the  Participant  under  the  ESOP, at
substantially the same time as such dividend is paid under the ESOP.

(c)The supplemental ESOP benefit payable to a Participant hereunder shall
be  paid  in a single lump sum as soon as practicable following the  last
day of the  calendar  year  in  which  the  Participant's  Termination of
Service occurs and shall be in an amount equal to the balance credited to
his  bookkeeping  account.   Notwithstanding the foregoing, a Participant
may, within thirty (30) days after first becoming eligible to participate
in  the  Plan  for purposes of receiving  a  supplemental  ESOP  benefit,
specify that such  supplemental  ESOP benefit be paid in a different form
or commencing at a different time  by  filing a written election, in such
form and manner as the Committee may prescribe,  within  such thirty (30)
day period.

PAGE 10

                            ARTICLE IV

                          DEATH BENEFITS

Section 4.1 Supplemental Retirement Plan Death Benefits.

If  a  Participant who is eligible for a supplemental retirement  benefit
under section
3.1 dies  before  the  payment  of  such  benefit  begins, a supplemental
survivor's  retirement  benefit  shall  be  payable to the  Participant's
Beneficiary under this Plan in amount equal to the excess (if any) of (a)
the survivor's benefit that would have been payable  under the Retirement
Plan commencing at the earliest permissible date in the  absence  of  the
Applicable Limitations if the Participant had effectively designated such
Beneficiary  as  his  beneficiary under the Retirement Plan, over (b) the
survivor's benefit would  have  been  payable  under  the Retirement Plan
commencing at the earliest permissible date after giving  effect  to  the
Applicable Limitations if the Participant had effectively designated such
Beneficiary  as his beneficiary under the Retirement Plan.   Such benefit
shall be paid  in  a single lump sum which is the Actuarial Equivalent of
the benefit described  in  the  preceding sentence as soon as practicable
following the death of the Participant.

Section 4.2 Supplemental Savings Plan Death Benefits.

If a Participant who is eligible for a supplemental savings benefit under
section 3.2dies  before  the  payment  of  such  benefit  begins,  a  
supplementalsurvivor's  savings  benefit  shall  be   payable  to  the 
Participant's Beneficiary under this Plan in amount equal  to  the  balance 
credited tothe  bookkeeping  account established for the Participant  under  
section3.2(b).  Such benefit  shall  be  paid  in  a  single  lump  as  soon as
practicable  following  the  death of the Participant and the bookkeeping
account established for such Participant pursuant to section 3.2(b) shall
continue to be adjusted as provided  therein  through the last day of the
last calendar month to end prior to the date of payment.

Section 4.3     Supplemental ESOP Death Benefits.

If a Participant who is eligible for a supplemental  ESOP  benefit  under
section 3.3  dies  before the payment of such benefit begins, a supplemental
ESOP benefit shall be payable to the Participant's Beneficiary under this Plan
in amount equal  to  the  balance  credited  to  the  bookkeeping account
established for the Participant under section 3.3(b).  Such benefit shall
be paid in a single lump as soon as practicable following  the  death  of
the  Participant,  and  the  bookkeeping  account  established  for  such
Participant  pursuant  to section 3.3(b) shall continue to be adjusted as
provided therein through  the  last day of the last calendar month to end
prior to the date of payment.

PAGE 11

Section 4.4              Beneficiaries.

A  Participant  or Former Participant  may  designate  a  Beneficiary  or
Beneficiaries to  receive  any  survivor  benefits payable under the Plan
upon his death.  Any such  designation, or  change  therein or revocation
thereof,  shall be made in writing in the form and manner  prescribed  by
the Committee, shall be revocable until the death of the Participant, and
shall thereafter  be  irrevocable; provided, however, that any  change or
revocation shall be effective  only if received by the Committee prior to
the Participant's or Former Participant's  death.   If  a  Participant or
Former   Participant  shall  die  without  having  effectively  named   a
Beneficiary,  he  shall  be  deemed  to have named his estate as his sole
Beneficiary.  If a Participant or Former  Participant  and his designated
Beneficiary  shall die in circumstances which give rise to  doubt  as  to
which of them shall have been the first to die, the Participant or Former
Participant shall  be  deemed  to  have  survived  the Beneficiary.  If a
Participant or Former Participant designates more than  one  Beneficiary,
all shall be deemed to have equal shares unless the Participant or Former
Participant shall expressly provide otherwise.

                             ARTICLE V

                            TRUST FUND

Section 5.1           Establishment of Trust.

The  Company  may  establish a trust fund which may be used to accumulate
funds to satisfy benefit liabilities to Participants, Former Participants
and their Beneficiaries  under  the  Plan;  provided,  however,  that the
assets  of such trust shall be subject to the claims of the creditors  of
the Company  in  the  event  that  it  is  determined that the Company is
insolvent; and provided, further, that the trust  agreement shall contain
such terms, conditions and provisions as shall be necessary  to cause the
Company  to be considered the owner of the trust fund for federal,  state
or local income  tax  purposes with respect to all amounts contributed to
the trust fund or any income attributable to the investments of the trust
fund.   The  Company  shall  pay  all  costs  and  expenses  incurred  in
establishing  and  maintaining  such  trust.   Any  payments  made  to  a
Participant, Former  Participant  or Beneficiary from a trust established
under this section 5.1  shall  offset  payments  which would otherwise be
payable by the Company in the absence of the establishment of such trust.
Any such trust will conform to the terms of the model  trust described in
Revenue Procedure 92-64, as the same may be modified from time to time.

PAGE 12

Section 5.2           Contributions to Trust.

If  a  trust is established in accordance with section 5.1,  the  Company
shall make  contributions to such trust in such amounts and at such times
as may be specified  by  the  Committee or as may be required pursuant to
the terms of the agreement governing  the  establishment and operation of
such trust.

Section 5.3         Unfunded Character of Plan.

Notwithstanding the establishment of a trust pursuant to section 5.1, the
Plan shall be unfunded for purposes of the Code and ERISA.  Any liability
of the Bank, the Company or another Employer  to  any person with respect
to  benefits  payable  under  the  Plan shall be based solely  upon  such
contractual obligations, if any, as  shall  be  created  by the Plan, and
shall give rise only to a claim against the general assets  of  the Bank,
the  Company or such Employer.  No such liability shall be deemed  to  be
secured  by  any pledge or any other encumbrance on any specific property
of the Bank, the Company or any other Employer.

                            ARTICLE VI

                          ADMINISTRATION

Section 6.1              The Committee.

Except for the  functions  reserved  to  the  Company  or  the Board, the
administration of the Plan shall be the responsibility of the  Committee.
The  Committee shall have the power and the duty to take all actions  and
to make  all  decisions  necessary  or  proper to carry out the Plan. The
determination of the Committee as to any  question  involving the general
administration and interpretation of the Plan shall be  final, conclusive
and binding.  Any discretionary actions to be taken under the Plan by the
Committee shall be uniform in their nature and applicable  to all persons
similarly  situated.   Without limiting the generality of the  foregoing,
the Committee shall have the following powers:

(a)to furnish to all Participants,  upon  request, copies of the Plan and
to require any person to furnish such information  as  it may request for
the purpose of the proper administration of the Plan as  a  condition  to
receiving any benefits under the Plan;

(b)to  make  and enforce such rules and regulations and prescribe the use
of such forms as it shall deem necessary for the efficient administration
of the Plan;

PAGE 13

(c)to interpret the Plan, and to resolve ambiguities, inconsistencies and
omissions, and  the  determinations  of  the Committee in respect thereof
shall be binding, final and conclusive upon all interested parties;

(d)to  decide on questions concerning the Plan  in  accordance  with  the
provisions of the Plan;

(e)to determine  the  amount  of  benefits  which shall be payable to any
person in accordance with the provisions of the  Plan, to hear and decide
claims  for  benefits,  and  to  provide a full and fair  review  to  any
Participant whose claim for benefits has been denied in whole or in part;

(f)to  designate  a person, who may  or  may  not  be  a  member  of  the
Committee, as "plan administrator" for purposes of the ERISA;

(g)to allocate any  such powers and duties to or among individual members
of the Committee; and

(h)the power to designate  persons  other than Committee members to carry
out any duty or power which would otherwise  be  a  responsibility of the
Committee or Administrator, under the terms of the Plan.

Section 6.2 Liability of Committee Members and their Delegates

To the extent permitted by law, the Committee and any  person  to whom it
may delegate any duty or power in connection with administering the Plan,
the  Bank,  the  Company,   any  Employer, and the officers and directors
thereof, shall be entitled to rely  conclusively upon, and shall be fully
protected in any action taken or suffered  by  them  in good faith in the
reliance  upon,  any actuary, counsel, accountant, other  specialist,  or
other person selected  by  the Committee, or in reliance upon any tables,
valuations, certificates, opinions or reports which shall be furnished by
any of them. Further, to the  extent  permitted  by law, no member of the
Committee, nor the Bank, the Company, any Employer,  nor  the officers or
directors  thereof,  shall  be  liable  for  any  neglect,  omission   or
wrongdoing  of  any  other  members  of  the Committee, agent, officer or
employee of the Bank, the Company  or any  Employer.  Any person claiming
benefits under the Plan shall look solely to the Employer for redress.

Section 6.3               Plan Expenses

All  expenses  incurred prior to the termination of the Plan  that  shall
arise in connection  with  the administration of the Plan (including, but
not limited to administrative expenses, proper charges and disbursements,
compensation and other expenses  and  charges  of  any  actuary, counsel,
accountant,  specialist,  or  other person who shall be employed  by  the
Committee in connection with the  administration  of  the Plan), shall be
paid by the Company.

PAGE 14

Section 6.4           Facility of Payment.

If  the  Company  is  unable  to make payment to any Participant,  Former
Participant  Beneficiary, or any  other  person  to whom a payment is due
under the Plan, because it cannot ascertain the identity  or  whereabouts
of  such  Participant,  Former  Participant  Beneficiary, or other person
after reasonable efforts have been made to identify or locate such person
(including  a  notice  of the payment so due mailed  to  the  last  known
address of such Participant,  Former  Participant  Beneficiary,  or other
person  shown  on  the  records  of  the  Employer), such payment and all
subsequent   payments   otherwise   due   to  such  Participant,   Former
Participant, Beneficiary or other person shall  be  forfeited twenty-four
(24)  months  after  the  date such payment first became  due;  provided,
however,  that  such  payment   and  any  subsequent  payments  shall  be
reinstated, retroactively, no later  than  sixty (60) days after the date
on  which  the  Participant, Former Participant,  Beneficiary,  or  other
person is identified or located.

                            ARTICLE VII

                     AMENDMENT AND TERMINATION

Section 7.1        Amendment by the Company.

The Company reserves  the  right, in its sole and absolute discretion, at
any time and from to time, by  action  of the Board, to amend the Plan in
whole  or  in  part.   In no event, however,  shall  any  such  amendment
adversely affect the right  of  any  Participant,  Former Participant  or
Beneficiary  to  receive  any  benefits  under  the  Plan in  respect  of
participation for any period ending on or before the later of the date on
which  such  amendment  is  adopted  or  the  date  on which it  is  made
effective.

Section 7.2              Termination.

The Company also reserve the right, in its sole and absolute  discretion,
by  action  of  the  Board,  to  terminate  the  Plan.   In  such  event,
undistributed benefits attributable to participation prior to the date of
termination  shall  be  distributed as though each Participant terminated
employment with the Bank,  the  Company and all other Employers as of the
effective date of termination of the Plan.

Section 7.3 Amendment or Termination by Other Employers.

In the event that a corporation or  trade  or  business  other  than  the
Company  shall  adopt  this  Plan, such cor-poration or trade or business
shall, by adopting the Plan, empower  the  Company  to amend or terminate
the  Plan,  insofar  as it shall cover employees of such  corporation  or
trade or business, upon  the  terms and condi-tions set forth in sections
7.17.2; provided, however, that any such corporation or trade or business
may, by action of its board of  directors or other govern-ing body, amend
or  terminate the Plan, insofar as  it  shall  cover  employees  of  such
corporation  or  trade or business, at different times and in a different
manner.  In the event of any such amend-ment or termina-tion by action of
the board of directors  or  other governing body of such a corporation or
trade or busi-ness, a separate  plan  shall be deemed to have been estab-
lished for the employees of such corporation  or  trade or busi-ness, and
any  amounts  set  aside  to  provide  for  the satisfaction  of  benefit
liabilities with respect to Employees of such  corporation  or  trade  or
business  shall  be segregated from the assets set aside for the purposes
of this Plan at the  earliest practicable date and shall be dealt with in
accor-dance with the documents governing such sepa-rate plan.

PAGE 15

                           ARTICLE VIII

                     MISCELLANEOUS PROVISIONS

Section 8.1      Construction and Language.

Wherever appropriate in  the Plan, words used in the singular may be read
in the plural, words in the plural may be read in the singular, and words
importing the masculine gender  shall  be  deemed equally to refer to the
feminine or the neuter.  Any reference to an  Article or section shall be
to an Article or section of the Plan, unless otherwise indicated.

Section 8.2               Headings.

The headings of Articles and sections are included solely for convenience
of reference.  If there is any conflict between  such  headings  and  the
text of the Agreement, the text shall control.

Section 8.3      Non-Alienation of Benefits.

Except  as  may  otherwise be required by law, no distribution or payment
under the Plan to  any  Participant,  Former  Participant  or Beneficiary
shall  be  subject  in  any  manner  to  anticipation, alienation,  sale,
transfer, assignment, pledge, encumbrance or charge, whether voluntary or
involuntary, and any attempt to so anticipate,  alienate, sell, transfer,
assign, pledge, encumber or charge the same shall  be void; nor shall any
such distribution or payment be in any way liable for  or  subject to the
debts,  contracts,  liabilities,  engagements  or  torts  of  any  person
entitled  to  such  distribution  or payment.  If any Participant, Former
Participant  or  Beneficiary  is  adjudicated  bankrupt  or  purports  to
anticipate, alienate, sell, transfer,  assign,  pledge encumber or charge
any  such  distribution  or  payment, voluntarily or  involuntarily,  the
Committee,  in  its sole discretion,  may  cancel  such  distribution  or
payment or may hold  or  cause to be held or applied such distribution or
payment, or any part thereof,  to or for the benefit of such Participant,
Former Participant or Beneficiary,  in such manner as the Committee shall
direct; provided, however, that no such  action  by  the  Committee shall
cause the acceleration or deferral of any benefit payments  from the date
on which such payments are scheduled to be made.

PAGE 16

Section 8.4           Indemnification.

The  Company  shall indemnify, hold harmless and defend each Participant,
Former Participant  and  Beneficiary,  against  their  reasonable  costs,
including legal fees, incurred by them or arising out of any action, suit
or  proceeding  in  which  they  may  be  involved,  as a result of their
efforts, in good faith, to defend or enforce the obligation  of the Bank,
the Company and any other Employer under the terms of the Plan.

Section 8.5             Severability.

A   determination   that   any  provision  of  the  Plan  is  invalid  or
unenforceable shall not affect  the  validity  or  enforceability  of any
other provision hereof.

Section 8.6                Waiver.

Failure to insist upon strict compliance with any of the terms, covenants
or  conditions  of  the  Plan  shall not be deemed a waiver of such term,
covenant or condition.  A waiver  of  any  provision  of the Plan must be
made in writing, designated as a waiver, and signed by  the party against
whom  its  enforcement  is sought.  Any waiver or relinquishment  of  any
right or power hereunder  at  any one or more times shall not be deemed a
waiver or relinquishment of such  right  or  power  at  any other time or
times.

Section 8.7            Governing Law.

The Plan shall be con-strued, administered Section and enforced according
to  the  laws  of  the  State  of New York without giving effect  to  the
conflict of laws principles thereof,  except to the extent that such laws
are preempted by the federal laws of the  United  States.   Any  payments
made  pursuant  to  this  Plan  are subject to and conditioned upon their
compliance  with  12  U.S.C.     1828(k)   and  any  regulations
promulgated thereunder.

Section 8.8                Taxes.

The Employer shall have the right to retain a suffi-cient  portion of any
payment made under the Plan to cover the amount re-quired to be with-held
pursuant to any applicable federal, state and local tax law.

PAGE 17

Section 8.9          No Deposit Account.

Nothing in this Plan shall be held or construed to establish  any deposit
account for any Participant or any deposit liability on the part  of  the
Bank.   Participants'  rights hereunder shall be equivalent to those of a
general unsecured creditor of each Employer.

Section 8.10  No Right to Continued Employment.

Neither the establishment  of  the  Plan, nor any provi-sions of the Plan
nor any action of the Plan Administrator,  the Commit-tee or any Employer
shall be held or construed to confer upon any  Employ-ee  any  right to a
continuation  of  employment by the Employer.  The Employer reserves  the
right to dismiss any Employee or other-wise deal with any Employee to the
same extent as though the Plan had not been adopted.

Section 8.11     Status of Plan Under ERISA.

The Plan is intended  to  be  (a)  to  the maximum extent permitted under
applicable  laws,  an  unfunded, non-qualified  excess  benefit  plan  as
contemplated by section  3(36)  of  ERISA  for  the  purpose of providing
benefits in excess of the limitations imposed under section  415  of  the
Code,  and (b) to the extent not so permitted, an unfunded, non-qualified
plan  maintained   primarily   for  the  purpose  of  providing  deferred
compensation  for  highly  compen-sated  employees,  as  contemplated  by
sections 201(2), 301(a)(3) and  401(a)(1)  of  ERISA.   The  Plan  is not
intend-ed to comply with the require-ments of section 401(a) of the  Code
or to be subject to Parts 2, 3 and 4 of Title I of ERISA.  The Plan shall
be adminis-tered and construed so as to effectuate this intent.

              DIME COMMUNITY BANCORP, INC.

               1996 STOCK OPTION PLAN FOR

        OUTSIDE DIRECTORS, OFFICERS AND EMPLOYEES

                  ______________________________

                      ADOPTED OCTOBER 8, 1996
                 EFFECTIVE AS OF DECEMBER 26, 1996
               INCORPORATING AMENDMENT NO. 1 AND 2

                         TABLE OF CONTENTS
                                                            Page

                                ARTICLE I
                                 PURPOSE

Section 1.1 General Purpose of the Plan                        1

ARTICLE II DEFINITIONS

Section 2.1 Bank                                               1
Section 2.2 Board                                              1
Section 2.3 Change in Control                                  1
Section 2.4 Code                                               2
Section 2.5 Committee                                          3
Section 2.6 Company                                            3
Section 2.7 Disability                                         3
Section 2.8 Disinterested Board Member                         3
Section 2.9 Effective Date                                     3
Section 2.10 Eligible Director                                 3
Section 2.11 Eligible Employee                                 3
Section 2.12 Employer                                          3
Section 2.13 Exchange Act                                      3
Section 2.14 Exercise Price                                    3
Section 2.15 Fair Market Value                                 3
Section 2.16 Family Member                                     4
Section 2.17 Incentive Stock Option                            4
Section 2.18 Non-Profit Organization                           4
Section 2.19 Non-Qualified Stock Option                        4
Section 2.20 Option                                            4
Section 2.21 Option Period                                     4
Section 2.22 OTS Regulations                                   4
Section 2.23 Person                                            4
Section 2.24 Plan                                              5
Section 2.25 Retirement                                        5
Section 2.26 Share                                             5
Section 2.27 Termination for Cause                             5

ARTICLE III AVAILABLE SHARES

Section 3.1 Available Shares                                   6

ARTICLE IV ADMINISTRATION

Section 4.1 Committee                                           6
Section 4.2 Committee Action                                    7

PAGE (i)

Section 4.3 Committee Responsibilities                          7

ARTICLE V STOCK OPTIONS FOR ELIGIBLE DIRECTORS

Section 5.1 In General                                           7
Section 5.2 Exercise Price                                       8
Section 5.3 Option Period                                        8

ARTICLE VI STOCK OPTIONS FOR ELIGIBLE EMPLOYEES

Section 6.1 Size of Option                                       9
Section 6.2 Grant of Options                                     9
Section 6.3 Exercise Price                                       10
Section 6.4 Option Period                                        10
Section 6.5 Required Regulatory Provisions                       10
Section 6.6 Additional Restrictions on Incentive Stock Options   12

ARTICLE VII OPTIONS - IN GENERAL

Section 7.1 Method of Exercise                                    13
Section 7.2 Limitations on Options                                14

ARTICLE VIII AMENDMENT AND TERMINATION

Section 8.1 Termination                                           15
Section 8.2 Amendment                                             15
Section 8.3 Adjustments in the Event of a Business Reorganization 16

ARTICLE IX MISCELLANEOUS

Section 9.1 Status as an Employee Benefit Plan                   17
Section 9.2 No Right to Continued Employment                     17
Section 9.3 Construction of Language                             17
Section 9.4 Governing Law                                        18
Section 9.5 Headings                                             18
Section 9.6 Non-Alienation of Benefits                           18
Section 9.7 Taxes                                                18
Section 9.8 Approval of Shareholders                             18
Section 9.9 Notices                                              19

PAGE (i)

              Dime Community Bancorp, Inc. 1996 Stock Option Plan

                                for

             Outside Directors, Officers and Employees

                             ARTICLE I

                              PURPOSE

Section 1.1        General Purpose of the Plan.

The  purpose  of  the  Plan is to promote the growth and profitability of
Dime Community Bancorp,  Inc., to provide eligible directors, certain key
officers and employees of Dime Community Bancorp, Inc. and its affiliates
with an incentive to achieve  corporate  objec-tives, to at-tract and re-
tain  individuals  of  outstanding  competence   and   to   provide  such
individuals with an equity interest in Dime Community Bancorp, Inc.

                            ARTICLE II

                            DEFINITIONS

The  following  definitions  shall  apply for the purposes of this  Plan,
unless a different meaning is plainly indicated by the context:

Section  2.1   Bank  means  The Dime Savings  Bank  of  Williamsburgh,  a
federally chartered savings institution, and any successor thereto.

Section 2.2 Board means the board of directors of the Company.

Section 2.3 Change in Control means any of the following events:

 (a)the occurrence of any event  upon which any "person" (as such term is
used in sections 13(d) and 14(d) of  the Securities Exchange Act of 1934,
as amended ("Exchange Act")), other than (A) a trustee or other fiduciary
holding  securities under an employee benefit  plan  maintained  for  the
benefit of employees of the Company; (B) a corporation owned, directly or
indirectly,  by the stockholders of the Company in substantially the same
proportions as  their ownership of stock of the Company; or (C) any group
constituting a person  in  which employees of the Company are substantial
members,  becomes  the "beneficial  owner"  (as  defined  in  Rule  13d-3
promulgated  under  the   Exchange   Act),  directly  or  indirectly,  of
securities issued by the Company representing 25% or more of the combined
voting power of all of the Company's then outstanding securities; or

PAGE 2

(b)the occurrence of any event upon which the individuals who on the date
the Plan is adopted are members of the  Board,  together with individuals
whose election by the Board or nomination for election  by  the Company's
stockholders was approved by the affirmative vote of at least  two-thirds
of the members of the Board then in office who were either members of the
Board  on  the  date this Plan is adopted or whose nomination or election
was previously so approved, cease for any reason to constitute a majority
of the members of  the  Board,  but excluding, for this purpose, any such
individual whose initial assumption  of  office  is in connection with an
actual  or  threatened  election  contest  relating to  the  election  of
directors  of  the Company (as such terms are  used  in  Rule  14a-11  of
Regulation 14A promulgated under the Exchange Act); or

(c)       the shareholders of the Company approve either:

(i)a merger or consolidation  of  the Company with any other corporation,
other  than  a  merger  or consolidation  following  which  both  of  the
following conditions are satisfied:

(A)either (I) the members  of  the Board of the Company immediately prior
to such merger or consolidation  constitute  at  least  a majority of the
members  of  the  governing body of the institution resulting  from  such
merger or consolidation;  or  (II)  the  shareholders  of the Company own
securities of the institution resulting from such merger or consolidation
representing  80%  or  more  of  the  combined voting power of  all  such
securities of the resulting institution then outstanding in substantially
the  same proportions as their ownership  of  voting  securities  of  the
Company immediately before such merger or consolidation; and

(B)the  entity  which results from such merger or consolidation expressly
agrees in writing  to  assume and perform the Company's obligations under
the Plan; or

(ii)a plan of complete liquidation of the Company or an agreement for the
sale or disposition by the  Company  of  all  or substantially all of its
assets; and

(d)any event that would be described in section  2.3(a),  (b)  or  (c) if
"the Bank" were substituted for "the Company" therein.

Section 2.4  Code means the Internal Revenue Code of 1986 (including  the
corresponding provisions of any succeeding law).

PAGE 3

Section 2.5 Committee means the Committee described in section 4.1.

Section  2.6 Company  means  Dime  Community  Bancorp, Inc., a corporation
organized and existing under the laws of the State  of  Delaware, and any
successor thereto.

Section 2.7 Disability means a condition of total in-capa-city, men-tal or
physical,  for  further  performance of duty with the Company  which  the
Committee shall have deter-mined,  on the basis of competent medical evi-
dence, is likely to be permanent.

Section 2.8  Disinterested Board Member  means  a member of the Board who
(a) is not a current employee of the Company or a  subsidiary, (b) is not
a  former  employee  of the Company who receives compensation  for  prior
services (other than benefits  under  a  tax-qualified  retirement  plan)
during the taxable year, (c) has not been an officer of the Company,  (d)
does  not  receive  remuneration from the Company or a subsidiary, either
directly or indirectly,  in any capacity other than as a director and (e)
does not possess an interest in any other transaction, and is not engaged
in  a business relationship,  for  which  disclosure  would  be  required
pursuant  to  Item  404(a)  or (b) of the proxy solicitation rules of the
Securities and Exchange Commission.   The term Disinterested Board Member
shall be interpreted in such manner as  shall  be necessary to conform to
the requirements of section 162(m) of the Code or  Rule 16b-3 promulgated
under the Exchange Act.

Section 2.9  Effective Date means December 26, 1996.

Section 2.10  Eligible Director means a member of the  board of directors
of an Employer who is not also an employee or an officer of an Employer.

Section 2.11 Eligible Employee means any employee whom the  Committee  may
determine  to  be  a key officer or employee of an Employer and select to
receive a grant of an Option pursuant to the Plan.

Section 2.12  Employer  means  the  Company,  the  Bank and any successor
thereto and, with the prior approval of the Board, and  subject  to  such
terms  and  conditions  as may be imposed by the Board, any other savings
bank,  savings  and  loan  associa-tion,   bank,  corporation,  financial
institution or other business organization or  institution.  With respect
to any Eligible Employer or Eligible Director, the  Employer  shall  mean
the  entity  which  employs  such person or upon whose board of directors
such person serves.

Section 2.13 Exchange Act means  the  Securities  Exchange Act of 1934, as
amended.

Section 2.14  Exercise Price means the price per Share  at  which  Shares
subject  to  an  Option  may  be  purchased upon ex-ercise of the Option,
determined in accordance with section 5.4.

Section 2.15  Fair Market Value means,  with  respect  to  a  Share  on a
specified date:

PAGE 4

(a)the final reported sales price on the date in question (or if there is
no  reported  sale  on such date, on the last preceding date on which any
reported  sale  occurred)  as  reported  in  the  principal  consolidated
reporting system with respect to securities listed or admitted to trading
on the principal  United  States  securities exchange on which the Shares
are listed or admitted to trading; or

(b)if  the Shares are not listed or  admitted  to  trading  on  any  such
exchange,  the closing bid quotation with respect to a Share on such date
on the National  Association  of  Securities Dealers Automated Quotations
System, or, if no such quotation is  provided, on another similar system,
selected by the Committee, then in use; or

(c)if sections 2.15(a) and (b) are not  applicable, the fair market value
of a Share as the Committee may determine.

Section 2.16  Family Member means the spouse, parent, child or sibling of
an Eligible Director or Eligible Employee.

Section 2.17  Incentive Stock Option means  a  right  to  purchase Shares
that  is granted to Eligible Employees pursuant to section 6.1,  that  is
des-ignated by the Committee to be an Incentive Stock Op-tion and that is
intended to satisfy the requirements of section 422 of the Code.

Section  2.18   Non-Profit  Organization  means any organization which is
exempt from federal income tax under section  501(c)(3),  (4),  (5), (6),
(7), (8) or (10) of the Internal Revenue Code.

Section  2.19 Non-Qualified Stock Option means a right to purchase  Shares
that is granted  pursuant to section 5.1 or 6.1.  For Eligible Employees,
an Option will be  a  Non-Qualified  Stock  Option  if (a) it is not des-
ignated by the Committee to be an Incentive Stock Option,  or (b) it does
not satisfy the requirements of section 422 of the Code.

Section  2.20  Option means either an Incentive Stock Option  or  a  Non-
Qualified Stock Option.

Section 2.21   Option  Period means the period during which an Option may
be exercised, de-termined in accordance with section 5.3 and 6.4.

Section 2.22OTS Regulations means the regulations issued by the Office of
Thrift Supervision and applicable to the Plan, the Bank or the Company.

Section 2.23  Person means  an  individual,  a  corpora-tion,  a  bank, a
savings bank, a savings and loan association, a financial institution,  a
partnership,  an  association, a joint-stock company, a trust, an estate,
an unincorporated organization  and  any  other  business organization or
institution.

PAGE 5

Section 2.24 Plan means the Dime Community Bancorp, Inc. 1996 Stock Option
Plan for Outside Directors, Officers and Employees,  as amended from time
to time.

Section 2.25Retirement means retirement at or after the  normal  or early
retirement  date  set  forth in any tax-qualified retirement plan of  the
Bank.

Section 2.26  Share means  a  share  of  Common Stock, par value $.01 per
share, of Dime Community Bancorp, Inc.

Section 2.27  Termination for Cause means one of the following:

(a)for an Eligible Employee who is not an officer or employee of any bank
or  savings institution regulated by the Office  of  Thrift  Supervision,
"Termination for Cause" means termination of employment with the Employer
upon   the  occurrence  of  any  of  the  following:   (i)  the  employee
intentionally  engages  in  dishonest  conduct  in  connection  with  his
performance of services for the Employer resulting in his conviction of a
felony;  (ii)  the  employee  is  convicted  of, or pleads guilty or nolo
contendere to, a felony or any crime involving moral turpitude; (iii) the
employee  willfully  fails or refuses to perform  his  duties  under  any
employment or retention  agreement  and  fails to cure such breach within
sixty (60) days following written notice thereof  from the Employer; (iv)
the employee breaches his fiduciary duties to the Employer  for  personal
profit;  or  (v)  the  employee's willful breach or violation of any law,
rule or regulation (other  than  traffic violations or similar offenses),
or final cease and desist order in  connection  with  his  performance of
services for the Employer;

(b)for an Eligible Employee who is an officer or employee of  a  bank  or
savings  institution  regulated  by  the  Office  of  Thrift Supervision,
"Termination  for  Cause" means termination of employment  for   personal
dishonesty, incompetence,  willful  misconduct,  breach of fiduciary duty
involving personal profit, intentional failure to  perform stated duties,
willful  violation  of  any law, rule or regulation (other  than  traffic
violations or similar offenses)  or  final cease and desist order, or any
material  breach of this Agreement, in  each  case  as  measured  against
standards generally  prevailing  at  the relevant time in the savings and
community  banking industry;  provided,  however,  that  such  individual
shall not be deemed to have been discharged for cause unless and until he
shall have received a written notice of termination from the Board, which
notice shall be given to such individual not later than five (5) business
days after the  board  of  directors of the Employer adopts, and shall be
accompanied by, a resolution  duly  approved  by  affirmative  vote  of a
majority  of  the  entire board of directors of the Employer at a meeting
called and held for  such  purpose  (which meeting shall be held not less
than fifteen (15) days nor more than thirty (30) days after notice to the
individual), at which meeting there shall  be  a reason-able oppor-tunity
for the individual to make oral and written presentations  to the members
of the board of directors of the Employer, on his own behalf,  or through
a  repre-sentative,  who  may be his legal counsel, to refute the grounds
for the proposed determination) finding that in the good faith opinion of
the board of directors of the  Employer grounds exist for discharging the
individual for cause.

PAGE 6

                            ARTICLE III

                         AVAILABLE SHARES

Section 3.1              Available Shares.

Subject  to section 8.3, the maximum  aggregate  number  of  Shares  with
respect to which Options may be granted at any time shall be equal to the
excess of:

(a) 1,454,750 Shares; over

(b) the sum of:

(i)the num-ber of Shares with respect to which previously granted Options
may then or may in the future be exercised; plus

(ii)the number of Shares with respect to which previously granted Options
have been exer-cised.

A maximum  aggregate  of  1,018,325  Shares  may  be  granted to Eligible
Employees  and a maximum aggregate of 436,425 Shares may  be  granted  to
Eligible Directors.   For  purposes  of this section 3.1, an Option shall
not be considered as having been exercised to the extent that such Option
terminates by reason other than the purchase of related Shares; provided,
however, that for purposes of meeting  the requirements of section 162(m)
of the Code, no Eligible Employee who is a covered employee under section
162(m) of the Code shall receive a grant  of  Options  in  excess  of the
amount  specified under this section 3.1, computed as if any Option which
is cancelled reduced the maximum number of Shares.

                            ARTICLE IV

                          ADMINISTRATION

Section 4.1                 Committee.

The Plan  shall  be  administered  by  the  members  of  the Compensation
Committee  of  Dime  Community Bancorp, Inc. who are Disinterested  Board
Members.  If the Committee consists of fewer than two Disinterested Board
Members, then the Board  shall  appoint to the Commit-tee such additional
Disinterested Board Members as shall  be  nec-es-sary  to  provide  for a
Committee con-sisting of at least two Disinterested Board Members.

PAGE 7

Section 4.2              Committee Action.

The Committee shall hold such meetings, and may make such administra-tive
rules and regulations, as it may deem proper.  A majority of the mem-bers
of  the Committee shall constitute a quorum, and the action of a majority
of the  members  of the Committee present at a meet-ing at which a quorum
is present, as well  as  actions taken pursu-ant to the unanimous written
consent of all of the members of the Committee without holding a meeting,
shall be deemed to be ac-tions  of  the  Commit-tee.   All actions of the
Committee  shall  be final and conclusive and shall be binding  upon  the
Company and all other  inter-ested  parties.  Any Person dealing with the
Committee shall be fully protected in  relying  upon  any written notice,
in-struc-tion, direction or other communication signed  by the secre-tary
of the Committee and one member of the Committee, by two  members  of the
Committee or by a representative of the Committee authorized to sign  the
same in its behalf.

Section 4.3         Committee Responsibilities.

Subject  to  the terms and conditions of the Plan and such limitations as
may be imposed from time to time by the Board, the Committee shall be re-
sponsible for  the overall management and administra-tion of the Plan and
shall have such  authority  as  shall  be  neces-sary or ap-pro-priate in
order to carry out its responsibilities, including,  without  limitation,
the authority:

(a)to  interpret  and  construe the Plan, and to deter-mine all questions
that may arise under the  Plan as to eligibility for participation in the
Plan, the number of Shares subject to the Options, if any, to be granted,
and the terms and conditions thereof;

(b)to  adopt  rules and regulations  and  to  pre-scribe  forms  for  the
operation and administration of the Plan; and

(c)to take any  other  action not inconsistent with the provisions of the
Plan that it may deem neces-sary or appropriate.

                             ARTICLE V

               STOCK OPTIONS FOR ELIGIBLE DIRECTORS

Section 5.1                 In General.

(a)On the Effective Date,  each  Eligible  Director  shall  be granted an
Option to purchase 39,675 Shares.

PAGE 8

(b)Any  Op-tion  granted under this section 5.1 shall be evidenced  by  a
written agreement which shall specify the number of Shares covered by the
Op-tion, the Exercise  Price for the Shares subject to the Option and the
Option Period, all as determined  pursuant to this Article V.  The Option
agreement shall also set forth specifically  or incorporate by ref-erence
the applicable provisions of the Plan.

Section 5.2               Exercise Price.

The price per Share at which an Option granted  to  an  Eligible Director
under section 5.1 may be exercised shall be the Fair Market  Value  of  a
Share on the date on which the Option is granted.

Section 5.3               Option Period.

(a)Subject  to  section  5.3(b), the Option Period during which an Option
granted to an Eligible Director  under section 5.1 may be exercised shall
commence  on the date the Option is  granted  and  shall  expire  on  the
earlier of:

(i) removal for cause in accordance with the Employer's bylaws; or

(ii)the last  day  of the ten-year period commencing on the date on which
the Option was granted.

(b)During the Option  Period,  the  maximum  number Shares as to which an
outstanding Option may be exercised shall be as follows:

(i)prior  to  the first anniversary of the date  on  which  the  Plan  is
approved by shareholders pursuant to section 9.8, the Option shall not be
exercisable;

(ii)on  and  after  the  first  anniversary,  but  prior  to  the  second
anniversary, of  the  date  on which the Plan is approved by shareholders
pursuant to section 9.8, the  Option  may be exercised as to a maximum of
twenty percent (20%) of the Shares subject to the Option;

(iii)on  and  after  the  second anniversary,  but  prior  to  the  third
anniversary, of the date on  which  the  Plan is approved by shareholders
pursuant to section 9.8, the Option may be  exercised  as to a maximum of
forty  percent (40%) of the Shares subject to the Option,  when  granted,
including  in  such  number  any  optioned Shares purchased prior to such
second anniversary;

(iv)on  and  after  the  third  anniversary,  but  prior  to  the  fourth
anniversary, of the date on which  the  Plan  is approved by shareholders
pursuant to section 9.8, the Option may be exercised  as  to a maximum of
sixty  percent  (60%) of the Shares subject to the Option, when  granted,
including in such  number  any  optioned  Shares  purchased prior to such
third anniversary;

PAGE 9

(v)on  and  after  the  fourth  anniversary,  but  prior  to   the  fifth
anniversary,  of  the  date on which the Plan is approved by shareholders
pursuant to section 9.8,  the  Option may be exercised as to a maximum of
eighty percent (80%) of the Shares  subject  to the Option, when granted,
including  in  such number any optioned Shares purchased  prior  to  such
fourth anniversary; and

(vi)on and after  the  fifth anniversary of the date on which the Plan is
approved by shareholders pursuant to section 9.8 and for the remainder of
the Option Period, the Option may be exercised as to the entire number of
optioned Shares not theretofore purchased;

provided, however, that  such  an  Option shall become fully exercisable,
and all optioned Shares not previously  purchased  shall become available
for purchase, on the date of the Option holder's death  or  Disability or
Retirement or the date of a Change in Control.

                            ARTICLE VI

               STOCK OPTIONS FOR ELIGIBLE EMPLOYEES

Section 6.1               Size of Option.

Subject  to  sections  6.2 and 6.5 and such limitations as the Board  may
from time to time impose,  the  number  of Shares as to which an Eligible
Employee may be granted Options shall be  determined by the Committee, in
its discretion.  Except as provided in section 6.5, the maximum number of
Shares that may be optioned to any one individual  under this Plan during
its entire duration shall be the entire number of Shares  available under
section 3.1 of the Plan.

Section 6.2              Grant of Options.

(a)Subject  to  the  limitations of the Plan, the Committee may,  in  its
discretion, grant to an  Eli-gible Employee an Option to purchase Shares.
The Option for such Eligible  Employees  must  be designated as either an
Incentive  Stock  Option  or a Non-Qualified Stock  Option  and,  if  not
designated as either, shall be a Non-Qualified Stock Option.

(b)Any Option granted under  this  section  6.2  shall  be evidenced by a
written agreement which shall:

(i)    specify the number of Shares covered by the Option;

PAGE 10

(ii)specify the Exercise Price, determined in accordance  with  section
6.3, for the Shares subject to the Option;

(iii)specify  the  Option  Period  determined in accordance with sec-tion
6.4;

(iv)set forth specifically or incorporate  by  ref-erence  the applicable
provisions of the Plan; and

(v)contain  such  other terms and conditions not inconsistent  with  the
Plan as the Com-mittee  may, in its discretion, prescribe with respect to
an Option granted to an Eligible Employee.

Section 6.3               Exercise Price.

The price per Share at which  an  Option  granted to an Eligible Employee
shall  be  determined  by the Com-mittee, in its  discretion;  provid-ed,
however, that the Exercise  Price  shall not be less than the Fair Market
Value of a Share on the date on which the Option is granted.

Section 6.4               Option Period.

Subject to section 6.5, the Option Period  during which an Option granted
to  an  Eligible Employee may be exercised shall  commence  on  the  date
specified  by  the Committee in the Op-tion agreement and shall expire on
the date specified  in  the Option agreement or, if no date is specified,
on the earliest of:

(a)the close of business  on  the  last  day  of  the  three-month period
commencing  on  the  date  of  the  Eligible  Employee's  termination  of
employment  with  the  Employer,  other  than  on  account  of  death  or
Disability, Retirement or a Termination for Cause;

(b)the  close  of  business  on  the  last  day  of  the  one-year period
commencing  on  the  date  of  the  Eligible  Employee's  termination  of
employment due to death, Disa-bility or Retirement;

(c)the date and time when the Eligible Employee ceases to be  an employee
of the Employer due to a Termination for Cause; and

(d)the  last  day of the ten-year period commencing on the date on  which
the Option was granted.

Section 6.5       Required Regulatory Provisions.

Notwithstanding anything contained herein to the contrary:

PAGE 11

(a)no Option shall  be  granted  to  an  Eligible Employee under the Plan
prior to shareholder approval under section 9.8;

(b)no  Eligible Employee may be granted Options  to  purchase  more  than
363,687  Shares;  provided,  however,  that  an  Eligible Employee may be
granted Options to purchase more Shares if such grant is not inconsistent
with section 563b.3(g) of the OTS Regulations.

(c)each Option granted to an Eligible Employee shall  become  exercisable
as follows:

(i)prior  to  the  first  anniversary  of  the date on which the Plan  is
approved by shareholders pursuant to section 9.8, the Option shall not be
exercisable;

(ii)on  and  after  the  first  anniversary,  but  prior  to  the  second
anniversary,  of the date on which the Plan is approved  by  shareholders
pursuant to section  9.8,  the Option may be exercised as to a maximum of
twenty percent (20%) of the Shares subject to the Option when granted;

(iii)on  and  after  the second  anniversary,  but  prior  to  the  third
anniversary, of the date  on  which  the Plan is approved by shareholders
pursuant to section 9.8, the Option may  be  exercised as to a maximum of
forty  percent (40%) of the Shares subject to the  Option  when  granted,
including in such forty percent (40%) any optioned Shares purchased prior
to such second anniversary;

(iv)on  and  after  the  third  anniversary,  but  prior  to  the  fourth
anniversary,  of  the  date on which the Plan is approved by shareholders
pursuant to section 9.8,  the  Option may be exercised as to a maximum of
sixty percent (60%) of the Shares  subject  to  the  Option when granted,
including in such sixty percent (60%) any optioned Shares purchased prior
to such third anniversary;

(v)on  and  after  the  fourth  anniversary,  but  prior  to  the   fifth
anniversary,  of  the  date on which the Plan is approved by shareholders
pursuant to section 9.8,  the  Option may be exercised as to a maximum of
eighty percent (80%) of the Shares  subject  to  the Option when granted,
including  in  such  eighty percent (80%) any optioned  Shares  purchased
prior to such fourth anniversary; and

(vi)on and after the fifth  anniversary  of the date on which the Plan is
approved by shareholders pursuant to section 9.8 and for the remainder of
the Option Period, the Option may be exercised as to the entire number of
optioned Shares not theretofore purchased;

PAGE 12

provided, however, that such an Option shall  become  fully  exercisable,
and  all optioned Shares not previously purchased shall become  available
for purchase,  on  the date of the Option holder's death or Disability or
Retirement or the date  of  a  Change  in Control; and provided, further,
that the Committee may establish a different  vesting  schedule  for  any
Options.

(d)The  Option  Period  of  any  Option  granted  to an Eligible Employee
hereunder, whether or not previously vested, shall be suspended as of the
time  and date at which the Option holder has received  notice  from  the
Board that his or her employment is subject to a possible Termination for
Cause.   Such  suspension  shall remain in effect until the Option holder
receives official notice from  the  Board that he or she has been cleared
of  any  possible Termination for Cause,  at  which  time,  the  original
Exercise Period  shall  be  reinstated  without  any  adjustment  for the
intervening suspended period.  In the event that the Option Period  under
section 6.4 expires during such suspension, the Company shall pay to  the
Eligible  Employee, within 30 days after his reinstatement as an employee
of the Company,  damages  equal  to the value of the expired Options less
the Exercise Price of such Options.

(e)No Option granted to an Eligible  Employee  hereunder,  whether or not
previously  vested, shall be exercised after the time and date  at  which
the Option holder's  employment  with  the  Employer  is  terminated in a
Termination for Cause.

Section 6.6 Additional Restrictions on Incentive Stock Options.

In addition to the limitations of section 7.3, an Op-tion granted  to  an
Eligible  Employee  designated  by the Committee to be an Incentive Stock
Op-tion shall be subject to the following limitations:

(a)If, for any calendar year, the  sum of (i) plus (ii) exceeds $100,000,
where (i) equals the Fair Market Value  (determined as of the date of the
grant) of Shares subject to an Option intended  to  be an Incentive Stock
Option which first be-come available for purchase during  such  cal-endar
year, and (ii) equals the Fair Market Value (determined as of the date of
grant)  of  Shares  subject to any other options intended to be Incentive
Stock Options and previously  granted to the same Eligible Employee which
first become exercisable in such  calendar  year,  then  that  number  of
Shares  optioned  which causes the sum of (i) and (ii) to exceed $100,000
shall be deemed to  be  Shares optioned pursuant to a Non-Qualified Stock
Option or Non-Qualified Stock  Options, with the same terms as the Option
or Options intended to be an Incentive Stock Option;

(b)The Exercise Price of an Incentive Stock Option granted to an Eligible
Employee who, at the time the Option  is  granted, owns Shares comprising
more than 10% of the total combined voting  power of all classes of stock
of the Company shall not be less than 110% of  the Fair Market Value of a
Share, and if an Option designated as an Incentive  Stock Option shall be
granted at an Exercise Price that does not satisfy this  requirement, the
designated  Exercise  Price  shall  be observed and the Option  shall  be
treated as a Non-Qualified Stock Option;

PAGE 13

(c)The Option Period of an Incentive  Stock Option granted to an Eligible
Employee who, at the time the Option is  granted,  owns Shares comprising
more than 10% of the total combined voting power of  all classes of stock
of the Company, shall expire no later than the fifth anniversary  of  the
date  on  which the Option was granted, and if an Option designated as an
Incentive Stock  Option  shall  be granted for an Option Period that does
not  satisfy this requirement, the  designated  Option  Period  shall  be
observed and the Option shall be treated as a Non-Qualified Stock Option;

(d)An  Incentive  Stock  Option  that  is exercised during its designated
Option Period but more than:

(i)three (3) months after the termination of employment with the Company,
a parent or a subsidiary (other than on  account of disability within the
meaning  of  section  22(e)(3)  of the Code or  death)  of  the  Eligible
Employee to whom it was granted; and

(ii)one (1) year after such individual's  termination  of employment with
the  Company,  a  parent  or a subsidiary due to disability  (within  the
meaning of section 22(e)(3) of the Code);

may be exercised in accordance  with  the  terms but shall at the time of
exercise be treated as a Non-Qualified Stock Option; and

(e)Except  with  the  prior  written  approval  of   the  Com-mittee,  no
individual shall dispose of Shares acquired pursuant to  the  exercise of
an  Incentive  Stock  Option  until  after  the  later  of (i) the second
anniversary of the date on which the Incentive Stock Option was gran-ted,
or  (ii)  the  first  an-niversary  of the date on which the Shares  were
acquired.

                            ARTICLE VII

                       OPTIONS - IN GENERAL

Section 7.1             Method of Exercise.

(a)  Subject to the limitations of the  Plan and the Option agreement, an
Option holder may, at any time during the  Option Period, exercise his or
her right to purchase all or any part of the  Shares  to which the Option
relates; provided, however, that the minimum number of  Shares  which may
be  purchased at any time shall be 100, or, if less, the total number  of
Shares relating to the Option which remain unpurchased.  An Option holder
shall exercise an Option to purchase Shares by:

PAGE 14

(i)giving written notice to the Committee, in such form and manner as the
Committee may prescribe, of his intent to exercise the Option;

(ii)delivering  to  the  Committee  full payment, consistent with section
7.1(b), for the Shares as to which the Option is to be exercised; and

(iii)satisfying such other conditions as may be pre-scribed in the Option
agreement.

(b)The Exercise Price of Shares to be  purchased  upon  ex-ercise  of any
Option shall be paid in full in cash (by certi-fied or bank check or such
other  instrument  as  the  Company  may accept) or, if and to the extent
permitted by the Committee, by one or  more of the following:  (i) in the
form of Shares already owned by the Option  holder  having  an  aggregate
Fair  Market  Value  on  the  date  the  Option is exercised equal to the
aggregate Exercise Price to be paid; (ii)  by  requesting  the Company to
cancel without payment Options outstanding to such Person for that number
of Shares whose aggregate Fair Market Value on the date of exercise, when
reduced by their aggregate Exercise Price, equals the aggregate  Exercise
Price  of the Options being exercised; or (iii) by a combination thereof.
Payment  for  any  Shares  to be purchased upon exercise of an Option may
also be made by deliver-ing  a  properly  executed exercise notice to the
Company, to-gether with a copy of irrevocable instructions to a broker to
deliver promptly to the Company the amount  of  sale  or loan proceeds to
pay the purchase price.  To facilitate the fore-going,  the  Company  may
enter  into  agreements  for  coordinated  procedures  with  one  or more
brokerage firms.

(c)When  the  requirements of section 7.1(a) and (b) have been satisfied,
the Committee shall  take  such  action  as  is  necessary  to  cause the
issuance  of a stock certificate evidencing the Option holder's ownership
of such Shares.   The Person exercising the Option shall have no right to
vote or to receive  dividends, nor have any other rights with re-spect to
the Shares, prior to  the date as of which such Shares are transferred to
such  Person  on the stock  transfer  records  of  the  Company,  and  no
adjustments shall be made for any dividends or other rights for which the
record date is  prior  to the date as of which such transfer is effected,
ex-cept as may be required under section 8.3.

Section 7.2           Limitations on Options.

(a)An Option by its terms  shall not be transferable by the Option holder
other than to Family Members or Non-profit Organizations or by will or by
the laws of descent and distribution and shall be exercisable, during the
lifetime of the Option holder, only by the Option holder, a Family Member
or a Non-profit Organization.   Any  such  transfer  shall be effected by
written  notice  to  the  Company  given in such form and manner  as  the
Committee may prescribe and shall be  recognized  only  if such notice is
received  by  the  Company  prior to the death of the person  giving  it.
Thereafter, the transferee shall  have,  with respect to such Option, all
of the rights, privileges and obligations  which  would attach thereunder
to  the transferor if the Option were issued to such  transferor.   If  a
privilege  of  the Option depends on the life, employment or other status
of the transferor,  such privilege of the Option for the transferee shall
continue to depend on  the  life,  employment  or  other  status  of  the
transferor.   The  Committee  shall  have full and exclusive authority to
interpret and apply the provisions of  this  Plan  to  transferees to the
extent not specifically described herein.  Notwithstanding the foregoing,
an  Incentive  Stock  Option is not transferable by an Eligible  Employee
other than by will or the  laws  of  descent  and  distribution,  and  is
exercisable, during his lifetime, solely by him.

PAGE 15

(b)   The  Company's  obligation  to  deliver  Shares with re-spect to an
Option  shall,  if  the Committee so requests, be condi-tioned  upon  the
receipt of a representation as to the investment inten-tion of the Option
holder to whom such Shares  are  to  be  de-liv-ered, in such form as the
Committee shall determine to be nec-essary  or  advisable  to comply with
the  provisions of applica-ble federal, state or local law.   It  may  be
provided  that  any  such  representation shall become inoperative upon a
registra-tion of the Shares  or  upon  the  occurrence of any other event
eliminat-ing the necessity of such representation.  The Company shall not
be  required  to  deliver  any Shares under the Plan  prior  to  (i)  the
admission of such Shares to listing on any stock exchange on which Shares
may then be listed, or (ii)  the completion of such registration or other
qualification under any state  or  federal law, rule or regulation as the
Committee shall determine to be necessary or advisable.

                           ARTICLE VIII

                     AMENDMENT AND TERMINATION

Section 8.1                Termination.

The Board may suspend or terminate the  Plan  in  whole or in part at any
time  prior  to  the tenth anniversary of the Effective  Date  by  giving
written notice of  such  sus-pension  or  ter-mination to the Commit-tee.
Unless soon-er termi-nated, the Plan shall terminate automatically on the
day preceding the tenth anniversary of the  Effective Date.  In the event
of  any suspension or termination of the Plan,  all  Options  theretofore
granted  under  the  Plan  that  are  outstanding  on  the  date  of such
suspension  or  termination  of  the  Plan  shall  remain outstanding and
exercisable for the period and on the terms and conditions  set  forth in
the Option agreements evidencing such Options.

Section 8.2                 Amendment.

The  Board may amend or revise the Plan in whole or in part at any  time;
provided,  however,  that,  to the extent required to comply with section
162(m) of the Code, no such amendment  or  revision shall be effective if
it amends a material term of the Plan unless approved by the holders of a
majority of the voting Shares of Dime Community Bancorp, Inc.

PAGE 16

Section 8.3 Adjustments in the Event of a Business Reorganization.

(a)In  the  event  of  any  merger,  consolidation,   or  other  business
reorganization in which the Company is the sur-viving entity,  and in the
event  of  any  stock  split,  stock  dividend  or  other event generally
affecting the num-ber of Shares held by each Person who  is then a holder
of record of Shares, the number of Shares covered by each outstanding Op-
tion and the number of Shares available pursuant to section  3.1 shall be
ad-justed to account for such event.  Such adjust-ment shall be  effected
by multi-plying such number of Shares by an amount equal to the
num-ber  of Shares that would be owned after such event by a Person  who,
immediately  prior  to such event, was the holder of record of one Share,
and the Exercise Price  of  the Options shall be adjusted by dividing the
Exercise Price by such number  of  Shares;  provided,  however,  that the
Committee  may,  in its discretion, establish another appro-priate method
of adjustment.

(b)In  the  event  of   any  merger,  consolidation,  or  other  business
reorganization in which the  Company  is  not  the  surviving entity, any
Options granted under the Plan which remain outstanding  may be cancelled
as  of  the  effective  date  of  such  merger,  consolidation,  business
reorganization,  liquidation  or  sale by the Board upon 30 days' written
notice to the Option holder; provided,  however,  that  on  or as soon as
practicable following the date of cancellation, each Option holder  shall
receive a monetary payment in such amount, or other property of such kind
and  value,  as  the  Board  determines in good faith to be equivalent in
value to the Options that have been cancelled.

(c)In the event that the Company  shall declare and pay any dividend with
respect to Shares (other than a dividend payable in Shares) which results
in a nontaxable return of capital to  the  holders  of Shares for federal
income tax purposes or otherwise than by dividend makes  distribution  of
property  to  the  holders  of  its  Shares,  the  Company  shall, in the
discretion of the Committee, either:

(i)  make  an  equivalent  payment  to each Person holding an outstanding
Option as of the record date for such  dividend.  Such  payment  shall be
made  at substantially the same time, in substantially the same form  and
in substantially  the  same  amount per optioned Share as the dividend or
other distribution paid with respect  to  outstanding  Shares;  provided,
however,  that  if any dividend or distribution on outstanding Shares  is
paid in property  other  than  cash,  the  Company,  in  the  Committee's
discretion,  may  make  such payment in a cash amount per optioned  Share
equal in fair market value  to  the  fair  market  value  of the non-cash
dividend or distribution; or

(ii)adjust the Exercise Price of each outstanding Option in  such  manner
as the Committee may determine to be appropriate to equitably reflect the
payment of the dividend: or

PAGE 17

(iii)take  the action described in section 8.3(c) with respect to certain
outstanding  Options  and  the  action  described  in with respect to the
remaining outstanding Options;

provided,  however,  that  no  such  action  shall be taken  without  the
approval of the Office of Thrift Supervision until  the  stockholders  of
the  Company  have voted to approve the provisions of this section 8.3(c)
in a vote taken after June 26, 1997.

                            ARTICLE IX

                           MISCELLANEOUS

Section 9.1     Status as an Employee Benefit Plan.

This Plan is not  intended  to  satisfy the requirements for qua-lifi-ca-
tion under sec-tion 401(a) of the  Code  or  to satisfy the defini-tional
re-quire-ments for an "employee benefit plan"  under  section 3(3) of the
Employee  Retirement  Income  Security  Act of 1974, as amended.   It  is
intended to be a non-qualified incentive  compen-sation  program  that is
exempt  from  the  regulatory  require-ments  of  the Employee Retirement
Income Security Act of 1974, as amended.  The Plan shall be construed and
administered so as to effectuate this intent.

Section 9.2      No Right to Continued Employment.

Nei-ther the establishment of the Plan nor any provi-sions  of  the  Plan
nor  any  action  of  the Board or the Committee with respect to the Plan
shall be held or construed  to  confer  upon  any  Eligible  Director  or
Eligible Employee any right to a continuation of his or her position as a
director  or employee of the Company.  The Employers reserve the right to
remove  any  Eligible  Director  or  dismiss  any  Eligible  Employee  or
otherwise  deal  with  any  Eligible Director or Eligible Employee to the
same extent as though the Plan had not been adopt-ed.

Section 9.3          Construction of Language.

Whenever ap-propriate in the Plan, words used in the singular may be read
in the plural, words used in  the plural may be read in the singular, and
words importing the masculine gender  may be read as referring equally to
the feminine or the neuter.  Any reference  to  an  Arti-cle  or  section
number shall refer to an Article or section of this Plan unless otherwise
indicated.

PAGE 18

Section 9.4               Governing Law.

The Plan shall be con-strued, administered and enforced according to  the
laws  of  the  State of New York without giving effect to the conflict of
laws principles  thereof,  except  to  the  extent  that  such  laws  are
preempted  by  federal  law.   The Plan shall be construed to comply with
applicable OTS Regulations.

Section 9.5                  Headings.

The headings of Articles and sections are included solely for convenience
of reference.  If there is any conflict  between  such  headings  and the
text of the Plan, the text shall control.

Section 9.6         Non-Alienation of Benefits.

The right to receive a benefit under the Plan shall not be subject in any
man-ner to anticipation, alienation or assign-ment, nor shall such  right
be  liable  for or subject to debts, contracts, liabilities, engage-ments
or torts, except to the extent provided in a qualified domestic relations
order as defined in section 414(p) of the Code.

Section 9.7                   Taxes.

The Company shall  have the right to de-duct from all amounts paid by the
Company in cash with  respect  to an Op-tion under the Plan any taxes re-
quired by law to be withheld with  respect  to  such  Option.   Where any
Person  is  entitled  to  re-ceive Shares pursuant to the exercise of  an
Option, the Company shall have  the  right to re-quire such Person to pay
the  Company  the amount of any tax which  the  Company  is  required  to
withhold with respect  to such Shares, or, in lieu thereof, to retain, or
to sell without no-tice,  a  suffi-cient  num-ber  of Shares to cover the
amount re-quired to be with-held.

Section 9.8          Approval of Shareholders.

The  Plan  shall  not  be  effective  or implemented unless  approved  by
shareholders of Dime Community Bancorp, Inc. as follows:

(1)if,  prior  to the one year anniversary  of  the  conversion  of  Dime
Community Bancorp,  Inc.  to  stock  form,  the  Plan  is approved by the
holders of a majority of the total votes eligible to be  cast at any duly
called  annual  or  special  meeting  of the Company, the Plan  shall  be
effective as of the later of (a) December  26,  1996  or  (b) the date of
such approval; and

PAGE 19

(2)if subsequent to the one year anniversary of such conversion, the Plan
is  approved  by  the  affirmative  vote of the holders of a majority  of
Shares present or represented by proxy  at  the  meeting  and entitled to
vote  at  an annual or special meeting at which a quorum is present,  the
Plan shall  be effective as of the later of (a) June 26, 1997, or (b) the
date of such approval.

Shareholder approval  shall  not  be  obtained  earlier  than  six months
following  such  conversion  unless  permitted  by  the  Office of Thrift
Supervision.  No Option shall be granted prior to shareholder approval of
the Plan.

Section 9.9                  Notices.

Any  communication  required  or permit-ted to be given under  the  Plan,
including  any  notice,  direction,  designation,  comment,  instruction,
objection or waiver, shall be in writing and shall be deemed to have been
given at such time as it is  delivered  personally or five (5) days after
mailing  if mailed, postage prepaid, by registered  or  cer-tified  mail,
return receipt  requested, addressed to such party at the ad-dress listed
below, or at such  other  address as one such party may by written notice
specify to the other party:

(a)                    If to the Committee:

Dime Community Bancorp, Inc.
c/o The Dime Savings Bank of Williamsburgh
209 Havemeyer Street
Brooklyn, New York  11211

Attention:  Corporate Secretary

(b)If to an Option holder, to the Option holder's address as shown in the
Employer's re-cords.

                RECOGNITION AND RETENTION PLAN FOR

             OUTSIDE DIRECTORS, OFFICERS AND EMPLOYEES

                             OF

                     DIME COMMUNITY BANCORP, INC.

                  ______________________________

                    ADOPTED ON OCTOBER 8, 1996
                 EFFECTIVE AS OF DECEMBER 26, 1996
                INCORPORATING AMENDMENT NO. 1 AND 2

                         TABLE OF CONTENTS
                                                            PAGE

ARTICLE I PURPOSE

Section 1.1 General Purpose of the Plan                          1

ARTICLE II DEFINITIONS

Section 2.1 Award                                                1
Section 2.2 Award Date                                           1
Section 2.3 Bank                                                 1
Section 2.4 Beneficiary                                          1
Section 2.5 Board                                                1
Section 2.6 Change of Control                                    2
Section 2.7 Code                                                 3
Section 2.8 Committee                                            3
Section 2.9 Company                                              3
Section 2.10 Disability                                          3
Section 2.11 Disinterested Board Member                          3
Section 2.12 Effective Date                                      3
Section 2.13 Eligible Director                                   3
Section 2.14 Eligible Employee                                   3
Section 2.15 Employer                                            3
Section 2.16 Exchange Act                                        3
Section 2.17 OTS Regulations                                     4
Section 2.18 Person                                              4
Section 2.19 Plan                                                4
Section 2.20 Retirement                                          4
Section 2.21 Share                                               4
Section 2.22 Trust                                               4
Section 2.23 Trust Agreement                                     4
Section 2.24 Trust Fund                                          4
Section 2.25 Trustee                                             4

ARTICLE III SHARES AVAILABLE UNDER PLAN

Section 3.1 Shares Available Under Plan                          5

PAGE (i)

ARTICLE IV ADMINISTRATION

Section 4.1 Committee                                            5
Section 4.2 Committee Action                                     5
Section 4.3 Committee Responsibilities                           5

ARTICLE V THE TRUST FUND

Section 5.1 Contributions                                        6
Section 5.2 The Trust Fund                                       6
Section 5.3 Investments                                          6

ARTICLE VI AWARDS

Section 6.1 To Eligible Directors                                7
Section 6.2 To Eligible Employees                                7
Section 6.3 Awards in General                                    7
Section 6.4 Share Allocations                                    8
Section 6.5 Dividend Rights                                      8
Section 6.6 Voting Rights                                        8
Section 6.7 Tender Offers                                        9
Section 6.8 Limitations on Awards                                9

ARTICLE VII VESTING AND DISTRIBUTION OF SHARES

Section 7.1 Vesting of Shares Granted to Eligible Directors      10
Section 7.2 Vesting of Shares Granted to Eligible Employees      11
Section 7.3 Designation of Beneficiary                           11
Section 7.4 Manner of Distribution                               11
Section 7.5 Taxes                                                12

ARTICLE VIII AMENDMENT AND TERMINATION

Section 8.1 Termination                                          12
Section 8.2 Amendment                                            12

PAGE (iii)

Section 8.3 Adjustments in the Event of a Business Reorganization12

ARTICLE IX MISCELLANEOUS

Section 9.1 Status as an Employee Benefit Plan                   13
Section 9.2 No Right to Continued Employment                     13
Section 9.3 Construction of Language                             14
Section 9.4 Governing Law                                        14
Section 9.5 Headings                                             14
Section 9.6 Non-Alienation of Benefits                           14
Section 9.7 Notices                                              14
Section 9.8 Approval of Shareholders                             15

PAGE (iii)

RECOGNITION  AND  RETENTION  PLAN  FOR  OUTSIDE  DIRECTORS,  OFFICERS AND
EMPLOYEES OF DIME COMMUNITY BANCORP, INC.

                             ARTICLE I

                              PURPOSE

          SECTION . GENERAL PURPOSE OF THE PLAN

          The   purpose  of  the  Plan  is  to  promote  the  growth  and
profitability of  Dime  Community  Bancorp,  Inc. and to provide eligible
directors, certain key officers and employees  of Dime Community Bancorp,
Inc. with an incentive to achieve corporate objectives,  to  at-tract and
retain  directors,  key  officers and employees of outstanding competence
and to provide such directors,  officers  and  employees  with  an equity
interest in Dime Community Bancorp, Inc.

               ARTICLE II

               DEFINITIONS

The  following  definitions  shall  apply  for the purposes of this Plan,
unless a different meaning is plainly indicated by the context:

Section 2.1 Award means a grant of Shares to  an  Eli-gible  Director  or
Eligible Employee pursuant to section 6.1 or 6.2.

Section  2.2  Award  Date means, with respect to a par-ticular Award, the
date specified by the  Committee in the notice of the Award issued to the
Eligible Director or Eligible  Employee  by  the  Committee,  pursuant to
section 6.1 or 6.2.

Section  2.3  Bank  means  The  Dime  Savings  Bank  of Williamsburgh,  a
federally chartered stock savings bank, and any successor thereto.

Section  2.4  Beneficiary  means  the  Person designated by  an  Eligible
Director or Eligible Employee pursuant to  section  7.3,  to receive dis-
tribution  of  any  Shares  available for distribution to such  Eli-gible
Director or Eligible Employee,  in  the  event  such Eligible Director or
Eligible Employee dies prior to receiving distribution of such Shares.

Section 2.5 Board means the Board of Directors of the Company.

PAGE 2

 Section 2.6 Change of Control means any of the following events:

(a)  the occurrence of any event upon which any "person" (as such term is
used in sections 13(d) and 14(d) of the Securities  Exchange Act of 1934,
as amended ("Exchange Act")), other than (A) a trustee or other fiduciary
holding  securities  under  an employee benefit plan maintained  for  the
benefit of employees of the Company; (B) a corporation owned, directly or
indirectly, by the stockholders  of the Company in substantially the same
proportions as their ownership of  stock of the Company; or (C) any group
constituting a person in which employees  of  the Company are substantial
members,  becomes  the  "beneficial  owner"  (as defined  in  Rule  13d-3
promulgated  under  the  Exchange  Act),  directly   or   indirectly,  of
securities issued by the Company representing 25% or more of the combined
voting power of all of the Company's then outstanding securities; or

(b)  the occurrence of any event upon which the individuals  who  on  the
date  the  Plan  is  adopted  are  members  of  the  Board, together with
individuals whose election by the Board or nomination for election by the
Company's stockholders was approved by the affirmative  vote  of at least
two-thirds  of  the  members of the Board then in office who were  either
members of the Board on the date this Plan is adopted or whose nomination
or  election  was  previously  so  approved,  cease  for  any  reason  to
constitute a majority  of  the  members  of the Board, but excluding, for
this purpose, any such individual whose initial  assumption  of office is
in  connection with an actual or threatened election contest relating  to
the election  of directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act); or

(c)  the shareholders of the Company approve either:

(i)  a merger or consolidation of the Company with any other corporation,
other  than  a merger  or  consolidation  following  which  both  of  the
following conditions are satisfied:

(A)  either (I) the members of the Board of the Company immediately prior
to such merger  or  consolidation  constitute  at least a majority of the
members  of  the governing body of the institution  resulting  from  such
merger or consolidation;  or  (II)  the  shareholders  of the Company own
securities of the institution resulting from such merger or consolidation
representing  80%  or  more  of  the  combined voting power of  all  such
securities of the resulting institution then outstanding in substantially
the  same proportions as their ownership  of  voting  securities  of  the
Company immediately before such merger or consolidation; and

(B)  the entity which results from such merger or consolidation expressly
agrees  in  writing to assume and perform the Company's obligations under
the Plan; or

PAGE 3

(ii) a plan of  complete  liquidation  of the Company or an agreement for
the sale or disposition by the Company of all or substantially all of its
assets; and

(d)  any event that would be described in  section  2.6(a), (b) or (c) if
"the Bank" were substituted for "the Company" therein.

Section 2.7 Code means the Internal Revenue Code of 1986  (includ-ing the
corresponding provisions of any succeeding law).

Section 2.8 Committee means the Committee des-cribed in section 4.1.

Section  2.9  Company  means  Dime Community Bancorp, Inc., a corporation
organized and existing under the  laws  of the State of Delaware, and any
successor thereto.

Section 2.10 Disability means a condition  of total in-capa-city, men-tal
or physical, for further performance of duty  with  the Company which the
Committee shall have deter-mined, on the basis of competent  medical evi-
dence, is likely to be per-manent.

Section 2.11 Disinterested Board Member means a member of the  Board  who
(a)  is  not  a current employee of the Company or a subsidiary, (b) does
not  receive remuneration  from  the  Company  or  a  subsidiary,  either
directly  or indirectly, in any capacity other than as a director and (c)
does not possess an interest in any other transaction, and is not engaged
in a business  relationship,  for  which  disclosure  would  be  required
pursuant  to  Item  404(a) or (b) of the proxy solicitation rules of  the
Securities and Exchange  Commission.  The term Disinterested Board Member
shall be interpreted in such  manner  as shall be necessary to conform to
the requirements of Rule 16b-3 promulgated under the Exchange Act.

Section 2.12 Effective Date means December 26, 1996.

Section 2.13 Eligible Director means a  member  of the board of directors
of the Employer who is not also an employee of the Employer.

Section 2.14 Eligible Employee means any employee  whom the Committee may
determine to be a key officer or employee of the Employer  and  select to
receive an Award pursuant to the Plan.

Section  2.15  Employer  means  the  Company,  the Bank and any successor
thereto and, with the prior approval of the Board,  and  subject  to such
terms  and  conditions  as may be imposed by the Board, any other savings
bank,  savings  and  loan  associa-tion,   bank,  corporation,  financial
institution or other business organization or  institution.  With respect
to any Eligible Employee or Eligible Director, the  Employer  shall  mean
the  entity  which  employs  such person or upon whose board of directors
such person serves.

Section 2.16 Exchange Act means  the Securities and Exchange Act of 1934,
as amended.

PAGE 4

Section 2.17 OTS Regulations means  the  regulations issued by the Office
of  Thrift  Supervision  and applicable to the  Plan,  the  Bank  or  the
Company.

Section 2.18 Person means an individual, a corporation, a bank, a savings
bank,  a  savings  and  loan  association,  a  financial  institution,  a
partnership, an association, a  joint-stock  company, a trust, an estate,
an  unincorporated  organization and any other business  organization  or
institution.

Section 2.19 Plan means  the  Recognition  and Retention Plan for Outside
Directors,  Officers  and Employees of Dime Community  Bancorp,  Inc.  as
amended from time to time.

Section 2.20 Retirement  means retirement at or after the normal or early
retirement date set forth in any tax-qualified plan of the Bank.

Section 2.21 Share means a  share  of  common  stock  of  Dime  Community
Bancorp, Inc., par value $.01 per share.

Section  2.22  Trust  means  the  legal relationship created by the Trust
Agreement pursuant to which the Trustee  holds  the  Trust Fund in trust.
The Trust may be referred to as the "Recognition and Retention Plan Trust
of Dime Community Bancorp, Inc."

Section 2.23 Trust Agreement means the agreement be-tween  Dime Community
Bancorp, Inc. and the Trustee therein named or its successor  pursuant to
which the Trust Fund shall be held in trust.

Section  2.24  Trust  Fund  means the corpus (consisting of contributions
paid over to the Trustee, and  investments  there-of),  and all earnings,
appreciations or additions thereof and thereto, held by the Trustee under
the  Trust Agreement in accor-dance with the Plan, less any  depreciation
thereof and any pay-ments made therefrom pursuant to the Plan.

Section  2.25  Trustee  means  the Trustee of the Trust Fund from time to
time in office.  The Trustee shall  serve  as Trustee until it is removed
or resigns from office and is replaced by a successor Trustee or Trustees
appointed by Dime Community Bancorp, Inc.

PAGE 5

     ARTICLE III

     SHARES AVAILABLE UNDER PLAN

Section 3.1 Shares Available Under Plan.

The  maximum  number  of  Shares under the Plan  shall  be  581,900.   An
aggregate maximum of 174,570 Shares may be granted to Eligible Directors,
with a maximum of 29,095 granted to any one Eligible Director.

     ARTICLE IV

     ADMINISTRATION

Section 4.1 Committee.

The  Plan shall be adminis-tered  by  the  members  of  the  Compensation
Committee  of  Dime  Community  Bancorp, Inc. who are Disinterested Board
Members.  If the Com-mittee consists  of  fewer  than  two Disinter-ested
Board  Members,  then  the  Board  shall  appoint to the Commit-tee  such
additional Disinterested Board Members as shall be nec-es-sary to provide
for a Committee con-sisting of at least two Disinterested Board Members.

Section 4.2 Committee Action.

The Committee shall hold such meetings, and may make such administra-tive
rules and regulations, as it may deem proper.  A majority of the mem-bers
of the Committee shall constitute a quorum,  and the action of a majority
of the members of the Committee present at a meet-ing  at  which a quorum
is  present, as well as actions taken pursu-ant to the unanimous  written
consent of all of the members of the Committee without holding a meeting,
shall  be  deemed  to  be ac-tions of the Commit-tee.  All actions of the
Committee shall be final  and  conclusive  and  shall be binding upon the
Company and all other inter-ested parties.  Any Person  dealing  with the
Committee  shall  be  fully protected in relying upon any written notice,
in-struc-tion, direction  or other communication signed by the Secre-tary
of the Committee and one member  of  the Committee, by two members of the
Committee or by a representative of the  Committee authorized to sign the
same in its behalf.

Section 4.3 Committee Responsibilities.

Subject to the terms and conditions of the  Plan  and such limitations as
may be imposed by the Board, the Committee shall be  re-sponsible for the
overall management and administra-tion of the Plan and  shall  have  such
authority  as  shall be neces-sary or ap-pro-priate in order to carry out
its responsibilities, including, without limitation, the authority:

PAGE 6

(a)  to interpret  and construe the Plan, and to deter-mine all questions
that may arise under  the  Plan  as  to  eligibility for Awards under the
Plan, the amount of Shares, if any, to be  granted  pursuant to an Award,
and the terms and conditions of such Award;

(b)  to  adopt  rules  and regulations and to pre-scribe  forms  for  the
operation and administration of the Plan; and

(c)  to take any other action not inconsistent with the provisions of the
Plan that it may deem neces-sary or appropriate.

     ARTICLE V

     THE TRUST FUND

Section 5.1 Contributions.

Dime  Community  Bancorp,   Inc.   shall   contribute,  or  cause  to  be
contributed, to the Trust, from time to time,  such  amounts  of money or
property  as  shall  be deter-mined by the Board, in its discretion.   No
con-tribu-tions by Eligible Directors or Eligible Employees shall be per-
mitted.

Section 5.2 The Trust Fund.

The Trust Fund shall be  held and invested under the Trust Agreement with
the  Trustee.   The provisions  of  the  Trust  Agreement  shall  include
provisions conferring powers on the Trustee as to investment, control and
disbursement  of  the   Trust   Fund,  and  such  other  provi-sions  not
inconsistent with the Plan as may be prescribed by or under the authority
of the Board.  No bond or security  shall  be  required of any Trustee at
any time in office.

Section 5.3 Investments.

The  Trustee shall in-vest the Trust Fund in Shares  and  in  such  other
investments  as  may  be  per-mitted under the Trust Agreement, including
savings accounts, time or other  interest  bearing  deposits  in or other
interest bearing obligations of the Company, in such proportions as shall
be  determined  by  the  Com-mittee; provided, however, that in no  event
shall  the Trust Fund be used  to  purchase  more  than  581,900  Shares.
Notwithstanding  the  immediately  preceding  sen-tence,  the Trustee may
temporarily  in-vest  the  Trust  Fund in short-term obligations  of,  or
guaranteed by, the U.S. Government  or  an agency thereof, or the Trustee
may retain the Trust Fund unin-vested or  may  sell  assets  of the Trust
Fund to provide amounts required for purposes of the Plan.

PAGE 7

     ARTICLE VI

     AWARDS

Section 6.1 To Eligible Directors.

On the Effective Date, each Person who is then an Eligible Director shall
be granted an Award of 15,870 Shares.

Section 6.2 To Eligible Employees.

Subject to sec-tion 6.8 and such limitations as the Board may  from  time
to  time  impose,  the number of Shares as to which an Eligible Employ-ee
may be granted an Award shall be deter-mined by the Committee in its dis-
cretion; provided however,  that  in  no event shall the number of Shares
allocated to an Eligible Employee in an Award exceed the number of Shares
then held in the Trust and not allocated in connection with other Awards.

Section 6.3 Awards in General.

Any Award shall be evidenced by a written notice issued by the Com-mittee
to the Eligible Director or Eligible Employee, which notice shall:

(a)  specify the number of Shares covered by the Award;

(b)  specify the Award Date;

(c)  specify the dates on which such Shares  shall  be-come available for
dis-tribution  to the Eligible Director or Eligible Employee,  in  accor-
dance with sec-tions 7.1 and 7.2; and

(d)  contain such  other  terms and conditions not incon-sistent with the
Plan as the Board may, in its discretion, prescribe.

PAGE 8

Section 6.4 Share Allocations.

Upon the grant of an Award  to an Eligible Director or Eligible Employee,
the Committee shall no-tify the Trustee of the Award and of the number of
Shares subject to the Award.   Thereafter,  until such time as the Shares
subject  to  such Award become vested or are forfeited,   the  books  and
records of the Trustee shall reflect that such number of Shares are being
held for the benefit of the Award recipient.

Section 6.5 Dividend Rights.

(a)  Any cash  dividends or distributions de-clared and paid with respect
to Shares in the  Trust  Fund  that  are,  as of the record date for such
dividend,  allocated to an Eligi-ble Director  or  Eligible  Employee  in
connection with an Award shall be promptly paid to such Eligible Director
or Eligible  Employee.  Any cash dividends declared and paid with respect
to Shares that  are  not,  as  of  the  record  date  for  such dividend,
allocated  to  any  Eligible  Director or Eligible Employee in connection
with any Award shall, at the direction  of  the Committee, be held in the
Trust or used to pay the administrative expenses  of  the Plan, including
any compensation due to the Trustee.

(b)  Any  dividends  or distributions declared and paid with  respect  to
Shares in property other  than cash shall be held in the Trust Fund.  If,
as of the record date for such  dividend or distribution, the Shares with
respect to which it is paid are allocated  to  an  Eligible  Director  or
Eligible   Employee   in  connection  with  an  Award,  the  property  so
distributed  shall  be similarly  allocated  such  Eligible  Director  or
Eligible Employee in  connection  with  such  Award and shall be held for
distribution or forfeiture in accordance with the terms and conditions of
the Award.

Section 6.6 Voting Rights.

(a)  Each Eligible Director or Eligible Employee  to  whom  an  Award has
been  made  that  is not fully vested shall have the right to direct  the
manner in which all  voting  rights  appurtenant to the Shares related to
such Award will be exercised while such  Shares  are  held  in  the Trust
Fund.  Such a direction shall be given by completing and filing, with the
inspec-tor  of  elections, the Trustee or such other person who shall  be
indepen-dent of the  Company  as  the  Committee  shall  designate in the
direction, a written direction in the form and manner prescribed  by  the
Com-mittee.   If  no  such  direction is given by an Eligible Director or
Eligible  Employee, then the voting  rights  appurtenant  to  the  Shares
allocated to him shall not be exercised.

(b)  To the  extent  that  the  Trust  Fund  contains Shares that are not
allocated in connection with an Award, all voting  rights  appurtenant to
such  Shares  shall  be  exercised by the Trustee in such manner  as  the
Committee shall direct to reflect the voting directions given by Eligible
Director  or Eligible Employees  with  respect  to  Shares  allocated  in
connection with their Awards.

PAGE 9

(c)  The Committee  shall  furnish,  or  cause  to be fur-nished, to each
Eligible  Director  or  Eligible  Employee,  all  annual  reports,  proxy
materials  and  other informa-tion furnished by Dime  Community  Bancorp,
Inc., or by any proxy solici-tor, to the holders of Shares.

Section 6.7 Tender Offers.

(a)  Each Eligible  Director  or  Eligible  Employee to whom an Award has
been made that is not fully vested shall have  the  right to direct, with
respect to the Shares related to such Award, the manner  of  response  to
any  tender  offer,  exchange offer or other offer made to the holders of
Shares.  Such a direction  shall  be given by completing and filing, with
the inspec-tor of elections, the Trustee  or  such other person who shall
be indepen-dent of the Company as the Committee  shall  designate  in the
direction,  a written direction in the form and manner prescribed by  the
Com-mittee.   If  no  such  direction is given by an Eligible Director or
Eligible Employee, then the Shares shall not be tendered or exchanged.

(b)  To the extent that the Trust  Fund  contains  Shares  that  are  not
allocated  in connection with an Award, all responses to tender, exchange
and other offers appurtenant to such Shares shall be given by the Trustee
in such manner  as  the  Committee  shall direct to reflect the responses
given by Eligible Director or Eligible  Employees  with respect to Shares
allocated in connection with their Awards.

(c)  The  Committee  shall  furnish, or cause to be fur-nished,  to  each
Eligible Director or Eligible Employee, all informa-tion furnished by the
offeror to the holders of Shares.

Section 6.8 Limitations on Awards.

(a)  Notwithstanding anything in the Plan to the contrary:

(i)  No Award shall be granted under the Plan prior to the earlier of the
date on which the Plan is approved  by  shareholders  pursuant to section
9.8 or June 27, 1997;

(ii) No  Eligible Employee may be granted Awards covering  in  excess  of
145,475 Shares;

(iii) each Award shall become vested and distributable as follows:

(A)  prior  to the February 1 following the first anniversary of the date
on which the  Plan  is  approved by shareholders pursuant to section 9.8,
the Award shall not be vested;

(B)  on the February 1 following  the  first  anniversary  of the date on
which the Plan is approved by shareholders pursuant to section  9.8,  the
Award  will be vested as to twenty percent (20%) of the Shares subject to
the Award when granted;

PAGE 10

(C)  on  the  February  1 following the second anniversary of the date on
which the Award is granted,  the Award will be vested as to an additional
twenty percent (20%) of the Shares subject to the Award when granted;

(D)  on the February 1 following  the  third  anniversary  of the date on
which the Plan is approved by shareholders pursuant to section  9.8,  the
Award  will  be  vested  as  to an additional twenty percent (20%) of the
Shares subject to the Award when granted;

(E)  on the February 1 following  the  fourth  anniversary of the date on
which the Plan is approved by shareholders pursuant  to  section 9.8, the
Award  will  be  vested as to an additional twenty percent (20%)  of  the
Shares subject to the Award when granted; and

(F)  on the February  1  following  the  fifth anniversary of the date on
which the Plan is approved by shareholders  pursuant  to section 9.8, the
Award  will  be vested as to an additional twenty percent  (20%)  of  the
Shares subject to the Award when granted;

provided, however,  that  such  an Award shall become fully vested on the
date of the Award holder's death or Disability or Retirement or Change of
Control;  and  provided, further, that  the  Committee  may  establish  a
different vesting schedule for any Awards.

(b)  An Award by  its  terms  shall not be trans-fer-able by the Eligible
Director or Eligible Employee other  than  by  will or by the laws of de-
scent  and distribution, and the Shares granted pursuant  to  such  Award
shall be distributable, during the lifetime of the Recipient, only to the
Recipient.

PAGE 11

     ARTICLE VII

     VESTING AND DISTRIBUTION OF SHARES

Section 7.1 Vesting of Shares Granted to Eligible Directors.

The Shares  subject to each Award granted to Eligible Directors under the
Plan shall become  vested  as  follows:  (i) twenty percent (20%) of such
Shares  shall become vested upon  the  February  1  following  the  first
anniversary  of the date the Plan is approved by shareholders pursuant to
section 9.8; (ii)  20%  of  such  Shares  shall  become  vested  upon the
February  1  following  the  second  anniversary  of the date the Plan is
approved  by  shareholders  pursuant to section 8.8; (iii)  20%  of  such
Shares  shall become vested upon  the  February  1  following  the  third
anniversary  of the date the Plan is approved by shareholders pursuant to
section 8.8; (iv)  20%  of  such  Shares  shall  become  vested  upon the
February  1  following  the  fourth  anniversary  of the date the Plan is
approved by shareholders pursuant to section 8.8; and  (v)  20%  of  such
Shares  shall  become  vested  upon  the  February  1 following the fifth
anniversary of the date the Plan is approved by shareholders  pursuant to
section 8.8; provided, however, that the Eligible Director has remained a
director  of  the  Employer during the entire period commencing with  the
date the Plan is approved  by  shareholders  pursuant  to section 8.8 and
ending on the applicable anniversary of the date of shareholder approval;
and provided, further, an Award shall become 100% vested  upon  the Award
holder's  death  or  disability or Retirement or the date of a Change  in
Control.

Section 7.2 Vesting of Shares Granted to Eligible Employees.

Subject to section 6.8  and  the  terms  and conditions of the Plan, each
Award to an Eligible Employee made under the  Plan shall become vested at
the times and upon the conditions specified by the Committee in the Award
notice; provided, however, that an Award shall become fully vested on the
date of the Award holder's death or disability  or Retirement or the date
of  a Change in Control; and provided, further, that  the  Committee  may
establish a different vesting schedule for any Awards.

Section 7.3 Designation of Beneficiary.

An Eligible  Director  or Eligible Employee who has received an Award may
designate a Beneficiary  to receive any undistributed Shares that are, or
become, available for distribution  on,  or after, the date of his death.
Such  des-ignation  (and any change or revocation  of  such  designation)
shall be made in writing  in  the  form and manner prescribed by the Com-
mittee.  In the event that the Beneficiary  designated  by  an  Eli-gible
Director  or  Eligible  Employee  dies prior to the Eligible Director  or
Eligible  Employee,  or  in  the event  that  no  Benefi-ciary  has  been
designated, any undistributed  Shares  that are, or become, available for
dis-tribution  on,  or  after,  the  Eligible   Director's   or  Eligible
Employee's death shall be paid to the execu-tor or administrator  of  the
Eligible Director's or Eligible Employee's estate, or if no such executor
or  administrator  is appointed within such time as the Committee, in its
sole discretion, shall deem reasonable, to such one or more of the spouse
and descendants and  blood  rela-tives  of  such  de-ceased person as the
Committee may select.

PAGE 12

Section 7.4 Manner of Distribution.

(a)  As  soon  as  practicable  following  the  date any  Shares  granted
pursuant to an Award be-come vested pursuant to sec-tions  7.1  and  7.2,
the  Committee  shall  take  such  actions  as are necessary to cause the
transfer of record ownership of the Shares that  have  become vested from
the Trustee to the Award holder and shall cause the Trustee to distribute
to  the Award holder all property other than Shares then  being  held  in
connection with the Shares being distributed.
(b)  The Company's obligation to deliver Shares with re-spect to an Award
shall,  if the Committee so requests, be condi-tioned upon the receipt of
a representation as to the in-vestment intention of the Eligible Director
or Eligible  Employee  or  Beneficiary  to whom such Shares are to be de-
livered, in such form as the Committee shall  deter-mine  to be necessary
or  advisable  to  comply  with the pro-vis-ions of applica-ble  federal,
state or local law.  It may  be  pro-vided  that  any such representation
shall become inoperative upon a registration of the  Shares  or  upon the
occurrence  of  any  other  event  eliminat-ing  the  necessity  of  such
representation.   The Company shall not be required to deliver any Shares
under the Plan prior  to  (i)  the admission of such Shares to listing on
any stock ex-change on which Shares  may  then  be  listed,  or  (ii) the
completion of such registration or other qualification under any state or
federal  law,  rule or regulation as the Committee shall determine to  be
necessary or advisable.

Section 7.5 Taxes.

The Company, the Committee or the Trustee shall have the right to require
any person entitled  to  receive  Shares  pursuant to an Award to pay the
amount of any tax which is required to be withheld  with  respect to such
Shares,  or,  in lieu thereof, to retain, or to sell without  no-tice,  a
suffi-cient num-ber  of  Shares to cover the amount re-quired to be with-
held.

     ARTICLE VIII

     AMENDMENT AND TERMINATION

Section 8.1 Termination.

The Board may suspend or terminate  the  Plan  in whole or in part at any
time by giving written notice of such sus-pension  or termina-tion to the
Commit-tee; provided, however, that the Plan may not  be terminated while
there are outstanding Awards that may thereafter become vested.  Upon the
termination  of the Plan, the Trustee shall make distributions  from  the
Trust Fund in  such  amounts  and  to  such  persons as the Committee may
direct and shall return the remaining assets of  the  Trust Fund, if any,
to Dime Community Bancorp, Inc.

Section 8.2 Amendment.

The Board may amend or revise the Plan in whole or in part at any time.

PAGE 13

Section 8.3 Adjustments in the Event of a Business Reorganization.

(a)  In  the  event  of  any  merger,  consolidation,  or other  business
reorganization  (including  but  not limited to a Change of  Control)  in
which Dime Community Bancorp, Inc.  is  the sur-viving entity, and in the
event  of  any  stock  split, stock dividend  or  other  event  generally
affecting the number of  Shares  held by each person who is then a holder
of  record  of Shares, the number of  Shares  held  in  the  Trust  Fund,
including Shares  covered  by  Awards, shall be ad-justed to ac-count for
such event.  Such ad-justment shall  be  effected  by  mul-ti-plying such
number of Shares by an amount equal to the num-ber of Shares  that  would
be  owned  after  such  event  by a person who, immediately prior to such
event, was the holder of record  of  one  Share; pro-vided, however, that
the Committee may, in its discre-tion, estab-lish  another  ap-pro-priate
method of adjustment.

(b)  In  the  event  of  any  merger,  consolidation,  or  other business
reorganization  (including  but  not  limited to a Change of Control)  in
which  Dime Community Bancorp, Inc. is not  the  sur-viving  entity,  the
Trustee  shall  hold  in  the  Trust Fund any money, stock, securities or
other property received by holders of record of Shares in connection with
such merger, consolidation, or other  business reorganization.  Any Award
with respect to which Shares had been allocated  to  an Eligible Director
or  Eligible  Employee  shall be adjusted by allocating to  the  Eligible
Director or Eligible Employee  receiving  such Award the amount of money,
stock,  securities or other property received  by  the  Trustee  for  the
Shares allocated to such Eligible Director or Eligible Employee.

     ARTICLE IX

     MISCELLANEOUS

Section 9.1 Status as an Employee Benefit Plan.

This Plan is not intended to satisfy the requirements for qualifi-ca-tion
under sec-tion  401(a)  of  the  Code or to satisfy the defini-tional re-
quire-ments for an "employee benefit  plan"  under  section  3(3)  of the
Employee  Retirement  Income  Security  Act  of  1974, as amended.  It is
intended to be a non-qualified incentive compen-sation  program  that  is
exempt from the regulatory requirements of the Employee Retirement Income
Security  Act  of  1974,  as  amended.   The  Plan shall be construed and
administered so as to effectuate this intent.

Section 9.2 No Right to Continued Employment.

Nei-ther the establishment of the Plan nor any provisions of the Plan nor
any action of the Board or the Committee with respect  to  the Plan shall
be  held  or construed to confer upon any Eligible Director or  El-igible
Employee any  right  to a continuation of employment by the Company.  The
Employers reserve the  right to dismiss any Eligible Director or Eligible
Employee or otherwise deal  with  any  Eligible  Di-rect-or  or  Eligible
Employee to the same extent as though the Plan had not been adopt-ed.

PAGE 14

Section 9.3 Construction of Language.

Whenever ap-propriate in the Plan, words used in the singular may be read
in the plural, words used in the plural may be read in the singular,  and
words  importing the masculine gender may be read as referring equally to
the feminine  or  the  neuter.   Any  reference to an Arti-cle or section
number shall refer to an Article or section of this Plan unless otherwise
indicated.

Section 9.4 Governing Law.

The Plan shall be con-strued and enforced  in accordance with the laws of
the  State of New York without giving effect  to  the  conflict  of  laws
principles  thereof, except to the extent that such laws are preempted by
the federal laws  of  the  United  States  of America.  The Plan shall be
construed to comply with applicable OTS Regulations.

Section 9.5 Headings.

The headings of Articles and sections are included solely for convenience
of reference.  If there is any conflict between  such  headings  and  the
text of the Plan, the text shall control.

Section 9.6 Non-Alienation of Benefits.

The right to receive a benefit under the Plan shall not be subject in any
man-ner  to anticipation, alienation or assign-ment, nor shall such right
be liable  for  or subject to debts, contracts, liabilities, engage-ments
or torts, except to the extent provided in a qualified domestic relations
order as defined in section 414(p) of the Code.

Section 9.7 Notices.

Any communication  required  or  permit-ted  to  be given under the Plan,
including  any  notice,  direction,  designation,  comment,  instruction,
objection or waiver, shall be in writing and shall be deemed to have been
given at such time as it is personally delivered or  5 days after mailing
if  mailed,  postage  prepaid, by registered or cer-tified  mail,  return
receipt requested, addressed  to such party at the ad-dress listed below,
or at such other address as one  such party may by written notice specify
to the other:

PAGE 15

(a)  If to the Stock Compensation Committee:

Dime Community Bancorp, Inc.
c/o The Dime Savings Bank of Williamsburgh
209 Havemeyer Street
Brooklyn, New York 11211

Attention:  Corporate Secretary

(b)  If to an Eligible Director or  Eligible  Employee,  to  the Eligible
Director's or El-igible Employee's address as shown in the Employer's re-
cords.

Section 9.8 Approval of Shareholders.

The  Plan  shall  not  be effective or implemented prior to the one  year
anniversary of the conversion  of  Dime  Community Bancorp, Inc. to stock
form  unless approved by the holders of a majority  of  the  total  votes
eligible  to  be cast at any duly called annual or special meeting of the
Company, in which case the Plan shall be effective as of the later of (a)
December 26, 1996  or  (b)  the  date of such approval.  If not effective
prior to such one year anniversary,  the  Plan shall be effective on such
later date as is specified by the Board.

     DIME COMMUNITY BANCORP, INC. 1996 STOCK OPTION PLAN FOR OUTSIDE
                               DIRECTORS,
                         OFFICERS AND EMPLOYEES
       NON-QUALIFIED STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS

                                                           -     - 
   ------------------------                            ---- ----- --------
      NAME OF OPTIONEE                                SOCIAL SECURITY NUMBER

   --------------------------------------------------------------------------
                                     STREET ADDRESS

    -----------------------       -------------       ------------
        CITY                      STATE               ZIP CODE

This  Non-Qualified  Stock  Option Agreement is intended to set forth the terms
and conditions on which a Non-Qualified Stock Option has been granted under the
Dime Community Bancorp, Inc.  1996  Stock  Option  Plan  for Outside Directors,
Officers and Employees.  Set forth below are the specific  terms and conditions
applicable to this Non-Qualified Stock Option.  Attached as  Exhibit  A are its
general terms and conditions.

         Option Grant                  (A)               (B)               (C)               (D)              (E)
                                                                                        
                    Grant Date:     
      Class of Optioned Shares*      Common            Common            Common            Common           Common
        No. of Optioned Shares*
      Exercise Price Per Share*      
            VESTING
        Earliest Exercise Date*     
        Option Expiration Date*    

*SUBJECT TO ADJUSTMENT AS PROVIDED IN THE PLAN AND THE GENERAL TERMS AND
CONDITIONS.

By  signing where indicated below, Dime Community Bancorp, Inc. (the "Company")
grants this Non-Qualified Stock Option upon the specified terms and conditions,
and the  Optionee  acknowledges  receipt  of  this  Non-Qualified  Stock Option
Agreement, including Exhibit A, and agrees to observe and be bound by the terms
and conditions set forth herein.

DIME COMMUNITY BANCORP, INC.                       OPTIONEE

By        ----------------------------------        -----------------------    
                 NAME: VINCENT F. PALAGIANO
                TITLE: CHAIRMAN OF THE BOARD AND
                       CHIEF EXECUTIVE OFFICER

INSTRUCTIONS:    This  page  should  be  completed  by  or  on  behalf  of  the
Compensation Committee.   Any  blank  space  intentionally left blank should be
crossed  out.  An option grant consists of a number  of  optioned  shares  with
uniform terms  and  condition.  Where options are granted on the same date with
varying terms and conditions  (for example, varying exercise prices or earliest
exercise dates), the options should be recorded as a series of grants each with
its own uniform terms and conditions.

                                   EXHIBIT A

  DIME COMMUNITY BANCORP, INC. 1996 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS,
                             OFFICERS AND EMPLOYEES
          NON-QUALIFIED STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS

                         GENERAL TERMS AND CONDITIONS

          SECTION 1.   NON-QUALIFIED  STOCK  OPTION.   The Company intends the
Option  evidenced  hereby  not  to  be an "incentive stock option"  within  the
meaning of section 422 of the Internal Revenue Code of 1986.

          SECTION 2.   OPTION PERIOD.   (a)   Subject  to  section  2(b),  the
Optionee  shall  have  the right to purchase all or any portion of the optioned
Common Stock at any time  during the period ("Option Period") commencing on the
Earliest Exercise Date and  ending  on  the  earliest to occur of the following
dates:

                  (i) removal for cause in accordance  with  the Company's
            bylaws; or

                  (ii)  the last day of the ten-year period commencing  on
            the date on which the Option was granted.

            (b)   Upon the  termination  of  the  Optionee's  Service  with the
Company,  any  Option  granted  hereunder  whose Earliest Exercise Date has not
occurred is deemed forfeited.  For this purpose, an Optionee's Service shall be
deemed  to  continue for so long as the Optionee  is  serving  as  an  officer,
employee, outside  director, advisory director, emeritus director or consultant
to the Company or is  subject  to  and  is  observing  the  terms  of a written
agreement  restricting  his  ability  to  compete or imposing other restrictive
covenants.

          SECTION 3.   EXERCISE PRICE.  During  the  Option  Period, and after
the  applicable Earliest Exercise Date, the Optionee shall have  the  right  to
purchase  all or any portion of the Optioned Common Stock at the Exercise Price
per Share.

          SECTION 4.   METHOD  OF  EXERCISE.   The  Optionee  may, at any time
during the Option Period provided by section 2, exercise his right  to purchase
all  or  any  part  of  the  optioned Common Stock then available for purchase;
PROVIDED, HOWEVER, that the minimum  number  of shares of optioned Common Stock
which may be purchased shall be one hundred (100) or, if less, the total number
of shares of optioned Common Stock then available  for  purchase.  The Optionee
shall exercise such right by:

            (a)  giving  written  notice  to  the  Committee, in  the  form
      attached hereto as Appendix A; and

            (b) delivering to the Committee full payment  of  the  Exercise
      Price for the Optioned Shares to be purchased.

The date of exercise shall be the earliest date practicable following  the date
the  requirements  of this section 4 have been satisfied, but in no event  more
than three (3) days  after  such  date.   Payment  shall  be made (i) in United
States dollars by certified check, money order or bank draft  made  payable  to
the  order  of  Dime  Community Bancorp, Inc., (ii) in Shares duly endorsed for
transfer and with all necessary  stock  transfer  tax  stamps attached, already
owned  by  the Optionee and having a fair market value equal  to  the  Exercise
Price, such  fair  market  value  to  be  determined  in  such manner as may be
provided  by  the Committee or as may be required in order to  comply  with  or
conform to the  requirements of any applicable laws or regulations, or (iii) in
a combination of (i) and (ii).

SECTION 5.   DELIVERY  AND  REGISTRATION  OF  OPTIONED  SHARES.  As  soon as is
practicable  following  the  date  on  which  the  Optionee  has  satisfied the
requirements of section 4, the Committee shall take such action as is necessary
to  cause  the  Company  to issue a stock certificate evidencing the Optionee's
ownership of the optioned  Common  Stock that has been purchased.  The Optionee
shall have no right to vote or to receive  dividends, nor have any other rights
with respect to optioned Common Stock, prior  to  the  date  as  of  which such
optioned  Common  Stock  is  transferred  to the Optionee on the stock transfer
records of the Company, and no adjustments  shall  be made for any dividends or
other rights for which the record date is prior to the  date  as  of which such
transfer  is  effected.  The obligation of the Company to deliver Common  Stock
under this Agreement  shall,  if the Committee so requests, be conditioned upon
the receipt of a representation as to the investment intention of the person to
whom such Common Stock is to be  delivered, in such form as the Committee shall
determine  to  be necessary or advisable  to  comply  with  the  provisions  of
applicable federal,  state  or  local  law.   It  may be provided that any such
representation shall become inoperative upon a registration of the Common Stock
or upon the occurrence of any other event eliminating  the  necessity  of  such
representation.   The Company shall not be required to deliver any Common Stock
under this Agreement prior to (a) the admission of such Common Stock to listing
on any stock exchange  on  which  Common  Stock  may then be listed, or (b) the
completion  of  such registration or other qualification  under  any  state  or
federal law, rule  or  regulations  as  the  Committee  shall  determine  to be
necessary or advisable.

           SECTION 6.   ADJUSTMENTS  IN  THE  EVENT  OF REORGANIZATION.  In the
event of any merger, consolidation, or other business  reorganization  in which
the Company is the surviving entity, and in the event of any stock split, stock
dividend  or  other  event  generally  affecting the number of shares of Common
Stock held by each person who is then a  shareholder  of  record, the number of
shares of Common Stock subject to the option granted hereunder and the Exercise
Price per share of such option shall be adjusted in accordance with section 5.3
of  the  Plan  to  account  for  such  event.   In  the  event  of any  merger,
consolidation, or other business reorganization in which the Company is not the
surviving entity, the option granted hereunder shall be canceled or adjusted in
accordance with the Plan.  In the event that the Company shall declare  and pay
any dividend with respect to Shares (other than a dividend payable in Shares or
a  regular  quarterly  cash dividend), including a dividend which results in  a
nontaxable return of capital  to  the  holders of Shares for federal income tax
purposes, or otherwise than by dividend  makes  distribution of property to the
holders of its Shares, at the election of the Committee,  the Company (i) shall
make an equivalent payment to each Person holding an outstanding  Option  as of
the  record  date  for such dividend in accordance with section 5.3 of the Plan
and (ii) the Committee,  in its discretion applied uniformly to all outstanding
Options, may adjust the Exercise Price per Share of outstanding Options in such
a manner as the Committee  may  determine to be necessary to reflect the effect
of the dividend or other distribution on the Fair Market Value of a Share.

           SECTION 7.   NO  RIGHT   TO  CONTINUED  SERVICE.   Nothing  in  this
Agreement  nor  any action of the Board  or  Committee  with  respect  to  this
Agreement shall be held or construed to confer upon the Optionee any right to a
continuation of service  by  the  Company.   The  Optionee  may be dismissed or
otherwise dealt with as though this Agreement had not been entered into.

          SECTION 8.   TAXES.  Where any person is entitled  to receive shares
pursuant  to  the  exercise of the Option granted hereunder, the Company  shall
have the right to require  such  person to pay to the Company the amount of any
tax which the Company is required  to withhold with respect to such shares, or,
in lieu thereof, to retain, or to sell  without  notice, a sufficient number of
shares to cover the amount required to be withheld.

          SECTION 9.   NOTICES.  Any communication required or permitted to be
given  under the Plan, including any notice, direction,  designation,  comment,
instruction,  objection  or  waiver, shall be in writing and shall be deemed to
have been given at such time as  it  is  delivered  personally or five (5) days
after  mailing  if mailed, postage prepaid, by registered  or  certified  mail,
return receipt requested,  addressed to such party at the address listed below,
or at such other address as one such party may by written notice specify to the
other party:

            (a) If to the Committee:

                  Dime Community Bancorp, Inc.

                  Attention:  COMPENSATION COMMITTEE

           (b) If to the Optionee,  to  the  Optionee's address as shown in the
      Company's personnel records.

         SECTION 10.   RESTRICTIONS ON TRANSFER.  The option granted hereunder
shall not be subject in any manner to anticipation,  alienation  or assignment,
nor   shall  such  option  be  liable  for  or  subject  to  debts,  contracts,
liabilities, engagements or torts, nor shall it be transferable by the Optionee
other than  by  will or by the laws of descent and distribution or as otherwise
permitted by the Plan.

         SECTION 11.   SUCCESSORS  AND ASSIGNS.  This Agreement shall inure to
the benefit of and shall be binding upon the Company and the Optionee and their
respective heirs, successors and assigns.

         SECTION 12.   CONSTRUCTION  OF LANGUAGE.  Whenever appropriate in the
Agreement, words used in the singular may  be read in the plural, words used in
the  plural  may be read in the singular, and  words  importing  the  masculine
gender may be  read  as  referring  equally to the feminine or the neuter.  Any
reference to a section shall be a reference  to  a  section  of this Agreement,
unless  the  context  clearly  indicates  otherwise.   Capitalized  terms   not
specifically  defined herein shall have the meanings assigned to them under the
Plan.

         SECTION 13.   GOVERNING  LAW.   This  Agreement  shall  be construed,
administered  and  enforced  according  to  the  laws of the State of New  York
without giving effect to the conflict of laws principles thereof, except to the
extent that such laws are preempted by the federal law.

         SECTION 14.   AMENDMENT.  This Agreement  may be amended, in whole or
in part and in any manner not inconsistent with the provisions  of the Plan, at
any  time and from time to time, by written agreement between the  Company  and
the Optionee.

          SECTION 15.   PLAN PROVISIONS CONTROL.  This Agreement and the rights
and obligations  created  hereunder  shall  be  subject to all of the terms and
conditions of the Plan.  In the event of any conflict between the provisions of
the Plan and the provisions of this Agreement, the terms of the Plan, which are
incorporated herein by reference, shall control.   By  signing  this Agreement,
the Optionee acknowledges receipt of a copy of the Plan.

          SECTION 16.   CHANGE  IN  CONTROL.   This  Option is granted  with  a
related Limited Appreciation Right that is exercisable  only  in the event of a
change in control.  A "change in control" shall be as defined in the Plan.

               APPENDIX A TO STOCK OPTION AGREEMENT

        DIME COMMUNITY BANCORP, INC. 1996 STOCK OPTION PLAN

           FOR OUTSIDE DIRECTORS, OFFICERS AND EMPLOYEES

                NOTICE OF EXERCISE OF STOCK OPTION

 USE THIS NOTICE TO INFORM THE COMMITTEE ADMINISTERING THE DIME  COMMUNITY  
 BANCORP,  INC. 1996 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS, OFFICERS AND 
 EMPLOYEES ("PLAN") THAT YOU ARE EXERCISING YOUR RIGHT  TO  PURCHASE SHARES OF
 COMMON STOCK ("SHARES") OF DIME COMMUNITY BANCORP,INC. ("DIME") PURSUANT TO AN
 OPTION ("OPTION") GRANTED  UNDER  THE PLAN. IF YOU ARE NOT THE PERSON TO WHOM 
 THE OPTION WAS GRANTED("OPTION RECIPIENT"),YOU MUST ATTACH TO THIS NOTICE PROOF
 OF  YOUR  RIGHT  TO  EXERCISE  THE OPTION GRANTED UNDER THE STOCK OPTION 
 AGREEMENT ENTERED INTO BETWEEN DIME AND THE OPTION RECIPIENT ("AGREEMENT").   
 THIS  NOTICE  SHOULD  BE  PERSONALLY DELIVERED OR MAILED BY CERTIFIED MAIL, 
 RETURN RECEIPT REQUESTED TO:  DIME COMMUNITY BANCORP, INC., C/O THE  DIME  
 SAVINGS  BANK  OF  WILLIAMSBURGH,  209 HAVEMEYER STREET,  BROOKLYN,  NEW  YORK
 11211, ATTENTION:  CORPORATE SECRETARY.   THE EFFECTIVE DATE OF THE EXERCISE OF
 THE OPTION SHALL BE THE EARLIEST  DATE  PRACTICABLE  FOLLOWING THE DATE THIS 
 NOTICE IS RECEIVED BY DIME, BUT IN NO EVENT MORE THAN THREE DAYS AFTER SUCH 
 DATE ("EFFECTIVE DATE").   EXCEPT  AS  SPECIFICALLY PROVIDED TO THE CONTRARY 
 HEREIN, CAPITALIZED TERMS SHALL HAVE THE MEANINGS ASSIGNED TO THEM UNDER THE 
 PLAN. THIS NOTICE  IS  SUBJECT TO ALL OF THE TERMS AND CONDITIONS OF THE PLAN 
 AND THE AGREEMENT.

 OPTION INFORMATION IDENTIFY BELOW THE OPTION THAT YOU ARE EXERCISING BY 
 PROVIDING THE FOLLOWING INFORMATION FROM THE STOCK OPTION AGREEMENT.

 NAME OF OPTIONEE: ____________________________________________________________

 OPTION GRANT DATE:_____________, _____ EXERCISE PRICE PER SHARE: $_______.____
                  (MONTH AND DAY) (YEAR)

 EXERCISE PRICE:COMPUTE THE EXERCISE PRICE BELOW AND SELECT A METHOD OF PAYMENT.

 Total Exercise Price ______________ x $________.______ = $_____________________
                      (No. of Shares)   (Exercise Price)    Total Exercise Price

     METHOD OF PAYMENT
      
 ___  I  enclose a certified check, money order, or bank draft payable
      to the order of Dime Community Bancorp, Inc. in the amount of $__________

 ___  I enclose Shares duly endorsed for transfer to Dime with all
      stamps attached and having a fair market value of $__________________

                Total Exercise Price       $__________________

 ISSUANCE OF CERTIFICATES
 I hereby direct that the stock certificates representing the Shares purchased 
 pursuant to section 2 above be issued to the following person(s) in the amount
 specified below:

   NAME AND ADDRESS                 SOCIAL SECURITY NO.         NO. OF SHARES
__________________________________  ______-____-_______     ___________________
__________________________________

__________________________________  ______-____-_______     ___________________
__________________________________

 WITHHOLDING  ELECTIONS FOR  EMPLOYEE OPTION RECIPIENTS WITH NON-QUALIFIED STOCK
 OPTIONS ONLY.

 BENEFICIARIES AND OUTSIDE DIRECTORS SHOULD NOT COMPLETE.

 I understand that I am responsible for the amount of federal, state and
 local taxes required to be withheld with respect to the Shares to be issued
 to me pursuant to this Notice, but that I may request Dime to retain or sell
 a sufficient number of such  Shares  to  cover  the amount to be withheld.
 I hereby request that any taxes required to be withheld be paid in the
 following manner [check one]:

                            
 __ With  a  certified or bank  check that I will deliver to the Administrator
    on the day after the Effective Date of my Option exercise.

 __ With the proceeds from a sale of Shares that would otherwise be distributed
    to me.
                            
 __ Retain shares that would otherwise be distributed to me.

 I understand that the withholding elections I have made  on  this  form  are
 not  binding  on the Committee, and that the Committee will decide the amount
 to be withheld and the method of withholding and advise me of  its  decision
 prior to the Effective  Date.  I further understand that the Committee may
 request additional information or assurances  regarding the manner and time at
 which I will report the income attributable to the distribution to be made to
 me.

 I further understand that if I have elected to have Shares sold to satisfy tax
 withholding, I may be asked to pay a minimal amount of such taxes in cash in
 order to avoid the sale of more Shares than are necessary.

 COMPLIANCE WITH TAX AND SECURITIES LAWS

      I  understand  that  I  must  rely on, and consult with, my own tax and
S H   legal  counsel (and not Dime Community  Bancorp,  Inc.)  regarding  the
I E   application  of  all laws -- particularly tax and securities laws -- to
G R   the transactions to  be effected pursuant to my Option and this Notice.
N E   I understand that I will  be  responsible for paying any federal, state
      and local taxes that may become  due  upon  the  sale (including a sale
      pursuant  to  a  "cashless  exercise") or other disposition  of  Shares
      issued pursuant to this Notice  and that I must consult with my own tax
      advisor regarding how and when such income will be reportable.
                                
                 ---------------------            ----------------
                   Signature                        Date

         -----------------------------------------------------------------_
                                      Address

                                   INTERNAL USE ONLY
 Corporate Secretary
 Received [CHECK ONE]:          ___  By Hand       ___  By Mail Post Marked

                                                         -----------------
                                                         DATE OF POST MARK

  By       -------------------------------               -----------------
           AUTHORIZED SIGNATURE                           DATE OF RECEIPT

 APPENDIX B TO STOCK OPTION AGREEMENT

  DIME COMMUNITY BANCORP, INC. 1996
          STOCK OPTION PLAN

 FOR OUTSIDE DIRECTORS, OFFICERS AND
              EMPLOYEES

        BENEFICIARY DESIGNATION FORM

GENERAL INFORMATION
 USE THIS FORM TO DESIGNATE THE BENEFICIARY(IES) WHO MAY EXERCISE OPTIONS
 OUTSTANDING TO YOU AT THE TIME OF YOUR DEATH.

Name of Person
Making a Designation___________________________________________________

Social Security Number________-______-________

BENEFICIARY DESIGNATION

COMPLETE  SECTIONS  A AND B.  IF NO PERCENTAGE SHARES ARE SPECIFIED, EACH
BENEFICIARY IN THE SAME CLASS (PRIMARY OR CONTINGENT)  SHALL HAVE AN EQUAL
SHARE.  IF ANY DESIGNATED BENEFICIARY PREDECEASES YOU, THE SHARES OF EACH
REMAINING BENEFICIARY  IN  THE  SAME  CLASS  (PRIMARY  OR CONTINGENT) SHALL
BE INCREASED PROPORTIONATELY.

A.  PRIMARY BENEFICIARY(IES).   I  hereby  designate  the following person
    as my primary Beneficiary under the Plan, reserving the right to change
    or revoke this designation at any time prior to my death:

                 NAME                                 ADDRESS                   RELATIONSHIP        BIRTHDATE          SHARE
                                                                                                              
______________________________________  ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________                                       Total= 100%

B. CONTINGENT BENEFICIARY(IES).  I hereby designate the  following  person(s)
   as my contingent Beneficiary(ies) under the Plan to receive benefits only
   if all of my primary Beneficiaries should predecease  me,  reserving  the
   right  to  change  or revoke this designation at any time prior to my death
   as to all outstanding Options:

                 NAME                             ADDRESS                          RELATIONSHIP        BIRTHDATE          SHARE
                                                                                                             
______________________________________  ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________                                     Total    =  100%

S H  I  understand that this Beneficiary Designation shall be effective only
I E  if properly  completed  and received by the Corporate Secretary of Dime
G R  Community Bancorp, Inc. prior  to  my  death, and that it is subject to
N E  all of the terms and conditions of the Plan.  I also understand that an
     effective Beneficiary designation revokes  my prior designation(s) with
     respect to all outstanding Options.

                 
     -------------------------------                   -------------
              YOUR SIGNATURE                             Date

                        INTERNAL USE ONLY

 This Beneficiary Designation was received by the Corporate       Comments
 Secretary of Dime Community Bancorp, Inc. on the date 
 Indicated.

By  ----------------------------     ------------               ____________
      AUTHORIZED SIGNATURE           DATE

     DIME COMMUNITY BANCORP, INC. 1996 STOCK OPTION PLAN FOR OUTSIDE
           DIRECTORS,OFFICERS AND EMPLOYEES
                STOCK OPTION AGREEMENT 

                                                           -     - 
   ------------------------                            ---- ----- --------
      NAME OF OPTIONEE                                SOCIAL SECURITY NUMBER

   --------------------------------------------------------------------------
                                     STREET ADDRESS

    -----------------------       -------------       ------------
        CITY                      STATE               ZIP CODE

This  INCENTIVEStock  Option Agreement is intended to set forth the terms
and conditions on which a Non-Qualified Stock Option has been granted under the
Dime Community Bancorp, Inc.  1996  Stock  Option  Plan  for Outside Directors,
Officers and Employees.  Set forth below are the specific  terms and conditions
applicable to this Non-Qualified Stock Option.  Attached as  Exhibit  A are its
general terms and conditions.

         Option Grant                  (A)               (B)               (C)               (D)              (E)
                                                                                        
                    Grant Date:      12/26/96          12/26/96          12/26/96          12/26/96         12/26/96
      Class of Optioned Shares*      Common            Common            Common            Common           Common
        No. of Optioned Shares*
      Exercise Price Per Share*        $14.50            $14.50           $14.50            $14.50           $14.50
      Option Type (ISO or NQSO)         ISO               ISO               ISO                ISO             ISO
            VESTING
        Earliest Exercise Date*      12/26/97           12/26/97          12/26/97          12/26/97         12/26/97
        Option Expiration Date*      12/25/2006         12/25/2006        12/25/2006        12/25/2006       12/25/2006 

*SUBJECT TO ADJUSTMENT AS PROVIDED IN THE PLAN AND THE GENERAL TERMS AND
CONDITIONS.

By  signing where indicated below, Dime Community Bancorp, Inc. (the "Company")
grants this Incentive Stock Option upon the specified terms and conditions,
and the  Optionee  acknowledges  receipt  of  this  Incentive Stock Option
Agreement, including Exhibit A, and agrees to observe and be bound by the terms
and conditions set forth herein.

DIME COMMUNITY BANCORP, INC.                       OPTIONEE

By        ----------------------------------        -----------------------    
                 NAME: VINCENT F. PALAGIANO
                TITLE: CHAIRMAN OF THE BOARD AND
                       CHIEF EXECUTIVE OFFICER

INSTRUCTIONS:    This  page  should  be  completed  by  or  on  behalf  of  the
Compensation Committee.   Any  blank  space  intentionally left blank should be
crossed  out.  An option grant consists of a number  of  optioned  shares  with
uniform terms  and  condition.  Where options are granted on the same date with
varying terms and conditions  (for example, varying exercise prices or earliest
exercise dates), the options should be recorded as a series of grants each with
its own uniform terms and conditions.

                                   EXHIBIT A

  DIME COMMUNITY BANCORP, INC. 1996 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS,
                             OFFICERS AND EMPLOYEES
                             STOCK OPTION AGREEMENT 

                         GENERAL TERMS AND CONDITIONS

          SECTION 1.   INCENTIVE STOCK  OPTION. If the Option is designated as
an ISO, the Company intends the Option  evidenced  hereby to  be an "incentive
stock option"  within  themeaning of section 422 of the Internal Revenue Code 
of 1986 ("Code").If the Option does not qualify as an "incentive stock option"
under the Plan or the Code, the Option or the part not qualifying shall be 
treated as a Non-Qualified Stock Option under the Code.

          SECTION 2.   OPTION PERIOD.   (a)   Subject  to  section  2(b),  the
Optionee  shall  have  the right to purchase all or any portion of the optioned
Common Stock at any time  during the period ("Option Period") commencing on the
Earliest Exercise Date and  ending  on  the  earliest to occur of the following
dates:
               (i)  the close of business on the last day of the 3-month
                    period commencing on the date of the termionation of all
                    employment with the Company and the Dime Savings Bank of
                    Williamsburgh; provided, however, that if such termination
                    is on account of death, Disability or Retirement, such date
                    shall be the last day of the 1-year period commencing on
                    such termination;

               (ii) the date of termination for Cause; or

              (iii) the last day of the ten-year period commencing  on
                    the date on which the Option was granted.

            (c)   Upon the  termination  of  the  Optionee's  Service  with the
Company,  any  Option  granted  hereunder  whose Earliest Exercise Date has not
occurred is deemed forfeited.  To the extent authorized pursuant to a Plan 
provision that is approved by the Company's shareholders after June 26, 1997, 
in the event of the Optionee's retirement (as defined by the Plan) or a change
of control (as defined by the Plan), the date of such retirement or change of
control shall be the Earliest Exercise Date of any Options that are not already
exercisable. 

          SECTION 3.   EXERCISE PRICE.  During  the  Option  Period, and after
the  applicable Earliest Exercise Date, the Optionee shall have  the  right  to
purchase  all or any portion of the Optioned Common Stock at the Exercise Price
per Share.

          SECTION 4.   METHOD  OF  EXERCISE.   The  Optionee  may, at any time
during the Option Period provided by section 2, exercise his right  to purchase
all  or  any  part  of  the  optioned Common Stock then available for purchase;
PROVIDED, HOWEVER, that the minimum  number  of shares of optioned Common Stock
which may be purchased shall be one hundred (100) or, if less, the total number
of shares of optioned Common Stock then available  for  purchase.  The Optionee
shall exercise such right by:

            (a)  giving  written  notice  to  the  Committee, in  the  form
      attached hereto as Appendix A; and

            (b) delivering to the Committee full payment  of  the  Exercise
      Price for the Optioned Shares to be purchased.

The date of exercise shall be the earliest date practicable following  the date
the  requirements  of this section 4 have been satisfied, but in no event  more
than three (3) days  after  such  date.   Payment  shall  be made (i) in United
States dollars by certified check, money order or bank draft  made  payable  to
the  order  of  Dime  Community Bancorp, Inc., (ii) in Shares duly endorsed for
transfer and with all necessary  stock  transfer  tax  stamps attached, already
owned  by  the Optionee and having a fair market value equal  to  the  Exercise
Price, such  fair  market  value  to  be  determined  in  such manner as may be
provided  by  the Committee or as may be required in order to  comply  with  or
conform to the  requirements of any applicable laws or regulations, or (iii) in
a combination of (i) and (ii).

SECTION 5.   DELIVERY  AND  REGISTRATION  OF  OPTIONED  SHARES.  As  soon as is
practicable  following  the  date  on  which  the  Optionee  has  satisfied the
requirements of section 4, the Committee shall take such action as is necessary
to  cause  the  Company  to issue a stock certificate evidencing the Optionee's
ownership of the optioned  Common  Stock that has been purchased.  The Optionee
shall have no right to vote or to receive  dividends, nor have any other rights
with respect to optioned Common Stock, prior  to  the  date  as  of  which such
optioned  Common  Stock  is  transferred  to the Optionee on the stock transfer
records of the Company, and no adjustments  shall  be made for any dividends or
other rights for which the record date is prior to the  date  as  of which such
transfer  is  effected.  The obligation of the Company to deliver Common  Stock
under this Agreement  shall,  if the Committee so requests, be conditioned upon
the receipt of a representation as to the investment intention of the person to
whom such Common Stock is to be  delivered, in such form as the Committee shall
determine  to  be necessary or advisable  to  comply  with  the  provisions  of
applicable federal,  state  or  local  law.   It  may be provided that any such
representation shall become inoperative upon a registration of the Common Stock
or upon the occurrence of any other event eliminating  the  necessity  of  such
representation.   The Company shall not be required to deliver any Common Stock
under this Agreement prior to (a) the admission of such Common Stock to listing
on any stock exchange  on  which  Common  Stock  may then be listed, or (b) the
completion  of  such registration or other qualification  under  any  state  or
federal law, rule  or  regulations  as  the  Committee  shall  determine  to be
necessary or advisable.

           SECTION 6.   ADJUSTMENTS  IN  THE  EVENT  OF REORGANIZATION.  In the
event of any merger, consolidation, or other business  reorganization  in which
the Company is the surviving entity, and in the event of any stock split, stock
dividend  or  other  event  generally  affecting the number of shares of Common
Stock held by each person who is then a  shareholder  of  record, the number of
shares of Common Stock subject to the option granted hereunder and the Exercise
Price per share of such option shall be adjusted in accordance with section 5.3
of  the  Plan  to  account  for  such  event.   In  the  event  of any  merger,
consolidation, or other business reorganization in which the Company is not the
surviving entity, the option granted hereunder shall be canceled or adjusted in
accordance with the Plan.  In the event that the Company shall declare  and pay
any dividend with respect to Shares (other than a dividend payable in Shares or
a  regular  quarterly  cash dividend), including a dividend which results in  a
nontaxable return of capital  to  the  holders of Shares for federal income tax
purposes, or otherwise than by dividend  makes  distribution of property to the
holders of its Shares, at the election of the Committee,  the Company shall
either (i) make an equivalent payment to each Person holding an outstanding  
Option  as ofthe  record  date  for such dividend in accordance with section 
8.3 of the Plan or (ii) adjust the Exercise Price per Share of outstanding 
Options in sucha manner as the Committee  may  determine to be necessary to 
reflect the effect of the dividend or other distribution, or (iii) take any 
other action described in section 8.3 of the Plan. Actions taken under section 
8.3(c) of the Plan are subject to the approval of the Office of Thrift 
Supervision unless section 8.3(c) is approved by the stockholders of the
Company after June 26, 1997.

           SECTION 7.   NO  RIGHT   TO  CONTINUED  SERVICE.   Nothing  in  this
Agreement  nor  any action of the Board  or  Committee  with  respect  to  this
Agreement shall be held or construed to confer upon the Optionee any right to a
continuation of service  by  the  Company.   The  Optionee  may be dismissed or
otherwise dealt with as though this Agreement had not been entered into.

          SECTION 8.   TAXES.  Where any person is entitled  to receive shares
pursuant  to  the  exercise of the Option granted hereunder, the Company  shall
have the right to require  such  person to pay to the Company the amount of any
tax which the Company is required  to withhold with respect to such shares, or,
in lieu thereof, to retain, or to sell  without  notice, a sufficient number of
shares to cover the amount required to be withheld.

          SECTION 9.   NOTICES.  Any communication required or permitted to be
given  under the Plan, including any notice, direction,  designation,  comment,
instruction,  objection  or  waiver, shall be in writing and shall be deemed to
have been given at such time as  it  is  delivered  personally or five (5) days
after  mailing  if mailed, postage prepaid, by registered  or  certified  mail,
return receipt requested,  addressed to such party at the address listed below,
or at such other address as one such party may by written notice specify to the
other party:

            (a) If to the Committee:

                  Dime Community Bancorp, Inc.

                  Attention:  COMPENSATION COMMITTEE

           (b) If to the Optionee,  to  the  Optionee's address as shown in the
      Company's personnel records.

         SECTION 10.   RESTRICTIONS ON TRANSFER.  The option granted hereunder
shall not be subject in any manner to anticipation,  alienation  or assignment,
nor   shall  such  option  be  liable  for  or  subject  to  debts,  contracts,
liabilities, engagements or torts, nor shall it be transferable by the Optionee
other than  by  will or by the laws of descent and distribution or as otherwise
permitted by the Plan.  To name a beneficiary who may exercise your Options
following your death, complete the attached Appendix B and file it with the 
Corporate Secretary of Dime Community Bancorp, Inc.

         SECTION 11.   SUCCESSORS  AND ASSIGNS.  This Agreement shall inure to
the benefit of and shall be binding upon the Company and the Optionee and their
respective heirs, successors and assigns.

         SECTION 12.   CONSTRUCTION  OF LANGUAGE.  Whenever appropriate in the
Agreement, words used in the singular may  be read in the plural, words used in
the  plural  may be read in the singular, and  words  importing  the  masculine
gender may be  read  as  referring  equally to the feminine or the neuter.  Any
reference to a section shall be a reference  to  a  section  of this Agreement,
unless  the  context  clearly  indicates  otherwise.   Capitalized  terms   not
specifically  defined herein shall have the meanings assigned to them under the
Plan.

         SECTION 13.   GOVERNING  LAW.   This  Agreement  shall  be construed,
administered  and  enforced  according  to  the  laws of the State of New  York
without giving effect to the conflict of laws principles thereof, except to the
extent that such laws are preempted by the federal law.

         SECTION 14.   AMENDMENT.  This Agreement  may be amended, in whole or
in part and in any manner not inconsistent with the provisions  of the Plan, at
any  time and from time to time, by written agreement between the  Company  and
the Optionee.

          SECTION 15.   PLAN PROVISIONS CONTROL.  This Agreement and the rights
and obligations  created  hereunder  shall  be  subject to all of the terms and
conditions of the Plan.  In the event of any conflict between the provisions of
the Plan and the provisions of this Agreement, the terms of the Plan, which are
incorporated herein by reference, shall control.   By  signing  this Agreement,
the Optionee acknowledges receipt of a copy of the Plan.

          SECTION 16.   CHANGE  IN  CONTROL.   This  Option is granted  with  a
related Limited Appreciation Right that is exercisable  only  in the event of a
change in control.  A "change in control" shall be as defined in the Plan.

               APPENDIX A TO STOCK OPTION AGREEMENT

        DIME COMMUNITY BANCORP, INC. 1996 STOCK OPTION PLAN

           FOR OUTSIDE DIRECTORS, OFFICERS AND EMPLOYEES

                NOTICE OF EXERCISE OF STOCK OPTION

 USE THIS NOTICE TO INFORM THE COMMITTEE ADMINISTERING THE DIME  COMMUNITY  
 BANCORP,  INC. 1996 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS, OFFICERS AND 
 EMPLOYEES ("PLAN") THAT YOU ARE EXERCISING YOUR RIGHT  TO  PURCHASE SHARES OF
 COMMON STOCK ("SHARES") OF DIME COMMUNITY BANCORP,INC. ("DIME") PURSUANT TO AN
 OPTION ("OPTION") GRANTED  UNDER  THE PLAN. IF YOU ARE NOT THE PERSON TO WHOM 
 THE OPTION WAS GRANTED("OPTION RECIPIENT"),YOU MUST ATTACH TO THIS NOTICE PROOF
 OF  YOUR  RIGHT  TO  EXERCISE  THE OPTION GRANTED UNDER THE STOCK OPTION 
 AGREEMENT ENTERED INTO BETWEEN DIME AND THE OPTION RECIPIENT ("AGREEMENT").   
 THIS  NOTICE  SHOULD  BE  PERSONALLY DELIVERED OR MAILED BY CERTIFIED MAIL, 
 RETURN RECEIPT REQUESTED TO:  DIME COMMUNITY BANCORP, INC., C/O THE  DIME  
 SAVINGS  BANK  OF  WILLIAMSBURGH,  209 HAVEMEYER STREET,  BROOKLYN,  NEW  YORK
 11211, ATTENTION:  CORPORATE SECRETARY.   THE EFFECTIVE DATE OF THE EXERCISE OF
 THE OPTION SHALL BE THE EARLIEST  DATE  PRACTICABLE  FOLLOWING THE DATE THIS 
 NOTICE IS RECEIVED BY DIME, BUT IN NO EVENT MORE THAN THREE DAYS AFTER SUCH 
 DATE ("EFFECTIVE DATE").   EXCEPT  AS  SPECIFICALLY PROVIDED TO THE CONTRARY 
 HEREIN, CAPITALIZED TERMS SHALL HAVE THE MEANINGS ASSIGNED TO THEM UNDER THE 
 PLAN. THIS NOTICE  IS  SUBJECT TO ALL OF THE TERMS AND CONDITIONS OF THE PLAN 
 AND THE AGREEMENT.

 OPTION INFORMATION IDENTIFY BELOW THE OPTION THAT YOU ARE EXERCISING BY 
 PROVIDING THE FOLLOWING INFORMATION FROM THE STOCK OPTION AGREEMENT.

 NAME OF OPTIONEE: ____________________________________________________________

 OPTION GRANT DATE:_____________, _____ EXERCISE PRICE PER SHARE: $_______.____
                  (MONTH AND DAY) (YEAR)

 EXERCISE PRICE:COMPUTE THE EXERCISE PRICE BELOW AND SELECT A METHOD OF PAYMENT.

 Total Exercise Price ______________ x $________.______ = $_____________________
                      (No. of Shares)   (Exercise Price)    Total Exercise Price

     METHOD OF PAYMENT
      
 ___  I  enclose a certified check, money order, or bank draft payable
      to the order of Dime Community Bancorp, Inc. in the amount of $__________

 ___  I enclose Shares duly endorsed for transfer to Dime with all
      stamps attached and having a fair market value of $__________________

                Total Exercise Price       $__________________

 ISSUANCE OF CERTIFICATES
 I hereby direct that the stock certificates representing the Shares purchased 
 pursuant to section 2 above be issued to the following person(s) in the amount
 specified below:

   NAME AND ADDRESS                 SOCIAL SECURITY NO.         NO. OF SHARES
__________________________________  ______-____-_______     ___________________
__________________________________

__________________________________  ______-____-_______     ___________________
__________________________________

 WITHHOLDING  ELECTIONS FOR  EMPLOYEE OPTION RECIPIENTS WITH NON-QUALIFIED STOCK
 OPTIONS ONLY.

 BENEFICIARIES AND OUTSIDE DIRECTORS SHOULD NOT COMPLETE.

 I understand that I am responsible for the amount of federal, state and
 local taxes required to be withheld with respect to the Shares to be issued
 to me pursuant to this Notice, but that I may request Dime to retain or sell
 a sufficient number of such  Shares  to  cover  the amount to be withheld.
 I hereby request that any taxes required to be withheld be paid in the
 following manner [check one]:

                            
 __ With  a  certified or bank  check that I will deliver to the Administrator
    on the day after the Effective Date of my Option exercise.

 __ With the proceeds from a sale of Shares that would otherwise be distributed
    to me.
                            
 __ Retain shares that would otherwise be distributed to me.

 I understand that the withholding elections I have made  on  this  form  are
 not  binding  on the Committee, and that the Committee will decide the amount
 to be withheld and the method of withholding and advise me of  its  decision
 prior to the Effective  Date.  I further understand that the Committee may
 request additional information or assurances  regarding the manner and time at
 which I will report the income attributable to the distribution to be made to
 me.

 I further understand that if I have elected to have Shares sold to satisfy tax
 withholding, I may be asked to pay a minimal amount of such taxes in cash in
 order to avoid the sale of more Shares than are necessary.

 COMPLIANCE WITH TAX AND SECURITIES LAWS

      I  understand  that  I  must  rely on, and consult with, my own tax and
S H   legal  counsel (and not Dime Community  Bancorp,  Inc.)  regarding  the
I E   application  of  all laws -- particularly tax and securities laws -- to
G R   the transactions to  be effected pursuant to my Option and this Notice.
N E   I understand that I will  be  responsible for paying any federal, state
      and local taxes that may become  due  upon  the  sale (including a sale
      pursuant  to  a  "cashless  exercise") or other disposition  of  Shares
      issued pursuant to this Notice  and that I must consult with my own tax
      advisor regarding how and when such income will be reportable.
                                
                 ---------------------            ----------------
                   Signature                        Date

         -----------------------------------------------------------------_
                                      Address

                                   INTERNAL USE ONLY
 Corporate Secretary
 Received [CHECK ONE]:          ___  By Hand       ___  By Mail Post Marked

                                                         -----------------
                                                         DATE OF POST MARK

  By       -------------------------------               -----------------
           AUTHORIZED SIGNATURE                           DATE OF RECEIPT

 APPENDIX B TO STOCK OPTION AGREEMENT

  DIME COMMUNITY BANCORP, INC. 1996
          STOCK OPTION PLAN

 FOR OUTSIDE DIRECTORS, OFFICERS AND
              EMPLOYEES

        BENEFICIARY DESIGNATION FORM

GENERAL INFORMATION
 USE THIS FORM TO DESIGNATE THE BENEFICIARY(IES) WHO MAY EXERCISE OPTIONS
 OUTSTANDING TO YOU AT THE TIME OF YOUR DEATH.

Name of Person
Making a Designation___________________________________________________

Social Security Number________-______-________

BENEFICIARY DESIGNATION

COMPLETE  SECTIONS  A AND B.  IF NO PERCENTAGE SHARES ARE SPECIFIED, EACH
BENEFICIARY IN THE SAME CLASS (PRIMARY OR CONTINGENT)  SHALL HAVE AN EQUAL
SHARE.  IF ANY DESIGNATED BENEFICIARY PREDECEASES YOU, THE SHARES OF EACH
REMAINING BENEFICIARY  IN  THE  SAME  CLASS  (PRIMARY  OR CONTINGENT) SHALL
BE INCREASED PROPORTIONATELY.

A.  PRIMARY BENEFICIARY(IES).   I  hereby  designate  the following person
    as my primary Beneficiary under the Plan, reserving the right to change
    or revoke this designation at any time prior to my death:

                 NAME                                 ADDRESS                   RELATIONSHIP        BIRTHDATE          SHARE
                                                                                                              
______________________________________  ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________                                       Total= 100%

B. CONTINGENT BENEFICIARY(IES).  I hereby designate the  following  person(s)
   as my contingent Beneficiary(ies) under the Plan to receive benefits only
   if all of my primary Beneficiaries should predecease  me,  reserving  the
   right  to  change  or revoke this designation at any time prior to my death
   as to all outstanding Options:

                 NAME                             ADDRESS                          RELATIONSHIP        BIRTHDATE          SHARE
                                                                                                             
______________________________________  ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________                                     Total    =  100%

S H  I  understand that this Beneficiary Designation shall be effective only
I E  if properly  completed  and received by the Corporate Secretary of Dime
G R  Community Bancorp, Inc. prior  to  my  death, and that it is subject to
N E  all of the terms and conditions of the Plan.  I also understand that an
     effective Beneficiary designation revokes  my prior designation(s) with
     respect to all outstanding Options.

                 
     -------------------------------                   -------------
              YOUR SIGNATURE                             Date

                        INTERNAL USE ONLY

 This Beneficiary Designation was received by the Corporate       Comments
 Secretary of Dime Community Bancorp, Inc. on the date 
 Indicated.

By  ----------------------------     ------------               ____________
      AUTHORIZED SIGNATURE           DATE

                                                                  DIRECTORS
                     RECOGNITION AND RETENTION PLAN
                 FOR OUTSIDE DIRECTORS, OFFICERS AND EMPLOYEES
                     OF DIME COMMUNITY BANCORP, INC.
                      RESTRICTED STOCK AWARD NOTICE

- ------------------------------                      -------------------------
NAME OF AWARD RECIPIENT                             SOCIAL SECURITY NUMBER

        ---------------------------------------------------------
                        Street Address

- -------------------------                     ----------------     -----------
CITY                                          STATE                 ZIP CODE

This  Restricted  Stock  Award  Notice  is  intended to set forth the terms and
conditions  on  which  a Restricted Stock Award  has  been  granted  under  the
Recognition and Retention Plan for Outside Directors, Officers and Employees of
Dime Community Bancorp,  Inc.  Set  forth  below  are  the  specific  terms and
conditions  applicable  to this Restricted Stock Award.  Attached as Exhibit  A
are its general terms and conditions.

    Restricted Stock Award             (A)               (B)               (C)               (D)              (E)
                                                                                        
                 Effective Date     12/26/96          12/26/96          12/26/96          12/26/96         12/26/96
               Class of Shares*      Common            Common            Common            Common           Common
         No. of Awarded Shares*       3,174             3,174             3,174             3,174            3,174
                  Vesting Date*      2/1/98            2/1/99           2/1/2000          2/1/2001         2/1/2002

*SUBJECT TO ADJUSTMENT AS PROVIDED IN THE PLAN AND THE GENERAL TERMS AND
CONDITIONS.

By signing where indicated  below, Dime Community Bancorp, Inc. (the "Company")
grants this Restricted Stock Award upon the specified terms and conditions, and
the  Optionee acknowledges receipt  of  this  Restricted  Stock  Award  Notice,
including  Exhibit  A,  and  agrees  to  observe  and be bound by the terms and
conditions set forth herein.

DIME COMMUNITY BANCORP, INC.                    AWARD RECIPIENT

By -----------------------------------------    --------------------
NAME: VINCENT F. PALAGIANO
TITLE: CHIEF EXECUTIVE OFFICER AND CHAIRMAN
OF THE BOARD OF DIRECTORS

INSTRUCTIONS:    This  page  should  be  completed  by  or  on  behalf  of  the
Compensation Committee.   Any  blank  space  intentionally left blank should be
crossed out.  A Restricted Stock Award consists  of  a number of Awarded Shares
with uniform terms and conditions.  Where Awarded Shares  are  awarded  on  the
same  date  with  varying  terms  and  conditions (for example, varying vesting
dates), the awards should be recorded as  a  series of grants each with its own
uniform terms and conditions.

                                                                      EXHIBIT A
                        RECOGNITION AND RETENTION PLAN
 FOR OUTSIDE DIRECTORS, OFFICERS AND EMPLOYEES OF DIME COMMUNITY BANCORP, INC.
                            RESTRICTED STOCK AWARD

                         GENERAL TERMS AND CONDITIONS

            Section 1.  OWNERSHIP OF SHARES.   The  shares of Common Stock, par
value  $.01 per share, of Dime Community Bancorp, Inc.  ("Shares")  covered  by
this Award  ("Awarded  Shares") are held in trust by Marine Midland Bank, N.A.,
the  Trustee of the Plan,  for  your  benefit  until  such  time  as  they  are
distributed to you or, if earlier, until you forfeit your rights to the Awarded
Shares.

            Section  2.   VESTING.   In general the Awarded Shares shall become
vested and available for distribution  to  you  at  the  dates set forth in the
Restricted Stock Award Notice.  In the event that your service with the Company
terminates on account of your death or Disability, then any  Awarded Shares not
therefore  forfeited  shall  become  immediately vested.  In addition,  to  the
extent  authorized  pursuant  to  a Plan provision  that  is  approved  by  the
Company's  shareholders  after  June  26,  1997,  in  the  event  your  service
terminates due to retirement (as defined  in the Plan) or in the event a change
of  control  (as  defined in the Plan) occurs,  then  any  Awarded  Shares  not
theretofore forfeited shall become immediately vested.

            Section  3.   FORFEITURES.  In the event that your service with the
Company terminates before all  of the Awarded Shares become vested, any Awarded
Shares that have not yet become  vested  pursuant  to  section  2 of this Award
Notice  shall  be  forfeited.   Following such a forfeiture, you will  have  no
rights whatsoever with respect to the Awarded Shares forfeited.

            Section 4.  DIVIDENDS.     Any cash or stock dividends declared and
paid with respect to Awarded Shares not  forfeited  shall  be allocated to you,
and such dividends (and any earnings attributable to them) shall be held in the
Trust Fund subject to such restrictions and shall become vested  under the same
terms and conditions as the Awarded Shares to which they pertain.

            Section 5.  VOTING RIGHTS.  You shall have the exclusive  right  to
direct  the manner in which all voting rights appurtenant to Awarded Shares not
forfeited  will  be  exercised  while such Awarded Shares are held in the Trust
Fund.  Such a direction shall be  given  by  completing  and  filing  a written
direction, in the form and manner prescribed by the Committee, with such person
as  the  Committee shall designate, prior to the date of the meeting of holders
of Shares at which such voting rights will be exercised.

            Section  6.   DISTRIBUTION  UPON  VESTING.   As soon as practicable
following  the  date  any Awarded Shares become vested pursuant  to  the  Award
Notice, the Company will  issue  to  you,  or your Beneficiary entitled to such
Awarded Shares, a stock certificate evidencing  ownership  of  the Shares.  Any
additional  Shares  attributable  to stock dividends paid with respect  to  the
Awarded Shares then being distributed  pursuant to this section 6 shall also be
distributed and shall be evidenced by such  stock  certificate.   At  the  same
time,  you  will  receive a cash distribution of any related cash dividends and
earnings thereon.

            Section  7.   REGISTRATION  OF SHARES.  The Company's obligation to
deliver  Shares  pursuant  to this Award Notice  shall,  if  the  Committee  so
requests, be conditioned upon  the  receipt  of  a  representation  as  to  the
investment  intention  of you or your Beneficiary to whom such Shares are to be
delivered, in such form  as  the  Committee  shall determine to be necessary or
advisable to comply with the provisions of applicable  federal,  state or local
law.  It may be provided that any such representation shall become  inoperative
upon  a  registration  of the Shares or upon the occurrence of any other  event
eliminating the necessity  of  such  representation.   The Company shall not be
required  to deliver any Shares under the Plan prior to (a)  the  admission  of
such Shares  to  listing  on  any  stock  exchange  on which Shares may then be
listed, or (b) the completion of such registration or other qualification under
any state or federal law, rule or regulation as the Committee  shall  determine
to be necessary or advisable.

            Section  8.  NO RIGHT TO CONTINUED SERVICE.  Nothing in this  Award
Notice nor any action  of the Board or the Committee with respect to this Award
Notice  shall  be  held or  construed  to  confer  upon  you  any  right  to  a
continuation of service  with the Company or any of its affiliates which retain
you.  You may be dismissed or otherwise dealt with to the same extent as though
this Award had not been made.

            Section 9.  TAXES.  The Company, the Committee or the Trustee shall
have the right to require you to pay the amount of any tax which is required to
be withheld with respect to the Awarded Shares, or, in lieu thereof, to retain,
or to sell without notice,  a  sufficient number of Awarded Shares to cover the
amount required to be withheld.

            Section 10.  NOTICES.   Any  communication required or permitted to
be given under the Plan, including any notice, direction, designation, comment,
instruction, objection or waiver, shall be  in  writing  and shall be deemed to
have been given at such time as it is personally delivered  or  five  (5)  days
after  mailing  if  mailed,  postage  prepaid, by registered or certified mail,
return receipt requested, addressed to  such party at the address listed below,
or at such other address as one such party may by written notice specify to the
other:

            (a)   If to the Committee:

                  Dime Community Bancorp, Inc.
                  c/o The Dime Savings Bank of Williamsburgh
                  209 Havemeyer Street
                  Brooklyn, New York  11211

                  Attention:  CORPORATE SECRETARY

            (b) If to you, to your address  as shown in the Company's personnel
      records.

            Section  11.   NO ASSIGNMENT.  The  Awarded  Shares  shall  not  be
transferable  by  you other than  by  will  or  by  the  laws  of  descent  and
distribution, and the  Awarded Shares shall be distributable only to you during
your lifetime.  To name a Beneficiary who may receive distribution of shares of
Common Stock available for distribution after your death, complete the attached
Appendix A and file it with  the Corporate Secretary of Dime Community Bancorp,
Inc.

            Section 12.  SUCCESSORS AND ASSIGNS.  This Award Notice shall inure
to the benefit of and shall be  binding  upon  you  and  the  Company  and your
respective heirs, successors and assigns.

            Section  13.   CONSTRUCTION  OF LANGUAGE.  Whenever appropriate  in
this Award Notice, words used in the singular  may be read in the plural, words
used  in  the  plural  may be read in the singular,  and  words  importing  the
masculine gender may be  read  as  referring  equally  to  the  feminine or the
neuter.  Any reference to a section shall be a reference to a section  of  this
Award  Notice,  unless  the  context  clearly indicates otherwise.  Capitalized
terms not specifically defined herein shall  have the meanings assigned to them
under the Plan.

            Section 14.  GOVERNING LAW.  This  Award  Notice shall be construed
and  enforced  in  accordance with the laws of the State of  New  York  without
giving effect to the  conflict of laws principles thereof, except to the extent
that such laws are preempted  by  the  federal  laws  of  the  United States of
America.

            Section 15.  AMENDMENT.  This Award Notice may be amended, in whole
or in part and in any manner not inconsistent with the provisions  of the Plan,
at  any  time and from time to time, by written agreement between you  and  the
Company.

            Section  16.   PLAN PROVISIONS CONTROL.  This Award Notice, and the
rights and obligations created  hereunder, shall be subject to all of the terms
and  conditions  of  the  Plan.  In the  event  of  any  conflict  between  the
provisions of the Plan and  the  provisions  of this Award Notice, the terms of
the  Plan,  which  are  incorporated herein by reference,  shall  control.   By
signing this Award Notice, you acknowledge receipt of a copy of the Plan.

APPENDIX A TO RESTRICTED STOCK AWARD NOTICE

  RECOGNITION AND RETENTION PLAN FOR OUTSIDE DIRECTORS, OFFICERS AND
              EMPLOYEES OF DIME COMMUNITY BANCORP, INC.

        BENEFICIARY DESIGNATION FORM

GENERAL INFORMATION
 USE THIS FORM TO DESIGNATE THE BENEFICIARY(IES) WHO MAY EXERCISE OPTIONS
 OUTSTANDING TO YOU AT THE TIME OF YOUR DEATH.

Name of Person
Award Recipient___________________________________________________

Social Security Number________-______-________

BENEFICIARY DESIGNATION

COMPLETE  SECTIONS  A AND B.  IF NO PERCENTAGE SHARES ARE SPECIFIED, EACH
BENEFICIARY IN THE SAME CLASS (PRIMARY OR CONTINGENT)  SHALL HAVE AN EQUAL
SHARE.  IF ANY DESIGNATED BENEFICIARY PREDECEASES YOU, THE SHARES OF EACH
REMAINING BENEFICIARY  IN  THE  SAME  CLASS  (PRIMARY  OR CONTINGENT) SHALL
BE INCREASED PROPORTIONATELY.

A.  PRIMARY BENEFICIARY(IES).   I  hereby  designate  the following person
    as my primary Beneficiary under the Plan, reserving the right to change
    or revoke this designation at any time prior to my death:

                 NAME                                 ADDRESS                   RELATIONSHIP        BIRTHDATE          SHARE
                                                                                                              
______________________________________  ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________                                       Total= 100%

B. CONTINGENT BENEFICIARY(IES).  I hereby designate the  following  person(s)
   as my contingent Beneficiary(ies) under the Plan to receive benefits only
   if all of my primary Beneficiaries should predecease  me,  reserving  the
   right  to  change  or revoke this designation at any time prior to my death
   as to all outstanding Options:

                 NAME                             ADDRESS                          RELATIONSHIP        BIRTHDATE          SHARE
                                                                                                             
______________________________________  ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________                                     Total    =  100%

S H  I  understand that this Beneficiary Designation shall be effective only
I E  if properly  completed  and received by the Corporate Secretary of Dime
G R  Community Bancorp, Inc. prior  to  my  death, and that it is subject to
N E  all of the terms and conditions of the Plan.  I also understand that an
     effective Beneficiary designation revokes  my prior designation(s) with
     respect to all outstanding Options.

                 
     -------------------------------                   -------------
              YOUR SIGNATURE                             Date

                        INTERNAL USE ONLY

 This Beneficiary Designation was received by the Corporate       Comments
 Secretary of Dime Community Bancorp, Inc. on the date 
 Indicated.

By  ----------------------------     ------------               ____________
      AUTHORIZED SIGNATURE           DATE

                                                        Officers and Employees
                     RECOGNITION AND RETENTION PLAN
                 FOR OUTSIDE DIRECTORS, OFFICERS AND EMPLOYEES
                     OF DIME COMMUNITY BANCORP, INC.
                      RESTRICTED STOCK AWARD NOTICE

- ------------------------------                      -------------------------
NAME OF AWARD RECIPIENT                             SOCIAL SECURITY NUMBER

        ---------------------------------------------------------
                        Street Address

- -------------------------                     ----------------     -----------
CITY                                          STATE                 ZIP CODE

This  Restricted  Stock  Award  Notice  is  intended to set forth the terms and
conditions  on  which  a Restricted Stock Award  has  been  granted  under  the
Recognition and Retention Plan for Outside Directors, Officers and Employees of
Dime Community Bancorp,  Inc.  Set  forth  below  are  the  specific  terms and
conditions  applicable  to this Restricted Stock Award.  Attached as Exhibit  A
are its general terms and conditions.

    Restricted Stock Award             (A)               (B)               (C)               (D)              (E)
                                                                                        
                 Effective Date     12/26/96          12/26/96          12/26/96          12/26/96         12/26/96
               Class of Shares*      Common            Common            Common            Common           Common
         No. of Awarded Shares*                    
                  Vesting Date*      2/1/98            2/1/99           2/1/2000          2/1/2001         2/1/2002

*SUBJECT TO ADJUSTMENT AS PROVIDED IN THE PLAN AND THE GENERAL TERMS AND
CONDITIONS.

By signing where indicated  below, Dime Community Bancorp, Inc. (the "Company")
grants this Restricted Stock Award upon the specified terms and conditions, and
the  Optionee acknowledges receipt  of  this  Restricted  Stock  Award  Notice,
including  Exhibit  A,  and  agrees  to  observe  and be bound by the terms and
conditions set forth herein.

DIME COMMUNITY BANCORP, INC.                    AWARD RECIPIENT

By -----------------------------------------    --------------------
NAME: VINCENT F. PALAGIANO
TITLE: CHIEF EXECUTIVE OFFICER AND CHAIRMAN
OF THE BOARD OF DIRECTORS

INSTRUCTIONS:    This  page  should  be  completed  by  or  on  behalf  of  the
Compensation Committee.   Any  blank  space  intentionally left blank should be
crossed out.  A Restricted Stock Award consists  of  a number of Awarded Shares
with uniform terms and conditions.  Where Awarded Shares  are  awarded  on  the
same  date  with  varying  terms  and  conditions (for example, varying vesting
dates), the awards should be recorded as  a  series of grants each with its own
uniform terms and conditions.

                                                                      EXHIBIT A
                        RECOGNITION AND RETENTION PLAN
 FOR OUTSIDE DIRECTORS, OFFICERS AND EMPLOYEES OF DIME COMMUNITY BANCORP, INC.
                            RESTRICTED STOCK AWARD

                         GENERAL TERMS AND CONDITIONS

            Section 1.  OWNERSHIP OF SHARES.   The  shares of Common Stock, par
value  $.01 per share, of Dime Community Bancorp, Inc.  ("Shares")  covered  by
this Award  ("Awarded  Shares") are held in trust by Marine Midland Bank, N.A.,
the  Trustee of the Plan,  for  your  benefit  until  such  time  as  they  are
distributed to you or, if earlier, until you forfeit your rights to the Awarded
Shares.

            Section  2.   VESTING.   In general the Awarded Shares shall become
vested and available for distribution  to  you  at  the  dates set forth in the
Restricted Stock Award Notice.  In the event that your service with the Company
terminates on account of your death or Disability, then any  Awarded Shares not
therefore  forfeited  shall  become  immediately vested.  In addition,  to  the
extent  authorized  pursuant  to  a Plan provision  that  is  approved  by  the
Company's  shareholders  after  June  26,  1997,  in  the  event  your  service
terminates due to retirement (as defined  in the Plan) or in the event a change
of  control  (as  defined in the Plan) occurs,  then  any  Awarded  Shares  not
theretofore forfeited shall become immediately vested.

            Section  3.   FORFEITURES.  In the event that your service with the
Company terminates before all  of the Awarded Shares become vested, any Awarded
Shares that have not yet become  vested  pursuant  to  section  2 of this Award
Notice  shall  be  forfeited.   Following such a forfeiture, you will  have  no
rights whatsoever with respect to the Awarded Shares forfeited.

            Section 4.  DIVIDENDS.     Any cash or stock dividends declared and
paid with respect to Awarded Shares not  forfeited  shall  be allocated to you,
and such dividends (and any earnings attributable to them) shall be held in the
Trust Fund subject to such restrictions and shall become vested  under the same
terms and conditions as the Awarded Shares to which they pertain.

            Section 5.  VOTING RIGHTS.  You shall have the exclusive  right  to
direct  the manner in which all voting rights appurtenant to Awarded Shares not
forfeited  will  be  exercised  while such Awarded Shares are held in the Trust
Fund.  Such a direction shall be  given  by  completing  and  filing  a written
direction, in the form and manner prescribed by the Committee, with such person
as  the  Committee shall designate, prior to the date of the meeting of holders
of Shares at which such voting rights will be exercised.

            Section  6.   DISTRIBUTION  UPON  VESTING.   As soon as practicable
following  the  date  any Awarded Shares become vested pursuant  to  the  Award
Notice, the Company will  issue  to  you,  or your Beneficiary entitled to such
Awarded Shares, a stock certificate evidencing  ownership  of  the Shares.  Any
additional  Shares  attributable  to stock dividends paid with respect  to  the
Awarded Shares then being distributed  pursuant to this section 6 shall also be
distributed and shall be evidenced by such  stock  certificate.   At  the  same
time,  you  will  receive a cash distribution of any related cash dividends and
earnings thereon.

            Section  7.   REGISTRATION  OF SHARES.  The Company's obligation to
deliver  Shares  pursuant  to this Award Notice  shall,  if  the  Committee  so
requests, be conditioned upon  the  receipt  of  a  representation  as  to  the
investment  intention  of you or your Beneficiary to whom such Shares are to be
delivered, in such form  as  the  Committee  shall determine to be necessary or
advisable to comply with the provisions of applicable  federal,  state or local
law.  It may be provided that any such representation shall become  inoperative
upon  a  registration  of the Shares or upon the occurrence of any other  event
eliminating the necessity  of  such  representation.   The Company shall not be
required  to deliver any Shares under the Plan prior to (a)  the  admission  of
such Shares  to  listing  on  any  stock  exchange  on which Shares may then be
listed, or (b) the completion of such registration or other qualification under
any state or federal law, rule or regulation as the Committee  shall  determine
to be necessary or advisable.

            Section  8.  NO RIGHT TO CONTINUED SERVICE.  Nothing in this  Award
Notice nor any action  of the Board or the Committee with respect to this Award
Notice  shall  be  held or  construed  to  confer  upon  you  any  right  to  a
continuation of service  with the Company or any of its affiliates which retain
you.  You may be dismissed or otherwise dealt with to the same extent as though
this Award had not been made.

            Section 9.  TAXES.  The Company, the Committee or the Trustee shall
have the right to require you to pay the amount of any tax which is required to
be withheld with respect to the Awarded Shares, or, in lieu thereof, to retain,
or to sell without notice,  a  sufficient number of Awarded Shares to cover the
amount required to be withheld.

            Section 10.  NOTICES.   Any  communication required or permitted to
be given under the Plan, including any notice, direction, designation, comment,
instruction, objection or waiver, shall be  in  writing  and shall be deemed to
have been given at such time as it is personally delivered  or  five  (5)  days
after  mailing  if  mailed,  postage  prepaid, by registered or certified mail,
return receipt requested, addressed to  such party at the address listed below,
or at such other address as one such party may by written notice specify to the
other:

            (a)   If to the Committee:

                  Dime Community Bancorp, Inc.
                  c/o The Dime Savings Bank of Williamsburgh
                  209 Havemeyer Street
                  Brooklyn, New York  11211

                  Attention:  CORPORATE SECRETARY

            (b) If to you, to your address  as shown in the Company's personnel
      records.

            Section  11.   NO ASSIGNMENT.  The  Awarded  Shares  shall  not  be
transferable  by  you other than  by  will  or  by  the  laws  of  descent  and
distribution, and the  Awarded Shares shall be distributable only to you during
your lifetime.  To name a Beneficiary who may receive distribution of shares of
Common Stock available for distribution after your death, complete the attached
Appendix A and file it with  the Corporate Secretary of Dime Community Bancorp,
Inc.

            Section 12.  SUCCESSORS AND ASSIGNS.  This Award Notice shall inure
to the benefit of and shall be  binding  upon  you  and  the  Company  and your
respective heirs, successors and assigns.

            Section  13.   CONSTRUCTION  OF LANGUAGE.  Whenever appropriate  in
this Award Notice, words used in the singular  may be read in the plural, words
used  in  the  plural  may be read in the singular,  and  words  importing  the
masculine gender may be  read  as  referring  equally  to  the  feminine or the
neuter.  Any reference to a section shall be a reference to a section  of  this
Award  Notice,  unless  the  context  clearly indicates otherwise.  Capitalized
terms not specifically defined herein shall  have the meanings assigned to them
under the Plan.

            Section 14.  GOVERNING LAW.  This  Award  Notice shall be construed
and  enforced  in  accordance with the laws of the State of  New  York  without
giving effect to the  conflict of laws principles thereof, except to the extent
that such laws are preempted  by  the  federal  laws  of  the  United States of
America.

            Section 15.  AMENDMENT.  This Award Notice may be amended, in whole
or in part and in any manner not inconsistent with the provisions  of the Plan,
at  any  time and from time to time, by written agreement between you  and  the
Company.

            Section  16.   PLAN PROVISIONS CONTROL.  This Award Notice, and the
rights and obligations created  hereunder, shall be subject to all of the terms
and  conditions  of  the  Plan.  In the  event  of  any  conflict  between  the
provisions of the Plan and  the  provisions  of this Award Notice, the terms of
the  Plan,  which  are  incorporated herein by reference,  shall  control.   By
signing this Award Notice, you acknowledge receipt of a copy of the Plan.

APPENDIX A TO RESTRICTED STOCK AWARD NOTICE

  RECOGNITION AND RETENTION PLAN FOR OUTSIDE DIRECTORS, OFFICERS AND
              EMPLOYEES OF DIME COMMUNITY BANCORP, INC.

        BENEFICIARY DESIGNATION FORM

GENERAL INFORMATION
 USE THIS FORM TO DESIGNATE THE BENEFICIARY(IES) WHO MAY EXERCISE OPTIONS
 OUTSTANDING TO YOU AT THE TIME OF YOUR DEATH.

Name of Person
Award Recipient___________________________________________________

Social Security Number________-______-________

BENEFICIARY DESIGNATION

COMPLETE  SECTIONS  A AND B.  IF NO PERCENTAGE SHARES ARE SPECIFIED, EACH
BENEFICIARY IN THE SAME CLASS (PRIMARY OR CONTINGENT)  SHALL HAVE AN EQUAL
SHARE.  IF ANY DESIGNATED BENEFICIARY PREDECEASES YOU, THE SHARES OF EACH
REMAINING BENEFICIARY  IN  THE  SAME  CLASS  (PRIMARY  OR CONTINGENT) SHALL
BE INCREASED PROPORTIONATELY.

A.  PRIMARY BENEFICIARY(IES).   I  hereby  designate  the following person
    as my primary Beneficiary under the Plan, reserving the right to change
    or revoke this designation at any time prior to my death:

                 NAME                                 ADDRESS                   RELATIONSHIP        BIRTHDATE          SHARE
                                                                                                              
______________________________________  ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________                                       Total= 100%

B. CONTINGENT BENEFICIARY(IES).  I hereby designate the  following  person(s)
   as my contingent Beneficiary(ies) under the Plan to receive benefits only
   if all of my primary Beneficiaries should predecease  me,  reserving  the
   right  to  change  or revoke this designation at any time prior to my death
   as to all outstanding Options:

                 NAME                             ADDRESS                          RELATIONSHIP        BIRTHDATE          SHARE
                                                                                                             
______________________________________  ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________
______________________________________
                                        ______________________________________   ______________    ______________    ___________%
                                        ______________________________________                                     Total    =  100%

S H  I  understand that this Beneficiary Designation shall be effective only
I E  if properly  completed  and received by the Corporate Secretary of Dime
G R  Community Bancorp, Inc. prior  to  my  death, and that it is subject to
N E  all of the terms and conditions of the Plan.  I also understand that an
     effective Beneficiary designation revokes  my prior designation(s) with
     respect to all outstanding Options.

                 
     -------------------------------                   -------------
              YOUR SIGNATURE                             Date

                        INTERNAL USE ONLY

 This Beneficiary Designation was received by the Corporate       Comments
 Secretary of Dime Community Bancorp, Inc. on the date 
 Indicated.

By  ----------------------------     ------------               ____________
      AUTHORIZED SIGNATURE           DATE

                                                  EXHIBIT NUMBER 11

DIME COMMUNITY BANCORP, INC. AND SUBSIDIARY
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (1)
                                                             FOR THE
                                                            YEAR ENDED
                                                          JUNE 30, 1997
                                                          -------------
Net income                                                      $12,316

Weighted average common shares outstanding                       12,934

Common stock equivalents due to dilutive
effect of stock options                                              47
                                                           ------------
Total weighted average common shares and
  common share equivalents                                       12,980
                                                           ============
Earnings per common share and common share
    equivalents                                                   $0.95
                                                           ============
Total weighted average common shares and
   common share equivalents                                      12,980

Additional dilutive shares using ending
  period market value versus average market
  value for the period when utilizing the treasury
  stock method regarding stock options                              157
                                                           ------------
Total shares for fully diluted earnings per                      
  share                                                          13,137
                                                           ============
Fully diluted earnings per common share and
  common share equivalents                                        $0.94
                                                           ============

(1)  Earnings  per  share information is not presented for the year ended
June 30, 1996 as it not  considered  meaningful  since the initial public
offering of the Company's stock did not occur until June, 1996.

                             FINANCIAL HIGHLIGHTS
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected consolidated financial and other data of the Company set forth
below is derived in part from, and should be read in conjunction with, the
Consolidated Financial Statements of the Company and Notes thereto.  Earnings
per share information for the Company for the fiscal years ended prior to June
30, 1996 are not meaningful since the sale of the Company's common stock and
the merger of Conestoga Bancorp, Inc. into the Bank occurred on June 26, 1996.

    At or for the years ended June 30,                 1997             1996     1995       1994           1993
                                                                                                     
- ----------------------------------------------  -------------   -------------   ----------  ----------   -----------
FINANCIAL CONDITION DATA:
Total assets                                 $1,315,026       $1,371,821      $662,739   $646,458       $645,899
Loans, net                                      739,858          575,874       424,680    427,960        458,422
Mortgage-backed securities                      308,525          209,941        91,548     94,356         82,077
Investment securities                       168,596          392,450       101,695     86,686         56,724
Federal funds sold                               18,902          115,130        17,809      7,029         21,037
Goodwill                                             26,433           28,438            -          -              -
Deposits                                            963,395          950,114       554,841    546,761        564,110
Borrowings                                          139,543           27,708        17,820     17,871         11,981
Stockholders' equity                            190,889          213,071        77,067     67,919         58,920
Tangible Stockholders' equity                   162,361          184,188        76,321     67,646         58,577
- ----------------------------------------------   -------------    -------------  ---------  ----------   -----------
SELECTED OPERATING DATA:
Interest income                                     $89,030          $52,619       $49,223    $49,821        $51,393
Interest expense on deposits and borrowings          41,564           23,516        18,946     17,594         21,251
- ----------------------------------------------   -------------    -------------   --------- ----------   -----------
Net interest income                                  47,466           29,103        30,277     32,227         30,142
Provision for losses                                  4,200            2,979         2,950      4,105          3,395
- ----------------------------------------------   -------------    -------------   --------- ----------   -----------
Net interest income after provision for loan
       losses                                        43,266           26,124        27,327     28,122         26,747
Non-interest income                                   4,133            1,375         1,773      2,267          3,195
Non-interest expense                             27,492           14,021        14,053     12,714         12,214
- ----------------------------------------------   -------------     -------------  --------- ---------    -----------
Income before income tax expense and
  cumulative effect of changes in                                                                        
  accounting principle                               19,907           13,478        15,047     17,675         17,728
Income tax expense                                7,591            6,181         6,621      8,211          8,530
- ----------------------------------------------     -------------   ------------- ---------- ----------    -----------
Income before cumulative effect of changes
       in accounting principle                       12,316            7,297         8,426      9,464          9,198
Cumulative effect on prior years of changing
       to a different method of accounting
       for:                                                      
      Income taxes                                   -                -             -        (383)            -
      Postretirement benefits other than
        pensions                                     -            (1,032)           -           -             -
- ----------------------------------------------     -------------   -------------  ----------- -----------  ------------
Net income                                     $12,316           $6,265         $8,426    $9,081         $9,198
==============================================    ==============   =============  =========== ===========   =========== 

Since the acquisition of Conestoga was completed at June 26, 1996, its
    contribution to the Company's earnings and the effect upon average balance
    computations for fiscal year ended June 30, 1996 were not material.
At June 30, 1996, investment securities and federal funds sold include
    125.0 million and $6.1 million, respectively,  of excess proceeds resulting
    from the oversubscription to the Company's initial public
    offering.  The excess proceeds were refunded on July 1, 1996.
Loans, net, represents gross loans less net deferred loan fees and
    allowance for loan losses.
The Company has classified its securities as ''held-to-maturity'' or
    ''available-for-sale'' since July 1, 1994, when it adopted SFAS No. 115
    ''Accounting for Investments in Debt and Equity Securities'' (''SFAS
    115'').  Amount includes investment in Federal Home Loan Bank of New York
    ("FHLBNY") capital stock.
Stockholders' Equity and tangible stockholders' equity increased from June
    30, 1995 to June 30, 1996 primarily due to the initial public offering.
Excluding a non-recurring charge of $2.0 million related to the
    recapitalization of the Savings Association Insurance Fund, non-interest
    expense was $25.5 million during the year ended June 30, 1997.  See
    "Impact of Recent Legislation."
Excluding non-recurring New York State and New York City income tax
    recoveries of $1.9 million and $1.0 million, respectively, income tax
    expense was $10.5 million during the fiscal year ended June 30, 1997.
Pursuant to Statement of Financial Accounting Standards No. 109,
    "Accounting for Income Taxes," ('SFAS 109"), on July 1, 1993, the Bank
    changed prospectively to the deferred method of accounting for income
    taxes. The effect of the adoption of this standard is reflected in the
    selected operating data  as the cumulative effect of adopting a change in
    accounting principles.
The Bank adopted Statement of Financial Accounting Standards No. 106,
    ''Employers' Accounting for Postretirement Benefits Other Than Pensions''
    ("SFAS 106") effective July 1, 1995. The Bank elected to record
    the full accumulated post retirement benefit obligation upon adoption. This
    resulted in a cumulative effect adjustment of $1,032,000 (after
    reduction for income taxes of $879,000) to apply retroactively to previous
    years the new method of accounting, which is shown in the consolidated
    statement of income for the year ended June 30, 1996.

PAGE 1

    At or for the fiscal years ended June 30,              1997         1996        1995       1994        1993
                                                                                                   
- --------------------------------------------           ---------     --------   ---------  ---------    ---------
SELECTED FINANCIAL RATIOS AND OTHER DATA (11):
FINANCIAL AND PERFORMANCE RATIOS:
   Return on average assets                      1.00%        1.07%       1.33%      1.46%         1.47%
   Return on average stockholders' equity             5.94         9.07       11.50      14.66         16.83
        
   Return on average tangible
     stockholders' equity                        6.84        11.84       11.53      14.66         16.83
   Stockholders' equity to total assets
     at end of period                                     14.52        15.53       11.63      10.51          9.12
   Tangible equity to tangible assets at end of           
     period                                               12.62        13.72       11.53      10.47          9.07
   Loans to deposits at end of period                     77.91        61.43       77.47      78.94         81.80
   Average interest rate spread                       3.38         3.85        4.51       4.80          4.61
   Net interest margin                                4.07         4.41        4.91       5.12          4.95
   Average interest earning assets to average
     interest bearing liabilities                        119.33       115.68      113.15     111.50        109.66
   Non-interest expense to average assets             2.24         2.06        2.21       1.97          1.95
   Core non-interest expense to average assets             1.87         2.06        2.21       1.97          1.95

   Efficiency ratio                             54.32        45.98       44.11      37.63         38.18
   Core efficiency ratio                        45.55        45.98       44.11      37.63         38.18
PER SHARE DATA:
   Earnings per share                                $0.95          N/A         N/A        N/A           N/A
   Cash dividends per share                               0.045          $-          N/A        N/A           N/A
   Book value per share                                   14.58        14.65         N/A        N/A           N/A
   Tangible book value per share                          12.40        12.66         N/A        N/A           N/A
CASH EARNINGS INFORMATION:
   Cash return on average assets                 1.36%        1.07%       1.33%      1.46%         1.47%
   Cash return on average
     stockholders' equity                        8.06         9.07       11.50      14.66         16.83
   Cash return on average tangible stockholders'
     equity                                      9.27         9.07       11.50      14.66         16.83
   Cash earnings per share                           $1.29          N/A         N/A        N/A           N/A
ASSET QUALITY RATIOS AND OTHER DATA:
   Total non-performing loans                       $3,190       $6,551      $5,073     $6,248        11,632
   Other real estate owned, net                           1,697        1,946       4,466      8,200         7,981
      Ratios:
        Non-performing loans to total loans                0.43%        1.12%       1.18%      1.45%         2.52%
        Non-performing loans and real estate
              owned to total assets                        0.37         0.62        1.44       2.23          3.04
ALLOWANCE FOR LOAN LOSSES TO:
        Non-performing loans                             336.24%      119.25%     101.99%     58.15%        25.76%
        Total loans                                   1.43         1.34        1.20       0.84          0.65
REGULATORY CAPITAL RATIOS: (Bank only)
   Tangible capital                                        9.86%        9.49%      11.53%     10.47%         9.07%
   Core capital                                            9.87         9.50       11.56      10.51          9.12
   Risk-based capital                                     19.99        21.24       22.18      19.83         14.13
FULL SERVICE BRANCHES                                        15           15           7          7             7

Excluding the effects of the Savings Association Insurance Fund ("SAIF')
     Special Assessment and the recovery of New York State and City deferred
     income taxes previously provided, net income would have been $10.5million,
     and the return on average assets, return on average stockholders'
     equity, return on average tangible stockholders' equity, non-interest
     expense to average assets, the efficiency ratio, and earnings per share
     would have been 0.86%, 5.08%, 5.85%, 2.07%, 50.30% and $0.81,
     respectively, for the year ended June 30, 1997.
With the exception of end of period ratios, all ratios are based on
     average daily balances during the indicated periods. Asset Quality Ratios
     and Regulatory Capital Ratios are end of period ratios.
Income before cumulative effect of changes in accounting principles is
     used to calculate return on average assets and return on average equity
     ratios.
Avedrage interest rate spread represents the difference between the
     weighted-average yield on interest-earning assets and the weighted-average
     cost of interest-bearing liabilities.
The net interest margin represents net interest income as a percentage of
     average interest-earning assets.
The efficiency ratio represents non-interest expense as a percentage of
     the sum of net interest income and non-interest income excluding any gains
     or losses on sales of assets.
In calculating these ratios, amortization expense related to goodwill and
     the SAIF recapitalization charge are excluded from non-interest expense.
In calculating these ratios, non-interest expense excludes expenses such
     as goodwill amortization and the after-tax effect of compensation 
     expense related to the Company's stock benefit plans which are accretive
     to book value.Excluding the effects of the SAIF Special Assessment and the
     recovery of New York State and City deferred income taxes previously
     provided, cash return on average assets, cash return on average
     stockholders' equity, cash return on average tangible stockholders'
     equity, and cash earnings per share would have been 1.21%, 7.19%, 8.28%,
     and $1.15 for the year ended June 30, 1997.
 Non-performing loans consists of non-accrual loans; the Bank did not have
     any loans that were 90 days or more past due and still accruing at any of
     the dates presented. Non-performing loans do not include troubled-debt
     restructurings (''TDRs''). See "Asset Quality.''
 Total loans represents loans, net, plus the allowance for loan losses.

PAGE 2

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

GENERAL

    Dime Community Bancorp, Inc. (the "Company") is a Delaware corporation
organized in December, 1995 at the direction of the Board of Directors of the
Dime Savings Bank of Williamsburgh (the "Bank")  for the purpose of acquiring
all of the capital stock of the Bank issued in the conversion of the Bank, on
June 26, 1996, from a federal mutual savings bank to a federal stock savings
bank (the "Conversion").  The Company had no operations prior to June 26, 1996.

    The primary business of the Company is the operation of its wholly-owned
subsidiary, the Bank. In addition to directing, planning and coordinating the
business activities of the Bank, the Company retained proceeds in connection
with the Conversion, which are invested primarily in federal funds and short-
term, investment grade marketable securities.

    The Bank's principal business has been, and continues to be, gathering
deposits from customers within its market area, and investing those deposits,
primarily in multi-family and one- to four-family residential mortgage loans,
mortgage-backed securities, and obligations of the U.S. Government and
Government Sponsored Entities ("GSEs"). The Bank's revenues are derived
principally from interest on its loan and securities portfolios. The Bank's
primary sources of funds are: deposits; loan amortization, prepayments and
maturities; amortization, prepayments and maturities of mortgage-backed and
investment securities, borrowed funds; and, to a lesser extent, the sale of
fixed-rate mortgage loans to the secondary market.

    The Company's consolidated results of operations are dependent primarily on
net interest income, which is the difference between the interest income earned
on its interest-earning assets, such as loans and securities, and the interest
expense paid on its interest-bearing liabilities, such as deposits. The Bank
also generates non-interest income such as service charges and other fees. The
Bank's non-interest expenses primarily consist of employee compensation and
benefits, occupancy expenses, federal deposit insurance premiums, net costs of
other real estate owned, data processing fees and other operating expenses. The
Bank's results of operations are also significantly affected by general
economic and competitive conditions (particularly changes in market interest
rates), government policies, changes in accounting standards and actions of
regulatory agencies.

ACQUISITION OF CONESTOGA BANCORP, INC.

    On June 26, 1996 the Bank completed the acquisition (the "Acquisition") of
Conestoga Bancorp, Inc. ("Conestoga"), resulting in the merger of Conestoga's
wholly-owned subsidiary, Pioneer Savings Bank, F.S.B. ("Pioneer") with and into
the Bank, with the Bank as the resulting financial institution.

    The Acquisition was accounted for in the financial statements using the
purchase method of accounting. Under the purchase method of accounting, the
acquired assets and liabilities of Conestoga are recognized at their fair value
as of the date of the Acquisition.  Shareholders of Conestoga were paid
approximately $101.3 million in cash, resulting in goodwill of $28.4 million,
which is being amortized on a straight line basis over a twelve year period.

    Since the Acquisition occurred on June 26, 1996, its impact upon the
Company's consolidated results of operations for the fiscal year ended June 30,
1996 was minimal.  The full effect of the Acquisition is reflected in the
Company's consolidated results of operations for the fiscal year ended June 30,
1997, as well the consolidated statements of financial condition as of June 30,
1997 and 1996.

SAIF SPECIAL ASSESSMENT

    On  September 30, 1996, the Deposit Insurance Funds Act of 1996 (the "Funds
Act") was enacted into law, and it amended the Federal Deposit Insurance Act in
several ways  to  recapitalize  the  SAIF  and  reduce  the  disparity  in  the
assessment  rates  for the BIF and the SAIF.  The Funds Act authorized the FDIC
to  impose  a special  assessment  on  all  institutions  with  SAIF-assessable
deposits in the  amount  necessary  to recapitalize the SAIF. As implemented by
the FDIC, the special assessment was  $0.657 per $100 of an institution's SAIF-
assessable deposits as of March 31, 1995.   However,  under  the Funds Act, the
Bank was entitled to reduce the amount of such deposits by 20% in computing the
special  assessment.  Accordingly, the SAIF special assessment,  which  totaled
$2.0 million,  was  paid  by  the  Bank  in  November,  1996.  The SAIF special
assessment,  although  paid  in  November,  1996,  was recorded as non-interest
expense during the three months ended September 30, 1996.

MANAGEMENT STRATEGY

    The Bank's primary management strategy is to increase its household and
deposit market shares in the communities it serves, either through acquisitions
or purchases of deposits, or by direct marketing, and to increase its
origination of, and investment in, mortgage loans, with an emphasis on multi-
family loans. Multi-family lending is a significant business of the Bank and
reflects the fact that much of the housing in the Bank's primary lending area
is multi-family housing. The Bank also strives to provide a stable source of
liquidity and earnings through the purchase of investment grade securities;
seek to maintain the Bank's asset quality for loans and other investments; and
use appropriate portfolio and asset/liability management techniques in an
effort to manage the effects of interest rate volatility on the Bank's
profitability and capital.

    FRANCHISE EXPANSION.   The Bank completed its merger of Conestoga into the
Bank on June 26, 1996, providing eight additional full service branches with
deposits totaling $394.3 million at June 26, 1996.  The Bank will continue to
evaluate acquisition and other growth opportunities as they become available.
Additionally, management plans to supplement this strategy with direct
marketing efforts designed to increase household balances and the number of the
Bank's services used per household among its existing customers.
PAGE 3

    LOAN ORIGINATIONS WITH AN EMPHASIS ON MULTI-FAMILY LENDING.   Management
believes that multi-family loans provide advantages as portfolio investments.
First, they provide a higher yield than single family loans or investment
securities of comparable maturities or terms to repricing. Second, the Bank's
market area generally has provided a stable flow of new and refinanced multi-
family loan originations. In addition to its emphasis on multi-family lending,
the Bank will continue to market and originate residential first mortgage loans
secured primarily by owner-occupied, one- to four-family residences, including
condominiums and cooperative apartments.  Third, origination and processing
costs for the Bank's multi-family loans are lower per thousand dollars of
originations than comparable single family costs. In addition, to address the
higher credit risk associated with multi-family lending, management has
developed what it believes are reliable underwriting standards for loan
applications in order to maintain a consistent credit quality for new loans.

    CAPITAL LEVERAGE STRATEGY. As a result of the initial public offering in
June, 1996, the Bank's capital level significantly exceeded all regulatory
requirements.  A portion of the "excess" capital generated by the initial
public offering has been temporarily deployed through the use of a capital
leverage strategy whereby the Bank invests in high quality mortgage-backed
securities ("leverage assets") funded by short term borrowings from various
third party lenders.  The capital leverage strategy generates additional
earnings for the Company by virtue of a positive interest rate spread between
the yield on the leverage assets and the cost of the borrowings.  Since the
average term to maturity of the leverage assets exceeds that of the borrowings
used to fund their purchase, the net interest income earned on the leverage
strategy would be expected to decline in a rising interest rate environment.
See "Market Risk."  To date, the capital leverage strategy has been undertaken
in accordance with limits established by the Board of Directors, aimed at
enhancing profitability under moderate levels of interest rate exposure.
Assets added under the capital leverage strategy were $96.3 million, on a net
basis, at June 30, 1997.

In addition to the capital leverage strategy, the Bank undertook an additional
$30.0 million in medium term borrowings from the FHLBNY during the year ended
June 30, 1997 in order to fund multi-family and underlying ccoperative loan
originations.  The Bank earns a net interest rate spread between the yield on
the multi-family and underlying cooperative loans and the cost of the
borrowings.  Since the repricing terms on the multi-family and underlying
cooperative loans and the maturities on the underlying borrowings are closely
matched, the Bank has been able to reduce its exposure to interest rate risk.

LIQUIDITY AND CAPITAL RESOURCES

    The Company's primary sources of funds are deposits, proceeds from
principal and interest payments on loans, mortgage-backed securities and
investments, borrowings, and, to a lesser extent, proceeds from the sale of
fixed-rate mortgage loans to the secondary mortgage market. While maturities
and scheduled amortization of loans and investments are a predictable source of
funds, deposit flows, mortgage prepayments and mortgage loan sales are
influenced by interest rates, economic conditions and competition.

    The primary investing activities of the Bank are the origination of multi-
family and single-family mortgage loans, and the purchase of mortgage-backed
and other securities. During the year ended June 30, 1997,  the Bank's loan
originations totaled $264.8 million compared to $114.9 million for the year
ended June 30, 1996. Purchases of mortgage-backed and other securities totaled
$362.9 million for the year ended June 30, 1997 compared to $574.5 million for
the year ended June 30, 1996.  These activities were funded primarily by
principal repayments on loans and mortgage-backed securities, maturities of
investment securities, and borrowings by means of repurchase agreements and
FHLB advances.  Principal repayments on loans and mortgage-backed securities
totaled $132.4 million during the year ended June 30, 1997, compared to $93.2
million for the year ended June 30, 1996.  Maturities of investment securities
totaled $378.8 million and $412.2 million, respectively, during the fiscal
years ended June 30, 1997 and 1996.  Loan and security sales, which totaled
$47.2 million and $8.8 million, respectively, during the fiscal years ended
June 30, 1997 and 1996, provided some additional cash flows.

    Deposits increased $13.3 million during the fiscal year ended June 30,
1997.  The Bank experienced a net increase in total deposits of $395.3 million
during the fiscal year ended June 30, 1996, attributable primarily to the
acquisition of $394.3 million in deposits from Conestoga.  Deposit flows are
affected by the level of interest rates, the interest rates and products
offered by local competitors, and other factors. Certificates of deposit which
are scheduled to mature in one year or less from June 30, 1997 totaled $313.5
million.  Based upon the Company's current pricing strategy and deposit
retention experience, management believes that a significant portion of such
deposits will remain with the Company.  Net borrowings increased $111.8 million
during the fiscal year ended June 30, 1997, with the majority of this growth
experienced in securities sold under agreement to repurchase ("Repo")
transactions.

    Stockholders' equity declined $22.2 million during the year ended June 30,
1997.  During the fiscal year ended June 30, 1997, the Company repurchased (the
"Repurchase") 1,454,750 shares of its common stock into treasury.  The
aggregate cost of the Repurchase was $27.7 million, at an average price of
$19.04 per share.  Offsetting the Repurchase, was net income of $12.3 million
and amortization of the Company's Stock Plans of $3.1 million during the fiscal
year ended June 30, 1997.

    On May 15, 1997, the Company declared its first quarterly cash dividend.
This dividend, which  totaled $589,000, or $.045 per share, was paid in June,
1997.

    The Bank is required to maintain a minimum average daily balance of liquid
assets and short-term liquid assets as a percentage of net withdrawable deposit
accounts plus short-term borrowings as defined by Office of Thrift Supervision
regulations. The minimum required liquidity and short-term liquidity ratios are
currently 5.0% and 1.0%, respectively. At June 30, 1997, the Bank's liquidity
ratio and short-term liquid asset ratio were 14.98% and 4.15%, respectively.
The levels of the Bank's short-term liquid assets are dependent on the Bank's
operating, financing and investing activities during any given period.
PAGE 4

     The Bank monitors its liquidity position on a daily basis. Excess short-
term liquidity is invested in overnight federal funds sales and various money
market investments. In the event that the Bank should require funds beyond its
ability to generate them internally, additional sources of funds are available
through the use of the Bank's $166.4 million borrowing limit at the Federal
Home Loan Bank of New York ("FHLBNY") . At June 30, 1997, the Bank had $132.6
million in short and medium term borrowings outstanding at the FHLBNY,
comprised of outstanding advances of $63.2 million and securities sold under
agreement to repurchase of $69.4 million, and a remaining unused borrowing
capacity from the FHLBNY of $33.8 million.

    At June 30, 1997, the Bank was in compliance with all applicable regulatory
capital requirements. Tangible capital totaled $124.1 million, or 9.86% of
total tangible assets, compared to a 1.50% regulatory requirement; core
capital, at 9.87%, exceeded the required 3.0% regulatory minimum, and total
risk-based capital, at 19.99% of risk weighted assets, exceeded the 8.0%
regulatory requirement.

DISCUSSION OF MARKET RISK

    As a financial institution, the Company's primary component of market risk
is interest rate volatility.  Fluctuations in interest rates will ultimately
impact both the level of income and expense recorded on a large portion of the
Bank's assets and liabilities, and the market value of all interest earning
assets, other than those which possess a short term to maturity.  Since all of
the Company's interest bearing liabilities and virtually all of the Company's
interest earning assets are located at the Bank, virtually all of the Company's
interest rate risk exposure lies at the Bank level.  As a result, all
significant interest rate risk management procedures are performed at the Bank
level.  Based upon the bank's nature of operations, the Bank is not subject to
foreign currency exchange or commodity price risk.  The Bank's real estate loan
portfolio, concentrated primarily within New York City, is subject to risks
associated with the local economy.  The Company does not own any trading
assets.  See "Asset Quality."  At June 30, 1997, the Company does not have any
hedging transactions in place such as interest rate swaps and caps.

    The Bank's interest rate management strategy is designed to stabilize net
interest income and preserve capital over a broad range of interest rate
movements and has three primary components:

    ASSETS.   The Bank's largest single asset type is the multi-family real
estate loan.  In order to manage interest rate risk, management emphasizes
origination of adjustable rate multi-family loans.  During the year ended June
30, 1997, approximately 75% of multi-family loans originated were adjustable
rate, with repricing typically occurring after five years.  In addition,
management has sought to include various types of adjustable-rate single family
(including cooperative apartment) whole loans and adjustable and floating-rate
investment securities in its portfolio, which generally have repricing terms of
3 years or less. Adjustable-rate whole totaled $571.0 million, or 43.4% of
total assets,  as of June 30, 1997, and adjustable-rate investment securities
(CMO's, REMIC's and mortgage-backed securities issued by GSEs) totaled $148.3
million, or 11.3% of total assets, at the same date.

    DEPOSIT LIABILITIES.   The Bank, a traditional community-based savings
bank, is largely dependent upon its base of competitively priced core deposits
(consisting of all deposits excepting certificates of deposit) to provide
stability on the liability side of the balance sheet. The Bank has retained
many loyal customers over the years through a combination of quality service,
convenience, and a stable and experienced staff. Core deposits, at June 30,
1997 were $421.6 million, or 43.76% of total deposits. The balance of
certificates of deposit as of June 30, 1997 was $541.8 million, or 56.24% of
total deposits, of which $228.3 million, or 23.7% of total deposits, mature
after one year. Depending on market conditions, management prices its
certificates of deposit in an effort to encourage the extension of the average
maturities of deposit liabilities beyond one year. Over the twelve-month period
ending June 30, 1997, the Bank experienced a strong retention rate on maturing
certificates of deposit.

    WHOLESALE FUNDS.   The Bank does not accept brokered deposits as a source
of funds and has no plans to do so in the future. However, the Bank is a member
of the FHLBNY which provides it with a borrowing line equal to $166.4 million.
From time to time, the Bank will borrow ("Advances") from the FHLBNY for
various purposes. At June 30, 1997, the Bank had outstanding borrowings of
$132.6 million with the FHLBNY.

    The Bank actively manages interest rate risk through the use of a
simulation model which measures the sensitivity of future net interest income
and the net portfolio value to changes in interest rates.  In addition, the
Bank regularly monitors interest rate sensitivity through GAP Analysis, which
measures the terms to maturity or next repricing date of interest earning
assets and interest bearing liabilities.

PAGE 5

GAP ANALYSIS

    The following table sets forth the amounts of the Company's consolidated
interest-earning assets and interest-bearing liabilities, outstanding at
June 30, 1997, which are anticipated, based upon certain assumptions, to
reprice or mature in each of the future time periods shown. Except as stated
below, the amount of assets and liabilities shown which reprice or mature
during a particular period were determined based on the earlier of term to
repricing or the term to repayment of the asset or liability. The table is
intended to provide an approximation of the projected repricing of assets and
liabilities at June 30, 1997 on the basis of contractual maturities,
anticipated prepayments, and scheduled rate adjustments within a three-month
period and subsequent selected time intervals. For purposes of presentation in
the following table, the Bank utilized the national deposit decay rate
assumptions published by the OTS as of December 31, 1992 (the latest
available), which for savings accounts, NOW and Super NOW accounts and money
market accounts in the one year or less category, were 17%, 37% and 79%,
respectively. The loan amounts in the table reflect principal balances expected
to be redeployed and/or repriced as a result of contractual amortization and
anticipated early payoffs of adjustable-and fixed-rate loans, and as a result
of contractual rate adjustments on adjustable-rate loans. The amounts
attributable to mortgage-backed securities reflect principal balances expected
to be redeployed and/or repriced as a result of anticipated principal
repayments, and as a result of contractual rate adjustments on adjustable-rate
mortgage-backed securities.

         89,927       23,282         39,399        59,376        49,219        47,322            -        308,525
Federal funds sold        18,902           -              -             -             -             -             -         18,902
FHLB capital stock         8,322           -              -             -             -             -             -          8,322
                        --------      ----------    ---------     ---------     ---------     ---------     ---------     ---------
Total interest
earning assets           183,322       81,748        125,043      329,820        305,262       221,412            -      1,246,607
LESS:
Allowance for loan
  losses                      -            -              -            -             -              -        (10,726)      (10,726)
                         --------     ---------     ---------     ---------     ---------     ---------     ---------    ----------
Net interest-earning
  assets                 183,322       81,748        125,043       329,820       305,262       221,412       (10,726)    1,235,881
Non-interest-earning
  assets                      -            -              -             -             -             -         79,145        79,145
                         --------     ---------      --------      --------      --------      --------      --------    ----------
Total assets            $183,322      $81,748       $125,043      $329,820      $305,262      $221,412       $68,419    $1,315,026
                        =========    ==========     =========     =========     =========     =========     =========    ==========

INTEREST-BEARING LIABILITIES:

Savings Accounts         $14,636      $14,636        $29,272       $88,923       $57,970      $138,940           $-       $344,377
NOW and Super
  NOW accounts             1,510        1,510          3,020         5,529         1,479         3,276            -         16,324
Money market
  accounts                 6,622        6,622         13,245         3,689         1,756         1,596            -         33,530
Certificates of
  Deposit                116,828       88,912        107,714       213,599        14,720            -             -        541,773
Borrowed funds            77,105        4,500          2,500        16,005        20,000        19,433            -        139,543
Interest-bearing  
  escrow                      -            -              -             -             -          3,464            -          3,464
                          --------    ----------    ---------     ---------     ---------     ---------     ---------     ---------
Total interest bearing 
liabilities              216,701       116,180       155,751       327,745        95,925       166,709            -      1,079,011
Checking accounts             -             -             -             -             -             -          27,391       27,391
Other non-interest
  bearing liabilities         -             -             -             -             -             -          17,735       17,735
Stockholders' equity          -             -             -             -             -             -         190,889      190,889
                          --------     ----------   ---------      ---------     ----------     ---------     ---------    ---------
Total liabilities and
  stockholders' equity  $216,701      $116,180      $155,751      $327,745       $95,925      $166,709       $236,015   $1,315,026
                         =========     ==========   =========     ==========     ==========   ===========  ============  ==========
Interest sensitivity
  gap per period        $(33,379)     $(34,432)     $(30,708)       $2,075      $209,337       $54,703         -    
                         =========     =========    =========     ==========     ===========   ===========    
Cumulative interest
  sensitivity gap       $(33,379)     $(67,811)     $(98,519)     $(96,444)     $112,893      $167,596         -    
                         =========    =========     =========      =========     ===========   ===========  
Cumulative interest
  sensitivity gap 
  as a percent of        
  total assets             (2.54)%       (5.16)%       (7.49)%       (7.33)%        8.58%        12.74%        -     

Cumulative total
  interest-earning
  assets as a
  percent of 
  cumulative total
  interest bearing
  liabilities              84.60%         79.63%       79.84%         88.19%        112.37%      115.53%        -

 Interest-earning assets are included in the period in which the
     balances are expected to be redeployed and/or repriced as result of
     anticipated pre-payments, scheduled rate adjustments, and contractual
     maturities.
 Based upon historical repayment experience.

PAGE 6

    The Bank's balance sheet is primarily comprised of assets which mature or
reprice within five years, with a significant portion maturing or repricing
within one year. In addition, the Bank's deposit base is comprised primarily of
savings accounts, and certificates of deposit with maturities of three years or
less, representing 15.3% and 54.7%, respectively, of total deposits at June 30,
1997. As a result, at June 30, 1997, the Bank's interest-bearing liabilities
maturing or repricing within one year totaled $488.6 million, while interest
earning assets maturing or repricing within one year totaled $390.1 million,
resulting in a negative one-year interest sensitivity gap of $98.5 million, or
7.5% of total assets. The Bank's estimate of repricing liabilities for selected
deposit types which do not carry contractual maturities, such as savings
accounts, is based upon the decay rate tables published by the OTS.

    Certain shortcomings are inherent in the method of analysis presented in
the foregoing table. For example, although certain assets and liabilities may
have similar maturities or periods to repricing, they may not react
correspondingly to changes in market interest rates. Also, the interest rates
on certain types of assets and liabilities may fluctuate with changes in market
interest rates, while interest rates on other types of assets may lag behind
changes in market rates. Additionally, certain assets, such as adjustable-rate
loans, have features, like annual and lifetime rate caps, which restrict
changes in interest rates both on a short-term basis and over the life of the
asset. Further, in the event of a change in interest rates, prepayment and
early withdrawal levels would likely deviate from those assumed in the table.
Finally, the ability of certain borrowers to make scheduled payments on their
adjustable-rate loans may decrease in the event of an interest rate increase.

    Under interest rate scenarios other than that which existed on June 30,
1997, the gap ratio for the Bank's assets and liabilities could differ
substantially based upon different assumptions about how core deposit decay
rates and loan prepayments would change. For example, the Bank's interest rate
risk management model assumes that in a rising rate scenario, by paying
competitive rates on non-core deposits, a large share of core deposits will
transfer to certificates of deposit and be retained, although at higher cost to
the Bank. Also, loan and mortgage-backed security prepayment rates would be
expected to slow, as borrowers postpone property sales or loan refinancings
until rates again decline.

INTEREST RATE RISK EXPOSURE COMPLIANCE

    Increases in the level of interest rates also may adversely affect the fair
value of the Bank's securities and other earning assets. Generally, the fair
value of fixed-rate instruments fluctuates inversely with changes in interest
rates. As a result, increases in interest rates could result in decreases in
the fair value of the Bank's interest-earning assets, which could adversely
affect the Bank's results of operations if sold, or, in the case of interest
earning assets classified as available for sale, the Bank's  stockholders'
equity, if retained. Under SFAS 115, which was adopted by the Bank on July 1,
1994, changes in the unrealized gains and losses, net of taxes, on securities
classified as available for sale will be reflected in the Bank's stockholders'
equity. As of June 30, 1997, the Bank's securities portfolio included $288.8
million in securities classified as available for sale. Accordingly, as a
result of adoption of SFAS 115 and the magnitude of the Bank's holdings of
securities available for sale, changes in interest rates could produce
significant changes in the value of such securities and could produce
significant fluctuations in the stockholders' equity of the Bank.  The Bank
does not own any trading assets.

    On a quarterly basis, an interest rate risk exposure compliance report is
prepared and presented to the Bank's Board of Directors.  This report, prepared
in accordance with Thrift Bulletin #13 issued by the OTS, presents an analysis
of the change in net interest income and net portfolio value resulting from an
increase or decrease in the level of interest rates.  All changes are measured
as percentage changes from the values of projected net interest income and net
projected portfolio value in the flat rate scenario.  The calculated estimates
of change in net interest income and net portfolio value are compared to
current limits established by management and approved by the Board of
Directors.  The following is a summary of the interest rate exposure report as
of June 30, 1997:
 
                                                       PERCENTAGE CHANGE IN
                                         NET INTEREST INCOME                              NET PORTFOLIO VALUE
CHANGE IN INTEREST RATE               LIMIT       PROJECTED CHANGE                       LIMIT     PROJECTED CHANGE
                                                                                             
- -400 Basis Points                     -50.00%               -10.48%                      -50.00%              15.09%
- -300 Basis Points                     -37.50                 -3.95                       -37.50                8.34
- -200 Basis Points                     -25.00                  0.77                       -25.00                3.69
- -100 Basis Points                     -12.50                  3.14                       -12.50                2.95
Flat Rate (1)                            -                      -                           -                    -
+100 Basis Points                     -12.50                 -9.50                       -12.50               -8.24
+200 Basis Points                     -25.00                -17.38                       -25.00              -17.97
+300 Basis Points                     -37.50                -25.92                       -37.50              -28.52
+400 Basis Points                     -50.00%               -35.31%                      -50.00%             -38.83%

    The model utilized to create the report presented above makes various
estimates at each level of interest rate change regarding cash flows from
principal repayments on loans and mortgage-backed securities and/or call
activity on investment securities.  Actual results could differ significantly
from these estimates which would result in significant differences in the
calculated projected change.  In addition, the limits stated above do not
necessarily represent the level of change under which management would
undertake specific measures to realign its portfolio in order to reduce the
projected level of change.
PAGE 7

ASSET QUALITY

    The Bank's real estate loan servicing policies and procedures require that
the Bank initiate contact with a delinquent borrower as soon as possible after
the payment is late ten days. Generally, the policy calls for a late notice to
be sent 10 days after the due date of the payment. If payment has not been
received within 30 days of the due date, a letter is sent to the borrower.
Thereafter, periodic letters and phone calls are placed to the borrower until
payment is received. In addition, Bank policy calls for the cessation of
interest accruals on loans delinquent 90 days or more. When contact is made
with the borrower at any time prior to foreclosure, the Bank will attempt to
obtain the full payment due, or work out a repayment schedule with the borrower
to avoid foreclosure. Generally, foreclosure proceedings are initiated by the
Bank when a loan is 90 days past due. If a foreclosure action is instituted and
the loan is not brought current, paid in full, or refinanced before the
foreclosure sale, the real property securing the loan is generally either sold
at foreclosure or sold subsequently by the Bank as soon thereafter as
practicable.

    Management reviews delinquent loans on a periodic basis and reports monthly
to the Board of Directors regarding the status of all delinquent and non-
accrual loans in the Bank's portfolio. The Bank retains outside counsel
experienced in foreclosure and bankruptcy procedures to institute foreclosure
and other actions on the Bank's delinquent loans. It is the policy of the Bank
to initiate foreclosure proceedings after a loan becomes 90 days past due.  As
soon as practicable after initiating foreclosure proceedings on a loan, the
Bank prepares an estimate of the fair value of the underlying collateral. It is
the Bank's general policy to dispose of properties acquired through foreclosure
or deeds in lieu thereof as quickly and as prudently as possible in
consideration of market conditions, the physical condition of the property, and
any other mitigating conditions.

    The continued adherence to these procedures, as well as a strong local real
estate market, resulted in a significant drop in problem loans in the Bank's
portfolio, particularly multi-family and underlying cooperative loans, during
the fiscal year ended June 30, 1997. Evidence of this is reflected in declines
in both non-performing loans and loans delinquent 60-89 days.  Non-performing
loans totaled $3.2 million at June 30, 1997, as compared to $6.6 million at
June 30, 1996. The Bank had 33 loans totaling $603,000 delinquent 60-89 days at
June 30, 1997, as compared to 33 such delinquent loans totaling $2.3 million at
June 30, 1996.  Early intervention procedures implemented during the fiscal
year ended June 30, 1997, have been preventing new mortgage delinquencies.

    Under Generally Accepted Accounting Principles ("GAAP"), the Bank is
required to account for certain loan modifications or restructurings as
''troubled-debt restructurings.'' In general, the modification or restructuring
of a debt constitutes a troubled-debt restructuring if the Bank, for economic
or legal reasons related to the borrower's financial difficulties, grants a
concession to the borrower that the Bank would not otherwise consider. Debt
restructurings or loan modifications for a borrower do not necessarily always
constitute troubled-debt restructurings, however, and troubled-debt
restructurings do not necessarily result in non-accrual loans. The Bank had
four loans classified as troubled-debt restructurings at June 30, 1997,
totaling $4.7 million, and all are currently performing according to their
restructured terms. The largest restructured debt, a $2.7 million loan secured
by a mortgage on an underlying cooperative apartment building located in Forest
Hills, New York, was originated in 1987. The loan was first restructured in
1988, and again in 1994.  The Office of Thrift Supervision's current
regulations require that troubled-debt restructurings remain classified as such
until the loan is either paid off or returned to its original terms.  The Bank
has had no new loan restructurings during the fiscal year ended June 30, 1997.
All four troubled-debt restructurings as of June 30, 1997 are on accrual status
as they have been performing in accordance with their restructured terms for
over one year.

    In the event the carrying balance of a loan, including all accrued
interest, exceeds the estimate of fair value, the loan is considered to be
impaired and a reserve is established pursuant to Statement of Financial
Accounting Standards No. 114 "Accounting by a Creditor for Impairment of a
Loan" ("SFAS 114").  The Bank adopted SFAS 114 effective July 1, 1995.  SFAS
114 established guidelines for determining and measuring impairment in loans.
Generally, the Bank considers non-performing loans to be impaired loans.  The
recorded investment in loans deemed impaired under the guidance of SFAS 114 was
approximately $4.3 million as of June 30, 1997, compared to $7.4 million at
June 30, 1996, and the average balance of impaired loans was $4.7 million for
the year ended June 30, 1997 compared to $6.7 million for the year ended June
30, 1996. The impaired portion of these loans is represented by specific
reserves totaling $122,000 allocated within the allowance for loan losses at
June 30, 1997. At June 30, 1997, one loan totaling $2.7 million, was deemed
impaired for which no reserves have been provided.  This loan, which is
included in troubled-debt restructurings at June 30, 1997, has performed in
accordance with the provisions of the restructuring agreement signed in
October, 1995.  The loan has been retained on accrual status at June 30, 1997.
At June 30, 1997, approximately $1.6 million of one-to-four family, cooperative
apartment and consumer loans on nonaccrual status are not deemed impaired under
SFAS 114.  All of these loans have outstanding balances less than $203,000, and
are considered a homogeneous loan pool not covered by SFAS 114.  See "Notes to
Consolidated Financial Statements" for a further discussion of impaired loans.

    The balance of Other real estate owned ("OREO")was $1.7 million at June 30,
1997 compared to $1.9 million at June 30, 1996.  During the year ended June 30,
1997, $1.4 million in loans were transferred into OREO.  Offsetting this
addition, were OREO sales and charge-offs of $1.2 million and $305,000,
respectively, during the year ended June 30, 1997.  All charge-offs were
recorded against the allowance for losses on real estate owned, which was
$187,000 as of June 30, 1997.

    The following table sets forth information regarding the Bank's non-
performing loans, non-performing assets, impaired loans and troubled-debt
restructurings at the dates indicated.

 At Year Ended June 30,                                  1997         1996      1995         1994          1993
                                                                                                     
- ------------------------------------------             --------    --------  --------     --------       --------
                                                                       (Dollars In Thousands)
NON-PERFORMING LOANS
   One-to four-family                                   $1,123       $1,149     $572       $1,276          $3,449
   Multi-family and underlying cooperative               1,613        4,734    3,978        4,363           7,265
   Non-residential                                          -            -        -            -               -
   Cooperative apartment                                   415          668      523          609             918
   Other                                                    39           -        -            -               -
- ------------------------------------------             --------    --------   --------   --------        --------
Total non-performing loans                               3,190        6,551    5,073        6,248          11,632
Other Real Estate Owned                                  1,697        1,946    4,466        8,200           7,981
- ------------------------------------------             --------     -------- --------    --------        --------
Total non-performing assets                             $4,887       $8,497   $9,539      $14,448         $19,613
==========================================             ========     ======== ========    ========        ========
Troubled-debt restructurings                            $4,671       $4,671   $7,651       $7,421          $5,219
Total non-performing assets and
       troubled-debt restructurings                     $9,558      $13,168  $17,190      $21,869         $24,832
Impaired loans                                      $4,294       $7,419      N/A          N/A             N/A
RATIOS:
   Total non-performing loans to total loans              0.43%        1.12%    1.18%        1.45%           2.52%
   Total non-performing assets to total assets            0.37         0.62     1.44         2.23            3.04
   Total non-performing assets and troubled-debt
         restructurings to total assets                   0.73         0.96     2.59         3.38            3.84

 The Bank adopted SFAS 114 effective July 1, 1995.  Impaired loans were not
measured prior to adoption.

PAGE 8

ANALYSIS OF NET INTEREST INCOME

    The Company's profitability, like that of most financial institutions, is
dependent to a large extent upon its net interest income, which is the
difference between its interest income on interest-earning assets, such as
loans and securities, and its interest expense on interest-bearing liabilities,
such as deposits and borrowings.  Net interest income depends upon the relative
amounts of interest-earning assets and interest-bearing liabilities and the
interest rates earned or paid on them.

    The following table sets forth certain information relating to the
Company's consolidated statements of operations for the years ended June 30,
1997, 1996 and 1995, and reflects the average yield on assets and average cost
of liabilities for the periods indicated. Such yields and costs are derived by
dividing income or expense by the average balance of assets or liabilities,
respectively, for the periods shown. Average balances are derived from average
daily balances. The yields and costs include fees which are considered
adjustments to yields.

For the years ended         
   June 30,                             1997                             1996                            1995
                          ------------------------------     --------------------------     ----------------------------

                                                 AVERAGE                         Average                         Average
                            AVERAGE               YIELD/      Average             Yield/     Average              Yield/
                            BALANCE   INTEREST    COST        Balance  Interest    Cost      Balance   Interest    Cost
                           ---------  --------   --------    --------  --------   ------     -------   --------   ------
                                                                   (Dollars in Thousands)
ASSETS:                                                 
Interest-earning
assets
Real estate loans          $642,913     $54,965      8.55%    $435,948   $39,314    9.02%    $427,042    $38,375    8.99%

Other loans                   5,444         460      8.45        3,497       340    9.72        3,803        307    8.07
Investment
  securities                215,809      13,654      6.33      107,206     5,738    5.35       84,188      4,402    5.23

Mortgage-backed
  securities                261,275      17,704      6.78       89,001     5,927    6.66       89,232      5,464    6.12
 
Federal funds sold           40,349       2,247      5.57       23,904     1,300    5.44       12,179        675    5.54
                           ---------  ---------    --------   --------  --------   ------     -------   --------   ------
Total interest-
  earning assets          1,165,790     $89,030      7.64      659,556   $52,619    7.98%     616,444    $49,223    7.99%
Non-interest earning
  assets                     64,148                             20,424                         19,258
                         -----------                          ---------                      --------                    
Total assets             $1,229,938                           $679,980                       $635,702
LIABILITIES AND          ===========                          =========                      =========
STOCKHOLDERS' EQUITY
Interest bearing
liabilities:
NOW, Super NOW
  and Money
  market accounts           $55,327      $1,404      2.54%     $30,759      $634     2.06%    $33,583       $716    2.13%
Savings accounts            349,821       8,192      2.34      232,631     5,789     2.49     264,247      6,575    2.49
Certificates of
  deposit                   515,542      28,869      5.60      285,524    16,013     5.61     225,785     10,571    4.68
Mortgagors' escrow            3,792          79      2.08        3,371        72     2.14       3,253         71    2.18
Borrowed funds               52,495       3,020      5.75       17,854     1,008     5.65      17,922      1,013    5.65

                           ---------    --------   --------    --------  --------   ------     -------   --------   ------
Total interest-
bearing liabilities         976,977     $41,564      4.26%     570,139   $23,516     4.13%    544,790    $18,946    3.48%
                           ---------    --------   --------    --------  --------   ------     -------   --------   ------    
Checking accounts            27,653                             11,646                         10,950
Other non-interest-
  bearing liabilites         18,131                             17,718                          6,678
                           ---------                           --------                        -------             
Total liabilities         1,022,761                            599,503                        562,418
Stockholders' equity        207,177                             80,477                         73,284
                           ---------                           --------                        -------
Total liabilities and
  stockholders' equity   $1,229,938                           $679,980                       $635,702
                          ==========                           ========                       ========
Net interest income/
  interest rate spread              $47,466      3.38%               $29,103     3.85%               $30,277    4.51%
                                        =======                          =======                          =======
Net interest-earning
  assets/netinterest       $188,813                  4.07%     $89,417               4.41%     $71,654              4.91%
  margin              =========                            ========                        ========
Ratio of interest-
  earning assets to
  interest-bearing
  liabilities                                      119.33%                         115.68%                        113.15%

 In computing the average balance of loans, non-accrual loans have been
     included.
 Includes securities classified ''available for sale.''
 Includes interest bearing deposits in other banks and FHLB stock.
 Net interest rate spread represents the difference between the average
     yield on interest-earning assets and the average cost of interest-bearing
     liabilities.
 Net interest margin represents net interest income as a percentage of
     average interest-earning assets.

PAGE 9

RATE/VOLUME ANALYSIS

    Net interest income can also be analyzed in terms of the impact of changing
interest rates on interest-earning assets and interest-bearing liabilities and
changing the volume or amount of these assets and liabilities. The following
table represents the extent to which changes in interest rates and changes in
the volume of interest-earning assets and interest-bearing liabilities have
affected the Company's interest income and interest expense during the periods
indicated. Information is provided in each category with respect to (i) changes
attributable to changes in volume (change in volume multiplied by prior rate),
(ii) changes attributable to rate (changes in rate multiplied by prior volume),
and (iii) the net change. Changes attributable to the combined impact of volume
and rate have been allocated proportionately to the changes due to the volume
and the changes due to rate.

                                     YEAR ENDED                    Year Ended                    Year Ended
                                    JUNE 30, 1997                 June 30, 1996                 June 30, 1995
                                     COMPARED TO                   Compared to                   Compared to
                                      YEAR ENDED                    Year Ended                    Year Ended
                                    JUNE 30, 1996                  June 30, 1995                 June 30, 1994
                                 INCREASE/(DECREASE)            Increase/(Decrease)           Increase/(Decrease)
                                       DUE TO                        Due to                         Due to
                             VOLUME      RATE      NET         Volume    Rate     Net       Volume       Rate        Net
                                                                                               
                           ---------    ------   -------      -------   ------   -----      -------      -----      ------
INTEREST-EARNING                                                             (Dollars in Thousands)
ASSETS                                                                 
Real estate loans           $18,182   $(2,531)  $15,651         $802     $137     $939      $(2,216)       $(5)    $(2,221)
Other loans                     177       (57)      120          (28)      61       33          (17)       (13)        (30)
Investment
  securities                  6,339     1,577     7,916        1,431      (95)   1,336          722        226         948
Mortgage-backed
  securities                 11,571       206    11,777          (24)     487      463          188        418         606
Federal funds sold              905        42       947        1,036     (411)     625         (254)       353          99
                           ---------    ------   -------      -------   ------   -----      -------      -----      ------
Total                       $37,174     $(763)  $36,411       $3,217     $179   $3,396      $(1,577)      $979       $(598)
                           =========    ======= ========     ========   ======= ======     ========     ======     =======
INTEREST-BEARING
LIABILITIES:
NOW, Super NOW
  and Money market 
  accounts                     $565      $205      $770         $(76)     $(6)    $(82)        $(82)      $(42)      $(124)
Savings accounts              2,834      (431)    2,403         (976)     190     (786)        (759)      (177)       (936)
Certificates of
  deposit                    12,893       (37)   12,856        3,846    1,596    5,442          542      1,810       2,352
Mortgagors' escrow                9        (2)        7            8       (7)       1            2          2           4
Borrowed funds                1,975        37     2,012           (6)       1       (5)          63         (7)         56
                           ---------    ------   -------      -------   ------   -----      -------      -----      ------
Total                        18,276      (228)   18,048        2,796    1,774    4,570         (234)     1,586       1,352
                           ---------    ------   -------      -------   ------   -----      -------      -----      ------
Net change in
 interest income            $18,898     $(535)  $18,363         $421  $(1,595) $(1,174)     $(1,343)     $(607)    $(1,950)
                           =========   =======  ========     ========  =======   ======     ========     ======     ======

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1997 AND JUNE 30, 1996

    The Company's assets totaled $1.32 billion at June 30, 1997, a decrease of
$56.8 million from total assets of $1.37 billion at June 30, 1996.  This
decline resulted primarily from the refund, on July 1, 1996, of $131.1 million
in excess proceeds related to the oversubscription to the Company's initial
public offering (the "oversubscription refund"), which were included in Escrow
and other deposits at June 30, 1996. The oversubscription refund was paid from
the proceeds of matured investment securities of $125.0 million, and from a
reduction of $6.1 million in federal funds sold.  Removing the effects of the
oversubscription refund, total assets increased $74.3 million, reflecting the
Company's capital leverage strategy.

    Real estate loans and loans held for sale increased $166.4 million,
resulting primarily from originations of $262.2 million during the year ended
June 30, 1997, of which $256.2 million were multi-family and underlying
cooperative and non-residential loans.  Mortgage backed securities increased
98.6 million and investment securities held to maturity increased $58.0
million, respectively during the fiscal year ended June 30, 1997.  Much of the
growth in these assets was realized from the movement of earning assets from
lower yielding investment securities available for sale and federal funds sold
into these higher-yielding assets.  In addition, in order to fund the growth in
these assets, borrowings increased $111.8 million and deposits increased $13.3
million.  At June 30, 1996, the Company had an unsettled security purchase
totaling $34.0 million, which was funded in July, 1996.  No such unsettled
trades existed as of June 30, 1997.

    Stockholders' equity totaled $190.9 million at June 30, 1997, a decrease of
$22.2 million from June 30, 1996.  The decrease resulted primarily from the
$27.7 million repurchase of the Company's common stock into treasury, and the
$10.8 million open market purchase of the Company's common stock by the
Recognition and Retention Plan ("RRP") during the year ended June 30, 1997.
Offsetting these items was net income of $12.3 million, an increase of $1.7
million in the equity component of the unrealized gain on available for sale
securities and a  direct contribution to stockholders' equity of $3.1 million
related to the benefit expense associated with the Company's ESOP and RRP
Plans.
PAGE 10

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1996 AND JUNE 30, 1995

    The Company's assets grew $709.1 million during the fiscal year ended June
30, 1996, increasing to $1.37 billion at June 30, 1996 from $662.7 million at
June 30, 1995.  The growth resulted primarily from increases of $406.3 million
and $151.2 million in investment and mortgage-backed securities and loans,
respectively.  Both investment and loan growth were enhanced by the acquisition
of Conestoga, which provided $295.2 million and $113.1 million of investments
and mortgage-backed securities and loans, respectively.

    In addition, the Company's investment in federal funds sold increased by
$97.3 million, due primarily to net proceeds of $141.4 million raised in the
Company's initial public offering, as well as excess proceeds of $131.1 million
resulting from the oversubscription to the Company's initial public offering,
which were refunded to subscribers on July 1, 1996.

    The Company continued its strategy of emphasizing multi-family lending with
multi-family loan originations of $94.4 million during the fiscal year ended
June 30, 1996.  As a result, multi-family loans grew to $296.6 million or 21.6%
of at June 30, 1996 from $252.4 million at June 30, 1995.  In addition, the
Company increased its non-residential loans by $10.7 million.  Growth in both
of these segments were attributable to more competitive loan pricing during the
period.  Offsetting this growth were declines of $2.4 million and $14.2 million
in one-to-four family residential loans (excluding loans acquired from
Conestoga) and cooperative apartment loans, as the Company originated only $6.6
million of one-to-four family and cooperative apartment loans, the majority of
which were fixed rate loans sold in the secondary market.

    The acquisition of Conestoga provided $124.4 million of mortgage-backed
securities, of which $70.0 million were GNMAs, and $170.8 of investment
securities, comprised of $119.1 million and $51.7 million, respectively.  The
growth in the securities portfolio also reflected the proceeds from the initial
public offering and the excess subscription proceeds.

    The growth in assets was funded primarily through increased stockholders'
equity of $136.0 million and the excess subscription proceeds of $131.1 million
included in escrow and other deposits at June 30, 1996.  The growth in
stockholders' equity was due primarily to $141.4 million in net proceeds
received from the Company's initial public offering and $6.3 million in net
income for the year.  Offsetting these increases to equity was the purchase of
the Company's Common Stock by the ESOP totaling $11.6 million.  Total
stockholders' equity was $213.1 million, or 15.53% of total assets at June 30,
1996.

    The Company acquired deposits totaling $394.3 million from Conestoga.
Removing this effect, deposits increased by $1.0 million during the year ended
June 30, 1996, as net outflows of $21.6 million offset interest credits of
$22.7 million. Liabilities at June 30, 1996 reflect a purchase by the Company
of $34.0 million of investment securities available for sale dated June 28,
1996, for which the proceeds were not disbursed until after July 1, 1996.

    The Company utilized the proceeds raised in the initial public offering to
fund the Merger Consideration of $101.3 million for the Bank's acquisition of
Conestoga.  The Acquisition resulted in goodwill of $28.4 million, which is
currently being amortized over a twelve year period.

COMPARISON OF OPERATING RESULTS FOR THE FISCAL YEARS ENDED JUNE 30, 1997 AND
1996

    GENERAL. Net income for the fiscal year ended June  30,  1997 totaled $12.3
million compared to $6.3 million during the fiscal year ended  June  30,  1996.
Net income for the fiscal year ended June 30, 1997 was affected by the New York
State and New York City income tax recoveries of $1.9 million and $1.0 million,
respectively, and the one-time special assessment of $1.1 million, after taxes,
for  the  recapitalization  of  the  SAIF  of  the  Federal  Deposit  Insurance
Corporation ("FDIC") recorded during the quarter ended September 30, 1996.  Net
income  for  the fiscal year ended June 30, 1997, excluding these non-recurring
items, was $10.5 million.

    Also affecting  the  comparison of the fiscal years ended June 30, 1997 and
1996 was the Bank's adoption,  on  July  1,  1995  of  Statement  of  Financial
Accounting  Standards  No. 106, "Accounting for Post-Retirement Benefits  Other
than Pensions," whereby  the  Bank elected to record the full accumulated post-
retirement medical benefit obligation upon adoption.  Adoption of this standard
resulted in a cumulative effect  reduction  of net income of approximately $1.0
million  for  the fiscal year ended June 30, 1996.   Income  before  cumulative
effect of change  in  accounting  principles for the fiscal year ended June 30,
1996 was $7.3 million.

    NET INTEREST INCOME. Net interest  income  totaled $47.5 million during the
year  ended  June  30,  1997  compared  to $29.1 million.   This  increase  was
attributable primarily to an increase of  $506.2  million in average balance of
interest earning assets, offset by a decline in the net interest rate spread of
47 basis points.  The net interest margin declined  34  basis points from 4.41%
for the year ended June 30, 1996 to 4.07% for the year ended June 30, 1997.

    INTEREST INCOME. Interest income for the year ended June 30, 1997 was $89.0
million, an increase of $36.4 million from $52.6 million  during the year ended
June  30,  1996.   The  largest components contributing to this  increase  were
interest income on real estate  loans,  investment  securities,  and  mortgage-
backed  securities,  which increased by $15.7 million, $7.9 million, and  $11.8
million, respectively.   The  increase  in interest income on real-estate loans
was attributable primarily to an increase  of  $207.0  million  in  the average
balance  of  real  estate loans, resulting from both the acquisition of  $113.1
million of loans from  Conestoga on June 26, 1996, and new loan originations of
$262.2 million during the fiscal year ended June 30, 1997, offset by a 47 basis
point decrease in the average  yield  as  compared  to  the  prior  year.   The
increases  in  interest  income  on  investment  securities and mortgage-backed
securities were also attributable primarily to increases in average balances of
$108.6 million and $172.3 million, respectively, during  the  fiscal year ended
June 30, 1997 compared to the fiscal year ended June 30, 1996.  The acquisition
of  $170.8  million  and $124.4 million of investment securities and  mortgage-
backed securities, respectively,  from  Conestoga, contributed significantly to
these average balance increases.  In addition,  the average yield on investment
securities and mortgage-backed securities increased  by  98 basis points and 12
basis  points,  respectively,  during  the  fiscal  year ended June  30,  1997,
compared to the fiscal year ended June 30, 1996, contributing  significantly to
the  increase  in  interest income. This increase in yields resulted  primarily
from both higher yields  on  securities acquired or repricing during the fiscal
year  ended  June 30, 1997, as well  as  the  acquisition  of  higher  yielding
investment and mortgage-backed securities from Conestoga.
PAGE 11

    INTEREST EXPENSE.  Interest  expense  increased  $18.1  million,  to  $41.6
million  during  the fiscal year ended June 30, 1997, from $23.5 million during
the fiscal year ended  June  30,  1996.   This increase resulted primarily from
increases of $12.9 million, $2.4 million and  $2.0  million in interest expense
on  Certificate  of  Deposit  accounts, Savings accounts  and  borrowed  funds,
respectively, which resulted from increased average balances of $230.0 million,
$117.2 million and $34.6 million,  respectively,  during  the fiscal year ended
June  30,  1997,  compared  to  the  fiscal  year  ended  June  30, 1996.   The
acquisition  of  $216.3  million  and $129.2 million of Certificate of  Deposit
accounts  and  Savings  accounts,  respectively,   from  Conestoga  contributed
significantly to these average balance increases.  The  increase  in  borrowing
resulted  from  the  capital  leverage  strategy  instituted during the current
fiscal year.  See "Management Strategy."  Overall, the average cost of interest
bearing liabilities increased 13 basis points from 4.12% during the fiscal year
ended June 30, 1996, to 4.25% during the fiscal year  ended  June 30, 1997, due
primarily to an increase of 48 basis points in the average cost  on  NOW, Super
Now  and money market accounts, which resulted from increased rates offered  on
these  deposits  under   management's  deposit  pricing  strategy,  as  well an
increase  of  10 basis points on the cost of borrowed funds resulting from  the
current year borrowing activity.

    PROVISION FOR  LOAN  LOSSES.  The  Provision for Loan Losses increased $1.2
million to $4.2 million for the fiscal year  ended  June  30,  1997  from  $3.0
million  for the fiscal year ended June 30, 1996. The Allowance for Loan Losses
increased  by  $2.9  million during the fiscal year ended June 30, 1997, as the
loan loss provision of  $4.2 million was partially offset by net charge-offs of
$1.3 million.  While the  allowance  for  loan losses increased, non-performing
loans declined from $6.6 million at June 30,  1996, to $3.2 million at June 30,
1997.  The Allowance for Loan Losses as a percentage  of  non-performing  loans
and total loans was 336.24% and 1.43%, respectively, at June 30, 1997, compared
to  119.25%  and  1.34%,  respectively,  at  June  30,  1996.   In management's
judgment,  it  was  prudent  to  continue  the loan loss provision in order  to
supplement the loan loss allowance, based upon  the  Bank's  growing  volume of
multi-family  loan originations, the composition of its loan portfolio and  the
Bank's historical charge-off experience.  See "Asset Quality."

    NON-INTEREST  INCOME.   Non-interest  income increased $2.7 million to $4.1
million during the fiscal year ended June 30,  1997  compared  to  $1.4 million
during  the  fiscal  year  ended June 30, 1996.  This increase was attributable
primarily to increases of $1.0  million  and  $733,000  in  service charges and
other fees, and other income, respectively.  Contributing to  the  increase  in
service  charges  and  other  fees were increased income of $465,000 related to
deposit accounts attributable to the growth in deposits from the acquisition of
Conestoga, and increases of $272,000  and  $162,000,  respectively,  related to
safe  deposit boxes and the Bank's funding of official checks. The increase  in
other income  was attributable primarily to increased rental income of $241,000
received from retail  and  other  commercial  premises acquired from Conestoga.
Also contributing to the increase in other income  were  increases  of $170,000
and  $120,000  on  Federal  Home  Loan  Bank of New York capital stock dividend
income  and loan prepayment penalty income,  respectively.   In  addition,  net
gains on  sale  of  assets totaled $984,000 during the year ended June 30, 1997
compared to a net loss  of  $18,000 during the year ended June 30, 1996.  Sales
of assets occur periodically  in  response  to management's review of portfolio
assets in light of current market conditions.

    NON-INTEREST  EXPENSE.  Non-interest expense  increased  $13.5  million  to
$27.5 million during  the  fiscal  year  ended June 30, 1997 from $14.0 million
during the fiscal year ended June 30, 1996. Several factors contributed to this
increase, including an increase of $2.3 million  in  federal  deposit insurance
premium expense.  As a result of the Acquisition of Pioneer the  Bank  acquired
$394.3  million  in  deposits  which  were  insured by the SAIF.  The Bank paid
higher  assessment  rates  on  these deposits during  the  three  months  ended
September 30, 1996.  In addition,  the  Bank  was required to pay $2.0 million,
before  taxes, related to the SAIF Special Assessment  paid  during  the  three
months ended  September  30,  1996  on  all  of  its  SAIF deposits, which were
primarily comprised of the deposits obtained from Pioneer.  As  a result of the
recapitalization  of SAIF, the Bank, which currently has a Bank Insurance  Fund
("BIF")/SAIF deposit  ratio  of  54/46,  has  experienced  a  reduction in FDIC
insurance expense during all fiscal quarters subsequent to September  30, 1996.
See "Impact of Recent Legislation."  Should the Bank maintain its status  as  a
well-capitalized  institution,  given  the  current FDIC assessment rates, this
reduction in quarterly FDIC insurance expense  is  expected to continue. During
the fiscal year ended June 30, 1996, the Bank received  a  refund from the FDIC
of $319,000 related to the Bank's insurance expense, which reduced  its federal
deposit insurance premium expense for the period to $109,000. During the fiscal
year ended June 30, 1996, virtually all of the Bank's deposits were insured  by
the BIF.  See "Impact of Recent Legislation."

    Salary and employee benefits, occupancy and equipment, data processing, and
other  operating  expenses  increased $2.4 million, $1.3 million, $443,000, and
$1.8 million, respectively, resulting  from  both  the acquisition of Conestoga
and  increased  costs  associated  with  activities  as a  public  company.  In
addition,  during  the  fiscal  year  ended June 30, 1997,  the  Bank  incurred
increased expenses of $2.9 million related  to  Employee  Stock  Ownership Plan
("ESOP")  and  RRP  benefits, and $2.4 million related to goodwill amortization
resulting from its acquisition of Conestoga.  Only minor expenses were recorded
during the fiscal year  ended June 30, 1996 related to these items, as the Bank
completed its initial public  offering  (from  which  the  ESOP  and  RRP  were
generated) and its acquisition of Conestoga (from which goodwill was generated)
on  June 26, 1996. Partially offsetting these increased expenses was a decrease
of $136,000  related  to  losses  on  other  real  estate owned, resulting from
management's periodic review of reserves established  for  losses on other real
estate  owned.  Overall, non-interest expense was 2.24% of average  assets  for
the fiscal  year  ended  June  30,  1997.   Excluding  the  effects of the non-
recurring SAIF charge, non-interest expense was 2.07% of average  assets during
the fiscal year ended June 30, 1997 compared to 2.06% for the fiscal year ended
June 30, 1996.
PAGE 12

    INCOME TAX EXPENSE.  Income tax expense totaled $7.6 million.   Income  tax
expense was reduced by $2.9 million during the fiscal year ended June 30, 1997,
due  to  New  York  State and New York City recoveries of $1.9 million and $1.0
million, respectively,  related  to the Bank's deferred tax liability.  Both of
these recoveries resulted from recent  tax  legislation passed by both New York
State  and  New  York City.  See "Impact of Recent  Legislation."   Income  tax
expense, exclusive of these recoveries, totaled $10.5 million during the fiscal
year ended June 30, 1997, compared to $6.2 million during the fiscal year ended
June 30, 1996, an  increase of $4.3 million.  This increase was attributable to
both an increase of  $6.4  million  in  pre-tax  income and  an increase in the
effective tax rate from 45.9% for the fiscal year ended June 30, 1996, to 52.6%
for  the  fiscal year ended June 30, 1997.  The increased  effective  tax  rate
during the  fiscal  year  ended  June  30,  1997,  (before recoveries) resulted
primarily from the acquisition of Conestoga being accounted  for  as a tax-free
transaction,  resulting  in  the Company receiving no tax benefit for  goodwill
expense. In addition, the Company  received  no  tax  deduction for $666,000 of
ESOP  compensation  expense related to the excess of the  average  fair  market
value of the Company's  stock  during the fiscal year ended June 30, 1997, over
the original purchase price of the stock by the ESOP.  Excluding the effects of
these items, the effective tax rate for the fiscal year ended June 30, 1997 was
45.6%.

COMPARISON OF OPERATING RESULTS FOR THE FISCAL YEARS ENDED JUNE 30, 1996 AND
1995

    GENERAL.   Net income for the fiscal year ended June 30, 1996 was $6.3
million as compared to $8.4 million for the fiscal year ended June 30, 1995.
Income before cumulative effect of change in accounting principles for the year
ended June 30, 1996 was $7.3 million, a decrease of $1.1 million from $8.4
million for the prior year. Decreases of  $1.2 million and $398,000 in net
interest income and non-interest income, respectively, were offset by a
$440,000 decrease in income tax expense.

    INTEREST INCOME.   Interest income amounted to $52.6 million for the year
ended June 30, 1996, representing an increase of $3.4 million from the prior
year. The increase was the result of the effect of a $43.1 million increase in
average interest-earning assets, as the average yield on interest-earning
assets decreased by 1 basis point. The largest components of the increase in
interest income were interest income on real estate loans, investment
securities and federal funds sold, of $939,000, $1.3 million and $625,000,
respectively. All of these increases were driven primarily by the increases in
average interest-earning assets of $8.9 million, $23.0 million and $11.7
million, in real estate loans, investment securities and federal funds sold,
respectively.  Average yields on real estate loans, and investment securities
increased by 3 basis points and 12 basis points respectively, while the average
yield on federal funds sold declined by 10 basis points.  The small increase in
yields on these assets resulted from general increase in interest rates during
the year ended June 30, 1996, offset by a shift of funds to shorter-term, lower
yielding investments and competitive loan pricing, which reduced rates slightly
on loan originations.  Since much of the real estate loan originations occurred
during the fourth fiscal quarter, the effect upon average balance and interest
income for the year ended June 30, 1996 was minor.

    INTEREST EXPENSE.    Interest expense was $23.5 million for the year ended
June 30, 1996, an increase of $4.6 million from the prior year. Interest-
bearing liabilities averaged $570.1 million for the year ended June 30, 1996,
representing an increase of $25.3 million, or 4.65%, over the prior year. The
average rate paid on interest-bearing liabilities increased 64 basis points,
from 3.48% to 4.12%. The increase in the average rate paid on interest-bearing
liabilities resulted from the higher interest rate environment and from a
steady shift of deposits out of savings accounts and into higher costing
certificates of deposit. Management's strategy of paying competitive interest
rates on certificates of deposit with maturities in excess of one year, which
management believes should help to stabilize the Bank's cost of funds over the
longer term, contributed to a higher cost of funds in the current period.
Average savings account balances decreased by $31.6 million from $264.2 million
for the year ended June 30, 1995, to $232.6 million for the year ended June 30,
1996, at the same time the average certificates of deposit balance increased by
$59.7 million, from $225.8 million for the year ended June 30, 1995, to $285.5
million for the year ended June 30, 1996. The average rate paid on certificates
of deposit increased by 93 basis points over the same period.

    PROVISION FOR LOAN LOSSES.  The provision for loan losses increased
slightly to $2.97 million for the year ended June 30, 1996, from $2.95 million
for the year ended June 30, 1995.  The Allowance for Loan Losses increased from
$5.2 million at June 30, 1995 to $7.8 million at June 30, 1996, reflecting net
charge-offs of $1.0 million during the fiscal year ended June 30, 1996,
compared to $1.4 million for the fiscal year ended June 30, 1995, the provision
for loan losses, and the addition for Conestoga allowance for loan losses of
$668,000.  In management's judgment, it was prudent to continue to increase the
loan loss allowance based upon an evaluation of the adequacy of the reserve in
the context of the Bank's historical loan loss experience and to reflect the
growing volume of multi-family loan originations during 1996. Although charge-
offs declined during fiscal 1996 from fiscal 1995, the Bank experienced an
increase in non-performing loans of $1.5 million, from $5.1 million at June 30,
1995 to $6.6 million at June 30, 1996. See "Asset Quality."

    NON-INTEREST INCOME.  Non-interest income declined $398,000 to $1.4 million
for the year ended June 30, 1996, from $1.8 million for the year ended June 30,
1995. This decrease reflects a $53,000 reduction in net gain on the sale of
Other Real Estate Owned ("OREO"), a decrease of $258,000 on net gains on sales
of stock, and a decline of $136,000 in income provided from service charges.
The decrease in net gain on sale of stocks was attributable primarily to a loss
of $195,000 on the sale of preferred stocks in December, 1995.  The decrease in
income provided by service charges resulted primarily from a change in the
manner in which the Bank accounts for income from the rental of safe deposit
boxes.  In addition, declines of $34,000 and  $39,000 occurred in dividends on
FHLBNY stock and annuity fees, respectively.  Offsetting these declines, was an
increase of $106,000 in net gains on sale of bonds.

    NON-INTEREST EXPENSE.  Non-interest expense declined $32,000 from $14.1
million for the year ended June 30, 1995, to $14.0 million for the year ended
June 30, 1996, attributable primarily to a decrease of $1.1 million in
insurance premiums paid to the Federal Deposit Insurance Corporation ("FDIC").
This decrease resulted from a reduction in the BIF rate paid by the Bank to the
FDIC for deposit insurance premiums, combined with a refund from the FDIC for
BIF premiums previously paid in the amount of $319,000.  The decrease in
deposit insurance expense was partially offset by a $594,000 increase in
compensation and benefits expense, which was attributable to an increase in
employee bonuses and normal salary increases, and a $586,000 provision for
losses attributable to the Bank's holding of OREO. Beginning with the fiscal
year ended June 30, 1996, periodic provisions to the OREO valuation reserve are
recorded as non-interest expense.

    INCOME TAX EXPENSE.   Income tax expense totaled $6.2 million for the year
ended June 30, 1996, compared to $6.6 million for the year ended June 30, 1995,
a decline of $440,000.  The decline was attributable primarily to a decrease of
$1.6 million in pre-tax income, offset by an increase in the effective tax rate
from 44.0% for the year ended June 30, 1995 to 45.9% for the year ended June
30, 1996.  The lower effective tax rate during the year ended June 30, 1995,
resulted substantially from the utilization of capital gains  tax loss
carryforwards totaling $183,000 during the fiscal year.

    CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES.   On July 1, 1995,
the Bank adopted SFAS 106, which requires accrual of post-retirement benefits,
such as health care benefits, during the years an employee provides services.
The cumulative effect of the adoption of SFAS 106 on prior years was
$1,032,000, after a reduction for income taxes of $879,000. As permitted by the
Standard, the Bank elected to record this liability at the time of adoption.
PAGE 13

IMPACT OF INFLATION AND CHANGING PRICES

    The Financial Statements and Notes thereto presented herein have been
prepared in accordance with GAAP, which require the measurement of financial
position and operating results in terms of historical dollars without
considering the changes in the relative purchasing power of money over time due
to inflation. The impact of inflation is reflected in the increased cost of the
Bank's operations. Unlike industrial companies, nearly all of the assets and
liabilities of the Bank are monetary in nature. As a result, interest rates
have a greater impact on the Bank's performance than do the effects of general
levels of inflation. Interest rates do not necessarily move in the same
direction or to the same extent as the price of goods and services.

IMPACT OF RECENT LEGISLATION

     SAIF RECAPITALIZATION. The is currently a member of the BIF.  The FDIC
also maintains another insurance fund, the SAIF, which primarily insures the
deposits of savings and loan associations, but also insures the deposits
acquired by a BIF-insured institution from a SAIF-insured institution.  With
the consummation of the acquisition of Conestoga, the Bank acquired the
deposits of Pioneer (the "Pioneer Deposits"), a member of the SAIF, which
deposits totaled approximately $394.3 million at June 26, 1996.  The Bank is
now required to pay SAIF assessments with respect to the Pioneer Deposits.  In
addition, the Bank is required to pay SAIF assessments on all previously
acquired SAIF deposits ("Oakar Deposits").

     Under law and regulation in effect at June 30, 1996, BIF-assessable
deposits were assessed at a rate of $2,000 per year while SAIF-assessable
deposits were assessed at rates ranging from $0.23 to $0.31 per $100 of SAIF-
assessable deposits.  This disparity resulted from the BIF's achievement of the
required 1.25% reserve ratio while the SAIF had not reached the required 1.25%
reserve, due primarily to the fact that a significant portion of SAIF
assessments had been and were then being used to make payments on bonds ("FICO
bonds") issued in the late 1980s by the Financing Corporation.

    On September 30, 1996, the Deposit  Insurance Funds Act of 1996 (the "Funds
Act") was enacted into law, and it amended the Federal Deposit Insurance Act in
several  ways  to  recapitalize  the  SAIF and  reduce  the  disparity  in  the
assessment rates for the BIF and the SAIF.   The  Funds Act authorized the FDIC
to  impose  a  special  assessment  on  all institutions  with  SAIF-assessable
deposits in the amount necessary to recapitalize  the  SAIF.  As implemented by
the FDIC, the special assessment was $0.657 per $100 of an institution's  SAIF-
assessable  deposits as of March 31, 1995.  As applied to the Bank, the special
assessment was imposed with respect to the Pioneer deposits, because Pioneer no
longer exists  as  a  corporate  entity,  as  well  as   $39.3 million of Oakar
Deposits.  However, under the Funds Act, the Bank was entitled  to  reduce  the
amount   of   such  deposits  by  20%  in  computing  the  special  assessment.
Accordingly, the  SAIF special assessment, which totaled $2.0 million, was paid
by the Bank in November,  1996.  The  SAIF special assessment, although paid in
November, 1996, was recorded as non-interest  expense  during  the three months
ended September 30, 1996.

     In view of the recapitalization of the SAIF and consistent with certain
requirements of the Funds Act, the FDIC announced, in December, 1996, a
reduction in the annual assessment rates on SAIF-assessable deposits for
periods beginning on October 1, 1996 to 0 to 27 basis points for the quarterly
period beginning October 1, 1996, with the rate of 0 basis points applied to
well-capitalized institutions in the top supervisory group, such as the Bank.
This rate range was identical to the rates previously approved for BIF members.
In addition to the rate change, the FDIC elected to refund the Bank's regular
assessment expense of $251,000 recorded during the three months ended September
30, 1996.  This refund was recorded in other income during the three months
ended December 31, 1996.  As a result of this ruling, the Bank, as a well-
capitalized institution in the top supervisory group, incurred, on a net basis,
no expense beyond the SAIF special assessment charge for deposit insurance
during the year ended June 30, 1997.

     Based upon the above, as long as the Bank maintains its current regulatory
status, the Bank will either not have to pay, or will pay substantially lower,
regular SAIF assessments compared to those paid prior to and including the
three months ended September 30, 1996, assuming that the designated reserve
ratio of 1.25% is maintained by the SAIF.

     In addition, the Funds Act expanded the assessment base for the payments
on the FICO bonds to include, beginning January 1, 1997, the deposits of both
BIF members and SAIF members.  Until December 31, 1999, or such earlier date on
which the last savings association ceases to exist, the rate of assessment for
the FICO bonds on BIF-assessable deposits shall be one-fifth of the rate
imposed on SAIF-assessable deposits. The rate of assessments for the FICO bonds
beginning on January 1, 1997, was $0.013 per $100 of BIF-assessable deposits
and $0.0648 per $100 of SAIF-assessable deposits.  During the year ended June
30, 1997, the Bank incurred $172,000 of expense related to the FICO bond
assessments, which has been included in Federal deposit insurance premium
expense in the consolidated statement of operations.  For the semi-annual
period beginning on July 1, 1997, the rates of assessment for the FICO bonds
are 0.0126% for BIF-assessable deposits and 0.0630% for SAIF-assessable
deposits.

     The Funds Act also provides for the merger of the BIF and SAIF on January
1, 1999, with such merger being conditioned upon the prior elimination of the
thrift charter.  The Secretary of the Treasury was required to conduct a study
of relevant factors with respect to the development of a common charter for all
insured depository institutions and abolition of separate charters for banks
and thrifts and to report the Secretary's conclusions and findings to the
Congress.  The Secretary of Treasury has recommended to the Congress that the
separate charter for thrifts be eliminated only if other legislation is adopted
that permits bank holding companies to engage in certain non-financial
activities.  Absent legislation permitting bank holding companies to engage in
such non-financial activities, the Secretary of the Treasury recommended that
the thrift charter be retained.  Several bills have been introduced in Congress
to eliminate the federal thrift charter, but no determination has been made as
to the enactment of legislation with respect to the thrift charter.
PAGE 14

     RECAPTURE OF BAD DEBT RESERVES.  Prior to the enactment, on August 20,
1996, of the Small Business Job Protection Act of 1996 (the "1996 Act"), for
federal income tax purposes, thrift institutions such as the Bank, which met
certain definitional tests primarily relating to their assets and the nature of
their business, were permitted to establish tax reserves for bad debts and to
make annual additions thereto, which additions could, within specified
limitations, be deducted in arriving at their taxable income.  The Bank's
deduction with respect to "qualifying loans," which are generally loans secured
by certain interests in real property, could be computed using an amount based
on a six-year moving average of the Bank's actual loss experience (the
"Experience Method"), or a percentage equal to 8.0% of the Bank's taxable
income (the "PTI Method"), computed without regard to this deduction and with
additional modifications and reduced by the amount of any permitted addition to
the non-qualifying reserve.  Similar deductions for additions to the Bank's bad
debt reserve were permitted under the New York State Bank Franchise Tax and the
New York City Banking Corporation Tax; however, for purposes of these taxes,
the effective allowable percentage under the PTI method was 32% rather than 8%.

     Under the 1996 Act, the PTI Method was repealed and the Bank, as a "large
bank" (one with assets having an adjusted basis of more than $500 million),
will be unable to make additions to its tax bad debt reserve, will be permitted
to deduct bad debts only as they occur and will be required to recapture (I.E.,
take into income) over a six-year period, beginning with the Bank's taxable
year beginning July 1, 1996, the excess of the balance of its bad debt reserves
(other than the supplemental reserve) as of June 30, 1997 over the greater of
the balance of such reserves as of December 31, 1987 (or over a lesser amount
if the Bank's loan portfolio decreased since June 30, 1988).  However, under
the 1996 Act, such recapture requirements will be suspended for each of the two
successive taxable years beginning July 1, 1996 in which the Bank originates a
minimum amount of certain residential loans during such years that is not less
than the average of the principal amounts of such loans made by the Bank during
its six taxable years preceding July 1, 1996.  Since the Bank has already
provided a deferred income tax liability for this tax for financial reporting
purposes, there was no adverse impact to the Bank's financial condition or
results of operations from the enactment of this legislation.

    On July 30, 1996, New York State (the "State") enacted legislation,
effective January 1, 1996, which generally retains the percentage of taxable
income method for computing allowable bad debt deductions and does not require
the Bank to recapture into income State tax bad debt reserves unless one of the
following events occur: 1) the Bank's retained earnings represented by the
reserve is used for purposes other than to absorb losses from bad debts,
including dividends in excess of the Bank's earnings and profits or
distributions in liquidation or in redemption of stock; 2) the Bank fails to
qualify as a thrift as provided by the State tax law, or 3) there is a change
in state tax law. The Bank had a deferred tax liability of approximately $1.9
million recorded for the excess of State tax bad debt reserves over its reserve
at December 31, 1987 in accordance with SFAS 109. In December, 1996 after
evaluating the State tax legislation, as well as relevant accounting literature
and industry practices, management of the Bank concluded that this liability
was no longer required to be recorded, and recovered the full deferred tax
liability.  This recovery resulted in a reduction of income tax expense during
the year ended June 30, 1997 for the full amount of the recovered deferred tax
liability.

    On March 11, 1997, New York City enacted legislation, effective January 1,
1996,  which conformed its tax law regarding bad debt deductions to New York
State's tax law.  As a result of this legislation, the Bank, in March, 1997,
recovered a deferred tax liability of approximately $1.0 million previously
recorded for the excess of New York City tax bad debt reserves over its base
year reserve at December 31, 1987. This recovery resulted in a reduction of
income tax expense during the year ended June 30, 1997 for the full amount of
the recovered deferred tax liability.

IMPACT OF RECENT ACCOUNTING STANDARDS

        In June 1996, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 125, ''Accounting for Transfers of
Financial Assets and Extinguishments of Liabilities'' ("SFAS 125"). SFAS 125
provides consistent standards for distinguishing transfers of financial assets
that are sales from transfers that are borrowings. SFAS 125 also requires that
liabilities and derivatives incurred or obtained as part of a transfer be
measured initially at fair value.  This statement also provides guidance on
measurement of servicing rights on assets transferred and derecognition of
liabilities transferred. SFAS 125 is effective for all transfers, servicing, or
extinguishments occurring after December 31, 1996, except for certain
provisions relating to the accounting for secured borrowings and collateral and
the accounting for transfers and servicing of repurchase agreements, dollar
rolls, securities lending and similar transactions, for which the effective
date was deferred until January 1, 1998, in accordance with Statement of
Financial Accounting Standards No. 127, "Deferral of the Effective Date of
Certain Provisions of FASB Statement No. 125" ("SFAS 127").  The Company
adopted SFAS 125 as amended by SFAS 127 effective January 1, 1997.  The
adoption of this standard did not have a material impact on the financial
condition or results of operations of the Bank.

     In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share''
("SFAS 128"). SFAS 128 establishes new standards for computing and presenting
earnings per share.  SFAS 128 is applicable to all U.S. entities with publicly
held common stock or potential common stock, and requires disclosure of basic
earnings per share and diluted earnings per share, for entities with complex
capital structures, on the face of the income statement, along with a
reconciliation of the numerator and denominator of basic and diluted earnings
per share.  SFAS 128 replaces APB Opinion No. 15, issued by the American
Institute of Certified Public Accountants in 1971, as the authoritative
guidance for calculation and disclosure of earnings per share, but does not
amend the provisions of SOP 93-6 related to the inclusion of allocated and
unallocated ESOP shares when calculating average shares outstanding. SFAS 128
is effective for financial statements issued for periods ending after December
15, 1997, including interim periods.  Early adoption is not permitted, and
restatement of prior periods is required. Basic and diluted earnings per share,
if computed under the standards of SFAS 128, would have been $0.95 and $0.95,
respectively, for the year ended June 30, 1997.

    In June, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income''
("SFAS 130"). SFAS 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements.  SFAS 130 requires that financial statements report and
display comprehensive income in the same prominence as net income, but permits
the statement of comprehensive income to be presented either together with or
apart from the income statement. Comprehensive income, as defined by SFAS 130
includes revenues, expenses, and gains and losses which, under current GAAP,
bypass net income and are typically reported as a component of stockholders'
equity.  SFAS 130 is applicable for all entities which present a full set of
financial statements and is effective for fiscal years beginning after December
15, 1997, with early adoption permitted.
PAGE 15

    In June, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information'' ("SFAS 131"). SFAS 131 introduces a new
model for segment reporting entitled the "management approach," which focuses
upon the manner in which the chief operating decision makers organize segments
within a company for making operating decisions and assessing performance.
Under the management approach, reportable segments can be based upon, but are
not limited to, products and services, geography and legal or management
structure.  SFAS 131 requires full financial disclosure for each segment, but
only requires limited quarterly segment disclosure. SFAS 131 is applicable for
all public, for-profit companies, and is effective for fiscal years beginning
after December 15, 1997, with early application encouraged.  Management of the
Company is currently evaluating SFAS 131.

PAGE 16

                         INDEPENDENT AUDITORS' REPORT

To the Stockholders and the Board of Directors of
 the Dime Community Bancorp, Inc. and Subsidiary

We have audited the accompanying consolidated statements of condition of the
Dime Community Bancorp, Inc. and Subsidiary (the ''Company'') as of June 30,
1997 and 1996, and the related consolidated statements of operations, changes
in stockholders' equity and cash flows for each of the three years in the
period ended June 30, 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Dime Community
Bancorp, Inc. and Subsidiary as of June 30, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended June 30, 1997 in conformity with generally accepted accounting
principles.

As discussed in Notes 1 and 15, effective July 1, 1995, the Company changed its
method of accounting for postretirement benefits other than pensions to comply
with Statement of Financial Accounting Standards No. 106.

/S/ DELOITTE & TOUCHE LLP

New York, New York
August 8, 1997

PAGE 17

                  DIME COMMUNITY BANCORP, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                  (Dollars in thousands except share amounts)

JUNE 30,                                                                                              1997                     1996
                                                                                                     
- --------------------------------------------------------------------                         -------------             ------------
ASSETS:
Cash and due from banks                                                                           $19,198                  $17,055
Investment securities held-to-maturity (estimated market value of
   $102,024 and $43,428 at June 30, 1997 and 1996, respectively)
   (Notes 2, 4, and 12)                                                                           101,587                   43,552
Investment securities available for sale (Notes 2, 4, and 12):
    Bonds and notes (amortized cost of $52,426 and $338,141 at
      June 30, 1997 and 1996, respectively)                                                        52,798                  338,089
    Marketable equity securities (historical cost of $4,912 and $2,977
      at June 30, 1997 and 1996, respectively)                                                      5,889                    3,205
Mortgage-backed securities held-to-maturity (estimated market
     value of $79,075 and $52,596 at June 30, 1997 and 1996,
     respectively) (Notes 5 and 12)                                                                78,388                   52,580
Mortgage backed securities available for sale (amortized cost of
     $227,776 and $156,962 at June 30, 1997 and 1996,
     respectively)(Notes 5 and 12)                                                                230,137                  157,361
Federal funds sold (Note 2)                                                                        18,902                  115,130
Loans (Note 6):
    Real estate                                                                                   744,246                  577,663
    Other loans                                                                                     6,076                    5,564
    Less allowance for loan losses (Note 7)                                                       (10,726)                  (7,812)
- --------------------------------------------------------------------                         -------------             ------------
   Total loans, net                                                                               739,596                  575,415
- --------------------------------------------------------------------                         -------------             ------------
Loans held for sale                                                                                   262                      459
Premises and fixed assets (Note 9)                                                                 13,995                   14,399
Federal Home Loan Bank of New York capital stock (Note 10)                                          8,322                    7,604
Other real estate owned, net (Note 7)                                                               1,697                    1,946
Goodwill (Note 3)                                                                                  26,433                   28,438
Other assets (Notes 14 and 15)                                                                     17,822                   16,588
- --------------------------------------------------------------------                         -------------             ------------
TOTAL ASSETS                                                                                   $1,315,026               $1,371,821
====================================================================                         =============             ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Due to depositors (Note 11)                                                                      $963,395                 $950,114
Escrow and other deposits (Note 2)                                                                 14,974                  141,732
Securities sold under agreements to repurchase (Note 12)                                           76,333                   11,998
Federal Home Loan Bank of New York advances                                                        63,210                   15,710
Payable for securities purchased (Note 12)                                                             -                    33,994
Accrued postretirement benefit obligation (Note 15)                                                 2,546                    2,381
Other liabilities (Note 1 and 15)                                                                   3,679                    2,821
- --------------------------------------------------------------------                         -------------             ------------
TOTAL LIABILITIES                                                                               1,124,137                1,158,750
- --------------------------------------------------------------------                         -------------             ------------
COMMITMENTS AND CONTINGENCIES (Note 16)
STOCKHOLDERS' EQUITY
Preferred stock ($0.01 par, 9,000,000 shares authorized, none issued or
   outstanding at June 30, 1997 and June 30, 1996)                                                     -                        -
Common stock ($0.01 par, 45,000,000 shares authorized, 14,547,500 shares
   issued, 13,092,750 and 14,547,500 shares outstanding at June 30, 1997
   and 1996, respectively                                                                             145                      145
Additional paid-in capital                                                                        141,716                  141,240
Unallocated common stock of Employee Stock Ownership Plan  (Note 15)                              (10,324)                 (11,541)
Unearned common stock of Recognition and Retention Plan  (Note 15)                                 (9,671)                      -
Treasury stock, at cost (1,454,750 shares at June 30, 1997) (Note 18)                             (27,703)                      -
Retained earnings (Note 2 and 14)                                                                  94,695                   82,916
Unrealized gain on securities available for sale, net of deferred taxes                             2,031                      311
- --------------------------------------------------------------------                         -------------             ------------
TOTAL STOCKHOLDERS' EQUITY                                                                        190,889                  213,071
- --------------------------------------------------------------------                         -------------             ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                     $1,315,026               $1,371,821
====================================================================                         =============             ============

See notes to consolidated financial statements.
PAGE 18

                  DIME COMMUNITY BANCORP, INC. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Dollars in thousands except share amounts)

FOR THE YEARS ENDED JUNE 30,                                                       1997                 1996                   1995
                                                                                                    
- -------------------------------------------------------                    ------------          -----------          -------------
INTEREST INCOME:
Loans secured by real estate                                                    $54,965             $39,314                 $38,375
Other loans                                                                         460                 340                     307
Investment securities                                                            13,654               5,738                   4,402
Mortgage-backed securities                                                       17,704               5,927                   5,464
Federal funds sold                                                                2,247               1,300                     675
- -------------------------------------------------------                    ------------          -----------          -------------
TOTAL INTEREST  INCOME                                                           89,030              52,619                  49,223
- -------------------------------------------------------                    ------------          -----------          -------------
INTEREST EXPENSE:
Deposits  and escrow                                                             38,544              22,508                  17,933
Borrowed funds                                                                    3,020               1,008                   1,013
- -------------------------------------------------------                    ------------          -----------          -------------
TOTAL INTEREST EXPENSE                                                           41,564              23,516                  18,946
NET INTEREST INCOME                                                              47,466              29,103                  30,277
Provision for loan losses                                                         4,200               2,979                   2,950
- -------------------------------------------------------                    ------------          -----------          -------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                              43,266              26,124                  27,327
- -------------------------------------------------------                    ------------          -----------          -------------
NON-INTEREST INCOME:
Service charges and other fees                                                    1,934                 911                   1,047
Net gain on sales and redemptions of securities and
   other assets                                                                     859                 (30)                    159
Net gain on sales of loans                                                          125                  12                      33
Other                                                                             1,215                 482                     534
- -------------------------------------------------------                    ------------          -----------          -------------
TOTAL NON-INTEREST INCOME                                                         4,133               1,375                   1,773
- -------------------------------------------------------                    ------------          -----------          -------------
NON-INTEREST EXPENSE:
Salaries and employee benefits                                                    9,794               7,359                   6,879
ESOP and RRP compensation expense                                                 3,058                 114                     -
OCCUPANCY AND EQUIPMENT                                                           3,084               1,775                   1,610
SAIF special assessment                                                           2,032                  -                      -
Federal deposit insurance premiums                                                  423                 109                   1,245
Data processing costs                                                             1,000                 557                     481
Provision for losses on Other real estate owned                                     450                 586                     -
Goodwill amortization                                                             2,405                  25                     -
Other                                                                             5,246               3,496                   3,838
- -------------------------------------------------------                    ------------          -----------          -------------
TOTAL NON-INTEREST EXPENSE                                                       27,492              14,021                  14,053
- -------------------------------------------------------                    ------------          -----------          -------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLES                                                            19,907              13,478                  15,047
Income tax expense                                                                7,591               6,181                   6,621
- -------------------------------------------------------                    ------------          -----------          -------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
                                                                                 12,316               7,297                   8,426
CUMULATIVE EFFECT ON PRIOR YEARS OF  CHANGING TO A DIFFERENT
METHOD OF ACCOUNTING FOR:
Postretirement benefits other than pensions                                         -                (1,032)                    -
- -------------------------------------------------------                    ------------          -----------          -------------
NET INCOME                                                                      $12,316              $6,265                  $8,426
=======================================================                    ============          ===========          =============
EARNINGS PER SHARE:
PRIMARY                                                                           $0.95                 N/A                     N/A
=======================================================                    ============          ===========          =============
FULLY DILUTED                                                                     $0.94                 N/A                     N/A
=======================================================                    ============          ===========          =============

See Notes to consolidated financial statements.
PAGE 20

                  DIME COMMUNITY BANCORP, INC. AND SUBSIDIARY
         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                     (IN THOUSANDS EXCEPT PER SHARE DATA)

FOR THE YEARS ENDED JUNE 30,                                                       1997                  1996                  1995
                                                                                                     
- --------------------------------------------------------                   ------------          ------------          ------------
COMMON STOCK (PAR VALUE $0.01):
Balance at beginning of period                                                    $145                   $-                    $-
Issuance of common stock in initial public offering
   (14,547,500 shares)                                                              -                    145                    -
- --------------------------------------------------------                   ------------          ------------          ------------
Balance at end of period                                                           145                   145                    -
- --------------------------------------------------------                   ------------          ------------          ------------
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of period                                                 141,240                    -                     -
Issuance of common stock in initial public offering                                 -                145,330                    -
Cost of issuance of common stock                                                  (190)               (4,107)                   -
Amortization of excess fair value over cost - ESOP stock                           666                    17                    -
- --------------------------------------------------------                   ------------          ------------          ------------
Balance at end of period                                                       141,716               141,240                    -
- --------------------------------------------------------                   ------------          ------------          ------------
EMPLOYEE STOCK OWNERSHIP PLAN:
Balance at beginning of period                                                 (11,541)                   -                     -
Common stock acquired by ESOP                                                       -                (11,638)                   -
Amortization of earned portion of ESOP stock                                     1,217                    97                    -
- --------------------------------------------------------                   ------------          ------------          ------------
Balance at end of period                                                       (10,324)              (11,541)                   -
- --------------------------------------------------------                   ------------          ------------          ------------
RECOGNITION AND RETENTION PLAN:
Balance at beginning of period                                                      -                     -                     -
Common stock acquired by RRP                                                   (10,846)                   -                     -
Amortization of earned portion of RRP stock                                      1,175                    -                     -
- --------------------------------------------------------                   ------------          ------------          ------------
Balance at end of period                                                        (9,671)                   -                     -
- --------------------------------------------------------                   ------------          ------------          ------------
TREASURY STOCK:
Balance at beginning of period                                                      -                     -                     -
Purchase of 1,454,750 shares, at cost                                          (27,703)                   -                     -
- --------------------------------------------------------                   ------------          ------------          ------------
Balance at end of period                                                       (27,703)                   -                     -
- --------------------------------------------------------                   ------------          ------------          ------------
RETAINED EARNINGS:
Balance at beginning of period                                                  82,916                76,651                68,225
Net income for the period                                                       12,316                 6,265                 8,426
CASH DIVIDENDS DECLARED AND PAID                                                  (537)                   -                     -
- --------------------------------------------------------                   ------------          ------------          ------------
Balance at end of period                                                        94,695                82,916                76,651
- --------------------------------------------------------                   ------------          ------------          ------------
MARKETABLE EQUITY SECURITIES VALUATION RESERVE:
Balance at beginning of period                                                      -                     -                   (306)
Effect of adoption of SFAS 115, net of deferred taxes                               -                     -                    306
- --------------------------------------------------------                   ------------          ------------          ------------
Balance at end of period                                                            -                     -                     -
- --------------------------------------------------------                   ------------          ------------          ------------
UNREALIZED GAIN ON SECURITIES AVAILABLE FOR SALE, NET:
Balance at beginning of period                                                     311                   416                    -
Effect of adoption of SFAS 115, net of deferred taxes                               -                     -                   (146)
Change in unrealized gain on securities available for sale
   during the period, net of deferred taxes                                      1,720                  (105)                  562
- --------------------------------------------------------                   ------------          ------------          ------------
Balance at end of period                                                        $2,031                  $311                  $416
- --------------------------------------------------------                   ------------          ------------          ------------

See notes to consolidated financial statements.
PAGE 21

                  DIME COMMUNITY BANCORP, INC. AND SUBSIDIARY
               CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (DOLLARS IN THOUSANDS)

FOR THE YEARS ENDED JUNE 30,                                                            1997                1996               1995
                                                                                                        
- ---------------------------------------------------------------                   ----------          ----------         ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                                          $12,316              $6,265             $8,426
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net gain on investment and mortgage backed securities called                             -                  (79)                -
Net (gain) loss on investment and mortgage backed securities sold                      (768)                164                 11
Net gain on sale of loans held for sale                                                (125)                (12)               (33)
Net gain on sale of other assets                                                        (19)                 -                  -
Net depreciation and amortization (accretion)                                          (958)                102              1,509
ESOP and RRP compensation expense                                                     3,058                 114                 -
Provision for loan losses                                                             4,200               2,979              2,950
Goodwill amortization                                                                 2,405                 25                  -
Decrease (increase) in loans held for sale                                              322                (310)               580
(Increase) decrease in other assets and other real estate owned                      (2,401)              3,040              3,762
Increase in accrued postretirement benefit obligation                                   165               2,115                 -
(DECREASE) INCREASE IN PAYABLE FOR SECURITIES PURCHASED                             (33,994)             33,994                 -
Increase in other liabilities                                                           858               1,677                291
- ---------------------------------------------------------------                   ----------          ----------         ----------
Net cash (used in) provided by Operating Activities                                 (14,941)             50,074             17,496
- ---------------------------------------------------------------                   ----------          ----------         ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease (increase) in Federal funds sold                                        96,228             (52,253)           (10,780)
Proceeds from maturities of investment securities held to maturity                   19,075              13,065              2,060
Proceeds from maturities of investment securities available for sale                359,710             399,135             26,300
Proceeds from calls of investment securities held to maturity                         5,000              11,056                 -
Proceeds from calls of investment securities available for sale                      26,011              11,323                 -
Proceeds from sales of investment securities available for sale                      27,253                 501                 -
Proceeds from sales of mortgage backed securities held to maturity                       -                2,555              1,067
Proceeds from sales of mortgage backed securities available for sale                 16,713                  -                  -
Purchases of investment securities held to maturity                                 (82,010)             (9,292)            (1,000)
Purchases of investment securities available for sale                              (126,741)           (541,951)           (43,251)
Purchases of mortgage backed securities held to maturity                            (38,842)            (11,714)            (6,093)
Purchases of mortgage backed securities available for sale                         (115,265)            (11,554)            (5,053)
Principal collected on mortgage backed securities held to maturity                   12,820               9,995              7,905
Principal collected on mortgage backed securities available for sale                 28,201              15,877              5,690
Net increase in loans                                                              (168,381)            (41,856)              (215)
Cash disbursed in acquisition of Conestoga Bancorp, net of cash acquired               (400)            (93,074)                -
Purchases of fixed assets                                                              (652)               (779)              (125)
Purchase of Federal Home Loan Bank stock                                               (718)               (123)               188
- ---------------------------------------------------------------                   ----------          ----------         ----------
Net cash provided by (used in) Investing Activities                                  58,002            (299,089)           (23,307)
- ---------------------------------------------------------------                   ----------          ----------         ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in Due to depositors                                                    13,281               1,019              8,080
Net decrease (increase) in escrow and other deposits                               (126,758)            128,625             (1,187)
Proceeds from Federal Home Loan Bank of New York Advances                            47,500                  -                  -
Increase (decrease) in securities sold under agreements to repurchase                64,335                (111)               (51)
Proceeds from issuance of common stock, net of ESOP stock purchase                       -              133,837                 -
Cash disbursed for expenses related to issuance of common stock                        (190)             (4,107)                -
Purchase of common stock by the Recognition and Retention Plan                      (10,846)                 -                  -
Cash dividends paid to stockholders                                                    (537)                 -                  -
Purchase of treasury stock                                                          (27,703)                 -                  -
- ---------------------------------------------------------------                   ----------          ----------         ----------
Net cash (used in) provided by Financing Activities                                 (40,918)            259,263              6,842
- ---------------------------------------------------------------                   ----------          ----------         ----------
INCREASE IN CASH AND DUE FROM BANKS                                                   2,143              10,248              1,031
CASH AND DUE FROM BANKS, BEGINNING OF PERIOD                                         17,055               6,807              5,776
- ---------------------------------------------------------------                   ----------          ----------         ----------
CASH AND DUE FROM BANKS, END OF PERIOD                                              $19,198             $17,055             $6,807
===============================================================                   ==========          ==========         ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes                                                           $8,486              $6,993             $5,996
Cash paid for interest                                                              $41,270             $23,744            $18,932
TRANSFER OF LOANS TO OTHER REAL ESTATE OWNED                                         $1,407              $1,069              2,795
Transfer of investment and mortgage backed securities held-to-maturity
   to available for sale                                                                $-               $3,300             70,000
Change in unrealized gain on available for sale securities,
   net of deferred taxes                                                             $1,720               $(105)               562

On June 26, 1996, the Bank acquired all of the outstanding common stock of
Conestoga Bancorp, Inc. for cash.  In connection with this acquisition, the
following assets were acquired and liabilities assumed:

Fair Value of Investments, Loans and Other Assets Acquired, net     $507,023
Cash paid for Common Stock                                          (101,272)
- ----------------------------------------------------------------- -----------
Deposits and Other Liabilities Assumed                              $405,751
================================================================= ===========

See Notes to consolidated financial statements.
PAGE 22

               DIME COMMUNITY BANCORP, INC. AND SUBSIDIARY
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

1.    NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

NATURE OF OPERATIONS - Dime Community Bancorp, Inc. (the
"Company") is a Delaware corporation organized by the Bank for
the purpose of acquiring all of the capital stock of The Dime
Savings Bank of Williamsburgh (the "Bank") issued in the
Conversion on June 26, 1996.  Presently, the significant assets
of the Company are the capital stock of the Bank, the Company's
loan to the Bank's ESOP, and investments of the net conversion
proceeds retained by the Company. The Company is subject to the
financial reporting requirements of the Securities Exchange Act
of 1934, as amended.

The Bank was originally founded in 1864 as a New York State-
chartered mutual savings bank.  On November 1, 1995, the Bank
converted to a federal mutual savings bank.  The Bank has been,
and intends to continue to be, a community-oriented financial
institution providing financial services and loans for housing
within its market areas.  The Bank maintains its headquarters in
the Williamsburgh section of the borough of Brooklyn.  Fourteen
additional offices are located in the boroughs of Brooklyn,
Queens, and the Bronx, and in Nassau County.

Since the sale of the Company's stock and the merger of
Conestoga Bancorp, Inc. into the Bank occurred on June 26, 1996,
the Company's results of operations for the years ended June 30,
1996 and 1995 are comprised of the results of operations of the
Bank.  Earnings per share information for the Company for the
years ended June 30, 1996 and 1995 are not meaningful.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The accounting and
reporting policies of the Company conform to generally accepted
accounting principles. The following is a description of the
significant policies:

PRINCIPLES OF CONSOLIDATION - The accompanying 1997, 1996 and
1995 consolidated financial statements include the accounts of
the Company, and its wholly-owned subsidiary, the Bank.  All
financial statements presented include the accounts of the
Bank's three wholly-owned subsidiaries, Havemeyer Equities Corp.
(''HEC''), Boulevard Funding Corp. (''BFC'') and Havemeyer
Brokerage Corp. (''HBC''). Prior to April, 1997, HBC was engaged
in the sale of insurance and annuity products primarily to the
Bank's customers and members of the local community. In April,
1997 HBC was changed from a service corporation to an operating
subsidiary, whose primary function is the management of an
investment securities portfolio.  BFC and HEC were established
in order to invest in real estate joint ventures and other real
estate assets. BFC and HEC had no investments in real estate at
June 30, 1997 and are currently inactive. All significant
intercompany accounts and transactions have been eliminated in
consolidation.

INVESTMENT SECURITIES AND MORTGAGE-BACKED SECURITIES - Purchases
and sales of Investments and Mortgage-backed securities are
recorded on trade date.  Gains and losses on sales of Investment
and Mortgage-backed securities are recorded on the specific
identification basis.

On July 1, 1994, the Bank adopted SFAS No. 115, ''Accounting for
Investments in Debt and Equity Securities'' (''SFAS 115''). The
Statement requires that debt and equity securities that have
readily determinable fair values be carried at fair value unless
they are held to maturity. Debt securities are classified as
held to maturity and carried at amortized cost only if the
reporting entity has a positive intent and ability to hold these
securities to maturity. If not classified as held to maturity,
such securities are classified as securities available for sale
or as trading securities. Unrealized holding gains or losses on
securities available for sale are excluded from earnings and
reported net of income taxes as a separate component of
stockholders' equity. The effect of adopting this statement was
not material.  At June 30, 1997, 1996 and 1995, all equity
securities are classified as available for sale.  At June 30,
1994, all debt securities were carried at amortized cost and all
equity securities were carried at lower of cost or market.

LOANS HELD FOR SALE - Mortgage loans originated and intended for
sale in the secondary market are carried at the lower of
aggregate cost or estimated market value.

ALLOWANCE FOR LOAN LOSSES - It is the policy of the Bank to
provide a valuation allowance for estimated losses on loans
based on the Bank's past loan loss experience, known and
inherent risks in the portfolio, adverse situations which may
affect the borrower's ability to repay, estimated value of
underlying collateral and current economic conditions in the
Bank's lending area. The allowance is increased by provisions
for loan losses charged to operations and is reduced by charge-
offs, net of recoveries. Management's periodic evaluation of the
adequacy of the allowance is based on the Bank's past loan loss
experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay, the
estimated value of any underlying collateral, and current
economic conditions. While management uses available information
to estimate losses on loans, future additions to the allowance
may be necessary based on changes in economic conditions beyond
management's control. In addition, various regulatory agencies,
as an integral part of their examination process, periodically
review the Bank's allowance for loan losses. Such agencies may
require the Bank to recognize additions to the allowance based
on judgments different from those of management. Management
believes, based upon all relevant and available information,
that the allowance for loan losses is adequate to absorb losses
inherent in the portfolio.

PAGE 23

On July 1, 1995, the Bank adopted Statement of Financial
Accounting Standards No. 114, ''Accounting by Creditors for
Impairment of a Loan'' (''SFAS 114''). The Statement requires
all creditors to account for impaired loans, except those loans
that are accounted for at fair value or at the lower of cost or
fair value, at the present value of expected future cash flows
discounted at the loan's effective interest rate. As an
expedient, creditors may account for impaired loans at the fair
value of the collateral or at the observable market price of the
loan if one exists. The adoption of SFAS 114, as amended by SFAS
118, did not have a material effect on the Bank's financial
condition or results of operations.

LOAN INCOME RECOGNITION - Interest income on loans is recorded
under the level yield method.  Under this method, discount
accretion and premium amortization are included in interest
income.

Accrual of interest is discontinued when its receipt is in doubt
but no later than when a loan becomes ninety days past due as to
principal or interest.  When interest accruals are discontinued,
any interest credited to income in the current year is reversed.
Payments on nonaccrual loans are applied to principal.
Management may elect to continue the accrual of interest when a
loan is in the process of collection and the estimated fair
value of collateral is sufficient to cover the principal balance
and accrued interest.  Loans are returned to accrual status once
the doubt concerning collectibility has been removed and the
borrower has demonstrated performance in accordance with the
loan terms and conditions.

LOAN FEES - Loan origination fees and certain direct loan
origination costs are deferred and amortized as a yield
adjustment over the contractual loan terms.

OTHER REAL ESTATE OWNED, NET - Properties acquired as a result
of foreclosure on a mortgage loan are classified as Other real
estate owned and are recorded at the lower of the recorded
investment in the related loan or the fair value of the property
at the date of acquisition, with any resulting write down
charged to the allowance for loan losses.  Subsequent write
downs are charged to the valuation allowance for possible losses
on Other real estate owned.

Prior to July 1, 1995, the Bank was required to include in Other
real estate owned loans which have been in substance foreclosed.
Effective July 1, 1995, the Bank adopted SFAS 114. The
provisions of this Statement eliminated the Bank's requirement
to include in substance foreclosed loans in other real estate
owned, except where the Bank has completed foreclosure
proceedings. In substance foreclosed real estate is not material
to the financial condition or results of operations of the Bank.

PREMISES AND FIXED ASSETS - Land is stated at original cost.
Buildings and furniture and equipment are stated at cost less
accumulated depreciation. Depreciation is computed by the
straight-line method over the estimated useful lives of the
properties as follows:

Buildings                  2.22% to 2.50% per year
Furniture and equipment               10% per year

Leasehold improvements are amortized over the remaining non-
cancelable terms of the related leases.

EARNINGS  PER  SHARE  ("EPS")- Primary and fully diluted EPS for
the year ended June 30, 1997 are computed by dividing net income
by the average number of  common  shares  outstanding during the
period, adjusted for common stock equivalents  related  to stock
options  granted.   The  dilutive  effect  of  stock  options is
computed using the average market price of the common stock  for
primary  EPS  and  the  greater  of  the average market price or
closing market price for fully diluted  EPS.  Unallocated shares
owned  by  the  ESOP and treasury stock are  excluded  from  the
number of shares  outstanding.   RRP  shares are included in the
number of shares outstanding.  The average  shares  utilized for
primary and fully diluted earnings per share were 12,980,190 and
13,137,482,  respectively,  for  the  year ended June 30,  1997.
Earnings per share information is not presented  for  the  years
ended  June 30, 1996 and 1995 as it is not considered meaningful
since the initial public offering of the Company's stock did not
occur until June 26, 1996.

GOODWILL - Goodwill generated from the Bank's acquisition of
Conestoga Bancorp, Inc. on June 26, 1996 is recorded on a
straight line basis over a twelve year period.  In March 1995,
the FASB issued SFAS No. 121, ''Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of''
which requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for
impairment and reported at the lower of carrying amount or fair
value, less cost to sell, whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable.  Since June 26, 1996, no such event or
change in circumstance has occurred which has caused the Company
to review the recorded level of goodwill associated with assets
acquired from Conestoga.

INCOME TAXES - Income taxes are accounted for in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting
for Income  Taxes,"  ("SFAS  109")  which requires that deferred
taxes be provided for temporary differences between the book and
tax basis of assets and liabilities.

CASH FLOWS - For purposes of the Consolidated Statement of Cash
Flows, the Bank considers cash and due from banks to be cash
equivalents.

EMPLOYEE BENEFITS - The Company maintains a Retirement Plan and
401(k) Plan for substantially all of its employees, both of
which are tax qualified under the Employee Retirement Income
Security Act of 1974 (ERISA).

The Company maintains a separate plan which provides additional
postretirement benefits to employees, which is recorded in
accordance with Statement of Financial Accounting Standards No.
106, ''Employers' Accounting for Postretirement Benefits Other
Than Pensions'' ("SFAS 106").  This Statement requires accrual
of postretirement benefits (such as health care benefits) during
the years an employee provides services. The Company adopted
SFAS 106 on July 1, 1995. As permitted by SFAS 106, the Bank
elected to record the full cumulative liability at the time of
adoption, which resulted in a cumulative effect adjustment of
$1,032, after reduction for income taxes of $879, which was
charged to operations during the fiscal year ended June 30,
1996.
PAGE 24

The  Company  maintains  an Employee Stock  Ownership  Plan  for
employees ("ESOP").  Compensation expense related to the ESOP is
recorded  in  accordance  with  SOP  93-6,  which  requires  the
compensation expense to be  recorded  during the period in which
the shares become committed to be released to participants.  The
compensation  expense is measured based  upon  the  fair  market
value of the stock  during  the  period, and, to the extent that
the fair value of the shares committed  to  be  released differs
from  the  original  cost  of  such  shares,  the difference  is
recorded as an adjustment to additional paid-in capital.

In December, 1996, the Company adopted a Recognition and
Retention Plan for employees and outside directors ("RRP') and
Stock Option Plan for Employees and Outside Directors (the
"Stock Option Plan"), which are subject to the accounting
requirements of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation," ("SFAS 123").
SFAS 123 encourages, but does not require companies to record
compensation cost for stock-based employee compensation plans at
fair value.  The Company has chosen to continue to account for
stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related
Interpretations ("APB 25").  Accordingly, compensation cost for
stock options is measured as the excess, if any, of the quoted
market price of the Company's stock at the date of the grant
over the amount an employee must pay to acquire the stock.  To
date, no compensation expense has been recorded for stock
options, since, for all granted options, the market price on the
date of grant equals the amount employees must pay to acquire
the stock.   In accordance with APB 25, compensation expense
related to the RRP is recorded for all shares earned by
participants during the period at $18.64 per share, the average
historical cost of the shares of all RRP shares acquired.

FINANCIAL INSTRUMENTS - Statement of Financial Accounting
Standards No. 119 "Disclosure About Derivative Financial
Instruments and Fair Value of Financial Instruments became
effective in 1994 and requires disclosures about financial
instruments, which are defined as futures, forwards, swap and
option contracts and other financial instruments with similar
characteristics.  On balance sheet receivables and payables are
excluded from this definition.  The Company did not hold any
derivative financial instruments as defined by SFAS 119 at June
30, 1997, 1996 or 1995.

RECENTLY ISSUED ACCOUNTING STANDARDS- In June 1996, the
Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125, ''Accounting for
Transfers of Financial Assets and Extinguishments of
Liabilities'' ("SFAS 125"). SFAS 125 provides consistent
standards for distinguishing transfers of financial assets that
are sales from transfers that are borrowings. SFAS 125 also
requires that liabilities and derivatives incurred or obtained
as part of a transfer be measured initially at fair value.  This
statement also provides guidance on measurement of servicing
rights on assets transferred and derecognition of liabilities
transferred. SFAS 125 is effective for all transfers, servicing,
or extinguishments occurring after December 31, 1996, except for
certain provisions relating to the accounting for secured
borrowings and collateral and the accounting for transfers and
servicing of repurchase agreements, dollar rolls, securities
lending and similar transactions, for which the effective date
was deferred until January 1, 1998, in accordance with Statement
of Financial Accounting Standards No. 127, "Deferral of the
Effective Date of Certain Provisions of FASB Statement No. 125"
("SFAS 127"). The Company adopted SFAS 125 as amended by SFAS
127 effective January 1, 1997.  The adoption of this standard
did not have a material impact on the financial condition or
results of operations of the Bank.

In  February,  1997  the  Financial  Accounting Standards  Board
issued  Statement  of Financial Accounting  Standards  No.  128,
"Earnings Per Share''  ("SFAS  128").  SFAS  128 establishes new
standards for computing and presenting earnings per share.  SFAS
128 is applicable to all U.S. entities with publicly held common
stock  or  potential  common stock, and requires  disclosure  of
basic earnings per share  and  diluted  earnings  per share, for
entities  with  complex capital structures, on the face  of  the
income statement,  along  with a reconciliation of the numerator
and denominator of basic and  diluted  earnings per share.  SFAS
128  replaces  APB  Opinion  No.  15,  issued  by  the  American
Institute  of  Certified  Public Accountants  in  1971,  as  the
authoritative  guidance  for   calculation   and  disclosure  of
earnings per share, but does not amend the provisions of SOP 93-
6  related  to  the inclusion of allocated and unallocated  ESOP
shares when calculating  average shares outstanding. SFAS 128 is
effective for financial statements  issued  for  periods  ending
after  December  15,  1997,  including  interim  periods.  Early
adoption is not permitted, and restatement of prior  periods  is
required.  Basic  and  diluted  earnings  per share, if computed
under  the  standards  of SFAS 128, would have  been  $0.95  and
$0.95, respectively, for the year ended June 30, 1997.

In June, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income'' ("SFAS 130"). SFAS 130 establishes
standards for reporting and display of comprehensive income and
its components in a full set of general purpose financial
statements.  SFAS 130 requires that financial statements report
and display comprehensive income in the same prominence as net
income, but permits the statement of comprehensive income to be
presented either together with or apart from the income
statement. Comprehensive income, as defined by SFAS 130 includes
revenues, expenses, and gains and losses which, under current
GAAP, bypass net income and are typically reported as a
component of stockholders' equity.  SFAS 130 is applicable for
all entities which present a full set of financial statements
and is effective for fiscal years beginning after December 15,
1997, with early adoption permitted.

In June, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related
Information'' ("SFAS 131"). SFAS 131 introduces a new method for
segment reporting referred to as the "management approach,"
which focuses upon the manner in which the chief operating
decision makers organize segments within a company for making
operating decisions and assessing performance.  Under the
management approach, reportable segments can be based upon, but
are not limited to, products and services, geography and legal
or management structure.  SFAS 131 requires full financial
disclosure for each segment, but only requires limited quarterly
segment disclosure. SFAS 131 is applicable for all public, for-
profit companies, and is effective for fiscal years beginning
after December 15, 1997, with early application encouraged.
Management of the Company is currently evaluating SFAS 131.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS -
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Areas
in the accompanying financial statements where estimates are
significant include the allowance for loans losses, the carrying
value of other real estate, purchase accounting adjustments
related to the acquisition of Conestoga and the fair value of
financial instruments.
PAGE 25

RECLASSIFICATION - Certain June 30, 1996, and 1995 amounts have
been reclassified to conform to the June 30, 1997 presentation.

2.   CONVERSION TO STOCK FORM OF OWNERSHIP:

On November 2, 1995, the Board of Directors of the Bank adopted
a Plan of Conversion to convert from mutual to stock form. As
part of the conversion, the Company was incorporated under
Delaware law for the purpose of acquiring and holding all of the
outstanding stock of the Bank. On June 26, 1996, the Company
completed its initial public offering and issued 14,547,500
shares of common stock (par value $.01 per share) at a price of
$10.00 per share, resulting in net proceeds of approximately
$141,368 prior to the acquisition of stock by the Employee Stock
Ownership Plan. The Company retained approximately $53,397 of
the net proceeds and used the remaining net proceeds to purchase
all of the outstanding stock of the Bank.  Costs related to the
conversion were charged against the Company's proceeds from the
sale of the stock.

The Company received approximately $131,078 of excess proceeds
resulting from the oversubscription of the Company's initial
public offering.  In accordance with the terms of the offering,
these funds were refunded on July 1, 1996 inclusive of interest
earned at the Bank's existing passbook rate for the period held.
The excess proceeds were recorded in Escrow and other deposits,
and were invested in short-term Investment securities and
Federal funds sold at June 30, 1996.

At the time of conversion, the Bank established a liquidation
account in an amount equal to the retained earnings of the Bank
as of the date of the most recent financial statements contained
in the final conversion prospectus. The liquidation account will
be reduced annually to the extent that eligible account holders
have reduced their qualifying deposits as of each anniversary
date. Subsequent increases will not restore an eligible account
holder's interest in the liquidation account. In the event of a
complete liquidation, each eligible account holder will be
entitled to receive a distribution from the liquidation account
in an amount proportionate to the current adjusted qualifying
balances for accounts then held.

As discussed in Note 3, the Company acquired Conestoga Bancorp,
Inc. on June 26, 1996.  The liquidation account previously
established by Conestoga's subsidiary, Pioneer Savings Bank,
F.S.A. during its initial public offering in March, 1993, was
assumed by the Company in the acquisition.

The Bank may not declare or pay cash dividends on or repurchase
any of its shares of common stock if the effect thereof would
cause stockholders' equity to be reduced below applicable
regulatory capital maintenance requirements, the amount required
for the liquidation account, or if such declaration and payment
would otherwise violate regulatory requirements.

3.   BUSINESS ACQUISITIONS

On June 26, 1996, the Bank completed the acquisition of
Conestoga Bancorp, Inc., the holding company for the Pioneer
Savings Bank, F.S.B.  The Bank received approximately $170,836,
$124,411 and $111,991 of investment securities, mortgage-backed
securities and loans, respectively, at fair value and assumed
approximately $394,250 of customer deposit liabilities.
Approximately $10,000 of investment securities acquired were
classified as held-to-maturity at June 30, 1996.  All other
securities acquired were classified as available for sale.
Total cash paid for the acquisition was $101,272.  The goodwill
generated in the transaction of $28,438 is being amortized on a
straight line basis over 12 years for financial reporting
purposes.

This acquisition was recorded using the purchase method of
accounting; accordingly,  the purchase price is allocated to the
respective assets acquired and liabilities assumed based on
their estimated fair values.

All operations of Conestoga acquired by the Bank are reflected
in the consolidated statement of operations of the Company for
the year ended June 30, 1997.  The consolidated statements of
financial condition as of June 30, 1997 and 1996 include the
assets acquired from Conestoga.  The information below presents,
on an unaudited pro forma basis, the consolidated statement of
operations for the Company for the years ended June 30, 1996 and
1995.  All information below is adjusted for the acquisition of
Conestoga, as if the transaction had been consummated on July 1,
1995 and 1994 respectively for the years ended June 30, 1996 and
1995.

Pro Forma for Year Ended June 30,           1996           1995
- -------------------------------------   ---------      ---------
Net interest income                       $43,129        $44,658
Provision for possible loan losses          3,083          2,914
Non-interest income                         3,965          3,603
Non-interest expense:
   Goodwill amortization                    2,350          2,347
   Other non-interest expense              20,540         19,833
- -------------------------------------   ---------      ---------
Total non-interest expense                 22,890         22,180
- -------------------------------------   ---------      ---------
Income before income taxes                $21,121        $23,167
=====================================   =========      =========

PAGE 26

4.   INVESTMENT SECURITIES HELD TO MATURITY AND AVAILABLE FOR SALE

The amortized cost, gross unrealized gains and losses and
estimated market value of investment securities held to maturity
at June 30, 1997 were as follows:

                                                                           Investment Securities Held to Maturity

                                                                          Gross                 Gross                Estimated
                                                  Amortized             Unrealized           Unrealized               Market    
                                                     Cost                 Gains                Losses                 Value
                                                                                                   
                                                  -----------           -----------           -----------          -----------
DEBT SECURITIES:
U.S. Treasury securities and obligations
  of U.S. Government corporations and
  agencies                                           $86,036               $498                  $(116)               $86,418
Obligations of state and political
  subdivisions                                         1,974                 43                     -                   2,017
Corporate securities                                  13,327                 28                    (14)                13,341
Public utilities                                         250                  -                     (2)                   248
                                                  -----------           -----------           -----------          -----------
                                                    $101,587               $569                  $(132)              $102,024
                                                  ===========           ===========           ===========          ===========

The amortized cost and estimated market value of investment
securities held to maturity at June 30, 1997, by contractual
maturity, are shown below. Expected maturities may differ from
contractual maturities because issuers may have the right to
call or prepay obligations with or without call or prepayment
penalties.

                                                                  Estimated
                                          Amortized                  Market
                                              Cost                    Value

- -----------------------------------      -----------              -----------
Due in one year or less                       $5,248                   $5,255
Due after one year through five years         83,962                   84,367
Due after five years through ten years        11,132                   11,157
Due after ten years                            1,245                    1,245
- -----------------------------------       -----------              -----------
                                            $101,587                 $102,024
===================================       ===========              ===========

During the year ended June 30, 1997, proceeds from the calls of
investment securities held to maturity totaled $5,000. No gain
or loss was realized on these calls. There were no sales of
investment securities held to maturity during the year ended
June 30, 1997.

The amortized/historical cost, gross unrealized gains and losses
and estimated market value of investment securities available
for sale at June 30, 1997 were as follows:

                                                                              Investment Securities Available for Sale
                                                  Amortized/              Gross                 Gross                Estimated
                                                  Historical            Unrealized           Unrealized               Market 
                                                     Cost                 Gains                Losses                 Value
                                                                                                   
                                                  -----------           -----------           -----------          -----------
DEBT SECURITIES:
U.S. Treasury securities and obligations
  of U.S. Government corporations and
  agencies                                           $33,706                 $130                  $(28)               $33,808
Corporate securities                                  17,471                  277                    (5)                17,743
Public utilities                                       1,249                   12                   (14)                 1,247
- -----------------------------------               -----------           -----------           -----------          -----------
                                                      52,426                  419                   (47)                52,798
EQUITY SECURITIES:                                     4,912                  980                    (3)                 5,889
- -----------------------------------               -----------           -----------           -----------          -----------
                                                     $57,338               $1,399                  $(50)               $58,687
===================================               ===========           ===========           ===========          ===========

The amortized cost and estimated market value of investment
securities available for sale at June 30, 1997, by contractual
maturity, are shown below. Expected maturities may differ from
contractual maturities because issuers may have the right to
call or prepay obligations with or without call or prepayment
penalties.

                                                                   Estimated
                                          Amortized                   Market
                                              Cost                     Value

- -----------------------------------       -----------              -----------
Due in one year or less                      $10,490                   $10,527
Due after one year through five years         36,442                    36,722
Due after five years through ten years         5,494                     5,549
                                           -----------              -----------
                                             $52,426                   $52,798
                                            ==========              ===========

During the year ended June 30, 1997, proceeds from the sales and
calls of investment securities available for sale totaled $27,253
and $26,011, respectively. A loss of $273 and gain of $11 resulted
from the sales and calls, respectively.
PAGE 27

The amortized cost, gross unrealized gains and losses and
estimated market value of investment securities held to maturity
at June 30, 1996 were as follows:

                                                                           Investment Securities Held to Maturity

                                                                          Gross                 Gross                Estimated
                                                  Amortized             Unrealized           Unrealized               Market 
                                                     Cost                 Gains                Losses                 Value
                                                                                                   
                                                  -----------           -----------           -----------          -----------
DEBT SECURITIES:
U.S. Treasury securities and obligations
  of U.S. Government corporations and
  agencies                                           $18,705                $-                    $(58)                $18,647
Obligations of state and political
  subdivisions                                         2,048                 31                      -                   2,079
Corporate securities                                  20,531                 34                   (117)                 20,448
Public utilities                                       2,268                 -                     (14)                  2,254
- -----------------------------------               -----------           -----------           -----------           -----------
                                                     $43,552                $65                  $(189)                $43,428
===================================               ===========           ===========           ===========           ===========

During the year ended June 30, 1996, proceeds from the calls of
investment securities held to maturity totaled $11,056. A gain
of $56 was realized on these calls. There were no sales of
investment securities held to maturity during the year ended
June 30, 1996.

The amortized/historical cost, gross unrealized gains and losses
and estimated market value of investment securities available
for sale at June 30, 1996 were as follows:

                                                                              Investment Securities Available for Sale

                                                  Amortized/              Gross                 Gross                Estimated
                                                  Historical           Unrealized           Unrealized               Market  
                                                     Cost                 Gains                Losses                 Value
                                                                                                   
                                                  -----------           -----------           -----------          -----------
DEBT SECURITIES:
U.S. Treasury securities and obligations
   of U.S. Government corporations and
   agencies                                          $277,240                 $20                   $(80)             $277,180
Corporate securities                                   58,652                  27                     -                 58,679
Public utilities                                        2,249                   9                    (28)                2,230
- -----------------------------------               -----------           -----------           -----------          -----------
                                                      338,141                  56                   (108)              338,089
EQUITY SECURITIES:
Mutual funds                                            2,977                 229                     (1)                3,205
- -----------------------------------               -----------           -----------           -----------          -----------
                                                     $341,118                $285                  $(109)             $341,294
===================================               ===========           ===========           ===========          ===========

During the year ended June 30, 1996, proceeds from the sales and
calls of investment securities available for sale totaled $501 and
$11,323, respectively. A loss of $195 and gain of $24 resulted from
the sales and calls respectively.

5.   MORTGAGE-BACKED SECURITIES  HELD  TO MATURITY AND AVAILABLE
FOR SALE

The amortized cost, gross unrealized gains and losses and the
estimated market value of mortgage-backed securities held to
maturity at June 30, 1997 were as follows:

                                                                       Mortgage-Backed Securities Held to Maturity

                                                                           Gross                 Gross              Estimated
                                                  Amortized             Unrealized           Unrealized               Market 
                                                     Cost                 Gains                Losses                 Value
                                                                                                   
                                                  -----------           -----------           -----------          -----------
GNMA pass-through certificates                       $15,100                 $562                   $(2)               $15,660
FHLMC pass-through certificates                       40,528                  127                   (56)                40,599
FNMA pass-through certificates                        22,760                  120                   (64)                22,816
- -----------------------------------               -----------           -----------           -----------          -----------
                                                     $78,388                 $809                 $(122)               $79,075
===================================               ===========           ===========           ===========          ===========

There were no sales of mortgage-backed securities held to
maturity during the fiscal year ended June 30, 1997.

The amortized cost, gross unrealized gains and losses and the
estimated market value of mortgage-backed securities available
for sale at June 30, 1997 were as follows:

                                                                     Mortgage-Backed Securities Available for Sale

                                                                          Gross                 Gross                Estimated
                                                  Amortized             Unrealized           Unrealized               Market 
                                                     Cost                 Gains                Losses                 Value
                                                                                                   
                                                  -----------           -----------           -----------          -----------
Collateralized mortage obligations                   $72,343                 $333                 $(176)               $72,500
GNMA pass-through certificates                        88,874                1,903                    (6)                90,771
FHLMC pass-through certificates                       17,698                  293                   (54)                17,937
FNMA pass-through certificates                        48,861                  416                  (348)                48,929
- -----------------------------------               -----------           -----------           -----------          -----------
                                                    $227,776               $2,945                 $(584)              $230,137
===================================               ===========           ===========           ===========          ===========

Proceeds from the sale of mortgage-backed securities available
for sale were $16,713 during the year ended June 30, 1997.  A
gain of $495 was recognized on these sales.
PAGE 28

The amortized cost, gross unrealized gains and losses and the
estimated market value of mortgage-backed securities held to
maturity at June 30, 1996 were as follows:

                                                                           Gross                 Gross              Estimated

                                                  Amortized             Unrealized           Unrealized               Market
                                                     Cost                 Gains                Losses                 Value
                                                                                                   
                                                  -----------           -----------           -----------          -----------
 
GNMA pass-through certificates                       $17,997                 $437                  $(8)               $18,426
FHLMC pass-through certificates                       27,296                   15                 (274)                27,037
FNMA pass-through certificates                         7,287                    2                 (156)                 7,133
- -----------------------------------               -----------           -----------           -----------          -----------
                                                     $52,580                 $454                $(438)               $52,596
===================================               ===========           ===========           ===========          ===========

Proceeds from the sale of mortgage-backed securities held to
maturity were approximately $2,555 for the year ended June 30,
1996.  A gain of approximately $31 was realized on these sales.
The securities sold met the DE MINIMUS exemption in SFAS 115, as
the unpaid principal at the date of sale was less than 15% of
their acquired par value.

The amortized cost, gross unrealized gains and losses and the
estimated market value of mortgage-backed securities available
for sale at June 30, 1996 were as follows:

                                                Mortgage-Backed Securities Available for Sale

                                                                          Gross                 Gross              Estimated
                                                  Amortized             Unrealized           Unrealized               Market
                                                     Cost                 Gains                Losses                 Value
                                                                                                   
                                                  -----------           -----------           -----------          -----------
Collateralized mortage obligations                    $8,566                  $23                   $-                 $8,589
GNMA pass-through certificates                        70,136                   -                     -                 70,136
FHLMC pass-through certificates                       28,826                  344                   (54)               29,116
FNMA pass-through certificates                        49,434                  118                   (32)               49,520
- -----------------------------------               -----------           -----------           -----------          -----------
                                                    $156,962                 $485                  $(86)             $157,361
===================================               ===========           ===========           ===========          ===========

There were no sales of mortgage-backed securities available for
sale during the year ended June 30, 1996.

6.   LOANS

The Company's real estate loans are comprised of the following:

    At June 30,                       1997                    1996
- -------------------------------  -----------             -----------
One-to-four family                 $140,536                $169,723
Multi-family and underlying
  cooperative                       498,536                 296,630
Nonresidential                       43,180                  37,708
F.H.A. insured mortgage loans        12,275                  14,132
V.A. insured mortgage loans           1,878                   2,554
Co-op loans                          50,931                  59,083
- -------------------------------  -----------             -----------
                                    747,336                 579,830
Net unearned fees                    (3,090)                 (2,167)
- -------------------------------  -----------             -----------
                                   $744,246                $577,663
===============================  ===========             ===========

The Bank originates both adjustable and fixed interest rate real
estate loans.  At June 30, 1997, the approximate composition of
these loans was as follows:

                        Fixed Rate                                                              Variable Rate
                                                                                                     
Period to Maturity or Next Repricing         Book Value                     Period to Maturity or Next Repricing     Book Value
- ------------------------------               ---------                      ------------------------------           ---------
1 month-1 year                                 $1,196                       1 month-1 year                            $118,874
1 year-3 years                                  8,991                       1 year-3 years                             136,427
3 years-5 years                                 5,288                       3 years-5 years                            274,223
5 years-10 years                               71,740                       5 years-10 years                            31,361
Over 10 years                                  89,141                       Over 10 years                               10,095
- ------------------------------               ---------                      ------------------------------           ---------
                                             $176,356                                                                 $570,980
==============================               =========                      ==============================           =========

The adjustable rate loans have interest rate adjustment
limitations and are generally indexed to the Federal Home Loan
Bank of New York five-year borrowing funds rate, the one-year
constant maturity Treasury index, or the Federal Home Loan Bank
national mortgage contract rate.

A concentration of credit risk exists within the Bank's loan
portfolio, as the majority of real estate loans are
collateralized by properties located in New York City and Long
Island.
PAGE 29

The Company's other loans are comprised of the following:

    At June 30,                              1997                     1996
- ---------------------------------        -----------             -----------
Student loans                                $1,005                  $1,307
Passbook loans (secured by savings
  and time deposits)                          2,801                   3,044
Home improvement loans                        1,243                     891
Consumer installment and other loans          1,027                     323
- ---------------------------------        -----------             -----------
                                              6,076                   5,565
Unearned discount                                -                       (1)
- ---------------------------------        -----------             -----------
                                             $6,076                  $5,564
=================================        ===========             ===========

Loans on which the accrual of interest has been discontinued
were $3,190 and $6,551 at June 30, 1997 and 1996, respectively.
If interest on those loans had been accrued, interest income
would have been increased by approximately $247 and $410 for the
years ended June 30, 1997 and 1996, respectively.

The Bank had outstanding loans considered troubled-debt
restructurings of $4,671 at both June 30, 1997 and 1996,
respectively. Income recognized on these loans was approximately
$357 and $344 for the years ended June 30, 1997 and 1996,
respectively, compared to interest income of $471 and $471
calculated under the original terms of the loans, for the years
ended June 30, 1997 and 1996, respectively.

The recorded investment in loans for which impairment has been
recognized under the guidance of SFAS 114 was approximately
$4,294 and $7,419 at June 30, 1997 and 1996, respectively. The
average balance of impaired loans was approximately $4,736 and
$6,696 for the years ended June 30, 1997 and 1996, respectively.
Write-downs of $985 and $553 were taken on impaired loans during
the years ended June 30, 1997 and 1996, respectively.  At June
30, 1997 and 1996, specific reserves totaling $122 and $955 were
allocated within the allowance for loan losses for impaired
loans.  Net principal received and interest income recognized on
impaired loans during the years ended June 30, 1997 was not
material. At June 30, 1997 and 1996, one loan totaling $2,681,
was deemed impaired for which no reserves have been provided.
This loan, which is included in troubled-debt restructurings at
June 30, 1997 and 1996, has performed in accordance with the
provisions of the restructuring agreement signed in October,
1995.  The loan was  on accrual status at both June 30, 1997 and
1996.  All other loans deemed impaired, which total 6 and 10
loans as of June 30, 1997 and 1996, respectively, have reserves
allocated towards their outstanding balance.

The following assumptions were utilized in evaluating the loan
portfolio pursuant to the provisions of SFAS 114:

HOMOGENOUS LOANS - One-to-four family residential mortgage loans
and loans on cooperative apartments having a balance of less
than $203 and consumer loans are considered to be small balance
homogenous loan pools and, accordingly, are not covered by SFAS
114.

LOANS EVALUATED FOR IMPAIRMENT - All non-homogeneous loans
greater than $1,000 are individually evaluated for potential
impairment. Additionally, residential mortgage loans exceeding
$203 and delinquent in excess of 60 days are evaluated for
impairment.  A loan is considered impaired when it is probable
that all contractual amounts due will not be collected in
accordance with the terms of the loan. A loan is not deemed to
be impaired if a delay in receipt of payment is expected to be
less than 30 days or if, during a longer period of delay, the
Bank expects to collect all amounts due, including interest
accrued at the contractual rate during the period of the delay.
Factors considered by management include the property location,
economic conditions, and any unique circumstances affecting the
loan. Except as noted above, at June 30, 1997 and 1996, all
impaired loans were on nonaccrual status. In addition, at June
30, 1997 and 1996, respectively, approximately $1,577 and $1,817
of one to four family residential mortgage loans and loans on
cooperative apartments with a balance of less than $203 were on
nonaccrual status. These loans are considered as a homogeneous
loan pool not covered by SFAS 114.

RESERVES AND CHARGE-OFFS - The Bank allocates a portion of its
total allowance for loan losses to loans deemed impaired under
SFAS 114. All charge-offs on impaired loans are recorded as a
reduction in both loan principal and the allowance for loan
losses. Management evaluates the adequacy of its allowance for
loan losses on a regular basis. At June 30, 1997, management
believes that its allowance is adequate to provide for losses
inherent in the total loan portfolio, including impaired loans.

MEASUREMENT OF IMPAIRMENT - Since all impaired loans are
collateralized by real estate properties, the fair value of the
collateral is utilized to measure impairment.

INCOME RECOGNITION - Accrual of interest is discontinued on
loans identified as impaired and past due ninety days.
Subsequent cash receipts are applied initially to the
outstanding loan principal balance. Additional receipts beyond
the recorded outstanding balance at the time interest is
discontinued are recorded as recoveries in the Bank's allowance
for loan losses.
PAGE 30

7. ALLOWANCE FOR LOAN LOSSES AND POSSIBLE LOSSES ON OTHER REAL
ESTATE OWNED

Changes in the allowance for loan losses were as follows:

For the year ended June 30,                         1997                1996                1995
                                                                      
- ---------------------------                      ---------           ---------           ---------
Balance at beginning of period                     $7,812              $5,174              $3,633
Provision charged to operations                     4,200               2,979               2,950
Loans charged off                                  (1,388)             (1,023)             (1,656)
Recoveries                                            102                  14                 247
Reserve acquired in purchase
   of Conestoga                                        -                  668                  -
- ---------------------------                      ---------           ---------           ---------
                                                  $10,726              $7,812              $5,174
===========================                      =========           =========           =========

Changes in the allowance for possible losses on real estate
owned were as follows:

For the year ended June 30,                     1997                  1996
- ---------------------------                  ---------             ---------
Balance at beginning of period                   $114                  $-
Provision charged to operations                   450                  586
Charge-offs, net of recoveries                   (377)                (472)
- ---------------------------                   ---------            ---------
                                                 $187                 $114
===========================                   =========            =========

Prior to July 1, 1995, no valuation allowance for possible
losses on Other real estate owned was maintained by the Bank.

8.   MORTGAGE SERVICING ACTIVITIES

At June 30, 1997 and 1996, the Bank was servicing loans for
others having principal amounts outstanding of approximately
$69,648 and $91,050 respectively.  Servicing loans for others
generally consists of collecting mortgage payments, maintaining
escrow accounts, disbursing payments to investors and
foreclosure processing. In connection with these loans serviced
for others, the Bank held borrowers' escrow balances of
approximately $652, $1,055 and $1,440 at June 30, 1997, 1996 and
1995, respectively.

9.   PREMISES AND FIXED ASSETS

The following is a summary of premises and fixed assets:

    At June 30,                       1997                  1996
- ------------------------------    ---------               ---------
Land                                $3,964                  $3,964
Buildings                           12,778                  12,527
Leasehold improvements               1,190                   1,190
Furniture and equipment              7,105                   6,673
- ------------------------------    ---------               ---------
                                    25,037                  24,354
Less:  accumulated appreciation
  and amortization                 (11,042)                 (9,955)
- ------------------------------    ---------               ---------
                                   $13,995                 $14,399
==============================    =========               =========

Depreciation and amortization expense amounted to approximately
$1,076, $501, and $459 for the years ended June 30, 1997, 1996
and 1995, respectively.

10.   FEDERAL HOME LOAN BANK OF NEW YORK CAPITAL STOCK

The Bank is a Savings Bank Member of the Federal Home Loan Bank
of New York (FHLBNY). Membership requires the purchase of shares
of FHLBNY capital stock at $100 per share. The Bank owned 83,215
and 76,043 shares at June 30, 1997 and 1996, respectively. The
FHLBNY paid dividends on the capital stock of 6.4% , 6.9%, and
7.5% during the years ended June 30, 1997, 1996 and 1995,
respectively.

11.   DUE TO DEPOSITORS

The deposit accounts of each deposit household are insured up to
$100 by either the Bank Insurance Fund or the Savings
Association Insurance Fund of the Federal Deposit Insurance
Corporation ("FDIC").

Deposits are summarized as follows:

    June 30,                                     1997                      1996
                                                                                      
- ---------------------------         ---------        ---------     ---------   ---------
                                     EFFECTIVE                     Effective
                                       COST          LIABILITY       Cost       Liability
- ---------------------------         ---------        ---------     ---------   ---------
Savings accounts                        2.27%         $344,377         2.50%    $365,146
Certificates of deposit                 5.61           541,773         5.50      495,755
Money market accounts                   2.96            33,530         2.65       45,948
NOW accounts                            1.24            15,817         1.51       15,029
Super NOW accounts                      1.24               507         1.51          552
Non-interest bearing checking
 accounts                                 -             27,391           -        27,684
                                                     ---------                 ---------
                                        4.09%         $963,395         4.09%    $950,114
                                                     =========                 =========

PAGE 31

The distribution of certificates of deposits by remaining
maturity was as follows:

    At June 30,                              1997                    1996
- ----------------------------                 ---------             ---------
Maturity in three months or less             $116,828               $124,903
Over 3 through 6 months                        88,912                 96,316
Over 6 through 12 months                      107,714                138,137
Over 12 months                                228,319                136,399
- ----------------------------                 ---------             ---------
Total certificates of deposit                $541,773               $495,755
============================                 =========             =========

The aggregate amount of Certificates of deposits with a minimum
denomination of $100 was approximately $46,806 and $40,065 at
June 30, 1997 and 1996, respectively.

12.   SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Presented below is information concerning securities sold with
agreement to repurchase:

    At or for the year ended June 30,            1997                 1996
- -----------------------------------           -----------        -----------
Balance outstanding at end of period             $76,333             $11,998
Average interest cost at end of period              5.69%               6.00%
Average balance outstanding                      $32,374              $2,148
Average interest cost during the year               5.73%               7.13%
Carrying value of underlying collateral          $83,778             $13,433
Estimated market value of underlying
  collateral                                     $84,172             $13,660
Maximum balance outstanding at month
  end during period                              $76,333             $11,998

13.   FEDERAL HOME LOAN BANK OF NEW YORK ADVANCES

The Bank had borrowings (''Advances'') from the Federal Home
Loan Bank of New York totaling $63,210 and $15,710 at
June 30, 1997 and 1996, respectively. The average cost of FHLB
advances was 5.79% and 5.40%, respectively, during the years
ended June 30, 1997 and 1996, and the average interest rate on
outstanding FHLB advances was 6.18% and 5.40%, respectively, at
June 30, 1997 and 1996.  At June 30, 1997, in accordance with
the Advances, Collateral Pledge and Security Agreement, the Bank
maintained in excess of $69,531 of qualifying collateral
(principally bonds and mortgage-backed securities), as defined,
to secure such advances.

14.   INCOME TAXES

The Company's Federal, State and City income tax provisions were
comprised of the following:

Year Ended June 30,       1997                              1996                             1995
                                                                                             
                         STATE                             State                            State
              FEDERAL   AND CITY     TOTAL    Federal   and City    Total     Federal     and City    Total
              -------   --------  ---------   -------   --------   -------    -------     --------   ------
Current       $6,047     $4,541    $10,588     $4,218     $2,563   $6,781      $4,328      $2,416    $6,744
Deferred       2,153     (5,150)   (2,997)       (332)      (268)    (600)       (314)        191      (123)
              -------   --------  ---------   -------   --------   -------    -------     --------   ------
              $8,200      $(609)   $7,591      $3,886     $2,295   $6,181      $4,014      $2,607    $6,621
              =======   ========  =========   =======   ========   =======    =======     ========   ======

In accordance with SFAS 109, deferred tax assets and liabilities
are recorded for temporary differences between  the book and tax
bases of assets and liabilities.
PAGE 32

The components of Federal and net State and City deferred income
tax assets and liabilities were as follows

 At June 30,                             1997                    1996
- ---------------------------       --------- ---------   --------- ---------
                                               STATE                 State
                                   FEDERAL   AND CITY    Federal   and City
- ---------------------------       ---------  ---------   --------- ---------
DEFERRED TAX ASSETS:
Deferred loan fees                     $33        $21         $47         $30
Excess book bad debt over tax
  bad debt reserve                   2,417      1,880       2,300          -
Net operating loss carryforward        305         -           -           -
Accumulated postretirment
  benefit obligation                   735        448         598         374
Tax effect of purchase
  accounting fair value
  adjustments                        1,173        715       1,173         735
Other                                  114         98          70          56
- ---------------------------       ---------  ---------    --------- ---------
Total deferred tax assets            4,777      3,162       4,188       1,195
Less: Valuation allowance on
  deferred tax assets                   -          -           -           -
- ---------------------------       ---------  ---------    --------- ---------
Deferred tax assets after
  valuation allowance               $4,777     $3,162      $4,188      $1,195
===========================       =========  =========     ========= =========
DEFERRED TAX LIABILITIES:
Excess tax bad debt over
  book bad debt                        $-         $-          $-       $2,083
Difference in book and tax
  carrying value of fixed assets       265        164         309         196
Tax effect of unrealized gain on
  securities available for sale      1,057        623         160         104
- ---------------------------       ---------  ---------     --------- ---------
Total deferred tax liabilities      $1,322       $787        $469      $2,383
===========================       =========  =========     ========= =========
Net deferred tax asset (liability)  $3,455     $2,375      $3,719     $(1,188)
===========================       =========  =========     ========= =========

During the year ended June 30, 1997, deferred tax liabilities
include an increase of $1,416 resulting from adjustments
pursuant to SFAS 115.

The provision for income taxes differed from that computed at
the Federal statutory rate as follows:

Year ended June 30,                    1997          1996       1995
- ---------------------------          ---------    ---------   ---------
Tax at Federal statutory rate          $6,967       $4,717      $5,266
State and local taxes, net of
  Federal income tax benefit             (396)       1,492       1,694
Goodwill amortization                     843           -           -
Amortization of excess fair value
  over cost - ESOP stock                  233           -           -
Reserve for losses on sale of
  loans                                    -            -         (185)
Utilization of capital loss on sale
  of securities                            -            -          (86)
Other, net                                (56)         (28)        (68)
- ---------------------------           ---------    ---------   ---------
                                       $7,591       $6,181      $6,621
===========================            =========   =========   =========
Effective tax rate                      38.13%        45.9%       44.0%
===========================            =========   =========   =========

Savings banks that meet certain definitions, tests, and other
conditions prescribed by the Internal Revenue Code are allowed
to deduct, with limitations, a bad debt deduction.  Prior to
August, 1996, this deduction could be computed as a percentage
of taxable income before such deduction ("PTI Method") or based
upon actual loss experience for Federal, New York State and New
York City income taxes.

Pursuant to SFAS 109, the Bank is not required to provide
deferred taxes on its tax loan loss reserve as of
December 31, 1987 ("base year reserve").  The amount of this
reserve on which no deferred taxes have been provided is
approximately $12,153.  This reserve could be recognized as
taxable income and create a current tax liability using the
income tax rates then in effect if one of the following occur:
1) the Bank's retained earnings represented by the reserve is
used for purposes other than to absorb losses from bad debts,
including dividends or distributions in liquidation; 2) the Bank
fails to qualify as a Bank as provided by the Internal Revenue
Code, or 3) there is a change in federal tax law.

On August 20, 1996, Federal legislation was signed into law
which repealed the reserve method of accounting for bad debts,
including the percentage of taxable income method used by the
Bank.  This repeal is effective for the Bank's taxable year
beginning January 1, 1996.  In addition, the legislation
requires the Bank to include in taxable income its bad debt
reserves in excess of its base year reserve over a 6 to 8 year
period depending upon the maintenance of certain loan
origination levels.  Since the percentage of taxable income
method tax bad debt deduction and the corresponding increase in
the tax bad debt reserve in excess of the base year have been
treated as temporary differences pursuant to SFAS 109, this
change in tax law will have no effect on the Company's future
consolidated statement of operations.  Since the Bank's bad debt
reserve exceeds its base year reserve by $3,100, approximately
$176 will be currently payable as a result of the legislation.
PAGE 33

In  anticipation of the Federal legislation, on July  30,  1996,
New York  State  (the  "State")  enacted  legislation, effective
January  1,  1996,  which  generally retains the  percentage  of
taxable  income  method  for  computing   allowable   bad   debt
deductions  and  does  not  require  the  Bank to recapture into
income State tax bad debt reserves unless one  of  the following
events occur: 1) the Bank's retained earnings represented by the
reserve  is  used for purposes other than to absorb losses  from
bad debts, including  dividends in excess of the Bank's earnings
and profits or distributions  in liquidation or in redemption of
stock; 2) the Bank fails to qualify  as  a thrift as provided by
the State tax law, or 3) there is a change in state tax law. The
Bank had a deferred tax liability of approximately  $1.9 million
recorded for the excess of State tax bad debt reserves  over its
reserve  at  December  31, 1987 in accordance with SFAS 109.  In
December, 1996 after evaluating  the  State  tax legislation, as
well  as relevant accounting literature and industry  practices,
management  of  the  Bank  concluded  that this liability was no
longer required to be recorded, and recovered  the full deferred
tax liability.  This recovery resulted in a reduction  of income
tax  expense  during  the year ended June 30, 1997 for the  full
amount of the recovered deferred tax liability.

On March 11, 1997, New  York City enacted legislation, effective
January 1, 1996, which conformed  its tax law regarding bad debt
deductions to New York State's tax  law.   As  a  result of this
legislation, the Bank, in March, 1997, recovered a  deferred tax
liability of approximately $1.0 million previously recorded  for
the  excess  of  New  York  City  tax bad debt reserves over its
reserve  at  December  31, 1987. This  recovery  resulted  in  a
reduction of income tax  expense  during the year ended June 30,
1997  for  the  full  amount  of  the  recovered   deferred  tax
liability.

15. EMPLOYEE BENEFIT PLANS

EMPLOYEE RETIREMENT PLAN - The Bank is a participant in a
noncontributory defined benefit retirement plan with the Savings
Bank Retirement System. Substantially all full-time employees
are eligible for participation after one year of service. In
addition, a participant must be at least 21 years of age at the
date of enrollment.

The retirement cost (benefit) for the pension plan includes the
following components:

For the year ended June 30,                1997         1996        1995
- ------------------------               ---------    ---------   ---------
Service cost                               $400         $206        $216
Interest cost                               727          488         455
Actual return on plan assets               (838)        (546)       (227)
Net amortization and deferral              (224)         (82)       (325)
- ------------------------               ---------    ---------   ---------
                                            $65          $66        $119
========================               =========    =========   =========

The funded status of the plan was as follows:

At June 30,                                        1997              1996
- -----------------------------------           -----------         -----------
Accumulated benefit obligation, including
  vested benefits of $8,976 and $8,613,
  respectively                                    $9,031             $8,848
===================================            ===========        ===========
Projected benefit obligation                     $10,015             $9,960
Plan assets at fair value (investments in
  trust funds managed by RSI and
  comingled New York State Retirement
  Fund)                                           11,121             10,594
- -----------------------------------            -----------        -----------
Excess of plan assets over projected
       benefit obligation                          1,106                634
Additional employer contribution                     126                 -
Unrecognized loss from experience
       different from that assumed                   380                967
Unrecognized transition asset                        (72)              (167)
Unrecognized net past service liability             (239)              (271)
- -----------------------------------            -----------        -----------
Prepaid retirement expense included in
       Other assets                               $1,301             $1,163
===================================            ===========        ===========

Major assumptions utilized were as follows:

At June 30,                                     1997                  1996

- -----------------------------------           --------             --------
Discount rate                                   8.00%                 7.50%
Rate of increase in compensation levels         6.00                  5.50
Expected long-term return on plan assets        9.00                  9.00

BENEFITS MAINTENANCE PLAN AND DIRECTORS' RETIREMENT PLAN -
During the fiscal year ended June 30, 1994, The Bank established
a Supplemental Executive Retirement Plan (''SERP'') for its
executive officers. The SERP was established to compensate the
executive officers for any curtailments in benefits due to the
statutory limitations on benefit plans. The SERP exists as a
nonqualified plan which supplements the existing qualified
plans. Defined benefit and defined contribution costs are
incurred annually related to the SERP.  During the year ended
June 30, 1997, the SERP was renamed the Benefits Maintenance
Plan ("BMP").  No significant changes to the plan's provisions
occurred.

Effective July 1, 1996, The Company established a non-qualified
Retirement plan for all of its Outside Directors, which will
provide benefits to each eligible Outside Director commencing
upon his termination of Board service or at age 65.  Each
Outside Director who serves or has agreed to serve as an outside
director  will automatically become a participant in the plan.
PAGE 34

The retirement cost (benefit) for the defined benefit portion of
the BMP and Directors' Retirement plan include the following
components:

For the year ended June 30,               1997            1996         1995
- ------------------------               ---------       ---------     ---------
Service cost                              $203              $56           $51
Interest cost                              211               88            75
Net amortization and deferral              178               49            54
- ------------------------               ---------       ---------     ---------
                                          $592             $193          $180
========================               =========       =========     =========

The defined contribution costs incurred by the Bank related to
the BMP/SERP for the years ended June 30, 1997, 1996 and 1995
were $305, $25 and $20, respectively.  During the fiscal year
ended June 30, 1997, benefits related to the Employee Stock
Ownership Plan were added to the defined contribution cost of
the BMP.

The funded status of the defined benefit portion of the plans
was as follows:

At June 30,                                    1997            1996
- -----------------------------------       -----------     -----------
Accumulated benefit obligation, including
  vested benefits of $1,530 and $450
  respectively                                 $1,808           $450
===================================        ===========    ===========
Projected benefit obligation                   $3,276         $1,690
Plan assets at fair value                          -              -
- -----------------------------------         -----------   -----------
Deficiency of plan assets over projected
       benefit obligation                      (3,276)        (1,690)
Unrecognized loss from experience
       different from that assumed                834            884
Unrecognized net past service liability         1,350            317
- -----------------------------------          -----------  -----------
Accrued expense prior to additional
       minimum liability included in other
       liabilities                              (1,092)         (489)
- -----------------------------------          -----------  -----------
Additional minimum liability                      (931)           -
- -----------------------------------          -----------  -----------
Accrued expense after minimum liability         $(2,023)       $(489)
===================================          ===========  ===========

Major assumptions utilized were as follows:

At June 30,                             1997                   1996
- ---------------------------      ----------------------     ---------
                                            DIRECTORS'
                                            RETIREMENT 
                                   BMP         PLAN             SERP
                                 ---------   -----------     --------
Discount rate                      7.50%         7.25%          7.50%
Rate of increase in
  compensation levels              5.50          4.00           5.50

401(K) PLAN - The Bank also has a 401(k) plan which covers
substantially all employees. Prior to May 31, 1996, under such
plan the Bank matched 50% of each participant's contribution up
to 6% of the participant's annual compensation for the first
four years of participation and thereafter 100% of the
participant's contribution up to a maximum of 6%.  Effective May
31, 1996, the plan was amended whereby the Bank ceased all
contributions to the plan.  Participation in the 401(k) plan is
voluntary. A salaried employee becomes eligible for the plan
after completion of one year of service. The Bank contributed
approximately $181 and $190 for the years ended June 30, 1996
and 1995, respectively, to the plan.  The 401(k) plan owns
participant investments in the Company's common stock which
totaled $4,758 and $2,092 at June 30, 1997 and 1996,
respectively.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS - The Bank offers
additional postretirement benefits to its retired employees who
have provided at least five (5) consecutive years of credited
service and were active employees prior to April 1, 1991, as
follows:

    (1) Employees who retired prior to April 1, 1991 receive
full medical coverage in effect until their death at no cost to
such retirees;

    (2)   Eligible employees retiring after April 1, 1991 will
be eligible for continuation of their medical coverage in effect
at the time of such employees' retirement until their death.
Throughout an employee's retirement, the Bank will continue to
pay the premiums for this coverage up to the premium amount paid
for the first year of retirement coverage. Should the premiums
increase, the employee will have to pay the differential to
maintain full medical coverage.
Postretirement medical benefits are only available to those
full-time employees who, upon termination of service, start
collecting retirement benefits immediately from the Bank. The
Bank reserves the right at any time, and to the extent permitted
by law, to change, terminate or discontinue any of the group
benefits, and can exercise the maximum discretion permitted by
law, in administering, interpreting, modifying or taking any
other action with respect to the plan or benefits.

The Bank accrues the cost of such benefits during the years an
employee renders the necessary service. The Bank adopted SFAS
106 effective July 1, 1995. The Bank elected to record the full
accumulated postretirement benefit obligation upon adoption.
This resulted in a cumulative effect adjustment of $1,032 (after
reduction for income taxes of $879), which is shown in the
consolidated statement of income for the year ended June 30,
1996.

The postretirement cost includes the following components:

For the year ended June 30,                1997              1996
- ------------------------                ---------        ---------
Service cost                                $75               $62
Interest cost                               192               167
- ------------------------                ---------         ---------
                                           $267              $229
========================                =========         =========

PAGE 35

The funded status of the postretirement benefit plan was as
follows:

At June 30,                                           1997          1996
- -----------------------------------             -----------      -----------
Accumulated benefit obligation:
   Retirees                                         $1,229            $1,364
   Fully eligible active participants                  163               173
   Other active participants                           963             1,005
- -----------------------------------             -----------      -----------
Total                                                2,355             2,542
Plan assets at fair value                               -                 -
- -----------------------------------             -----------      -----------
Deficiency of plan assets over
  accumulated benefit obligation                     2,355             2,542
Unrecognized loss (gain) from experience
  different from that assumed                          191              (161)
- -----------------------------------             -----------      -----------
Accrued postretirement benefit obligation           $2,546            $2,381
===================================             ===========      ===========

The assumed medical cost trend rates used in computing the
accumulated postretirement benefit obligation was 7.5% in 1997
and was assumed to decrease gradually to 5.0% in 2003 and to
remain at that level thereafter. Increasing the assumed medical
care cost trend rates by 1% in each year would increase the
accumulated postretirement benefit obligation by approximately
$162.

The assumed discount rate and rate of compensation increase used
to measure the accumulated postretirement benefit obligation at
June 30, 1997 were 8.0% and 6.0%, respectively. The assumed
discount rate and rate of compensation increase used to measure
the accumulated postretirement benefit obligation at June 30,
1996 were 7.5% and 5.5%, respectively.

EMPLOYEE STOCK OWNERSHIP PLAN - In connection with the
conversion, the Board of Directors of the Company adopted the
Dime Community Bancorp Employee Stock Ownership Plan (the
"ESOP").  The ESOP borrowed $11,638 from the Company and used
the funds to purchase 1,163,800 shares of the Company's common
stock.  The loan will be repaid principally from the Bank's
discretionary contributions to the ESOP over a period of time
not to exceed 10 years.  The Bank's obligation to make such
contributions is reduced by any investment earnings realized on
such contributions or any dividends paid by the Company on stock
held in the unallocated account.  The loan had an outstanding
balance of $10,324 and $11,541, respectively at June 30, 1997
and 1996, and a fixed rate of 8.0%.

Shares purchased with the loan proceeds are held in a suspense
account for allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense
account are allocated among participants on the basis of
compensation, as described in the plan, in the year of
allocation.  The ESOP vests at a rate of 25% per year of service
beginning after two years with full vesting after five years, or
upon attainment of age 65, death, disability, retirement or
change of control.  Shares of common stock allocated to
participating employees totaled 121,702 and 9,698 during the
years ended June 30, 1997 and 1996. The ESOP benefit expense
recorded in accordance with SOP 93-6 for allocated shares
totaled $1,883 and $114, respectively,  for the years ended
June 30, 1997 and 1996.

STOCK BENEFIT PLANS

        RECOGNITION AND RETENTION PLAN ("RRP") - In December,
1996, the shareholders approved the RRP, which is designed to
encourage key officers and directors of the Company and Bank to
remain with the Company, as well as to provide these persons
with a proprietary interest in the Company.  During the year
ended June 30, 1997, the Bank contributed $7.2 million to the
RRP, which purchased 581,900 shares of the Company's common
stock in open market transactions.  As of June 30, 1997, all of
the shares under the RRP have been allocated to officers or
directors of the Company or Bank.  The RRP shares vest on
February 1{st }of each year over a total period of five years.
Shares become 100% vested in the event of death or disability of
the participant.  As of June 30, 1997, 15,870 shares have vested
under the RRP.  During the year ended June 30, 1997, the Company
recognized compensation expense of $1,175, which related
primarily to the earned portion of shares scheduled to vest on
February 1, 1998 during the period February 1, 1997 to June 30,
1997.

The Company continues to account for compensation expense under
the RRP under APB 25, measuring compensation cost based upon the
average acquisition value of the RRP shares.  Had the Company
recorded compensation expense under the fair value methodology
encouraged under SFAS 123, compensation expense would have
decreased by $315 and net income and EPS would have increased by
$173 and $.01, respectively.  The effects of applying SFAS 123
for disclosing compensation cost may not be representative of
the effect on reported net income for future years.

        STOCK OPTION PLAN - In November, 1996, the Company
adopted the Dime Community Bancorp, Inc. 1996 Stock Option Plan
for Outside Directors, Officers and Employees (the "1996 Stock
Option Plan"), which permits the Company  to grant up to
1,454,750 incentive or non-qualified stock options to outside
directors, officers and other employees of the Company or the
Bank.  The Compensation Committee of the Board of Directors
administers the Stock Option Plan and authorizes all share
grants.  A total of 1,454,750 shares were authorized for grant
under the 1996 Stock Option Plan.
PAGE 36

On December 26, 1996, 1,393,425 stock options were granted to
outside directors, officers and certain employees.  All stock
options granted under the 1996 Stock Option Plan, expire on
December 26, 2006.  One-fifth of the shares granted to
participants under the 1996 Stock Option Plan become exercisable
to participants on December 26, 1997, 1998, 1999, 2000 and 2001,
respectively.  Stock-based compensation for the fiscal year
ended June 30, 1997 is as follows:

                                                           FISCAL YEAR ENDED
                                                              JUNE 30, 1997
                                                            -----------------
Options outstanding - beginning of year                                  -
Options granted                                                    1,393,425
Options exercised                                                        -
Options outstanding - end of year                                  1,393,425
Remaining options available for grant under the plan                  61,325

The exercise price on all stock options granted during the year
ended June 30, 1997 was $14.50, which, under the terms of the
Stock Option Plan, was equivalent to the fair market value of
the Company's stock as of the close of business on the grant
date.  At June 30, 1997, 39,675 shares are currently exercisable
due to the death of a participant.

The weighted average fair value per option at the date of grant
for stock options granted during the fiscal year ended June 30,
1997 was estimated to be $5.72 using the Binomial Option Pricing
model with the following assumptions:

                                               FISCAL YEAR ENDED
                                                  JUNE 30, 1997
                                                -----------------
Expected life (in years)                                     10
Interest rate                                              5.79%
Volatility                                                22.89
Dividend yield                                             1.40

The Company continues to account for Stock Options under APB 25,
accordingly no compensation cost has been recognized.  Had the
Company recorded compensation expense under the fair value
methodology encouraged under SFAS 123, compensation expense
would have increased by $532 and net income and EPS would have
decreased by $287 and $0.02, respectively.  The effects of
applying SFAS 123 for disclosing compensation cost may not be
representative of the effect on reported net income for future
years.

16.   COMMITMENTS AND CONTINGENCIES

MORTGAGE LOAN COMMITMENTS AND LINES OF CREDIT - At June 30, 1997
and 1996, the Bank had outstanding commitments to make mortgage
loans aggregating approximately $115,076 and $81,252,
respectively.

At June 30, 1997, commitments to originate fixed rate and
adjustable rate mortgage loans were $86,549 and $28,527
respectively.  Interest rates on fixed rate commitments ranged
between 7.13% to 8.88%. Substantially all of the Bank's
commitments will expire within two months.  A concentration risk
exists with these commitments as virtually all of the
outstanding mortgage loan commitments involve properties located
within New York City.

The Bank had available at June 30, 1997 unused lines of credit
with the Federal Home Loan Bank of New York totaling $100,000,
expiring on August 8, 1997.  These credit lines were renewed on
August 8, 1997 for one year.

LEASE COMMITMENTS - At June 30, 1997, aggregate net minimum
annual rental commitments on leases are as follows:

Year Ended June 30,     Amount
- -------------------    -----------
1998                       $392
1999                        401
2000                        422
2001                        423
2002                        376
Thereafter                1,810

Net rental expense for the years ended June 30, 1997, 1996 and
1995 approximated $197, $278, and $267, respectively.

LITIGATION - The Company and its subsidiary are subject to
certain pending and threatened legal actions which arise out of
the normal course of business.  Management believes that the
resolution of any pending or threatened litigation will not have
a material adverse effect on the financial condition or results
of operations.
PAGE 37

OUTSTANDING CLAIMS WITH NATIONAR - On February 8, 1995 the New
York State Banking Department took possession of Nationar, a
check clearing and trust company. At that time, the Bank had
$2,500 invested in Nationar, comprised of approximately $1,900
in cash demand accounts and Federal funds sold and approximately
$567 in debenture bonds and stock.  During the year ended
June 30, 1995, the Bank established reserves for possible losses
related to investments in Nationar.  The following is a summary
of activity in the reserve account:

Year ended June 30,                 1997         1996       1995

- ---------------------------       ------      ------      ------
Beginning balance                   $216        $640         $-
Provision for losses, net of
  recoveries received               (216)        143         640
Charge-off of investments
  deemed uncollectible                -         (567)         -
- ---------------------------       ------      ------       ------
Ending balance                       $-         $216        $640
===========================       ======      ======       ======

During the year ended June 30, 1996, management of the Bank
deemed the investments in debentures worthless, and accordingly
charged-off all outstanding amounts against the established
reserve.  During the year ended June 30, 1996, the Bank received
approximately $1,700 in refunds from the New York State Banking
Department which was related primarily to its cash demand
accounts.  During the year ended June 30, 1997, the Bank
received additional refunds of $388 for settlement of all
remaining outstanding claims, which  were recorded as a
reduction of operating expenses during the year.  Upon receipt
of the refunds for the remaining claims, the Bank reduced the
outstanding reserve balance to zero.

17.   FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of
financial instruments is made in accordance with the
requirements of Statement of Financial Standards No. 107,
''Disclosures About Fair Value of Financial Instruments.'' The
estimated fair value amounts have been determined by the Bank
using available market information and appropriate valuation
methodologies. However, considerable judgment is required to
interpret market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily
indicative of the amounts the Bank could realize in a current
market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the
estimated fair value amounts.
CASH AND DUE FROM BANKS - The fair value is assumed to be equal
to their carrying value as these amounts are due upon demand.

INVESTMENT SECURITIES AND MORTGAGE-BACKED SECURITIES - The fair
value of these securities is based on quoted market prices
obtained from an independent pricing service.

FEDERAL FUNDS SOLD - The fair value of these assets, principally
overnight deposits, is assumed to be equal to their carrying
value due to their short maturity.

FEDERAL HOME LOAN BANK OF NEW YORK (FHLBNY) STOCK - The fair
value of FHLBNY stock is assumed to be equal to the carrying
value as the stock is carried at par value and redeemable at par
value by the FHLBNY.

LOANS AND LOANS HELD FOR SALE - The fair value of loans
receivable is determined by utilizing either secondary market
prices, or, to a greater extent, by discounting the future cash
flows, net of prepayments of the loans using a rate for which
similar loans would be originated to new borrowers with similar
terms.  This methodology is applied to all loans, inclusive of
impaired and non-accrual loans.

DEPOSITS - The fair value of savings, money market, NOW, Super
NOW and checking accounts is assumed to be their carrying
amount. The fair value of certificates of deposit is based upon
the discounted value of contractual cash flows using current
rates for instruments of the same remaining maturity.

ESCROW, OTHER DEPOSITS AND BORROWED FUNDS - The estimated fair
value of escrow, other deposits and borrowed funds is assumed to
be the amount payable at the reporting date.

OTHER LIABILITIES - The estimated fair value of other
liabilities, which primarily include trade accounts payable, is
assumed to be their carrying amount.

COMMITMENTS TO EXTEND CREDIT - The fair value of commitments is
estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the
counterparties. For fixed-rate loan commitments, fair value also
considers the difference between current levels of interest
rates and the committed rates.
PAGE 38

The estimated fair values of the Bank's financial instruments at
June 30, 1997 and 1996 were as follows:

                                               Carrying              Fair
    June 30, 1997                               Amount              Value

- -----------------------------------            ---------          ---------
ASSETS:
Cash and due from banks                           $19,198            $19,198
Investment securities held to maturity            101,587            102,024
Investment securities available for sale           58,687             58,687
Mortgage-backed securities held to
  maturity                                         78,388             79,075
Mortgage-backed securities available for
  sale                                            230,137            230,137
Loans and loans held for sale                     739,858            738,958
Federal funds sold                                 18,902             18,902
FHLB stock                                          8,322              8,322

LIABILITIES:
Savings, money market, NOW Super
  NOW and checking accounts                      $421,622           $421,622
Certificates of Deposit                           541,773            540,319
Escrow , other deposits and borrowed
  funds                                           154,517            154,517
Other liabilities                                   6,225              6,225
Off-balance sheet liability-commitments
  to extend credit                                    $-             $(1,179)

                                               Carrying              Fair
    June 30, 1996                               Amount              Value

- -----------------------------------            ---------          ---------
ASSETS:
Cash and due from banks                           $17,055            $17,055
Investment securities held to maturity             43,552            $43,428
Investment securities available for sale          341,294            341,294
Mortgage-backed securities held to
  maturity                                         52,580             52,596
Mortgage-backed securities available for
  sale                                            157,361            157,361
Loans and loans held for sale                     575,874            571,942
Federal funds sold                                115,130            115,130
FHLB stock                                         $7,604             $7,604

LIABILITIES:
Savings, money market, NOW Super
  NOW and checking accounts                      $454,359           $454,359
Certificates of Deposit                           495,755            494,975
Escrow , other deposits and borrowed
   funds                                          169,440            169,440
Other liabilities                                  36,816             36,816
Off-balance sheet liability-commitments 
  to extend credit                                    $-               $(664)

18. TREASURY STOCK

During the fiscal year ended June 30, 1997, the Company
repurchased 1,454,750 shares of its common stock into treasury.
The average cost of all shares repurchased was $19.04, for an
aggregate cost of $27,703.  All shares were repurchased in
accordance with applicable regulations of the Office of Thrift
Supervision and Securities and Exchange Commission.

19. REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies.  Failure to meet
minimum capital requirements can initiate certain mandatory--and
possibly additional discretionary-- actions by regulators that,
if undertaken, could have a direct material effect on the Bank's
financial statements.  Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must
meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain off-
balance-sheet items as calculated under regulatory accounting
practices.  The Bank's capital amounts and classification are
also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
PAGE 39

Quantitative measures that have been established by regulation
to ensure capital adequacy require the Bank to maintain minimum
capital amounts and ratios (set forth in the table below).  The
Bank's primary regulatory agency, the OTS, requires that the
Bank maintain minimum ratios of tangible capital (as defined in
the regulations) of 1.5%, core capital (as defined) of 3%, and
total risk-based capital (as defined) of 8%.  The Bank is also
subject to prompt corrective action requirement regulations set
forth by the FDIC.  The FDIC requires the Bank to maintain
minimum of Total and Tier I capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier I
capital (as defined) to average assets (as defined).  Management
believes, as of June 30, 1997, that the Bank meets all capital
adequacy requirements to which it is subject.

As of June 30, 1997, the most recent notification from the OTS
categorized the Bank as "well capitalized" under the regulatory
framework for prompt corrective action.  To be categorized as
"well capitalized" the Bank must maintain minimum total risk-
based, Tier I risk-based, Tier I leverage ratios as set forth in
the table.  There are no conditions or events since that
notification that management believes have changed the
institution's category.

                                                                                                                     To Be   
                                                                                                               "Well Capitalized"
                                                                                   For Capital                    Under Prompt 
                                                                                     Adequacy                  Corrective Action 
                                                                                     Purposes                       Provisions

    As of June 30, 1997                             Amount        Ratio         Amount        Ratio         Amount        Ratio
                                                                                                    
- ------------------------------------------          --------      --------      --------      --------      ---------     ---------
Tangible capital:                                   $124,118        9.86%       $18,873         1.5%             N/A         N/A
Core capital:                                        124,182        9.87         37,748         3.0%             N/A         N/A
Total risk-based capital (to risk weighted           132,465       19.99         53,009         8.0%         $66,261        10.00%
assets)
Tier I risk-based capital (to risk weighted          124,182       18.74            N/A         N/A           39,756         6.00
assets)
Tier I leverage capital (to average assets)          124,182       10.35            N/A         N/A           59,980         5.00

                                                                                                                 To Be
                                                                                                          "Well Capitalized"
                                                                                      For Capital             Under Prompt 
                                                                                       Adequacy             Corrective Action
                                                           Actual                      Purposes                Provisions

    As of June 30, 1996                             Amount        Ratio         Amount        Ratio         Amount        Ratio
                                                                                                    
- ------------------------------------------          --------      --------      --------      --------      ---------     ---------
Tangible capital:                                   $119,125        9.49%        $18,828         1.5%           N/A           N/A
Core capital:                                        119,259        9.50          37,659         3.0%           N/A           N/A
Total risk-based capital (to risk weighted           126,715       21.24          47,718         8.0%        $59,659       10.00%
assets)
Tier I risk-based capital (to risk weighted          119,259       19.99             N/A          N/A         35,795        6.00
assets)
Tier I leverage capital (to average assets)          119,259       16.58             N/A          N/A         35,970        5.00

The following is a reconciliation of generally accepted
accounting principles (GAAP) capital to regulatory capital for
the Bank:

 At June 30,                                    1997                                    1996
                                                                                                            
                                  TANGIBLE      CORE       RISK-BASED      Tangible      Core      Risk-Based
                                   CAPITAL      CAPITAL    CAPITAL          Capital      Capital    Capital  
                                 ---------     ---------   ---------       ---------    ---------  ----------
- ---------
GAAP capital                     $152,198       $152,198    $152,198        $148,008    $148,008     $148,008
Non-allowable assets:
Core deposit intangible               (64)            -           -             (134)         -           -
Unrealized gain on
  available for sale
  securities                       (1,583)        (1,583)     (1,583)           (311)       (311)        (311)
Goodwill                          (26,433)       (26,433)    (26,433)        (28,438)    (28,438)     (28,438)
General valuation
  allowance                            -              -        8,283               -          -         7,456
                                 ---------     ---------    ---------       ---------    ---------   ---------
Regulatory capital                124,118        124,182     132,465         119,125     119,259      126,715
Minimum capital
  requirement                      18,873         37,748      53,009          18,828      37,659       47,718
                                 ---------      ---------   ---------        ---------   ---------   ---------
Regulatory capital
  excess                         $105,245        $86,434     $79,456        $100,297     $81,600      $78,997
                                 =========      =========   =========       =========    =========   =========

PAGE 40

20.   QUARTERLY FINANCIAL INFORMATION

The following represents the unaudited results of operations for
each of the quarters during the fiscal years ended June 30, 1997
and 1996.  Since the Bank's conversion to a public company
occurred substantially at year end (June 26, 1996), earnings per
share information during the year ended June 30, 1996 is not
considered meaningful.

    For the three                   September 30, 1996     December 31, 1996      March 31, 1997      June 30, 1997
    months ended
                                                                                      
- ---------------------               -------------------     -----------------     ---------------     --------------
Net interest income                          $11,165                $11,969              $12,116             $12,216
Provision for loan losses                      1,050                  1,050                1,050               1,050
Net interest income after
  provision for loan losses                   10,115                 10,919               11,066              11,166
Non-interest income                              757                  1,052                  781               1,543
Non-interest expense:                          8,132                  5,604                6,741               7,015
- ---------------------                     ------------           ------------           ---------           ---------
Income before income
   taxes                                       2,740                  6,367                5,106               5,694
Income tax expense                             1,516                  1,428                1,608               3,039
- ---------------------                     ------------           ------------           ---------           ---------
Net income                                    $1,224                 $4,939               $3,498              $2,655
=====================                     ============           ============           =========           =========
EARNINGS PER SHARE (1):
  Primary                                      $0.09                  $0.37                $0.26               $0.22
=====================                     ============           ============           =========           =========
  Fully diluted                                $0.09                  $0.37                $0.26               $0.21
=====================                     ============           ============           =========           =========
SUPPLEMENTAL DISCLOSURE:
SAIF special assessment
      charge                                  $2,032                    $-                    $-                 $-
Income tax recovery                               -                   1,848                1,034                  -
Fully diluted EPS
      excluding SAIF special
      assessment and income
      tax recoveries                           $0.17                  $0.23                $0.19               $0.21
- ---------------------                    ------------           ------------           ---------           ---------

    For the three                   September 30, 1995     December 31, 1995      March 31, 1996      June 30, 1996
    months ended
                                                                                      
- ---------------------               ------------------     ------------------     ---------------     --------------
Net interest income                          $6,913                 $7,379                $7,171             $7,640
Provision for loan losses                       600                    351                   900              1,128
Net interest income after
  provision for loan losses                   6,313                  7,028                 6,271              6,512
Non-interest income                             414                    186                   379                396
Non-interest expense:                         2,922                  3,478                 3,901              3,720
- ---------------------                   ------------           ------------           ------------       ------------
Income before income
  taxes and cumulative
  effect of change in
  accounting principle                        3,805                  3,736                 2,749              3,188
Income tax expense                            1,741                  1,705                 1,266              1,469
Income before
  cumulative effect of
  change in accounting
  principle                                   2,064                  2,031                 1,483              1,719
Cumulative effect of
  change in accounting
  principle                                  (1,032)                    -                     -                  -
- ---------------------                   ------------           ------------           ------------        ------------
Net income                                   $1,032                 $2,031                $1,483             $1,719
=====================                   ============           ============           ============         ===========
EARNINGS PER SHARE (1):
  Primary                                       N/A                    N/A                   N/A                N/A
=====================                   ============           ============           ============          ===========
  Fully diluted                                 N/A                    N/A                   N/A                N/A
=====================                   ============           ============           ============          ===========

(1) The quarterly earnings per share amounts, when added, total
    $0.94 for the year ended June 30, 1997.  This amount differs
    from earnings per share for the year ended June 30, 1997 in
    the consolidated statement of operations due to differences
    in the computed weighted average shares outstanding as well
    as rounding differences.
PAGE 41

21. CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS:

The Company began operations on June 26, 1996.  The following
statements of condition as of June 30, 1997 and 1996, and the
related statements of operations and cash flows for the years
ended June 30, 1997 and 1996, reflect the Company's investment
in its wholly-owned subsidiary, the Bank, using the equity
method of accounting:

                      DIME COMMUNITY BANCORP, INC.
          CONDENSED STATEMENTS OF FINANCIAL CONDITION
               (Dollars in thousands except share amounts)

 At June 30,                                                 1997                         1996
                                                                              
- --------------------------------------------------           -----------                -----------
ASSETS:
Cash and due from banks                                             $17                       $117
Investment securities available
   for sale                                                      22,363                     33,994
Federal funds sold                                                6,040                     53,623
ESOP loan to subsidiary                                          10,324                     11,541
Investment in subsidiary                                        152,198                    148,008
Other assets                                                        344                         23
- --------------------------------------------------           -----------                 -----------
TOTAL ASSETS                                                   $191,286                   $247,306
==================================================           ===========                 ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Payable for securities purchased                                    $-                     $33,994
Other liabilities                                                   397                        241
Stockholders' equity                                            190,889                    213,071
- --------------------------------------------------           -----------                  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY:                    $191,286                   $247,306
==================================================           ===========                  ===========

                      DIME COMMUNITY BANCORP, INC.
               CONDENSED STATEMENTS OF OPERATIONS
               (Dollars in thousands except share amounts)

        For the year ended June 30,                           1997              1996
                                                                   
- --------------------------------------------------        -----------        -----------
Interest income                                               $3,585                $27
Gain on sales of securities                                       11                 -
Non-interest expense                                             446                 -
- --------------------------------------------------        -----------        -----------
Income before income taxes and equity of undistributed
   earnings of subsidiary                                      3,150                 27
Income tax expense                                             1,487                 -
- --------------------------------------------------        -----------         -----------
Income before equity of undistributed earnings of
 subsidiary                                                    1,663                 27
Equity in undistributed earnings of subsidiary                10,653              6,238
- --------------------------------------------------        -----------         -----------
NET INCOME                                                   $12,316             $6,265
==================================================        ===========         ===========

PAGE 42

                      DIME COMMUNITY BANCORP, INC.
               CONDENSED STATEMENTS OF CASH FLOWS
               (Dollars in thousands except share amounts)

        For the year ended June 30,                             1997                 1996
                                                                         
- --------------------------------------------------              -----------          -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                         $12,316                $6,265
Adjustments to reconcile net income to net 
  cash provided by operating activities:
     Undistributed earnings of subsidiary                           (10,653)              (6,238)
     Gain on sale of investment securities available for sale           (11)                  -
     Net accretion of discount on investment securities                                       
        available for sale                                           (1,130)                  -
     Increase in other assets                                          (321)                 (23)
     Increase in payable for securities purchased                   (33,994)              33,994
     (Decrease)Increase in other liabilities                           (225)                 241
- --------------------------------------------------                -----------          -----------
Net cash (used in) provided by operating activities                 (34,018)              34,239
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (Increase) in federal funds sold                            47,583              (53,623)
Proceeds from sale of investment securities available for
   sale                                                              10,011                    -
Proceeds from calls and maturities of investment securities
   available for sale                                               120,595                    -
Purchases of investment securities available for sale              (117,006)              (33,994)
Principal repayments on ESOP loan                                     1,165                    97
Cash disbursed in purchase of subsidiary stock                           -                (76,332)
- --------------------------------------------------                -----------           -----------
Net cash provided by (used in) investing activities                  62,348              (163,852)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock                               -                129,730
Cash disbursed for expenses related to issuance of
  common stock                                                          (190)                   -
CASH DIVIDENDS PAID TO STOCKHOLDERS                                     (537)                   -
PURCHASE OF TREASURY STOCK                                           (27,703)                   -
- --------------------------------------------------                  -----------          -----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                  (28,430)              129,730
- --------------------------------------------------                  -----------           -----------
NET (DECREASE) INCREASE IN CASH AND DUE FROM BANKS                      (100)                  117
CASH AND DUE FROM BANKS, BEGINNING OF PERIOD                             117                    -
- --------------------------------------------------                   -----------           -----------
CASH AND DUE FROM BANKS, END OF PERIOD                                   $17                   $117
==================================================                   ===========            ===========

PAGE 43

MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

    Dime Community Bancorp, Inc. Common Stock is traded on the Nasdaq National
Market and quoted under the symbol "DIME."

    The following table shows the high and low sales price during the period
indicated.  The Company's Common stock began trading on June 26, 1996, the date
of the initial public offering.

                     Fiscal Year End June 30, 1997              Fiscal Year End June 30, 1996
                     ----------------------------                 -------------------------
 Quarter Ended             High                Low                High            Low
                                                                              
- --------------------       ------------       ------------       ------------    ------------
September 30th              $14                  11{3/4}               N/A               N/A
December 31st                15{1/8}             13{1/4}               N/A               N/A
March 31st                   19{5/8}             14{1/2}               N/A               N/A
June 30th                   $20                 $16{5/8}           $11{3/4}        $11{11/16}

    On June 30, 1997, the last trading date in the fiscal year, the Company's
stock closed at $20.  At September 22, 1997 the Company had approximately 1,200
shareholders of record, not including the number of persons or entities holding
stock in nominee or street name through various brokers and banks.  There were
13,092,750 shares of common stock outstanding at June 30, 1997.

    On May 15, 1997, the Company declared its first cash dividend of 4{1/2}
cents per share for all shareholders of record as of the close of business on
June 2, 1997.  The dividend was paid on June 27, 1997.  No dividends have been
declared subsequently. The Board of Directors of the Company plans to maintain
a regular quarterly dividend in the future, and will continue to review the
dividend payment amount in relation to the Company's earnings, financial
condition or other relevant factors.

    As the principal asset of the Company, the Bank could be called upon to
provide the principal source of funds for payment of dividends by the Company.
The Bank will not be permitted to pay dividends on its capital stock if its
stockholders' equity would be reduced below applicable regulatory requirements
or the amount required for the liquidation account established during the
Bank's conversion.  See Note 2 to the Consolidated Financial Statements of the
Company for a further discussion of the liquidation account.  The OTS capital
distribution regulations applicable to savings institutions (such as the Bank)
that meet their regulatory capital requirements, generally limit dividend
payments in any year to the greater of (i) 100% of year-to-date net income plus
an amount that would reduce surplus capital by one-half or (ii) 75% of net
income for the most recent four quarters.  Surplus capital is the excess of
actual capital at the beginning of the year over the institution's minimum
regulatory capital requirement.  In addition, capital distributions from the
Bank to the Company, if in excess of established limits, could result in
recapture of the Bank's New York State and City bad debt reserves.  See Note 14
to the Consolidated Financial Statements of the Company for a further
discussion of this tax matter.

      Unlike the Bank, the Company is not subject to OTS
regulatory restrictions on the payment of dividends to its
shareholders, although the source of such dividends will be
dependent on the net proceeds retained by the Company and
earnings thereon and may be dependent, in part, upon dividends
from the Bank. The Company is subject, however, to the
requirements of Delaware law, which generally limit dividends to
an amount equal to the excess of the net assets of the Company
(the amount by which total assets exceed total liabilities) over
its statutory capital, or if there is no such excess, to its net
profits for the current and/or immediately preceding fiscal
year.

PAGE 44

 9
 1,000

                   YEAR
                          JUN-30-1997
                               JUN-30-1997
                                           19198
                          939647
                                 18902
                                     0
                     288824
                          179975
                            181099
                                         750584
                                      10726
                                 1315026
                                      963395
                                     84105
                              21199
                                      55438
                                0
                                          0
                                           145
                                      190744
                 1315026
                                  55425
                                31358
                                  2247
                                 89030
                               38544
                               41564
                            47466
                                     4200
                                 768
                                  27492
                                  19907
                        7591
                                      0
                                            0
                                     12316
                                     0.95
                                     0.94
                                    7.64
                                       3190
                                         0
                                  4671
                                   2933
                                  7812
                                     1388
                                       102
                                10726
                             10726
                                  0
                              0