Astoria Financial Corp – ‘DEFA14A’ on 6/25/97

As of:  Wednesday, 6/25/97   ·   Accession #:  950123-97-5320   ·   File #:  0-22228

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Additional Definitive Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEFA14A     Def 14A.                                             195   1.13M 

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 

Filed by the Registrant  [ X ]                                                  
Filed by a Party other than the Registrant  [   ]                               

CHECK THE APPROPRIATE BOX:

[   ]  Preliminary Proxy Statement                                              
[   ]  Confidential, for Use of the Commission Only (as permitted by            
Rule 14a-6(e)(2))                                                 
[ X ]  Definitive Proxy Statement                                               
[ X ]  Definitive Additional Materials                                          
[   ]  Soliciting Material Pursuant to Sec. 240.14a-11(c) or                    
Sec. 240.14a-12                                                   

ASTORIA FINANCIAL CORPORATION 
------------------------------------------------
(Name of Registrant as Specified in its Charter)

N/A 
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if 
other than the Registrant)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):

[   ]  No fee required.                                                         
[   ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 

     (1)     Title of each class of securities to which transaction applies:

          (a)     The Greater New York Savings Bank, Common Stock, par
          value $0.01 per share ("GNYSB Common Stock")
          (b)     The Greater New York Savings Bank, 12% Noncumulative
                  Perpetual Preferred Stock, Series B, par value $1.00
          per share ("GNYSB Series B Preferred Stock")

  (2)     Aggregate number of securities to which transaction applies:

(a)     15,072,552 shares of GNYSB Common Stock*  
     (b)     2,000,000 shares GNYSB Series B Preferred Stock

      (3)     Per unit price or other underlying value of transaction computed
               pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
            the filing fee is calculated and state how it was determined):

             (a)     (i)   75% of GNYSB Common Stock to be exchanged for 0.5
                         shares of Astoria Financial Corporation ("AFC")
                           common stock, par value $0.01 per share, for each
                           share of GNYSB Common Stock multiplied by $39.75,
                         the closing sales prices of AFC common stock on
May 9, 1997.          
                 (ii)  25% of GNYSB Common Stock to be exchanged for
                      $19.00 for each share of GNYSB Common Stock.

          (b)     Each share of GNYSB Series B Preferred Stock will be
                    exchanged for a share of a newly created series of AFC
                      preferred stock with a stated value of $25.00 per share.

    (4)     Proposed maximum aggregate value of transaction:  $346,269,850
(5)     Total fee paid:  $69,254.00                               

[ X ]  Fee paid previously with preliminary materials.                          

[   ]  Check box if any part of the fee is offset as provided by Exchange Act   
      Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
     paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.       

(1)     Amount Previously Paid:                                   
(2)     Form, Schedule or Registration Statement No.:             
(3)     Filing Party:                                             
(4)     Date Filed:                                               

_______________                                                                 

*  Assumes the conversion of 1,478,077 shares of the Series A Convertible       
Preferred Stock, par value $1.00 per share of The Greater New York Savings
   Bank ("GNYSB Series A Preferred Stock") into 1,396,487 shares of GNYSB Common
   Stock, pursuant to a ratio of .9448 shares of GNYSB Common Stock per share of
  GNYSB Series A Preferred Stock. This assumption reflects GNYSB's desire that
 the ESOP Trustee convert its shares of GNYSB Series A Preferred Stock prior
to the GNYSB record date for the special meeting of GNYSB.                

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ASTORIA FINANCIAL CORPORATION 

AND 
THE GREATER NEW YORK SAVINGS BANK 

JOINT PROXY STATEMENT 
------------------------------

ASTORIA FINANCIAL CORPORATION 

PROSPECTUS

(UP TO 5,666,517 SHARES OF COMMON STOCK, SUBJECT TO ADJUSTMENT) 

------------------------------

    This Joint Proxy Statement-Prospectus is being furnished to the holders of
common stock, par value $1.00 per share ("GNYSB Common Stock"), of The Greater  
New York Savings Bank ("GNYSB") and to holders of the GNYSB Series A ESOP       
Convertible Preferred Stock, par value $1.00 per share ("GNYSB Series A         
Preferred Stock"), each in connection with the solicitation of proxies by the   
GNYSB Board of Directors (the "GNYSB Board") for use at a special meeting of    
GNYSB's stockholders to be held at 9:30 a.m., Eastern Time, on August 1, 1997,  
at The Grand Prospect Hall, 263 Prospect Avenue, Brooklyn, New York 11215, and  
at any adjournment or postponement thereof (the "GNYSB Meeting").               

At the GNYSB Meeting, holders of GNYSB Common Stock and GNYSB Series A
Preferred Stock, will consider and vote, together as a single class, upon a     
proposal to approve the Agreement and Plan of Merger, dated as of the 29th day  
of March, 1997, as amended, by and among Astoria Financial Corporation ("AFC"), 
Astoria Federal Savings and Loan Association ("Astoria Federal"), and GNYSB, and
the related Plan of Bank Merger to be entered into between GNYSB and Astoria    
Federal (together, the "Merger Agreement") pursuant to which GNYSB will merge   
with and into Astoria Federal (the "Merger"), with Astoria Federal surviving the
Merger. Holders of GNYSB Common Stock or GNYSB Series A Preferred Stock who     
deliver a written objection to the Merger to the Secretary of GNYSB before the  
vote on the adoption of the Merger Agreement at the GNYSB Meeting and otherwise 
comply with the additional requirements of Section 6022 of the New York Banking 
Law will be entitled to dissenters' rights in connection with the Merger. In the
event shares of GNYSB Series A Preferred Stock are converted into shares of     
GNYSB Common Stock, holders of the GNYSB Series A Preferred Stock who dissent   
from the Merger will have dissenters' rights with respect to the shares of GNYSB
Common Stock into which the GNYSB Series A Preferred Stock is converted. See    
"THE MERGER -- Dissenters' Rights." Holders of GNYSB Series B Preferred Stock   
are not entitled to vote at the GNYSB Meeting.                                  

     The Merger Agreement provides that the aggregate consideration (the "Merger
Consideration") payable to holders of GNYSB Common Stock will consist of 0.5 of 
a share of common stock of AFC, par value $0.01 per share ("AFC Common Stock")  
together with the related preferred share purchase right ("AFC Right") issued   
pursuant to the Rights Agreement between AFC and ChaseMellon Shareholder        
Services, L.L.C. dated as of July 17, 1996 (the "AFC Rights Agreement") per     
share of GNYSB Common Stock for 75% of the shares of GNYSB Common Stock (the    
"Stock Consideration") and $19.00 in cash per share of GNYSB Common Stock for   
the remaining 25% of the shares of GNYSB Common Stock (the "Cash                
Consideration"). Each share of GNYSB Common Stock will be converted in the      
Merger into the right to receive: (i) 0.5 of a share of AFC Common Stock, (ii)  
$19.00 in cash or (iii) a combination of cash and a fraction of a share of AFC  
Common Stock determined as provided below. The actual consideration ultimately  
received by a stockholder for shares of GNYSB Common Stock will depend upon     
certain election, allocation and proration procedures and the election of other 
stockholders as described herein. Because the Merger provides that the aggregate
consideration payable to holders of GNYSB Common Stock in the Merger will be    
fixed such that it consists of 0.5 of a share of AFC Common Stock per share of  
GNYSB Common Stock for 75% of the shares of GNYSB Common Stock and $19.00 in    
cash per share of GNYSB Common Stock for the remaining 25% of the shares of     
GNYSB Common Stock, no guarantee can be given that the election of any given    
stockholder of GNYSB will be honored.                                           

  GNYSB expects that the shares of GNYSB Series A Preferred Stock, held by
United States Trust Company of New York (the "GNYSB ESOP Trustee"), as trustee  
of the trust created pursuant to The Greater New York Savings Bank Employee     
Stock Ownership Plan Trust Agreement, dated February 13, 1989 (the "GNYSB       
ESOP"), will be converted into shares of GNYSB Common Stock prior to the        
consummation of the Merger and otherwise exchanged as described above. Holders  
of GNYSB Common Stock who own less than 100 shares will not be entitled to elect
to receive the Stock Consideration but must elect the Cash                      

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Consideration or be treated as having made no election under the election and   
allocation procedures described herein. The Merger Consideration may be         
increased by AFC in the event GNYSB exercises its rights under the Merger       
Agreement to deliver to AFC a notice to terminate the Merger Agreement due to   
the price of the AFC Common Stock declining below certain levels established by 
formulas set forth in the Merger Agreement. See "THE MERGER -- Price Based      
Termination." Holders of shares of GNYSB 12% Noncumulative Perpetual Preferred  
Stock, Series B, par value $1.00 per share (the "GNYSB Series B Preferred       
Stock"), will receive an equal amount of shares of a newly-created series of    
preferred stock of AFC with substantially identical and no less favorable terms 
("AFC Series B Preferred Stock").                                               

This Joint Proxy Statement-Prospectus is also being furnished to the  
holders of AFC Common Stock in connection with the solicitation of proxies by   
the AFC Board of Directors (the "AFC Board") for use at a special meeting of    
AFC's stockholders to be held at 9:30 a.m., Eastern Time on August 1, 1997, at  
the New Hyde Park Inn, 214 Jericho Turnpike, New Hyde Park, New York 11040, and 
at any adjournment or postponement thereof (the "AFC Meeting" and, together with
the GNYSB Meeting, the "Meetings"). At the AFC Meeting, AFC stockholders will   
consider and vote upon a proposal to approve the issuance of shares of AFC      
Common Stock to be exchanged for shares of GNYSB Common Stock pursuant to the   
Merger Agreement and an amendment to AFC's Certificate of Incorporation to      
change the par value of AFC's authorized preferred stock from $0.01 to $1.00 per
share ("Certificate Amendment").                                                

    Each of the stockholders of AFC and GNYSB entitled to vote at the Meetings
will also consider and vote upon a proposal to authorize their respective Board 
of Directors to vote upon such other business as may properly come before the   
AFC Meeting and GNYSB Meeting, respectively, including and without limitation a 
motion to adjourn the AFC Meeting, or the GNYSB Meeting, as the case may be, to 
another time or place for the purpose of soliciting additional proxies (the     
"Additional Proposal"). See "ADDITIONAL PROPOSAL."                              

    This Joint Proxy Statement-Prospectus also constitutes a prospectus of AFC
with respect to up to 5,666,517 shares of AFC Common Stock to be issued in      
exchange for shares of GNYSB Common Stock upon consummation of the Merger       
pursuant to the Merger Agreement, subject to adjustment in the event the Merger 
Consideration is increased as described in "THE MERGER -- Price-Based           
Termination" (the "Merger Shares"). As a result of the Merger, holders of GNYSB 
Common Stock as of completion of the Merger will own approximately 21% of the   
outstanding shares of AFC Common Stock. (This percentage is based on outstanding
shares at March 31, 1997 and assumes conversion of the GNYSB Series A Preferred 
Stock into GNYSB Common Stock.)                                                 

For a description of the Merger Agreement, which is included in its   
entirety as Appendix A to this Joint Proxy Statement-Prospectus, see "THE       
MERGER."                                                                        

AFC Common Stock and GNYSB Common Stock are currently, and the Merger 
Shares will be, traded in the over-the-counter market and included for quotation
on the National Market System of the Nasdaq Stock Market (the "Nasdaq National  
Market"). The last reported sale prices per share of AFC Common Stock and GNYSB 
Common Stock as reported on the Nasdaq National Market on March 27, 1997, the   
last business day preceding public announcement of the signing of the Merger    
Agreement, were $37 7/8 and $17 7/8, respectively, and on June 20, 1997 were    
$45 5/8 and $21 1/4, respectively.                                              

 All of the shares of the GNYSB Series A Preferred Stock are held by the
GNYSB ESOP Trustee.                                                             

   This Joint Proxy Statement-Prospectus and the accompanying proxy card are
first being mailed to stockholders of AFC and GNYSB on or about June 25, 1997.  

  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE         
SECURITIES AND EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS    
JOINT PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A       
CRIMINAL OFFENSE.                                                               

 THE SHARES OF AFC COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT      
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL  
AGENCY AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF          
INVESTMENT.                                                                     
------------------------------

THE DATE OF THIS JOINT PROXY STATEMENT-PROSPECTUS IS JUNE 24, 1997. 

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AVAILABLE INFORMATION 

AFC and GNYSB are subject to the informational requirements of the    
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in        
accordance therewith file reports, proxy statements and other information with  
the Securities and Exchange Commission (the "Commission") and with the Federal  
Deposit Insurance Corporation ("FDIC"), respectively. GNYSB has pending a       
proposed reorganization of GNYSB as a wholly-owned subsidiary of Greater New    
York Bancorp Inc. ("GNYBancorp"). In connection therewith, GNYBancorp has filed 
with the Commission a Registration Statement on Form S-4, which includes GNYSB's
Registration Statement on Form F-1, GNYSB's 1996 Annual Report on Form F-2,     
GNYSB's Current Report on Form F-3, dated April 8, 1997, and GNYSB's Quarterly  
Report on Form 10-Q for the quarter ended March 31, 1997, as exhibits. As a     
result of the Merger Agreement, GNYSB has suspended its plan to form a holding  
company. If the Merger is consummated, such proposed reorganization will not    
occur.                                                                          

    Copies of AFC's reports, proxy statements and other information and copies
of GNYBancorp's Registration Statement on Form S-4 can be obtained, upon payment
of prescribed fees, from the public reference facilities of the Commission at   
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, such    
reports, proxy statements and other information can be inspected at the         
Commission's facilities referred to above and at the Commission's Regional      
Offices at 7 World Trade Center, Suite 1300, New York, New York 10048 and       
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.  
If available, such information may also be accessed through the Commission's    
Electronic Data, Gathering, Analysis and Retrieval System via electronic means, 
including the Commission's website on the Internet (http://www.sec.gov).        

  Copies of GNYSB's reports, proxy statements and other information can be
obtained, upon payment of prescribed fees, from the FDIC at the Registration and
Disclosure Section of the FDIC at 550 17th Street, N.W., Room F-643, Washington,
D.C. 20429 (202-898-8910).                                                      

Both the AFC Common Stock and the GNYSB Common Stock are included for 
quotation on the Nasdaq National Market and such reports, proxy statements and  
other information concerning AFC and GNYSB are available for inspection and     
copying at the offices of the National Association of Securities Dealers, Inc., 
1735 K Street, N.W., Washington, D.C. 20006.                                    

AFC has filed with the Commission a Registration Statement on Form S-4
(together with any amendments thereto, the "AFC Registration Statement") under  
the Securities Act of 1933, as amended (the "Securities Act"), with respect to  
the Merger Shares. This Joint Proxy Statement-Prospectus does not contain all of
the information set forth in the AFC Registration Statement and the exhibits    
thereto. Such additional information may be obtained from the Commission's      
principal office in Washington, D.C. Statements contained in this Joint Proxy   
Statement-Prospectus or in any document incorporated by reference in this Joint 
Proxy Statement-Prospectus as to the contents of any contract or other document 
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an    
exhibit to the AFC Registration Statement or such other document, each such     
statement being qualified in all respects by such reference.                    

     All information contained in this Joint Proxy Statement-Prospectus relating
to AFC and its subsidiaries has been supplied by AFC, and all information       
relating to GNYSB and its subsidiaries has been supplied by GNYSB.              

THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS CERTAIN FORWARD LOOKING
STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND   
BUSINESS OF AFC FOLLOWING THE CONSUMMATION OF THE MERGER, INCLUDING STATEMENTS  
RELATING TO: (A) THE COST SAVINGS AND REVENUE ENHANCEMENTS THAT ARE EXPECTED TO 
BE REALIZED FROM THE MERGER AND (B) PROJECTED 1998 EARNINGS PER SHARE. SEE      
"SUMMARY" "THE MERGER -- BACKGROUND AND REASONS FOR THE MERGER -- AFC's REASONS 
FOR THE MERGER" AND "UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED        
FINANCIAL INFORMATION." FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER         
MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE,  

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AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (1) EXPECTED COST SAVINGS OR REVENUE 
ENHANCEMENTS FROM THE MERGER CANNOT BE FULLY REALIZED; (2) DEPOSIT ATTRITION,   
CUSTOMER LOSS OR REVENUE LOSS FOLLOWING THE MERGER IS GREATER THAN EXPECTED; (3)
COMPETITIVE PRESSURE IN THE BANKING AND FINANCIAL SERVICES INDUSTRY INCREASES   
SIGNIFICANTLY; (4) CHANGES IN THE INTEREST RATE ENVIRONMENT REDUCE MARGINS; AND 
(5) GENERAL ECONOMIC CONDITIONS, EITHER NATIONALLY OR IN THE STATE OF NEW YORK, 
ARE LESS FAVORABLE THAN EXPECTED.                                               

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

   THIS JOINT PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (EXCLUDING 
CERTAIN EXHIBITS THERETO) WILL BE FURNISHED WITHOUT CHARGE TO ANY PERSON TO WHOM
THIS JOINT PROXY STATEMENT-PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST
OF SUCH PERSON, DIRECTED, IN THE CASE OF DOCUMENTS RELATING TO AFC, TO INVESTOR 
RELATIONS DEPARTMENT, ONE ASTORIA FEDERAL PLAZA, LAKE SUCCESS, NEW YORK 11042,  
TELEPHONE NUMBER (516) 327-7877, AND, IN THE CASE OF DOCUMENTS RELATING TO      
GNYSB, TO INVESTOR RELATIONS DEPARTMENT, THE GREATER NEW YORK SAVINGS BANK, ONE 
PENN PLAZA, NEW YORK, NEW YORK 10119, TELEPHONE NUMBER (212) 613-4073. IN ORDER 
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY JULY  
25, 1997.                                                                       

     The following documents filed with the Commission by AFC (File No. 0-22228)
pursuant to the Exchange Act are incorporated by reference in this Joint Proxy  
Statement-Prospectus:                                                           

       1. AFC's Annual Report on Form 10-K for the year ended December 31,
1996;                                                                 

         2. AFC's Current Report on Form 8-K, dated March 31, 1997, as amended
by a Form 8-K/A, dated April 8, 1997;                                 

          3. AFC's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997; and                                                             

   4. The description of AFC Common Stock, and AFC Series A Junior
     Participating Preferred Stock and Preferred Stock Purchase Rights set forth
     in AFC's Registration Statements on Form 8-A dated August 11, 1993 and July
   23, 1996, respectively, and any amendment or report filed for the purpose
of updating any such descriptions.                                    

The following documents filed with the FDIC by GNYSB (FDIC Insurance  
Certificate No. 16015-6) pursuant to the Exchange Act also have been filed as   
exhibits to GNYBancorp's Registration Statement on Form S-4 filed with the      
Commission on February 20, 1997, as amended (File No. 333-22127), pursuant to   
the Securities Act, and are incorporated by reference in this Joint Proxy       
Statement-Prospectus:                                                           

        1. GNYSB's Annual Report on Form F-2 for the year ended December 31,
1996;                                                                 

2. The description of the GNYSB Common Stock included in the
    Registration Statement on Form F-1 filed with the FDIC on May 4, 1987, and
the description of the GNYSB Series A Preferred Stock, GNYSB 12%      
Noncumulative Perpetual Preferred Stock, Series B, and GNYSB Junior   
Participating Preferred Stock included in the Amended and Restated    
  Organization Certificate of The Greater New York Savings Bank, including
any amendment or report filed for the purpose of updating any such    
description;                                                          

  3. GNYSB's Current Report on Form F-3 dated April 8, 1997; and

        4. GNYSB's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997.                                                             

  All documents filed by AFC or GNYBancorp with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Joint Proxy Statement-Prospectus and prior to the date of the Meetings     
shall be deemed to be incorporated by reference in this Joint Proxy Statement-  
Prospectus and to be a part hereof from the date of filing of such documents.   
Any statement contained herein or in a document incorporated or deemed to be    
incorporated by reference herein shall be deemed to be modified or superseded   
for purposes of this Joint Proxy Statement-Prospectus to the extent that a      
statement contained herein or in any subsequently filed document which also is  
or is deemed to be incorporated by reference herein modifies or supersedes such 
statement. Any such statement so modified or superseded shall                   

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not be deemed, except as so modified or superseded, to constitute a part of this
Joint Proxy Statement-Prospectus.                                               

NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS JOINT PROXY STATEMENT-PROSPECTUS
IN CONNECTION WITH THE SOLICITATIONS OF PROXIES OR THE OFFERING OF SECURITIES   
MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT 
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY AFC, GNYSB OR GNYBANCORP. THIS JOINT
PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A           
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES, OR THE SOLICITATION OF A PROXY,
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT        
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT      
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT-PROSPECTUS NOR 
ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES     
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF AFC OR    
GNYSB SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY 
TIME SUBSEQUENT TO ITS DATE.                                                    

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TABLE OF CONTENTS 

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                                                                                       PAGE
                                                                                       ----
                                                                                           
AVAILABLE INFORMATION.................................................................    3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.......................................    4
SUMMARY...............................................................................    9
  Parties to the Merger...............................................................    9
  The Meetings........................................................................    9
  Reasons for the Merger; Recommendations of Boards of Directors......................   11
  Effects of the Merger...............................................................   11
  Effective Time......................................................................   11
  Merger Consideration and Election, Allocation and Proration Procedures..............   11
  Opinions of Financial Advisors......................................................   15
  Conditions; Regulatory Approvals....................................................   15
  Certain Federal Income Tax Considerations...........................................   16
  Accounting Treatment................................................................   16
  Nasdaq Listing......................................................................   16
  Dissenters' Rights..................................................................   16
  Termination.........................................................................   16
  Termination Fees....................................................................   17
  Interests of Certain Persons in the Merger..........................................   17
  Management of AFC After the Merger..................................................   17
  Stock Option Agreement..............................................................   18
  Amendment to GNYSB Rights Agreement.................................................   18
  Certain Differences in Stockholders' Rights.........................................   19
  Certificate Amendment...............................................................   19
COMPARATIVE COMMON STOCK PRICE AND DIVIDEND INFORMATION...............................   20
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA........................................   21
  AFC -- Historical...................................................................   21
  GNYSB -- Historical.................................................................   23
SELECTED CONSOLIDATED PRO FORMA FINANCIAL DATA........................................   25
COMPARATIVE PER SHARE DATA............................................................   26
THE MEETINGS..........................................................................   27
  GNYSB Meeting.......................................................................   27
  AFC Meeting.........................................................................   28
THE MERGER............................................................................   30
  Parties to the Merger...............................................................   30
  Effects of the Merger...............................................................   30
  Effective Time......................................................................   31
  Merger Consideration and Election, Allocation and Proration Procedures..............   31
  Background of and Reasons for the Merger............................................   35
  Opinions of Financial Advisors......................................................   38
  Procedures for Exchange of GNYSB Common Stock Certificates..........................   48
  Regulatory Approvals................................................................   50
  Conditions to the Consummation of the Merger........................................   51
  Representations and Warranties......................................................   52
  Conduct of Business Pending the Merger..............................................   52
  No Solicitation.....................................................................   54

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                                                        [Enlarge/Download Table]

                                                                                       PAGE
                                                                                       ----
                                                                                           
  Amendment and Waiver................................................................   54
  Price-Based Termination.............................................................   55
  Termination.........................................................................   57
  Termination Fees....................................................................   57
  Expenses............................................................................   58
  Material Federal Income Tax Consequences............................................   59
  Accounting Treatment................................................................   62
  Dissenters' Rights..................................................................   62
  Interests of Certain Persons in the Merger..........................................   63
  Effect on GNYSB Employee Benefit Plans..............................................   68
  Operations After the Merger.........................................................   69
  Management of AFC After the Merger..................................................   69
  Involvement in Legal Proceedings....................................................   69
CERTAIN RELATED TRANSACTIONS..........................................................   70
  Stock Option Agreement..............................................................   70
  Amendment to GNYSB Rights Agreement.................................................   71
  Resales of AFC Common Stock.........................................................   72
CERTIFICATE AMENDMENT.................................................................   72
ADDITIONAL PROPOSAL...................................................................   73
BENEFICIAL OWNERSHIP OF AFC COMMON STOCK..............................................   74
  Principal Security Ownership........................................................   74
  Directors and Executive Officers....................................................   75
BENEFICIAL OWNERSHIP OF GNYSB COMMON STOCK............................................   77
  Principal Security Ownership........................................................   77
  Directors and Executive Officers....................................................   78
CERTAIN REGULATORY CONSIDERATIONS.....................................................   79
  General.............................................................................   79
  Business Activities of Federal Savings Associations.................................   80
  Restrictions on Payment of Dividends................................................   80
  Capital Requirements................................................................   80
  Prompt Corrective Regulatory Action.................................................   81
  Impact of Recent Legislation........................................................   82
  Transactions with Related Parties...................................................   84
  Federal Home Loan Bank System.......................................................   84
  Other Regulations Applicable to Federal Savings Associations........................   84
  Holding Company Regulation..........................................................   85
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL INFORMATION.............   88
DESCRIPTION OF AFC CAPITAL STOCK......................................................   96
  General.............................................................................   96
  AFC Common Stock....................................................................   96
  AFC Preferred Stock.................................................................   97

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                                                                                       PAGE
                                                                                       ----
                                                                                           
COMPARISON OF CERTAIN RIGHTS OF STOCKHOLDERS..........................................  103
  Special Meetings of Stockholders....................................................  103
  Stockholder Action by Written Consent...............................................  103
  Amendment of Certificate of Incorporation/Organization Certificate..................  103
  Limitation of Director and Officer Liability........................................  104
  Indemnification of Directors and Officers...........................................  104
  Required Vote for Authorization of Certain Actions..................................  104
  Business Combinations Involving Interested Stockholders.............................  105
  Appraisal Rights....................................................................  106
  Other Constituencies................................................................  106
  Rights Plans........................................................................  106
LEGAL MATTERS.........................................................................  108
EXPERTS...............................................................................  108
STOCKHOLDER PROPOSALS.................................................................  108
APPENDICES                                                                                 
  A. Agreement and Plan of Merger, as amended.........................................  A-1
  B. Stock Option Agreement...........................................................  B-1
  C. Plan of Bank Merger..............................................................  C-1
  D. Opinion of GNYSB's Financial Advisor.............................................  D-1
  E. Opinion of AFC's Financial Advisor...............................................  E-1
  F. New York Banking Law Section 6022................................................  F-1

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SUMMARY 

   The following summary is not intended to be a complete description of all
material facts regarding AFC, GNYSB and the matters to be considered at the     
Meetings and is qualified in all respects by the information appearing elsewhere
or incorporated by reference in this Joint Proxy Statement-Prospectus, the      
Appendices hereto and the documents referred to herein.                         

PARTIES TO THE MERGER                                                           

AFC and Astoria Federal.  Astoria Financial Corporation is a Delaware 
corporation incorporated on June 14, 1993, and is the holding company for       
Astoria Federal. The principal business of AFC is the operation of its          
wholly-owned subsidiary, Astoria Federal, a federally-chartered savings and loan
association. Astoria Federal's principal business is attracting retail deposits 
from the general public and investing those deposits, together with funds       
generated from operations, principal repayments and borrowings, primarily in    
one-to-four family residential mortgage loans and mortgage-backed and           
mortgage-related securities and, to a lesser extent, commercial real estate     
loans, multi-family mortgage loans and consumer loans. In addition, Astoria     
Federal invests in mortgage-backed and mortgage-related securities and other    
securities, including those issued by the U.S. Government and Federal agencies  
and other securities. At March 31, 1997, AFC had total consolidated assets of   
$7.7 billion, deposits of $4.5 billion and stockholders' equity of $584.4       
million. As of March 31, 1997, Astoria Federal had 45 retail banking office     
locations with thirteen in Queens County, New York, eighteen in Nassau County,  
New York, six in Suffolk County, New York, and eight in the upstate New York    
counties of Westchester, Chenango and Otsego. The principal executive offices of
AFC are located at One Astoria Federal Plaza, Lake Success, New York 11042-1085 
and its telephone number is (516) 327-3000. Astoria Federal's deposits are      
insured by the Savings Association Insurance Fund ("SAIF") of the FDIC.         

 GNYSB.  The Greater New York Savings Bank is a New York State-chartered
capital stock savings bank which was originally organized as a New York         
State-chartered mutual savings bank in 1897 in the Park Slope section of        
Brooklyn, New York. At March 31, 1997, GNYSB had total assets of $2.6 billion,  
deposits of $1.7 billion and stockholders' equity of $212.8 million.            

     As of March 31, 1997, GNYSB conducted its retail banking activities through
nine full-service branch offices located in Brooklyn, New York, three           
full-service branch offices in Nassau County, New York and one full-service     
branch office in each of Queens and Suffolk Counties, New York. GNYSB has       
received regulatory approval to open three new full service branches in         
Brooklyn. GNYSB and AFC intend to proceed with the opening of these facilities. 
GNYSB has its administrative headquarters in Manhattan, New York at One Penn    
Plaza, New York, New York 10119, telephone number (212) 613-4000, and its       
lending office in Mineola, New York. GNYSB's deposits are insured by the Bank   
Insurance Fund of the FDIC.                                                     

GNYSB has pending a proposed reorganization of GNYSB as a wholly-owned
subsidiary of GNYBancorp. This reorganization has received the approval of      
GNYSB's stockholders. As a result of the Merger Agreement, GNYSB has suspended  
its plan to form a holding company. If the Merger is consummated, such proposed 
reorganization will not occur.                                                  

See INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE," "THE MERGER --  
Parties to the Merger," "SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA,"       
"CERTAIN REGULATORY CONSIDERATIONS" and "UNAUDITED PRO FORMA COMBINED CONDENSED 
CONSOLIDATED FINANCIAL INFORMATION."                                            

THE MEETINGS                                                                    

GNYSB.  The GNYSB Meeting will be held at 9:30 a.m., Eastern Time, on 
August 1, 1997 at The Grand Prospect Hall, 263 Prospect Avenue, Brooklyn, New   
York 11215. The purpose of the GNYSB Meeting is to consider and vote upon a     
proposal to approve the Merger Agreement and a proposal to authorize the GNYSB  
Board, in its discretion, to vote upon such other business as may properly come 
before the GNYSB Meeting, including, without limitation, a motion to adjourn the
GNYSB Meeting to another time or place for the purpose of soliciting additional 
proxies in order to approve and adopt the Merger Agreement or otherwise.        

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   Only holders of record of GNYSB Common Stock and GNYSB Series A Preferred
Stock at the close of business on June 19, 1997 (the "GNYSB Record Date") will  
be entitled to vote at the GNYSB Meeting with each entitled to one vote per     
share. The affirmative vote of two-thirds of the aggregate outstanding shares on
the GNYSB Record Date of GNYSB Common Stock and GNYSB Series A Preferred Stock  
entitled to vote at the GNYSB Meeting, voting as a single class, is required to 
approve the Merger Agreement. In addition, assuming the existence of a quorum,  
the affirmative vote of a majority of the votes present in person or by proxy   
and entitled to vote at the GNYSB Meeting is required to approve the Additional 
Proposal (as defined herein). As of the GNYSB Record Date, there were 13,714,485
shares of GNYSB Common Stock outstanding and entitled to be voted at the GNYSB  
Meeting and 1,477,802 shares of GNYSB Series A Preferred Stock outstanding and  
entitled to be voted at the GNYSB Meeting. Holders of GNYSB Series B Preferred  
Stock are not entitled to vote at the GNYSB Meeting.                            

   As of April 30, 1997, GNYSB's directors and executive officers (and their
affiliates) (22 persons) beneficially owned and had the power to vote 271,109   
shares of GNYSB Common Stock, beneficially owned, but did not have the right to 
vote approximately 84,133 shares of GNYSB Common Stock held in the GNYSB        
Incentive Savings Plan and had a beneficial interest in, and the right to direct
the voting of, approximately 143,195 shares of GNYSB Common Stock and GNYSB     
Series A Preferred Stock held in the GNYSB ESOP accounts. Such shares of GNYSB  
Common Stock and GNYSB Series A Preferred Stock which GNYSB's directors and     
executive officers (and their affiliates) have the right to vote or direct the  
voting thereof, represent approximately 2.73%, as of April 30, 1997, of the     
outstanding GNYSB Common Stock and GNYSB Series A Preferred Stock which may be  
voted at the GNYSB Meeting. Such persons have indicated their intention to vote,
or direct the voting of, all such shares, in favor of the Merger Agreement and  
for the Additional Proposal (as defined herein). See "BENEFICIAL OWNERSHIP OF   
GNYSB COMMON STOCK." The Trustee of the GNYSB ESOP is obligated to vote         
unallocated shares and shares for which no direction has been received in the   
same proportion as shares for which such voting directions have been received   
from participants, so long as such vote is in accordance with the provisions of 
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). As of
April 30, 1997, AFC, its subsidiaries, and the directors and executive officers 
of AFC, beneficially owned 240,000 shares or approximately 1.75% of GNYSB Common
Stock. Such persons have indicated their intention to vote, or direct the voting
of, all such shares, in favor of the Merger Agreement and for the Additional    
Proposal. See "THE MEETINGS -- GNYSB Meeting."                                  

     AFC.  The AFC Meeting will be held at 9:30 a.m., Eastern Time, on August 1,
1997 at the New Hyde Park Inn, 214 Jericho Turnpike, New Hyde Park, New York    
11040. The purpose of the AFC Meeting is to consider and vote upon a proposal to
approve the issuance of the Merger Shares, a proposal to approve the Certificate
Amendment in connection with the Merger, and a proposal to authorize the AFC    
Board, in its discretion, to vote upon such other business as may properly come 
before the AFC Meeting and any adjournment thereof, including, without          
limitation, a motion to adjourn the AFC Meeting to another time or place for the
purpose of soliciting additional proxies in order to approve the issuance of the
Merger Shares, the Certificate Amendment, or otherwise. The proposals to        
authorize the AFC Board or the GNYSB Board, as the case may be, to vote upon    
such other business as may properly come before the AFC Meeting or the GNYSB    
Meeting, as the case may be, is hereinafter referred to as the "Additional      
Proposal." See the "ADDITIONAL PROPOSAL."                                       

     Only holders of record of AFC Common Stock at the close of business on June
23, 1997 (the "AFC Record Date") will be entitled to vote at the AFC Meeting.   
The issuance of the Merger Shares and the Additional Proposal requires the      
affirmative vote of the holders of a majority of the shares of AFC Common Stock 
represented in person or by proxy at the AFC Meeting. The affirmative vote of a 
majority of shares of AFC Common Stock outstanding is required for approval of  
the Certificate Amendment. As of the AFC Record Date, there were 20,972,257     
shares of AFC Common Stock outstanding and entitled to be voted at the AFC      
Meeting.                                                                        

The directors and executive officers of AFC and their affiliates (13  
persons) beneficially owned, as of April 30, 1997, 2,081,461 shares, or         
approximately 9.32% of the outstanding shares, of AFC Common Stock and all such 
persons have indicated a present intent to vote their shares in favor of        
approval of the issuance of                                                     

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the Merger Shares, the Certificate Amendment and the Additional Proposal. See   
"BENEFICIAL OWNERSHIP OF AFC COMMON STOCK." As of April 30, 1997, GNYSB, its    
subsidiaries and the directors and executive officers of GNYSB beneficially     
owned 1,304 shares of AFC Common Stock. See "THE MEETINGS -- AFC Meeting."      

REASONS FOR THE MERGER; RECOMMENDATIONS OF BOARDS OF DIRECTORS                  

   GNYSB.  THE GNYSB BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
HAS DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF GNYSB AND ITS        
STOCKHOLDERS. THE GNYSB BOARD, THEREFORE, UNANIMOUSLY RECOMMENDS THAT GNYSB'S   
STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE ADDITIONAL       
PROPOSAL. The GNYSB Board believes that the Merger will provide significant     
value to all GNYSB stockholders and also enable them to participate in the      
opportunities for growth that the GNYSB Board believes the Merger makes         
possible. See "THE MEETINGS -- GNYSB Meeting -- Recommendation of the Board of  
Directors" and "THE MERGER -- Background of and Reasons for the Merger --       
GNYSB's Reasons for the Merger."                                                

   AFC.  THE AFC BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND HAS
DETERMINED THAT THE MERGER, THE ISSUANCE OF THE MERGER SHARES AND THE           
CERTIFICATE AMENDMENT PURSUANT THERETO ARE IN THE BEST INTERESTS OF AFC AND ITS 
STOCKHOLDERS. THE AFC BOARD, THEREFORE, UNANIMOUSLY RECOMMENDS THAT AFC'S       
STOCKHOLDERS VOTE FOR APPROVAL OF THE ISSUANCE OF THE MERGER SHARES, THE        
CERTIFICATE AMENDMENT AND THE ADDITIONAL PROPOSAL. The AFC Board believes the   
Merger will result in the addition of a well-suited and positioned banking      
institution to AFC's existing organization. See "THE MEETINGS -- AFC Meeting -- 
Recommendation of the Board of Directors" and "THE MERGER -- Background of and  
Reasons for the Merger -- AFC's Reasons for the Merger."                        

EFFECTS OF THE MERGER                                                           

     Pursuant to the Merger Agreement, at the Effective Time (as defined below),
GNYSB will be merged with and into Astoria Federal, and GNYSB stockholders will 
receive the consideration described in "THE MERGER -- Merger Consideration and  
Election, Allocation and Proration Procedures" and "-- Effects of the Merger."  
For information on how GNYSB stockholders will be able to exchange certificates 
representing shares of GNYSB Common Stock for new certificates representing the 
shares of AFC Common Stock to be issued to them and/or cash, see "THE           
MERGER -- Procedures for Exchange of GNYSB Common Stock Certificates." Each     
outstanding share of AFC Common Stock at the Effective Time shall remain        
outstanding and unchanged as a result of the Merger.                            

EFFECTIVE TIME                                                                  

The Merger will become effective at the date and time set forth in the
articles of combination which will be filed with the Office of Thrift           
Supervision (the "OTS") in accordance with applicable law (the "Effective       
Time"). The articles of combination will be filed not later than the last       
business day of the month in which the last of the waiting periods related to   
regulatory approval has occurred and after satisfaction or waiver of certain    
conditions to the Merger specified in the Merger Agreement and become effective 
after the close of business on such date, unless another date is agreed to by   
AFC and GNYSB. See "THE MERGER -- Effective Time."                              

MERGER CONSIDERATION AND ELECTION, ALLOCATION AND PRORATION PROCEDURES          

  General.  The Merger Agreement provides that the aggregate consideration
payable to holders of GNYSB Common Stock in the Merger will consist of 0.5 of a 
share of AFC Common Stock per share of GNYSB Common Stock for 75% of the shares 
of GNYSB Common Stock and $19.00 in cash per share of GNYSB Common Stock for the
remaining 25% of the shares of GNYSB Common Stock. Each share of GNYSB Common   
Stock will be converted in the Merger into the right to receive: (i) 0.5 of a   
share of AFC Common Stock, (ii) $19.00 in cash or (iii) a combination of cash   
and a fraction of a share of AFC Common Stock determined as provided below. The 
actual consideration ultimately received by a stockholder for shares of GNYSB   
Common Stock will depend upon the election, allocation and proration procedures 
described below and the election of other stockholders. The Merger Consideration
may be increased by AFC in the event GNYSB exercises its rights under the Merger
Agreement to deliver to AFC a notice to terminate the Merger                    

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Agreement due to the price of the AFC Common Stock declining below certain      
levels established by formulas set forth in the Merger Agreement. See "THE      
MERGER -- Price Based Termination."                                             

  Elections.  Within three days after the consummation of the Merger, each
record holder of GNYSB Common Stock will be sent materials asking such          
stockholder to elect (an "Election") to receive for its shares of GNYSB Common  
Stock:                                                                          

     (i) 0.5 of a share of AFC Common Stock for each share of GNYSB Common
Stock (a "Stock Election");                                           

   (ii) $19.00 in cash without interest for each share of GNYSB Common
Stock (a "Cash Election");                                            

     (iii) a Stock Election with respect to some of such stockholder's
shares of GNYSB Common Stock and a Cash Election with respect to the  
remaining shares of GNYSB Common Stock held by such holder; or        

          (iv) whatever is left after the election of the other holders of GNYSB
Common Stock and the application, to the extent necessary, of certain 
random selection procedures (a "No-Election").                        

Notwithstanding the foregoing, in order to make a Stock Election, the 
number of shares of GNYSB Common Stock a holder must elect to convert to AFC    
Common Stock must equal or exceed 100 shares. Therefore, any holder of GNYSB    
Common Stock who owns less than 100 shares must elect the Cash Election or be   
treated as having made a No-Election. A failure to properly make an Election as 
described below will be treated as a No-Election.                               

  NO GAIN OR LOSS WILL BE RECOGNIZED BY HOLDERS OF GNYSB COMMON STOCK AS A
RESULT OF THE MERGER, EXCEPT WHERE ANY CASH CONSIDERATION IS RECEIVED OR TO THE 
EXTENT OF ANY CASH RECEIVED IN LIEU OF A FRACTIONAL SHARE INTEREST IN AFC COMMON
STOCK. SEE "THE MERGER -- MATERIAL FEDERAL INCOME TAX CONSEQUENCES."            

    No Oversubscription.  In the event that the number of shares as to which a
Cash Election has been made does not exceed 25% of the shares of GNYSB Common   
Stock outstanding at the Effective Time and the number of shares as to which a  
Stock Election has been made does not exceed 75% of the shares of GNYSB Common  
Stock outstanding at the Effective Time, then:                                  

     (i) all shares as to which a Cash Election has been made shall be
 converted into the right to receive $19.00 in cash without interest per
share of GNYSB Common Stock;                                          

       (ii) all shares as to which a Stock Election has been made shall be
    converted into the right to receive 0.5 of a share of AFC Common Stock per
share of GNYSB Common Stock; and                                      

         (iii) shares as to which No-Election has been made shall be converted
 into either the right to receive 0.5 of a share of AFC Common Stock per
  share of GNYSB Common Stock or $19.00 per share of GNYSB Common Stock as
  determined by random selection so that 25% of the shares of GNYSB Common
     Stock are converted into the right to receive cash and 75% of the shares of
GNYSB Common Stock are converted into the right to receive AFC Common 
Stock.                                                                

The random selection process to be used by ChaseMellon Shareholder    
Services, LLC (the "Exchange Agent") will consist of drawing by lot or such     
other process as the Exchange Agent deems equitable and necessary to effect the 
allocations described above.                                                    

     Oversubscription for Cash.  If the aggregate number of shares as to which a
Cash Election has been made exceeds 25% of the shares of GNYSB Common Stock     
outstanding at the Effective Time, then:                                        

      (i) each share as to which a Stock Election has been made and each
 share as to which No-Election has been made shall be converted into the
right to receive 0.5 of a share of AFC Common Stock; and              

      (ii) each share as to which a Cash Election has been made shall be
  converted into the right to receive a combination of cash and AFC Common
Stock. The amount in cash will be equal to the product, rounded to the
    nearest $0.01, of (x) $19.00 and (y) a fraction (the "Cash Fraction"), the
numerator of                                                          

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  which shall be a number equal to 25% of the shares of GNYSB Common Stock
     outstanding at the Effective Time and the denominator of which shall be the
total number of shares as to which a Cash Election has been made. The 
    number of shares of AFC Common Stock will be equal to the product, rounded
     to four decimal places, of (x) 0.50 and (y) a number equal to one minus the
     Cash Fraction. For example, if the aggregate number of shares as to which a
    Cash Election has been made equals 50%, 75% or 100% of the shares of GNYSB
    Common Stock, the combination would consist of $9.50 in cash and 0.25 of a
share of AFC Common Stock, $6.33 in cash and 0.3333 of a share of AFC 
  Common Stock and $4.75 in cash and 0.375 of a share of AFC Common Stock,
respectively.                                                         

   Oversubscription for AFC Common Stock.  If the aggregate number of shares
as to which a Stock Election has been made exceeds 75% of the shares of GNYSB   
Common Stock outstanding at the Effective Time, then:                           

     (i) each share as to which a Cash Election has been made and each
 share as to which No-Election has been made shall be converted into the
right to receive $19.00 in cash without interest; and                 

       (ii) each share as to which a Stock Election has been made shall be
  converted into the right to receive a combination of cash and AFC Common
Stock. The number of shares of AFC Common Stock will be equal to the  
 product, rounded to four decimal places, of (x) 0.50 and (y) a fraction
   (the "Stock Fraction"), the numerator of which shall be a number equal to
   75% of the shares of GNYSB Common Stock outstanding at the Effective Time
and the denominator of which shall be the total number of shares as to
   which a Stock Election has been made. The amount of cash will be equal to
   the product, rounded to the nearest $0.01, of (x) $19.00 and (y) a number
     equal to one minus the Stock Fraction. For example, if the aggregate number
    of shares as to which a Stock Election has been made equals 90% or 100% of
   the shares of GNYSB Common Stock, the combination would consist of 0.4167
  of a share of AFC Common Stock and $3.17 in cash and 0.375 of a share of
AFC Common Stock and $4.75 in cash, respectively.                     

No Guarantee of Chosen Consideration or Equivalent Value.  Because the
Merger provides that the aggregate consideration payable to holders of GNYSB    
Common Stock in the Merger will be fixed such that it consists of 0.5 of a share
of AFC Common Stock per share of GNYSB Common Stock for 75% of the shares of    
GNYSB Common Stock and $19.00 in cash per share of GNYSB Common Stock for the   
remaining 25% of the shares of GNYSB Common Stock, no guarantee can be given    
that the Election of any given stockholder of GNYSB will be honored. Rather, the
election by each stockholder will be subject to the election, allocation and    
proration procedures described herein. Thus stockholders may not receive their  
requested form of consideration or combination thereof. Because the market price
of AFC Common Stock may fluctuate and it could be greater than or less than     
$38.00 per share (the price at which the market value of 0.5 of a share of AFC  
Common Stock would equal the cash consideration of $19.00 per share), the market
value of 0.5 of a share of AFC Common Stock received per share could be less    
than or greater than the cash price per share of $19.00.                        

     Election Procedures.  All Elections will be required to be made on a Letter
of Transmittal and Election Form. To make an effective Election with respect to 
shares of GNYSB Common Stock, the holder thereof must, in accordance with the   
Letter of Transmittal and Election Form, (i) complete properly and return the   
Letter of Transmittal and Election Form to the Exchange Agent, (ii) either (a)  
deliver therewith his or her certificates representing shares of GNYSB Common   
Stock (the "GNYSB Stock Certificates") with respect to such shares (or an       
appropriate guarantee of delivery thereof), or (b) complete the procedure for   
delivery by book-entry transfer of such shares on a timely basis, and (iii)     
deliver therewith any other required documents, prior to 5:00 p.m. on the 10th  
business day following mailing of the Letter of Transmittal and Election Form   
(the "Election Deadline").                                                      

     GNYSB STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY AND
SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT UNTIL A GNYSB STOCKHOLDER HAS     
RECEIVED THE LETTER OF TRANSMITTAL AND ELECTION FORM.                           

     A holder of shares of GNYSB Common Stock having a preference as to the form
of consideration to be received for his or her shares of GNYSB Common Stock     
should make an Election because shares as to which an Election has been made    
will be given priority in allocating such consideration over shares as to which 
an                                                                              

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Election is not received. Neither GNYSB nor the GNYSB Board makes any           
recommendation as to whether stockholders should elect to receive the Cash      
Consideration or the Stock Consideration in the Merger. Each holder of GNYSB    
Common Stock must make his or her own decision with respect to such election.   

  GNYSB Series A Preferred Stock.  All of the shares of the GNYSB Series A
Preferred Stock are held by the GNYSB ESOP Trustee. The shares held in the GNYSB
ESOP and allocated to participants' accounts are voted by the beneficial owners 
of such shares based on directions received from such beneficial owners by the  
trustee of the GNYSB ESOP. Unallocated shares and any allocated shares with     
respect to which no voting instructions have been received will be voted by the 
trustee of the GNYSB ESOP in the same manner and proportion as the allocated    
shares with respect to which voting instructions have been received, as long as 
such vote is in accordance with the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").                                     

    1,477,802 shares of GNYSB Series A Preferred Stock were outstanding on the
Record Date, but may be redeemed or converted into shares of GNYSB Common Stock 
at any time after the date of this Joint Proxy Statement-Prospectus and prior to
the anticipated closing date of the Merger. The Merger Agreement requires that  
if certain conditions are satisfied GNYSB is obligated to redeem all of the     
shares of the GNYSB Series A Preferred Stock prior to the consummation of the   
Merger. These conditions include (i) the approval of the Merger Agreement and   
related transactions by the holders of GNYSB and AFC stock entitled to vote     
thereon, (ii) the receipt of all required regulatory approvals, (iii) the waiver
by AFC of all conditions to its obligations to consummate the Merger and (iv) a 
market price of AFC Common Stock of at least $34.125. The redemption price in   
effect after July 1, 1997 for the GNYSB Series A Preferred Stock is $13.20 plus 
accrued dividends to the date of redemption. The effectiveness of such          
redemption is a condition to the consummation of the Merger. GNYSB may, of its  
own accord, provide a notice of redemption to the GNYSB ESOP Trustee at any     
time. However, it has not yet done so because it was determined that it was in  
the best interest of both GNYSB and the GNYSB ESOP and its participants to      
receive a dividend for the full semi-annual period ending June 30, 1997. AFC has
requested that GNYSB exercise its right to call the GNYSB Series A Preferred    
Stock for redemption prior to the time frames set forth in the Merger Agreement,
and GNYSB has advised AFC that it will consider exercising such right to cause a
redemption to occur shortly after the payment of such dividend. However, no     
assurance can be given that GNYSB will exercise such right within such time     
frame. As long as the market price of the GNYSB Common Stock exceeds            
approximately $14.00, GNYSB expects that the GNYSB ESOP Trustee will, in lieu of
allowing such shares to be redeemed for cash, convert such shares into shares of
GNYSB Common Stock with a conversion ratio of .9448 of a share of GNYSB Common  
Stock for each share of GNYSB Series A Preferred Stock. Notwithstanding the     
foregoing, GNYSB intends to seek the GNYSB ESOP Trustee's agreement to convert  
the GNYSB Series A Preferred Stock prior to the time GNYSB is obligated to      
redeem such shares. Shares of GNYSB Common Stock held by the GNYSB ESOP at the  
Effective Time will be subject to the election, allocation and proration        
procedures in the same manner as all other shares of GNYSB Common Stock. AFC    
intends to enforce its rights to require the issuance of a notice of redemption 
to the GNYSB ESOP Trustee, which will require the GNYSB ESOP Trustee to choose  
either to allow such redemption or exercise its right of conversion at the      
conversion ratio of .9448 per share. However, if for any reason AFC does not do 
so and GNYSB does not of its own accord exercise its right to call the GNYSB    
Series A Preferred Stock for redemption, the GNYSB Series A Preferred Stock     
outstanding at the Effective Time of the Merger, under the Certificate of       
Designations, would be deemed immediately prior to the Effective Time to have   
been converted into shares of GNYSB Common Stock at a prescribed conversion     
ratio.                                                                          

GNYSB Series B Preferred Stock.  Upon consummation of the Merger, the 
outstanding shares of GNYSB Series B Preferred Stock will be converted into AFC 
Series B Preferred Stock, a newly-created series of preferred stock of AFC with 
substantially identical and no less favorable terms.                            

Miscellaneous.  If AFC effects a stock dividend, reclassification,    
recapitalization, split-up, combination, exchange of shares or similar          
transaction prior to the Effective Time, an appropriate adjustment to the       
consideration will be made.                                                     

    No fractional shares of AFC Common Stock will be issued in connection with
the Merger and cash will be paid in lieu thereof.                               

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    Upon consummation of the Merger, any shares of GNYSB Common Stock that are
owned by GNYSB as treasury stock or that are held directly or indirectly by AFC,
other than in a fiduciary capacity or in satisfaction of a debt previously      
contracted, will be canceled and retired and no payment will be made with       
respect thereto and such shares will not be considered for purposes of the      
foregoing. In addition, shares of GNYSB Common Stock with respect to which      
dissenters' rights have been asserted and not withdrawn will not be converted   
into the right to receive cash or AFC Common Stock as provided in the Merger    
Agreement and will be considered No-Election Shares for purposes of applying the
allocation and proration procedures described herein. For certain information   
concerning the historical market prices of GNYSB Common Stock and AFC Common    
Stock, see "COMPARATIVE STOCK PRICE AND DIVIDEND INFORMATION."                  

   Dissenting Stockholders.  Any shares as to which dissenters' or appraisal
rights have been asserted and not withdrawn ("Dissenters' Shares") shall not be 
converted into the right to receive the Merger Consideration unless and until   
the holder shall have failed to perfect, or shall have effectively withdrawn or 
lost, his right to dissent. If any such holder shall have so failed to perfect  
or shall have effectively withdrawn or lost such right, each share of such      
holder's GNYSB Common Stock shall be deemed to be No-Election Shares and shall  
be subject to the allocation and proration procedures described herein. See "THE
MERGER -- Dissenters' Rights."                                                  

OPINIONS OF FINANCIAL ADVISORS                                                  

    GNYSB.  Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") has served as
financial advisor to GNYSB in connection with the Merger and has rendered an    
opinion to the GNYSB Board that, as of the date of this Joint Proxy             
Statement-Prospectus, the consideration to be received by the holders of shares 
of GNYSB Common Stock (including any shares that are issued upon the conversion 
of shares of GNYSB Series A Preferred Stock) and GNYSB Series B Preferred Stock 
pursuant to the Merger Agreement is fair, from a financial point of view, to    
such stockholders. For additional information, see "THE MERGER -- Opinions of   
Financial Advisors -- GNYSB." The opinion of Sandler O'Neill is attached as     
Appendix D to this Joint Proxy Statement-Prospectus. Stockholders are urged to  
read such opinion in its entirety for a description of the procedures followed, 
assumptions made, matters considered and qualifications of the review undertaken
by Sandler O'Neill in connection therewith.                                     

     AFC.  Merrill Lynch & Co. ("Merrill Lynch") has served as financial advisor
to AFC in connection with the Merger and has rendered a written opinion to the  
AFC Board that, as of the date of this Joint Proxy Statement-Prospectus, the    
proposed Merger Consideration is fair to AFC from a financial point of view. The
opinion of Merrill Lynch is attached as Appendix E to this Joint Proxy          
Statement-Prospectus. Stockholders are urged to read such opinion in its        
entirety for a description of the procedures followed, assumptions made, matters
considered and qualifications on the review undertaken by Merrill Lynch in      
connection therewith. See "THE MERGER -- Opinions of Financial Advisors -- AFC."

CONDITIONS; REGULATORY APPROVALS                                                

Consummation of the Merger is subject to various conditions, including
receipt of the stockholder approvals solicited hereby, receipt of the necessary 
regulatory approvals, receipt of opinions of counsel regarding certain tax      
aspects of the Merger, and satisfaction of other customary closing conditions.  

  The regulatory approvals and consents necessary to consummate the Merger
include the approvals of the OTS and the Superintendent of Banks of the State of
New York ("Superintendent"). Applications were filed on June 5, 1997. Such      
applications are currently under review. THERE CAN BE NO ASSURANCE THAT SUCH    
REGULATORY APPROVALS WILL BE OBTAINED, AND, IF THE MERGER IS APPROVED, THERE CAN
BE NO ASSURANCE AS TO THE DATE OF ANY SUCH APPROVAL. THERE CAN ALSO BE NO       
ASSURANCE THAT ANY SUCH APPROVALS WILL NOT CONTAIN A CONDITION OR REQUIREMENT   
WHICH CAUSES SUCH APPROVALS TO FAIL TO SATISFY THE CONDITIONS SET FORTH IN THE  
MERGER AGREEMENT AND DESCRIBED UNDER "THE MERGER -- REGULATORY APPROVALS" AND   
"CONDITIONS TO THE CONSUMMATION OF THE MERGER."                                 

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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS                                       

   It is intended that the Merger will be treated as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986 (the "Code").
Consummation of the Merger is conditioned upon receipt by AFC of an opinion of  
Thacher Proffitt & Wood and the receipt by GNYSB of an opinion of Sullivan &    
Cromwell, each dated as of the Effective Date, substantially to such effect. In 
general, it is expected that no gain or loss will be recognized by AFC, Astoria 
Federal or GNYSB as a result of the Merger and, except where any Cash           
Consideration is received or to the extent of any cash received in lieu of a    
fractional share interest in GNYSB Common Stock, no gain or loss will be        
recognized by holders of GNYSB Common Stock or GNYSB Series B Preferred Stock as
a result of the Merger. See "THE MERGER -- Material Federal Income Tax          
Consequences."                                                                  

ACCOUNTING TREATMENT                                                            

   AFC will treat the Merger as a purchase for accounting purposes. See "THE
MERGER -- Accounting Treatment."                                                

NASDAQ LISTING                                                                  

     Both the GNYSB Common Stock and the AFC Common Stock are currently included
for quotation on the Nasdaq National Market. It is a condition to consummation  
of the Merger that the AFC Common Stock to be issued to the stockholders of     
GNYSB pursuant to the Merger Agreement will be included for quotation on the    
Nasdaq National Market. Similar to the GNYSB Series B Preferred Stock, the AFC  
Series B Preferred Stock will not be listed on the Nasdaq National Market or on 
any other exchange.                                                             

DISSENTERS' RIGHTS                                                              

     Holders of GNYSB Common Stock or GNYSB Series A Preferred Stock who deliver
a written objection to the Merger to the Secretary of GNYSB before the vote on  
the adoption of the Merger Agreement at the GNYSB Meeting and otherwise comply  
with the additional requirements of Section 6022 of the New York Banking Law    
(the "NYBL") will be entitled to dissenters' rights in connection with the      
Merger. A copy of Section 6022 of the NYBL is attached to this Joint Proxy      
Statement-Prospectus as Appendix F. In the event shares of GNYSB Series A       
Preferred Stock are converted into shares of GNYSB Common Stock, holders of the 
GNYSB Series A Preferred Stock who dissent from the Merger will have dissenters'
rights with respect to the shares of GNYSB Common Stock into which the GNYSB    
Series A Preferred Stock is converted. No stockholder of AFC is entitled to     
dissenters' rights in connection with or as a result of the Merger. See "THE    
MEETINGS -- GNYSB Meeting," "THE MERGER -- Dissenters' Rights," "-- Interests of
Certain Persons in the Merger," and "BENEFICIAL OWNERSHIP OF GNYSB COMMON       
STOCK."                                                                         

TERMINATION                                                                     

    The Merger Agreement may be terminated, and the Merger abandoned, prior to
the Effective Time, either before or after its approval by the stockholders of  
AFC or GNYSB under certain specified circumstances, including without limitation
a price-based termination provision. Under this provision, the Merger Agreement 
may be terminated by GNYSB at any time during the five-day period commencing    
with the date (the "Valuation Date") that is the latest of (i) the day of       
expiration of the last waiting period with respect to any of the required       
regulatory approvals, (ii) the day on which the last of the required regulatory 
approvals is obtained and (iii) the day on which the last of the required       
stockholder approvals have been received, such termination to be effective on   
the 30th day following such date, but only if all of the following are true: (i)
the average closing price of AFC Common Stock over the 30 consecutive trading   
days prior to the Valuation Date is less than $30.30 per share, (ii) the        
quotient obtained by dividing such average closing price of AFC Common Stock on 
the Valuation Date by $37.88 is less than the number obtained by subtracting    
0.15 from the quotient obtained by dividing the weighted average common stock   
price of a group of other financial institution holding companies over the 30   
consecutive trading days prior to the Valuation Date by the weighted average    
common stock price of such group on March 27, 1997 and (iii) AFC elects on a    
timely basis not to                                                             

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increase the Merger Consideration including the number of shares of AFC Common  
Stock to be received by the holders of GNYSB Common Stock in the Merger. Prior  
to making any decision to terminate (or allow the termination of) the Merger    
Agreement, each of the GNYSB Board and the AFC Board would consult with its     
respective financial and other advisors and would consider all financial and    
other information it deemed relevant to its decision. Approval of the Merger    
Agreement by the stockholders of GNYSB at the GNYSB Meeting will confer on the  
GNYSB Board the power, consistent with its fiduciary duties, to elect to        
consummate the Merger in the event the termination right is triggered whether or
not there is any increase in the Merger Consideration and without any further   
action by, or resolicitation of, the stockholders of GNYSB. Approval of the     
issuance of the Merger Shares by the stockholders of AFC of the AFC Meeting will
confer on the AFC Board the power, consistent with its fiduciary duties, to     
elect to increase the Merger Consideration as described above and consummate the
Merger in the event the termination right is triggered without any further      
actions by, or resolicitation of, the stockholders of AFC. See "THE             
MERGER -- Price-Based Termination," "-- Termination" and "-- Termination Fees." 

TERMINATION FEES                                                                

In recognition of the efforts and expenses of, and other opportunities
foregone by AFC while structuring the Merger, the Merger Agreement provides that
GNYSB shall, in certain circumstances involving an attempt by a third party to  
acquire GNYSB, pay to AFC a termination fee of $5 million in cash. In addition, 
pursuant to the Stock Option Agreement (as defined herein), GNYSB granted AFC an
option to purchase up to 2,721,536 shares of GNYSB Common Stock at an exercise  
price of $17.875 upon the occurrence of certain events. However, the maximum    
aggregate profit AFC can receive under the Stock Option Agreement and the       
termination fee arrangement is $10 million. See "THE MERGER -- Termination Fees"
and "CERTAIN RELATED TRANSACTIONS -- Stock Option Agreement."                   

INTERESTS OF CERTAIN PERSONS IN THE MERGER                                      

    Certain members of GNYSB's management and the GNYSB Board may be deemed to
have interests in the Merger in addition to their interests, if any, as         
stockholders of GNYSB generally. These include interests relating to            
indemnification, cash payments under employment agreements and change of control
agreements, cash payments under outstanding stock options or the roll-over of   
stock options, service on an advisory board, employment agreements for executive
officers, certain benefits under the GNYSB Retirement Plan for Non-Employee     
Directors and liability insurance coverage. The estimated maximum severance     
benefits and excise tax indemnity payment amount under the Employment Agreements
(as defined herein) and the Change in Control Letter Agreements (as defined     
herein) for the executive officers of GNYSB are as follows: Gerard C. Keegan,   
$5,253,000 and $1,977,000; Michael J. Henchy, $1,352,000 and $535,000; Daniel J.
Harris, $846,000 and $408,000; Philip A. Cimino, $792,000 and $398,000; Philip  
T. Spies, $618,000 and $274,000; and all executive officers as a group, which   
consists of 13 persons, $12,956,000 and $5,622,000. The estimated maximum       
aggregate amount that would be required to be paid pursuant to the Merger       
Agreement in consideration for the cancellation of stock options for the        
executive officers of GNYSB are as follows: Gerard C. Keegan, $3,665,311,       
Michael J. Henchy, $1,133,146, Daniel J. Harris, $834,063, Philip A. Cimino,    
$820,526, Philip T. Spies, $718,281; and all executive officers as a group,     
which consists of 13 persons, $9,973,889. The estimated aggregate potential     
benefits that could be payable in connection with the Merger to the directors of
GNYSB are described in more detail elsewhere herein. See "THE                   
MERGER -- Interests of Certain Persons in the Merger."                          

MANAGEMENT OF AFC AFTER THE MERGER                                              

     The Merger Agreement provides that, at the Effective Time, the directors of
AFC and Astoria Federal, respectively, will be the directors of AFC and Astoria 
Federal, respectively, immediately prior to the Effective Time of the Merger and
the directors of AFC and Astoria Federal will cause Mr. Gerard C. Keegan and one
other member of the GNYSB Board selected by GNYSB and acceptable to AFC and who 
was a member of the GNYSB Board on the date of the Merger Agreement, to be      
elected and appointed to the AFC Board and the board of directors of Astoria    
Federal (the "Astoria Federal Board"). Except for the addition of               

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Mr. Keegan, the executive officers of AFC and Astoria Federal at the Effective  
Time, respectively, will be the executive officers of AFC and Astoria Federal,  
respectively, immediately prior to the Effective Time. At the Effective Time,   
Mr. Keegan will become Vice Chairman and Chief Administrative Officer of AFC and
Astoria Federal. See "THE MERGER -- Interests of Certain Persons in the Merger" 
and "-- Management of AFC After the Merger."                                    

STOCK OPTION AGREEMENT                                                          

     As a condition to AFC entering into the Merger Agreement, AFC required that
GNYSB also enter into a Stock Option Agreement, dated as of March 29, 1997 (the 
"Stock Option Agreement"), pursuant to which GNYSB granted AFC an option (the   
"Option"), exercisable upon the occurrence of certain events (none of which has 
occurred, to the best of AFC's and GNYSB's knowledge, as of the date hereof), to
purchase up to 2,721,536 shares of GNYSB Common Stock (representing             
approximately 19.9% of the outstanding shares of GNYSB Common Stock on March 29,
1997), at an exercise price of $17.875 per share, subject to adjustment in      
certain circumstances and subject to termination within certain periods. In     
addition, the Merger Agreement provides that GNYSB shall in certain             
circumstances pay to AFC a termination fee of $5 million in cash. However, the  
maximum aggregate profit AFC can receive under the Stock Option Agreement and   
the termination fee arrangement is $10 million. See "THE MERGER -- Price-Based  
Termination."                                                                   

    The Stock Option Agreement is intended to increase the likelihood that the
Merger will be consummated in accordance with the terms of the Merger Agreement.
Certain aspects of the Stock Option Agreement may have the effect of            
discouraging persons who might now or prior to the consummation of the Merger be
interested in acquiring all of or a significant interest in GNYSB from          
considering or proposing such an acquisition, even if such persons were prepared
to pay a higher price per share for the GNYSB Common Stock than the value per   
share contemplated by the Merger Agreement. The acquisition of GNYSB or an      
interest in GNYSB, or an agreement to do either, could cause the Option to      
become exercisable. The existence of such Option could significantly increase   
the cost to a potential acquiror of acquiring GNYSB compared to its cost had the
Stock Option Agreement not been entered into. Such increased costs might        
discourage a potential acquiror from considering or proposing an acquisition or 
might result in a potential acquiror proposing to pay a lower per share price to
acquire GNYSB than it might otherwise have proposed to pay. The management of   
GNYSB believes that the exercise of the Option is likely to prohibit any        
acquiror of GNYSB from accounting for any acquisition of GNYSB using the        
pooling-of-interests accounting method for a period of two years. The inability 
to use the pooling-of-interests accounting method could discourage or preclude  
an acquisition by other banking organizations during that period.               

A copy of the Stock Option Agreement is attached as Appendix B to this
Joint Proxy Statement-Prospectus. A description of the Stock Option Agreement,  
including a description of the events which will result in the Option becoming  
exercisable, is set forth under "CERTAIN RELATED TRANSACTIONS -- Stock Option   
Agreement -- Terms of Stock Option Agreement."                                  

AMENDMENT TO GNYSB RIGHTS AGREEMENT                                             

On June 14, 1990, GNYSB adopted a Rights Agreement (the "GNYSB Rights 
Agreement"), pursuant to which GNYSB's stockholders each received a dividend of 
one GNYSB Right for each outstanding share of GNYSB Common Stock to holders of  
record as of June 25, 1990. In connection with the execution of the Merger      
Agreement, GNYSB amended the GNYSB Rights Agreement to clarify that for purposes
of determining whether AFC (as well as its affiliates and associates) is an     
acquiring person, as defined in the GNYSB Rights Agreement, AFC shall not be    
deemed to be a beneficial owner, as defined in the GNYSB Rights Agreement, or to
beneficially own any securities as a result of GNYSB's obligation to merge under
the Merger Agreement. See "CERTAIN RELATED TRANSACTIONS -- Amendment to GNYSB   
Rights Agreement."                                                              

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CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS                                     

At the Effective Time, stockholders of GNYSB who receive shares of AFC
Common Stock will become stockholders of AFC and their rights as stockholders of
AFC will be determined by the Delaware General Corporation Law ("DGCL") and by  
AFC's Certificate of Incorporation and Bylaws. The rights of GNYSB stockholders 
are currently governed by the NYBL and by GNYSB's Restated Organization         
Certificate and Bylaws. The rights of stockholders of AFC differ from rights of 
the stockholders of GNYSB with respect to certain important matters, including: 
the right to call special meetings; the right to take action by written consent;
the right to amend certain provisions of AFC's Certificate of Incorporation or  
GNYSB's Restated Organization Certificate, as the case may be; appraisal rights;
the required stockholder vote as to certain matters; statutory and other        
restrictions on certain business combinations; consideration of other           
constituencies when evaluating a change of control; limitations of director and 
officer liability; indemnification of directors and officers and provisions of  
the rights agreements including triggering events. For a summary of these       
differences, see "COMPARISON OF CERTAIN RIGHTS OF STOCKHOLDERS."                

CERTIFICATE AMENDMENT                                                           

 In connection with the Merger Agreement, the AFC Board has approved the
Certificate Amendment to change the par value of AFC's authorized preferred     
stock from $0.01 per share to $1.00 per share. Approval of the Certificate      
Amendment requires the affirmative vote of holders of at least a majority of the
issued and outstanding shares of AFC Common Stock entitled to vote thereon. The 
purpose of the increase in par value to $1.00 per share is to have available AFC
preferred stock that has the same par value as the GNYSB Series B Preferred     
Stock so that the par value of the AFC Series B Preferred Stock is the same as  
the GNYSB Series B Preferred Stock. The Certificate Amendment provides that at  
such time as the AFC Series B Preferred Stock is no longer outstanding, the par 
value of AFC Preferred Stock automatically, without any further action by AFC's 
stockholders, will be reduced back to $0.01 per share. If approved, the         
Certificate Amendment will be effective only upon consummation of the Merger.   
Regardless of whether the Merger Agreement is approved by stockholders of GNYSB 
or the issuance of the Merger Shares is approved by stockholders of AFC, failure
of AFC's stockholders to approve the Certificate Amendment will prevent         
consummation of the Merger unless such condition is waived by GNYSB. See        
"CERTIFICATE AMENDMENT."                                                        

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COMPARATIVE COMMON STOCK PRICE AND DIVIDEND INFORMATION 

   AFC Common Stock and GNYSB Common Stock are included for quotation on the
Nasdaq National Market (symbols: "ASFC" and "GRTR," respectively). The following
table sets forth the high and low sale prices of shares of AFC Common Stock and 
GNYSB Common Stock as reported in the Nasdaq National Market, and the quarterly 
cash dividends declared per share, for the periods indicated.                   

                                                        [Enlarge/Download Table]

                                                              AFC                                     GNYSB                 
                                                         COMMON STOCK                             COMMON STOCK              
                                            ---------------------------------------  ---------------------------------------
                                            HIGH          LOW          DIVIDENDS(1)  HIGH          LOW          DIVIDENDS(2)
                                            -----        -----         ------------  -----        -----         ------------
                                                                                                                            
1995(3)                                                                                                                     
  First Quarter............................ $ 15 5/8     $ 13 1/8         $   --     $  9 1/8     $  7 7/8         $   --   
  Second Quarter...........................   18 7/16      15 3/8             --       10 1/8        8 1/4             --   
  Third Quarter............................   22 5/16      17 29/32         0.10       12 3/4        9 1/4             --   
  Fourth Quarter...........................   23 1/4       21 1/32          0.10       13 1/2       11 3/8             --   
1996                                                                                                                        
  First Quarter(3).........................   25 15/16     22 5/16          0.10       12 1/8       11 1/8             --   
  Second Quarter(3)........................   28 1/8       23 5/16          0.11       12 1/4       10 1/2             --   
  Third Quarter............................   29 1/8       24 5/8           0.11       13 3/8        9 7/8             --   
  Fourth Quarter...........................   38           29 3/8           0.11       15           11 7/8           0.05   
1997                                                                                                                        
  First Quarter............................   44           35 1/2           0.11       18 1/2       13 1/4           0.05   
  Second Quarter (through June 20).........   47 1/4       33 3/4           0.15       22 1/16      16 5/8           0.05   

---------------                                                                 

(1) Pursuant to the Merger Agreement, AFC may not, without the prior written    
    consent of GNYSB, make, declare or pay any cash dividends in excess of $0.25
per share per quarter.                                                  

(2) Pursuant to the Merger Agreement, GNYSB may not, without the prior written  
    consent of AFC, make, declare or pay any dividend on the GNYSB Common Stock,
except for its regular quarterly dividend of $0.05 per share.           

(3) On April 17, 1996 the AFC Board declared a two-for-one stock split in the   
    form of a 100% stock dividend and on June 3, 1996, AFC stockholders received
   one additional share of AFC Common Stock for each share of AFC Common Stock
   owned as of May 15, 1996. AFC's high and low stock prices and dividends for
   prior periods have been adjusted to reflect the effect of such stock split.

  The following table sets forth the last reported sale price per share of
AFC Common Stock and GNYSB Common Stock on (i) January 31, 1997; (ii) March 27, 
1997, the last business day preceding public announcement of the signing of the 
Merger Agreement; and (iii) June 20, 1997, the last practicable date prior to   
the mailing of this Joint Proxy Statement-Prospectus:                           

                                                                [Download Table]

                                                            AFC       GNYSB  
                                                            COMMON    COMMON 
                                                            STOCK     STOCK  
                                                            ----      ----   
                                                                             
January 31, 1997..........................................  36  5/8   14  1/4
March 27, 1997(1).........................................  37  7/8   17  7/8
June 20, 1997.............................................  45  5/8   21  1/4

---------------                                                                 

(1) On March 27, 1997, the high and low sales prices of AFC Common Stock were   
$38 7/8 and $37 7/8, respectively, and the high and low sales prices of 
  GNYSB Common Stock were $18 1/4 and $16 3/4, respectively, all as reported
on the Nasdaq National Market.                                          

    GNYSB AND AFC STOCKHOLDERS ARE ADVISED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR AFC COMMON STOCK AND GNYSB COMMON STOCK.  The market price of AFC Common    
Stock will fluctuate between the date of this Joint Proxy Statement-Prospectus  
and the Effective Date. No assurance can be given concerning the market price of
AFC Common Stock before or after the Effective Date.                            

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

AFC -- HISTORICAL                                                               

   Set forth below are selected consolidated financial and other data of AFC
and is based on, and qualified in its entirety by, the consolidated financial   
statements of AFC and subsidiary, including the notes thereto, which are        
incorporated by reference in this Joint Proxy Statement-Prospectus and should be
read in conjunction therewith. The selected consolidated financial and other    
data for AFC at March 31, 1997 and for the three-month periods ended March 31,  
1997 and March 31, 1996 were not audited, but in the opinion of management,     
contain all adjustments (consisting only of normal recurring adjustments)       
necessary for a fair presentation of the financial conditions and results for   
such periods. The results of operations for the three-month periods ended March 
31, 1997 and March 31, 1996 are not necessarily indicative of the results of    
operations to be expected for the remainder of the year or any other interim    
period.                                                                         

                                                        [Enlarge/Download Table]

                                                                                     AT DECEMBER 31,                        
                                                AT MARCH 31,  --------------------------------------------------------------
                                                    1997         1996         1995         1994         1993         1992   
                                                ------------  ----------   ----------   ----------   ----------   ----------
                                                (UNAUDITED)                           (IN THOUSANDS)                        
                                                                                                                            
SELECTED FINANCIAL DATA:                                                                                                    
Total assets...................................  $7,689,409   $7,272,763   $6,620,102   $4,642,547   $4,121,280   $3,418,924
Federal funds sold and repurchase agreements...      81,518       56,000      100,000      198,490      229,820      150,000
Securities available-for-sale..................   2,430,970    2,296,662    2,515,968       55,550           --           --
Securities held-to-maturity....................   2,080,739    1,961,015    1,615,542    2,659,533    2,227,402    1,404,020
Loans receivable, net..........................   2,763,538    2,637,327    2,043,643    1,574,760    1,506,966    1,692,939
Real estate owned and investments in real                                                                                   
  estate, net..................................      11,768       12,129       23,331       26,378       32,141       36,428
Deposits.......................................   4,494,230    4,513,093    4,263,421    3,280,652    2,898,372    2,877,843
Borrowed funds.................................   2,540,477    2,111,514    1,704,691      766,849      652,849      265,500
Stockholders' equity(1)........................     584,392      588,829      590,685      550,575      537,349      242,219
Non-performing assets(2),(3),(4)...............      40,073       45,589       67,811       93,316      130,957      164,225

                                                        [Enlarge/Download Table]

                                                     FOR THE THREE                                                          
                                                     MONTHS ENDED                                                           
                                                       MARCH 31,                  FOR THE YEAR ENDED DECEMBER 31,           
                                                  -------------------   ----------------------------------------------------
                                                    1997       1996       1996       1995       1994       1993       1992  
                                                  --------   --------   --------   --------   --------   --------   --------
                                                      (UNAUDITED)          (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)    
                                                                                                                            
SELECTED OPERATING DATA:                                                                                                    
Interest income.................................  $129,073   $115,834   $491,174   $434,976   $301,387   $266,983   $266,119
Interest expense................................    79,617     71,100    304,481    265,705    150,527    140,406    155,692
                                                  --------   --------   --------   --------   --------   --------   --------
Net interest income.............................    49,456     44,734    186,693    169,271    150,860    126,577    110,427
Provision for loan losses ......................       500        522      3,963      2,007      3,733      6,959     11,553
                                                  --------   --------   --------   --------   --------   --------   --------
Net interest income after provision for loan                                                                                
  losses........................................    48,956     44,212    182,730    167,264    147,127    119,618     98,874
Non-interest income.............................     3,471      3,558     13,722      9,466      6,218      6,374      5,759
Non-interest expense:                                                                                                       
  General and administrative....................    23,759     23,927     96,165     90,344     72,089     61,877     59,500
  Real estate operations, net...................       112     (3,255)    (2,723)    (3,344)     1,894      3,557      2,218
  Provision for (recovery of) real estate                                                                                   
    losses......................................        64     (1,397)    (1,747)       259      3,017      6,020      3,546
  Amortization of excess of cost over fair value                                                                            
    of net assets acquired......................     2,110      2,171      8,684      8,307      1,788      2,250      2,895
  SAIF recapitalization assessment..............        --         --     28,545         --         --         --         --
  Provision for restructuring...................        --         --         --         --         --      8,325         --
                                                  --------   --------   --------   --------   --------   --------   --------
  Total non-interest expense....................    26,045     21,446    128,924     95,566     78,788     82,029     68,159
                                                  --------   --------   --------   --------   --------   --------   --------
  Income before income taxes, extraordinary item                                                                            
    and cumulative effect of accounting                                                                                     
    changes.....................................    26,382     26,324     67,528     81,164     74,557     43,963     36,474
Income tax expense..............................    10,948     11,606     30,675     35,743     30,880     18,677     17,502
                                                  --------   --------   --------   --------   --------   --------   --------
Income before extraordinary item and cumulative                                                                             
  effect of accounting changes..................    15,434     14,718     36,853     45,421     43,677     25,286     18,972
Extraordinary item:                                                                                                         
Penalty on prepayment of FHLB-NY advances, net                                                                              
  of income tax benefit.........................        --         --         --         --         --     (3,499)        --
Cumulative effect of accounting changes(5)......        --         --         --         --         --      2,881         --
                                                  --------   --------   --------   --------   --------   --------   --------
Net income......................................  $ 15,434   $ 14,718   $ 36,853   $ 45,421   $ 43,677   $ 24,668   $ 18,972
                                                  ========   ========   ========   ========   ========   ========   ========
Primary earnings per common share(6),(7)........  $   0.72   $   0.68   $   1.77   $   2.07   $   1.85   $   0.19        N/A
Fully diluted earnings per common                                                                                           
  share(6),(7)..................................  $   0.72   $   0.68   $   1.71   $   2.06   $   1.85   $   0.19        N/A

                                           (See footnotes on the following page)

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA -- (CONTINUED) 

                                                        [Enlarge/Download Table]

                                                    AT OR FOR THE                                                        
                                                     THREE MONTHS          AT OR FOR THE YEAR ENDED DECEMBER 31,         
                                                        ENDED       ---------------------------------------------------- 
                                                    MARCH 31, 1997    1996       1995       1994       1993       1992   
                                                    --------------  --------   --------   --------   --------   -------- 
                                                     (UNAUDITED)       (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)     
                                                                                                                         
SELECTED FINANCIAL RATIOS AND OTHER DATA:                                                                                
Fully diluted earnings per common share excluding                                                                        
  SAIF recapitalization assessment, net of                                                                               
  tax(6),(7),(8)...................................    $   0.72     $   2.49   $   2.06   $   1.85   $   0.19   $    N/A 
Return on average assets(9)........................        0.83%        0.53%      0.73%      0.99%      0.67%      0.57%
Return on average assets, excluding SAIF                                                                                 
  recapitalization assessment(8),(9)...............        0.83         0.77       0.73       0.99       0.67       0.57 
Return on average stockholders' equity(9)..........       10.52         6.38       8.01       7.95       8.37       8.14 
Return on average stockholders' equity, excluding                                                                        
  SAIF recapitalization assessment(8),(9)..........       10.52         9.28       8.01       7.95       8.37       8.14 
Return on average tangible stockholders'                                                                                 
  equity(9)........................................       12.65         7.79       9.81       8.04       8.61       8.54 
Return on average tangible stockholders' equity,                                                                         
  excluding SAIF recapitalization                                                                                        
  assessment(8),(9)................................       12.65        11.33       9.81       8.04       8.61       8.54 
Average stockholders' equity to average assets.....        7.93         8.25       9.09      12.44       7.99       7.02 
Average tangible stockholders' equity to average                                                                         
  tangible assets..................................        6.68         6.86       7.55      12.32       7.79       6.69 
Stockholders' equity to total assets...............        7.60         8.10       8.92      11.86      13.04       7.08 
Core deposits to total deposits(10)................       39.68        38.52      39.59      38.71      47.56      45.49 
Net interest spread(9).............................        2.46         2.45       2.55       3.04       3.29       3.20 
Net interest margin(9),(11)........................        2.77         2.77       2.85       3.51       3.55       3.45 
Operating income to average assets(9),(12).........        0.17         0.17       0.15       0.14       0.17       0.17 
General and administrative expense to average                                                                            
  assets(9)........................................        1.28         1.37       1.45       1.63       1.68       1.79 
Efficiency ratio(13)...............................       45.21        48.37      50.55      45.89      46.54      51.21 
Average interest-earning assets to average                                                                               
  interest-bearing liabilities.....................        1.07x        1.07x      1.07x      1.13x      1.07x      1.05x
Book value per common share........................    $  27.51     $  27.42   $  26.13   $  22.87   $  20.39   $     -- 
Tangible book value per common share...............       22.89        22.75      21.30      22.65      20.12         -- 
Cash dividends declared per common share...........        0.11         0.43       0.20         --         --         -- 
ASSET QUALITY RATIOS:                                                                                                    
Non-performing loans to total loans(2).............        1.02%        1.26%      2.16%      4.20%      6.45%      7.43%
Non-performing loans to total assets...............        0.37         0.46       0.67       1.44       2.40       3.74 
Non-performing assets to total assets(3)...........        0.52         0.63       1.02       2.01       3.18       4.80 
Allowance for loan losses to non-performing                                                                              
  loans............................................       49.55        42.11      30.34      18.19      16.87      12.32 
Allowance for loan losses to non-accrual loans.....       60.72        54.06      34.90      21.37      21.47      15.14 
Allowance for loan losses to total loans...........        0.50         0.53       0.65       0.76       1.09       0.92 
OTHER DATA:                                                                                                              
Number of deposit accounts.........................     462,353      461,044    439,681    308,218    284,334    297,941 
Mortgage loans serviced for others (in                                                                                   
  thousands).......................................    $107,707     $109,521   $123,931   $ 54,157   $ 67,791   $ 87,070 
Number of full service banking offices.............          45           46         46         28         28         30 
Full time equivalent employees ....................         925          930        954        751        788        791 

---------------                                                                 

(1) Balance at December 31, 1992 represents only retained earnings,           
substantially restricted.                                             

(2) Non-performing loans consist of all non-accrual loans and all mortgage    
  loans delinquent 90 days or more as to their maturity date but not their
interest payments.                                                    

(3) Non-performing assets consist of all non-performing loans, real estate    
owned and investments in real estate, net.                            

(4) For the periods indicated, AFC had no troubled debt restructurings.       

(5) The cumulative effect of accounting changes represents the adoption of    
    Statement of Financial Accounting Standards No. 106 "Employers' Accounting
     for Postretirement Benefits Other than Pensions" and Statement of Financial
Accounting Standard No. 109 "Accounting for Income Taxes."            

(6) 1993 based on net income from November 18, 1993 to December 31, 1993.     

(7) Prior periods adjusted for two-for-one stock split on June 3, 1996.       

(8) The SAIF recapitialization assessment was a one-time nonrecurring charge  
taken as a result of the Deposit Insurance Funds Act of 1996 which was
enacted into law on September 30, 1996. Such disclosure is shown for  
purposes of comparing information with prior periods. See "CERTAIN    
REGULATORY CONSIDERATIONS -- Impact of Recent Legislation -- Deposit  
Insurance -- SAIF Recapitalization."                                  

(9) Data provided for the three months ended March 31, 1997 is shown on an    
annualized basis.                                                     

(10) Core deposits are comprised of savings, money market, money manager and NOW
accounts.                                                             

(11) Net interest margin represents net interest income divided by average      
interest-earning assets.                                              

(12) Operating income represents total non-interest income less net gains on    
sales of securities, loans and premises and equipment of $1,614,000,  
$11,000 and $165,000, for 1996, 1995 and 1993, respectively.          

(13) Efficiency ratio represents general and administrative expense divided by  
the sum of net interest income plus operating income.                 

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA -- (CONTINUED) 

GNYSB -- HISTORICAL                                                             

    Set forth below is selected consolidated financial and other data of GNYSB
and subsidiaries for the years 1992-1996, which is derived from, and qualified  
in its entirety by, GNYSB's Annual Report on Form F-2 for the year ended        
December 31, 1996, which is incorporated by reference in this Joint Proxy       
Statement-Prospectus and should be read in conjunction therewith. In addition,  
set forth below is selected unaudited financial and other data of GNYSB and     
subsidiaries at March 31, 1997 and for the quarters ended March 31, 1996 and    
1997. This information is derived from, and qualified in its entirety by,       
GNYSB's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997,     
which is incorporated herein by reference. In the opinion of management, all    
material adjustments necessary for a fair presentation of the financial position
and results of operations for the interim periods presented have been made. All 
such adjustments were of a normal recurring nature. The results of operations   
for the quarter ended March 31, 1997 are not necessarily indicative of the      
results of operations for the full year or any other interim period.            

                                                        [Enlarge/Download Table]

                                                                                    AT DECEMBER 31,                        
                                                             --------------------------------------------------------------
                                                                1996         1995         1994         1993         1992   
                                                             ----------   ----------   ----------   ----------   ----------
                                               AT MARCH 31,                                                                
                                               ------------                                                                
                                                   1997                                                                    
                                               ------------                                                                
                                               (UNAUDITED)                   (IN THOUSANDS)                                
                                                                                                                           
SELECTED FINANCIAL CONDITION DATA:                                                                                         
Total assets..................................  $2,570,533   $2,541,888   $2,582,977   $2,572,631   $2,459,696   $2,702,849
Securities available-for-sale.................     209,274      215,961      202,444       44,331       44,806      262,064
Securities held-to-maturity...................   1,212,710    1,174,321    1,091,717    1,125,637      906,148      804,156
Loans receivable, net.........................     947,220      951,340    1,071,175    1,191,323    1,285,061    1,427,428
Real estate held for development and acquired                                                                              
  through foreclosure, net....................      31,491       33,644       36,076       67,693       83,052       89,321
Deposits......................................   1,667,433    1,666,674    1,715,340    1,732,453    1,811,311    2,195,850
Borrowed funds................................     670,108      640,384      641,242      622,356      438,024      333,763
Stockholders' equity..........................     212,814      209,648      195,937      182,484      175,506      142,107
Troubled debt restructurings..................     155,019      155,538      195,139      199,290      174,769      159,485
Nonperforming assets..........................      38,723       45,561       55,769      123,674      186,092      245,835

                                                        [Enlarge/Download Table]

                                                     FOR THE THREE                                                         
                                                     MONTHS ENDED                                                          
                                                       MARCH 31,                 FOR THE YEAR ENDED DECEMBER 31,           
                                                   -----------------   ----------------------------------------------------
                                                    1997      1996       1996       1995       1994       1993       1992  
                                                   -------   -------   --------   --------   --------   --------   --------
                                                      (UNAUDITED)                                                          
                                                                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)              
                                                                                                                           
SELECTED OPERATING DATA:                                                                                                   
Interest income................................... $44,065   $44,712   $176,934   $182,351   $170,607   $168,466   $203,998
Interest expense..................................  25,169    26,732    104,577    109,994     92,766     96,223    129,826
                                                   -------   -------   --------   --------   --------   --------   --------
Net interest income...............................  18,896    17,980     72,357     72,357     77,841     72,243     74,172
Provision for loan losses.........................      --       500      1,500     29,400      7,990     26,444     26,289
                                                   -------   -------   --------   --------   --------   --------   --------
Net interest income after provision for loan                                                                               
  losses..........................................  18,896    17,480     70,857     42,957     69,851     45,799     47,883
Noninterest income................................   2,041     1,993     10,797     10,419      5,799     15,912     32,613
Noninterest expenses:                                                                                                      
  General and administrative......................  11,932    11,976     48,151     47,539     47,119     49,466     48,804
  Real estate operations, net.....................     992       843      3,457      8,398     11,470     15,597     10,485
  Provision for real estate losses................     500        --        500     17,700      7,110     22,056      6,711
                                                   -------   -------   --------   --------   --------   --------   --------
Total noninterest expenses........................  13,424    12,819     52,108     73,637     65,699     87,119     66,000
                                                   -------   -------   --------   --------   --------   --------   --------
Income (loss) before income tax expense (benefit)                                                                          
  and cumulative effect of accounting change......   7,513     6,654     29,546    (20,261)     9,951    (25,408)    14,496
Income tax expense (benefit)......................   2,810     2,442     11,047    (39,500)    (3,000)    (3,750)       750
                                                   -------   -------   --------   --------   --------   --------   --------
Income (loss) before cumulative effect of                                                                                  
  accounting change...............................   4,703     4,212     18,499     19,239     12,951    (21,658)    13,746
Cumulative effect of accounting change(1).........      --        --         --         --         --      7,000         --
                                                   -------   -------   --------   --------   --------   --------   --------
Net income (loss)................................. $ 4,703   $ 4,212   $ 18,499   $ 19,239   $ 12,951   $(14,658)  $ 13,746
                                                   =======   =======   ========   ========   ========   ========   ========
Primary earnings (loss) per common share(2)....... $  0.21   $  0.18   $   0.83   $   0.85   $   0.42   $  (1.25)  $   0.92
Fully diluted earnings (loss) per common                                                                                   
  share(2)........................................ $  0.20   $  0.17   $   0.77   $   0.80   $   0.41   $  (1.25)  $   0.79

                                           (See footnotes on the following page)

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA -- (CONTINUED) 

GNYSB -- HISTORICAL                                                             

                                                        [Enlarge/Download Table]

                                                        AT OR FOR THE                                                      
                                                         THREE MONTHS         AT OR FOR THE YEAR ENDED DECEMBER 31,        
                                                            ENDED       -------------------------------------------------- 
                                                        MARCH 31, 1997   1996       1995       1994       1993       1992  
                                                        --------------  ------     ------     ------     ------     ------ 
                                                         (UNAUDITED)                                                       
                                                                                                                           
SELECTED FINANCIAL RATIOS AND OTHER DATA:                                                                                  
Return on average assets(3)............................       0.74%       0.72%      0.74%      0.51%     (0.58)%     0.50%
Return on average stockholders' equity(3)..............       8.92        9.20      10.18       7.22      (9.31)      9.83 
Average stockholders' equity to average assets.........       8.28        7.87       7.31       7.09       6.21       5.05 
Stockholders' equity to total assets...................       8.28        8.25       7.59       7.09       7.14       5.26 
Core deposits to total deposits(4).....................      43.06       43.30      44.44      50.88      56.92      56.07 
Net interest spread(3).................................       2.85        2.78       2.77       3.12       2.95       2.60 
Net interest margin(3).................................       3.11        3.02       2.98       3.28       3.04       2.77 
General and administrative expenses to average                                                                             
  assets(3)............................................       1.87        1.88       1.84       1.86       1.95       1.76 
Efficiency ratio(5)....................................      57.00       58.40      57.50      56.10      60.90      58.00 
Average interest-earning assets to average                                                                                 
  interest-bearing liabilities.........................       1.06        1.05       1.05       1.04       1.02       1.03 
Book value per common share............................     $11.48      $11.31     $10.55     $ 9.71     $ 9.36     $10.65 
Cash dividends declared per common share...............     $ 0.05      $ 0.05     $   --     $   --     $   --     $   -- 
Number of full service banking offices.................         14          14         14         13         13         14 
ASSET QUALITY RATIOS:                                                                                                      
Nonperforming loans to total loans.....................       2.75%       3.29%      3.59%      5.83%      8.54%     11.77%
Nonperforming loans to total assets....................       1.03        1.25       1.52       2.75       4.56       6.40 
Nonperforming assets to total assets...................       1.51        1.79       2.16       4.81       7.57       9.10 
Allowance for loan losses to nonperforming loans.......      62.46       54.14      60.94      32.99      27.01      23.76 
Allowance for loan losses to total loans...............       1.72        1.78       2.19       1.92       2.31       2.80 

---------------                                                                 

(1) The cumulative effect of accounting change represents the adoption of       
   Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."                                                                 
(2) For 1993, both primary and fully diluted loss per common share, based on    
loss before cumulative effect of accounting change, was $1.78.          

(3) Data provided for the three months ended March 31, 1997 is shown on an      
annualized basis.                                                       

(4) Core deposits are comprised of savings, money market and NOW accounts.      

(5) The efficiency ratio is defined as general and administrative expenses as a 
percentage of net interest and dividend income plus noninterest income  
excluding net gain (loss) on sales of assets.                           

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SELECTED CONSOLIDATED PRO FORMA FINANCIAL DATA

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following tables set forth certain selected consolidated pro forma
financial data for AFC and GNYSB as if the Merger had become effective on March 
31, 1997 in the case of the selected statement of financial condition data      
presented, and as if the Merger had become effective on January 1, 1996, in the 
case of the statements of operations data presented. The unaudited pro forma    
data in the tables assume that the Merger is accounted for using the purchase   
method of accounting. This table should be read in conjunction with, and is     
qualified in its entirety by, the historical financial statements, including the
notes thereto, of AFC and GNYSB incorporated by reference herein and the more   
detailed pro forma financial information, including the notes thereto, appearing
elsewhere in this Joint Proxy Statement-Prospectus. See "INCORPORATION OF       
CERTAIN DOCUMENTS BY REFERENCE" and "UNAUDITED PRO FORMA COMBINED CONDENSED     
CONSOLIDATED FINANCIAL INFORMATION." The unaudited pro forma statements do not  
reflect any income and expense adjustments which may result from the            
consolidation of the operations of AFC and GNYSB. The unaudited pro forma       
statements will not be indicative of the results that actually would have       
occurred had the Merger been consummated on the dates indicated, or which may be
attained in the future.                                                         

                                                        [Enlarge/Download Table]

SELECTED STATEMENT OF FINANCIAL CONDITION DATA:                                      AT MARCH 31, 1997   
                                                                                     ------------------  
                                                                                                         
Total assets........................................................................    $ 10,294,045     
Securities available-for-sale.......................................................       2,532,394     
Securities held-to-maturity.........................................................       3,278,449     
Loans and investments in real estate held-for-sale..................................          33,413     
Loans receivable, net...............................................................       3,677,148     
Real estate owned and investments in real estate, net...............................          21,456     
Deposits............................................................................       6,177,222     
Borrowed funds......................................................................       3,195,655     
Stockholders' equity................................................................         841,039     

                                                        [Enlarge/Download Table]

                                                                                          FOR THE             FOR THE     
                                                                                     THREE MONTHS ENDED     YEAR ENDED    
SELECTED STATEMENTS OF OPERATIONS DATA:                                                MARCH 31, 1997    DECEMBER 31, 1996
                                                                                     ------------------  -----------------
                                                                                                                          
Interest income.....................................................................     $  171,689         $   662,310   
Interest expense....................................................................        104,561             408,158   
                                                                                         ----------          ----------   
Net interest income.................................................................         67,128             254,152   
Provision for loan losses...........................................................            500               5,463   
                                                                                         ----------          ----------   
Net interest income after provision for loan losses.................................         66,628             248,689   
Non-interest income.................................................................          5,512              24,519   
Non-interest expense................................................................         42,145             191,734   
                                                                                         ----------          ----------   
Income before income taxes..........................................................         29,995              81,474   
Income taxes........................................................................         12,448              36,989   
                                                                                         ----------          ----------   
Net income..........................................................................     $   17,547         $    44,485   
                                                                                         ==========          ==========   
Primary weighted average common stock equivalents...................................     26,934,752          26,492,540   
Fully diluted weighted average common stock equivalents.............................     26,935,780          27,201,531   

                                                        [Enlarge/Download Table]

                                                                                       AT OR FOR THE       FOR THE YEAR   
                                                                                     THREE MONTHS ENDED        ENDED      
                                                                                       MARCH 31, 1997    DECEMBER 31, 1996
                                                                                     ------------------  -----------------
                                                                                                                          
PER COMMON SHARE DATA(1):                                                                                                 
Primary earnings per common share...................................................     $     0.60         $      1.45   
Fully diluted earnings per common share.............................................           0.60                1.41   
Cash dividends declared.............................................................           0.11                0.43   
Book value..........................................................................          29.55                  --   
Tangible book value.................................................................          19.92                  --   
SELECTED FINANCIAL RATIOS(1):                                                                                             
Return on average assets............................................................           0.70%               0.54%  
Return on average stockholders' equity..............................................           8.32                6.20   
Stockholders' equity to total assets................................................           8.17                  --   
General and administrative expense to average assets................................           1.42                1.75   
Efficiency ratio....................................................................          49.39               52.09   
Average tangible stockholders' equity to average tangible assets....................           5.96                  --   

---------------                                                                 

(1) Per Common Share Data and Selected Financial Ratios are presented only for  
    data relating to the pro forma combined condensed consolidated statements of
operations for the year ended December 31, 1996 and for the three months
  ended March 31, 1997 and data relating to the pro forma combined condensed
consolidated statement of financial condition at March 31, 1997. Average
assets and average stockholders' equity for the periods presented were  
calculated assuming the Merger was consummated on December 31, 1996.    

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COMPARATIVE PER SHARE DATA

    The following table sets forth for AFC Common Stock and GNYSB Common Stock
certain historical, pro forma and pro forma equivalent per share financial      
information. The pro forma and pro forma equivalent per share information gives 
effect to the Merger as if the Merger had been effective on the dates presented,
in the case of the book value data presented, and as if the Merger had become   
effective January 1, 1996, in the case of the net income and dividends declared 
data presented. The pro forma data in the tables assumes that the Merger is     
accounted for using the purchase method of accounting. See "THE                 
MERGER -- Accounting Treatment." The information presented herein is based on,  
and is qualified in its entirety by, the historical financial statements,       
including the notes thereto, of AFC and GNYSB incorporated by reference herein  
and the pro forma financial information, including the notes thereto, appearing 
elsewhere in this Joint Proxy Statement-Prospectus, and should be read in       
conjunction therewith. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and
"UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL INFORMATION." The
pro forma and equivalent pro forma per share data in the following tables are   
presented for comparative purposes only and are not necessarily indicative of   
what the combined financial position or results of operations would have been   
had the Merger been consummated during the periods or as of the date for which  
such pro forma tables are presented.                                            

                                                        [Enlarge/Download Table]

                                                          AFC AND                        75% OF    
                                          HISTORICAL       GNYSB                     PER EQUIVALENT
                                        ---------------  PRO FORMA   PER EQUIVALENT      GNYSB     
PER COMMON SHARE                         AFC     GNYSB   COMBINED    GNYSB SHARE(1)     SHARE(2)   
--------------------------------------  ------   ------  ---------   --------------  --------------
                                                                                                   
NET INCOME                                                                                         
For the year ended December 31, 1996:                                                              
  Primary.............................  $ 1.77   $0.83    $  1.45(3)     $ 0.73          $ 0.55    
  Fully diluted.......................    1.71    0.77       1.41(3)       0.71            0.53    
For the three months ended March 31,                                                               
  1997:                                                                                            
  Primary.............................    0.72    0.21       0.60          0.30            0.23    
  Fully diluted.......................    0.72    0.20       0.60          0.30            0.23    
CASH DIVIDENDS DECLARED                                                                            
For the year ended December 31,                                                                    
  1996................................    0.43    0.05       0.43(4)       0.22            0.17    
For the three months ended March 31,                                                               
  1997................................    0.11    0.05       0.11(4)       0.06            0.05    
BOOK VALUE(5)                                                                                      
As of December 31, 1996...............   27.42   11.31      29.46         14.73           11.05    
As of March 31, 1997(6)...............   27.51   11.48      29.55         14.78           11.09    

---------------                                                                 

(1) Assuming the conversion of each share of GNYSB Common Stock into 0.50 of a  
share of AFC Common Stock.                                              
(2) Per equivalent GNYSB share multiplied by 0.75. Shown for comparative        
purposes only.                                                          
(3) Does not take into consideration any operating efficiencies that may be     
realized as a result of the Merger.                                     
(4) Pro forma cash dividends represents the AFC historical amount. On April 16, 
1997, the AFC Board increased its regular quarterly dividend on the AFC 
Common Stock to $0.15 per share.                                        

(5) Book value per common share calculated after giving effect to book value per
share for all or any outstanding and/or allocated preferred shares.     

(6) GNYSB historical book value per share as of March 31, 1997, as adjusted, is 
$10.71. For a description of the adjustment, see Note B to "Notes to    
 Unaudited Pro Forma Combined Condensed Consolidated Financial Statements,
December 31, 1996 and March 31, 1997."                                  

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THE MEETINGS

GNYSB MEETING                                                                   

General.  Each copy of this Joint Proxy Statement-Prospectus mailed to
holders of GNYSB Common Stock and GNYSB Series A Preferred Stock is accompanied 
by a white proxy card furnished in connection with the GNYSB Board's            
solicitation of proxies for use at the GNYSB Meeting. The GNYSB Meeting is      
scheduled to be held on August 1, 1997, at 9:30 a.m., Eastern Time, at The Grand
Prospect Hall, 263 Prospect Avenue, Brooklyn, New York 11215. At the GNYSB      
Meeting, stockholders will consider and vote upon (i) a proposal to approve the 
Merger Agreement and (ii) the Additional Proposal. See "ADDITIONAL PROPOSAL."   

HOLDERS OF GNYSB COMMON STOCK AND GNYSB SERIES A PREFERRED STOCK ARE  
REQUESTED TO PROMPTLY COMPLETE, SIGN AND DATE THE ACCOMPANYING WHITE PROXY CARD 
AND RETURN IT PROMPTLY TO GNYSB IN THE ENCLOSED POSTAGE-PAID, ADDRESSED         
ENVELOPE.                                                                       

 GNYSB STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS.                                                                    

     Recommendation of the Board of Directors.  THE GNYSB BOARD HAS APPROVED THE
MERGER AGREEMENT AND HAS DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF 
GNYSB AND ITS STOCKHOLDERS. THE GNYSB BOARD THEREFORE UNANIMOUSLY RECOMMENDS    
THAT GNYSB'S STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE     
ADDITIONAL PROPOSAL.                                                            

See "THE MERGER -- Background of and Reasons for the Merger -- GNYSB's
Reasons for the Merger."                                                        

   Record Date.  The GNYSB Board has fixed the close of business on June 19,
1997 as the record date for the determination of holders of GNYSB Common Stock  
and GNYSB Series A Preferred Stock entitled to receive notice of and to vote at 
the GNYSB Meeting. Only holders of record of GNYSB Common Stock and GNYSB Series
A Preferred Stock at the close of business on the GNYSB Record Date are entitled
to receive notice of and to vote at the GNYSB Meeting.                          

     Voting and Solicitation of Proxies.  GNYSB stockholders will be entitled to
one vote for each share of GNYSB Common Stock and GNYSB Series A Preferred Stock
held of record as of the close of business on the GNYSB Record Date on each     
matter to be voted upon at the GNYSB Meeting. The presence in person or by proxy
of the holders of at least a majority of the aggregate number of shares         
outstanding of GNYSB Common Stock and GNYSB Series A Preferred Stock on the     
GNYSB Record Date is necessary to constitute a quorum at the GNYSB Meeting.     
Holders of GNYSB Series B Preferred Stock are not entitled to vote at the GNYSB 
Meeting.                                                                        

The shares of GNYSB Common Stock and GNYSB Series A Preferred Stock   
represented by properly executed proxies received at or prior to the GNYSB      
Meeting and not subsequently revoked prior to the vote at the GNYSB Meeting will
be voted as directed in such proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES     
REPRESENTED BY PROPERLY EXECUTED PROXIES WILL BE VOTED FOR APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT AND FOR THE ADDITIONAL PROPOSAL. However, no proxy which
is voted against the proposal to approve the Merger Agreement will be voted in  
favor of the Additional Proposal by the proxies pursuant to such discretion.    

    Any holder of GNYSB Common Stock or GNYSB Series A Preferred Stock who has
executed and delivered a proxy may revoke it at any time before it is voted by  
attending the GNYSB Meeting and voting in person or by giving notice of         
revocation in writing or submitting a signed proxy card bearing a later date to 
GNYSB, at its administrative headquarters at One Penn Plaza, New York, New York 
10119, provided that such notice or proxy card is actually received by GNYSB    
before the vote of stockholders. A proxy will not be revoked by death or        
supervening incapacity of the stockholder executing the proxy unless, before the
vote, notice of such death or incapacity is filed with the Corporate Secretary  
or other person responsible for tabulating votes on behalf of GNYSB.            

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     The cost of soliciting proxies from holders of GNYSB Common Stock and GNYSB
Series A Preferred Stock in the form enclosed herewith will be borne by GNYSB.  
Such solicitation will be made by mail but also may be made by telephone or in  
person by the directors, officers and employees of GNYSB (who will receive no   
additional compensation for doing so). GNYSB has retained Georgeson & Company,  
Inc. to assist in such solicitation. The fee to be paid to such firm is not     
expected to exceed $20,000, plus reasonable out-of-pocket costs and expenses    
authorized by GNYSB. In addition, GNYSB will make arrangements with brokerage   
firms and other custodians, nominees and fiduciaries to send proxy materials to 
their principals and will reimburse such parties for their expenses in doing so.

  A representative of GNYSB's independent auditors, KPMG Peat Marwick LLP,
will not be present at the GNYSB Meeting.                                       

Vote Required.  The affirmative vote of two-thirds of the aggregate   
outstanding shares on the GNYSB Record Date of GNYSB Common Stock and GNYSB     
Series A Preferred Stock entitled to vote at the GNYSB Meeting, voting as a     
single class, is required in order to approve and adopt the Merger Agreement. In
addition, the affirmative vote of a majority of the votes present in person or  
by proxy and entitled to vote at the GNYSB Meeting is required to approve the   
Additional Proposal. A failure to return a properly executed proxy card or to   
vote in person or abstaining from voting will have the same effect as a vote    
against the Merger Agreement. An abstention, with respect to the Additional     
Proposal, will have the effect of a vote against the Additional Proposal. Broker
non-votes will not be counted as having been voted in person or by proxy at the 
GNYSB Meeting and will have the same effect as a vote against the Merger        
Agreement. In contrast, shares underlying broker non-votes will have no effect  
on the vote on the Additional Proposal. As of the GNYSB Record Date, there were 
a total of 13,714,485 shares of GNYSB Common Stock and 1,477,802 shares of GNYSB
Series A Preferred Stock outstanding and entitled to be voted at the GNYSB      
Meeting.                                                                        

   As of April 30, 1997, GNYSB's directors and executive officers (and their
affiliates) (22 persons) beneficially owned and had the power to vote 271,109   
shares of GNYSB Common Stock, beneficially owned, but did not have the right to 
vote approximately 84,133 shares of GNYSB Common Stock held in the GNYSB        
Incentive Savings Plan and had a beneficial interest in, and the right to direct
the voting of, approximately 143,195 shares of GNYSB Common Stock and GNYSB     
Series A Preferred Stock held in the GNYSB ESOP accounts. Such shares of GNYSB  
Common Stock and GNYSB Series A Preferred Stock which GNYSB directors and       
executive officers (and their affiliates) have the right to vote, or direct the 
voting thereof, represent approximately 2.73%, as of April 30, 1997, of the     
outstanding GNYSB Common Stock and GNYSB Series A Preferred Stock which may be  
voted at the GNYSB Meeting. Such persons have indicated their intention to vote,
or direct the voting of, all such shares, in favor of the Merger Agreement and  
for the Additional Proposal. See "BENEFICIAL OWNERSHIP OF GNYSB COMMON STOCK."  
The Trustee of the GNYSB ESOP is obligated to vote unallocated shares and shares
for which no direction has been received in the same proportion as shares for   
which such voting directions have been received from participants so long as    
such vote is in accordance with the provisions of ERISA. As of April 30, 1997,  
AFC, its subsidiaries, and the directors and executive officers of AFC,         
beneficially owned 240,000 shares, or approximately 1.75%, of GNYSB Common      
Stock. Such persons have indicated their intention to vote, or direct the voting
of, all such shares, in favor of the Merger Agreement and for the Additional    
Proposal.                                                                       

AFC MEETING                                                                     

General.  Each copy of this Joint Proxy Statement-Prospectus mailed to
holders of AFC Common Stock is accompanied by a proxy card furnished in         
connection with the AFC Board's solicitation of proxies for use at the AFC      
Meeting. The AFC Meeting is scheduled to be held on August 1, 1997, at 9:30     
a.m., Eastern Time, at the New Hyde Park Inn, 214 Jericho Turnpike, New Hyde    
Park, New York 11040. At the AFC Meeting, stockholders will consider and vote   
upon (i) a proposal to approve the issuance of the Merger Shares in connection  
with the Merger, (ii) a proposal to approve the Certificate Amendment and (iii) 
the Additional Proposal. See "ADDITIONAL PROPOSAL."                             

  HOLDERS OF AFC COMMON STOCK ARE REQUESTED TO COMPLETE, SIGN AND DATE THE
ACCOMPANYING BLUE PROXY CARD AND RETURN IT PROMPTLY TO AFC IN THE ENCLOSED      
POSTAGE-PAID, ADDRESSED ENVELOPE.                                               

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  Recommendation of the Board of Directors.  THE AFC BOARD HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND HAS DETERMINED THAT THE MERGER, THE ISSUANCE  
OF THE MERGER SHARES PURSUANT THERETO AND THE CERTIFICATE AMENDMENT ARE IN THE  
BEST INTERESTS OF AFC AND ITS STOCKHOLDERS. THE AFC BOARD THEREFORE UNANIMOUSLY 
RECOMMENDS THAT AFC'S STOCKHOLDERS VOTE FOR APPROVAL OF THE ISSUANCE OF THE     
MERGER SHARES, THE CERTIFICATE AMENDMENT AND THE ADDITIONAL PROPOSAL.           

See "THE MERGER -- Background of and Reasons for the Merger -- AFC's  
Reasons for the Merger."                                                        

 Record Date.  The AFC Board has fixed the close of business on June 23,
1997 as the record date for the determination of holders of AFC Common Stock    
entitled to receive notice of and to vote at the AFC Meeting. Only holders of   
record of AFC Common Stock at the close of business on the AFC Record Date are  
entitled to receive notice of and to vote at the AFC Meeting.                   

   Voting and Solicitation of Proxies.  AFC stockholders will be entitled to
one vote for each share of AFC Common Stock held of record as of the close of   
business on the AFC Record Date on each matter to be voted upon at the AFC      
Meeting. The presence in person or by proxy of the holders of at least a        
majority of the total number of shares of AFC Common Stock outstanding on the   
AFC Record Date is necessary to constitute a quorum at the AFC Meeting.         

 The shares of AFC Common Stock represented by properly executed proxies
received at or prior to the AFC Meeting and not subsequently revoked prior to   
the vote at the AFC Meeting will be voted as directed in such proxies. IF       
INSTRUCTIONS ARE NOT GIVEN, SHARES REPRESENTED BY PROPERLY EXECUTED PROXIES WILL
BE VOTED FOR APPROVAL OF THE ISSUANCE OF THE MERGER SHARES, THE CERTIFICATE     
AMENDMENT AND THE ADDITIONAL PROPOSAL. However, no proxy which is voted against 
the proposal to approve the issuance of the Merger Shares or the Certificate    
Amendment will be voted in favor of the Additional Proposal by the proxies      
pursuant to such discretion.                                                    

   Any holder of AFC Common Stock who has executed and delivered a proxy may
revoke it at any time before it is voted by attending and voting in person at   
the AFC Meeting or by giving written notice of revocation or submitting a signed
proxy card bearing a later date to AFC, at One Astoria Federal Plaza, Lake      
Success, New York 11042, attention: Corporate Secretary, provided that such     
notice or proxy card is actually received by AFC prior to the vote of           
stockholders.                                                                   

     The cost of soliciting proxies from holders of AFC Common Stock in the form
enclosed herewith will be borne by AFC. Such solicitation will be made by mail  
but also may be made by telephone or in person by the directors, officers or    
employees of AFC (who will receive no additional compensation for doing so). AFC
has retained Kissell-Blake, Inc. to assist in such solicitation. The fee to be  
paid to such firm is not expected to exceed $5,000, plus reasonable             
out-of-pocket costs and expenses. In addition, AFC will make arrangements with  
brokerage firms and other custodians, nominees and fiduciaries to send proxy    
materials to their principals and will reimburse such parties for their expenses
in doing so.                                                                    

     A representative of AFC's independent auditors, KPMG Peat Marwick LLP, will
not be present at the AFC Meeting.                                              

Vote Required.  Assuming a quorum is present at the AFC Meeting, the  
affirmative vote of the holders of a majority of the total votes cast at the AFC
Meeting and entitled to vote thereon is required for approval of the issuance of
the Merger Shares and the Additional Proposal and the affirmative vote of the   
holders of a majority of shares of AFC Common Stock outstanding is required for 
approval of the Certificate Amendment. Shares represented at the AFC Meeting and
abstaining from voting will be counted as shares represented at the AFC Meeting.
Therefore an abstention will have the same effect as a vote against the issuance
of the Merger Shares, the Certificate Amendment and the Additional Proposal.    
Broker non-votes will not be counted as having been voted in person or by proxy 
at the AFC Meeting and will have the same effect as a vote against the          
Certificate Amendment, but will have no effect on the vote on the issuance of   
the Merger Shares or the Additional Proposal. As of the AFC Record Date, there  
were 20,972,257 shares of AFC Common Stock outstanding and entitled to vote at  
the AFC Meeting.                                                                

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The directors and executive officers of AFC and their affiliates      
beneficially owned, as of April 30, 1997, 2,081,461 shares, or approximately    
9.32% of the outstanding shares, of AFC Common Stock and all such persons have  
indicated a present intent to vote their shares in favor of approval of the     
issuance of the Merger Shares, the Certificate Amendment and the Additional     
Proposal. See "BENEFICIAL OWNERSHIP OF AFC COMMON STOCK." As of April 30, 1997, 
the directors and executive officers of GNYSB and their affiliates beneficially 
owned 1,304 shares of AFC Common Stock.                                         

THE MERGER

  The following information, insofar as it relates to matters contained in
the Merger Agreement or the Stock Option Agreement, is qualified in its entirety
by reference to the Merger Agreement and the Stock Option Agreement, which are  
attached hereto as Appendix A and Appendix B, respectively, and are incorporated
herein by reference. AFC and GNYSB stockholders are urged to read the Merger    
Agreement and the Stock Option Agreement in their entirety.                     

PARTIES TO THE MERGER                                                           

 AFC and Astoria Federal.  AFC is a Delaware corporation incorporated on
June 14, 1993, and is the holding company for Astoria Federal. The principal    
business of AFC is the operation of its wholly-owned subsidiary, Astoria        
Federal, a federally-chartered savings and loan association. Astoria Federal's  
principal business is attracting retail deposits from the general public and    
investing those deposits, together with funds generated from operations,        
principal repayments and borrowings, primarily in one-to-four family residential
mortgage loans and mortgage-backed and mortgage-related securities and, to a    
lesser extent, commercial real estate loans, multi-family mortgage loans and    
consumer loans. In addition, Astoria Federal invests in mortgage-backed and     
mortgage-related securities, securities issued by the U.S. Government and       
Federal agencies and other securities. At March 31, 1997, AFC had total         
consolidated assets of $7.7 billion, deposits of $4.5 billion and stockholders' 
equity of $584.4 million. As of March 31, 1997, Astoria Federal had 45 retail   
banking office locations with thirteen in Queens County, New York, eighteen in  
Nassau County, New York, six in Suffolk County, New York, and eight in the      
upstate New York counties of Westchester, Chenango and Otsego. The principal    
executive offices of AFC are located at One Astoria Federal Plaza, Lake Success,
New York 11042-1085 and its telephone number is (516) 327-3000. Astoria         
Federal's deposits are insured by the SAIF of the FDIC.                         

 GNYSB.  The Greater New York Savings Bank is a New York State-chartered
capital stock savings bank which was originally organized as a New York         
State-chartered mutual savings bank in 1897 in the Park Slope section of        
Brooklyn, New York. At March 31, 1997, GNYSB had total assets of $2.6 billion,  
deposits of $1.7 billion and stockholders' equity of $212.8 million.            

     As of March 31, 1997, GNYSB conducted its retail banking activities through
nine full-service branch offices located in Brooklyn, New York, three           
full-service branch offices in Nassau County, New York and one full-service     
branch office in each of Queens and Suffolk Counties, New York. GNYSB has       
received regulatory approval to open three new full-service branches in         
Brooklyn. GNYSB and AFC intend to proceed with the opening of these facilities. 
GNYSB has its administrative headquarters in Manhattan, New York at One Penn    
Plaza, New York, New York 10119 and its lending office in Mineola, New York.    
GNYSB's telephone number is (212) 613-4000. GNYSB's deposits are insured by the 
Bank Insurance Fund of the FDIC.                                                

GNYSB has pending a proposed reorganization of GNYSB as a wholly-owned
subsidiary of GNYBancorp. This reorganization has received the approval of      
GNYSB's stockholders. As a result of the Merger Agreement, GNYSB has suspended  
its plan to form a holding company. If the Merger is consummated, such proposed 
reorganization will not occur.                                                  

EFFECTS OF THE MERGER                                                           

    Pursuant to the terms of the Merger Agreement, subject to the satisfaction
or waiver (where permissible) of certain conditions, including, among other     
things, the receipt of all necessary regulatory approvals, the                  

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expiration of all waiting periods in respect thereof, the approval of the Merger
Agreement by the requisite vote of the stockholders of GNYSB and the approval of
the issuance of the Merger Shares and the Certificate Amendment by the requisite
vote of the stockholders of AFC, GNYSB will be merged with and into Astoria     
Federal. GNYSB stockholders will receive the consideration described below in   
"-- Merger Consideration and Election, Allocation and Proration Procedures."    
Astoria Federal shall be the surviving corporation in the Merger. Upon          
consummation of the Merger, the separate corporate existence of GNYSB shall     
terminate.                                                                      

Each outstanding share of AFC Common Stock at the Effective Time will 
remain outstanding and unchanged as a result of the Merger.                     

EFFECTIVE TIME                                                                  

The Merger will become effective at the date and time set forth in the
articles of combination which will be filed with the OTS in accordance with     
applicable law. The articles of combination will be filed not later than the    
last business day of the month in which the expiration of the last applicable   
waiting period in connection with approvals of governmental authorities shall   
occur and all conditions to the consummation of the Merger Agreement are        
satisfied or waived and will be effective after the close of business on such   
date, unless another date is agreed to in writing by AFC and GNYSB (the "Closing
Date"). See "-- Conditions to the Consummation of the Merger." It is expected   
that a period of time will elapse between the Meetings and the Effective Time   
while the parties seek to obtain the regulatory approvals required to consummate
the Merger. There can be no assurance that such regulatory approvals will be    
obtained, and if obtained, there can be no assurance as to the date of any such 
approval. There can likewise be no assurance that the United States Department  
of Justice or the New York State Attorney General will not challenge the Merger 
or, if such a challenge is made, as to the result thereof. See "-- Regulatory   
Approvals."                                                                     

MERGER CONSIDERATION AND ELECTION, ALLOCATION AND PRORATION PROCEDURES          

  General.  The Merger Agreement provides that the aggregate consideration
payable to holders of GNYSB Common Stock in the Merger will consist of 0.5 of a 
share of AFC Common Stock per share of GNYSB Common Stock for 75% of the shares 
of GNYSB Common Stock and $19.00 in cash per share of GNYSB Common Stock for the
remaining 25% of the shares of GNYSB Common Stock. Each share of GNYSB Common   
Stock will be converted in the Merger into the right to receive: (i) 0.5 of a   
share of AFC Common Stock, (ii) $19.00 in cash or (iii) a combination of cash   
and a fraction of a share of AFC Common Stock determined as provided below. The 
actual consideration ultimately received by a stockholder for shares of GNYSB   
Common Stock will depend upon the election, allocation and proration procedures 
described below and the election of other stockholders. The Merger Consideration
may be increased by AFC in the event GNYSB exercises its rights under the Merger
Agreement to deliver to AFC a notice to terminate the Merger Agreement due to   
the price of the AFC Common Stock declining below certain levels established by 
formulas set forth in the Merger Agreement. See "THE MERGER -- Price Based      
Termination."                                                                   

  Elections.  Within three days after the consummation of the Merger, each
record holder of GNYSB Common Stock will be sent materials asking such          
stockholder to elect (an "Election") to receive for its shares of GNYSB Common  
Stock:                                                                          

         (i) 0.5 of a share of AFC Common Stock for each share of GNYSB Common
Stock (a "Stock Election");                                           

       (ii) $19.00 in cash without interest for each share of GNYSB Common
Stock (a "Cash Election");                                            

     (iii) a Stock Election with respect to some of such stockholder's
shares of GNYSB Common Stock and a Cash Election with respect to the  
remaining shares of GNYSB Common Stock held by such holder; or        

          (iv) whatever is left after the election of the other holders of GNYSB
    Common Stock and the application to the extent necessary of certain random
selection procedures (a "No-Election").                               

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Notwithstanding the foregoing, in order to make a Stock Election, the 
number of shares of GNYSB Common Stock a holder must elect to convert to AFC    
Common Stock must equal or exceed 100 shares. Therefore, any holder of GNYSB    
Common Stock who owns less than 100 shares must elect the Cash Election or be   
treated as having made a No-Election. A failure to properly make an election as 
described below will be treated as a No-Election.                               

  NO GAIN OR LOSS WILL BE RECOGNIZED BY HOLDERS OF GNYSB COMMON STOCK AS A
RESULT OF THE MERGER, EXCEPT WHERE ANY CASH CONSIDERATION IS RECEIVED OR TO THE 
EXTENT OF ANY CASH RECEIVED IN LIEU OF A FRACTIONAL SHARE INTEREST IN AFC COMMON
STOCK. SEE "THE MERGER -- MATERIAL FEDERAL INCOME TAX CONSEQUENCES."            

    No Oversubscription.  In the event that the number of shares as to which a
Cash Election has been made does not exceed 25% of the shares of GNYSB Common   
Stock outstanding at the Effective Time and the number of shares as to which a  
Stock Election has been made does not exceed 75% of the shares of GNYSB Common  
Stock outstanding at the Effective Time, then:                                  

     (i) all shares as to which a Cash Election has been made shall be
 converted into the right to receive $19.00 in cash without interest per
share of GNYSB Common Stock;                                          

       (ii) all shares as to which a Stock Election has been made shall be
    converted into the right to receive 0.5 of a share of AFC Common Stock per
share of GNYSB Common Stock; and                                      

         (iii) shares as to which No-Election has been made shall be converted
 into either the right to receive 0.5 of a share of AFC Common Stock per
  share of GNYSB Common Stock or $19.00 per share of GNYSB Common Stock as
  determined by random selection so that 25% of the shares of GNYSB Common
     Stock are converted into the right to receive cash and 75% of the shares of
GNYSB Common Stock are converted into the right to receive AFC Common 
Stock.                                                                

    The random selection process to be used by the Exchange Agent will consist
of drawing by lot or such other process as the Exchange Agent deems equitable   
and necessary to effect the allocations described above.                        

     Oversubscription for Cash.  If the aggregate number of shares as to which a
Cash Election has been made exceeds 25% of the shares of GNYSB Common Stock     
outstanding at the Effective Time, then:                                        

      (i) each share as to which a Stock Election has been made and each
 share as to which No-Election has been made shall be converted into the
right to receive 0.5 of a share of AFC Common Stock; and              

      (ii) each share as to which a Cash Election has been made shall be
  converted into the right to receive a combination of cash and AFC Common
Stock. The amount in cash will be equal to the product, rounded to the
    nearest $0.01, of (x) $19.00 and (y) a fraction (the "Cash Fraction"), the
  numerator of which shall be a number equal to 25% of the shares of GNYSB
     Common Stock outstanding at the Effective Time and the denominator of which
  shall be the total number of shares as to which a Cash Election has been
made. The number of shares of AFC Common Stock will be equal to the   
     product, rounded to four decimal places, of (x) 0.50 and (y) a number equal
 to one minus the Cash Fraction. For example, if the aggregate number of
     shares as to which a Cash Election has been made equals 50%, 75% or 100% of
     the shares of GNYSB Common Stock, the combination would consist of $9.50 in
     cash and 0.25 of a share of AFC Common Stock, $6.33 in cash and 0.3333 of a
 share of AFC Common Stock and $4.75 in cash and 0.375 of a share of AFC
Common Stock, respectively.                                           

   Oversubscription for AFC Common Stock.  If the aggregate number of shares
as to which a Stock Election has been made exceeds 75% of the shares of GNYSB   
Common Stock outstanding at the Effective Time, then:                           

     (i) each share as to which a Cash Election has been made and each
 share as to which No-Election has been made shall be converted into the
right to receive $19.00 in cash without interest; and                 

       (ii) each share as to which a Stock Election has been made shall be
  converted into the right to receive a combination of cash and AFC Common
Stock. The number of shares of AFC Common Stock will be equal to the  
 product, rounded to four decimal places, of (x) 0.50 and (y) a fraction
   (the "Stock Fraction"), the numerator of which shall be a number equal to
75% of the shares of GNYSB Common                                     

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    Stock outstanding at the Effective Time and the denominator of which shall
   be the total number of shares as to which a Stock Election has been made.
 The amount of cash will be equal to the product, rounded to the nearest
$0.01, of (x) $19.00 and (y) a number equal to one minus the Stock    
Fraction. For example, if the aggregate number of shares as to which a
Stock Election has been made equals 90% or 100% of the shares of GNYSB
 Common Stock, the combination would consist of 0.4167 of a share of AFC
     Common Stock and $3.17 in cash and 0.375 of a share of AFC Common Stock and
$4.75 in cash, respectively.                                          

No Guarantee of Chosen Consideration or Equivalent Value.  Because the
Merger provides that the aggregate consideration payable to holders of GNYSB    
Common Stock in the Merger will be fixed such that it consists of 0.5 of a share
of AFC Common Stock per share of GNYSB Common Stock for 75% of the shares of    
GNYSB Common Stock and $19.00 in cash per share of GNYSB Common Stock for the   
remaining 25% of the shares of GNYSB Common Stock, no guarantee can be given    
that the election of any given stockholder of GNYSB will be honored. Rather, the
election by each stockholder will be subject to the election, allocation and    
proration procedures described herein. Thus stockholders may not receive their  
requested form of consideration or combination thereof. Because the market price
of AFC Common Stock may fluctuate and it could be greater than or less than     
$38.00 per share (the price at which the market value of 0.5 of a share of AFC  
Common Stock would equal the cash consideration of $19.00 per share), the market
value of 0.5 of a share of AFC Common Stock received per share could be less    
than or greater than the cash price per share of $19.00.                        

     Election Procedures.  All Elections will be required to be made on a Letter
of Transmittal and Election Form. To make an effective Election with respect to 
shares of GNYSB Common Stock, the holder thereof must, in accordance with the   
Letter of Transmittal and Election Form, (i) complete properly and return the   
Letter of Transmittal and Election Form to the Exchange Agent, (ii) either (a)  
deliver therewith his or her certificates representing shares of GNYSB Common   
Stock (the "GNYSB Stock Certificates") with respect to such shares (or an       
appropriate guarantee of delivery thereof), or (b) complete the procedure for   
delivery by book-entry transfer of such shares on a timely basis, and (iii)     
deliver therewith any other required documents, prior to 5:00 p.m. on the 10th  
business day following mailing of the Letter of Transmittal and Election Form   
(the "Election Deadline").                                                      

     GNYSB STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY AND
SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT UNTIL A GNYSB STOCKHOLDER HAS     
RECEIVED THE LETTER OF TRANSMITTAL AND ELECTION FORM.                           

     A holder of shares of GNYSB Common Stock having a preference as to the form
of consideration to be received for his or her shares of GNYSB Common Stock     
should make an Election because shares as to which an Election has been made    
will be given priority in allocating such consideration over shares as to which 
an Election is not received. Neither GNYSB nor the GNYSB Board makes any        
recommendation as to whether stockholders should elect to receive the Cash      
Consideration or the Stock Consideration in the Merger. Each holder of GNYSB    
Common Stock must make his or her own decision with respect to such election.   

  GNYSB Series A Preferred Stock.  All of the shares of the GNYSB Series A
Preferred Stock are held by the GNYSB ESOP Trustee. The shares held in the GNYSB
ESOP and allocated to participants' accounts are voted by the beneficial owners 
of such shares based on directions received from such beneficial owners by the  
trustee of the GNYSB ESOP. Unallocated shares and any allocated shares with     
respect to which no voting instructions have been received will be voted by the 
trustee of the GNYSB ESOP in the same manner and proportion as the allocated    
shares with respect to which voting instructions have been received, as long as 
such vote is in accordance with the provisions of ERISA.                        

    1,477,802 shares of GNYSB Series A Preferred Stock were outstanding on the
Record Date, but may be redeemed or converted into shares of GNYSB Common Stock 
at any time after the date of this Joint Proxy Statement-Prospectus and prior to
the anticipated closing date of the Merger. The Merger Agreement requires that  
if certain conditions are satisfied GNYSB is obligated to redeem all of the     
shares of the GNYSB Series A Preferred Stock prior to the consummation of the   
Merger. These conditions include (i) the approval of the Merger Agreement and   
related transactions by the holders of GNYSB and AFC stock entitled to vote     
thereon, (ii) the receipt of all required regulatory approvals, (iii) the waiver
by AFC of all conditions to its                                                 

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obligations to consummate the Merger and (iv) a market price of AFC Common Stock
of at least $34.125. The redemption price in effect after July 1, 1997 for the  
GNYSB Series A Preferred Stock is $13.20 plus accrued dividends to the date of  
redemption. The effectiveness of such redemption is a condition to the          
consummation of the Merger. GNYSB may, of its own accord, provide a notice of   
redemption to the GNYSB ESOP Trustee at any time. However, it has not yet done  
so because it was determined that it was in the best interest of both GNYSB and 
the GNYSB ESOP and its participants to receive a dividend for the full semi-    
annual period ending June 30, 1997. AFC has requested that GNYSB exercise its   
right to call the GNYSB Series A Preferred Stock for redemption prior to the    
time frames set forth in the Merger Agreement, and GNYSB has advised AFC that it
will consider exercising such right to cause a redemption to occur shortly after
the payment of such dividend. However, no assurance can be given that GNYSB will
exercise such right within such time frame. As long as the market price of the  
GNYSB Common Stock exceeds approximately $14.00, GNYSB expects that the GNYSB   
ESOP Trustee will, in lieu of allowing such shares to be redeemed for cash,     
convert such shares into shares of GNYSB Common Stock with a conversion ratio of
0.9448 of a share of GNYSB Common Stock for each share of GNYSB Series A        
Preferred Stock. Notwithstanding the foregoing, GNYSB intends to seek the GNYSB 
ESOP Trustee's agreement to convert the GNYSB Series A Preferred Stock prior to 
the time GNYSB is obligated to redeem such shares. Shares of GNYSB Common Stock 
held by the GNYSB ESOP at the Effective Time will be subject to the election,   
allocation and proration procedures in the same manner as all other shares of   
GNYSB Common Stock. AFC intends to enforce its rights to require the issuance of
a notice of redemption to the GNYSB ESOP Trustee, which will require the GNYSB  
ESOP Trustee to choose either to allow such redemption or exercise its right of 
conversion at the conversion ratio of .9448 per share. However, if for any      
reason AFC does not do so and GNYSB does not of its own accord exercise its     
right to call the GNYSB Series A Preferred Stock for redemption, the GNYSB      
Series A Preferred Stock outstanding at the Effective Time of the Merger, under 
the Certificate of Designations, would be deemed immediately prior to the       
Effective Time to have been converted into shares of GNYSB Common Stock at a    
prescribed conversion ratio.                                                    

GNYSB Series B Preferred Stock.  Upon consummation of the Merger, the 
outstanding shares of GNYSB Series B Preferred Stock will be converted into the 
AFC Series B Preferred Stock, a newly-created series of preferred stock of AFC  
with substantially identical and no less favorable terms.                       

Miscellaneous.  If AFC effects a stock dividend, reclassification,    
recapitalization, split-up, combination, exchange of shares or similar          
transaction prior to the Effective Time, an appropriate adjustment to the       
consideration will be made.                                                     

    No fractional shares of AFC Common Stock will be issued in connection with
the Merger and cash will be paid in lieu thereof.                               

    Upon consummation of the Merger, any shares of GNYSB Common Stock that are
owned by GNYSB as treasury stock or that are held directly or indirectly by AFC 
other than in a fiduciary capacity or in satisfaction of a debt previously      
contracted will be canceled and retired and no payment will be made with respect
thereto and such shares will not be considered for purposes of the foregoing. In
addition, shares of GNYSB Common Stock with respect to which dissenters' rights 
have been asserted and not withdrawn will not be converted into the right to    
receive cash or AFC Common Stock as provided in the Merger Agreement and will be
considered No-Election Shares for purposes of applying the allocation and       
proration procedures described herein. For certain information concerning the   
historical market prices of GNYSB Common Stock and AFC Common Stock, see        
"COMPARATIVE COMMON STOCK PRICE AND DIVIDEND INFORMATION."                      

     Dissenting Stockholders.  Any Dissenting Shares shall not be converted into
the right to receive the Merger Consideration unless and until the holder shall 
have failed to perfect, or shall have effectively withdrawn or lost, his right  
to dissent. If any such holder shall have so failed to perfect or shall have    
effectively withdrawn or lost such right, each share of such holder's GNYSB     
Common Stock shall be deemed to be No-Election Shares and shall be subject to   
the allocation and proration procedures described herein. See "-- Dissenters'   
Rights."                                                                        

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BACKGROUND OF AND REASONS FOR THE MERGER                                        

     Background of the Merger.  In early January of 1997, Mr. George L. Engelke,
Jr., the chief executive officer of AFC, called Mr. Gerard C. Keegan, the chief 
executive officer of GNYSB, to request a meeting. After informing the GNYSB     
Board at a regularly scheduled meeting on January 22, 1997, Mr. Keegan agreed to
meet with Mr. Engelke on January 23, 1997. At this meeting, Mr. Engelke raised  
with Mr. Keegan the concept of a possible combination between AFC and GNYSB. Mr.
Keegan informed the GNYSB Board of Mr. Engelke's interest at a regularly        
scheduled meeting of the GNYSB Board on February 13, 1997. Although the GNYSB   
Board recognized that there may well be a strategic fit between the two         
institutions and strategic benefits to such a combination, it declined to pursue
Mr. Engelke's interest because of the general nature of the interest and absence
of specifics as to a proposed combination and the manner in which it would be   
executed and implemented. Mr. Keegan called Mr. Engelke on February 14, 1997 and
informed him of the GNYSB Board's determination.                                

On March 7, 1997, Mr. Engelke again contacted Mr. Keegan to arrange a 
meeting to discuss a possible combination. He indicated that, despite GNYSB's   
earlier rejection, his further consideration of a strategic business combination
with GNYSB led him to conclude that there were even more compelling reasons for 
a combination than he had initially thought and that such a combination would   
provide significant benefits to both organizations and their shareholders. At a 
GNYSB Board meeting held on March 13, 1997, it was decided that Mr. Keegan      
should meet again with Mr. Engelke and hear what he had to say. As a result, Mr.
Engelke and Mr. Keegan met on March 16, 1997. At this meeting, Mr. Engelke      
explained to Mr. Keegan, among other things, (i) the strategic focus and plan of
AFC and how he believed GNYSB and its operations were consistent with and would 
facilitate such strategic focus and plan, (ii) the complementary nature of AFC's
and GNYSB's branch networks (location and product mix, as well as service       
orientation) and how a combination of those branch networks could strengthen a  
combined organization, (iii) AFC's views, approaches and commitments to the     
communities and customers it serves and its employees and how they were similar 
to GNYSB's and (iv) certain economic effects and implications of a possible     
combination, including cost savings, and the general effect the foregoing could 
have on the combined organization and its shareholders. After a discussion of   
the foregoing, and the benefits it would have, Mr. Engelke indicated to Mr.     
Keegan that AFC would be willing to pursue a negotiated strategic combination on
an expedited basis with GNYSB at a price of approximately $18 per share in part 
cash and part AFC Common Stock and that AFC would be willing to consider a      
higher price subject in each case to the results of its due diligence as well as
various different combinations of cash and AFC Common Stock.                    

On March 17, 1997, Mr. Keegan received a call from the chief executive
officer of another banking organization (the "Other Organization") expressing an
interest in acquiring GNYSB.                                                    

 Mr. Keegan reported the contact with the chief executive officer of the
Other Organization to the GNYSB Board at a special meeting on March 17, 1997. At
this meeting, he also reported the results of his meeting with Mr. Engelke and  
the GNYSB Board authorized the further consideration of a possible combination  
with AFC, including due diligence on GNYSB and AFC, and the further             
consideration of GNYSB's strategic alternatives. The GNYSB Board authorized the 
further consideration of a possible combination with AFC at such time in part   
because of its assessment regarding AFC's strategic plan and focus and how GNYSB
and its operations were consistent with such focus and plan, the branch network 
strengths of a combined organization, the similarity in AFC's and GNYSB's views,
approaches and commitments to the communities and customers they each serve and 
their respective employees, the strategic benefits that a possible combination  
would have on the combined organization and AFC's stated willingness to pursue a
negotiated strategic combination on an expedited basis with GNYSB at a price of 
approximately $18 per share with the possibility that such price could be higher
and with flexibility with respect to any cash/stock mix.                        

Subsequently, the chief executive officer of the Other Organization   
initiated a series of telephone calls with Mr. Keegan and GNYSB's investment    
bankers, Sandler O'Neill, regarding its interest in GNYSB and seeking the       
opportunity to make a proposal regarding a possible business combination with   
GNYSB. As part of these discussions and at the request of GNYSB, the Other      
Organization submitted a letter intended to address its views on how an         
acquisition by it would impact the communities and customers served by GNYSB and
its employees.                                                                  

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     Discussions and negotiations concerning a possible combination with AFC and
due diligence by both parties continued through a special meeting of the GNYSB  
Board on Thursday March 27, 1997 attended by representatives of Sandler O'Neill,
GNYSB's counsel and the GNYSB Board's counsel at which there was before the     
GNYSB Board a proposal by AFC to combine with GNYSB. This proposal involved the 
exchange by AFC of $19.00 in cash per share for 25% of the shares of GNYSB      
Common Stock and AFC Common Stock with a value of approximately $19.00 per share
for 75% of the shares of GNYSB Common Stock in a combination accounted for as a 
"purchase." Based on the closing price of AFC Common Stock of $38.75 per share  
on March 26 (the day prior to the meeting), this represented an exchange ratio  
of 0.4903 of a share of AFC Common Stock per share of GNYSB Common Stock. At    
this meeting, the GNYSB Board considered, among others, the strategic           
alternatives available to GNYSB, the AFC proposal and the alternatives to the   
AFC proposal, including a possible combination with the Other Organization, and 
their feasibility.                                                              

   As part of the GNYSB Board's deliberations, it instructed Sandler O'Neill
to contact the Other Organization to inquire as to the consideration it would be
willing to provide to GNYSB's shareholders in a combination with GNYSB and its  
ability to move expeditiously to sign a definitive agreement with respect to    
such a transaction. The Other Organization responded with a proposal that       
involved a combination conditioned on "pooling of interests" accounting         
treatment and consideration consisting of a fixed exchange ratio of the Other   
Organization's common stock that had a value of $18.53 per share of GNYSB Common
Stock based on the closing price of the Other Organization's common stock on    
March 27, 1997. Sandler O'Neill asked the Other Organization to increase its    
price and it declined to do so. The Other Organization also indicated that it   
could move expeditiously to enter into a definitive agreement. This proposal was
immediately communicated to the GNYSB Board.                                    

As a result of a decline in the closing price of AFC Common Stock from
$38.75 on March 26, 1997 to $37.875 on March 27, 1997, the value of the exchange
ratio of 0.4903 of a share of AFC Common Stock for each share of GNYSB Common   
Stock declined from $19.00 to $18.57. In light of this decline, GNYSB requested 
AFC to increase the exchange ratio to reflect a value of $19.00 per share based 
on the closing price of AFC Common Stock on March 27, 1997. AFC indicated that  
it would be willing to increase the fixed exchange ratio in its proposal to 0.5,
but demanded, in return, that it be granted a stock option for 19.9% of GNYSB   
Common Stock, which was intended to increase the likelihood that the Merger will
be consummated in accordance with the Merger Agreement. This increased exchange 
ratio had a value of $18.94 based on the closing price of AFC Common Stock on   
March 27, 1997, the last trading day prior to the announcement of the Merger.   

 A special meeting of the AFC Board was held on Thursday, March 27, 1997
attended by representatives of Merrill Lynch and AFC's counsel. At the meeting, 
there was before the AFC Board a proposal to authorize Mr. Engelke to finalize a
definitive agreement for the merger of GNYSB with Astoria Federal on the terms  
presented at the meeting, which proposal was unanimously approved by the AFC    
Board. The material terms presented at the meeting included pricing, the Stock  
Option Agreement, termination provisions, standard representations and          
warranties, negative covenants, customary closing conditions, honoring any      
existing employment agreements between GNYSB and its officers, the cash-out of  
existing stock options of GNYSB, the creation of an advisory board, the addition
of two directors of GNYSB to the AFC Board and Mr. Keegan becoming an officer of
AFC and Astoria Federal with the title of Vice Chairman and Chief Administrative
Officer.                                                                        

 On Saturday March 29, 1997, the GNYSB Board held a special meeting with
representatives of Sandler O'Neill, GNYSB's counsel and the GNYSB Board's       
counsel to further consider the AFC proposal and its alternatives. Sandler      
O'Neill rendered its oral opinion, subsequently confirmed in writing, that, as  
of such date, the consideration to be received in the Merger by the holders of  
GNYSB Common Stock, including the shares of GNYSB Common Stock issued upon the  
conversion of GNYSB Series A Preferred Stock and GNYSB Series B Preferred Stock,
was fair to the holders thereof from a financial point of view. After an        
extensive discussion, the GNYSB Board unanimously determined, based on the      
consideration of the various factors discussed below, to accept the AFC         
proposal.                                                                       

   GNYSB's Reasons for the Merger.  The GNYSB Board has unanimously approved
the Merger Agreement and has determined that the Merger is in the best interests
of GNYSB and its stockholders. The                                              

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GNYSB Board therefore unanimously recommends that holders of GNYSB Common Stock 
and GNYSB Series A Preferred Stock vote FOR the adoption and approval of the    
Merger Agreement. The GNYSB Board believes that the Merger will enable holders  
of GNYSB Common Stock and GNYSB Series A Preferred Stock to realize significant 
value in part on a tax-free basis. In addition, the shareholders would receive a
higher dividend on the AFC Common Stock than that presently received on GNYSB   
Common Stock. See "-- AFC's Reasons for the Merger" and "-- Opinions of         
Financial Advisors -- GNYSB."                                                   

    In reaching its determination that the Merger and the Merger Agreement are
in the best interests of GNYSB and the holders of GNYSB Common Stock, GNYSB     
Series A Preferred Stock and GNYSB Series B Preferred Stock, the GNYSB Board    
considered during the course of its strategic deliberations a number of factors,
both from a short-term and a long-term perspective, including, without          
limitation, the following:                                                      

          (i) The GNYSB Board's familiarity with and review of GNYSB's business,
  financial condition, results of operations and prospects, including, but
not limited to, its level of non-performing assets and troubled debt  
     restructurings, the quality of its loan portfolio and its potential growth,
development, productivity and profitability;                          

         (ii) The current and prospective environment in which GNYSB operates,
including national and local economic conditions, the competitive     
environment for banks and other financial institutions generally, the 
 increased regulatory burden on financial institutions generally and the
trend toward consolidation in the financial services industry;        

        (iii) The GNYSB Board's review with its legal and financial advisors
     of alternatives to the Merger (including its review of the proposal made by
 the Other Organization and the possibility of remaining independent and
growing internally);                                                  

          (iv) The GNYSB Board's review, based in part on presentations by GNYSB
     management and advisors, of AFC's business, financial condition, results of
operations and management and the recent performance of the AFC Common
Stock on both an historical and prospective basis, the strategic fit  
    between the parties, the enhanced opportunities for operating efficiencies
that could result from the Merger and the respective contributions the
parties would bring to a combined institution;                        

     (v) The expectation that the Merger will provide holders of GNYSB
     Common Stock with the opportunity to receive a substantial premium over the
historical trading prices for their shares and that a portion of the  
  consideration received will be tax-free for federal income tax purposes;

   (vi) The review by the GNYSB Board with its legal and financial
 advisors of the provisions of the Merger Agreement and the Stock Option
    Agreement and the limit therein on the total amount AFC could obtain under
the Stock Option Agreement and the termination fee arrangements of $10
million;                                                              

          (vii) The oral presentation by Sandler O'Neill and the oral opinion of
   Sandler O'Neill that the consideration to be received by holders of GNYSB
  Common Stock, including the shares of GNYSB Common Stock issued upon the
    conversion of GNYSB Series A Preferred Stock, and GNYSB Series B Preferred
  Stock is fair to the holders thereof from a financial point of view. See
"-- Opinions of Financial Advisors -- GNYSB;"                         

         (viii) The similarity between AFC's and GNYSB's views, approaches and
commitments to the communities and customers they each serve and their
respective employees;                                                 

          (ix) The expectation that AFC will continue to provide quality service
to the communities and customers served by GNYSB; and                 

          (x) AFC's agreement in the Merger Agreement to form an Employee Merger
 Transition Committee that will include Mr. Keegan, Mr. Engelke and such
     others as they shall mutually select and that will have sole responsibility
for all decisions affecting the employees of GNYSB after the Merger.  

The GNYSB Board did not assign any specific or relative weights to the
factors under consideration.                                                    

     AFC's Reasons for the Merger.  The AFC Board believes that the Merger is in
the best interests of AFC and its stockholders. Accordingly, the AFC Board has  
unanimously approved and adopted the Merger Agreement and recommends that AFC   
stockholders vote FOR the approval and adoption of the transactions related to  
the Merger Agreement.                                                           

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In negotiating the terms of the Merger and in considering its         
recommendation for the approval of the Merger Agreement, the AFC Board          
considered a number of factors including, without limitation, the following:    

        (i) the Merger Consideration to be paid to the GNYSB stockholders in
relation to the market value, book value and earnings per share of the
GNYSB Common Stock;                                                   

          (ii) the AFC Board's review, based in part on presentations by Merrill
   Lynch, its financial advisor, and management, of the business, operations
and financial condition of GNYSB, the prospects of the combined       
  institution, and the increased market presence, economies of scale, cost
   savings opportunities and enhanced opportunities for growth made possible
by the Merger;                                                        

        (iii) the AFC Board's recognition of the complementary nature of the
   markets served and products offered by AFC and GNYSB and expectation that
   the Merger would provide it with opportunities for additional growth, and
permit it to commence operations with a significant market presence in
  Kings County while further enhancing its market presence in Long Island;

(iv) the impact the Merger is anticipated to have on AFC's  
consolidated results of operations, including anticipated cost savings
     (estimated to be approximately $26.3 million per annum ($13.6 million after
  tax) representing 45% of GNYSB projected 1997 non-interest expense base)
   resulting from consolidation in certain areas such that management of AFC
    estimated that the transaction would be accretive to earnings per share in
1998 by 4.4%, and accretive to cash earnings per share (calculated as 
  reported earnings plus non-cash charges for amortization of goodwill and
 amortization relating to certain employee stock plans) in 1998 by 6.7%,
with estimated pro forma earnings per share of $3.60 and estimated pro
forma cash earnings per share of $4.75 for 1998;                      

        (v) the opinion of Merrill Lynch that the Merger Consideration to be
paid by AFC is fair, from a financial point of view, to AFC. See      
"-- Opinions of Financial Advisors -- AFC");                          

         (vi) the impact of the Merger on depositors, employees, customers and
communities served by AFC and GNYSB;                                  

      (vii) the expectation that the Merger will generally be a tax-free
   transaction to Astoria Financial and its stockholders and that the Merger
will be accounted for under the purchase method of accounting. See    
"-- Material Federal Income Tax Consequences" and "-- Accounting      
Treatment;"                                                           

     (viii) the Merger is consistent with AFC's ongoing strategy of growth
through acquisitions; and                                             

          (ix) the terms of the Merger Agreement, the Stock Option Agreement and
the other documents executed in connection with the Merger.           

The AFC Board did not assign any specific or relative weights to the  
factors under consideration.                                                    

OPINIONS OF FINANCIAL ADVISORS                                                  

GNYSB.  Pursuant to letter agreements dated as of October 1, 1992 and 
February 1, 1994, GNYSB retained Sandler O'Neill as an independent financial    
advisor to assist GNYSB in connection with its analysis of various strategic    
alternatives available to it, including strategic planning and merger and       
acquisition transactions. Pursuant to a letter agreement dated as of March 29,  
1997, GNYSB retained Sandler O'Neill as an independent financial advisor in     
connection with certain possible business combinations with third parties (the  
letter agreements are collectively referred to herein as the "Sandler O'Neill   
Agreement.") Sandler O'Neill is a nationally-recognized investment banking firm 
whose principal business specialty is banks and savings institutions and, in    
that connection, is regularly engaged in the valuation of such businesses and   
their securities in connection with mergers and acquisitions and other corporate
transactions.                                                                   

 Pursuant to the terms of the Sandler O'Neill Agreement, Sandler O'Neill
acted as financial advisor to GNYSB in connection with the Merger. In connection
therewith, at the March 29, 1997 meeting at which the GNYSB Board approved and  
adopted the Merger Agreement, Sandler O'Neill delivered an oral opinion, which  
was subsequently confirmed in writing, to the GNYSB Board, that, as of March 29,
1997, the consideration to be received by the holders of shares of GNYSB Common 
Stock (including any shares that are issued upon the conversion of GNYSB Series 
A Preferred Stock) and the holders of shares of GNYSB Series B Preferred Stock  
pursuant to the Merger Agreement was fair, from a financial point of view, to   
such stockholders. Sandler O'Neill has also delivered to the GNYSB Board a      
written opinion (the "Sandler                                                   

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O'Neill Fairness Opinion") dated the date of this Joint Proxy                   
Statement-Prospectus which is substantially identical to the March 29, 1997     
opinion. THE FULL TEXT OF THE SANDLER O'NEILL FAIRNESS OPINION, WHICH SETS FORTH
THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND QUALIFICATIONS
AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX D TO THIS     
JOINT PROXY STATEMENT-PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE   
DESCRIPTION OF SUCH OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY    
REFERENCE TO APPENDIX D. HOLDERS OF GNYSB COMMON STOCK AND GNYSB SERIES A       
PREFERRED STOCK ARE URGED TO READ THE SANDLER O'NEILL FAIRNESS OPINION IN ITS   
ENTIRETY IN CONNECTION WITH THEIR CONSIDERATION OF THE PROPOSED MERGER.         

THE SANDLER O'NEILL OPINION WAS PROVIDED TO THE GNYSB BOARD FOR ITS   
INFORMATION AND IS DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL POINT OF VIEW 
TO THE HOLDERS OF GNYSB COMMON STOCK (INCLUDING ANY SHARES THAT ARE ISSUED UPON 
THE CONVERSION OF GNYSB SERIES A PREFERRED STOCK) AND GNYSB SERIES B PREFERRED  
STOCK OF THE PROPOSED MERGER CONSIDERATION. IT DOES NOT ADDRESS THE UNDERLYING  
BUSINESS DECISION OF GNYSB TO ENGAGE IN THE MERGER AND DOES NOT CONSTITUTE A    
RECOMMENDATION TO ANY GNYSB STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE  
AT THE GNYSB MEETING WITH RESPECT TO THE MERGER OR ANY OTHER MATTER RELATED     
THERETO.                                                                        

In connection with rendering its opinion dated March 29, 1997, Sandler
O'Neill performed a variety of financial analyses. The following is a summary of
the material analyses performed by Sandler O'Neill and included in Sandler      
O'Neill's presentation to the GNYSB Board on March 29, 1997. Such summary does  
not purport to be a complete description of Sandler O'Neill's analyses or the   
presentation made by Sandler O'Neill to the GNYSB Board. The preparation of a   
fairness opinion is a complex process involving subjective judgments and is not 
necessarily susceptible to a partial analysis or summary description. Sandler   
O'Neill believes that its analyses must be considered as a whole and that       
selecting portions of such analyses and the factors considered therein, without 
considering all factors and analyses, could create an incomplete view of the    
analyses and processes underlying the Sandler O'Neill Fairness Opinion. In      
performing its analyses, Sandler O'Neill made numerous assumptions with respect 
to industry performance, business and economic conditions and various other     
matters, many of which cannot be predicted and are beyond the control of AFC,   
GNYSB and Sandler O'Neill. Any estimates contained in Sandler O'Neill's analyses
are not necessarily indicative of future results or values, which may be        
significantly more or less favorable than such estimates. Estimates of the      
values of companies do not purport to be appraisals or necessarily reflect the  
prices at which companies or their securities may actually be sold. Because such
estimates are inherently subject to uncertainty, none of AFC, GNYSB, or Sandler 
O'Neill assumes responsibility for their accuracy.                              

     Stock Trading History.  Sandler O'Neill examined the history of the trading
prices and the volume of the GNYSB Common Stock and the AFC Common Stock, and   
the relationship between the movements in the prices of the GNYSB Common Stock  
and the AFC Common Stock, respectively, to movements in certain stock indices,  
including the Standard & Poor's 500 Index, the Nasdaq Banking Index and a       
composite group of publicly traded savings institutions in geographic proximity 
and of similar asset size.                                                      

Analysis of Selected Publicly Traded Companies.  Sandler O'Neill used 
publicly available information to compare selected financial and market trading 
information, including balance sheet composition, asset quality ratios, loan    
loss reserve levels, profitability, capital adequacy, dividends and trading     
multiples, of GNYSB, AFC, and two different groups of selected institutions. The
first group consisted of GNYSB, AFC and the following fifteen (15) publicly     
traded savings institutions (the "Regional Thrift Group") which operate in the  
same general geographic region as GNYSB and have assets of from $1.5 billion to 
$18.9 billion: Dime Bancorp, Inc., GreenPoint Financial Corp., Sovereign        
Bancorp, Inc., Chevy Chase Bank, FSB, Long Island Bancorp, Inc., RCSB Financial,
Inc., Roslyn Bancorp, Inc., ALBANK Financial Corporation, TR Financial Corp.,   
New York Bancorp Inc., Commonwealth Bancorp, Inc., Reliance Bancorp, Inc., ML   
Bancorp, Inc., Haven Bancorp, Inc., and JSB Financial, Inc. Sandler O'Neill also
compared GNYSB and AFC to a group of eleven (11) publicly traded savings        
institutions of asset size from $3.3 billion to $37.7 billion which had a price 
to tangible book value multiple of greater than 140% and a ratio of last 12     
months' core income to common equity of greater than 14% (the "Highly-Valued    
Group"). The Highly-Valued Group was comprised of: Golden West Financial, Dime  
Bancorp, Inc., Charter One Financial, Bank United Corp.,                        

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Sovereign Bancorp, Inc., TCF Financial Corp., Commercial Federal Corporation,   
Washington Federal, Inc., First Financial Corp., Peoples Heritage Financial     
Group, and TR Financial Corp. The analysis compared publicly available financial
information as of and for the years ended December 31, 1991 through December 31,
1996. The following comparisons are based upon financial information at or for  
the year ended December 31, 1996 and the data with respect to the Regional      
Thrift Group and the Highly-Valued Group consists of the median data for such   
groups.                                                                         

   The total assets of GNYSB were $2.5 billion, compared to $7.3 billion for
AFC, $3.5 billion for the Regional Thrift Group and $7.1 billion for the        
Highly-Valued Group. The annual growth rate of assets for GNYSB was negative    
1.59%, compared to a positive growth rate of 9.86% for AFC, approximately 12%   
for the Regional Thrift Group and approximately 4% for the Highly-Valued Group. 
The total equity of GNYSB was $210 million, compared to $589 million for AFC,   
$319 million for the Regional Thrift Group and $545 million for the             
Highly-Valued Group. The tangible equity to total assets ratio was 8.25% for    
GNYSB, compared to 6.72% for AFC, 6.72% for the Regional Thrift Group and 6.23% 
for the Highly-Valued Group. The intangible assets to total equity ratio was 0% 
for GNYSB, compared to 17.03% for AFC, 2.48% for the Regional Thrift Group and  
3.77% for the Highly-Valued Group. The net loans to total assets ratio for GNYSB
was 37%, compared to 36% for AFC, 53% for the Regional Thrift Group and 68% for 
the Highly-Valued Group. The cash and securities to total assets ratio was 57%  
for GNYSB, compared to 60% for AFC, 42% for the Regional Thrift Group and 26%   
for the Highly-Valued Group. Total deposits were $1.7 billion for GNYSB,        
compared to $4.5 billion for AFC, $2.3 billion for the Regional Thrift Group and
$5.0 billion for the Highly-Valued Group. GNYSB had a gross loans to total      
deposits ratio of 58%, compared to 59% for AFC, 76% for the Regional Thrift     
Group and 104% for the Highly-Valued Group. The total borrowings to total assets
ratio for GNYSB was 25%, compared to 29% for AFC, 22% for the Regional Thrift   
Group and 28% for the Highly-Valued Group. The ratio of non-performing loans    
(including troubled debt restructurings) to total assets for GNYSB was 7.37%    
(1.25%, excluding troubled debt restructurings), compared to 0.46% for AFC,     
0.84% for the Regional Thrift Group and 0.56% for the Highly-Valued Group. The  
ratio of non-performing assets (including troubled debt restructurings) to total
assets for GNYSB was 7.84% (1.79%, excluding troubled debt restructurings)      
compared to 0.63% for AFC, 0.90% for the Regional Thrift Group and 0.81% for the
Highly-Valued Group. The ratio of loan loss reserves to non-performing loans    
(including troubled debt restructurings) for GNYSB was 9.20% (54.14%, excluding 
troubled debt restructurings) compared to 54.06% for AFC, approximately 70% for 
the Regional Thrift Group and approximately 94% for the Highly-Valued Group. The
net interest margin of GNYSB was 3.02%, compared to 2.77% for AFC, 3.3% for the 
Regional Thrift Group and 2.7% for the Highly-Valued Group. The ratio of        
non-interest income to average total assets for GNYSB was 0.42%, compared to    
0.20% for AFC, 0.42% for the Regional Thrift Group and 0.52% for the            
Highly-Valued Group. The ratio of non-interest expense to average total assets  
was 2.04% for GNYSB, compared to 1.49% for AFC, 1.98% for the Regional Thrift   
Group and 1.47% for the Highly-Valued Group. The efficiency ratio of GNYSB was  
59.65%, compared to 48.37% for AFC, approximately 54% for the Regional Thrift   
Group and approximately 50% for the Highly-Valued Group. The overhead ratio of  
GNYSB was 54.99%, compared to 45.02% for AFC, approximately 45% for the Regional
Thrift Group and approximately 41% for the Highly-Valued Group. The return on   
average assets for GNYSB was 0.72%, compared to 0.53% for AFC, 0.83% for the    
Regional Thrift Group and 0.98% for the Highly-Valued Group. The return on      
average equity for GNYSB was 9.20%, compared to 6.38% for AFC, approximately 10%
for the Regional Thrift Group and approximately 16% for the Highly-Valued Group.
The price to tangible book value for GNYSB was 148.1%, compared to 171.4% for   
AFC, approximately 167% for the Regional Thrift Group and approximately 236% for
the Highly-Valued Group. The price to earnings per share multiple for GNYSB was 
21.75x, compared to 22.81x for AFC, approximately 15x for the Regional Thrift   
Group and approximately 13x for the Highly-Valued Group. The dividend payout    
ratio for GNYSB was 6.49%, compared to 25.15% for AFC, 26.28% for the Regional  
Thrift Group and 24.92% for the Highly-Valued Group. Ratios with respect to AFC 
include the one-time SAIF-recapitalization expense.                             

 Analysis of Selected Merger Transactions.  Sandler O'Neill reviewed 128
transactions announced from January 1, 1995 to March 29, 1997 involving public  
savings institutions nationwide as targets with transaction values over $15     
million ("All Transactions"), 21 transactions announced from January 1, 1995 to 
March 29, 1997 involving public savings institutions nationwide with transaction
values between $150 million and $550                                            

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million ("Nationwide $150-$550 Transactions"), 10 transactions announced from   
January 1, 1995 to March 29, 1997 involving public savings institutions         
nationwide with transaction values between $150 million and $550 million and    
with the seller's return on average equity below 10% ("Nationwide Low ROAE      
$150-$550 Transactions"), 22 transactions announced from January 1, 1995 to     
March 29, 1997 involving public savings institutions in the Mid-Atlantic region 
with transaction values over $15 million ("Mid-Atlantic Transactions"), 4       
transactions announced from January 1, 1995 to March 29, 1997 involving public  
savings institutions in the Mid-Atlantic region with transaction values between 
$150 million and $550 million ("Mid-Atlantic $150-$550 Transactions"), 1        
transaction announced from January 1, 1995 to March 29, 1997 involving a public 
savings institution in the Mid-Atlantic region with a transaction value between 
$150 million and $550 million and with the seller's return on average equity    
below 10% ("Mid-Atlantic Low ROAE $150-$550 Transaction"), 8 transactions       
announced from January 1, 1995 to March 29, 1997 involving public savings       
institutions in New York ("New York Transactions"), and 2 transactions announced
from January 1, 1995 to March 29, 1997 involving public savings institutions in 
New York with transaction values between $150 million and $550 million ("New    
York $150-$550 Transactions"). Sandler O'Neill reviewed the ratios of price to  
earnings, price to book value, price to tangible book value, price to deposits, 
price to assets, and core deposit premium paid in each such transaction and     
computed high, low, mean, and median ratios and premiums for the respective     
groups of transactions. Based upon the median multiples for All Transactions,   
Sandler O'Neill derived an imputed range of values per share of the GNYSB Common
Stock of $13.25 to $26.80. Based upon the median multiples for Nationwide       
$150-$550 Transactions, Sandler O'Neill derived an imputed range of values per  
share of the GNYSB Common Stock of $12.02 to $24.28. Based upon the median      
multiples for Nationwide Low ROAE $150-$550 Transactions, Sandler O'Neill       
derived an imputed range of values per share of the GNYSB Common Stock of $13.69
to $24.04. Based upon the median multiples for Mid-Atlantic Transactions,       
Sandler O'Neill derived an imputed range of values per share of the GNYSB Common
Stock of $10.70 to $26.26. Based upon the median multiples for Mid-Atlantic     
$150-$550 Transactions, Sandler O'Neill derived an imputed range of values per  
share of the GNYSB Common Stock of $10.09 to $24.87. Based upon the median      
multiples for the one Mid-Atlantic Low ROAE $150-$550 Transaction, Sandler      
O'Neill derived an imputed range of values per share of the GNYSB Common Stock  
of $13.43 to $24.77. Based upon the median multiples for New York Transactions, 
Sandler O'Neill derived an imputed range of values per share of the GNYSB Common
Stock of $11.73 to $29.13. Based upon the median multiples for New York         
$150-$550 Transactions, Sandler O'Neill derived an imputed range of values per  
share of the GNYSB Common Stock of $10.09 to $24.87.                            

  Discounted Dividend Stream and Terminal Value Analysis.  Sandler O'Neill
also performed an analysis which estimated the future stream of after-tax       
dividend flows of GNYSB through the year 2001 under various circumstances,      
assuming GNYSB performed in accordance with the earnings forecasts of its       
management and certain variations thereof (including variations with respect to 
the growth rate of assets, net interest spread, non-interest income,            
non-interest expense and dividend payout ratio). To approximate the terminal    
value of the GNYSB Common Stock at the end of the five-year period, Sandler     
O'Neill applied price to earnings multiples ranging from 8x to 17x and applied  
multiples of tangible book value ranging from 100% to 190%. The dividend income 
streams and terminal values were then discounted to present values using        
different discount rates (ranging from 8% to 13%) chosen to reflect different   
assumptions regarding required rates of return of holders or prospective buyers 
of the GNYSB Common Stock. This analysis, assuming the current dividend payout  
ratio, indicated an imputed range of values per share of the GNYSB Common Stock 
of between $6.19 and $15.40 when applying the price to earnings multiples, and  
an imputed range of values per share of the GNYSB Common Stock of between $10.43
and $23.96 when applying multiples of tangible book value. In connection with   
its analysis, Sandler O'Neill extensively used sensitivity analyses to          
illustrate the effects changes in the underlying assumptions would have on the  
resulting present value, and discussed these changes with the GNYSB Board.      

In addition, Sandler O'Neill performed an analysis which estimated the
future stream of after-tax dividend flows of AFC on a pro forma basis assuming  
consummation of the Merger (the "Combined Company") through the year 2001 under 
various circumstances, assuming (i) the operations of the Combined Company      
attributable to GNYSB performed in accordance with the earnings forecasts of    
GNYSB's management and certain variations thereof, as described in the previous 
paragraph, (ii) the operations of the                                           

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Combined Company attributable to AFC performed in accordance with the earnings  
forecasts of AFC's management and certain variations thereof (including         
variations with respect to the growth rate of assets, net interest spread,      
non-interest income, non-interest expense and dividend payout ratio); and (iii) 
the Combined Company realized cost savings equal to 48.8% of GNYSB's projected  
non-interest expenses (other than the expense of deposit insurance). To         
approximate the terminal value of the AFC Common Stock at the end of the        
five-year period, Sandler O'Neill applied a range of price to earnings multiples
and tangible book value multiples. The dividend income streams and terminal     
values were then discounted to present values using different discount rates    
(ranging from 9% to 14%) chosen to reflect different assumptions regarding      
required rates of return of holders or prospective buyers of the AFC Common     
Stock. This analysis, assuming the current dividend payout ratio, indicated that
the imputed range of values of the 0.5 shares of AFC Common Stock or $19.00 in  
cash to be received in the Merger for each share of GNYSB Common Stock was in   
excess of the imputed range of the values of the shares of GNYSB Common Stock.  
In connection with its analysis, Sandler O'Neill extensively used sensitivity   
analyses to illustrate the effects changes in the underlying assumptions would  
have on the resulting present value, and discussed these changes with the GNYSB 
Board.                                                                          

     In connection with rendering its opinion of March 29, 1997, Sandler O'Neill
also reviewed, among other things: (i) the Merger Agreement and exhibits        
thereto; (ii) the Stock Option Agreement; (iii) AFC's audited consolidated      
financial statements and management's discussion and analysis of the financial  
condition and results of operations contained in its annual report to           
shareholders for the year ended December 31, 1996; (iv) GNYSB's audited         
consolidated financial statements and management's discussion and analysis of   
the financial condition and results of operations contained in its annual report
to shareholders for the year ended December 31, 1996; (v) certain financial     
analyses and forecasts of GNYSB prepared by and reviewed with management of     
GNYSB and the views of senior management of GNYSB regarding GNYSB's past and    
current business operations, results thereof, financial condition and future    
prospects, (vi) certain financial analyses and forecasts of AFC prepared by and 
reviewed with management of AFC and the views of senior management of AFC       
regarding AFC's past and current business operations, results thereof, financial
condition and future prospects; (vii) the pro forma impact of the Merger on AFC;
(viii) the historical reported price and trading activity for the AFC Common    
Stock and the GNYSB Common Stock, including a comparison of certain financial   
and stock market information for AFC and GNYSB with similar information for     
certain other companies, the securities of which are publicly traded; (ix) the  
financial terms of recent business combinations in the savings institution and  
banking industries; (x) the current market environment generally and the banking
environment in particular; and (xi) such other information, financial studies,  
analyses and investigations and financial, economic and market criteria as      
Sandler O'Neill considered relevant. Sandler O'Neill was not asked to, and did  
not, solicit indications of interest in a potential transaction with GNYSB from 
other third parties, other than one third party specifically identified to      
Sandler O'Neill by GNYSB.                                                       

    In connection with rendering the Sandler O'Neill Fairness Opinion, Sandler
O'Neill confirmed the appropriateness of its reliance on the analyses used to   
render its March 29, 1997 opinion by performing procedures to update certain of 
such analyses and by reviewing the assumptions upon which such analyses were    
based and the factors considered in connection therewith.                       

     In performing its reviews, Sandler O'Neill assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial    
information, analyses and other information reviewed by and discussed with it,  
and Sandler O'Neill did not make an independent evaluation or appraisal of the  
specific assets, the collateral securing assets or the liabilities of AFC or    
GNYSB or any of their subsidiaries, or the collectibility of any such assets    
(relying, where relevant, on the analyses and estimates of AFC and GNYSB). With 
respect to the financial projections reviewed with each company's management,   
Sandler O'Neill assumed that they have been reasonably prepared on bases        
reflecting the best currently available estimates and judgments of the          
respective managements of the respective future financial performances of AFC   
and GNYSB and that such performances will be achieved. Sandler O'Neill also     
assumed that there has been no material change in AFC's or GNYSB's assets,      
financial condition, results of operations, business or prospects since the date
of the last financial statements noted above. With respect to the exchange of   
GNYSB Series B Preferred Stock, Sandler O'Neill also assumed that the terms and 
conditions of the AFC Series B Preferred Stock are substantially identical to   
the GNYSB Series B Preferred Stock and that there are no material and           

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adverse differences in the rights and privileges of the holders of the AFC      
Series B Preferred Stock under Delaware law as compared to the rights and       
privileges of holders of the GNYSB Series B Preferred Stock under New York law. 

Under the Sandler O'Neill Agreement, GNYSB will pay Sandler O'Neill a 
transaction fee in connection with the Merger, a substantial portion of which is
contingent upon the consummation of the Merger. Under the terms of the          
Agreement, GNYSB will pay Sandler O'Neill a transaction fee equal to 1.0% of the
aggregate purchase price paid in the transaction (as defined in the Sandler     
O'Neill Agreement). Based upon the closing price of AFC Common Stock on the     
business day preceding announcement of the Merger, such fee would be            
approximately $3.1 million. Approximately 25% of such transaction fee was paid  
upon execution of the Merger Agreement and 75% will be paid if the Merger is    
consummated. GNYSB has also paid Sandler O'Neill a fee of $100,000 for rendering
the Sandler O'Neill Fairness Opinion. The Sandler O'Neill Agreement provides    
that the aggregate of the 1% transaction fee and the fee paid for the Sandler   
O'Neill Fairness Opinion will not exceed $3.4 million. GNYSB has also agreed to 
reimburse Sandler O'Neill for its reasonable out-of-pocket expenses incurred in 
connection with its engagement and to indemnify Sandler O'Neill and its         
affiliates and their respective partners, directors, officers, employees,       
agents, and controlling persons against certain expenses and liabilities,       
including liabilities under securities laws.                                    

    Pursuant to the Sandler O'Neill Agreement, Sandler O'Neill has in the past
provided, and may continue to provide, other financial advisory services to     
GNYSB and has received, and may receive, fees for the rendering of such         
services. In the ordinary course of its business, Sandler O'Neill may actively  
trade the debt and/or equity securities of AFC and GNYSB and their respective   
affiliates for their own account and for the accounts of customers and,         
accordingly, may at any time hold a long or short position in such securities.  

    AFC.  AFC retained Merrill Lynch to act as its exclusive financial advisor
to assist AFC in analyzing, structuring, negotiating and effecting a transaction
with GNYSB.                                                                     

     Representatives of Merrill Lynch attended the meeting of the AFC Board held
on March 27, 1997 at which the AFC Board considered and approved the Merger     
Agreement. At that meeting, Merrill Lynch rendered its oral opinion, that, as of
the date of the Merger Agreement, the Merger Consideration was fair to AFC from 
a financial point of view. This opinion was confirmed in writing as of the date 
of the Merger Agreement. Such opinion was reconfirmed in writing as of the date 
of this Joint Proxy Statement-Prospectus (the "Merrill Lynch Opinion").         

  The full text of Merrill Lynch's written opinion dated as of the date of
this Joint Proxy Statement-Prospectus is attached as Appendix E to this Joint   
Proxy Statement-Prospectus and is incorporated herein by reference. The         
description of the Merrill Lynch Opinion set forth herein is qualified in its   
entirety by reference to the full text of such opinion. AFC stockholders are    
urged to read the opinion in its entirety for a description of the procedures   
followed, assumptions made, matters considered, and qualifications and          
limitations on the review undertaken, by Merrill Lynch in connection therewith. 

     THE MERRILL LYNCH OPINION WAS PROVIDED TO THE AFC BOARD FOR ITS INFORMATION
AND IS DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL POINT OF VIEW TO AFC OF   
THE PROPOSED MERGER CONSIDERATION. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS  
DECISION OF AFC TO ENGAGE IN THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION
TO ANY AFC STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE AFC MEETING
WITH RESPECT TO THE MERGER OR ANY OTHER MATTER RELATED THERETO.                 

   The summary set forth below does not purport to be a complete description
of the analyses performed by Merrill Lynch underlying the Merrill Lynch Opinion 
or the presentation made by Merrill Lynch to the AFC Board. The preparation of a
fairness opinion involves various determinations as to the most appropriate and 
relevant methods of financial analysis and the application of these methods to  
the particular circumstances and, therefore, such an opinion is not readily     
susceptible to a partial analysis or summary description. Accordingly,          
notwithstanding the separate factors summarized below, Merrill Lynch believes   
that its analyses must be considered as a whole and that selecting portions of  
its analyses and factors considered by it, without considering all analyses and 
factors, or attempting to ascribe relative weights to some or all such analyses 
and factors, could create an incomplete view of the evaluation process          
underlying the Merrill Lynch Opinion.                                           

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  In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business and economic conditions and   
other matters, many of which are beyond the control of AFC, GNYSB and Merrill   
Lynch. The analyses performed by Merrill Lynch are not necessarily indicative of
actual values or actual future results, which may be significantly more or less 
favorable than suggested by such analyses. With respect to the comparison of    
selected companies analysis and the analysis of selected nationwide thrift      
transactions summarized below, no public company utilized as a comparison is    
identical to AFC or GNYSB. Accordingly, an analysis of publicly traded          
comparable companies and comparable business combinations is not mathematical;  
rather it involves complex considerations and judgments concerning the          
differences in financial and operating characteristics of the companies and     
other factors that could affect the public trading values of the companies      
concerned. The analyses do not purport to be appraisals or to reflect the prices
at which AFC or GNYSB might actually be sold or the prices at which any         
securities may trade at the present time or at any time in the future. Merrill  
Lynch was not asked to consider, and the Merrill Lynch Opinion does not in any  
manner address, the price at which shares of common stock of AFC will actually  
trade following consummation of the Merger. In addition, as described below, the
Merrill Lynch Opinion and Merrill Lynch's presentation to the AFC Board were    
among many factors taken into consideration by the AFC Board in making its      
determination to approve the Merger Agreement. Consequently, the Merrill Lynch  
analyses described below should not be viewed as determinative of the decision  
of the AFC Board or AFC's management with respect to the Merger.                

 In arriving at its opinion, Merrill Lynch, among other things, reviewed
certain publicly available business and financial information relating to AFC   
and GNYSB, as well as a draft of the Merger Agreement. Merrill Lynch also       
reviewed certain other information, including financial forecasts for AFC and   
GNYSB, as well as information regarding cost savings and related expenses and   
revenue enhancements expected to result from the Merger (the "Expected          
Synergies") provided to it by AFC and GNYSB, and met with members of senior     
management of AFC and GNYSB to discuss the businesses and prospects of AFC and  
GNYSB, before and after giving effect to the Merger, and the Expected Synergies.

    Merrill Lynch reviewed certain financial and stock market data for AFC and
GNYSB and compared that data with similar data for other publicly held companies
that Merrill Lynch deemed to be relevant. In addition, Merrill Lynch considered 
the financial terms of certain other transactions which Merrill Lynch deemed    
relevant. Merrill Lynch also considered the pro forma impact of the Merger.     
Merrill Lynch reviewed such other financial studies and analyses and performed  
such other investigations and took into account such other matters as it deemed 
necessary, including its assessment of general economic, market and monetary    
conditions.                                                                     

In preparing its opinion, Merrill Lynch relied on the accuracy and    
completeness of all information supplied or otherwise made available to Merrill 
Lynch, discussed with or reviewed by or for Merrill Lynch, or publicly          
available. Merrill Lynch has not assumed responsibility for independently       
verifying such information, has not undertaken an independent evaluation or     
appraisal of the assets or liabilities, contingent or otherwise, of AFC or GNYSB
or any of their subsidiaries and was not furnished with any such evaluation or  
appraisal. Merrill Lynch is not expert in the evaluation of allowances for loan 
losses and has not made an independent evaluation of the adequacy of the        
allowance for loan losses of AFC or GNYSB, nor has Merrill Lynch reviewed any   
individual credit files relating to AFC or GNYSB and Merrill Lynch has assumed  
that the aggregate allowance for loan losses for each of AFC and GNYSB is       
adequate to cover such losses and will be adequate on a pro forma basis for the 
combined entity, utilizing AFC's ordinary course practice for such allowances.  
In addition, Merrill Lynch has not conducted any physical inspection of the     
properties or facilities of AFC or GNYSB. With respect to the financial forecast
information, including, without limitation, financial forecasts, evaluations of 
contingencies and projections regarding under-performing and non-performing     
assets, net charge-offs, adequacy of reserves and future economic conditions,   
and the Expected Synergies furnished to or discussed with Merrill Lynch by AFC  
and GNYSB, Merrill Lynch assumed that they were reasonably prepared and         
reflected the best currently available estimates, allocations and judgment of   
AFC's and GNYSB's management as to the expected future financial performance of 
AFC or GNYSB, as the case may be, and the Expected Synergies. Merrill Lynch     
expressed no opinion as to such financial forecast information or the Expected  
Synergies or the assumptions on which they were based. In addition, Merrill     
Lynch assumed                                                                   

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that the Merger will be accounted for as a purchase under generally accepted    
accounting principles and that it will qualify as a tax-free reorganization for 
United States Federal income tax purposes.                                      

  The Merrill Lynch Opinion is necessarily based upon market, economic and
other conditions as they existed on, and could be evaluated as of, the date of  
such opinion. For purposes of rendering its opinion Merrill Lynch assumed, in   
all respects material to its analysis, that the representations and warranties  
of each party to the Merger Agreement and all related documents and instruments 
(collectively, the "Documents") contained therein are true and correct, that    
each party to the Documents will perform all of the covenants and agreements    
required to be performed by such party under such Documents and that all        
conditions to the consummation of the Merger will be satisfied without waiver   
thereof. Merrill Lynch also assumed that in the course of obtaining the         
necessary regulatory or other consents or approvals (contractual or otherwise)  
for the Merger, no restrictions, including any divestiture requirements or      
amendments or modifications, will be imposed that will have a material adverse  
effect on the contemplated benefits of the Merger.                              

     The projections furnished to Merrill Lynch and used by it in certain of its
analyses were prepared by the management of AFC and GNYSB in connection with the
Merger and were not prepared with a view towards public disclosure. The         
projections were based on numerous variables and assumptions which are          
inherently uncertain, including, without limitation, factors related to general 
economic and competitive conditions, and accordingly, actual results could vary 
significantly from those set forth in such projections.                         

  The following is a summary of the material analyses presented by Merrill
Lynch to the AFC Board on March 27, 1997, in connection with its fairness       
opinion.                                                                        

Transaction Summary.  Merrill Lynch reviewed the terms of the proposed
transaction, including the Merger Consideration and the implied aggregate       
transaction value. Based on AFC's closing stock price of $38.75 on March 26,    
1997, Merrill Lynch calculated an implied transaction value per share of GNYSB  
of $19.00, and an implied total transaction value of approximately $292.9       
million. Merrill Lynch also calculated the price to market, price to fully      
diluted book value, price to fully diluted tangible book value and price to last
twelve months ("LTM") adjusted fully diluted earnings multiples for GNYSB in the
Merger based on such implied total transaction value. This analysis yielded a   
price to market multiple of 1.13x based on GNYSB's closing stock price on March 
26, 1997 and a price to market multiple of 1.26x based on GNYSB's average       
closing stock price over the 30 trading days prior to March 26, 1997, a price to
fully diluted book value multiple of 1.68x, a price to fully diluted tangible   
book value multiple of 1.68x, a price to fully diluted earnings multiple of     
24.67x, a price to 1997 earnings multiple (based on information provided by     
First Call Earnings Estimates ("First Call")) of 19.00x and a price to 1998     
earnings multiple (based on information provided by First Call) of 17.27x. First
Call is a data service that monitors and publishes compilations of earnings     
estimates by selected research analysts regarding companies of interest to      
institutional investors.                                                        

    Pro Forma Merger Analysis.  Based on projections provided to Merrill Lynch
by AFC's management, Merrill Lynch analyzed certain pro forma effects of the    
Merger. This analysis indicated that the Merger would be accretive to projected 
earnings per share of AFC Common Stock in 1998 and thereafter (calculated on    
both a GAAP and cash basis). Including an estimated pre-tax charge of $30       
million for transaction costs and an additional loan loss reserve to comply     
GNYSB's reserve methodology to that of AFC's, this analysis indicated that the  
Merger would be dilutive to tangible book value per share. In this analysis,    
Merrill Lynch assumed that AFC performed in accordance with the earnings        
forecasts and Expected Synergies provided to Merrill Lynch by AFC's management. 

   Contribution Analysis.  Merrill Lynch reviewed the relative contributions
in terms of various balance sheet items, LTM net income, 1997 estimated income  
and 1998 estimated income to be made by AFC and GNYSB to the combined           
institution based on data at December 31, 1996. Merrill Lynch analyzed total    
assets, total loans, total deposits, common equity, total equity, LTM net       
income, 1997 estimated income and 1998 estimated income of the combined         
institution as provided by AFC's management. This analysis showed that, while   
AFC stockholders would own approximately 79.9% of the outstanding shares of the 
combined institution based upon the terms of the Merger Agreement, AFC's implied
contribution (not taking into account the Cash Consideration paid pursuant to   
the Merger Agreement) was 74.1% of total assets, 73.5% of total loans,          

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73.0% of total deposits, 78.9% of common equity, 73.7% of total equity, 82.19%  
of LTM income, 82.89% of 1997 estimated income and 80.83% of 1998 estimated     
income.                                                                         

  Discounted Dividend Stream Analysis.  Using a discounted dividend stream
analysis, Merrill Lynch estimated the net present value of the future streams of
after tax cash flows that GNYSB could produce ("dividendable net income")       
assuming fully phased-in after-tax cost savings of $25.7 million and an         
estimated pre-tax charge of $30 million for transaction costs and an additional 
loan loss reserve to conform GNYSB's reserve methodology to that of AFC's.      
Merrill Lynch assumed that GNYSB performed in accordance with earnings forecasts
provided to Merrill Lynch by AFC's management and that GNYSB's tangible common  
equity to tangible asset ratio would be maintained at a minimum 6.0% level.     
Merrill Lynch assumed terminal values for the GNYSB common stock at 10.0, 11.0  
and 12.0 times GNYSB's, estimated operating income in the year 2003 (defined as 
net income before intangible amortization). The dividendable net income streams 
and terminal values were then discounted to present values using different      
discount rates (ranging from 13% to 14%) chosen to reflect different assumptions
regarding required rates of return of holders or prospective buyers of GNYSB    
Common Stock. This discounted dividend stream analysis indicated a reference    
range of $18.59 to $22.98 per share for GNYSB Common Stock. As indicated above, 
this analysis is not necessarily indicative of actual values or actual future   
results and does not purport to reflect the prices at which any securities may  
trade at the present or at any time in the future. Merrill Lynch noted that the 
discounted dividend stream analysis is a widely used valuation methodology, but 
the results of such methodology are highly dependent upon the numerous          
assumptions that must be made, including earnings growth rates, dividend payout 
rates, terminal values and discount rates.                                      

Analysis of Selected Thrift Acquisition Transactions.  Merrill Lynch  
reviewed publicly available information regarding selected nationwide thrift    
transactions with a value between $100 million and $400 million which had       
occurred in the United States since January 1, 1996 that it deemed to be        
relevant (the "Comparable Transactions"). The Comparable Transactions and the   
month in which they were announced are: Provident Bankshares Corporation's      
proposed acquisition of First Citizens Financial Corporation (March, 1997), CCB 
Financial Corporation's proposed acquisition of American Federal Bank (February,
1997), CFX Corporation's proposed acquisition of Portsmouth Bank Shares         
(February, 1997), Sovereign Bancorp's proposed acquisition of Bankers Corp.     
(February, 1997), Temple-Inland Inc.'s proposed acquisition of California       
Financial (December, 1996), Pinnacle Financial Services' acquisition of Indiana 
Federal Corporation (November, 1996), Webster Financial Corp.'s acquisition of  
DS Bancor (October, 1996), Mutual Savings Bank's proposed acquisition of First  
Federal Bancshares of Eau Claire (September, 1996), UST Corp.'s acquisition of  
Walden Bancorp (August, 1996), North Fork Bancorporation's acquisition of North 
Side Savings (July, 1996), First Union's acquisition of Home Financial          
Corporation (June, 1996), First Union's acquisition of Center Financial         
Corporation (June, 1996), Peoples Heritage Financial's acquisition of Family    
Bancorp (May, 1996), NationsBank Corporation's acquisition of TAC Bancshares    
(April, 1996) and Norwest Corp.'s acquisition of Primerit Bank FSB (January,    
1996). Merrill Lynch compared the price to market multiple, price to fully      
diluted book value, price to fully diluted tangible book value, price to LTM    
earnings ratios and the implied deposit premium paid in the Merger to the       
corresponding ratios for the Comparable Transactions. This analysis yielded a   
range of (i) price to market multiple of 0.97x to 1.63x with a mean of 1.29x and
a median of 1.22 (compared with multiple of 1.13x for GNYSB in the Merger), (ii)
price to fully diluted book value multiples of 0.97x to 2.81x with a mean of    
1.71 and a median of 1.72x (compared with a multiple of 1.68x for GNYSB in the  
Merger), (iii) price to fully diluted tangible book value multiples of 1.03x to 
3.03x with a mean of 1.82x and a median of 1.75x (compared with a multiple of   
1.68x for GNYSB in the Merger), (iv) price to fully diluted LTM earnings        
multiples of 11.73x to 24.69x with a mean of 17.53x and a median of 16.68x      
(compared with a multiple of 24.67x for GNYSB in the merger), and (v) implied   
deposit premiums paid of 2.80% to 19.39% with a mean of 8.82% and a median of   
7.70% (compared with a premium of 8.14% for GNYSB in the merger). This analysis 
yielded an overall imputed reference range per share of GNYSB common stock of   
$12.84 to $21.61 based on the mean and median imputed range.                    

 No company or transaction used in the above analysis as a comparison is
identical to GNYSB or the Merger respectively. Accordingly, an analysis of the  
results of the foregoing necessarily involves complex                           

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considerations and judgments concerning differences in financial and operating  
characteristics of the companies and other factors that could affect the public 
trading value of GNYSB and the companies to which it is being compared.         

Comparable Company Analysis -- GNYSB.  Merrill Lynch compared selected
operating and stock market results of GNYSB to the publicly available           
corresponding data of certain other companies which Merrill Lynch deemed to be  
relevant, including AFC, Haven Bancorp, Inc., JSB Financial, Inc., Long Island  
Bancorp, Inc., Queens County Bancorp, Inc., Reliance Bancorp, Inc., T R         
Financial Corp. and Flushing Financial Corp. (collectively the "GNYSB           
Composite"). For purposes of this analysis, ratios with respect to the GNYSB    
Composite have been adjusted to exclude the one-time SAIF recapitalization      
expense. This comparison showed, among other things, that at or for the latest  
twelve months ended December 31, 1996 (i) GNYSB's ratio of net noninterest      
expense to average assets was 1.56% compared to a mean of 1.56% of and a median 
of 1.57% for the GNYSB Composite, (ii) GNYSB's ratio of noninterest income to   
average assets was 0.33% compared to a mean of 0.30% and a median of 0.22% for  
the GNYSB Composite, (iii) GNYSB's net interest margin was 3.02%, compared with 
a mean 3.52% and a median of 3.29% for the GNYSB Composite, (iv) GNYSB's        
efficiency ratio (defined as noninterest expense divided by the sum of          
noninterest income and net interest income before provision for loan losses) was
58.44%, compared with a mean of 50.91% and a median of 50.06% for the GNYSB     
Composite, (v) GNYSB's return on average assets was 0.72% compared to a mean of 
1.00% and a median of 0.89% for the GNYSB Composite and (vi) GNYSB's return on  
average equity was 9.20% compared to a mean of 9.90% and a median of 9.23% for  
the GNYSB Composite. This comparison also indicated that (i) at December 31,    
1996, (A) GNYSB's tangible equity to tangible asset ratio was 6.19% compared to 
a mean of 11.13% and a median of 7.88% for the GNYSB Composite, (B) GNYSB's     
ratio of nonperforming loans (including troubled debt restructurings) to total  
loans was 19.69% compared with a mean of 3.38% and a median of 1.52% for the    
GNYSB Composite, (C) GNYSB's ratio of nonperforming assets (including troubled  
debt restructurings) to total assets was 7.91% compared with a mean of 1.61% and
a median of 0.86% for the GNYSB Composite, (D) GNYSB's ratio of loan loss       
reserves to nonperforming assets was 8.57% compared with a mean of 59.46% and a 
median of 54.05% for the GNYSB Composite, (ii) as of December 31, 1996 (X) the  
ratio of GNYSB's market price to 1998 estimated earnings was 15.23x, compared to
a mean of 13.50x and a median of 12.93x for the GNYSB Composite (based on       
information from First Call for both GNYSB and the GNYSB Composite), (Y) the    
ratio of GNYSB's market price to book value per share at December 31, 1996 was  
1.48x, compared to a mean of 1.47x and a median of 1.44x for the GNYSB          
Composite, (Z) the ratio of GNYSB's market price to tangible book value per     
share at December 31, 1996 was 1.48x, compared to a mean of 1.58x and a median  
of 1.58x for the GNYSB Composite, and (iii) as of December 31, 1996, GNYSB's    
common dividend yield was 1.19%, compared to a mean of 1.96% and a median of    
1.78% for the GNYSB Composite.                                                  

Comparable Company Analysis -- AFC.  Merrill Lynch compared selected  
operating and stock market results of AFC to the publicly available             
corresponding data of certain other companies which Merrill Lynch deemed to be  
relevant, including GNYSB, Haven Bancorp, Inc., JSB Financial, Inc., Long Island
Bancorp, Inc., Queens County Bancorp, Inc., Reliance Bancorp, Inc., T R         
Financial Corp. and Flushing Financial Corp. (collectively the "AFC Composite").
For purposes of this analysis, ratios with respect to AFC and the AFC Composite 
have been adjusted to exclude the one-time SAIF recapitalization expense. This  
comparison showed, among other things, that at or for the latest twelve months  
ended December 31, 1996, (i) AFC's ratio of net noninterest expense to average  
assets was 1.20% compared to a mean of 1.56% and a median of 1.57% for the AFC  
Composite, (ii) AFC's ratio of noninterest income to average assets was 0.17%   
compared to a mean of 0.30% and a median of 0.22% for the AFC Composite, (iii)  
AFC's net interest margin was 2.77%, compared with a mean of 3.52% and median of
3.29% for the AFC Composite, (iv) AFC's efficiency ratio (defined as noninterest
expenses divided by the sum of noninterest income and net interest income before
provision for loan losses) was 48.37%, compared with a mean of 50.91% and a     
median of 50.06% for the AFC Composite, (v) AFC's return on average assets was  
0.77% compared to a mean of 1.00% and a median of 0.89% for the AFC Composite,  
and (vi) AFC's return on average equity was 9.28% compared to a mean of 9.90%   
and a median of 9.23% for the AFC Composite. This comparison also indicated that
(i) at December 31, 1996, (A) AFC's tangible equity to tangible asset ratio was 
6.72% compared to a mean of 11.07% and a median of 7.65% for the AFC Composite, 
(B) AFC's ratio of nonperforming loans to total loans                           

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was 1.26% compared with a mean of 3.65% and a median of 1.58% for the AFC       
Composite, (C) AFC's ratio of nonperforming assets to total assets was 0.63%    
compared with a mean of 1.73% and a median of 0.90% for the AFC Composite, (D)  
AFC's ratio of loan loss reserves to nonperforming assets was 30.90% compared   
with a mean of 63.03% and a median of 62.87% for the AFC Composite, (ii) as of  
December 31, 1996 (X) the ratio of AFC's market price to estimated 1998 earnings
for the twelve month period ending December 31, 1997 was 11.92x, compared to a  
mean of 13.91x and a median of 14.29x for the AFC Composite (based on           
information from First Call for both AFC and the AFC Composite), (Y) the ratio  
of AFC's market price to book value per share at December 31, 1996 was 1.41x,   
compared to a mean of 1.48x and a median of 1.47x for the AFC Composite, (Z) the
ratio of AFC's market price to tangible book value per share at December 31,    
1996 was 1.70x, compared to a mean of 1.55x and a median of 1.49x for the AFC   
Composite, and (iii) as of December 31, 1996, AFC's dividend yield was 1.14%,   
compared to a mean of 1.97% and a median of 1.78% for the AFC Composite.        

 In connection with its opinion dated as of the date of this Joint Proxy
Statement-Prospectus, Merrill Lynch performed procedures to update, as          
necessary, certain of the analyses described above and reviewed the assumptions 
on which such analyses described above were based and the factors considered in 
connection therewith. Merrill Lynch did not perform any analyses in addition to 
those described above in updating its March 27, 1997 opinion.                   

AFC retained Merrill Lynch based upon Merrill Lynch's experience and  
expertise. Merrill Lynch is an internationally-recognized investment banking and
advisory firm. Merrill Lynch, as part of its investment banking business, is    
continuously engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,  
secondary distributions of listed and unlisted securities, private placements   
and valuations for corporate and other purposes. Merrill Lynch has, in the past,
provided financial advisory and/or financing services to AFC and GNYSB and may  
continue to do so and has received, and may receive, fees for the rendering of  
such services. In the ordinary course of its business, Merrill Lynch and its    
affiliates may actively trade the debt and/or equity securities of AFC and GNYSB
and their respective affiliates for their own account and for the accounts of   
customers and, accordingly, may at any time hold a long or short position in    
such securities.                                                                

    AFC and Merrill Lynch have entered into a letter agreement dated March 19,
1997 relating to the services to be provided by Merrill Lynch in connection with
the Merger. AFC has agreed to pay Merrill Lynch fees as follows: (i) a cash fee 
of $25,000, which was payable upon the execution of the letter agreement, (ii) a
cash fee of $200,000, which was payable upon the execution of the Merger        
Agreement and (iii) a cash fee in an amount equal to 0.60% of the aggregate     
purchase price paid in connection with the Merger to be calculated at the       
closing of the Merger. Based on the closing price of AFC Common Stock on the    
business day preceding announcement of the Merger, this fee is estimated to be  
approximately $1.8 million (less any fees paid pursuant to clauses (i) or (ii)  
above). In such letter, AFC also agreed to reimburse Merrill Lynch for its      
reasonable out-of-pocket expenses incurred in connection with its advisory work,
including the reasonable fees and disbursements of its legal counsel, and to    
indemnify Merrill Lynch against certain liabilities relating to or arising out  
of the Merger, including liabilities under the federal securities laws.         

PROCEDURES FOR EXCHANGE OF GNYSB COMMON STOCK CERTIFICATES                      

     As of the Effective Time, AFC shall deposit, or will cause to be deposited,
with the Exchange Agent, for the benefit of the holders of shares of GNYSB      
Common Stock for exchange, an estimated amount of cash sufficient to pay the    
aggregate Cash Consideration and the aggregate amount of cash paid in lieu of   
fractional shares, and AFC shall reserve for issuance with its Transfer Agent   
and Registrar the aggregate Stock Consideration and AFC Series B Preferred Stock
to be issued.                                                                   

The Letter of Transmittal and Election Form to be mailed within three 
business days after the Effective Date will specify that delivery will be       
effected, and risk of loss and title to the GNYSB Stock Certificates            
representing AFC Common Stock shall pass, only upon proper delivery of the GNYSB
Stock Certificates to the Exchange Agent and shall include instructions for use 
in effecting the surrender of the GNYSB Stock                                   

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Certificates in exchange for certificates evidencing shares of AFC Common Stock 
or cash or AFC Series B Preferred Stock, as appropriate.                        

Upon the proper surrender to the Exchange Agent of a GNYSB Stock      
Certificate for cancellation, together with such letter of transmittal, duly    
executed and completed in accordance with the instructions thereto, and such    
other documents as may be reasonably required pursuant to such instructions, the
holder of such GNYSB Stock Certificate will be entitled to receive in exchange  
therefor the appropriate Merger Consideration or a certificate representing     
shares of AFC Series B Preferred Stock, as appropriate. However, holders of the 
GNYSB Series B Preferred Stock Certificates will not be required to exchange    
such certificates for certificates representing AFC Series B Preferred Stock,   
but may do so voluntarily. As soon as practicable after completion of the       
allocations of the Merger Consideration and in no event later than ten business 
days after the Election Deadline, the Exchange Agent shall distribute AFC Common
Stock and cash as provided in the Merger Agreement.                             

  No dividends or other distributions declared or made after the Effective
Time with respect to AFC Common Stock with a record date after the Effective    
Time shall be paid to the holder of any unsurrendered GNYSB Stock Certificate   
with respect to the shares of AFC Common Stock represented thereby, and no cash 
payment in lieu of any fractional shares shall be paid to any such holder, until
the holder of such GNYSB Stock Certificate shall surrender such certificate.    
Subject to the effect of escheat, tax or other applicable laws, following       
surrender of any such Certificate, the holder of whole shares of AFC Common     
Stock issued in exchange therefor, will be paid without interest, (i) the amount
of any cash payable with respect to a fractional share of AFC Common Stock to   
which such holder is entitled and the amount of dividends or other distributions
with a record date after the Effective Time and theretofore paid with respect to
such whole shares of AFC Common Stock, and (ii) at the appropriate payment date,
the amount of dividends or other distributions, with a record date after the    
Effective Time but prior to surrender and a payment date occurring after        
surrender, payable with respect to such whole shares of AFC Common Stock.       

     At the Effective Time, the stock transfer books of GNYSB will be closed and
there shall be no further registration of transfers of shares of GNYSB Common   
Stock, GNYSB Series A Preferred Stock or GNYSB Series B Preferred Stock         
thereafter on the records of GNYSB. From and after the Effective Time, the      
holders of certificates representing shares of GNYSB Common Stock outstanding   
immediately prior to the Effective Time shall cease to have any rights with     
respect to such shares of GNYSB Common Stock, except as otherwise provided      
herein or by law.                                                               

Any portion of the aggregate Cash Consideration or the proceeds of any
investments thereof that remains unclaimed by the stockholders of GNYSB for six 
(6) months after the Effective Time will be repaid by the Exchange Agent to AFC 
upon the written request of AFC. After such request is made, any stockholders of
GNYSB will look only to AFC for payment and issuance of their Merger            
Consideration deliverable in respect of each share of GNYSB Common Stock such   
stockholder holds as determined pursuant to the Merger Agreement without any    
interest thereon. If outstanding certificates for shares of GNYSB Common Stock  
are not surrendered or the payment for such shares is not claimed prior to the  
date on which such payments would otherwise escheat to or become the property of
any governmental unit or agency, the unclaimed items shall, to the extent       
permitted by abandoned property and any other applicable law, become the        
property of AFC (and to the extent not in its possession shall be paid over to  
it), free and clear of all claims or interest of any person previously entitled 
to such claims. Notwithstanding the foregoing, none of AFC, Astoria Federal, the
Exchange Agent or any other person shall be liable to any former holder of GNYSB
Common Stock or GNYSB Series B Preferred Stock for any amount delivered to a    
public official pursuant to applicable abandoned property, escheat or similar   
laws.                                                                           

 AFC and the Exchange Agent shall be entitled to rely upon GNYSB's stock
transfer books to establish the identity of those persons entitled to receive   
the Merger Consideration or shares of AFC Series B Preferred Stock, which books 
shall be conclusive with respect thereto. In the event of a dispute with respect
to ownership of stock represented by any GNYSB Stock Certificate, AFC and the   
Exchange Agent shall be entitled to deposit any consideration represented       
thereby in escrow with an independent third party and thereafter be relieved    
with respect to any claims thereto.                                             

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  In the event any GNYSB Stock Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming  
such GNYSB Stock Certificate to be lost, stolen or destroyed and, if required by
the Exchange Agent, the posting by such person of a bond in such amount as the  
Exchange Agent may direct as indemnity against any claim that may be made       
against it with respect to such GNYSB Stock Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed GNYSB Stock Certificate the
Merger Consideration or the shares of AFC Series B Preferred Stock deliverable  
in respect thereof pursuant to the Merger Agreement.                            

REGULATORY APPROVALS                                                            

    Pursuant to the Bank Merger Act, Section 1828(c) of Title 12 of the United
States Code, and the Home Owners' Loan Act, Section 1467a(s) of Title 12 of the 
United States Code and Sections 552.13 and 563.22 of Title 12 of the Code of    
Federal Regulations, promulgated thereunder, the Merger is subject to the       
approval of the OTS. AFC filed an application for approval of the Merger with   
the OTS on June 5, 1997. This application is currently under review by the OTS. 
There can be no assurance as to the timing of such approval or that the OTS will
approve the Merger. The OTS is required to evaluate the applications by taking  
into consideration, among other things, the capital level of the resulting      
institution, the financial and managerial resources and future prospects of the 
institutions involved, the convenience and needs of the communities to be served
and the conformity of the transaction to applicable law, regulation and         
supervisory policies. In addition, the OTS may not approve any proposed         
acquisition (i) which would result in a monopoly or which would be in           
furtherance of any combination or conspiracy to monopolize or to attempt to     
monopolize the savings and loan business in any part of the United States, or   
(ii) which in any section of the country may have the effect of substantially   
lessening competition or tending to create a monopoly or which in any other     
manner would be in restraint of trade, unless the OTS finds that the            
anti-competitive effects of the proposed acquisition are clearly outweighed in  
the public interest by the probable effect of the acquisition in meeting the    
convenience and needs of the community to be served. Under the Community        
Reinvestment Act of 1977 ("CRA"), the OTS must take into account Astoria        
Federal's record of performance in meeting the credit needs of the entire       
community, including low- and moderate-income neighborhoods, served by Astoria  
Federal. The OTS also considers, among other things, the fairness and disclosure
of the plan (including compensation to officers, directors and controlling      
persons of the disappearing association by the surviving association), the      
justification, need for and compensation to be paid to any advisory board, fees 
paid to each person or firm rendering legal or other professional services in   
connection with a merger, and the accounting and tax treatment of the merger.   
The regulations of the OTS also provide for the publication of notice and the   
opportunity for public comments relating to the application for approval        
discussed above.                                                                

   In addition, under federal law, a period of 30 days must expire following
approval by the OTS within which period the Department of Justice may file      
objections to the Merger under the federal antitrust laws. The post-approval    
waiting period may be reduced by the OTS to 15 days, with the concurrence of the
Department of Justice. The Department of Justice could take such action under   
the antitrust laws as it deems necessary or desirable in the public interest,   
including seeking to enjoin the Merger unless divestiture of an acceptable      
number of branches to a competitively suitable purchaser could be made. While   
AFC believes that the likelihood of such action by the Department of Justice is 
remote in this case, there can be no assurance that the Department of Justice   
will not initiate such proceeding, or that the Attorney General of the State of 
New York will not challenge the Merger, or if such proceeding is instituted or  
challenge is made, as to the result thereof.                                    

    In addition, pursuant to Section 601 of the NYBL, the Merger is subject to
the prior approval of the Superintendent. AFC filed an application for approval 
of the Merger with the Superintendent on June 5, 1997. In determining whether to
approve the application for the merger of GNYSB with and into Astoria Federal,  
the Superintendent will consider, among other factors, whether the Merger would 
be consistent with adequate or sound banking and would not result in            
concentration of assets beyond limits consistent with effective competition, and
whether the Merger would result in such a lessening of competition as to be     
injurious to the interest of the public or tend toward monopoly. The            
Superintendent will also consider the public interest and the needs and         
convenience thereof. Further, it is the policy of the State of New York to      
ensure the safe and                                                             

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sound conduct of banking organizations, to conserve assets of banking           
organizations, to prevent hoarding of money, to eliminate unsound and           
destructive competition among banking organizations, and to maintain public     
confidence in the business of banking and protect the public interest and the   
interests of depositors, creditors, and stockholders, and such factors will be  
considered by the Superintendent in connection with Astoria Federal's           
application.                                                                    

The Merger cannot proceed in the absence of the requisite regulatory  
approvals. See "-- Conditions to the Consummation of the Merger" and            
"-- Termination." There can be no assurance that such regulatory approvals will 
be obtained, and if obtained, there can be no assurance as to the date of any   
such approval. There can also be no assurance that any such approvals will not  
contain a condition or requirement which causes such approvals to fail to       
satisfy the conditions set forth in the Merger Agreement and described below    
under "-- Conditions to the Consummation of the Merger."                        

     Inner City Press/Community on the Move has indicated in a letter to the OTS
that it intends to protest the application to be submitted by AFC to the OTS    
with respect to the Merger on the grounds of the institutions' CRA compliance.  
AFC and GNYSB believe that any such protest would be without merit although     
there can be no assurance that such protest, if filed, would not delay or       
otherwise affect AFC's ability to obtain the requisite regulatory approvals of  
the Merger. As a result of the most recent OTS examination of Astoria Federal,  
Astoria Federal received a CRA compliance rating of "Outstanding." Based upon   
the most recent New York State Banking Department and FDIC examinations of      
GNYSB, GNYSB received a CRA compliance rating of "Satisfactory."                

CONDITIONS TO THE CONSUMMATION OF THE MERGER                                    

  Consummation of the Merger is subject to various conditions. While it is
anticipated that all such conditions will be satisfied, there can be no         
assurance that all of such conditions will be satisfied or waived.              

The respective obligations of AFC and GNYSB to cause the Merger to be 
consummated are subject to certain conditions, including the following:         

          (i) the requisite vote of GNYSB's stockholders and AFC's stockholders;

          (ii) receipt and effectiveness of all regulatory approvals required to
consummate the Merger and the expiration of all applicable statutory  
   waiting periods in respect thereof; provided, that no regulatory approval
   contains any term or condition which would have a material adverse effect
on (x) GNYSB and its subsidiaries taken as a whole or (y) AFC and its 
subsidiaries taken as a whole;                                        

         (iii) no party to the Merger Agreement shall be subject to any order,
   decree or injunction of a court or agency of competent jurisdiction which
prohibits the consummation of the Merger;                             

         (iv) no statute, rule or regulation shall have been enacted, entered,
     promulgated, interpreted, applied or enforced by any governmental authority
 which prohibits, restricts or makes illegal consummation of the Merger;

          (v) no proceedings shall be pending or threatened by the Commission to
    suspend the effectiveness of the Registration Statement; and the shares of
    AFC Common Stock issuable pursuant to the Merger Agreement shall have been
 approved for listing on the Nasdaq National Market, subject to official
notice of issuance;                                                   

        (vi) AFC shall have received letters from Messrs. Keegan, Henchy and
 Harris with respect to settlement of such individuals' rights under the
specified compensation and benefits programs;                         

      (vii) the representations and warranties of the other party in the
    Merger Agreement being true and correct in all material respects as of the
dates specified therein, and the performance by the other party in all
     material respects of all obligations required by the Merger Agreement to be
performed;                                                            

        (viii) the receipt by AFC of the opinion of Thacher Proffitt & Wood,
and the receipt by GNYSB of the opinion of Sullivan & Cromwell, each  
     substantially to the effect that on the basis of the facts, representations
 and assumptions set forth in such opinion which are consistent with the
state of facts                                                        

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existing at the Effective Time, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 
368(a) of the Code and that, accordingly, no gain or loss will be     
recognized by AFC or GNYSB as a result of the Merger; and             

  (ix) the delivery to each of AFC and GNYSB of various letters,
certificates and other documents.                                     

The obligations of AFC and Astoria Federal to cause the Merger to be  
consummated are subject to certain additional conditions, including that neither
AFC nor Astoria Federal shall have become an "Acquiring Person" and no "Stock   
Acquisition Date" or "Distribution Date" shall have occurred as such terms are  
defined in the GNYSB Rights Agreement, and the rights reserved thereunder shall 
not have become distributable, unredeemable or exercisable. See "CERTAIN RELATED
TRANSACTIONS -- Amendment to GNYSB Rights Agreement."                           

    The obligations of GNYSB to cause the Merger to be consummated are subject
to certain additional conditions, including the following:                      

        (i) AFC shall have filed with the Secretary of State of the State of
     Delaware the amendment to the certificate of incorporation changing the par
 value of the shares of AFC Preferred Stock to $1.00 per share and AFC's
  certificate of designations with respect to AFC Series B Preferred Stock
and such documents shall have become effective under the DGCL; and    

         (ii) no "Share Acquisition Date" or "Distribution Date" as such terms
   are defined in AFC's Rights Agreement shall have occurred, and the rights
  reserved thereunder shall not have become distributable, unredeemable or
exercisable.                                                          

REPRESENTATIONS AND WARRANTIES                                                  

   Each of GNYSB and AFC have made certain representations and warranties to
each other in the Merger Agreement as to, among other things, the authorization,
validity, binding effect and enforceability of the Merger Agreement, various    
corporate matters, capital structure, compliance with laws, absence of material 
adverse changes, labor matters, employee benefit plans, environmental matters,  
asset quality, loan portfolio and allowances for possible loan losses,          
investment securities and borrowings, books and records, absence of certain     
legal proceedings and regulatory actions and certain fees payable in connection 
with the proposed transactions. GNYSB has also made certain representations and 
warranties to AFC and Astoria Federal with respect to among other things, its   
taxes, its deposits, its material agreements, its insurance, its termination    
benefits and certain other matters. AFC has also made representations and       
warranties to GNYSB, with respect to the shares of AFC Common Stock and AFC     
Series B Preferred Stock to be issued in connection with the Merger and AFC's   
access to all funds necessary to consummate the Merger and pay aggregate Merger 
Consideration. Virtually all of the representations and warranties of the       
parties, the accuracy of which is a condition to the closing of the transactions
contemplated by the Merger Agreement, contain exceptions for any condition,     
event, change or occurrence that would not have a material adverse effect on the
business, financial condition or results of operations of the party making such 
representation or warranty, and its subsidiaries taken as a whole; provided that
any such effects resulting from any (i) changes in law, rule or regulation or   
generally accepted accounting principles or interpretations thereof that applies
to both AFC and Astoria Federal, and GNYSB, as the case may be, or (ii) changes 
in interest rates, shall not be considered in determining if a material adverse 
effect has occurred. The representations and warranties of the parties do not   
survive beyond the Effective Time if the Merger is consummated, and, if the     
Merger Agreement is terminated without consummation of the Merger, there will be
no liability on the part of any party for a misrepresentation except that no    
party will be relieved from any liability arising out of the willful and        
material misrepresentation in the Merger Agreement of any fact actually known to
its senior officers.                                                            

CONDUCT OF BUSINESS PENDING THE MERGER                                          

 Pursuant to the Merger Agreement, each of GNYSB and AFC has agreed that
during the period from the date of the Merger Agreement to the Effective Time   
(except as expressly provided in the Merger Agreement and except to the extent  
required by law or regulation or by regulatory authorities), to use             

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commercially reasonable efforts to, and shall cause each of its respective      
subsidiaries to use commercially reasonable efforts to, (i) conduct its business
in the ordinary and usual course consistent with prudent banking practice, (ii) 
maintain and preserve intact its business organization, properties, leases,     
employees and advantageous business relationships and retain the services of its
officers and key employees, (iii) take no action that would materially adversely
affect or delay the ability of AFC, Astoria Federal or GNYSB to perform its     
covenants and agreements on a timely basis under the Merger Agreement, (iv) take
no action which would adversely effect or delay the ability of AFC, Astoria     
Federal or GNYSB to obtain any necessary approvals, consents or waivers of any  
governmental authority required for the transactions contemplated by the Merger 
Agreement or to perform its respective covenants and agreements on a timely     
basis under the Merger Agreement or which could reasonably be expected to result
in any such approval, consent or waiver containing any material condition or    
restriction, and (v) take no action that results in or is reasonably likely to  
have a material adverse effect on the other party.                              

   In addition, pursuant to the Merger Agreement, during the period from the
date of the Merger Agreement to the Effective Time (except as otherwise         
specifically provided in the Merger Agreement or as required by law or          
regulation or by regulatory authorities), GNYSB has agreed that it shall not,   
and shall not permit any of its subsidiaries to, without the prior consent of   
AFC, take certain actions, including the following:                             

       (i) complete any reorganization into a holding company structure or
 otherwise change its corporate structure or amend GNYSB's or any of its
subsidiaries' charters or bylaws;                                     

     (ii) issue any shares of capital stock except pursuant to (a) the
  exercise of stock options, or (b) the Stock Option Agreement, or (c) the
  terms of the certificate of designations of the GNYSB Series A Preferred
     Stock, or (d) the Rights Agreement; declare or pay any dividend (except for
 payment of the quarterly cash dividend of $0.05 per share and dividends
   payable pursuant to the Certificate of Designations of the GNYSB Series A
   Preferred Stock and the Certificate of Designations of the GNYSB Series B
Preferred Stock);                                                     

        (iii) other than in the ordinary course of business, sell, transfer,
    mortgage, encumber or otherwise dispose of any material properties, leases
or assets;                                                            

   (iv) increase the compensation or fringe benefits of any of its
employees or directors, except for general salary increases for       
    non-executive officers in the ordinary course of business, consistent with
     past practice, not to exceed 5% of the aggregate annualized compensation of
 such employees participating in the increase being granted, immediately
     following such increase and that do not cause the aggregate annual rates of
salaries of all of GNYSB's non-officer employees participating in the 
    increase to exceed 5% over such aggregate base salaries at March 31, 1997;
pay any pension or retirement allowance not required under existing   
    agreements; commit to the funding of accounts or trusts related to GNYSB's
 Plans; voluntarily accelerate the vesting of any stock options or other
 compensation or benefit; terminate or increase the cost to GNYSB of any
     GNYSB Plan; hire any new employees with an annual compensation in excess of
 $50,000; enter into any employment contracts; or make any discretionary
contribution to any GNYSB Plan;                                       

        (v) except as contemplated by the Merger Agreement or as required by
certain accounting standards, change GNYSB's methods of accounting;   

        (vi) make any individual investment of more than $50,000 by purchase
   of stock or security of any individual, corporation or other entity other
    than in the ordinary course of business, consistent with past practice, or
as permitted by (vii);                                                

      (vii) make any investment in any mortgage-backed security or other
debt security, other than U.S. government and U.S. government agency  
securities with final maturities not greater than 5 years or          
    mortgage-backed securities not considered "high risk" under OTS guidelines
that are purchased in the ordinary course of business;                

       (viii) enter into, terminate or revise any contract or agreement in
excess of $100,000;                                                   

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    (ix) settle any claim, action or proceeding for money damages in
   excess of $500,000 or which materially restricts the operations of GNYSB;

      (x) waive or release any material right or collateral or cancel or
compromise any extension of credit or claim in excess of $500,000;    

          (xi) make, renegotiate, renew, increase, extend or purchase any loans,
 lease, advance, credit enhancement or extension of credit except loans,
advances or commitments made in accordance with generally established 
underwriting guidelines in amounts not in excess of $1,000,000;       

          (xii) organize, capitalize, lend or otherwise invest in any subsidiary
or acquire a 10% or greater equity or voting interest in any entity;  

  (xiii) make any new capital expenditure in excess of $100,000;

       (xiv) make any new real estate loans secured by undeveloped land or
    real estate located outside the State of New York or make any construction
loan; and                                                             

          (xv) establish or make any commitment relating to the establishment of
  any new branch, other than those for which all regulatory approvals have
been obtained.                                                        

After the date on which all required stockholder approvals, regulatory
approvals and other approvals are received with respect to the Merger and prior 
to the Effective Time, at the request of AFC, GNYSB will modify and change its  
loan, litigation and real estate valuation policies and practices (including    
loan classifications, levels of reserves and tax effects thereof) and investment
and asset/liability management policies and practices so as to be consistent on 
a mutually satisfactory basis with those of AFC and generally accepted          
accounting principles; provided, that such policies and procedures (i) are      
consistent with all applicable laws and regulations and (ii) do not violate any 
law or regulation or cause GNYSB to be other than "well-capitalized".           

GNYSB is obligated under the Merger Agreement to change the record and
payment dates of its regular quarterly dividend on GNYSB Common Stock to be the 
same as record and payment dates of AFC's regular quarterly dividend on AFC     
Common Stock. During the period from the date of the Merger Agreement to the    
Effective Time, AFC may not, without the prior written consent of the GNYSB,    
make, declare or pay any quarterly cash dividends in excess of $0.25 per share  
(AFC's current quarterly dividend is $0.15 per share.)                          

NO SOLICITATION                                                                 

  GNYSB has agreed not to: (i) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any "Acquisition Proposal" or, (ii)  
except to the extent legally required for the discharge by the GNYSB Board of   
its fiduciary duties as advised in writing by such board's counsel, engage in   
any negotiations concerning, or provide any confidential information or data to,
or have discussions with, any person relating to an Acquisition Proposal, or    
otherwise facilitate or attempt to make or implement an Acquisition Proposal.   
"Acquisition Proposal" means for such purposes any proposal or offer (including,
without limitation, any proposal or offer to stockholders of GNYSB) with respect
to a merger, consolidation or similar transaction involving, or any purchase of 
all or more than 10% of the assets or equity securities of, GNYSB or any of its 
material subsidiaries. This restriction applies to GNYSB's officers and         
directors as well. GNYSB is required to notify AFC immediately if any such      
negotiations or discussions are sought to be initiated or continued in respect  
of any such Acquisition Proposal, together with details as to the identity of   
the persons making such inquiry or proposal, requesting such information or     
seeking such negotiations or discussions and the terms and conditions thereof.  

AMENDMENT AND WAIVER                                                            

   Subject to applicable law, the Merger Agreement may be amended by AFC and
GNYSB at any time before or after approval of the matters presented herein in   
connection with the Merger by the stockholders of AFC or GNYSB except that,     
after any such approval, no amendment may be made which either (i) legally      
requires further approval by stockholders, unless such further stockholder      
approval is obtained, or (ii) reduces                                           

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the aggregate Merger Consideration or contravenes New York State or federal     
banking laws, rules or regulations. Subject to applicable law, the parties may  
extend the time for performance of the obligations or other acts of the other   
party to the Merger Agreement, may waive any inaccuracies in the representations
and warranties contained in the Merger Agreement or in any document delivered   
pursuant thereto and may waive compliance with any agreements or conditions for 
their respective benefit contained in the Merger Agreement.                     

PRICE-BASED TERMINATION                                                         

   The Merger Agreement contains a provision that permits GNYSB to terminate
the Merger Agreement if there is a significant and prolonged decline in the per 
share market price of AFC's Common Stock that is not coincidental with a        
significant and prolonged decline in the stock prices of certain other financial
institution holding companies unless AFC is willing to increase the Merger      
Consideration.                                                                  

  This provision specifically provides that GNYSB may terminate the Merger
Agreement at any time during the five-day period commencing with the day (the   
"Valuation Date") that is the latest of (i) the day of expiration of the last   
waiting period with respect to any of the required regulatory approvals, (ii)   
the day on which the last of the required regulatory approvals is obtained and  
(iii) the day on which the last of the required stockholder approvals have been 
received, such termination to be effective on the 30th day following such date  
(the "Effective Termination Date"), if both of the following conditions are     
satisfied:                                                                      

        (i) the average of the mean between the closing high bid and the low
    asked prices of a share of AFC Common Stock for the 30 consecutive trading
   days immediately preceding the Valuation Date (the "AFC Market Value") is
less than $30.30; and                                                 

        (ii) (A) the number obtained by dividing the AFC Market Value on the
Valuation Date by $37.88 (the "AFC Ratio") is less than (B) the number
obtained by dividing the Final Index Price (as defined below) by the  
Initial Index Price (as defined below) and subtracting 0.15 from the  
quotient in this clause (ii)(B) (the "Index Ratio").                  

    If the GNYSB Board elects to exercise this termination right, it must give
prompt written notice to AFC following such election (provided that such notice 
of election to terminate may be withdrawn at any time prior to the Effective    
Termination Date). During the seven-day period commencing with its receipt of   
such notice, AFC has the option to avoid such termination of the Merger         
Agreement by electing to increase the consideration to be received by the       
holders of GNYSB Common Stock. This increase would occur by adjusting the Stock 
Consideration to equal the lesser of (x) a number equal to a fraction, the      
numerator of which is $15.15 and the denominator of which is AFC Market Value,  
and (y) a number equal to a fraction, the numerator of which is the Index Ratio 
(as defined below) multiplied by 0.50 and the denominator of which is the AFC   
Ratio. If AFC so elects within such seven-day period, it must give prompt       
written notice to GNYSB of such election and the revised Stock Consideration,   
whereupon no termination will have occurred and the Merger Agreement will       
otherwise remain in effect in accordance with its terms.                        

The following terms have the meanings indicated below:                

          "Final Index Price" means the sum of the Final Prices for each company
comprising the Index Group multiplied by the appropriate weighting.   

     "Final Price," with respect to any company belonging to the Index
  Group, means the average of the daily closing sales prices of a share of
   common stock of such company, as reported on the consolidated transaction
   reporting system for the market or exchange on which such common stock is
principally traded, during the period of 30 trading days ending on the
Valuation Date.                                                       

      "Index Group" means the 15 financial institution holding companies
     listed below, the common stock of all of which shall be publicly traded and
    as to which there shall not have been a publicly announced proposal at any
  time during the period beginning on the date of the Merger Agreement and
  ending on the Valuation Date for any such company to be acquired. In the
event that the common stock of any such company ceases to be publicly 
   traded or a proposal to acquire any such company is announced at any time
     during the period beginning on the date of this Agreement and ending on the
Valuation Date, such                                                  

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     company will be removed from the Index Group, and the weights attributed to
  the remaining companies will be adjusted proportionately for purposes of
determining the Final Index Price and the Initial Index Price. The 15 
    financial institution holding companies and the weights attributed to them
are as follows:                                                       

                                                                [Download Table]

HOLDING COMPANY                                              WEIGHTING
-----------------------------------------------------------  ---------
                                                                      
ALBANK Financial Corporation...............................      2.4% 
Bank United Corp...........................................      5.9% 
Charter One Financial......................................      8.6% 
Commercial Federal Corporation.............................      4.0% 
GreenPoint Financial Corp..................................      8.8% 
Sovereign Bancorp, Inc.....................................     11.8% 
First Financial Corp.......................................      6.8% 
North Fork Bancorporation Inc..............................      6.0% 
Dime Bancorp, Inc..........................................     19.4% 
Long Island Bancorp, Inc...................................      4.5% 
New York Bancorp Inc.......................................      3.1% 
Peoples Heritage Financial Group, Inc......................      5.2% 
RCSB Financial, Inc........................................      2.8% 
St. Paul Bancorp, Inc......................................      4.2% 
TCF Financial Corp.........................................      6.4% 

          "Initial Index Price" means the sum of each per share closing price of
   the common stock of each company comprising the Index Group multiplied by
   the applicable weighting, as such prices are reported on the consolidated
transactions reporting system for the market or exchange on which such
common stock is principally traded, on the trading day immediately    
preceding the public announcement of the Merger Agreement.            

If AFC or any company belonging to the Index Group declares or effects a stock  
dividend, reclassification, recapitalization, split-up, combination, exchange of
shares or similar transaction between the date of the Merger Agreement and the  
Valuation Date, the prices for the common stock of such company will be         
appropriately adjusted for purposes of applying the foregoing price-based       
termination option.                                                             

     Prior to making any decision to terminate (or allow the termination of) the
Merger Agreement, each of the GNYSB Board and the AFC Board would consult with  
its respective financial and other advisors and would consider all financial and
other information it deemed relevant to its decision. It is not possible to know
whether such termination right will be triggered until after the Valuation Date.
The GNYSB Board has made no decision as to whether it would exercise its right  
to terminate the Merger Agreement if the termination right has been triggered.  
In considering whether to exercise its termination right in such situation, the 
GNYSB Board would, consistent with its fiduciary duties, take into account all  
relevant facts and circumstances that exist at such time and would consult with 
its financial advisors and legal counsel. Approval of the Merger Agreement by   
the stockholders of GNYSB at the GNYSB Meeting will confer on the GNYSB Board   
the power, consistent with its fiduciary duties, to elect to consummate the     
Merger in the event the termination right is triggered whether or not there is  
any increase in the Merger Consideration and without any further action by, or  
resolicitation of, the stockholders of GNYSB. If the GNYSB Board elects to      
exercise its termination right, GNYSB must give AFC prompt notice of that       
decision during a five-day period beginning with the Valuation Date but the     
GNYSB Board may withdraw such notice, at its sole option, at any time prior to  
the 30th day following the Valuation Date. During the seven-day period          
commencing with receipt of such notice, AFC has the option, in its sole         
discretion, to increase the Merger Consideration in the manner set forth in the 
Merger Agreement and as illustrated above and thereby avoid such termination of 
the Merger Agreement. AFC is under no obligation to increase the Merger         
Consideration, and there can be no assurance that AFC would elect to increase   
the Merger Consideration if the GNYSB Board were to exercise its right to       
terminate the Merger Agreement as set forth above. Any such decision would be   
made by AFC in consultation with its investment and legal advisors in light of  
the circumstances existing at the time AFC has the opportunity to make          

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such an election. Approval of the issuance of the Merger Shares by the          
stockholders of AFC at the AFC Meeting will confer on the AFC Board the power,  
consistent with its fiduciary duties, to elect to increase the Merger           
Consideration as described above and consummate the Merger in the event the     
termination right is triggered without any further action by, or resolicitation 
of, the stockholders of AFC. If AFC elects to increase the Merger Consideration 
as set forth in the Merger Agreement and as illustrated above, it must give     
GNYSB prompt notice of that election and such increased Merger Consideration, in
which case no termination of the Merger Agreement would occur as a result of the
triggering of the termination right.                                            

TERMINATION                                                                     

   The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after its approval by the stockholders of GNYSB or AFC: 
(i) by mutual consent of AFC and GNYSB if the board of directors of each so     
determines by a vote of a majority of the members of its entire board; (ii) by  
either AFC or GNYSB upon written notice to the other party if either (a) any    
approval, consent or waiver of a governmental agency required to permit         
consummation of the transactions contemplated by the Merger Agreement shall have
been denied, or (b) if any governmental authority of competent jurisdiction     
issues a final, nonappealable order enjoining or otherwise prohibiting the      
consummation of the transactions contemplated by the Merger Agreement; (iii) by 
either AFC or GNYSB if the board of directors of either so determines by a vote 
of a majority of the members of its entire Board, in the event the Merger is not
consummated on or before March 31, 1998, unless the failure to consummate the   
Merger by such date is due to the breach of any representation, warranty or     
covenant contained in the Merger Agreement by the party seeking to terminate the
Merger Agreement; provided, that such date shall be extended for a period of 30 
days following the Valuation Date in the event GNYSB delivers a written notice  
to AFC of the satisfaction of the conditions for a price-based termination. See 
"-- Price-Based Termination"; (iv) by either AFC or GNYSB, if its board of      
directors so determines by vote of a majority of the members of its entire      
board, in the event (a) any approval of the stockholders of AFC or GNYSB        
required for the consummation of the Merger shall not have been obtained or (b) 
of a material breach by the other party of any representation, warranty,        
covenant or agreement in the Merger Agreement, which is not cured within 25     
business days after written notice of such breach or which breach by its nature 
cannot be cured prior to the closing date or any extension thereof; (v) by      
either AFC or GNYSB if the GNYSB Board shall have withdrawn or adversely        
modified its approval or recommendation of the Merger Agreement at a time when  
there has been proposed (x) a merger, consolidation, or similar transaction     
involving GNYSB, (y) a purchase, lease or other acquisition of all or           
substantially all of the assets of GNYSB or (z) a purchase or other acquisition 
(including by way of merger, consolidation, share exchange or otherwise) of     
securities representing 20% or more of the voting power of GNYSB; (vi) by either
AFC or GNYSB, if the AFC Board shall have withdrawn or adversely modified its   
approval or recommendation of the Merger Agreement or AFC has not convened a    
meeting of stockholders at which a vote was taken to approve the transactions   
contemplated by the Merger prior to the termination of the Merger Agreement     
pursuant to the terms thereof.                                                  

   In the event of termination of the Merger Agreement, the Merger Agreement
shall thereafter become void and, subject to certain specified provisions of the
Merger Agreement dealing with confidentiality of information and expenses, there
shall be no liability on the part of any party hereto or their respective       
officers or directors, except that any such termination shall be without        
prejudice to the rights of such party arising out of the willful breach by any  
other party of any covenant or willful misrepresentation contained in the Merger
Agreement and except that in certain limited circumstances, a termination fee   
may become payable as described under "-- Termination Fees."                    

TERMINATION FEES                                                                

In recognition of the efforts and expenses of, and other opportunities
foregone by AFC while, structuring the Merger, the Merger Agreement provides    
that GNYSB shall, except as described below, pay to AFC a termination fee of    
$5,000,000 in cash (the "Termination Fee") on demand if, during a period of     
eighteen (18)                                                                   

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months after the date of the Merger Agreement, the Merger has not been completed
and any of the following has occurred:                                          

 (i) Any person other than AFC or an affiliate of AFC acquires
     beneficial ownership of 20% or more of the then outstanding voting power of
GNYSB;                                                                

        (ii) GNYSB or any of its subsidiaries, without having received AFC's
     prior written consent, enters into an agreement to engage in an acquisition
  transaction with any person other than AFC or any of its subsidiaries or
     the GNYSB Board recommends that the stockholders of GNYSB approve or accept
  any acquisition transaction with any person other than AFC or any of its
   subsidiaries; under the Merger Agreement, an "acquisition transaction" is
    defined as (a) a merger or consolidation, or similar transaction involving
    GNYSB, (b) a purchase, lease, or other acquisition of all or substantially
all of the assets of GNYSB or (c) a purchase or other acquisition of  
securities representing 20% or more of the voting power of GNYSB; or  

          (iii) If a bona fide proposal is made by a third party to GNYSB or its
stockholders to engage in an acquisition transaction (as defined in   
   paragraph (ii) above) and after such proposal is made: (a) GNYSB breaches
any covenant or obligation contained in the Merger Agreement and such 
   breach entitles AFC to terminate the Merger Agreement; (b) the holders of
  GNYSB Common Stock do not approve the Merger Agreement; or (c) the GNYSB
   Board withdraws or modifies in a manner adverse to AFC the recommendation
of the GNYSB Board with respect to the Merger Agreement.              

   Notwithstanding the foregoing, GNYSB shall not be obligated to pay to AFC
such termination fee in the event that: (i) GNYSB or AFC validly terminate the  
Merger Agreement due to the failure of stockholders of AFC to approve the       
transactions contemplated by the Merger, the denial of any governmental approval
necessary to consummate the Merger, the issuance of a final governmental order  
enjoining the Merger or the mutual consent of the parties; (ii) GNYSB terminates
the Merger Agreement due to a material breach by AFC of any representation      
warranty, covenant or agreement contained in the Merger Agreement which causes  
the conditions to the Merger Agreement not to be satisfied and which breach is  
not cured within 25 days after written notice of such breach is given by GNYSB  
to AFC or which breach is not capable of being cured by the closing or any      
extension thereof or due to a drop in the price of the AFC common stock as      
described in the Merger Agreement; or (iii) the Merger is not consummated by    
March 31, 1998 (other than by reason of GNYSB's fault).                         

     The Termination Fee may be reduced under certain circumstances. Pursuant to
the Stock Option Agreement, GNYSB has granted AFC an option to purchase up to   
2,271,536 shares of GNYSB Common Stock at an exercise price of $17.875 upon the 
occurrence of certain events. The maximum aggregate profit AFC can receive under
the Stock Option Agreement and the Termination Fee arrangements is $10 million. 
See "CERTAIN RELATED TRANSACTIONS -- Stock Option Agreement."                   

     In the event of a termination (i) by either AFC or GNYSB if the GNYSB Board
shall have withdrawn or adversely modified its approval or recommendation of the
Merger Agreement at a time when there has been proposed (x) a merger,           
consolidation, or similar transaction involving GNYSB, (y) a lease or other     
acquisition of all or substantially all of the assets of GNYSB or (z) a purchase
or other acquisition (including by way of merger, consolidation, share exchange 
or otherwise) of securities representing 20% or more of the voting power of     
GNYSB; or (ii) by either AFC or GNYSB, if the AFC Board shall have withdrawn or 
adversely modified its approval or recommendation of the Merger Agreement or AFC
has not convened a meeting of stockholders at which a vote was taken to approve 
the transactions contemplated by the Merger prior to the termination of the     
Merger Agreement pursuant to the terms thereof, the party which has withdrawn or
adversely modified its approval or recommendation shall pay to the other party a
termination fee of $5 million in cash in recognition of the efforts, expenses   
and other opportunities foregone by the other party while structuring the       
Merger. In the event GNYSB makes such payment it shall have no further          
obligations to pay the Termination Fee described above.                         

EXPENSES                                                                        

  All costs and expenses incurred in connection with the Merger Agreement,
the Stock Option Agreement and the transactions contemplated thereby shall be   
paid by the party incurring such expense.                                       

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MATERIAL FEDERAL INCOME TAX CONSEQUENCES                                        

    The federal income tax discussion set forth below may not be applicable to
certain classes of taxpayers, including insurance companies, securities dealers,
financial institutions, tax exempt organizations or trusts, foreign persons,    
persons who hold shares of GNYSB Common Stock as part of a straddle or          
conversion transaction and persons who acquired shares of GNYSB Common Stock    
pursuant to the exercise of employee stock options or rights or otherwise as    
compensation. In addition, this discussion does not address the tax consequences
of transactions effectuated prior to or after the Merger, whether or not such   
transactions are in connection with the Merger, including, without limitation,  
the exercise of options or rights to purchase shares of GNYSB stock in          
anticipation of the Merger. GNYSB stockholders are urged to consult their own   
tax advisors as to the specific tax consequences to them of the Merger,         
including the applicability and effect of federal, state, local and other tax   
laws.                                                                           

Tax Opinions.  It is intended that the Merger will be treated as a    
reorganization within the meaning of Section 368(a) of the Code. Consummation of
the Merger is conditioned upon receipt by AFC of an opinion of Thacher Proffitt 
& Wood, and receipt by GNYSB of an opinion of Sullivan & Cromwell, (the "Tax    
Opinions"), dated the Effective Date, substantially to the effect that, for     
federal income tax purposes: (i) the Merger will be treated as a reorganization 
within the meaning of Section 368(a) of the Code, (ii) no gain or loss will be  
recognized by AFC, Astoria Federal or GNYSB as a result of the Merger; (iii)    
except to the extent of any cash received in lieu of a fractional share interest
in GNYSB Common Stock or of any Cash Consideration received, no gain or loss    
will be recognized by holders of GNYSB Common Stock who exchange their shares of
GNYSB Common Stock for shares of AFC Common Stock pursuant to the Merger; (iv)  
the tax basis of the shares of AFC Common Stock received by each holder of GNYSB
Common Stock who exchanges shares of GNYSB Common Stock for shares of AFC Common
stock in the Merger will be the same as the tax basis of the shares of GNYSB    
Common Stock surrendered pursuant to the Merger, reduced by any amount allocable
to a fractional share interest of GNYSB Common Stock for which cash is received 
and by the amount of any Cash Consideration received, and increased by any gain 
recognized on such exchange; (v) the holding period of the shares of AFC Common 
Stock received by each holder of GNYSB Common Stock in the Merger will include  
the holding period of the shares of GNYSB Common Stock exchanged therefor,      
provided that such stockholder holds such shares of GNYSB Common Stock as a     
capital asset at the Effective Time; (vi) no gain or loss will be recognized by 
the holders of GNYSB Series B Preferred Stock who exchange their shares of GNYSB
Series B Preferred Stock solely for shares of AFC Series B Preferred Stock      
pursuant to the Merger; (vii) the tax basis of the shares of AFC Series B       
Preferred Stock received by each GNYSB stockholder who exchanges GNYSB Series B 
Preferred Stock solely for shares of AFC Series B Preferred Stock in the Merger 
will be the same as the tax basis of the GNYSB Series B Preferred Stock         
surrendered pursuant to the Merger and (viii) the holding period of the shares  
of AFC Series B Preferred Stock received by each holder of GNYSB Series B       
Preferred Stock in the Merger will include the holding period of the shares of  
GNYSB Series B Preferred Stock exchanged therefor, provided that such           
stockholder holds such GNYSB Series B Preferred Stock as a capital asset at the 
Effective Time.                                                                 

   The Tax Opinions will not be binding on the Internal Revenue Service (the
"Service"), and there can be no assurance that the Service will not contest the 
conclusions expressed therein. The Tax Opinions may be based in part upon       
certain factual assumptions and upon certain representations made, and          
certificates delivered, by AFC, Astoria Federal, GNYSB and certain of their     
respective stockholders, officers and other persons, which representations and  
certificates Thacher Proffitt & Wood and Sullivan & Cromwell will assume to be  
true, correct and complete. If such representations or certificates are         
inaccurate, the Tax Opinions could be adversely affected. In the event the      
parties waive receipt of the tax opinions and the material federal income tax   
consequences are materially different for stockholders than as described herein,
GNYSB will resolicit its voting stockholders prior to completing the Merger.    

Tax Consequences; General.  The following summary sets forth certain  
anticipated material federal income tax consequences of the Merger to GNYSB     
stockholders. The tax treatment of each GNYSB stockholder will depend in part   
upon such stockholder's particular situation and the consideration received by  
such stockholder pursuant to the Merger. This summary is based on the provisions
of the Code, the Treasury Regulations promulgated thereunder and administrative 
and judicial interpretations thereof, all as in effect as                       

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of the date hereof. Such laws, regulations or interpretations may differ at the 
Effective Time, and relevant facts also may differ. In general, the tax         
treatment of holders of both GNYSB Common Stock and GNYSB Series B Preferred    
Stock who receive Cash Consideration pursuant to the Merger will be essentially 
as described below under "Exchange of GNYSB Common Stock for AFC Common Stock   
and Cash." Such holders should consult their own tax advisors for the specific  
tax consequences applicable to such holders.                                    

Exchange of GNYSB Stock Solely for AFC Stock.  No gain or loss will be
recognized by a GNYSB stockholder who receives solely AFC Common Stock for such 
stockholder's shares of GNYSB Common Stock (except to the extent such a         
stockholder receives cash in lieu of a fractional share interest in AFC Common  
Stock) or by a GNYSB stockholder who receives solely AFC Series B Preferred     
Stock for such stockholder's shares of GNYSB Series B Preferred Stock.          

Such a GNYSB stockholder's aggregate tax basis in the AFC Common Stock
received pursuant to the Merger will equal such stockholder's aggregate tax     
basis in the shares of GNYSB Common Stock exchanged therefor, reduced by any    
amount allocable to a fractional share interest of AFC Common Stock for which   
cash is received. Such a GNYSB stockholder's aggregate tax basis in the AFC     
Series B Preferred Stock received pursuant to the Merger will equal such        
stockholder's aggregate tax basis in the shares of GNYSB Series B Preferred     
Stock exchanged therefor. The holding period of AFC Common Stock or AFC Series B
Preferred Stock received will include the holding period of the shares of GNYSB 
Common Stock or GNYSB Series B Preferred Stock exchanged therefor, provided that
such shares were held as a capital asset as of the Effective Date. GNYSB        
stockholders should consult their own tax advisors concerning the determination 
of their basis and holding period in any particular share of AFC Common Stock or
AFC Series B Preferred Stock since several methods of determination may be      
available.                                                                      

Exchange of GNYSB Common Stock for AFC Common Stock and Cash.  A GNYSB
stockholder who receives both AFC Common Stock and cash (other than cash        
received in lieu of a fractional share interest in AFC Common Stock) will       
recognize gain, but not loss, to the extent of the lesser of:                   

       (i) the excess of (A) the sum of the aggregate fair market value of
the AFC Common Stock received (including the fair market value of any 
   fractional share interest in AFC Common Stock for which cash is received)
   and the amount of cash received (other than cash received in lieu of such
  fractional share interest) over (B) the stockholder's aggregate adjusted
  federal income tax basis for the shares of GNYSB Common Stock exchanged;
and                                                                   

         (ii) the amount of cash received by such stockholder (other than cash
received in lieu of such fractional share interest).                  

  If the shares of GNYSB Common Stock exchanged in the Merger were held as
capital assets at the Effective Time, any such gain will be treated as capital  
gain (which will be long-term capital gain if the shares of GNYSB Common Stock  
exchanged were held for more than one year), unless the receipt of cash (other  
than cash received in lieu of a fractional share interest) has the effect of a  
distribution of a dividend within the meaning of Section 356(a)(2) of the Code, 
in which case such gain will be treated as a dividend to the extent of such     
stockholder's ratable share of the undistributed accumulated earnings and       
profits of GNYSB or possibly of AFC. Following is a brief discussion of such    
potential tax treatment; however, GNYSB stockholders should consult their own   
tax advisors as to the possibility that all or a portion of any cash received in
exchange for their GNYSB Common Stock will be treated as a dividend.            

The stock redemption provisions of Section 302 of the Code apply in   
determining whether cash received by a GNYSB stockholder pursuant to the Merger 
has the effect of a distribution of a dividend under Section 356(a)(2) of the   
Code (the "Hypothetical Redemption Analysis"). Under the Hypothetical Redemption
Analysis, a GNYSB stockholder will be treated as if the portion of the shares of
GNYSB Common Stock exchanged for cash in the Merger had been instead exchanged  
for shares of AFC Common Stock (the "Hypothetical Shares"), followed immediately
by a redemption of the Hypothetical Shares by AFC for cash. Under the principles
of Section 302 of the Code, a GNYSB stockholder will recognize capital gain     
rather than dividend income with respect to the cash received if the            
hypothetical redemption is "not essentially equivalent to a dividend" or is     
"substantially disproportionate" with respect to such GNYSB                     

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stockholder. In applying the principles of Section 302, the constructive        
ownership rules of Section 318 of the Code will apply in comparing a GNYSB      
stockholder's ownership interest in AFC both immediately after the Merger (but  
before the hypothetical redemption) and after the hypothetical redemption.      

   Whether the hypothetical redemption by AFC of the Hypothetical Shares for
cash is "not essentially equivalent to a dividend" with respect to a GNYSB      
stockholder will depend upon such stockholder's particular circumstances.       
However, the hypothetical redemption must, in any event, result in a "meaningful
reduction" in such GNYSB stockholder's percentage ownership of AFC stock. In    
determining whether the hypothetical redemption by AFC results in a meaningful  
reduction in a GNYSB stockholder's percentage ownership of AFC stock, and       
therefore, does not have the effect of a distribution of a dividend, a GNYSB    
stockholder should compare his or her share interest in AFC (including interests
owned actually, hypothetically and constructively) immediately after the Merger 
(but before the hypothetical redemption) to his or her share interest after the 
hypothetical redemption. The Service has indicated, in Revenue Ruling 76-385,   
that a stockholder in a publicly-held corporation whose relative stock interest 
in the corporation is minimal and who exercises no "control" over corporate     
affairs is generally treated as having had a meaningful reduction in his or her 
stock after a redemption transaction if his or her percentage stock ownership in
the corporation has been reduced to any extent, taking into account the         
stockholder's actual and constructive ownership before and after the redemption.
In Revenue Ruling 76-385, a reduction from .0001118 percent to .0001081 percent 
was found to be a meaningful reduction in stockholdings.                        

The hypothetical redemption transaction would be "substantially       
disproportionate", and therefore, would not have the effect of a distribution of
a dividend with respect to a GNYSB stockholder who owns less than 50% of the    
voting power of the outstanding AFC Common Stock if the percentage of AFC Common
Stock actually and constructively owned by such stockholder immediately after   
the hypothetical redemption is less than 80% of the percentage of AFC Common    
Stock actually, hypothetically and constructively owned by the GNYSB stockholder
immediately before the hypothetical redemption.                                 

     In determining how many shares of AFC Common Stock a GNYSB stockholder owns
constructively before the hypothetical redemption for purposes of making the    
"not essentially equivalent to a dividend" or "substantially disproportionate"  
determination, a GNYSB stockholder must take into account any Hypothetical      
Shares owned by the persons or entities whose stock he or she is deemed to own  
constructively under Section 318 of the Code.                                   

Such a GNYSB stockholder's aggregate tax basis in the AFC Common Stock
received pursuant to the Merger will equal such stockholder's aggregate tax     
basis in the shares of GNYSB Common Stock exchanged therefor, reduced by any    
amount allocable to a fractional share interest of AFC Common Stock for which   
cash is received and by the amount of any Cash Consideration received, and      
increased by the amount of gain, if any, recognized by such stockholder in the  
Merger (including any portion of such gain that is treated as a dividend). The  
holding period of AFC Common Stock received will include the holding period of  
the shares of GNYSB Common Stock exchanged therefor, provided that such shares  
of GNYSB Common Stock were held as a capital asset as of the Effective Date.    
GNYSB stockholders should consult their own tax advisors concerning the         
determination of their basis and holding period in any particular share of AFC  
Common Stock since several methods of determination may be available.           

  Exchange of GNYSB Common Stock Solely for Cash.  A GNYSB stockholder who
receives solely cash in exchange for such stockholder's shares of GNYSB Common  
Stock may be treated as (i) having sold such shares of GNYSB Common Stock to    
AFC, (ii) having received, in exchange for such shares of GNYSB Common Stock,   
stock of AFC which was deemed to have been redeemed by AFC, or (iii) as having  
such shares of GNYSB Common Stock deemed to have been redeemed by GNYSB. In the 
event of sale treatment, such stockholder would recognize gain or loss in an    
amount equal to the difference between the amount of cash received and the      
stockholder's aggregate adjusted federal income tax basis for such shares of    
GNYSB Common Stock. In the event of redemption treatment, such deemed redemption
would be subject to Section 302 of the Code, with the result that such          
stockholder would be treated as having sold his or her shares and would         
recognize gain or loss in a like amount if the deemed redemption is in "complete
redemption" of all of such stockholder's stock in the redeeming corporation, is 
"substantially disproportionate" with respect to                                

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such stockholder or is "not essentially equivalent to a dividend." In making    
such a determination under Section 302, the constructive ownership rules of     
Section 318 of the Code will apply in comparing a GNYSB stockholder's ownership 
interest in the redeeming corporation both immediately before and after the     
Merger. See "-- Exchange of GNYSB Common Stock for AFC Common Stock and Cash."  
Gain or loss realized on a sale of such shares of GNYSB Common Stock will be    
capital gain or loss if such shares of GNYSB Common Stock were held as capital  
assets at the Effective Time, and will be long-term capital gain or loss if such
shares of GNYSB Common Stock were held for more than one year. If sale treatment
does not apply to a deemed redemption, the cash received by such a stockholder  
will be treated as a dividend to the extent of the redeeming corporation's      
accumulated and current earnings and profits. GNYSB stockholders should consult 
their own tax advisors as to the possibility that all or a portion of any cash  
received in exchange for their shares of GNYSB Common Stock will be treated as a
dividend.                                                                       

    Fractional Shares of AFC Common Stock.  No fractional shares of AFC Common
Stock will be issued in the Merger. A GNYSB stockholder who receives cash in    
lieu of such a fractional share will be treated as having received such         
fractional share pursuant to the Merger and then as having exchanged such       
fractional share for cash in a redemption by AFC subject to Section 302 of the  
Code. Such a deemed redemption will be treated as a sale of the fractional      
share, provided that it is not "essentially equivalent to a dividend." See      
"-- Exchange of GNYSB Common Stock for AFC Common Stock and Cash." If the AFC   
Common Stock represents a capital asset in the hands of the stockholder, the    
stockholder will generally recognize capital gain or loss on such a deemed      
redemption of the fractional share in an amount determined by the excess of the 
amount of cash received therefor and the stockholder's tax basis in the         
fractional share. Any such capital gain will be long-term if the GNYSB Common   
Stock exchanged was held for more than one year.                                

   Backup Withholding.  Unless an exemption applies under applicable law and
regulations, the Exchange Agent will be required to withhold 31% of any cash    
payments to which a non-corporate stockholder or other payee is entitled        
pursuant to the Merger unless the stockholder or other payee provides its       
taxpayer identification number (social security number, employer identification 
number or individual taxpayer identification number) and certifies that such    
number is correct. Each stockholder and, if applicable, each other payee must   
complete and sign the substitute Form W-9 or, if applicable, the certificate of 
foreign status on Form W-8, included with the Election Forms, so as to provide  
the information and certification necessary to avoid backup withholding, unless 
an applicable exemption exists and is established in a manner satisfactory to   
AFC and the Exchange Agent.                                                     

Redemption of GNYSB Rights.  Receipt of a cash payment from GNYSB in  
redemption of a GNYSB Right should be treated as a dividend taxable as ordinary 
income to the extent of the accumulated and current earnings and profits of     
GNYSB.                                                                          

ACCOUNTING TREATMENT                                                            

   AFC will record the Merger using the purchase method of accounting. Under
the purchase method of accounting, assets acquired and liabilities assumed are  
recorded at their fair value.                                                   

DISSENTERS' RIGHTS                                                              

    GNYSB.  Any holder of GNYSB Common Stock or GNYSB Series A Preferred Stock
entitled to vote on the Merger who does not vote in favor thereof has the right 
to receive payment of the fair value of such stockholder's shares of GNYSB      
Common Stock, upon compliance with the provisions of Section 6022 of the NYBL.  
GNYSB expects that the shares of GNYSB Series A Preferred Stock will have been  
converted or redeemed prior to the time at which a notice of election to dissent
may be filed under Section 6022 of the NYBL, in which case holders of GNYSB     
Series A Preferred Stock who dissent from the Merger will have dissenters'      
rights only with respect to the shares of GNYSB Common Stock into which such    
holders' GNYSB Series A Preferred Stock is converted. If shares of GNYSB Series 
A Preferred Stock are outstanding at the time a notice of election to dissent is
filed with respect thereto, and all other provisions of Sections 6022 of the    
NYBL are complied with, then the holder of GNYSB Series A Preferred Stock who   
filed such notice of election to dissent shall have the right to receive payment
of the fair value of such stockholder's shares of GNYSB Series A Preferred      
Stock. Failure to comply strictly with the procedures set forth in that section 
will cause the stockholder to lose his dissenters' rights. The following summary
of the applicable provisions of                                                 

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Section 6022 of the NYBL is not intended to be a complete statement thereof and 
is qualified in its entirety by reference to the full text of Section 6022 of   
the NYBL, which is attached hereto as Appendix F.                               

     Any GNYSB stockholder intending to enforce his right to receive payment for
shares of GNYSB Common Stock or GNYSB Series A Preferred Stock may not vote in  
favor of the Merger Agreement and must file with GNYSB before or at the GNYSB   
Meeting (but before the stockholders' vote), written objection to the Merger    
Agreement. Neither a vote against the Merger Agreement, a proxy directing such  
vote, an abstention nor a failure to vote will satisfy the requirement that a   
written demand for payment be delivered to GNYSB before the vote on the Merger  
Agreement is taken at the GNYSB Meeting. In addition, a vote in favor of the    
Merger Agreement shall constitute a waiver of any dissenters' rights pursuant to
the NYBL. A vote against, an abstention or a failure to vote will not constitute
a waiver of such rights.                                                        

     A stockholder's objection must state that the stockholder intends to demand
payment for his shares of GNYSB Common Stock or GNYSB Series A Preferred Stock, 
if the Merger is consummated. Each stockholder who has filed such an objection  
will be notified of the approval of the Merger Agreement within ten (10) days   
following the date of any approval by the GNYSB stockholders. Any such          
stockholder who elects to dissent must, within twenty (20) days of the giving of
such notice, file with GNYSB a written notice of such election containing the   
information required under Section 6022 of the NYBL, and simultaneously or      
within one month thereafter, must submit the certificate representing shares of 
GNYSB Common Stock or GNYSB Series A Preferred Stock for placement of the       
appropriate legend thereon. A stockholder may not dissent as to less than all of
the shares of GNYSB Common Stock or GNYSB Series A Preferred Stock held by the  
stockholder. A nominee or fiduciary may not dissent on behalf of any beneficial 
owner as to less than all of the shares of such owner held of record by such    
nominee or fiduciary.                                                           

  Upon filing a Notice of Election to dissent, a stockholder will cease to
have any of the rights of a stockholder of GNYSB Common Stock or GNYSB Series A 
Preferred Stock including dividend rights, except the right to be paid the fair 
value of his or her shares and such other rights as are granted under the NYBL. 
Withdrawal of any election to dissent will require the written consent of GNYSB.
If the Merger is not consummated, dissenting stockholders will have no right to 
payment for shares and will be reinstated with all rights of a stockholder of   
GNYSB Common Stock or GNYSB Series A Preferred Stock.                           

Within seven (7) days after the later of the expiration of the period 
within which stockholders may file their written election to dissent or the     
consummation of the Merger, AFC may make a written offer to all dissenting      
stockholders to pay a specified amount, which it considers to be a fair amount, 
for each share of GNYSB Common Stock or GNYSB Series A Preferred Stock held by  
dissenting stockholders. If, within thirty (30) days of such offer, any         
dissenting stockholder and AFC agree on the price to be paid for the            
stockholder's shares of GNYSB Common Stock or GNYSB Series A Preferred Stock the
agreed upon payment will be made to such stockholder within sixty (60) days of  
the written offer and upon surrender of the certificates representing such      
shares.                                                                         

   If a written offer is not made within the specified period or if there is
no agreement with the dissenting stockholder on the price to be paid, then AFC  
may institute a special court proceeding to determine the rights of dissenting  
stockholders and to fix the fair value of shares of GNYSB Common Stock or GNYSB 
Series A Preferred Stock. If such proceeding is not instituted, then any        
dissenting stockholder who has not accepted an offer must initiate a similar    
court proceeding within thirty (30) days of the last date on which AFC could    
have initiated such a court proceeding. If the required court proceeding is not 
instituted within the thirty (30) day period, a dissenting stockholder shall    
lose all dissenters' rights unless the court directs otherwise.                 

  AFC.  Under the DGCL stockholders of AFC are not entitled to dissenters'
rights in connection with the transactions related to the consummation of the   
Merger.                                                                         

INTERESTS OF CERTAIN PERSONS IN THE MERGER                                      

    Certain members of GNYSB's management and the GNYSB Board may be deemed to
have interests in the Merger in addition to their interests, if any, as holders 
of GNYSB Common Stock and as holders of GNYSB Series A Preferred Stock through  
their participation in the GNYSB ESOP. The GNYSB Board was aware of these       
factors and considered them, among other matters, in approving the Merger       
Agreement and the transactions contemplated thereby.                            

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 Election to Advisory Board.  Promptly following the Effective Time, AFC
will cause all of the non-officer members of the GNYSB Board as of March 29,    
1997 who are willing to so serve to be elected or appointed as members of the   
Advisory Board, the principal function of which shall be to advise AFC with     
respect to deposit and lending activities in GNYSB's former market area and to  
maintain and develop customer relationships. The members of the Advisory Board  
who are willing to so serve shall be elected to serve a term of three years     
beginning on the Effective Date. Each member of the Advisory Board who is not a 
director of AFC and who is not an employee of AFC will receive an annual        
retainer fee for such service at an annual rate of $24,000, payable in monthly  
installments or in one lump sum at any time in advance at the option of AFC. In 
addition, within 30 days after the Effective Date, each member of the Advisory  
Board will be granted an option to purchase 4,000 shares of AFC Common Stock.   
Such options will be for a term of ten (10) years beginning on the Effective    
Date and will be exercisable at any time after the Effective Date at an exercise
price per share equal to the closing sales price for a share of AFC Common Stock
on the date of grant.                                                           

    Effect on Retirement Plan for Non-employee Directors.  GNYSB maintains The
Retirement Plan of The Greater New York Savings Bank for Non-Employee Directors 
("GNYSB Directors Plan"). The GNYSB Directors Plan provides each nonemployee    
director of GNYSB who has attained age 55 and has completed five years of       
service as a director with an annual retirement benefit equal to the director's 
annual retainer payable on the date of retirement ($24,000), reduced by 5% for  
each year (or fraction thereof) that the director's retirement date precedes the
director's attainment of age 65 and increased to the actuarial equivalent of the
normal annual retirement benefit based upon interest rate and mortality         
assumptions specified in the GNYSB Directors' Plan if the director's retirement 
date is after age 65. In addition, each non-employee director may elect to      
receive the actuarial equivalent of the annual pension benefit described above  
in the form of a lump sum payment. All of the directors of GNYSB, other than    
Gwendolyn Calvert Baker, will have satisfied the vesting requirements of the    
GNYSB Directors Plan at, or prior to, the Effective Time. All of the directors  
except for Peter Haeffner, Jr. and C. Stephen Connolly are at least 65 years of 
age and are therefore currently eligible for an unreduced retirement benefit.   
The Merger, as a "change in control" as defined in the GNYSB Directors Plan will
result in Dr. Baker's benefit being vested and Mr. Connolly, Mr. Haeffner and   
Dr. Baker being entitled to an unreduced retirement benefit.                    

    Indemnification.  AFC has agreed, among other things, that AFC shall, from
and after the Effective Time through the sixth anniversary of the Effective     
Time, indemnify and hold harmless each present and former director and officer  
of GNYSB or its subsidiaries and each officer or employee of GNYSB or its       
subsidiaries that is serving or has served as a director or trustee of another  
entity expressly at GNYSB's request or direction (each, an "Indemnified Party"),
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") incurred  
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of matters        
existing or occurring at or prior to the Effective Time (including the          
transactions contemplated by the Merger), whether asserted or claimed prior to, 
at or after the Effective Time, and to advance any such Costs to each           
Indemnified Party as they are from time to time incurred, in each case to the   
fullest extent then permitted under applicable law. AFC has also agreed, among  
other things, that for a period of six years after the Effective Time, it will  
maintain in effect the current policies of directors' and officers' liability   
insurance maintained by GNYSB (provided that AFC may substitute therefor        
policies with reputable and financially sound carriers of at least the same     
coverage and amount containing terms which are no less advantageous to the      
beneficiaries thereof); however, in no event will AFC be obligated to expend any
premium per annum in excess of 200% of the amount of the annual premiums paid as
of March 29, 1997 by GNYSB for such insurance.                                  

    Employment Agreements for Executive Officers.  AFC has agreed to honor all
existing GNYSB employment, severance and other compensation agreements and      
arrangements, including the employment agreements dated various dates (and for  
some individuals, subsequent amendatory agreements dated June 22, 1994 amending 
the respective employment agreements) between GNYSB and, respectively, Gerard C.
Keegan, Michael J. Henchy, Daniel J. Harris, Philip A. Cimino, Philip T. Spies, 
Michael R. Barrett, Franklyn A. Berkowitz, Robert P. Carlson, Gary P. DiLorenzo,
Michael D. Gornicki, Jeanne M. Lutfy, Theodore A. Zarembo and John A. Dresch    
(the "Employment Agreements") and change in control letter agreements dated     
various dates between GNYSB and, respectively, Gerard C. Keegan, Michael J.     
Henchy, Daniel J. Harris, Philip A. Cimino, Philip T. Spies, Michael R. Barrett,
Franklyn A. Berkowitz, Robert P. Carlson,                                       

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Gary P. DiLorenzo, Michael D. Gornicki, Jeanne M. Lutfy, Theodore A. Zarembo and
John A. Dresch (the "Change in Control Letter Agreements"). Under the Change in 
Control Letter Agreements, upon the involuntary termination of the covered      
executive's employment other than for "cause" or the voluntary termination by   
the covered executive for "good reason" (as defined in the Change in Control    
Letter Agreements) following a "change in control" as defined in those          
agreements (which includes the Merger), during the term of such agreements or   
within two years after the change in control, if later, the covered executive   
would be entitled to the following payments and benefits: (a) the product of (i)
and (ii), where (i) is the sum of the executive's base salary and the single    
highest bonus amount paid to him or her during the prior three years and (ii) is
three in the case of Mr. Keegan or two in the case of the twelve other officers;
(b) the present value of the executive's accrued benefit under any of GNYSB's   
qualified or non-qualified defined benefit plans and the executive's account    
balance under any of GNYSB's qualified or non-qualified defined contribution    
plans, in either case to the extent that such accrued benefit or account balance
is not fully vested as of the Effective Date; (c) a lump sum payment for all    
outstanding options (whether or not vested) held by the executive equal to the  
difference between the exercise price of such options and the higher of the     
closing price of the GNYSB Common Stock on the day before the payment or the    
highest price per share paid in connection with any change in control of GNYSB  
multiplied by the number of shares of GNYSB Common Stock subject to such options
(see "-- Stock Options" below); (d) indemnification for any excise taxes that   
may be imposed pursuant to Section 4999 of the Code (the "Excise Tax Indemnity")
and (e) if the Executive has attained age 55 and is eligible for early          
retirement under the GNYSB pension plan, a lump sum payment representing the    
present value of the difference between normal retirement benefits and early    
retirement benefits under the GNYSB pension plan. Each covered executive would  
also be entitled to continued insurance coverage for two years.                 

 Under the Employment Agreements upon the involuntary termination of the
executive's employment other than for "cause" (as defined in such agreements) or
a termination by the executive following a material breach of the agreement by  
GNYSB, each executive would be entitled to the following payments and           
benefits: (a) an amount equal to the executive's annual base salary in effect as
of the date of his termination multiplied by the number of years (including     
fractions) remaining in the executive's term under the Employment Agreement,    
such amount payable in bi-weekly payments over such term; (b) continued         
insurance benefits for the remaining term of such agreement; (c) lump sum cash  
payments equal to the present value of the additional benefits to which he would
have been entitled under GNYSB's pension plan, the GNYSB ESOP and GNYSB's       
supplemental executive retirement plan ("SERP") or other similar plans if he had
continued working for GNYSB for the remaining term under his agreement; and (d) 
a lump sum as payment for all outstanding options held by the executive (whether
or not vested) equal to the difference between the exercise price of such       
options and the fair market value of the Common Stock on the date of the        
termination multiplied by the number of shares of GNYSB Common Stock subject to 
such options. See "-- Stock Options" below. Each Employment Agreement provides  
an offset for benefits payable under the related Change in Control Letter       
Agreement.                                                                      

     The Merger Agreement provides that Astoria Federal will pay Messrs. Keegan,
Harris and Henchy a cash amount in settlement of their Employment Agreements and
Change in Control Letter Agreements as soon as practicable following the        
Effective Time. The estimated maximum severance benefits and excise tax         
indemnity payment amount under the Employment Agreements and the Change in      
Control Letter Agreements for the executive officers of GNYSB are as follows:   
Gerard C. Keegan, $5,253,000 and $1,977,000; Michael J. Henchy, $1,352,000 and  
$535,000; Daniel J. Harris, $846,000 and $408,000; Philip A. Cimino, $792,000   
and $398,000; Philip T. Spies, $618,000 and $274,000; and all executive officers
as a group, which consists of 13 persons, $12,956,000 and $5,622,000.           

Mr. Keegan will be named as a director, Vice Chairman and Chief       
Administrative Officer of each of AFC and Astoria Federal. AFC also agrees to   
cause one other member of the GNYSB Board (as of March 29, 1997), selected by   
GNYSB and acceptable to AFC, to be elected or appointed as a director of AFC and
Astoria Federal as promptly as practicable after the Effective Time. AFC and    
Astoria Federal have entered into new employment agreements with Mr. Keegan to  
serve as Vice Chairman and Chief Administrative Officer and as a director of AFC
and Astoria Federal, which agreements are conditioned upon the consummation of  
the Merger and will take effect at the Effective Time and will have an initial  
term of three years. On each anniversary of the Effective Time, the             
disinterested members of the Astoria Federal Board may                          

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extend Mr. Keegan's agreement with Astoria Federal for an additional year such  
that the remaining term shall be three years. The agreement with AFC            
automatically extends daily, so as to maintain its original term of three years,
unless written notice of non-renewal is given by the AFC Board. The agreements  
provide for an annual base salary of $350,000. The agreement with AFC provides  
for an award of 15,000 shares of restricted stock under the Astoria Federal     
Savings and Loan Association Recognition and Retention Plan for Officers and    
Employees, with such shares vesting in equal portions over three years beginning
on January 10, 1998. There is no cost to Mr. Keegan for such shares. The        
agreements provide for Mr. Keegan's participation in retirement plans, group    
life, medical and disability insurance plans and any other employee benefit     
programs, including incentive compensation plans and stock option, stock        
appreciation right ("SAR") and restricted stock plans maintained by AFC or      
Astoria Federal in accordance with the terms and conditions of such plans. The  
agreements provide for termination of Mr. Keegan's employment at any time by AFC
or Astoria Federal with or without cause, as separately defined in such         
agreements. In the event Mr. Keegan's employment terminates (A) due to AFC's or 
Astoria Federal's (i) failure to re-elect him to the office of Vice Chairman and
Chief Administrative Officer (or a higher office) or to the Board, (ii) failure 
by whatever cause to vest in Mr. Keegan the functions, duties or                
responsibilities prescribed in the agreement, (iii) material breach of the      
agreements or reduction in Mr. Keegan's base salary or other change to the terms
and conditions of his compensation and benefits which either individually or in 
the aggregate has a material adverse effect on the aggregate value of the total 
compensation package provided to him or (iv) relocation of Mr. Keegan's         
principal place of employment outside of Nassau or Queens Counties of New York; 
or (B) for reasons other than (i) for cause (as defined in the agreements), (ii)
voluntary resignation, except as a result of the actions specified under clause 
(A) above or following a change of control, as defined in the agreements, (iii) 
following the executive's attainment of mandatory retirement age for executive  
officers (currently 70 years of age); (iv) death, (v) long term disability or   
(vi) expiration of the term of the agreement, Mr. Keegan would be entitled to   
severance benefits.                                                             

  The severance benefits to which Mr. Keegan would be entitled include (i)
continued life, medical and disability insurance benefits for the period from   
termination of his employment through the remaining term of the agreement as if 
he had continued in the employ of AFC or Astoria Federal through the end of the 
term of the agreement (the "Unexpired Term"); (ii) a lump sum payment equal to  
the present value of the salary, incentive compensation, pension, profit-sharing
and the GNYSB ESOP benefits he would have earned during the Unexpired Term      
computed using a prescribed valuation method; (iii) accelerated vesting of all  
outstanding options and restricted stock awards; (vi) at the election of AFC or 
Astoria Federal, a cash settlement of all outstanding options and restricted    
stock awards. In addition, if Mr. Keegan's employment terminates following a    
change of control of AFC or Astoria Federal, his agreement with AFC provides    
that for any taxable year in which Mr. Keegan would be liable for the payment of
excise taxes under Section 4999 of the Code with respect to any payment in the  
nature of compensation paid by AFC or any of its affiliated companies, as a     
result of such payments constituting an "excess parachute payments" under       
Section 280G of the Code, or any successor thereto, then an amount will be paid 
(the "Tax Payment") to him, or on his behalf, based upon a formula set forth in 
the agreement, the effect of which would be to maintain the after-tax severance 
benefit to which he would be entitled as described in the preceding paragraph   
for the application of the excise tax specified in Section 4999 of the Code and 
any federal, state and local income or other taxes to which he would be subject 
as a result of the Tax Payment. Mr. Keegan's agreement with AFC provides that   
any compensation or benefits provided to Mr. Keegan under the agreement with    
Astoria Federal will be applied to offset the obligations under the agreement   
with AFC.                                                                       

Change in Control Severance Agreements.  Under the terms of the Merger
Agreement, AFC will honor the change in control severance agreements dated      
various dates between GNYSB and 73 individuals, in addition to those individuals
named above.                                                                    

     Share Ownership.  As of April 30, 1997, directors and executive officers of
GNYSB and certain of their affiliates had a beneficial interest in 405,002      
shares of GNYSB Common Stock (exclusive of shares which could be acquired upon  
exercise of options) and 93,435 shares of GNYSB Series A Preferred Stock for    
which they will receive the Merger Consideration.                               

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Stock Options.  GNYSB maintains the Long-Term Incentive Program, 1996 
Equity Incentive Plan and 1996 Non-Employee Directors' Stock Option Plan        
(collectively, the "GNYSB Option Plans"). At the Effective Time, each option to 
purchase a share of GNYSB Common Stock that has been granted pursuant to the    
GNYSB Option Plans and that is outstanding and unexercised at the Effective Time
(whether or not such option is otherwise vested or exercisable) (each, an       
"Outstanding GNYSB Option") will be cancelled and will cease to be exercisable. 
In consideration for such cancellation, AFC will, with respect to each          
Outstanding GNYSB Option, pay to the holder thereof an amount equal to the      
excess (if any) of (i) $19.00 over (ii) the price at which the holder may       
acquire a share of GNYSB Common Stock upon exercise of such Outstanding GNYSB   
Option multiplied by the number of shares of GNYSB Common Stock subject to such 
option (the "Option Cashout Payment"). Any cash paid in connection with the     
cancellation of GNYSB stock options issued pursuant to GNYSB Option Plans is    
independent of the Merger Consideration paid pursuant to the procedures         
discussed in "Merger Consideration and Election, Allocation and Proration       
Procedures" herein and so is not considered for purposes of determining the     
allocation and proration of the Merger Consideration among GNYSB shares.        

     The following table sets forth, with respect to outstanding options held by
executive officers on April 30, 1997, the aggregate number of shares subject to 
such options (whether or not exercisable), the number of shares with respect to 
which such options are exercisable on September 30, 1997, the number of         
additional shares with respect to which such options would become exercisable   
because of a change in control, and based on figures provided by GNYSB, the     
aggregate amount that would be required to be paid pursuant to the Merger       
Agreement in consideration for the cancellation of such options.                

                                                        [Enlarge/Download Table]

                                            (2)                                                              
                                     SHARES SUBJECT TO                                                       
                                        OUTSTANDING                                                          
                                        OPTIONS ON                                  (4)              (5)     
                                        4/30/97 AND            (3)           AGGREGATE SHARES     AGGREGATE  
                (1)                     EXERCISABLE     ADDITIONAL SHARES       SUBJECT TO       CANCELLATION
         EXECUTIVE OFFICER              AT 9/30/97      SUBJECT TO OPTIONS  OUTSTANDING OPTIONS     PRICE*   
-----------------------------------  -----------------  ------------------  -------------------  ------------
                                                                                                             
Gerard C. Keegan...................       231,250              86,250             317,500         $ 3,665,311
Michael J. Henchy..................        74,430              22,500              96,930           1,133,145
Daniel J. Harris...................        50,375              22,125              72,500             834,063
Philip A. Cimino...................        53,875              14,625              68,500             820,526
Philip T. Spies....................        42,875              14,625              57,500             718,281
All executive officers as a group                                                                            
  (13 persons).....................       623,255             246,675             869,930         $ 9,973,889

---------------                                                                 

* Based on calculations provided by GNYSB and $19.00 per share.                 

     In lieu of the payment indicated in the table above, Mr. Keegan and any two
other officers of the GNYSB to be designated by Mr. Keegan (currently expected  
to be Messrs. Henchy and Harris) or any one or more of them may (and each of    
Messrs. Keegan, Henchy and Harris have indicated that they currently expect to),
by written notice to AFC received not less than the day that is ten (10)        
business days prior to the Effective Time, elect to convert all or any portion  
of the Outstanding GNYSB Options held by them into options ("AFC Options") to   
purchase shares of AFC Common Stock. Any such election will be irrevocable upon 
receipt by AFC of the notice of election. As a result of such election, AFC will
issue to the electing individual AFC Options to purchase the number of shares of
AFC Common Stock (rounded down to the nearest whole share) equal to one-half the
number of shares of GNYSB Common Stock subject to the Outstanding GNYSB Options 
being converted. The exercise price per share for each share of AFC Common Stock
subject to an AFC Option issued under an election will be equal to two times the
per share exercise price of the Outstanding GNYSB Option being converted into   
such AFC Options, rounded up to the next whole cent. Each such AFC Option (i)   
shall be fully vested and non-forfeitable, (ii) shall be exercisable at the same
time and for the same terms as the related Outstanding GNYSB Options, (iii)     
shall not be subject to any condition, except as may be required under          
applicable securities laws, including without limitation the continued          
employment by AFC of the holder thereof, and (iv) shall be evidenced by an AFC  
Option agreement. No cash payment will be made with respect to any portion of an
Outstanding GNYSB Option that                                                   

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is converted into an AFC Option as aforesaid. Any holder of an Outstanding GNYSB
Option other than Mr. Keegan or the two individuals he designates may request a 
conversion identical to that described above but AFC may, in its sole and       
absolute discretion, determine whether to accept or deny such request.          

Each non-employee director of GNYSB is the beneficial owner of 8,000  
outstanding GNYSB Options. The approximate economic benefit of the stock options
held by each of the non-employee directors of GNYSB is $34,000 (based on an     
option to purchase 4,000 shares at an $11.50 exercise price and 4,000 shares at 
an $17.875 exercise price).                                                     

    Any payment for GNYSB options, less any applicable withholding taxes, will
be made as soon as practicable following the Effective Time or the date on which
such holder delivers to AFC his or her written acceptance of an Option Cashout  
Payment as full and complete consideration for the cancellation of each         
Outstanding GNYSB Option held by him or her.                                    

EFFECT ON GNYSB EMPLOYEE BENEFIT PLANS                                          

 Each person who is employed by GNYSB immediately prior to the Effective
Time (a "GNYSB Employee") shall, at the Effective Time, become an employee (but 
not an officer) of Astoria Federal. Beginning at the Effective Time, each GNYSB 
Employee will serve Astoria Federal in the same capacity in which he or she     
served GNYSB immediately prior to the Effective Time and upon the same terms and
conditions generally applicable to other employees of Astoria Federal with      
comparable positions. If it is not practical to enroll GNYSB Employees as of the
Effective Time in a particular employee benefit plan or program maintained by   
Astoria Federal for its employees (the "Astoria Federal Plans"), Astoria Federal
shall continue any comparable plan or program of GNYSB in effect immediately    
prior to the Effective Time (the "GNYSB Plans") for a transition period. During 
the transition period, GNYSB Employees shall continue to participate in GNYSB   
Plans which are continued, and all other employees of Astoria Federal will      
participate only in the Astoria Federal Plans and AFC plans, if any.            

    Each of AFC and Astoria Federal will amend its respective employee benefit
plans and programs to recognize the service of each GNYSB Employee with GNYSB as
service with AFC and Astoria Federal for all purposes. Each of GNYSB's          
tax-qualified plans will be amended, if necessary, to provide that all benefits 
accrued by employees through the Effective Time will be fully vested without    
regard to their length of service. Astoria Federal will amend its tax-qualified 
defined benefit plan to recognize the service of each GNYSB Employee with GNYSB 
as service with Astoria Federal for purposes of benefit accrual, with an offset 
for vested benefits accrued under GNYSB's tax-qualified defined benefit plan.   
GNYSB will take all necessary action to amend its tax-qualified defined benefit 
plan, effective no later than the Effective Time, to cease all future benefit   
accruals.                                                                       

   If GNYSB Employees become eligible to participate in a medical, dental or
health plan of AFC or Astoria Federal, AFC will cause such plan to (A) waive any
preexisting condition limitations for conditions covered under the applicable   
medical, health or dental plans of GNYSB and (B) honor any deductible and out of
pocket expenses incurred by the GNYSB Employees and their beneficiaries under   
such plans during the portion of the calendar year prior to such participation. 
If GNYSB Employees become eligible to participate in a life insurance plan      
maintained by AFC or Astoria Federal, AFC will cause such plan to waive any     
medical certification for the GNYSB Employees up to the amount of coverage the  
GNYSB Employees had under the life insurance plan of GNYSB (but subject to any  
limits on the maximum amount of coverage under the life insurance plan of AFC or
Astoria Federal). GNYSB will amend its SERP to provide that amounts includible  
in the wages of a GNYSB Employee as a result of stock option exercises that     
occur after the date of execution of the Merger Agreement and payments in       
settlement of GNYSB obligations under any employment agreement or change of     
control agreement will not be included as compensation for purposes of benefit  
accrual under such plan. GNYSB will amend its SERP to cease all future benefit  
accruals effective no later than the Effective Time, but such amendment will not
affect the calculation of any "make-up" payment provided for under any          
employment agreement or change in control severance agreement.                  

 As long as the market price of GNYSB Common Stock exceeds approximately
$14.00, GNYSB expects that the GNYSB ESOP Trustee will convert the outstanding  
shares of GNYSB Series A Preferred Stock into                                   

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GNYSB Common Stock prior to the consummation of the Merger. See "THE            
MERGER -- Merger Consideration and Election, Allocation and Proration           
Procedures -- GNYSB Series A Preferred Stock." Each such share of GNYSB Common  
Stock will be converted into the Cash Consideration or the Stock Consideration  
pursuant to election procedures to be established for participants in the GNYSB 
ESOP. It is also anticipated that, in connection with the Merger, the GNYSB     
ESOP's outstanding indebtedness will be repaid in full, any unallocated assets  
remaining after such repayment will be allocated among participating employees  
of GNYSB, the GNYSB ESOP will be terminated and the remaining assets, if any,   
will be allocated to the accounts of participants.                              

OPERATIONS AFTER THE MERGER                                                     

     At the Effective Time, GNYSB will merge with and into Astoria Federal, with
Astoria Federal being the surviving entity. Under the terms of the Merger       
Agreement, the charter and bylaws of Astoria Federal will be the charter and    
bylaws of the surviving entity which will retain the name of Astoria Federal    
Savings and Loan Association. Astoria Federal, as the resulting entity, will    
operate under the policies, practices and procedures currently in place. All    
assets and property (real, personal and mixed, tangible and intangible, choses  
in actions, rights and credits) owned by GNYSB shall immediately become the     
property of Astoria Federal. AFC and Astoria Federal do not currently anticipate
closing any of GNYSB's or Astoria Federal's branches following the Merger which 
will result in a greater number of branches and the addition of a new market    
area for AFC. Also, AFC will recognize some cost savings through consolidation  
of back office functions. Also, see "-- Management of AFC after the Merger."    

MANAGEMENT OF AFC AFTER THE MERGER                                              

     The Merger Agreement provides that, at the Effective Time, the directors of
AFC and Astoria Federal, respectively, will be the directors of AFC and Astoria 
Federal, respectively, immediately prior to the Effective Time of the Merger and
the directors of AFC and Astoria Federal will cause Mr. Gerard C. Keegan and one
other member of the GNYSB Board, selected by GNYSB and acceptable to AFC and who
was a member of the GNYSB Board on the date of the Merger Agreement, to be      
elected and appointed to the boards of directors of AFC and Astoria Federal.    
Except for the addition of Mr. Keegan, the executive officers of AFC and Astoria
Federal, respectively, will be the executive officers of AFC and Astoria        
Federal, respectively, immediately prior to the Effective Time. At the Effective
Time, Mr. Keegan will become Vice Chairman and Chief Administrative Officer of  
AFC and Astoria Federal. See "-- Interests of Certain Persons in the Merger."   

INVOLVEMENT IN LEGAL PROCEEDINGS                                                

    On April 3, 1997, a purported class action (the "Action") was commenced in
the Supreme Court of the State of New York (Kings County) entitled Leonard      
Minzer and Harry Schipper v. Gerard C. Keegan, et al (Index No. 11546/1997)     
against GNYSB and its directors and certain executive officers. The suit        
alleges, among other things, that the directors and executive officers of GNYSB 
have breached their fiduciary duties in entering into the Merger Agreement and  
related arrangements. The complaint seeks, among other things, a preliminary and
permanent injunction against the Merger and the related transactions, an order  
to the directors and executive officers of GNYSB to carry-out their fiduciary   
duties and unspecified damages and costs. GNYSB believes that the allegations   
made in the Action are without merit. On May 16, 1997, Mr. Keegan and GNYSB     
filed a motion to dismiss the Action.                                           

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CERTAIN RELATED TRANSACTIONS

STOCK OPTION AGREEMENT                                                          

General.  As a condition to entering into the Merger Agreement, AFC   
required that GNYSB enter into the Stock Option Agreement, which allows AFC to  
purchase GNYSB Common Stock under certain circumstances. Pursuant to the Stock  
Option Agreement, GNYSB granted to AFC the Option to purchase 2,721,536 shares  
of GNYSB Common Stock (representing approximately 19.9% of the issued and       
outstanding shares of the GNYSB Common Stock on March 29, 1997) (subject to     
adjustment such that in no event may AFC acquire shares of GNYSB Common Stock   
representing more than 19.9% of the issued and outstanding shares of such stock)
at an exercise price of $17.875 per share (subject to adjustment). The Option   
may only be exercised upon the occurrence of certain "Purchase Events" which are
described herein (none of which has occurred to the best of AFC's or GNYSB's    
knowledge as of the date of this Joint Proxy Statement-Prospectus).             

   Effect of Stock Option Agreement.  The Stock Option Agreement is intended
to increase the likelihood that the Merger will be consummated in accordance    
with the terms of the Merger Agreement. Consequently, certain aspects of the    
Stock Option Agreement may have the effect of discouraging persons who might now
or prior to the consummation of the Merger be interested in acquiring all of or 
a significant interest in GNYSB from considering or proposing such an           
acquisition, even if such persons were prepared to pay a higher price per share 
for the GNYSB Common Stock than the value per share contemplated by the Merger  
Agreement. The acquisition of GNYSB, a significant portion of its consolidated  
assets or an interest in GNYSB, or an agreement to do so, could cause the Option
to become exercisable. The existence of such Option could significantly increase
the cost to a potential acquiror of acquiring GNYSB compared to its cost had the
Stock Option Agreement not been executed. Such increased costs might discourage 
a potential acquiror from considering or proposing an acquisition or might      
result in a potential acquiror proposing to pay a lower per share price to      
acquire GNYSB than it might otherwise have proposed to pay. The management of   
GNYSB believes that the exercise of the Option is likely to prohibit any        
acquiror of GNYSB from accounting for any acquisition of GNYSB using the pooling
of interests accounting method for a period of two years. This could discourage 
or preclude an acquisition by other banking organizations.                      

Terms of Stock Option Agreement.  The following is a brief summary of 
certain provisions of the Stock Option Agreement, which is attached hereto as   
Appendix B. The following summary is qualified in its entirety by reference to  
the Stock Option Agreement.                                                     

If AFC is not in material breach of the Stock Option Agreement or the 
Merger Agreement and if no injunction or other court order against delivery of  
the shares covered by the related Option is in effect, AFC may exercise the     
Option, in whole or in part, at any time and from time to time upon the         
occurrence of the following (each a "Purchase Event"):                          

         (i) Without AFC's prior written consent, GNYSB taking certain actions
    (each an "Acquisition Transaction") including authorizing, recommending or
     proposing, or entering into an agreement with any third party to effect (A)
  a merger, consolidation or similar transaction involving GNYSB or any of
its significant subsidiaries, (B) the sale, lease, exchange or other  
    disposition of 25% or more of the consolidated assets or deposits of GNYSB
     or (C) the issuance, sale or other disposition of 25% or more of the voting
power of GNYSB; or                                                    

        (ii) Any third party acquiring or having the right to acquire 20% or
more of the voting power of GNYSB;                                    

provided, that the Option will terminate upon the earliest to occur of certain  
events, including:                                                              

(i) the Effective Time;                                     

         (ii) termination of the Merger Agreement in accordance with the terms
thereof prior to the occurrence of a Purchase Event or a Preliminary  
Purchase Event other than a termination thereof by AFC under certain  
circumstances (a "Default Termination");                              

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(iii) 15 months after a Default Termination; or             

          (iv) 15 months after termination of the Merger Agreement (other than a
Default Termination) following the occurrence of a Purchase Event or a
Preliminary Purchase Event.                                           

  The term "Preliminary Purchase Event" means any of the following events:

     (i) Commencement by any third party of a tender offer or exchange
   offer to purchase 20% or more of the voting power of GNYSB (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer,"  
respectively); or                                                     

   (ii) Failure of the stockholders of GNYSB to approve the Merger
    Agreement or failure of GNYSB to have held such meeting or the GNYSB Board
shall have withdrawn or modified in a manner adverse to AFC the       
    recommendation of the GNYSB Board with respect to the Merger Agreement, in
each case after public announcement that a third party (A) proposes to
   engage in an Acquisition Transaction, (B) commences a Tender Offer or (C)
files an application under certain federal statutes relating to the   
regulation of banks and other financial institutions or their holding 
companies to engage in an Acquisition Transaction; or                 

         (iii) Any third party proposal to GNYSB or its stockholders publicly,
or in any writing that becomes publicly disclosed, to engage in an    
Acquisition Transaction; or                                           

  (iv) After a proposal is made by a third party to GNYSB or its
   stockholders to engage in an Acquisition Transaction, or such third party
states its intention to GNYSB to make such a proposal if the Merger   
     Agreement terminates, GNYSB breaches any representation, warranty, covenant
   or agreement in the Merger Agreement and such breach would entitle AFC to
terminate the Merger Agreement.                                       

  In the event that GNYSB shall enter into an agreement (i) to consolidate
with or merge into any person, other than AFC or one of its subsidiaries, and   
GNYSB shall not be the continuing or surviving corporation of such consolidation
or merger, (ii) to permit any person, other than AFC or one of its subsidiaries,
to merge into GNYSB and GNYSB shall be the continuing or surviving corporation, 
but, in connection with such merger, the then outstanding shares of GNYSB Common
Stock shall be changed into or exchanged for stock or other securities of GNYSB 
or any other person or cash or any other property, or the outstanding shares of 
GNYSB Common Stock immediately prior to such merger shall after such merger     
represent less than 50% of the outstanding shares and share equivalents of the  
merged company, or (iii) to sell or otherwise transfer all or substantially all 
of its assets or deposits to any person, other than AFC or one of its           
subsidiaries, then, and in each such case, the agreement governing such         
transaction shall make proper provisions so that the Option shall, upon the     
consummation of any such transaction and upon the terms and conditions set forth
in the Stock Option Agreement, be converted into, or exchanged for, an option   
(the "Substitute Option"), at the election of AFC, of either (A) the Acquiring  
Corporation (as defined in the Stock Option Agreement), (B) any person that     
controls the Acquiring Corporation or (C) in the case of a merger described in  
clause (ii), GNYSB (such person being referred to as "Substitute Option GNYSB").

     Both the Merger Agreement and the Stock Option Agreement contain provisions
that limit the aggregate realizable profit to AFC from the Option and the       
Termination Fee to $10 million.                                                 

AMENDMENT TO GNYSB RIGHTS AGREEMENT                                             

On June 14, 1990, GNYSB adopted the GNYSB Rights Agreement pursuant to
which GNYSB's stockholders of record as of June 25, 1990 each received a        
dividend of one GNYSB Right for each outstanding share of GNYSB Common Stock to 
holders. In connection with the execution of the Merger Agreement, GNYSB amended
the GNYSB Rights Agreement to clarify that for purposes of determining whether  
AFC (as well as its affiliates and associates) is an Acquiring Person, as       
defined in the GNYSB Rights Agreement, AFC shall not be deemed to be a          
Beneficial Owner, as defined in the GNYSB Rights Agreement, or to beneficially  
own any securities as a result of GNYSB's obligation to merge under the Merger  
Agreement. See "COMPARISON OF CERTAIN RIGHTS OF STOCKHOLDERS -- Rights          
Plans -- GNYSB."                                                                

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RESALES OF AFC COMMON STOCK                                                     

     The shares of AFC Common Stock issued pursuant to the Merger Agreement will
be freely transferable under the Securities Act except for shares issued to any 
stockholder who may be deemed to be an "affiliate" of GNYSB for purposes of Rule
145 under the Securities Act as of the date of the GNYSB Meeting. Affiliates may
not sell their shares of AFC Common Stock acquired in connection with the Merger
except pursuant to an effective registration statement under the Securities Act 
covering such shares or in compliance with Rule 145 under the Securities Act or 
another applicable exemption from the registration requirements of the          
Securities Act. Persons who may be deemed to be affiliates of GNYSB generally   
include individuals or entities that control, are controlled by or are under    
common control with GNYSB and may include certain officers and directors of     
GNYSB as well as principal stockholders of GNYSB.                               

  GNYSB agreed in the Merger Agreement to cause each affiliate of GNYSB to
enter into an agreement with AFC providing that such persons will not sell,     
transfer or otherwise dispose of shares of GNYSB Common Stock owned by such     
person or AFC Common Stock to be received by such person in the Merger except in
compliance with the applicable provisions of the Securities Act and the rules   
and regulations thereunder. GNYSB has delivered these agreements to AFC.        

CERTIFICATE AMENDMENT 

   In connection with the Merger, the AFC Board has approved the Certificate
Amendment to change the par value of AFC's authorized preferred stock from $0.01
to $1.00 per share. Approval of the Certificate Amendment requires the          
affirmative vote of the holders of at least a majority of the issued and        
outstanding shares of AFC Common Stock. The purpose of the increase in par value
to $1.00 per share is to have available AFC Preferred Stock that has the same   
par value as the GNYSB Series B Preferred Stock so that the par value of the AFC
Series B Preferred Stock is the same as the GNYSB Series B Preferred Stock. The 
Certificate Amendment provides that at such time as the AFC Series B Preferred  
Stock is no longer outstanding, the par value of AFC Preferred Stock            
automatically, without any further action by AFC's stockholders, will be reduced
back to $0.01 per share.                                                        

The text of the Certificate Amendment is as follows:                  

Section Fourth A.1. of the Certificate of Incorporation of Astoria    
Financial Corporation is hereby restated in its entirety as follows:            

        1. Five million (5,000,000) shares of Preferred Stock, par value one
   dollar ($1.00) per share (the "Preferred Stock"); provided, however, that
at such time as the Astoria Financial Corporation 12% Noncumulative   
  Perpetual Preferred Stock, Series B, issued pursuant to the terms of the
Agreement and Plan of Merger, dated as of March 29, 1997, by and among
     Astoria Financial Corporation, Astoria Federal Savings and Loan Association
and The Greater New York Savings Bank, is no longer outstanding, then 
Section Fourth A.1. of the Certificate of Incorporation shall         
automatically, and without any further action of the stockholders of  
Astoria Financial Corporation, be restated in its entirety as follows:

          1. Five million (5,000,000) shares of Preferred Stock, par value
one cent ($0.01) per share (the "Preferred Stock"); and         

   The Certificate Amendment will become effective only upon consummation of
the Merger. Regardless of whether the Merger Agreement is approved by           
stockholders of GNYSB or the issuance of the Merger Shares is approved by       
stockholders of AFC, failure of AFC's stockholders to approve the Certificate   
Amendment will prevent consummation of the Merger unless such condition is      
waived by GNYSB.                                                                

 THE AFC BOARD HAS UNANIMOUSLY DETERMINED THAT THE MERGER IS IN THE BEST
INTERESTS OF ITS STOCKHOLDERS AND, ACCORDINGLY, HAS UNANIMOUSLY APPROVED THE    
TRANSACTIONS REQUIRED FOR THE CONSUMMATION OF THE MERGER AND UNANIMOUSLY        
RECOMMENDS A VOTE FOR APPROVAL OF THE CERTIFICATE AMENDMENT BY AFC'S            
STOCKHOLDERS.                                                                   

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ADDITIONAL PROPOSAL 

     The Bylaws of GNYSB and AFC each require that no business be transacted and
no corporate action be taken at a special meeting of their respective           
stockholders other than that stated in the Notice of Meeting. The GNYSB Board is
not aware of any other business that may properly come before the GNYSB Meeting.
The AFC Board is not aware of any other business that may properly come before  
the AFC Meeting. The GNYSB Board and the AFC Board each seek the authorization  
of their respective stockholders, in the event matters incident to the conduct  
of the GNYSB Meeting or AFC Meeting, as the case may be, properly come before   
such meeting, including, without limitation, a motion to adjourn the GNYSB      
Meeting or the AFC Meeting, as the case may be, to another time or place for the
purpose of soliciting additional proxies in order to approve and adopt the      
transactions contemplated by the Merger Agreement or otherwise. As to all such  
matters, the GNYSB Board and the AFC Board each intends to direct the voting of 
such shares in the manner determined by the board of directors in its           
discretion, and in the exercise of its duties and responsibilities, to be in the
best interests of GNYSB or AFC, as the case may be, and its stockholders, taken 
as a whole.                                                                     

THE GNYSB BOARD AND THE AFC BOARD EACH UNANIMOUSLY RECOMMENDS THAT ITS
RESPECTIVE STOCKHOLDERS VOTE "FOR" AUTHORIZATION OF THEIR BOARD OF    
DIRECTORS, TO DIRECT THE VOTE OF THE PROXIES UPON SUCH OTHER MATTERS  
INCIDENT TO THE CONDUCT OF THE AFC MEETING OR THE GNYSB MEETING, AS   
THE CASE MAY BE, AS MAY PROPERLY COME BEFORE SUCH MEETING, INCLUDING, 
WITHOUT LIMITATION, A MOTION TO ADJOURN SUCH MEETING.                 

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BENEFICIAL OWNERSHIP OF AFC COMMON STOCK

PRINCIPAL SECURITY OWNERSHIP                                                    

    As of April 30, 1997 management of AFC knew of no person, other than those
below, who is the beneficial owner of more than 5% of AFC Common Stock.         

                                                        [Enlarge/Download Table]

                                                               AMOUNT AND NATURE OF  PERCENT OF
TITLE OF CLASS       NAME & ADDRESS OF BENEFICIAL OWNER        BENEFICIAL OWNERSHIP    CLASS   
--------------  ---------------------------------------------  --------------------  ----------
                                                                                               
    Common      State Street Bank and Trust Company, Trustee         2,716,424(1)       12.72% 
                225 Franklin Street                                                            
                Boston, Massachusetts                                                          
    Common      FMR Corp.                                            1,530,170(2)        7.16% 
                82 Devonshire Street                                                           
                Boston, Massachusetts 02109                                                    
    Common      Keystone Investment Management Company               1,122,924           5.29% 
                200 Berkeley Street                                                            
                Boston, Massachusetts 02116                                                    

---------------                                                                 

(1) State Street Bank and Trust Company ("State Street") is the trustee of the  
   Astoria Federal Employee Stock Ownership Plan (the "Astoria Federal ESOP"),
 which is administered by the Astoria Federal ESOP Committee consisting of
    four (4) officers of Astoria Federal, one of whom is an executive officer of
    Astoria Federal. As of December 31, 1996, State Street held 2,612,324 shares
of AFC Common Stock for the benefit of the participants of the Astoria  
    Federal ESOP. Under the terms of the Astoria Federal ESOP, the Trustee votes
the shares held by the Astoria Federal ESOP Trust based upon directions 
    received from the participants as "named fiduciaries" in the Astoria Federal
  ESOP. As of December 31, 1996, approximately 653,212 shares were allocated
to participants. For voting purposes, each participant as a "named      
fiduciary" will be eligible to direct the Trustee how to vote at the AFC
Meeting as to the number of shares of AFC Common Stock which have been  
allocated to his or her account under the Astoria Federal ESOP. The     
   remaining unallocated shares and any allocated shares with respect to which
 no voting instructions have been received will be voted by the Trustee at
 the AFC Meeting in the same manner and proportion as the allocated shares
with respect to which voting instructions have been received, so long as
such vote is in accordance with the provisions of ERISA. Due to the     
   requirements of ERISA, the trustee is deemed to have shared voting power as
   to all shares held in the Astoria Federal ESOP Trust. According to a filing
    on Schedule 13G under the Exchange Act dated February 10, 1997, State Street
   also holds 104,100 shares as trustee of various collective investment funds
  for employee benefit plans of other companies and other index accounts, as
to which State Street has sole voting and dispositive power.            
(2) According to a filing on Schedule 13G, dated February 14, 1997, under the   
    Exchange Act Edward C. Johnson 3d and Abigail P. Johnson own 12.0 % and 24.5
%, respectively, of the outstanding voting common stock of FMR Corp. Mr.
Johnson is Chairman of FMR Corp. Ms. Johnson is a director of FMR Corp. 
 Members of Mr. Johnson's family and trusts beneficially own approximately
  49% of the voting power of FMR Corp. These family members may be deemed to
form a controlling group with respect to FMR Corp. Fidelity Management &
Research Company ("FMRC"), a wholly owned subsidiary of FMR Corp. and an
  investment advisor registered under Section 203 of the Investment Advisors
  Act of 1940, is the beneficial owner of 816,000 shares of AFC Common Stock
   as a result of acting as investment advisor to various investment companies
  registered under Section 8 of the Investment Company Act of 1940. Fidelity
Management Trust Company, a wholly owned subsidiary of FMR Corp., is the
    beneficial owner of 714,170 shares of AFC Common Stock. Edward C. Johnson 3d
and FMR Corp., through its control of Fidelity Management Trust Company,
 each claim sole dispositive power over 714,170 shares of AFC Common Stock
   and sole power to direct the voting of 582,570 shares, and no power to vote
or to direct the voting of 131,600 shares of AFC Common Stock owned by  
institutional account(s).                                               

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DIRECTORS AND EXECUTIVE OFFICERS                                                

 The following table sets forth certain information as of April 30, 1997
with respect to the beneficial ownership of AFC Common Stock by each director of
AFC, the Chief Executive Officer and each of the four most highly compensated   
officers of AFC other than the Chief Executive Officer, and all of the directors
and executive officers of AFC as a group.                                       

                                                                [Download Table]

                  NAME OF BENEFICIAL         AMOUNT AND NATURE       PERCENT OF
TITLE OF CLASS           OWNER           OF BENEFICIAL OWNERSHIP(1)   CLASS(2) 
--------------  -----------------------  --------------------------  ----------
                                                                               
    Common      George L. Engelke, Jr.              607,336(3)(12)      2.83%  
    Common      Andrew M. Burger                    111,754(12)         *      
    Common      William J. Fendt                    120,474(12)         *      
    Common      Robert G. Bolton                    114,874(4)(12)      *      
    Common      Denis J. Connors                    122,107(12)         *      
    Common      Thomas J. Donahue                   124,666(5)(12)      *      
    Common      Thomas V. Powderly                  115,349(6)(12)      *      
    Common      Ralph F. Palleschi                    7,000(12)         *      
    Common      Arnold K. Greenberg                 254,721(7)(12)      1.20%  
    Common      Thomas W. Drennan                   193,954(8)(12)      *      
    Common      Monte N. Redman                     186,943(9)(12)      *      
    Common      William K. Sheerin                  211,284(10)(12)     *      
    Common      All Directors and                                              
                Executive Officers as a                                        
                group (13 persons)                2,081,461(11)(12)     9.32%  

---------------                                                                 

* Less than 1%                                                                

(1) Except as otherwise indicated, each person listed has sole voting and     
    investment power with respect to the shares of AFC Common Stock indicated.
 (2) Except as otherwise indicated, the percent of class beneficially owned does
not exceed one percent (1.00%).                                       
(3) Included are 62,000 shares of AFC Common Stock as to which Mr. Engelke has
   shared voting and investment power, 105,800 shares of AFC Common Stock as
  to which he has sole voting and no investment power, 5,555 shares of AFC
    Common Stock as to which he has shared voting and no investment power, and
    8,216 shares of AFC Common Stock as to which he has shared voting and sole
investment power.                                                     
(4) Included are 2,270 shares of AFC Common Stock as to which Mr. Bolton is   
deemed to have shared voting and investment power.                    
(5) Included are 24,813 shares of AFC Common Stock as to which Mr. Donahue is 
deemed to have shared voting and investment power.                    
(6) Included are 6,784 shares of AFC Common Stock as to which Mr. Powderly is 
   deemed to have shared voting and investment power and 3,392 shares of AFC
Common Stock as to which he has sole voting and no investment power.  
(7) Included are 63,486 shares of AFC Common Stock as to which Mr. Greenberg  
   has shared voting and investment power, 37,836 shares of AFC Common Stock
     as to which he has sole voting and no investment power, 5,555 shares of AFC
    Common Stock as to which he has shared voting and no investment power, and
     12,305 shares of AFC Common Stock as to which he has shared voting and sole
investment power.                                                     
(8) Included are 40,340 shares of AFC Common Stock as to which Mr. Drennan has
     shared voting and investment power, 37,836 shares of AFC Common Stock as to
which he has sole voting and no investment power, 5,555 shares of AFC 
Common Stock as to which he has shared voting and no                  

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   investment power, and 9,723 shares of AFC Common Stock as to which he has
shared voting and sole investment power.                              
(9) Included are 709 shares of AFC Common Stock as to which Mr. Redman has    
     shared voting and investment power, 37,836 shares of AFC Common Stock as to
which he has sole voting and no investment power, 5,555 shares of AFC 
    Common Stock as to which he has shared voting and no investment power, and
    7,857 shares of AFC Common Stock as to which he has shared voting and sole
investment power.                                                     
(10) Included are 61,943 shares of AFC Common Stock as to which Mr. Sheerin has 
     shared voting and investment power, 28,478 shares of AFC Common Stock as to
which he has sole voting and no investment power, 5,555 shares of AFC 
    Common Stock as to which he has shared voting and no investment power, and
     13,538 shares of AFC Common Stock as to which he has shared voting and sole
investment power.                                                     
(11) Included are 146,878 shares of AFC Common Stock as to which Directors and  
  Executive Officers, as a group, have shared voting and investment power,
     251,178 shares of AFC Common Stock as to which they have sole voting and no
   investment power, 31,288 shares of AFC Common Stock as to which they have
shared voting and no investment power, and 52,197 shares of AFC Common
Stock as to which they have shared voting and sole investment power.  
(12) Included are shares of AFC Common Stock which could be acquired within 60  
   days of April 30, 1997 pursuant to options to acquire AFC Common Stock as
follows: Mr. Engelke (285,660 shares), Mr. Burger (80,314 shares), Mr.
Fendt (80,314 shares), Mr. Bolton (80,314 shares), Mr. Connors (80,314
  shares), Mr. Donahue (80,314 shares), Mr. Powderly (104,969 shares), Mr.
Palleschi (6,000 shares), Mr. Greenberg (97,669 shares), Mr. Drennan  
(92,669 shares), Mr. Redman (97,669 shares), and Mr. Sheerin (68,243  
     shares) and All Directors, Board Nominees and Executive Officers as a group
(1,168,499 shares).                                                   

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BENEFICIAL OWNERSHIP OF GNYSB COMMON STOCK

PRINCIPAL SECURITY OWNERSHIP                                                    

   As of April 30, 1997 management of GNYSB knew of no person, except as set
forth below, who is the beneficial owner of more than 5% of GNYSB Common Stock  
or GNYSB Series A Preferred Stock, as the case may be:                          

                                                        [Enlarge/Download Table]

                                                                                         PERCENT OF   
                                                           AMOUNT AND                     COMBINED    
                                                           NATURE OF                    COMMON STOCK  
                                                           BENEFICIAL        PERCENT    AND SERIES A  
TITLE OF CLASS             NAME AND ADDRESS               OWNERSHIP(1)      OF CLASS   PREFERRED STOCK
-----------------  ---------------------------------  --------------------  ---------  ---------------
                                                                                                      
GNYSB Common                                                                                          
  Stock..........  Dimensional Fund Advisors Inc.     770,000 shares (sole   5.63%(2)        5.08%(2) 
                   1299 Ocean Avenue, 11th Floor      voting and/or                                   
                   Santa Monica, California 90401     dispositive power)                              
GNYSB Series A                                                                                        
  Preferred                                                                                           
  Stock..........  United States Trust Company of     1,478,077 shares      100.0%(3)       11.99%(3) 
                   New York, solely as Trustee under  (shares voted by                                
                   The Greater New York Savings       ESOP participants)                              
                   Bank Employee Stock Ownership                                                      
                   Plan Trust                                                                         
                   114 West 47th Street                                                               
                   New York, New York 10036                                                           

---------------                                                                 

(1) Based upon current filing with the FDIC pursuant to the Exchange Act.       
(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment     
  advisor, is deemed to have beneficial ownership of 770,000 shares of GNYSB
Common Stock as of April 30, 1997, all of which shares are held in      
portfolios of the DFA Investment Dimensions Group Inc. and the DFA      
   Investment Trust Company, both registered open-end investment companies, or
    in series of the DFA Investment Trust Company, a Delaware business trust, or
in the DFA Group Trust and DFA Participation Group Trust, investment    
 vehicles for qualified employee benefit plans, all of which are served by
Dimensional as investment manager. Dimensional disclaims beneficial     
ownership of all such shares.                                           

(3) GNYSB Series A Preferred Stock votes with GNSYB Common Stock as a single    
   class, except as otherwise required by law. As of April 30, 1997, the GNYSB
 Series A Preferred Stock represented 9.75% of the voting power of GNYSB's
    voting securities. In addition, as of April 30, 1997, the GNYSB ESOP Trustee
was the record owner of 339,789 shares of GNYSB Common Stock, which,    
together with the GNYSB Series A Preferred Stock, accounts for 11.99% of
combined GNYSB Common Stock and GNYSB Series A Preferred Stock. For a   
   description of who has voting rights as to the shares of GNYSB Common Stock
held by the GNYSB ESOP, see note 2 to the table under "-- Directors and 
Executive Officers."                                                    

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DIRECTORS AND EXECUTIVE OFFICERS                                                

 The following table sets forth certain information as of April 30, 1997
with respect to the beneficial ownership of GNYSB Common Stock and GNYSB Series 
A Preferred Stock by each director of GNYSB, the Chief Executive Officer and    
each of the four most highly compensated officers of GNYSB other than the Chief 
Executive Officer, and all of the directors and executive officers of GNYSB as a
group as of April 30, 1997.                                                     

                                                        [Enlarge/Download Table]

                                                                                                                PERCENT OF 
                                                                                  SHARES OF                       GNYSB    
                                                       SHARES OF                    GNYSB        PERCENT OF    COMMON STOCK
                                                         GNYSB      PERCENT OF     SERIES A        GNYSB        AND GNYSB  
                                                        COMMON         GNYSB      PREFERRED       SERIES A       SERIES A  
                                                         STOCK        COMMON        STOCK        PREFERRED      PREFERRED  
                                                      BENEFICIALLY     STOCK     BENEFICIALLY      STOCK          STOCK    
NAME                                   TITLE          OWNED(1)(2)   OUTSTANDING    OWNED(3)    OUTSTANDING(3)  OUTSTANDING 
------------------------------ ---------------------  -----------   -----------  ------------  --------------  ------------
                                                                                                                           
Gerard C. Keegan.............. Chairman, President       298,193        2.14%       15,906          1.08%          2.04%   
                               and Chief Executive                                                                         
                               Officer, Director                                                                           
William F. de Neergaard....... Director                   59,000           *             0             0              *    
James G. Peel................. Director                   12,400(4)        *             0             0              *    
C. Stephen Connolly, M.D. .... Director                   90,972(5)        *             0             0              *    
Philip F. Ruppel.............. Director                    7,000           *             0             0              *    
George H. Sorter.............. Director                   43,350           *             0             0              *    
Nicholas A. Marshall.......... Director                   17,000           *             0             0              *    
William F. Ward............... Director                   18,125(6)        *             0             0              *    
Peter C. Haeffner, Jr......... Director                   17,000           *             0             0              *    
Gwendolyn Calvert Baker....... Director                   16,314(6)        *             0             0              *    
Michael J. Henchy............. Executive Vice             93,521           *        12,278             *                   
                               President and Chief                                                                         
                               Administration                                                                              
                               Officer                                                                                     
Daniel J. Harris.............. Executive Vice             52,608           *         5,089             *              *    
                               President and Chief                                                                         
                               Lending Officer                                                                             
Philip A. Cimino.............. Senior Vice President      72,925           *        10,814             *              *    
                               and Chief                                                                                   
                               Investment Officer                                                                          
Philip T. Spies............... Senior Vice President      61,537           *        11,552             *              *    
                               and Controller                                                                              
All directors and executive                                                                                                
  officers as a group (22                                                                                                  
  persons)(7).................                         1,070,196        7.46%       93,435          6.32%          7.36%   

---------------                                                                 

* Less than 1%.                                                             
(1) For purposes of this and the following table, under the rules of the FDIC, a
 person is considered to "beneficially own" any shares of common stock (a)
  over which that person exercises sole or shared voting or investment power
    or (b) of which that person has the right to acquire beneficial ownership at
  any time within sixty days. As used herein, "voting power" is the power to
  vote or direct the voting of shares and "investment power" is the power to
   dispose of or direct the disposition of shares. Unless otherwise indicated,
  all persons named in the table above have sole voting and investment power
    or share voting and investment power with members of their immediate family.

(2) The total number of shares shown includes shares beneficially owned in      
GNYSB's Stock Fund (the "GNYSB Stock Fund") by Mr. Keegan (42,936), Mr. 
    Henchy (10,261), Mr. Cimino (11,969), Mr. Spies (4,729) and by the executive
   officers who are not directors (14,238) under GNYSB Incentive Savings Plan.
   Directors who are not officers are not eligible to participate in the GNYSB
   Incentive Savings Plan. All shares in the GNYSB Stock Fund are voted by the
trustee of the GNYSB Incentive Savings Plan in its sole discretion. The 
total number of shares includes shares beneficially owned by Mr. Keegan 
 (11,842), Mr. Henchy (8,303), Mr. Harris (1,033), Mr. Cimino (7,081), Mr.
Spies (7,823) and by the other executive officers who are not directors 
  (13,678) under GNYSB ESOP. Directors who are not officers are not eligible
to participate in the GNYSB ESOP. The shares held in the GNYSB          

                                           (See footnotes on the following page)

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 ESOP, and allocated to participants' accounts are voted by the beneficial
owners of such shares based on directions received from such beneficial 
owners by the trustee of the GNYSB ESOP. Unallocated shares and any     
allocated shares with respect to which no voting instructions have been 
  received will be voted by the trustee of the GNYSB ESOP in the same manner
and proportion as the allocated shares with respect to which voting     
   instructions have been received, as long as such vote is in accordance with
the provisions of ERISA. The total number of shares shown also includes 
4,000 options exercisable by each non-employee director, and options    
exercisable by Mr. Keegan (231,250), Mr. Henchy (74,430), Mr. Harris    
    (50,375), Mr. Cimino (53,875), Mr. Spies (42,875) and by the other executive
officers who are not directors (170,450).                               
(3) As of April 30, 1997, GNYSB's current named executive officers and          
  approximately 434 other current or former officers and employees of GNYSB,
   had in the aggregate beneficial ownership of 649,045 shares of GNYSB Series
A Preferred Stock which had been allocated to their respective accounts 
under the GNYSB ESOP. Of these shares, 93,435 had been allocated to the 
 GNYSB's executive officers, which was 14.4% of the allocated shares as of
April 30, 1997.                                                         
(4) Mr. Peel disclaims beneficial ownership of 2,400 shares held jointly with   
his wife which are included in the total number of shares shown.        
(5) Dr. Connolly disclaims beneficial ownership of 19,500 shares owned by his   
  wife or his wife's Individual Retirement Account which are included in the
number of shares shown.                                                 
(6) Includes 3,814 phantom stock units held for Dr. Baker and 2,125 phantom     
stock units held for Mr. Ward in The Greater New York Savings Bank      
Non-Employee Director's Deferred Compensation Plan.                     
(7) One executive officer disclaims beneficial ownership of 1,000 shares owned  
by a member of his immediate family which are included in the number of 
shares shown.                                                           
------------------------

 The FDIC Rules and Regulations require the GNYSB's directors, executive
officers and holders of more than 10% of the GNYSB Common Stock to file with the
FDIC initial reports of ownership and reports of changes in ownership of common 
stock and other equity securities of GNYSB. GNYSB believes that during the      
fiscal year ended December 31, 1996, its directors, executive officers and      
holders of more than 10% of the GNYSB Common Stock complied with all filing     
requirements.                                                                   

CERTAIN REGULATORY CONSIDERATIONS 

GENERAL                                                                         

   Astoria Federal, as a federal savings and loan association, is subject to
extensive regulation, examination and supervision by the OTS, as its chartering 
agency, and by the FDIC, as the insurer of its deposits. Astoria Federal is a   
member of the Federal Home Loan Bank ("FHLB") System, and its deposit accounts  
are insured up to applicable limits by the FDIC under the SAIF. AFC, as a       
savings and loan holding company, is registered with the OTS and is subject to  
OTS regulations, examination, supervision and reporting requirements. GNYSB is  
subject to extensive regulation, examination and supervision by the Banking     
Department, as its chartering agency, and by the FDIC, as the insurer of its    
deposits.                                                                       

The earnings of AFC and Astoria Federal and the earnings of GNYSB are 
affected by general economic conditions, management policies and the legislative
and governmental actions of various federal and state regulatory authorities,   
including the Board of Governors of the Federal Reserve System (the "Federal    
Reserve Board"), the OTS, the FDIC and the Banking Department. Additionally,    
there are numerous governmental requirements and regulations that affect the    
activities of AFC, GNYSB and their respective subsidiaries. Any change in       
applicable law or regulation might have a material effect on the business and   
prospects of AFC and GNYSB.                                                     

The description of statutory provisions and regulations applicable to 
federally chartered savings associations and to savings and loan holding        
companies set forth in this document do not purport to be complete descriptions 
of such statutes and regulations and their effects on AFC or Astoria Federal.   

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BUSINESS ACTIVITIES OF FEDERAL SAVINGS ASSOCIATIONS                             

    The activities of federally chartered savings associations are governed by
the Home Owner's Loan Act, as amended ("HOLA") and, in certain respects, by the 
Federal Deposit Insurance Act ("FDI Act"). The federal banking statutes, among  
other things, (i) restrict the use of brokered deposits by federally chartered  
savings associations that are not well-capitalized, (ii) prohibit the           
acquisition of any corporate debt security that is not rated in one of the four 
highest rating categories, (iii) restrict the aggregate amount of loans secured 
by non-residential real estate property, (iv) permit savings and loan holding   
companies to acquire up to 5% of the voting shares of non-subsidiary savings    
associations or savings and loan holding companies without prior approval of the
OTS, (v) permit bank holding companies to acquire savings associations and (vi) 
require the federal banking agencies to establish by regulation uniform         
standards for real estate lending. Under HOLA, Astoria Federal has the authority
to make certain loans or investments not exceeding 5.0% of its total assets on  
each of (a) non-conforming loans (loans in excess of the specific limitations of
the HOLA) and (b) construction loans without security for the purpose of        
financing what is or is expected to be residential property. To assure repayment
of such loans, an association would rely substantially on the borrower's general
credit standing, personal guarantees and projected future income on the         
properties.                                                                     

RESTRICTIONS ON PAYMENT OF DIVIDENDS                                            

     AFC is a separate legal entity from Astoria Federal and its subsidiaries. A
substantial portion of the revenues of AFC (on an unconsolidated basis)         
available for payment of dividends to its stockholders will result from the     
amounts paid to it, directly or indirectly, in the form of dividends from       
Astoria Federal. OTS regulations impose limitations upon all capital            
distributions by savings associations, such as cash dividends, payments to      
repurchase or otherwise acquire its shares, payments to stockholders of another 
institution in a cash-out merger and other distributions charged against        
capital. The regulations establish three tiers of institutions, which are based 
primarily on an institution's capital level. An institution that exceeds all    
fully phased-in capital requirements before and after a proposed capital        
distribution ("Tier I Association") and has not been advised by the OTS that it 
is in need of more than normal supervision, could, after prior notice but       
without the approval of the OTS, make capital distributions during a calendar   
year equal to the greater of: (i) 100% of its net income 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 (ii) 75% of its net income for the previous   
four quarters. Any additional capital distributions would require prior         
regulatory approval. As of March 31, 1997, Astoria Federal was a Tier I         
Association. In the event Astoria Federal's capital fell below its fully-phased 
in requirement or the OTS notified Astoria Federal that it was in need of more  
than normal supervision, Astoria Federal's ability to make capital distributions
could be restricted. In addition, the OTS could prohibit a proposed capital     
distribution by any institution, which would otherwise be permitted by the      
regulation, if the OTS determines that such distribution would constitute an    
unsafe or unsound practice. Furthermore, under the OTS' prompt corrective action
regulations, Astoria Federal would be prohibited from making any capital        
distributions if, after the distribution, Astoria Federal would not comply with 
applicable minimum capital requirements. See "-- Capital Requirements." At the  
time of the conversion to stock form, Astoria Federal was required to establish 
a liquidation account in an amount equal to its capital as of June 30, 1993. As 
part of the acquisition of Fidelity New York, F.S.B. ("Fidelity"), Astoria      
Federal established a similar liquidation account equal to the remaining        
liquidation account balance previously maintained by Fidelity as a result of its
conversion from mutual to stock form of ownership. The liquidation account is   
reduced to the extent that eligible account holders reduce their qualifying     
deposits. In the unlikely event of a complete liquidation of Astoria Federal,   
each eligible account holder will be entitled to receive a distribution from the
liquidation account. Astoria Federal 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 the amount required for the liquidation
account.                                                                        

CAPITAL REQUIREMENTS                                                            

 There is no capital requirement applicable to AFC as a savings and loan
holding company, other than those applicable to Astoria Federal. With respect to
Astoria Federal, the OTS capital regulations require                            

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savings associations to meet three capital ratios: a 1.5% tangible capital      
ratio, a 3% leverage (core capital) ratio and an 8% risk-based capital ratio.   
Core capital is defined as common stockholders' equity (including retained      
earnings but excluding net unrealized gains and losses from available-for-sale  
debt securities), certain noncumulative perpetual preferred stock and related   
surplus, minority interests in equity accounts of consolidated subsidiaries,    
less intangibles other than certain qualifying supervisory intangible assets,   
certain mortgage servicing rights and certain other assets as defined by OTS    
capital regulations. The OTS regulations also require that, in meeting the      
tangible, leverage, and risk-based capital ratios, institutions must deduct     
investments in and loans to subsidiaries engaged in activities not permissible  
for a national bank.                                                            

The risk-based capital standard for savings associations requires the 
maintenance of total risk-based capital (which is defined as core capital plus  
supplementary capital less certain adjustments) to risk weighted assets of 8%.  
In determining the amount of risk-weighted assets, all assets, including certain
off balance sheet assets, are multiplied by a risk-weight of 0% to 100%, as     
assigned by the OTS capital regulation based on the risks the OTS believes are  
inherent in the type of asset. The components of core capital are equivalent to 
those discussed earlier under the 3% leverage ratio. The components of          
supplementary capital currently include cumulative preferred stock, long-term   
perpetual preferred stock, mandatory convertible securities, subordinated debt  
and intermediate preferred stock and allowance for loan and lease losses.       
Allowance for loan and lease losses includible in supplementary capital is      
limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of   
supplementary capital counted toward total capital cannot exceed 100% of core   
capital. In addition, certain assets are required to be deducted from risk-based
capital, such as certain equity investments and construction loans with         
loan-to-value ratios exceeding 80%.                                             

Financial Institutions Reform, Recovery and Enforcement Act of 1989   
requires that the OTS and other federal banking agencies revise the risk-based  
capital standards, with appropriate transition rules, to ensure that they take  
into account interest rate risk ("IRR"), concentration of risk and the risks of 
non-traditional activities. The OTS adopted regulations, effective January 1,   
1994, that set forth the methodology for calculating an interest rate risk      
component to be incorporated into the OTS risk-based capital regulations. The   
OTS has indefinitely deferred its requirement of the interest rate risk         
component in the calculation of an institution's risk-based capital             
requirements. The OTS continues to monitor the IRR of individual institutions   
and retains the right to impose minimum capital requirements on individual      
institutions. Based on Astoria Federal's IRR profile and the level of interest  
rates at December 31, 1996, as well as Astoria Federal's level of risk-based    
capital at December 31, 1996, management believes that Astoria Federal does not 
have a greater than normal level of IRR as measured under the OTS rule and would
not be required to hold additional capital against its IRR as a result of the   
rule.                                                                           

  At March 31, 1997, Astoria Federal met each of its capital requirements.
The following table sets forth the regulatory capital calculations of Astoria   
Federal at March 31, 1997, calculated in accordance with applicable requirements
of the OTS. At March 31, 1997, Astoria Federal is a "well capitalized"          
institution.                                                                    

                                                        [Enlarge/Download Table]

                                                            AT MARCH 31, 1997                       
                                      ------------------------------------------------------------- 
                                          CAPITAL                                                   
                                        REQUIREMENT          ACTUAL CAPITAL        EXCESS CAPITAL   
                                      ----------------     ------------------     ----------------- 
                                                         (DOLLARS IN THOUSANDS)                     
                                                                                                    
Tangible............................. $113,327     1.5%    $410,105      5.43%    $296,778     3.93%
Leverage.............................  226,661     3.0      410,105      5.43      183,444     2.43 
Risk-based...........................  214,925     8.0      424,062     15.78      183,444     8.41 

 On a pro forma basis after giving effect to the Merger, Astoria Federal
would remain a "well capitalized" institution with pro forma tangible, leverage 
and risk-based capital ratios of 5.01%, 5.01% and 13.65% respectively at March  
31, 1997.                                                                       

PROMPT CORRECTIVE REGULATORY ACTION                                             

FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, the banking       
regulators are required to take certain supervisory actions against             
undercapitalized institutions, the severity of which depends upon the           
institution's degree of capitalization.                                         

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Generally, subject to a narrow exception, FDICIA requires the applicable banking
regulator to appoint a receiver or conservator for an institution that is       
critically undercapitalized.                                                    

Under the OTS regulations, generally, a federally chartered savings   
association is treated as "well                                                 
capitalized" if its total risk-based capital ratio is 10% or greater, its Tier 1
risk-based capital ratio is 6% or greater, and its leverage ratio is 5% or      
greater, and it is not subject to any order or directive by the OTS to meet a   
specific capital level. A federally chartered savings association is treated as 
adequately capitalized if its ratio of total capital to risk-weighted assets is 
at least 8%, its Tier 1 risk-based capital ratio is at least 4%, and its        
leverage ratio is at least 4% (3% if the institution receives the highest rating
on the regulatory rating system). A federally chartered savings association that
has a total risk-based capital ratio of less than 8% or a leverage ratio or a   
Tier 1 risk-based capital ratio of less than 4% is considered to be             
"undercapitalized." A federally chartered savings association that has a total  
risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of  
less than 3% or a leverage ratio of less than 3% is considered to be            
"significantly undercapitalized," and a federally chartered savings association 
that has a tangible-capital to assets ratio equal to or less than 2% is deemed  
to be "critically undercapitalized." Generally, a capital restoration plan must 
be filed with the OTS within 45 days of the date an association receives notice 
that it is "undercapitalized," "significantly undercapitalized" or "critically  
undercapitalized." In addition, various mandatory supervisory actions become    
immediately applicable to the institution, including restrictions on growth of  
assets and other forms of expansion. The OTS could also take any one of a number
of discretionary supervisory actions, including the issuance of a capital       
directive and the replacement of senior executive officers and directors. As of 
March 31, 1997, Astoria Federal was considered "well capitalized" by the OTS.   

"Undercapitalized" depository institutions are subject to growth      
limitations and are required to submit a capital restoration plan.              
"Significantly undercapitalized" institutions are subject to more severe        
restrictions. The OTS may not accept a capital restoration plan without         
determining, among other things, that the plan is based on realistic assumptions
and is likely to succeed in restoring the depository institution's capital. In  
addition, for a capital restoration plan to be acceptable, the depository       
institution's parent holding company must guarantee that the institution will   
comply with such capital restoration plan. The aggregate liability of the parent
holding company is limited to the lesser of (i) an amount equal to the five     
percent of the depository institution's total assets at the time it became      
"undercapitalized," and (ii) the amount which is necessary (or would have been  
necessary) to bring the institution into compliance with all capital standards  
applicable with respect to such institution as of the time it fails to comply   
with the plan. If a depository institution fails to submit an acceptable plan,  
it is treated as if it is "significantly undercapitalized." In the event of a   
savings and loan holding company's bankruptcy, any commitment by the savings and
loan company to a federal bank regulatory agency to maintain the capital of a   
subsidiary depository institution will be assumed by the bankruptcy trustee and 
entitled to a priority of payment.                                              

IMPACT OF RECENT LEGISLATION                                                    

   Deposit Insurance -- SAIF Recapitalization.  For the first three quarters
of 1996, SAIF-insured institutions paid deposit insurance assessment rates on an
annual basis of $0.23 to $0.31 per $100 of deposits. As a well capitalized      
institution, Astoria Federal paid deposit insurance assessment rates on an      
annual basis of $0.23 per $100 of deposits or $7.4 million for the first three  
quarters of 1996. In contrast, BIF-insured institutions that were well          
capitalized and without any significant supervisory concerns paid the minimum   
annual assessment of $2,000, and all other BIF-insured institutions paid deposit
insurance assessments at annual rates of $0.03 to $0.27 per $100 of deposits.   

 In response to the SAIF/BIF assessment disparity, the Deposit Insurance
Funds Act of 1996 (the "Funds Act") was enacted into law on September 30, 1996. 
The Funds Act amended the FDI 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 one-time assessment on all          
institutions with SAIF-assessable deposits in the amount necessary to           
recapitalize the SAIF. As implemented by the FDIC, institutions with            
SAIF-assessable deposits paid a special assessment, subject to adjustment, of   
65.7 basis points per $100 of the institution's SAIF-assessable deposits. The   
special assessment was based on the amount of SAIF-assessable deposits held on  
March 31, 1995. The Funds Act provides that the amount of the special           

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assessment is deductible for federal income tax purposes for the taxable year in
which the special assessment is paid. Based on the foregoing, the special       
assessment for Astoria Federal of $28.5 million (before taxes) was charged      
against income during the quarter ended September 30, 1996 and paid in November 
1996.                                                                           

In view of the recapitalization of the SAIF, the FDIC reduced the     
assessment rates for SAIF-assessable deposits. For periods beginning on October 
1, 1996 the annual rates were reduced to a range of 18 to 27 basis points, and  
beginning on January 1, 1997, the effective annual rates were reduced to a range
of 0 to 27 basis points. The Funds Act also provides that the FDIC cannot assess
regular insurance assessments for an insurance fund unless required to maintain 
or to achieve the designated reserve ratio of 1.25% of insured deposits, except 
on those of its member institutions that are not classified as "well            
capitalized" or that have been found to have "moderately severe" or             
"unsatisfactory" financial, operational or compliance weaknesses. Astoria       
Federal has not been so classified by the FDIC or the OTS.                      

  In addition, the Funds Act expanded the assessment base to provide funds
for the payment of interest on the bonds issued in the late 1980s by the        
Financing Corporation (the "FICO bonds") to recapitalize the now defunct Federal
Savings and Loan Insurance Corporation to include the deposits of both BIF- and 
SAIF-insured institutions beginning January 1, 1997. Until December 31, 1999, or
such earlier date on which the last savings association ceases to exist         
(relative to charter form), the rate of assessment for BIF-assessable deposits  
will be one-fifth of the rate imposed on SAIF-assessable deposits. The annual   
rate of assessment for the payments on the FICO bonds for the semiannual period 
beginning on January 1, 1997 was 0.013% for BIF-assessable deposits and 0.0648% 
for SAIF-assessable deposits, and for the semiannual period beginning on July 1,
1997 will be 0.0126% and 0.0630%, respectively. Assuming that the designated    
reserve ratio is maintained by the SAIF, Astoria Federal, as long as it         
maintains its regulatory status, will pay substantially lower regular           
assessments compared to those paid by Astoria Federal in recent years. Based on 
the foregoing, Astoria Federal's SAIF assessment rate was 4.5 basis points for  
the last quarter of 1996, and Astoria Federal's annual SAIF assessment rate for 
1997 is zero basis points. As a result, AFC expects a reduction in its total    
1997 expense for the assessment for deposit insurance and FICO obligations of   
$6.7 million from the 1996 expense incurred.                                    

   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 and the development of a new common charter. The Funds Act       
directs the Secretary of the Treasury to conduct a study of relevant factors    
with respect to the development of a common charter for all insured depository  
institutions and to report the Secretary's conclusions and findings to the      
Congress. The Secretary of the Treasury has recommended 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 such non-financial activity, the Secretary of the 
Treasury recommended retention of the thrift charter. The Secretary of the      
Treasury also recommended the merger of the BIF and the SAIF irrespective of    
whether the thrift charter is eliminated. Other proposed legislation has been   
introduced in Congress that would require thrift institutions to convert to bank
charters. These bills include provisions that would (i) apply the restrictions  
on activities applicable to multiple savings and loan holding companies and bank
holding companies to unitary savings and loan building companies and (ii)       
eliminate the savings association charter and require savings associations to   
become banks and simultaneously abolish the OTS and its supervisory role over   
savings and loan holding companies. Although no assurances can be given as to   
whether legislation will be enacted to eliminate the thrift charter or if       
enacted, what powers would be available to Astoria Federal under any new or     
revised depository institution charter, management of AFC and Astoria Federal   
believes that such legislation will not significantly impact the core business  
activities of Astoria Federal. Management intends to continue to closely monitor
such developments.                                                              

Recapture of Bad Debt Reserves.  Prior to the enactment of the Small  
Business Job Protection Act of 1996 (the "1996 Act"), on August 20, 1996, thrift
institutions such as Astoria Federal, which met certain definitional tests      
primarily relating to their assets and the nature of their business, for federal
income tax purposes, were permitted to establish tax reserves for bad debts and 
to make annual additions thereto, which additions could be deducted, within     
specified limitations, in arriving at their taxable income. Astoria Federal's   
deduction with respect to "qualifying loans," which are generally loans secured 
by certain interest in real                                                     

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property, could be computed using an amount based on Astoria Federal's actual   
loss experience (the "Experience Method"), or a percentage equal to 8.0% of     
Astoria Federal'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 Astoria Federal's bad debt reserve were permitted under the New    
York State Franchise Tax and the New York City Financial 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 Astoria Federal, 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 (that is, take into taxable income) over a six-year period, beginning 
with Astoria Federal's taxable year beginning January 1, 1996, the excess of the
balance of such reserves (other than the supplemental reserve) as of December   
31, 1995 over the balance of such reserves as of December 31, 1987. However,    
under the 1996 Act, such recapture requirements will be suspended for each of   
the two successive taxable years beginning January 1, 1996 in which Astoria     
Federal 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 Astoria Federal during its six taxable years preceding January 1, 1996. 
Since Astoria Federal has already provided a deferred income tax liability for  
financial reporting purposes, there will be no adverse impact to Astoria        
Federal's financial condition or results of operations from the enactment of    
this legislation.                                                               

    The New York State and New York City tax laws have been amended to prevent
a similar recapture of Astoria Federal's bad debt reserve, and to permit        
continued future use of the bad debt reserve method for purposes of determining 
the Astoria Federal's New York State and New York City tax liabilities, in      
either case so long as the Astoria Federal continues to satisfy the New York    
State and New York City definitional tests related to its assets and the nature 
of its business, which are similar to the former federal income tax tests,      
discussed above.                                                                

TRANSACTIONS WITH RELATED PARTIES                                               

 In addition to Sections 23A and 23B of the Federal Reserve Act ("FRA"),
which limit Astoria Federal's authority to engage in transactions with          
"affiliates" (i.e., any company that controls or is under common control with an
institution, which for Astoria Federal would be AFC), OTS regulations prohibit  
savings associations from lending to any affiliate 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"). Further, no savings association may       
purchase the securities of any affiliate other than a subsidiary.               

FEDERAL HOME LOAN BANK SYSTEM                                                   

Astoria Federal is a member of the FHLB System, which consists of 12  
regional FHLBs. The FHLB provides a central credit facility primarily for member
institutions. Astoria Federal, as a member of the FHLB-NY, is required to       
acquire and hold shares of capital stock in FHLB-NY in an amount at least equal 
to 1% of the aggregate principal amount of its unpaid residential mortgage loans
and similar obligations at the beginning of each year, 0.3% of total assets, or 
1/20% of its advances from the FHLB-NY, whichever is greater. Astoria Federal   
was in compliance with this requirement with an investment in FHLB-NY stock at  
December 31, 1996, of $32.4 million.                                            

    For each of the years ended December 31, 1996 and 1995, dividends from the
FHLB-NY to Astoria Federal amounted to $2.0 million, and for the year ended     
December 31, 1994, dividends amounted to $1.5 million.                          

OTHER REGULATIONS APPLICABLE TO FEDERAL SAVINGS ASSOCIATIONS                    

Qualified Thrift Lender ("QTL") Test.  The HOLA requires savings      
associations to meet a QTL test. Under the QTL test, a savings association is   
required to maintain at least 65% of its "portfolio assets" (total assets less  
(i) specified liquid assets up to 20% of total assets, (ii) intangibles,        
including goodwill, and (iii) the                                               

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value of property used to conduct business) in certain "qualified thrift        
investments" (primarily residential mortgages and related investments, including
certain mortgage-backed and mortgage-related securities) on a monthly basis in 9
out of every 12 months.                                                         

 A savings association that fails the QTL test and does not convert to a
bank charter generally will be prohibited from: (i) engaging in any new activity
not permissible for a national bank, (ii) paying dividends not permissible under
national bank regulations, (iii) obtaining advances from any FHLB, and (iv)     
establishing any new branch office in a location not permissible for a national 
bank in the association's home state. In addition, beginning three years after  
an association fails the QTL test, the association is prohibited from engaging  
in any activity not permissible for a national bank and must repay any          
outstanding advances from the FHLB as promptly as possible. On September 30,    
1996, Congress enacted the Economic Growth and Paperwork Reduction Act of 1996  
("Regulatory Paperwork Reduction Act"), which modified and expanded the         
investment authority of federal savings associations under the QTL test. The    
Regulatory Paperwork Reduction Act expanded the definition of "qualified thrift 
investment" to include, without limit, education, small business, and credit    
card loans, and removed the 10% limit on personal, family, or household loans   
for purposes of the QTL test. The legislation also provides that a thrift meets 
the QTL test if it qualifies as a domestic building and loan association under  
the Internal Revenue Code. As of December 31, 1996, Astoria Federal maintained  
its portfolio assets in qualified thrift investments in excess of 85% and had   
more than 65% of its portfolio assets in qualified thrift investments for each  
of the 12 months ending December 31, 1996. Therefore, Astoria Federal qualified 
under the QTL test.                                                             

Liquidity.  Astoria Federal 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. Astoria Federal's liquidity and short-term liquidity ratios for   
December 31, 1996 were 8.60% and 3.76%. Astoria Federal has never failed to meet
its liquidity requirements.                                                     

    Assessments.  Federally chartered savings associations are required by OTS
regulations 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 federally 
chartered savings association's total assets, including consolidated            
subsidiaries, as reported in the association's latest quarterly thrift financial
report. The assessment recorded by Astoria Federal for the year ended December  
31, 1996 totaled $917,200.                                                      

Branching.  OTS regulations authorize federally chartered savings     
associations to branch nationwide to the extent allowed by federal statute. This
permits federal savings and loan associations with interstate networks to       
diversify more easily their loan portfolios and lines of business               
geographically. The OTS' authority preempts any state law purporting to regulate
branching by federal savings associations. The branching powers afforded federal
savings associations are broader than the branching authority currently         
available to national banks and state chartered institutions, which generally   
lack the authority to branch outside their state of domicile. However, national 
banks and state chartered banks and savings banks will have increased authority 
under 1995 legislation to establish interstate branches beginning in June 1997. 

HOLDING COMPANY REGULATION                                                      

   AFC is a non-diversified, unitary savings and loan holding company within
the meaning of the HOLA. As such, AFC is registered with the OTS and is subject 
to the OTS regulations, examinations, supervision and reporting requirements. In
addition, the OTS has enforcement authority over AFC. Among other things, this  
authority permits the OTS to restrict or prohibit activities that are determined
to be a serious risk to any of a holding company's subsidiaries which are       
savings associations. Astoria Federal must notify the OTS at least 30           

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days before declaring any dividend to AFC. Such notification has been complied  
with for each dividend declared in 1996 to AFC, for which Astoria Federal has   
received OTS approval.                                                          

   Because AFC is a holding company, the rights of AFC to participate in any
distribution of assets of any subsidiary, including Astoria Federal, upon the   
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
AFC's stockholders to benefit indirectly from such distribution) would be       
subject to the prior claims of creditors of that subsidiary, except to the      
extent that AFC itself may be a creditor of that subsidiary with recognized     
claims. Claims on AFC subsidiaries by creditors other than AFC will include     
substantial obligations with respect to deposit liabilities and purchased funds.

The HOLA prohibits a savings and loan 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 nonsubsidiary holding company, or a       
non-subsidiary company engaged in activities other than those permitted by the  
HOLA or acquiring or retaining control of an institution that is not federally  
insured. In evaluating applications by holding companies to acquire savings     
associations, the OTS must consider the financial and managerial resources and  
future prospects of the company and institution involved, the effect of the     
acquisition on the risk to the insurance funds, the convenience and needs of the
community and competitive factors.                                              

As a unitary savings and loan holding company, AFC generally is not   
restricted under existing laws as to the types of business activities in which  
it may engage; provided, that Astoria Federal continues to be a QTL. Upon any   
non-supervisory acquisition by AFC of another savings association or savings    
bank that meets the QTL test and is deemed to be a savings association by the   
OTS, AFC would become a multiple savings and loan holding company (if the       
acquired institution is held as a separate subsidiary) and would be subject to  
extensive limitations on the types of business activities in which it could     
engage. The HOLA limits the activities of a multiple savings and loan holding   
company and its non-insured institution 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 activities authorized by OTS      
regulations, which activities include mortgage banking, consumer finance,       
operation of a trust company, and certain types of securities brokerage         
activities.                                                                     

     The OTS is prohibited from approving any acquisition that would result in a
multiple savings and loan holding company controlling savings associations in   
more than one state, subject to two exceptions: (i) the approval of interstate  
supervisory acquisitions by savings and loan holding companies, and (ii) the    
acquisition of a savings association in another state if the laws of the state  
of the target savings association specifically permit such acquisitions.        
Although the conditions imposed upon acquisitions in those states that have     
enacted such legislation vary, many such statutes are of the "reciprocity" type 
and a number are limited by regional restrictions, which require that the       
acquiring holding company be located (as defined by the location of its         
subsidiary savings associations) in a state within a defined geographic region  
and that the state in which the acquiring holding company is located has enacted
reciprocal legislation allowing savings associations in the target state to     
purchase savings associations in the acquiror's home state on terms no more     
restrictive than those imposed by the target state on the acquiror. Some states 
authorize acquisition by out-of-state holding companies only in supervisory     
cases, and certain states do not authorize interstate acquisitions under any    
circumstances.                                                                  

Under the Change in Bank Control Act, HOLA and 12 C.F.R. Part 574     
promulgated thereunder, OTS approval (or, in certain cases, non-disapproval)    
must be obtained before any person may acquire control of a savings and loan    
holding company such as AFC. For such purposes, "person" includes an individual 
or an entity, and security holdings of persons acting in concert are aggregated 
for purposes of applying these provisions. Control is conclusively presumed to  
exist if, among other things, a person acquires more than 25% of any class of   
voting stock of a savings and loan holding company or controls in any manner the
election of a majority of the directors of the savings and loan holding company.
Control is rebuttably presumed to exist if, among other things, a person        
acquires more than 10% of any class of voting stock (or 25% of any class of     
stock) of a savings and loan holding company and is subject to any of certain   
specified "control factors." The control factors relate to, among other matters,
the percentage of the debt and equity of the savings and loan                   

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holding company owned by the person, agreements giving the person influence over
a material aspect of the operations of the savings and loan holding company and 
the number of seats on the board of directors of the savings and loan holding   
company held by the person or designees of the person. Subject to rebuttal, a   
person also may be deemed to have control of a savings and loan holding company 
if such person holds any combination of voting stock and revocable or           
irrevocable proxies representing more than 25% of any class of voting stock of  
the savings and loan holding company (excluding proxies held in connection with 
a solicitation by, or in opposition to, a solicitation on behalf of management, 
but including a solicitation in connection with the election of directors) and  
the proxies would enable such person to: (i) elect one-third or more directors  
of, (ii) cause the stockholders to approve the acquisition or reorganization of,
or (iii) exert a continuing influence on a material aspect of the business      
operations of, an association or its holding company. OTS regulations provide an
application procedure to rebut the control presumptions. If the holders of the  
AFC Series B Preferred Stock become entitled to vote for the election of        
directors because dividends are in arrears, such series may then be deemed a    
separate "class of voting stock" for purposes of the foregoing.                 

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UNAUDITED PRO FORMA 
COMBINED CONDENSED CONSOLIDATED FINANCIAL INFORMATION 

     The following Unaudited Pro Forma Combined Condensed Consolidated Statement
of Financial Condition combines the historical Consolidated Statement of        
Financial Condition of AFC and subsidiary and the adjusted historical           
Consolidated Statement of Financial Condition of GNYSB and subsidiaries giving  
effect to the consummation of the Merger on March 31, 1997, using the purchase  
method of accounting and giving effect to the related pro forma adjustments     
described in the accompanying Notes to the Unaudited Pro Forma Combined         
Condensed Consolidated Financial Statements. The following Unaudited Pro Forma  
Combined Condensed Consolidated Statements of Operations for the year ended     
December 31, 1996 and the three months ended March 31, 1997 combine the         
historical Consolidated Statements of Operations of AFC and subsidiary and GNYSB
and subsidiaries giving effect to the Merger as if the Merger had become        
effective on January 1, 1996, using the purchase method of accounting and giving
effect to the related pro forma adjustments described in the accompanying Notes 
to the Unaudited Pro Forma Combined Condensed Consolidated Financial Statements.

The unaudited pro forma combined condensed consolidated financial     
statements included herein are presented for informational purposes only. This  
information includes various estimates and may not necessarily be indicative of 
the financial position or results of operations that would have occurred if the 
Merger had been consummated on the date or at the beginning of the periods      
indicated or which may be obtained in the future. The unaudited pro forma       
combined condensed consolidated financial statements and accompanying notes     
should be read in conjunction with and are qualified in their entirety by       
reference to the historical financial statements and related notes thereto of   
AFC and subsidiary and GNYSB and subsidiaries incorporated by reference in this 
Joint Proxy Statement-Prospectus and the other pro forma financial information  
and notes thereto appearing elsewhere herein.                                   

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AFC AND SUBSIDIARY AND GNYSB AND SUBSIDIARIES 
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
CONDITION 
AS OF MARCH 31, 1997
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                     ADJUSTED                                       
                                      HISTORICAL    HISTORICAL       PRO FORMA           PRO FORMA  
                                          AFC         GNYSB         ADJUSTMENTS          COMBINED   
                                      -----------   ----------      -----------         ----------- 
                                                                                                    
ASSETS                                                                                              
Cash and due from banks.............  $    22,674   $   23,279       $      --          $    45,953 
Federal funds sold and repurchase                                                                   
  agreements........................       81,518        8,300              --               89,818 
Securities available-for-sale (at                                                                   
  estimated fair value).............    2,430,970      209,274        (107,850)(C)        2,532,394 
Securities held-to-maturity.........    2,080,739    1,212,710         (15,000)(D)        3,278,449 
Federal Home Loan Bank of New York                                                                  
  stock.............................       35,800       23,600              --               59,400 
Loans and investments in real estate                                                                
  held-for-sale.....................           --           --          33,413(D(ii))        33,413 
Loans receivable....................    2,777,562      963,799          23,000(D)         3,727,251 
                                               --           --         (37,110)(D(ii))           -- 
  Less allowance for loan losses....      (14,024)     (36,079)(B)          --              (50,103)
                                      -----------   ----------       ---------          ----------- 
  Loans receivable, net.............    2,763,538      927,720(B)      (14,110)           3,677,148 
Real estate owned and investments in                                                                
  real estate, net..................       11,768       31,491         (21,803)(D(ii))       21,456 
Accrued interest receivable.........       44,591       13,552              --               58,143 
Premises and equipment, net.........       83,433       28,567              --              112,000 
Excess of cost over fair value of                                                                   
  net assets acquired and other                                                                     
  intangibles.......................       98,157           --         160,535(E)           258,692 
Other assets........................       36,221       81,491(B)        9,467(D)           127,179 
                                      -----------   ----------       ---------          ----------- 
          Total Assets..............  $ 7,689,409   $2,559,984(B)    $  44,652          $10,294,045 
                                      ===========   ==========       =========          =========== 
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                
Liabilities:                                                                                        
  Deposits:.........................  $ 4,494,230   $1,667,433       $   5,200(D)       $ 6,177,222 
  Borrowed funds....................    2,540,477      670,108         (14,930)(D)        3,195,655 
  Accrued expenses and other                                                                        
     liabilities....................       70,310       20,178              --               80,129 
                                      -----------   ----------       ---------          ----------- 
          Total Liabilities.........    7,105,017    2,357,719          (9,730)           9,453,006 
                                      -----------   ----------       ---------          ----------- 
Stockholders' Equity:                                                                               
  Preferred stock...................           --        3,478          (3,478)(F)            2,000 
                                                                         2,000(C)                   
  Common stock......................          264       13,678         (13,678)(F)              264 
  Additional paid-in capital........      334,960      166,937        (166,937)(F)          485,812 
                                                                       150,852(C)                   
  Retained earnings.................      391,639       32,817(B)      (32,817)(F)          391,639 
  Treasury stock....................     (103,795)          --         103,795(C)                -- 
  Net unrealized (losses) on                                                                        
     securities, net of taxes.......       (9,471)        (415)            415(F)            (9,471)
  Unallocated common stock held by                                                                  
     ESOP...........................      (23,755)     (14,230)         14,230(F)           (23,755)
  Unearned common stock held by the                                                                 
     RRPs...........................       (5,450)          --              --               (5,450)
                                      -----------   ----------       ---------          ----------- 
          Total Stockholders'                                                                       
            Equity..................      584,392      202,265(B)       54,382              841,039 
                                      -----------   ----------       ---------          ----------- 
          Total Liabilities and                                                                     
            Stockholders' Equity....  $ 7,689,409   $2,559,984(B)    $  44,652          $10,294,045 
                                      ===========   ==========       =========          =========== 

See accompanying notes to unaudited pro forma combined condensed consolidated 
financial statements. 

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AFC AND SUBSIDIARY AND GNYSB AND SUBSIDIARIES 
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                 HISTORICAL                                       
                                          -------------------------   PRO FORMA      PRO FORMA    
                                             AFC           GNYSB     ADJUSTMENTS      COMBINED    
                                          ----------     ----------  -----------     ----------   
                                                                                                  
Total interest income...................  $  491,174     $  176,934   $  (5,798)(G)  $  662,310   
Total interest expense..................     301,481        104,577        (900)(G)     408,158   
                                          ----------     ----------   ---------      ----------   
Net interest income.....................     186,693         72,357      (4,898)(B)     254,152   
Provision for loan losses...............       3,963          1,500                       5,463   
                                          ----------     ----------   ---------      ----------   
Net interest income after provision for                                                           
  loan losses...........................     182,730         70,857      (4,898)        248,689   
Non-interest income.....................      13,722         10,797          --          24,519   
Non-interest expense:                                                                             
  General and administrative............      96,165         48,151          --         144,316   
  Real estate operations, net...........      (2,723)         3,457          --             734   
  (Recovery of) provision for real                                                                
     estate losses......................      (1,747)           500          --          (1,247)  
  Amortization of excess of cost over                                                             
     fair value of net assets                                                                     
     acquired...........................       8,684             --      10,702(H)       19,386   
SAIF recapitalization assessment........      28,545             --          --          28,545   
                                          ----------     ----------   ---------      ----------   
Total non-interest expense..............     128,924         52,108      10,702         191,734   
                                          ----------     ----------   ---------      ----------   
Income before income taxes..............      67,528         29,546     (15,600)         81,474   
Income taxes............................      30,675         11,047      (4,733)         36,989(I)
                                          ----------     ----------   ---------      ----------   
Net income..............................  $   36,853     $   18,499   $ (10,867)     $   44,485   
                                          ==========     ==========   =========      ==========   
Primary weighted average number of                                                                
  common stock equivalents outstanding                                                            
  during the year.......................  20,872,779     13,528,303                  26,492,540(J)
Fully diluted weighted average number of                                                          
  common stock equivalents outstanding                                                            
  during the year.......................  21,581,770     15,134,708                  27,201,531(J)
Net income per common share:                                                                      
  Primary...............................  $     1.77     $     0.83                  $     1.45(K)
  Fully diluted.........................  $     1.71     $     0.77                  $     1.41(K)

See accompanying notes to unaudited pro forma combined condensed consolidated 
financial statements. 

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AFC AND SUBSIDIARY AND GNYSB AND SUBSIDIARIES 
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 
THREE MONTHS ENDED MARCH 31, 1997 
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                HISTORICAL                                       
                                         -------------------------   PRO FORMA      PRO FORMA    
                                            AFC           GNYSB     ADJUSTMENTS      COMBINED    
                                         ----------     ----------  ------------    ----------   
                                                                                                 
Total interest income..................  $  129,073     $   44,065    $ (1,449)(G)  $  171,689   
Total interest expense.................      79,617         25,169        (225)(G)     104,561   
                                         ----------     ----------    --------      ----------   
Net interest income....................      49,456         18,896      (1,224)(B)      67,128   
Provision for loan losses..............         500             --          --             500   
                                         ----------     ----------    --------      ----------   
Net interest income after provision for                                                          
  loan losses..........................      48,956         18,896      (1,224)         66,628   
Non-interest income....................       3,471          2,041          --           5,512   
Non-interest expense:                                                                            
  General and administrative...........      23,759         11,932                      35,691   
  Real estate operations, net..........         112            992                       1,104   
  Provision for real estate losses.....          64            500                         564   
  Amortization of excess of cost over                                                            
     fair value of net assets                                                                    
     acquired..........................       2,110             --       2,676(H)        4,786   
                                         ----------     ----------    --------      ----------   
Total non-interest expense.............      26,045         13,424       2,676          42,145   
                                         ----------     ----------    --------      ----------   
Income before income taxes.............      26,382          7,513      (3,900)         29,995   
Income taxes...........................      10,948          2,810      (1,310)         12,448(I)
                                         ----------     ----------    --------      ----------   
Net income.............................  $   15,434     $    4,703    $ (2,590)     $   17,547   
                                         ==========     ==========    ========      ==========   
Primary weighted average number of                                                               
  common stock equivalents outstanding                                                           
  during the year......................  21,314,991     13,884,527                  26,934,752(J)
Fully diluted weighted average number                                                            
  of common stock equivalents                                                                    
  outstanding during the year..........  21,316,019     15,361,009                  26,935,780(J)
Net income per common share:                                                                     
  Primary..............................  $     0.72     $     0.21                  $     0.60(K)
  Fully diluted........................  $     0.72     $     0.20                  $     0.60(K)

See accompanying notes to unaudited pro forma combined condensed consolidated 
financial statements. 

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AFC AND SUBSIDIARY AND GNYSB AND SUBSIDIARIES 
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 1996 AND MARCH 31, 1997

(A) Basis of Presentation                                             

The Unaudited Pro Forma Combined Condensed Consolidated Statement of  
Financial Condition of AFC and subsidiary and GNYSB and subsidiaries at March   
31, 1997 has been prepared as if the Merger had been consummated on that date.  
The Unaudited Pro Forma Combined Condensed Consolidated Statements of Operations
for the year ended December 31, 1996 and the three months ended March 31, 1997  
were prepared as if the Merger had been consummated on January 1, 1996. The     
unaudited pro forma combined condensed consolidated financial statements are    
based on the historical financial statements of AFC and GNYSB after giving      
effect to the Merger under the purchase method of accounting and the assumptions
and adjustments in the notes that follow.                                       

Assumptions relating to the pro forma adjustments set forth in the    
unaudited pro forma combined condensed consolidated financial statements are    
summarized as follows:                                                          

     (i) Estimated fair values -- Estimated fair values for securities
     held-to-maturity, loans, deposits and borrowings were obtained from GNYSB's
1996 Annual Report to Shareholders -- Footnote number 17 of "Notes to 
    Consolidated Financial Statements" -- Fair Value of Financial Instruments.
The resulting net discount/premium on securities held-to-maturity and 
    loans, respectively, for purposes of these pro forma financial statements,
 is being accreted/amortized to interest income on a straight-line basis
    over four and ten years, respectively. The actual discount/premium will be
accreted/amortized to interest income to produce a constant yield to  
maturity. The resulting net premium and discount on deposits and      
     borrowings, respectively, is being amortized/accreted into interest expense
on a straight-line basis over their remaining estimated lives of five 
years.                                                                

       (ii) Income taxes -- a net deferred tax asset was recorded equal to
   the deferred tax consequences associated with the differences between the
  tax basis and book basis of the assets acquired and liabilities assumed,
using a statutory tax rate of 43.03%.                                 

  (B) The Merger Agreement requires GNYSB at the written request of AFC to
modify and change certain of its policies and practices, including loan policies
and practices, before the Effective Time so as to be consistent on a mutually   
satisfactory basis with those of Astoria Federal subject to compliance with     
generally accepted accounting principles and all applicable laws and            
regulations. GNYSB is not obligated to take any such action until after the date
on which all required regulatory approvals and stockholder approvals are        
received and after receipt of written confirmation from AFC that it is not aware
of any fact or circumstance that would prevent completion of the Merger. AFC has
advised GNYSB that it expects to make such a request and that it currently      
expects that compliance with such requirement will result in an additional      
provision for loan losses of $19,500,000. Differences in policies and practices 
of GNYSB and AFC which give rise to this additional provision include, but are  
not limited to, evaluation of current and future economic trends, estimation of 
fair value, particularly for collateral dependent loans, designation of         
non-accrual loans and underwriting standards. A corresponding deferred tax asset
of $8,951,000 was recorded in other assets using GNYSB's historical statutory   
tax rate of 45.9%. The provision is not reflected in the Unaudited Pro Forma    
Combined Condensed Consolidated Statements of Operations as the statements are  
prepared as if the Merger had occurred on January 1, 1996. The provision is a   
non-recurring charge which would have been recorded by GNYSB prior to the Merger
assuming all regulatory and stockholder approvals were obtained, AFC made a     
written request and the Merger was consummated. The following table reconciles  
the adjustments to the historical GNYSB and subsidiaries Consolidated Statement 
of Condition at March 31, 1997 with the presentation of the Unaudited Pro Forma 
Combined Condensed Consolidated Statement of Financial Condition as of March 31,
1997.                                                                           

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AFC AND SUBSIDIARY AND GNYSB AND SUBSIDIARIES 
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS -- (CONTINUED) 

                                                        [Enlarge/Download Table]

                                                                                ADJUSTED  
                                                 HISTORICAL                    HISTORICAL 
                                                   GNYSB        ADJUSTMENT       GNYSB    
                                                 ----------   ---------------  ---------- 
                                                              (IN THOUSANDS)              
                                                                                          
Allowance for loan losses.......................  $ (16,579)     $ (19,500)     $ (36,079)
                                                   ========    ===========       ======== 
Other assets (including deferred tax assets of                                            
  $43,213,000 prior to adjustment and                                                     
  $52,164,000 after adjustment).................  $  72,540      $   8,951      $  81,491 
                                                   ========    ===========       ======== 
Retained Earnings...............................  $  43,366      $ (10,549)     $  32,817 
                                                   ========    ===========       ======== 

    (C) Under the terms of the Merger Agreement, holders of GNYSB Common Stock
will receive either 0.50 shares of AFC Common Stock or $19.00 in cash for each  
share, subject to 75% of the GNYSB Common Stock being converted into the right  
to receive AFC Common Stock and 25% being converted into the right to receive   
cash. The total cost of the transaction is summarized as follows:               

                                                        [Enlarge/Download Table]

                                                25% CASH       75% STOCK        TOTAL  
                                                --------       ---------       --------
                                                            (IN THOUSANDS)             
                                                                                       
GNYSB's total common shares outstanding(i)..... $ 64,968       $ 190,289(vii)  $255,257
Cash-out of incremental stock options, net of                                          
  tax(ii)......................................    6,871              --          6,871
Conversion of GNYSB's Series A Preferred Stock                                         
  to GNYSB Common Stock(iii)...................    6,633          19,429         26,062
Issuance of Preferred Stock Series B(iv).......       --          47,312         47,312
Estimated transaction costs....................   28,995(v)           --         28,995
                                                --------       ---------       --------
          Totals............................... $107,467(vi)   $ 257,030       $364,497
                                                ========        ========       ========

---------------                                                                 

(i)   Based on 13,677,565 shares of GNYSB Common Stock outstanding as of March  
 31, 1997, of which 25% represents 3,419,391 shares and 75% represents
10,258,174 shares.                                                  

(ii)  Assumes that none of the holders of GNYSB's stock options elect to        
     exchange such options for AFC's options. As of March 31, 1997, there were
1,090,480 outstanding options to purchase GNYSB Common Stock with a 
weighted average exercise price of $7.94.                           

(iii) Assumes the conversion of shares of GNYSB Series A Preferred Stock into   
shares of GNYSB Common Stock at or prior to the Effective Time at an
  exchange ratio of .9448 shares of GNYSB Common Stock for each share of
      GNYSB Series A Preferred Stock. As of March 31, 1997, there were 1,478,077
shares of GNYSB Series A Preferred Stock outstanding. See "THE      
 MERGER -- Merger Consideration and Election, Allocation and Proration
Procedures -- GNYSB Series A Preferred Stock."                      

(iv) Estimated fair value of AFC Series B Preferred Stock to be issued pursuant 
to the Merger Agreement.                                              

(v)  Estimated transaction costs of $28,995,000 consist of the following:       

                                                                [Download Table]
                                                                             
Merger-related compensation and severance.......................  $19,320,000
Professional services...........................................    5,600,000
Systems and facilities conversion and other expenses............    4,075,000

(vi) It is assumed that the cash portion of the transaction will be financed    
 through the sale of securities from AFC's available-for-sale securities
portfolio. As of March 31, 1997, the weighted average yield of AFC's  
available-for-sale securities portfolio was 6.72%.                    
(vii) Assumes reissuance of AFC's Common Stock through its treasury account with
  an average cost per share of $20.28. For accounting purposes, the fair
    market value of AFC Common Stock was $37.10 per share, for determination
of total stock consideration.                                       

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AFC AND SUBSIDIARY AND GNYSB AND SUBSIDIARIES 
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS -- (CONTINUED) 

(D) Purchase accounting adjustments are estimated as follows:         

                                                                [Download Table]

                                                                  (IN THOUSANDS)
                                                                  --------------
                                                                                
GNYSB's net assets -- historical at March 31,                                   
  1997(i)..............................................              $202,265   
Adjustments to GNYSB's statement of condition:                                  
  Termination of GNYSB's ESOP (payoff of loan                                   
     payable)..........................................                14,230   
Fair value adjustments:(ii)                                                     
  Securities held-to-maturity.......................... (15,000)                
  Loans and investments in real estate held-for-sale... (25,500  iii)           
  Loans receivable.....................................  23,000                 
  Deposits.............................................  (5,200)                
  Borrowings...........................................     700                 
                                                        -------                 
Subtotal -- net fair value adjustments.................               (22,000)  
Tax effects of fair value adjustments at 43.03%........                 9,467   
                                                                     --------   
Total net adjustments to net assets acquired...........                 1,697   
                                                                     --------   
Adjusted net assets acquired...........................              $203,962   
                                                                     ========   

---------------                                                                 

(i) After adjustments as described above under Note B.                        
(ii) Fair value adjustments in accordance with purchase accounting under      
generally accepted accounting principles.                           

(iii) Represents loans and investments in real estate, held-for-investment by   
     GNYSB, but which AFC will consider selling subsequent to the consummation
    of the Merger. Based on the intent to accelerate the disposition of such
  assets, an estimated purchase accounting adjustment of $25,500,000 was
made.                                                               

  (E) The excess of cost over the fair value of net assets acquired is set
forth below:                                                                    

                                                                [Download Table]

                                                                 (IN THOUSANDS)
                                                                 --------------
                                                                               
Total cost:                                                                    
Cash portion...................................................     $107,467   
  Stock portion................................................      257,030   
                                                                 --------------
                                                                     364,497   
  Net assets acquired..........................................      203,962   
                                                                 --------------
  Total excess of cost over the fair value of net assets                       
     acquired..................................................     $160,535   
                                                                 ===========   

(F) Purchase accounting adjustments to eliminate GNYSB's stockholders'
equity accounts.                                                                

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AFC AND SUBSIDIARY AND GNYSB AND SUBSIDIARIES 
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS -- (CONTINUED) 

(G) Pro forma adjustments to interest income and interest expense were
calculated as follows:                                                          

                                                        [Enlarge/Download Table]

                                            FOR THE YEAR ENDED   FOR THE THREE MONTHS
                                            DECEMBER 31, 1996    ENDED MARCH 31, 1997
                                            ------------------   --------------------
                                                         (IN THOUSANDS)              
                                                                                     
Reduction in interest income on securities                                           
  sold to fund acquisition ($107,850 at                                              
  6.72%)..................................       $ (7,248)             $ (1,812)     
Accretion of discount on securities (4                                               
  years)..................................          3,750                   938      
Amortization of premium on loans (10                                                 
  years)..................................         (2,300)                 (575)     
                                                  -------               -------      
  Total net adjustments -- interest                                                  
     income...............................       $ (5,798)             $ (1,449)     
                                                  =======               =======      
Amortization of premium on deposits (5                                               
  years)..................................       $  1,040              $    260      
Accretion of discount on borrowings (5                                               
  years)..................................           (140)                  (35)     
                                                  -------               -------      
  Total net adjustments -- interest                                                  
     expense..............................       $    900              $    225      
                                                  =======               =======      

(H) The amortization of the excess of cost over the fair value of net 
assets acquired is assumed straight-line over a period of fifteen years.        

     (I) Income tax expense was calculated using AFC's actual three months ended
March 31, 1997 and year ended December 31, 1996 effective tax rates of 41.5%,   
and 45.4%, respectively.                                                        

    (J) Primary and fully diluted weighted average number of common and common
stock equivalents utilized for the calculation of earnings per share for the    
periods presented were calculated using AFC's historical weighted average common
and common stock equivalents plus 5,619,761 shares issued to GNYSB stockholders 
under the terms of the Merger Agreement.                                        

 (K) Net income per common share was adjusted for dividends on preferred
shares of $6,000,000 annually and $1,500,000 quarterly.                         

     (L) The following table summarizes the estimated impact of the amortization
and accretion of the purchase accounting adjustments made in connection with the
Merger on AFC's results of operations for the next five years:                  

                                                        [Enlarge/Download Table]

               PROJECTED FUTURE                                                                           
                AMOUNTS FOR THE                                                     NET       NET DECREASE
                  YEARS ENDED                      EXCESS OF COST OVER FAIR     (ACCRETION)    IN INCOME  
                  DECEMBER 31                    VALUE OF NET ASSETS ACQUIRED   AMORTIZATION  BEFORE TAXES
-----------------------------------------------  ----------------------------   ------------  ------------
                                                                       (IN THOUSANDS)                     
                                                                                                          
1997...........................................            $ 10,702               $ (2,350)     $  8,352  
1998...........................................              10,702                 (2,350)        8,352  
1999...........................................              10,702                 (2,350)        8,352  
2000...........................................              10,702                 (2,350)        8,352  
2001...........................................              10,702                  1,400        12,102  
2002 and thereafter............................             107,025                 11,500       118,525  
                                                           --------                -------      --------  
                                                           $160,535               $  3,500      $164,035  
                                                           ========                =======      ========  

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DESCRIPTION OF AFC CAPITAL STOCK

GENERAL                                                                         

   AFC is authorized to issue 70,000,000 shares of Common Stock having a par
value of $0.01 per share and 5,000,000 shares of Preferred Stock having a par   
value of $0.01 per share (the "AFC Preferred Stock"). If AFC's stockholders     
approve the Certificate Amendment, upon consummation of the Merger, AFC         
Preferred Stock will have a par value of $1.00 per share. As of the AFC Record  
Date, there were 20,972,257 shares of AFC Common Stock issued and outstanding   
and no shares of AFC Preferred Stock issued and outstanding. Each share of the  
AFC Common Stock has the same relative rights as, and is identical in all       
respects with, each other share of AFC Common Stock. The AFC Board has the power
from time to time to issue additional shares of AFC Common Stock or preferred   
stock authorized by AFC's Certificate of Incorporation without obtaining        
approval of AFC's stockholders. The rights, qualifications, limitations and     
restrictions on each series of preferred stock issued will be determined by the 
AFC Board and approved as required by the DGCL or otherwise, at the time of     
issuance and may include, among other things, rights in liquidation, rights to  
participating dividends, voting and convertibility to AFC Common Stock. The     
following descriptions of AFC capital stock are qualified in their entirety by  
reference to AFC's Certificate of Incorporation. See "CERTIFICATE AMENDMENT."   

AFC COMMON STOCK                                                                

    Dividends.  AFC can pay dividends out of statutory surplus or from certain
net profits if, as, and when declared by the AFC Board. The payment of dividends
by AFC is subject to limitations that are imposed by law and applicable         
regulations. The holders of AFC Common Stock are entitled to receive and share  
equally in such dividends as may be declared by the AFC Board out of funds      
legally available therefor. Holders of AFC Preferred Stock will have a priority 
over the holders of AFC Common Stock with respect to dividends. See "-- AFC     
Preferred Stock -- AFC Series B Preferred Stock -- Noncumulative Dividends," and
"CERTAIN REGULATORY CONSIDERATIONS -- Restrictions on Payment of Dividends."    

  Voting Rights.  The holders of AFC Common Stock possess exclusive voting
rights in AFC. Such holders elect the AFC Board and act on such other matters as
are required to be presented to them under the DGCL or AFC's Certificate of     
Incorporation or as are otherwise presented to them by the AFC Board. Except as 
discussed in "Limitation on Voting Rights," each holder of AFC Common Stock is  
entitled to one vote per share of AFC Common Stock and will not have any right  
to cumulate votes in the election of directors. Holders of AFC Preferred Stock  
will not have voting rights except in certain limited circumstances although the
AFC Board may provide voting rights for any newly created series of AFC         
Preferred Stock that may be issued in the future. See "-- AFC Preferred         
Stock -- AFC Junior Preferred Stock" and " -- AFC Preferred Stock -- AFC Series 
B Preferred Stock -- Voting Rights."                                            

   Limitation on Voting Rights.  AFC's Certificate of Incorporation provides
that in no event shall any record owner of any outstanding AFC Common Stock that
is beneficially owned, directly or indirectly, by a person who beneficially owns
in excess of 10% of the then outstanding shares of AFC Common Stock (the        
"Limit") be entitled or permitted to any vote with respect to the shares held in
excess of the Limit. Beneficial ownership is determined pursuant to Rule 13d-3  
of the General Rules and Regulations promulgated pursuant to the Exchange Act,  
and includes shares beneficially owned by such person or any of his affiliates  
(as defined in AFC's Certificate of Incorporation), shares that such person or  
his affiliates have the right to acquire upon the exercise of conversion rights 
or options, and shares as to which such person and his affiliates have or share 
investment or voting power, but shall not include shares beneficially owned by  
Astoria Federal's ESOP or, in the case of directors or officers of Astoria      
Federal or AFC, shares beneficially owned by any other such director or officer 
or shares that are subject to a publicly solicited revocable proxy and that are 
not otherwise beneficially owned, or deemed by AFC to be beneficially owned, by 
such person and his affiliates. AFC's Certificate of Incorporation further      
provides that such provision limiting voting rights only may be amended upon the
vote of 80% of the outstanding shares of voting stock.                          

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Liquidation Rights.  In the event of any liquidation, dissolution, or 
winding up of Astoria Federal, AFC, as a holder of Astoria Federal's capital    
stock, would be entitled to receive, after payment or provision for payment of  
all debts and liabilities of Astoria Federal (including all deposit accounts and
accrued interest thereon) and after distribution of the balance in the special  
liquidation accounts established for the benefit of certain account holders of  
Astoria Federal in connection with its conversion to stock form and for the     
benefit of certain account holders of Fidelity in connection with its conversion
to stock form, all assets of Astoria Federal available for distribution. In the 
event of liquidation, dissolution, or winding up of AFC, the holders of AFC     
Common Stock would be entitled to receive, after payment or provision for       
payment of all its debts and liabilities, all of the assets of AFC available for
distribution. Holders of AFC Preferred Stock will have a priority over the      
holders of AFC Common Stock in the event of liquidation or dissolution.         

 Preemptive Rights.  Holders of the AFC Common Stock are not entitled to
preemptive rights with respect to any shares which may be issued.               

  Issuance of Stock.  In certain instances, the issuance of authorized but
unissued shares of AFC Common Stock or AFC Preferred Stock may have an          
anti-takeover effect. The authority of the AFC Board to issue AFC Preferred     
Stock with rights and privileges, including voting rights, as it may deem       
appropriate, may enable the AFC Board to prevent a change of control despite a  
shift in ownership of AFC Common Stock. In addition, the AFC Board's authority  
to issue additional shares of AFC Common Stock may help deter or delay a change 
of control by increasing the number of shares needed to gain control.           

   Certain Anti-takeover Provisions.  AFC's Certificate of Incorporation and
Bylaws contain a number of provisions that may be deemed to have the effect of  
discouraging or delaying attempts to gain control of AFC, including provisions  
(i) classifying the AFC Board into three classes with each class to serve for   
three years with one class being elected annually; (ii) authorizing the AFC     
Board the exclusive power to fix from time to time the size of the AFC Board;   
(iii) authorizing a majority vote of the AFC Board then in office to fill       
vacancies in the AFC Board; (iv) providing that the directors may be removed    
only for cause and only by the affirmative vote of at least 80% of the shares   
entitled to be voted in the election of directors; (v) providing that any action
required or permitted to be taken by the stockholders of AFC may not be effected
by a written consent by such stockholders; (vi) allowing the AFC Board to give  
due consideration to constituencies other than AFC's stockholders in evaluating 
acquisition or merger proposals; (vii) providing that certain of the foregoing  
provisions only may be amended by the affirmative vote of at least 80% of the   
outstanding stock entitled to vote or a majority vote of the AFC Board; and     
(viii) setting forth specific conditions under which: (a) business may be       
transacted at an annual meeting of stockholders; and (b) persons may be         
nominated for election as directors of AFC at an annual meeting of stockholders.

The foregoing provisions could impede a change of control of AFC. In  
particular, classification of the AFC Board has the effect of decreasing the    
number of directors that could be elected in a single year by any person who    
seeks to elect its designees to a majority of the seats on the AFC Board.       
Furthermore, allowing the AFC Board to consider nonstockholder constituencies   
may have the effect of increasing the AFC Board's discretion to reject          
acquisition or merger proposals.                                                

AFC PREFERRED STOCK                                                             

As of the AFC Record Date, no shares of AFC Preferred Stock have been 
issued by AFC. AFC Preferred Stock may be issued with such preferences and      
designations as the AFC Board may determine from time to time. The AFC Board may
issue, without stockholder approval, AFC Preferred Stock with voting, dividend, 
liquidation, and conversion rights that could dilute the voting strength of the 
holders of AFC Common Stock and may assist AFC's management in impeding an      
unfriendly takeover or an attempted change in control.                          

   Although AFC has no arrangements, understandings, or plans at the present
time for the issuance or use of the shares of undesignated preferred stock (the 
"AFC Undesignated Preferred Stock") authorized, the AFC Board believes that the 
availability of such shares will provide AFC and Astoria Federal with increased 
flexibility in structuring possible future financing and acquisitions and in    
meeting other corporate needs that may arise. In the event of a proposed merger,
tender offer, or other attempt to gain control of AFC of which                  

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AFC management does not approve, the AFC Board may be able to authorize the     
issuance of one or more series of AFC Preferred Stock with rights and           
preferences that could impede the completion of such a hostile transaction. The 
issuance of AFC Preferred Stock, therefore, may deter future takeover attempts. 
The AFC Board does not intend to issue any AFC Preferred Stock except on terms  
that it deems to be in the best interest of both Astoria Federal's and AFC's    
then existing stockholders.                                                     

     AFC Junior Preferred Stock.  AFC's Certificate of Designations with respect
to the AFC Junior Preferred Stock authorizes the issuance of AFC Series A Junior
Participating Preferred Stock, par value $.01 per share ("AFC Junior Preferred  
Stock"). AFC Junior Preferred Stock is only issuable in connection with AFC's   
Rights Plan. See "COMPARISON OF CERTAIN RIGHTS OF STOCKHOLDERS -- Rights        
Plans -- AFC." When issued, the AFC Junior Preferred Stock will rank junior to  
all other series of AFC's preferred stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series provide otherwise.  
The AFC Junior Preferred Stock will rank junior to the AFC Series B Preferred   
Stock.                                                                          

Dividends on the AFC Junior Preferred Stock will be cumulative to the 
greater of (i) $1.00 or (ii) subject to adjustment, 100 times the aggregate per 
share amount of all cash dividends declared on AFC Common Stock, and 100 times  
the aggregate per share amount of all non-cash dividends or other distributions 
declared on AFC Common Stock other than a dividend payable in shares of AFC     
Common Stock or a subdivision of the outstanding shares of AFC Common Stock.    

     The holders of AFC Junior Preferred Stock will have no voting rights except
as required by law.                                                             

 The AFC Junior Preferred Stock has preference over the AFC Common Stock
with respect to the distribution of assets in the event of a liquidation,       
dissolution, or winding up of AFC. The liquidation preference of the AFC Junior 
Preferred Stock is $100.00 per share, plus an amount equal to accrued and unpaid
dividends and distributions.                                                    

If AFC enters into any consolidation, merger, combination or other    
transaction in which shares of AFC Common Stock are exchanged for or changed    
into other stock or securities, cash and/or any other property, then the shares 
of AFC Junior Preferred Stock will at the same time be similarly exchangeable or
changeable in an amount equal to 100 times the aggregate amount of consideration
received by the holders of AFC Common Stock. Holders of the AFC Junior Preferred
Stock are not entitled to preemptive rights with respect to any shares of AFC   
that may be issued.                                                             

AFC Series B Preferred Stock.  AFC's Certificate of Designations with 
respect to AFC Series B Preferred Stock authorizes AFC to issue up to 2,000,000 
shares of AFC Series B Preferred Stock. Except for its issuer, the AFC Series B 
Preferred Stock will have terms that are substantially identical to and no less 
favorable than the terms of the GNYSB Series B Preferred Stock. The AFC Series B
Preferred Stock, upon issuance in connection with the Merger, will be fully paid
and nonassessable. The holders of AFC Series B Preferred Stock will have no     
preemptive rights. The rights of the holders of AFC Series B Preferred Stock    
will be subordinate to the rights of AFC's general creditors. The AFC Series B  
Preferred Stock will not be subject to any mandatory redemption, sinking fund,  
or other obligation of AFC to redeem or retire the AFC Series B Preferred Stock.

  Rank.  The AFC Series B Preferred Stock will rank prior to the AFC
Common Stock and to all other classes and series of equity securities of AFC    
(collectively, "Junior Stock"), now or hereafter authorized, other than Parity  
Stock and Senior Stock (as hereinafter defined) with respect to dividend rights 
and rights upon the voluntary or involuntary liquidation, dissolution or winding
up of AFC. "Parity Stock" means any class or series of equity securities of AFC 
expressly designated as ranking, with respect to dividend rights and rights upon
the voluntary or involuntary liquidation, dissolution or winding up of AFC, on a
parity with the AFC Series B Preferred Stock. "Senior Stock" means any class or 
series of equity securities of AFC expressly designated as ranking, with respect
to dividend rights and rights upon the liquidation, dissolution or winding up of
AFC, as senior to the AFC Series B Preferred Stock. AFC Junior Preferred Stock  
is designated as Junior Stock.                                                  

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     Noncumulative Dividends.  Holders of shares of AFC Series B Preferred
Stock will be entitled to receive, when, as and if declared by the AFC Board or 
a duly authorized committee thereof, out of funds of AFC legally available for  
payment therefor, noncumulative cash dividends at an annual rate of 12% of the  
$25.00 liquidation preference per share ($3.00 per share per annum), and no     
more. Such noncumulative dividends, payable only in cash, may be declared and   
payable quarterly in equal amounts in arrears, at the rate of $0.75 per share   
per quarter, to be paid on January 15, April 15, July 15 and October 15 of each 
year or, if such day is not a business day, on the next business day (each such 
date, a "Series B Dividend Payment Date"). Each declared dividend shall be      
payable to holders of record of the AFC Series B Preferred Stock as they appear 
on the stock books of AFC (or of any transfer agent for the AFC Series B        
Preferred Stock) at the close of business on such record dates, not more than   
fifty (50) calendar days nor less than ten (10) calendar days preceding the     
Series B Dividend Payment Date therefor, as determined by the AFC Board (each   
such date, a "Record Date"). The initial period for which dividends shall be    
paid (the "Initial Dividend Period") shall commence on the last "Dividend Period
Commencement Date" (as defined below) that occurred under the GNYSB Series B    
Preferred Stock and shall end on and include the date next preceding the first  
Dividend Period Commencement Date to occur after the Merger. A full dividend    
shall be paid for the Initial Dividend Period. Thereafter, quarterly dividend   
periods (each, a "Dividend Period") shall commence on and include March 1, June 
1, September 1 and December 1 of each year (each such date, a "Dividend Period  
Commencement Date") and shall end on and include the date next preceding the    
Dividend Period Commencement Date of the following Dividend Period.             

   The right of holders of AFC Series B Preferred Stock to receive dividends
is noncumulative. Accordingly, if the AFC Board fails to declare a dividend     
payable on a Series B Dividend Payment Date, then holders of the AFC Series B   
Preferred Stock will have no right to receive a dividend in respect of the      
Dividend Period ending on such Series B Dividend Payment Date, and AFC will have
no obligation to pay the dividend accrued for such period, whether or not       
dividends are declared and payable on any future Series B Dividend Payment      
Dates.                                                                          

   No full dividends may be declared or paid or set apart for payment on any
Parity Stock for any dividend period unless full dividends on the AFC Series B  
Preferred Stock for the Dividend Period ending on the same day as such dividend 
period will have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof is set apart for such payment. If, with
respect to any Dividend Period, dividends are not paid in full (or declared and 
a sum sufficient for such full payment is not so set apart) on the AFC Series B 
Preferred Stock and any other Parity Stock, dividends declared on the AFC Series
B Preferred Stock and other Parity Stock shall only be declared pro rata, such  
that the amount of dividends declared per share on the AFC Series B Preferred   
Stock and other Parity Stock shall bear to each other the same ratio that, at   
the time of such declaration, all accrued and payable but unpaid dividends for  
such Dividend Period per share on shares of the AFC Series B Preferred Stock    
(which shall not include any accumulation in respect of unpaid dividends for    
prior Dividend Periods) and other Parity Stock bear to each other. Full         
dividends on the AFC Series B Preferred Stock must be declared and paid or set  
apart for payment for the most recently concluded Dividend Period before (i) any
dividends (other than dividends payable in AFC Common Stock or other Junior     
Stock) may be declared or paid or set aside for payment, or other distribution  
made upon the AFC Common Stock or on any other Junior Stock or (ii) any Junior  
Stock is redeemed (or any monies are paid to or made available for a sinking    
fund for the redemption of any shares of any such Junior Stock) or any Junior   
Stock is purchased or otherwise acquired by AFC for any consideration except by 
conversion into or exchange for Junior Stock.                                   

   There can be no assurance that any dividend on the AFC Series B Preferred
Stock will be declared or, if so, in what amount. Further, there can be no      
assurance that dividends, once declared, will continue for any future Dividend  
Period. The declaration and payment of future dividends on the AFC Series B     
Preferred Stock will be subject to business conditions, the earnings and        
financial condition of AFC and the judgment of the AFC Board. Dividends also    
will be affected by dividend restrictions and limitations imposed by the DGCL   
and by the ability of Astoria Federal to pay dividends to AFC. See "CERTAIN     
REGULATORY CONSIDERATIONS -- Restrictions on Payment of Dividends."             

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        Liquidation Preference.  In the event of any liquidation, dissolution or
winding up of AFC, voluntary or involuntary, the holders of AFC Series B        
Preferred Stock will be entitled to receive out of the assets of AFC available  
for distribution to stockholders, before any distribution of assets is made to  
the holders of AFC Common Stock or other Junior Stock, liquidating distributions
in the amount of $25.00 per share, plus an amount per share equal to all        
accrued, undeclared and unpaid dividends thereon from the Dividend Period       
Commencement Date next preceding the date fixed for such liquidation,           
dissolution or winding up; provided, however, that the holders of AFC Series B  
Preferred Stock and any Parity Stock will be entitled to such liquidating       
distributions only after payment in full of liquidating distributions of holders
of shares of any Senior Stock. If, upon any voluntary or involuntary            
liquidation, dissolution or winding up of AFC, the amounts payable with respect 
to the AFC Series B Preferred Stock and any Parity Stock are not sufficient to  
satisfy the full liquidation rights of all the outstanding shares thereof, the  
holders of the AFC Series B Preferred Stock and of such Parity Stock will share 
ratably in any such distribution of assets of AFC in proportion to the full     
respective preferential amounts to which they are entitled (which, in the case  
of Parity Stock, may include accumulated dividends). After payment of the full  
amount of the liquidating distribution to which they are entitled, the holders  
of AFC Series B Preferred Stock will not be entitled to any further             
participation in any distribution of assets of AFC. All distributions made with 
respect to the AFC Series B Preferred Stock in connection with such liquidation,
dissolution or winding up of AFC will be made pro rata to the holders entitled  
thereto. Neither the merger or consolidation of AFC with or into any other      
entity, nor the merger or consolidation of any other entity with or into AFC,   
nor the sale, transfer or lease of all or any portion of the assets of AFC, will
be deemed to be a liquidation, dissolution or winding up of AFC.                

  Optional Redemption.  The AFC Series B Preferred Stock will not be
redeemable before October 1, 2003. On or after October 1, 2003, the AFC Series B
Preferred Stock is redeemable at the option of AFC, in whole or in part, at any 
time and from time to time, at the redemption prices set forth below in cash,   
plus in each case, an amount in cash equal to all accrued and unpaid dividends  
thereon, whether or not declared, from the Dividend Period Commencement Date    
next preceding the date fixed for redemption (the "Redemption Date") to, but    
excluding, the Redemption Date (without accumulation of unpaid dividends for    
prior Dividend Periods):                                                        

                                                                [Download Table]

         REDEMPTION PRICE                             REDEMPTION PRICE
YEAR        PER SHARE                 YEAR               PER SHARE    
-----    ----------------             ----            ----------------
                                                                      
2003...      $ 27.250         2009................        $ 25.900    
2004...        27.025         2010................          25.675    
2005...        26.800         2011................          25.450    
2006...        26.575         2012................          25.225    
                                    2013 and                          
2007...        26.350         thereafter .........          25.000    
2008...        26.125                                                 

If fewer than all the outstanding shares of the AFC Series B Preferred
Stock are to be redeemed, AFC will select those to be redeemed pro rata, by lot,
or by such other method as the AFC Board, in its sole discretion, determines to 
be equitable.                                                                   

Notice of any redemption shall be given by first-class mail, postage  
prepaid, mailed at least twenty (20) days but not more than sixty (60) days     
prior to the Redemption Date to each holder of record of AFC Series B Preferred 
Stock to be redeemed at such holder's address as the same shall appear on the   
stock books of AFC (or of any transfer agent for the AFC Series B Preferred     
Stock). If on or before the Redemption Date specified in such notice, all funds 
necessary for such redemption have been set aside by AFC, separate and apart    
from its other funds, in trust for the account of holders of shares of AFC      
Series B Preferred Stock to be redeemed, then, on and after the Redemption Date,
notwithstanding that any certificates for shares of AFC Series B Preferred Stock
so called for redemption shall not have been surrendered for cancellation, the  
shares of AFC Series B Preferred Stock so called for redemption will be deemed  
to be no longer outstanding and the holders of such shares will cease to be     
stockholders of AFC and shall have no voting or other rights with respect to    
such shares, except for the right to receive out of the funds so set aside in   
trust the amount payable on redemption thereof, without interest, upon surrender
of their certificates.                                                          

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   Conversion Rights.  The holders of shares of AFC Series B Preferred
Stock will not have any rights to convert such shares into shares of any other  
class or series of capital stock or into any other securities of, or any        
interest in, AFC.                                                               

   Voting Rights.  Except as indicated below and except as required by
applicable law, the holders of the AFC Series B Preferred Stock will not be     
entitled to vote for any purpose.                                               

As long as any shares of the AFC Series B Preferred Stock remain      
outstanding, unless the vote of the holders of a greater number of such shares  
is required by law, the affirmative vote of the holders of at least two-thirds  
of the votes entitled to be cast with respect to the then-outstanding shares of 
the AFC Series B Preferred Stock, voting as a class, will be necessary to (i)   
amend, alter, or repeal or otherwise change any provision of the AFC's          
Certificate of Incorporation (including any such amendment, alteration, repeal  
or change effected by any merger or consolidation in which AFC is the surviving 
or resulting corporation) if such amendment, alteration, repeal, or change would
materially and adversely affect the rights, preferences, powers, or privileges  
of the AFC Series B Preferred Stock, or (ii) authorize, create, or issue or     
increase the authorized or issued amount of any class or series of Senior Stock 
or any warrants, options, or other rights convertible into or exchangeable for  
any class or series of Senior Stock. The creation or issuance of Parity Stock or
Junior Stock, or the distribution of assets upon a voluntary or involuntary     
liquidation, dissolution or winding up of AFC, or a merger, consolidation,      
reorganization, or other business combination in which AFC is not the surviving 
or resulting corporation, or an amendment that substitutes the surviving or     
resulting corporation in a merger or consolidation for AFC or which increases   
the number of shares of preferred stock which AFC is authorized to issue, shall 
not be deemed to be a material and adverse change to the rights, preferences,   
powers, or privileges of the AFC Series B Preferred Stock requiring a vote of   
the holders thereof. No vote of the AFC Series B Preferred Stock will be        
required if the AFC Series B Preferred Stock is to be redeemed in whole on a    
Redemption Date occurring on or prior to the date of occurrence of any event    
otherwise requiring a class vote by the AFC Series B Preferred Stock.           

  If six (6) full quarterly dividends on the AFC Series B Preferred Stock,
whether or not consecutive, are not paid, the holders of AFC Series B Preferred 
Stock and the holders of any other class or series of Parity Stock as to which  
the payment of dividends is in arrears and unpaid in an aggregate amount equal  
to or exceeding the amount of dividends payable for six (6) quarterly dividend  
periods (or if dividends are payable other than on a quarterly basis, the number
of dividend periods, whether or not consecutive, containing in the aggregate not
less than five hundred forty (540) calendar days) and upon which by its terms   
the same right to elect two (2) directors has been conferred and is exercisable 
(the "Voting Parity Stock"), will have the exclusive right, voting together as a
single class, to elect two directors for newly created directorships of AFC,    
each director to be in addition to the number of directors constituting the AFC 
Board immediately prior to the accrual of such right (the remaining directors to
be elected by the other class or classes of stock entitled to vote therefor), at
each meeting of stockholders duly held for the purpose of electing directors. At
any time when the right to elect such directors is vested, AFC may, and upon the
written request of the holders of record of not less than 20% of the total      
number of shares of the AFC Series B Preferred Stock and such Voting Parity     
Stock then outstanding will, call a special meeting of the holders of such      
shares to fill such newly-created directorships. The right of holders of AFC    
Series B Preferred Stock to elect directors will continue until dividends on the
AFC Series B Preferred Stock have been paid for four (4) consecutive Dividend   
Periods, at which time such voting rights of the holders of the AFC Series B    
Preferred Stock and the Voting Parity Stock will, without further action,       
terminate, subject to revesting in the event of each and every subsequent       
failure of AFC to pay such dividends for the requisite number of periods as     
described above; provided, however, that if, at the time of termination of the  
election right of the holders of the AFC Series B Preferred Stock, there will be
outstanding any Voting Parity Stock having similar voting rights which remain in
effect, the term of any directors elected by the holders of the AFC Series B    
Preferred Stock and such Voting Parity Stock shall continue until such time as  
the voting right of the holders of such Voting Parity Stock shall terminate by  
its terms.                                                                      

The term of office of all directors elected by the holders of the AFC 
Series B Preferred Stock and the Voting Parity Stock in office at any time when 
the aforesaid voting right is vested in such holders will terminate upon the    
election of their successors at any meeting of stockholders for the purpose of  
electing                                                                        

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directors; provided, however, that, without further action and unless otherwise 
required by law, any directors who shall have been elected by the holders of the
AFC Series B Preferred Stock and the Voting Parity Stock as provided herein may 
be removed at any time, either with or without cause by the affirmative vote of 
the holders of record of a majority of the outstanding shares of the AFC Series 
B Preferred Stock and the Voting Parity Stock, voting together as a single      
class. Upon termination of the aforesaid voting right in accordance with the    
foregoing provisions, the term of office of all directors elected by the holders
of the AFC Series B Preferred Stock and the Voting Parity Stock pursuant thereto
then in office will, without further action, terminate unless otherwise required
by law. Upon such termination, the number of directors constituting AFC's Board 
of Directors will, without further action, be reduced by two (2), subject always
to the increase of the number of directors pursuant to the foregoing provisions 
in the case of the future right of such holders of the AFC Series B Preferred   
Stock and the Voting Parity Stock to elect directors as provided above.         

Unless otherwise required by law, in the case of any vacancy occurring
among the directors so elected, the remaining director who shall have been so   
elected may appoint a successor to hold office for the unexpired term of the    
director whose place shall be vacant, and if all directors so elected by the    
holders of the AFC Series B Preferred Stock and the Voting Parity Stock shall   
cease to serve as directors before their term shall expire, the holders of the  
AFC Series B Preferred Stock and the Voting Parity Stock then outstanding may,  
at a meeting of such holders duly held, elect successors to hold office for the 
unexpired terms of the directors whose places shall be vacant.                  

  The directors elected by the holders of the AFC Series B Preferred Stock
and the Voting Parity Stock in accordance with the foregoing provisions will be 
entitled to one vote per director on any matter.                                

AFC's Certificate of Incorporation provides that the AFC Board will be
divided into three (3) classes. AFC's Certificate of Designations with respect  
to the AFC Series B Preferred Stock also provides that the directors to be      
elected by the AFC Series B Preferred Stock and the Voting Parity Stock, voting 
together as a class, will not become members of the three (3) classes of        
directors otherwise required by AFC's Certificate of Incorporation. AFC's       
Certificate of Incorporation provides that if for any reason the holders of the 
AFC Series B Preferred Stock and the Voting Parity Stock would not be able to   
elect the specified number of directors at the next annual meeting of           
stockholders in the manner described above, AFC will use its best efforts to    
take all actions necessary to permit the full exercise of such voting rights    
which will include, if necessary, taking action to increase the authorized      
number of directors standing for election at such next annual meeting of        
stockholders or seeking to amend, alter or change AFC's Certificate of          
Incorporation and Bylaws. If such directors were required by law to be          
classified, then such directors could not be removed from office except for     
cause and then only with the vote of 80% of the votes eligible to be cast, and  
any vacancies would be required to be filled by a majority of the directors then
in office.                                                                      

In connection with any matter on which holders of the AFC Series B    
Preferred Stock are entitled to vote as one class or otherwise pursuant to law  
or the provisions of AFC's Certificate of Incorporation, including, without     
limitation, the election of directors as set forth above, each holder of the AFC
Series B Preferred Stock will be entitled to one vote for each share of the AFC 
Series B Preferred Stock held by such holder.                                   

         No Other Rights.  The shares of AFC Series B Preferred Stock will not
have any preferences, voting powers or relative, participating, optional or     
other special rights except as set forth above and in AFC's Certificate of      
Incorporation or as otherwise required by law.                                  

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COMPARISON OF CERTAIN RIGHTS OF STOCKHOLDERS

   GNYSB is a New York State-chartered capital stock savings bank subject to
the provisions of the NYBL. AFC is a Delaware corporation subject to the        
provisions of the DGCL. At the Effective Time, stockholders of GNYSB whose      
rights are governed by the GNYSB Restated Organization Certificate, the GNYSB   
Bylaws and the NYBL and who are allocated stock under the exchange procedures   
set forth herein, will, upon consummation of the Merger, become stockholders of 
AFC, and their rights as stockholders will be determined by AFC's Certificate of
Incorporation, AFC's Bylaws, and the DGCL. The terms, designations, preferences,
limitations, privileges, and rights of the holders of AFC Series B Preferred    
Stock under AFC's Certificate of Incorporation and AFC's Bylaws will be         
substantially identical to those of GNYSB Series B Preferred Stock under GNYSB's
Restated Organization Certificate and GNYSB's Bylaws.                           

 The following is a summary of the material differences in the rights of
stockholders of GNYSB under GNYSB's Restated Organization Certificate, GNYSB's  
Bylaws and the NYBL on the one hand, and the rights of stockholders of AFC under
AFC's Certificate of Incorporation, AFC's Bylaws and the DGCL, on the other     
hand. The following discussion does not purport to be a complete discussion of, 
and is qualified in its entirety by reference to, the governing laws, GNYSB's   
Restated Organization Certificate, GNYSB's Bylaws, AFC's Certificate of         
Incorporation and AFC's Bylaws.                                                 

SPECIAL MEETINGS OF STOCKHOLDERS                                                

AFC.  Under AFC's Bylaws, special meetings of AFC stockholders may be 
called only by the AFC Board pursuant to a resolution adopted by a majority of  
the total number of AFC directors that AFC would have if there were no vacancies
on the AFC Board.                                                               

     GNYSB.  GNYSB's Bylaws provide that special meetings of GNYSB stockholders,
for any purpose, may be called at any time by the Chairman, the President, or by
resolution of at least three-fourths of the GNYSB Board and must be called by   
the Secretary upon the written request of the holders of record of three-fourths
of all the outstanding voting stock of GNYSB.                                   

STOCKHOLDER ACTION BY WRITTEN CONSENT                                           

  AFC.  AFC's Certificate of Incorporation does not permit any stockholder
action by written consent.                                                      

  GNYSB.  GNYSB's Restated Organization Certificate provides that whenever
GNYSB stockholders are required or permitted to take any action by vote at any  
annual or special meeting, such action may be taken without a meeting upon      
written consent, setting forth the action so taken, signed by the holders of all
outstanding shares of GNYSB stock entitled to vote thereon.                     

AMENDMENT OF CERTIFICATE OF INCORPORATION/ORGANIZATION CERTIFICATE              

 AFC.  The DGCL provides that a corporation may amend its certificate of
incorporation by a majority vote of the outstanding stock entitled to vote      
thereon, unless the certificate of incorporation provides for a higher vote.    
AFC's Certificate of Incorporation requires the affirmative vote of the holders 
of at least 80% of the voting power of all of the then-outstanding shares of the
capital stock of AFC entitled to vote generally in the election of AFC's        
directors, voting together as a single class, to amend or repeal the provisions 
of AFC's Certificate of Incorporation regarding: (i) amendments to AFC's        
Certificate of Incorporation, (ii) beneficial ownership limitations on AFC      
Common Stock, (iii) actions by stockholders by written consent, (iv) staggered  
board of directors and the ability to fill vacancies on the AFC Board, (v)      
removal of directors, (vi) stockholder special meetings, (vii) higher vote      
requirements for certain actions, and (viii) director and officer               
indemnification.                                                                

GNYSB.  The NYBL provides that a stock form savings bank may amend its
organization certificate by a vote of the holders of a majority all outstanding 
shares entitled to vote thereon at a meeting of stockholders unless the         
organization certificate provides for a higher vote. GNYSB's Restated           
Organization Certificate provides that the affirmative vote of at least 66 2/3% 
of the total votes eligible to be cast by the holders of all outstanding shares 
of GNYSB's capital stock entitled to vote thereon is required to amend, repeal  
or adopt any                                                                    

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provisions inconsistent with the provisions of GNYSB's Restated Organization    
Certificate regarding: (i) the GNYSB Board, (ii) actions by stockholders by     
written consent, and (iii) certain amendments to GNYSB's Restated Organization  
Certificate or Bylaws.                                                          

LIMITATION OF DIRECTOR AND OFFICER LIABILITY                                    

     AFC.  Section 102(b)(7) of the DGCL permits the inclusion of a provision in
the certificate of incorporation of a Delaware corporation which eliminates or  
limits the personal liability of a director of such corporation to the          
corporation or its stockholders for monetary damages for breach of fiduciary    
duty as a director, provided that such provision does not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to 
the corporation or its stockholders; (ii) for acts or omissions not in good     
faith or which involve intentional misconduct or a knowing violation of law;    
(iii) for a breach of the DGCL provision relating to unlawful payment of        
dividends or redemptions; or (iv) for any transaction from which the director   
derived an improper personal benefit. AFC's Certificate of Incorporation        
contains a provision so eliminating the liability of AFC directors to AFC or its
stockholders for monetary damages for breach of fiduciary duty as a director,   
except to the extent such exemption is not permitted under the DGCL. Such       
provision absolves AFC directors from liability for monetary damages to AFC or  
AFC's stockholders for breaches of their duty of due care, even if it involved  
gross negligence, unless the conduct falls within one of the statutory          
limitations.                                                                    

  GNYSB.  There is no analogous provision in GNYSB's Restated Organization
Certificate as such a provision is not permitted under the NYBL.                

INDEMNIFICATION OF DIRECTORS AND OFFICERS                                       

   AFC.  Under Section 145 of the DGCL, a Delaware corporation may indemnify
fully its directors, officers, employees, and agents if such persons have acted 
in good faith and in a manner that such persons reasonably believed was in, or  
not opposed to, the best interests of the corporation. A Delaware corporation   
also may indemnify fully such individuals with respect to criminal actions or   
proceedings, provided that such individual had no reasonable cause to believe   
such conduct was unlawful. AFC's Certificate of Incorporation provides that AFC 
shall indemnify its directors, officers, employees, and agents to the fullest   
extent authorized by the DGCL against all expense, liability and loss reasonably
incurred or suffered by such indemnitee in connection therewith; provided,      
however, that except as provided in AFC's Certificate of Incorporation with     
respect to proceedings to enforce rights to indemnification, AFC shall indemnify
any such indemnitee in connection with a proceeding initiated by such indemnitee
only if such proceeding was authorized by the AFC Board. AFC's Certificate of   
Incorporation further permits AFC to maintain insurance on behalf of any        
director, officer, employee, or agent of AFC.                                   

   GNYSB.  Section 7019 of the NYBL permits indemnification of directors and
officers (but not employees) if such person acted in good faith for a purpose   
that he reasonably believed to be in the best interests of the corporation, and 
in criminal actions or proceedings, in addition, had no reasonable cause to     
believe that his conduct was unlawful. GNYSB's Bylaws provide for the full      
indemnification of GNYSB's directors, officers, and employees to the extent     
permitted by law and permit, but do not require, GNYSB to purchase and maintain 
insurance on behalf of any director, officer, employee, or agent of GNYSB.      

The NYBL requires that (i) stockholders be notified of any expenses or
other amounts paid to a director or officer by way of indemnification otherwise 
than by court order or stockholder action, and (ii) the Superintendent be       
notified of any amounts to be paid to a director or officer by way of           
indemnification at least thirty (30) days prior to such payment.                

REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS                              

AFC.  AFC's Certificate of Incorporation requires the approval of the 
holders of at least 80% of the AFC's outstanding shares of voting stock to      
approve certain "Business Combinations," as defined therein, and related        
transactions. Under the DGCL, absent this provision, Business Combinations,     
including mergers, consolidations and sales of all or substantially all of the  
assets of a corporation must, subject to certain                                

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exceptions, be approved by the vote of the holders of only a majority of the    
outstanding shares of AFC Common Stock and any other affected class of stock.   
Under AFC's Certificate of Incorporation, at least 80% approval of stockholders 
is required in connection with any Business Combination involving an Interested 
Stockholder (as defined below) except (i) in cases where the proposed           
transaction has been approved in advance by a majority of those members of the  
AFC Board who are unaffiliated with the Interested Stockholder and were         
directors prior to the time when the Interested Stockholder became an Interested
Stockholder, or (ii) if the proposed transaction meets certain conditions set   
forth therein which are designed to afford the stockholders a fair price in     
consideration for their shares in which case, if a stockholder vote is required,
approval of only a majority of the outstanding shares of voting stock would be  
sufficient. For purposes of this paragraph, the term "Interested Stockholder" is
defined to include any individual, corporation, partnership or other entity     
(other than AFC or a subsidiary of AFC) which owns beneficially or controls,    
directly or indirectly, 10% or more of the outstanding shares of voting stock of
AFC. This provision of AFC's Certificate of Incorporation applies to any        
"Business Combination," which is defined to include (i) any merger or           
consolidation of AFC or any of its subsidiaries with or into any Interested     
Stockholder or Affiliate (as defined in the Certificate of Incorporation) of an 
Interested Stockholder; (ii) any sale, lease, exchange, mortgage, pledge,       
transfer, or other disposition to or with any Interested Stockholder or         
Affiliate of an Interested Stockholder of 25% or more of the assets of AFC or   
combined assets of AFC and AFC's subsidiaries; (iii) the issuance or transfer to
any Interested Stockholder or its Affiliate by AFC (or any subsidiary of AFC) of
any securities of AFC in exchange for any assets, cash or securities the value  
of which equals or exceeds 25% of the fair market value of outstanding AFC      
Common Stock; (iv) the adoption of any plan for the liquidation or dissolution  
of AFC proposed by or on behalf of any Interested Stockholder or Affiliate      
thereof; and (v) any reclassification of securities, recapitalization, merger or
consolidation of AFC which has the effect of increasing the proportionate share 
of AFC Common Stock or any class of equity or convertible securities of AFC     
owned directly or indirectly by an Interested Stockholder or Affiliate thereof. 

    GNYSB.  The NYBL provides that a merger, voluntary liquidation, or sale of
assets by a savings bank must be approved by the vote of at least 66 2/3% of the
outstanding stock of such savings bank eligible to vote, unless the total assets
of the entity being acquired do not exceed 10% of the total assets of the       
acquiring entity and the plan of merger does not change the name or the         
authorized shares of capital stock of the acquiring entity or make or require   
any other change or amendment for which the approval or consent of stockholders 
of GNYSB would be required under the NYBL.                                      

BUSINESS COMBINATIONS INVOLVING INTERESTED STOCKHOLDERS                         

   AFC.  Section 203 of the DGCL provides that a Person (as defined therein)
who owns 15% or more of the outstanding voting stock of a Delaware corporation  
(an "Interested Stockholder") may not engage in any business combination with   
such corporation for a period of three years following the time such person     
became an Interested Stockholder, unless an exception to Section 203 of the DGCL
applies. Section 203(c)(3) broadly defines "business combination" to cover a    
wide range of corporate transactions, including mergers, sales of assets,       
issuances of stock, transactions with subsidiaries and receipts of              
disproportionate financial benefits.                                            

Section 203 of the DGCL exempts the following transactions from its   
requirements: (i) any business combination if, prior to the time such person    
became an Interested Stockholder, the board of directors of the corporation     
approved either the business combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder; (ii) any business combination   
involving a person who acquired at least 85% of the outstanding voting stock in 
the transaction in which such person became an Interested Stockholder,          
calculated without regard to those shares owned by the corporation's directors  
who are also officers or certain employee stock plans; (iii) any business       
combination with an Interested Stockholder that is approved by the board of     
directors of the corporation and by a 66 2/3% vote of the outstanding voting    
stock not owned by the Interested Stockholder; (iv) business combinations with  
Interested Stockholders who become interested when the corporation is not       
covered by the statute; and (v) certain business combinations that are proposed 
after the corporation had received other acquisition proposals and that are     
approved or not opposed by a majority of certain continuing members of the board
of directors of the corporation. A corporation may                              

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exempt itself from the requirements of Section 203 of the DGCL by adopting an   
amendment to its certificate of incorporation or bylaws electing not to be      
governed by Section 203 of the DGCL. No such amendment has been adopted by AFC. 

     Under the DGCL there is no statutory minimum beneficial ownership threshold
requirement for a stockholder rights plan to be authorized.                     

     GNYSB.  The NYBL does not have an analogous business combination statute to
Section 203 of the DGCL. For a stockholder rights plan to be authorized under   
the NYBL the beneficial ownership threshold at which a stockholder's rights may 
become void must be at least 20%. See "-- Rights Plans -- GNYSB."               

APPRAISAL RIGHTS                                                                

    AFC.  Pursuant to Section 262 of the DGCL, a stockholder of AFC, including
those not entitled to vote, generally will be entitled to appraisal rights in   
connection with a merger, consolidation, or similar transaction in which the    
vote of the stockholders of AFC is required. No such appraisal rights, however, 
are available for the shares of any class or series of stock if (i) such class  
or series is either (a) listed on a stock exchange or quoted on the Nasdaq      
National Market (as the AFC Common Stock is) or (b) held of record by more than 
2,000 holders and (ii) such class or series receives stock in such transaction. 

     GNYSB.  Pursuant to Section 6022 of the NYBL, a stockholder who is entitled
to vote on a merger, consolidation, or similar transaction who does not approve 
such transaction generally is entitled to appraisal rights. See "THE            
MERGER -- Dissenters' Rights."                                                  

OTHER CONSTITUENCIES                                                            

AFC.  AFC's Certificate of Incorporation requires the AFC Board, when 
evaluating offers to make a tender offer, merge or consolidate AFC, or purchase 
or otherwise acquire all or substantially all of the assets and properties of   
AFC, to determine what is in the best interests of AFC and AFC's stockholders.  
In exercising such duty, AFC may, in connection with the exercise of its        
judgment in determining what is in the best interest of AFC, Astoria Federal,   
and the stockholders of AFC, give due consideration (to the extent permitted by 
law) to all relevant factors, including, without limitation, those factors that 
directors of AFC or any subsidiary of AFC may consider in evaluating any action 
that may result in a change in control of the subsidiary, and the social and    
economic effect of acceptance of such offer: (i) on AFC's and any of AFC's      
subsidiary's present and future customers and employees, (ii) on the communities
in which AFC and any subsidiary of AFC operate or are located, (iii) on the     
ability of AFC to fulfill its corporate objectives as a savings and loan holding
company, and (iv) on the ability of Astoria Federal to fulfill the objectives of
a federally chartered stock savings and loan association. The DGCL does not     
address what factors a board of directors may consider in exercising such duty. 
However, pursuant to case law interpreting the provisions of the DGCL, the board
of directors of a Delaware corporation, such as AFC, generally may consider the 
impact of such a proposal on AFC's other constituencies, provided that doing so 
bears some reasonable relationship to general stockholder interests.            

GNYSB.  GNYSB's Restated Organization Certificate contains a provision
requiring the GNYSB Board, when evaluating a change of control proposal         
presented to GNYSB, to give due consideration to, among other things, the       
possible effects on constituencies other than the stockholders of GNYSB. In     
addition, Section 7015 of the NYBL as described above contains a provision      
specifically permitting the GNYSB Board to consider, in taking any action,      
including in the context of a change in control, both the long term and short   
term interests of GNYSB and its stockholders and various constituencies.        

RIGHTS PLANS                                                                    

AFC.  The AFC Rights Agreement, dated as of July 17, 1996, contains   
provisions intended to protect stockholders in the event of unsolicited offers  
or attempts to acquire AFC. The AFC Rights Agreement provides that attached to  
each share of AFC Common Stock is an AFC Right, which constitutes a right to    
purchase one one-hundredth of a share of AFC Junior Preferred Stock, at a price 
of $100.00 per one one-                                                         

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hundredth interest in a share of AFC Junior Preferred Stock, subject to         
adjustment. The AFC Rights will expire on September 3, 2006, unless extended or 
unless the AFC Rights are earlier redeemed by AFC, in each case as described    
below.                                                                          

The AFC Rights will separate from the AFC Common Stock and become     
exercisable for AFC Junior Preferred Stock within a specified time after (i) a  
person or group (an "AFC Acquiring Person") other than AFC or its affiliates    
acquires "beneficial ownership" of 10% or more of the outstanding AFC Common    
Stock or (ii) the commencement of, or the public announcement of an intention to
commence, a tender or exchange offer which would result in the beneficial       
ownership by a person or group (other than AFC or its affiliates) of 10% or more
of such outstanding AFC Common Stock (the "AFC Distribution Date"). The AFC     
Rights Agreement provides that, until the AFC Distribution Date, the AFC Rights 
will be transferred with and only with the transfer of AFC Common Stock and will
not be exercisable. In the event that any person or group becomes an AFC        
Acquiring Person pursuant to the terms of the AFC Rights Agreement, each holder 
of AFC Rights, other than the AFC Acquiring Person (whose rights will thereafter
be void), will thereafter have the right to receive upon exercise that number of
shares of AFC Common Stock having a market value of two times the purchase price
of an AFC Right.                                                                

In the event that, at any time after a person becomes an AFC Acquiring
Person, AFC is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, pursuant to   
the terms of the AFC Rights, proper provision must be made so that each holder  
of AFC Rights will thereafter have the right to receive, upon the exercise      
thereof at the then current purchase price of an AFC Right, that number of      
shares of common stock of the acquiring company which at the time of such       
transaction will have a market value of two times the purchase price of an AFC  
Right.                                                                          

 At any time after a person or group becomes an AFC Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the          
outstanding AFC Common Stock, the AFC Board may exchange the AFC Rights (other  
than the AFC Rights owned by such person or group which have become void), in   
whole or in part, at an exchange ratio of one share of AFC Common Stock, or one 
one-hundredth of a share of AFC Junior Preferred Stock (or equivalent class of  
securities), per AFC Right (subject to adjustment).                             

  At any time prior to a person or group becoming an AFC Acquiring Person,
the AFC Board may redeem the AFC Rights in whole, but not in part, at a price of
$0.01 per AFC Right.                                                            

     The terms of the AFC Rights may be amended by the Board of Directors of AFC
without the consent of the holders of the AFC Rights. Until an AFC Right is     
exercised, the holder thereof, as such, will have no rights as a stockholder of 
AFC, including, without limitation, the right to vote or to receive dividends.  

    The AFC Rights will not prevent a takeover of AFC. However, the AFC Rights
may cause substantial dilution to a person or group that acquires 10% or more of
the AFC Common Stock without receiving the prior approval of the AFC Board.     
Accordingly, the AFC Rights may result in AFC being less attractive to a        
potential acquiror and, in the event that the existence of the AFC Rights deter 
certain potential acquirors, such AFC Rights could result in holders of AFC     
Common Stock receiving less in the event of a takeover. The AFC Rights should   
not interfere with any merger or other business combination approved by the AFC 
Board.                                                                          

Each share of AFC Common Stock issued in the Merger will have attached
thereto an AFC Right.                                                           

     GNYSB.  On June 14, 1990, the GNYSB Board adopted the GNYSB Rights Plan and
declared a dividend distribution of one GNYSB Right for each outstanding share  
of GNYSB Common Stock to holders of record at the close of business on June 25, 
1990. The GNYSB Rights Agreement contains provisions intended to protect        
stockholders in the event of unsolicited offers or attempts to acquire GNYSB and
is substantially similar in effect to the AFC Rights Agreement, except that the 
relevant triggering threshold for certain events is beneficial ownership of 20% 
or more of the outstanding GNYSB Common Stock.                                  

   GNYSB and the rights agent with respect to the GNYSB Rights have executed
and delivered an amendment dated as of March 29, 1997 to the GNYSB Rights       
Agreement. See "THE MERGER -- Amendment to the GNYSB Rights Agreement."         

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LEGAL MATTERS 

  The validity of the Merger Shares will be passed upon for AFC by Thacher
Proffitt & Wood.                                                                

EXPERTS 

The consolidated financial statements of AFC and subsidiaries as of   
December 31, 1996 and 1995 and for each of the years in the three-year period   
ended December 31, 1996, included in AFC's Form 10-K for the year ended December
31, 1996 and incorporated by reference into this Joint Proxy                    
Statement-Prospectus, have been incorporated by reference herein and in the     
Registration Statement of which this Joint Proxy Statement-Prospectus is a part 
in reliance upon the report of KPMG Peat Marwick LLP, independent auditors,     
included in AFC's 1996 Form 10-K and incorporated by reference herein, and upon 
the authority of said firm as experts in accounting and auditing.               

The consolidated financial statements of GNYSB and subsidiaries as of 
December 31, 1996 and 1995 and for each of the years in the three-year period   
ended December 31, 1996, included in GNYBancorp's Registration Statement on Form
S-4 dated March 11, 1997 and GNYSB's Annual Report on Form F-2 and incorporated 
by reference into this Joint Proxy Statement-Prospectus, have been incorporated 
by reference herein and in the Registration Statement of which the Joint Proxy  
Statement-Prospectus is a part in reliance upon the report of KPMG Peat Marwick 
LLP, independent auditors, included in GNYBancorp's Registration Statement on   
Form S-4 dated March 11, 1997 and incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.                   

STOCKHOLDER PROPOSALS 

   To be considered for inclusion in AFC's proxy statement and form of proxy
relating to the annual meeting of stockholders to be held in 1998, a stockholder
proposal must be received by the Secretary of AFC at Astoria Financial          
Corporation, One Astoria Federal Plaza, Lake Success, New York 11042 but not    
later than December 8, 1997. Any such proposal will be subject to 17 C.F.R. sec.
240.14a-8 promulgated by the Commission under the Exchange Act.                 

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                                                                      APPENDIX A

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AGREEMENT AND PLAN OF MERGER

DATED AS OF THE 29TH DAY OF MARCH, 1997 

AS AMENDED

BY AND AMONG

ASTORIA FINANCIAL CORPORATION 

ASTORIA FEDERAL SAVINGS 

AND LOAN ASSOCIATION

AND 

THE GREATER NEW YORK SAVINGS BANK 

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TABLE OF CONTENTS 

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                                                                                        PAGE
                                                                                       -----
                                                                                            
Introductory Statement................................................................   A-1

                                          ARTICLE I                                         

                                         THE MERGER                                         

SECTION 1.01  Structure of the Merger.................................................   A-1
SECTION 1.02  Effect on Outstanding Shares............................................   A-1
SECTION 1.03  Effect on Outstanding Shares of Company Preferred Stock.................   A-2
SECTION 1.04  Fractional Shares.......................................................   A-2
SECTION 1.05  Elections...............................................................   A-2
SECTION 1.06  Allocations of Merger Consideration.....................................   A-3
SECTION 1.07  Exchange Procedures.....................................................   A-4
SECTION 1.08  Dissenters' Rights......................................................   A-6
SECTION 1.09  Options.................................................................   A-6
SECTION 1.10  Directors and Officers of the Association after Effective Time..........   A-7
SECTION 1.11  Liquidation Account.....................................................   A-7

                                         ARTICLE II                                         

                               REPRESENTATIONS AND WARRANTIES                               

SECTION 2.01  Disclosure Letters......................................................   A-7
SECTION 2.02  Standards...............................................................   A-7
SECTION 2.03  Representations and Warranties of the Company...........................   A-8
SECTION 2.04  Representations and Warranties of the Parent............................  A-19

                                         ARTICLE III                                        

                                 CONDUCT PENDING THE MERGER                                 

SECTION 3.01  Conduct of the Company's Business Prior to the Effective Time...........  A-27
SECTION 3.02  Forbearance by the Company..............................................  A-27
SECTION 3.03  Conduct of the Parent's Business Prior to the Effective Time............  A-30

                                         ARTICLE IV                                         

                                          COVENANTS                                         

SECTION 4.01  Acquisition Proposals...................................................  A-30
SECTION 4.02  Certain Policies of the Company.........................................  A-31
SECTION 4.03  Employees; Benefit Plans and Programs...................................  A-31
SECTION 4.04  Access and Information..................................................  A-32
SECTION 4.05  Certain Filings, Consents and Arrangements..............................  A-33
SECTION 4.06  Antitakeover Provisions.................................................  A-33
SECTION 4.07  Additional Agreements...................................................  A-33
SECTION 4.08  Publicity...............................................................  A-34
SECTION 4.09  Stockholders' Meeting...................................................  A-34
SECTION 4.10  Proxy; Registration Statement...........................................  A-34
SECTION 4.11  Registration of Parent Common Stock.....................................  A-34
SECTION 4.12  Affiliate Letters.......................................................  A-35
SECTION 4.13  Notification of Certain Matters.........................................  A-35

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SECTION 4.14  Advisory Board..........................................................  A-35
SECTION 4.15  Directors...............................................................  A-35
SECTION 4.16  Indemnification; Directors' and Officers' Insurance.....................  A-35
SECTION 4.17  Transition Committee....................................................  A-36
SECTION 4.18  Series A ESOP Convertible Preferred Stock...............................  A-37

                                          ARTICLE V                                         

                                 CONDITIONS TO CONSUMMATION                                 

SECTION 5.01  Conditions to Each Party's Obligations..................................  A-37
SECTION 5.02  Conditions to the Obligations of the Parent and the Association Under         
                this Agreement........................................................  A-37
SECTION 5.03  Conditions to the Obligations of the Company............................  A-39

                                         ARTICLE VI                                         

                                         TERMINATION                                        

SECTION 6.01  Termination.............................................................  A-40
SECTION 6.02  Effect of Termination...................................................  A-43
SECTION 6.03  Third Party Termination Fee.............................................  A-43

                                         ARTICLE VII                                        

                         CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME                         

SECTION 7.01  Effective Date and Effective Time.......................................  A-44
SECTION 7.02  Deliveries at the Closing...............................................  A-44

                                        ARTICLE VIII                                        

                                        OTHER MATTERS                                       

SECTION 8.01  Certain Definitions; Interpretation.....................................  A-44
SECTION 8.02  Survival................................................................  A-44
SECTION 8.03  Waiver; Amendment.......................................................  A-44
SECTION 8.04  Counterparts............................................................  A-44
SECTION 8.05  Governing Law...........................................................  A-45
SECTION 8.06  Expenses................................................................  A-45
SECTION 8.07  Notices.................................................................  A-45
SECTION 8.08  Entire Agreement; etc...................................................  A-46
SECTION 8.09  Assignment..............................................................  A-46

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     This is an AGREEMENT AND PLAN OF MERGER, dated as of the 29th day of March,
1997 (this "Agreement"), by and among ASTORIA FINANCIAL CORPORATION, a Delaware 
corporation (the "Parent"), ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION, a     
federally chartered savings and loan association and a wholly owned subsidiary  
of the Parent (the "Association"), and THE GREATER NEW YORK SAVINGS BANK, a New 
York chartered stock savings bank (the "Company"), as amended.                  

INTRODUCTORY STATEMENT

The Board of Directors of each of the Parent and the Company (i) has  
determined that this Agreement and the transactions contemplated hereby are in  
the best interests of the Parent and the Company, respectively, and in the best 
long-term interests of their respective stockholders, (ii) has determined that  
this Agreement and the transactions contemplated hereby are consistent with, and
in furtherance of, its respective business strategies and (iii) has approved, at
meetings of each of such Boards of Directors, this Agreement.                   

  Concurrently with the execution and delivery of this Agreement, and as a
condition and inducement to the Parent's willingness to enter into this         
Agreement, the Parent and the Company have entered into a Stock Option Agreement
(the "Option Agreement") pursuant to which the Company has granted to the Parent
an option to purchase shares of the Company's common stock, par value $1.00 per 
share (the "Company Common Stock"), upon the terms and conditions therein       
contained.                                                                      

The Parent and the Company desire to make certain representations,    
warranties and agreements in connection with the business combination           
transaction provided for herein and to prescribe various conditions to the      
transaction.                                                                    

  In consideration of their mutual promises and obligations hereunder, the
parties hereto adopt and make this Agreement and prescribe the terms and        
conditions hereof and the manner and basis of carrying it into effect, which    
shall be as follows:                                                            

ARTICLE I 

THE MERGER

   SECTION 1.01  Structure of the Merger.  On the Effective Date (as defined
in Section 7.01), the Company will merge with and into the Association (the     
"Merger"), with the Association being the surviving entity, pursuant to the     
provisions of, and with the effect provided in, the rules and regulations of the
Office of Thrift Supervision (the "OTS") and the Banking Law of the State of New
York (the "NYBL") and pursuant to the terms and conditions of an agreement and  
plan of merger to be entered into between the Association and the Company in a  
form to be mutually agreed upon. The separate corporate existence of the Company
shall thereupon cease. The Association shall continue to be governed by the laws
of the United States and its name and separate corporate existence with all of  
its rights, privileges, immunities, powers and franchises shall continue        
unaffected by the Merger.                                                       

     SECTION 1.02  Effect on Outstanding Shares of Company Common Stock.  (a) By
virtue of the Merger, automatically and without any action on the part of the   
holder thereof, each share of Company Common Stock issued and outstanding at the
Effective Time (as defined in Section 7.01) (other than (i) shares the holder of
which (the "Dissenting Stockholder") pursuant to any applicable law providing   
for dissenters' or appraisal rights is entitled to receive payment in accordance
with the provisions of any such law, such holder to have only the rights        
provided in any such law (the "Dissenters' Shares"), (ii) shares held directly  
or indirectly by the Parent (other than shares held in a fiduciary capacity or  
in satisfaction of a debt previously contracted), and (iii) shares held as      
treasury stock of the Company (the "Excluded Shares") shall become and be       
converted into, at the election of the holder thereof (subject to the provisions
of this Article), the right to receive: (x) the "Cash Consideration," described 
below, or (y) the "Stock Consideration" consisting of shares of common stock,   
par value $.01 per share of the Parent ("Parent Common Stock"), together with   
the related preferred share purchase right issued pursuant to the rights        
agreement (the "Parent                                                          

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Rights Agreement") between the Parent and ChaseMellon Shareholder Services,     
L.L.C. dated as of July 17, 1996 (the "Preferred Share Purchase Right"),        
described below (collectively, the "Merger Consideration").                     

    (i) The Cash Consideration shall be $19.00 for each share of Company
Common Stock.                                                                   

      (ii) The Stock Consideration shall be 0.50 of a share of Parent Common
Stock for each share of Company Common Stock.                                   

      (iii) If between the date of this Agreement and the Effective Time the
outstanding shares of Parent Common Stock shall have been changed into a        
different number of shares or into a different class, by reason of any stock    
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares (each, a "Stock Adjustment"), the Merger Consideration shall 
be adjusted correspondingly to the extent appropriate to reflect the Stock      
Adjustment.                                                                     

      (iv) As used herein, "Parent Market Value" shall be the average of the
mean between the closing high bid and low asked prices of a share of Parent     
Common Stock, as reported on the National Association of Securities Dealers     
Automated Quotation System National Market System (the "Nasdaq"), for the 30    
consecutive trading days immediately preceding the day (the "Valuation Date")   
which is the day that is the latest of (i) the day of expiration of the last    
waiting period with respect to any of the required regulatory approvals, as     
defined in Section 5.01(b), (ii) the day on which the last of the required      
regulatory approvals, as defined in Section 5.01(b), is obtained and (iii) the  
day on which the last of the required stockholder approvals have been received. 

   (b) As of the Effective Time, each Excluded Share, other than Dissenters'
Shares, shall be cancelled and retired and cease to exist, and no exchange or   
payment shall be made with respect thereto.                                     

     (c) As of the Effective Time, all shares of Company Common Stock other than
Excluded Shares shall no longer be outstanding and shall be automatically       
cancelled and retired and shall cease to exist, and each holder of a certificate
formerly representing any such shares of Company Common Stock shall cease to    
have any rights with respect thereto, except the right to receive the Merger    
Consideration. After the Effective Time, there shall be no transfers on the     
stock transfer books of the Parent.                                             

     SECTION 1.03  Effect on Outstanding Shares of Company Preferred Stock.  (a)
Subject to Section 4.18 hereof, at or prior to the Effective Time, the Company  
shall use such procedures as they deem necessary and appropriate in order to    
cause the shares of Series A ESOP Convertible Preferred Stock to be converted   
into Company Common Stock which shall include, if necessary, giving notice of   
its intention to redeem the Series A ESOP Convertible Preferred Stock in        
accordance with the terms thereof.                                              

(b) At or immediately prior to the Effective Time, the Certificate of 
Incorporation of the Parent shall be amended to (i) change the par value of the 
authorized shares of Parent Preferred Stock from $0.01 per share to $1.00 per   
share and (ii) fix the preferences of a newly-created Series B Preferred Stock  
of the Parent (the "Parent Series B Preferred Stock") to have terms             
substantially identical, and in any event no less favorable, to those of the 12%
Noncumulative Preferred Stock, Series B of the Company (the "Company Series B   
Preferred Stock") and agreeable to the Company; provided, that, the Parent may, 
in its sole discretion, effect such an amendment provided for in clause (ii)    
above through a Certificate of Designations filed pursuant to Section 151 of the
Delaware General Corporation Law. At the Effective Time, each share of Company  
Series B Preferred Stock issued and outstanding immediately prior to the        
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into, and shall become, one share of the    
Parent Series A Preferred Stock.                                                

SECTION 1.04  Fractional Shares.  Notwithstanding any other provision 
hereof, no fraction of a whole share of Parent Common Stock and no certificates 
or scrip therefor will be issued in the Merger; instead, the Parent shall pay to
each holder of Company Common Stock who would otherwise be entitled to a        
fractional share an amount in cash, rounded to the nearest cent, determined by  
multiplying such fraction by the Parent Market Value.                           

SECTION 1.05  Elections.  (a) Subject to the allocation procedures set
forth in this Article, each holder of Company Common Stock will be entitled,    
with respect to the Merger Consideration to be received for each                

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share of Company Common Stock held by such holder, to (i) elect to receive the  
Stock Consideration (a "Stock Election") with respect to such holder's Company  
Common Stock ("Stock Election Shares"), (ii) elect to receive the Cash          
Consideration (a "Cash Election") with respect to such holder's Company Common  
Stock ("Cash Election Shares"), (iii) make no election (a "No-Election") with   
respect to such holder's Company Common Stock ("No-Election Shares") or (iv)    
elect to make a Stock Election with respect to some of such holder's shares of  
Company Common Stock and a Cash Election with respect to the remaining shares of
Company Common Stock held by such holder (a "Split Election"). Any Dissenting   
Shares shall be deemed to be No-Election Shares. Notwithstanding the foregoing, 
in order to make a Stock Election, the number of shares of Company Common Stock 
a Company stockholder elects to convert must equal or exceed 100 shares.        

(b) An election form and other appropriate transmittal materials (the 
"Letter of Transmittal and Election Form") will be mailed within three business 
days after the Effective Date to each holder of record of Company Common Stock  
as of the Effective Time permitting such holder (or in the case of nominee      
record holders, the beneficial owner through proper instructions and            
documentation) to make a (i) Stock Election, (ii) Cash Election, (iii)          
No-Election or (iv) Split Election. Holders who hold in a variety of capacities 
may make a separate election in each capacity. Any election shall have been     
properly made only if a bank or trust company designated by the Parent (the     
"Exchange Agent") shall have actually received a properly completed Letter of   
Transmittal and Election Form by the Election Deadline, described below. A      
Letter of Transmittal and Election Form will be properly completed only if      
accompanied by certificates representing all shares of Company Common Stock     
converted thereby. Any shares of Company Common Stock with respect to which the 
holder thereof shall not, as of the Election Deadline, have made such an        
election by submission to the Exchange Agent of an effective, properly completed
Letter of Transmittal and Election Form shall be deemed to be No-Election Shares
(as defined herein). The Exchange Agent shall have reasonable discretion to     
determine when any election, modification or revocation is received and whether 
any such election, modification or revocation has been properly made.           

 (c) The Election Deadline shall be 5:00 p.m., Eastern Time, on the 10th
business day following but not including the date of mailing of the Letter of   
Transmittal and Election Form or such other date as the Parent and the Company  
shall mutually agree upon.                                                      

    SECTION 1.06  Allocations of Merger Consideration.  (a) As provided below,
75% of the shares of Company Common Stock will be converted into the right to   
receive the Stock Consideration. The Exchange Agent shall effectuate the        
allocations of the Merger Consideration described below among the holders of    
Company Common Stock within five business days after the Election Deadline.     

   (b) If the aggregate number of Cash Election Shares exceeds the number of
shares of Company Common Stock equal to 25% of the shares of Company Common     
Stock outstanding at the Effective Time (excluding such shares which are to be  
cancelled and retired in accordance with Section 1.02(b)) (the "Cash Election   
Number"), all Stock Election Shares and all No-Election Shares outstanding at   
the Effective Time shall be converted into the right to receive the Stock       
Consideration, and the Cash Election Shares shall be converted into the right to
receive the Stock Consideration and the Cash Consideration in the following     
manner:                                                                         

   each Cash Election Share shall be converted into the right to receive (i)
   an amount in cash, without interest, equal to the product, rounded to the
 nearest 1c, of (x) the Cash Consideration and (y) a fraction (the "Cash
  Fraction"), the numerator of which shall be the Cash Election Number and
     the denominator of which shall be the total number of Cash Election Shares,
  and (ii) a number of shares of Parent Common Stock equal to the product,
  rounded to four decimal places, of (x) the Stock Consideration and (y) a
number equal to one minus the Cash Fraction.                          

    (c) If the aggregate number of Stock Election Shares exceeds the number of
shares of Company Common Stock equal to 75% of the shares of Company Common     
Stock outstanding at the Effective Time (excluding such shares which are to be  
cancelled and retired in accordance with Section 1.02(d)) (the "Stock Election  
Number"), all Cash Election Shares and all No-Election Shares shall be converted
into the right to                                                               

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receive the Cash Consideration, and all Stock Election Shares shall be converted
into the right to receive the Stock Consideration and the Cash Consideration in 
the following manner:                                                           

    each Stock Election Share shall be converted into the right to receive (i)
    a number of shares of Parent Common Stock equal to the product, rounded to
     four decimal places, of (x) the Stock Consideration and (y) a fraction (the
"Stock Fraction"), the numerator of which shall be the Stock Election 
Number and the denominator of which shall be the total number of Stock
     Election Shares, and (ii) an amount of cash, without interest, equal to the
     product, rounded to the nearest 1c, of (x) the Cash Consideration and (y) a
number equal to one minus the Stock Fraction.                         

  (d) In the event that the number of Cash Election Shares does not exceed
the Cash Election Number and the number of Stock Election Shares does not exceed
the Stock Election Number, all Cash Election Shares shall be converted into the 
right to receive the Cash Consideration, all Stock Election Shares shall be     
converted into the right to receive the Stock Consideration, and the No-Election
Shares shall be converted into either the right to receive the Stock            
Consideration or the Cash Consideration as determined by random selection so    
that the result provided for in Section 1.06(a) is achieved.                    

    (e) The random selection process to be used by the Exchange Agent pursuant
to this Section 1.06 will consist of drawing by lot or such other process as the
Exchange Agent deems equitable and necessary to effect the allocations described
in such subparagraphs.                                                          

  SECTION 1.07  Exchange Procedures.  (a) At and after the Effective Time,
each certificate previously representing shares of Company Common Stock (except 
as specifically set forth in Section 1.02) shall represent only the right to    
receive the Merger Consideration and each certificate previously representing   
shares of Company Series B Preferred Stock shall be deemed to represent shares  
of Parent Series B Preferred Stock (the Company Common Stock Certificates and   
the Company Preferred Stock Certificates, together, are herein referred to as   
the "Company Certificates").                                                    

   (b) As of the Effective Time, the Parent shall deposit, or shall cause to
be deposited, with the Exchange Agent, for the benefit of the holders of shares 
of Company Common Stock, for exchange in accordance with this Section 1.07, an  
estimated amount of cash sufficient to pay the aggregate Cash Consideration to  
be paid pursuant to Section 1.02 and the aggregate amount of cash paid in lieu  
of fractional shares to be paid pursuant to Section 1.04, and the Parent shall  
reserve for issuance with its Transfer Agent and Registrar, the aggregate Stock 
Consideration and Parent Series B Preferred Stock to be issued.                 

   (c) The Letter of Transmittal and Election Form to be mailed within three
business days of the Effective Date shall specify that delivery shall be        
effected, and risk of loss and title to the Company Common Stock Certificates   
shall pass, only upon delivery of the Company Common Stock Certificates to the  
Exchange Agent, shall be in a form and contain any other provisions as the      
Parent may reasonably determine and shall include instructions for use in       
effecting the surrender of the Company Certificates in exchange for the Merger  
Consideration or Parent Series B Preferred Stock, as appropriate. Upon the      
proper surrender of a Company Certificate or Company Certificates to the        
Exchange Agent, together with a properly completed and duly executed Letter of  
Transmittal and Election Form, the holder of such Company Certificate or Company
Certificates shall be entitled to receive in exchange therefor (i) a certificate
representing that number of whole shares of Parent Common Stock or Preferred    
Series B Stock, if any, that such holder has the right to receive pursuant to   
Article I of this Agreement and (ii) a check in the amount equal to the cash, if
any, which such holder has the right to receive pursuant to Article I of this   
Agreement (including any cash in lieu of any fractional shares of Parent Common 
Stock to which such holder is entitled to pursuant to Section 1.04 and any      
dividend or other distributions to which such holder of Parent Common Stock is  
entitled to pursuant to Section 1.07(d)). Holders of Company Preferred Stock    
Certificates shall not be required to exchange such certificates for            
certificates representing Parent Series B Preferred Stock but may do so in      
accordance with the provisions hereof. Upon the proper surrender of a Company   
Certificate or Company Certificates previously representing shares of Company   
Preferred Stock, the holder of such Company Certificates or Company Certificates
shall be entitled to receive in exchange therefor a certificate representing the
same number of shares of Parent Series B Preferred Stock. The Company           
Certificate or Company Certificates so surrendered shall forthwith be cancelled.
As soon as practicable after completion of the allocations of the Merger        

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Consideration and in no event later than ten business days after the Election   
Deadline, the Exchange Agent shall distribute Parent Common Stock and cash as   
provided herein. The Exchange Agent shall not be entitled to vote or exercise   
any rights of ownership with respect to the shares of Parent Common Stock held  
by it from time to time hereunder, except that it shall receive and hold all    
dividends or other distributions paid or distributed with respect to such shares
for the account of the persons entitled thereto. In the event of a transfer of  
ownership of any shares of Company Common Stock not registered in the transfer  
records of the Company, the Cash Consideration shall be paid and the Stock      
Consideration shall be issued to the transferee if the Company Certificate      
representing such Company Common Stock is presented to the Exchange Agent,      
accompanied by documents sufficient, in the reasonable judgment of the Parent   
and the Exchange Agent, (x) to evidence and effect such transfer and (y) to     
evidence that all applicable stock transfer taxes have been paid.               

(d) No interest will be paid or accrued on the Cash Consideration. No 
dividend or other distributions declared or made after the Effective Time with  
respect to the Parent Common Stock shall be remitted to any person entitled to  
receive shares of Parent Common Stock until such person surrenders the Company  
Common Stock Certificate or Company Common Stock Certificates, at which time    
such dividends shall be remitted to such persons, without interest.             

   (e) From and after the Effective Time, there shall be no transfers on the
stock transfer records of the Company of any shares of Company Common Stock or  
Company Preferred Stock that were outstanding immediately prior to the Effective
Time. If after the Effective Time Company Certificates are presented to the     
Parent or the Association, they shall be cancelled and exchanged for the Merger 
Consideration or Parent Series B Preferred Stock, as appropriate, deliverable in
respect thereof pursuant to this Agreement in accordance with the procedures set
forth in this Section 1.07.                                                     

    (f) Any portion of the aggregate Cash Consideration or the proceeds of any
investments thereof that remains unclaimed by the stockholders of the Company   
for six (6) months after the Effective Time shall be repaid by the Exchange     
Agent to the Parent upon the written request of the Parent. After such request  
is made, any stockholders of the Company who have not theretofore complied with 
this Section 1.07 shall look only to the Parent for payment and issuance of     
their Merger Consideration deliverable in respect of each share of Company      
Common Stock such stockholder holds as determined pursuant to this Agreement    
without any interest thereon. If outstanding certificates for shares of Company 
Common Stock are not surrendered or the payment for them is not claimed prior to
the date on which such payments would otherwise escheat to or become the        
property of any governmental unit or agency, the unclaimed items shall, to the  
extent permitted by abandoned property and any other applicable law, become the 
property of the Parent (and to the extent not in its possession shall be paid   
over to it), free and clear of all claims or interest of any person previously  
entitled to such claims. Notwithstanding the foregoing, none of the Parent, the 
Association, the Exchange Agent or any other person shall be liable to any      
former holder of Company Common Stock for any amount delivered to a public      
official pursuant to applicable abandoned property, escheat or similar laws.    

  (g) The Parent and the Exchange Agent shall be entitled to rely upon the
Company's stock transfer books to establish the identity of those persons       
entitled to receive the Merger Consideration or shares of Parent Series B       
Preferred Stock, which books shall be conclusive with respect thereto. In the   
event of a dispute with respect to ownership of stock represented by any Company
Certificate, the Parent and the Exchange Agent shall be entitled to deposit any 
consideration represented thereby in escrow with an independent third party and 
thereafter be relieved with respect to any claims thereto.                      

  (h) In the event any Company Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming  
such Company Certificate to be lost, stolen or destroyed and, if required by the
Exchange Agent, the posting by such person of a bond in such amount as the      
Exchange Agent may direct as indemnity against any claim that may be made       
against it with respect to such Company Certificate, the Exchange Agent will    
issue in exchange for such lost, stolen or destroyed Company Certificate the    
Merger Consideration or the shares of Parent Series B Preferred Stock           
deliverable in respect thereof pursuant to this Agreement.                      

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     SECTION 1.08  Dissenters' Rights.  (a) Any Dissenting Stockholder who shall
be entitled to dissenters' rights with respect to his or her Dissenters' Shares,
as provided in Sections 604 and 6022 of the NYBL, shall not be entitled to the  
Merger Consideration, unless and until the holder thereof shall have failed to  
perfect or shall have effectively withdrawn or lost such holder's right to      
dissent from the Merger under such law, and shall be entitled to receive only   
the payment to the extent provided for therein with respect to such Dissenters' 
Shares. If any Dissenting Stockholder shall fail to perfect or shall have       
effectively withdrawn or lost the right to dissent, the Dissenters' Shares held 
by such Dissenting Stockholder shall thereupon be treated as No-Election Shares.

(b) The Company shall (i) give the Parent prompt written notice of the
receipt of any notice from a stockholder to exercise any dissenters' rights,    
(ii) not settle nor offer to settle any demand for payment without the prior    
written consent of the Parent and (iii) not waive any failure strictly to comply
with any procedural requirements of Section 6022 of the NYBL.                   

SECTION 1.09  Options.  (a) Subject to Section 1.09(b) and (c), at the
Effective Time, each option to purchase a share of Company Common Stock that has
been granted pursuant to Company's Long-Term Incentive Program, 1996 Equity     
Incentive Plan and 1996 Non-Employee Directors' Stock Option Plan (collectively,
the "Company's Option Plans") and that is outstanding and unexercised at the    
Effective Time (whether or not such option is otherwise vested or exercisable)  
(each, an "Outstanding Company Option") shall be cancelled and shall cease to be
exercisable. In consideration for such cancellation, the Parent shall, with     
respect to each Outstanding Company Option, pay to the holder thereof an amount 
equal to the excess (if any) of (a) the Cash Consideration over (b) price at    
which the holder may acquire a share of Company Common Stock upon exercise of   
such Outstanding Company Option (the "Option Cashout Payment"). The Parent shall
make such payment as soon as practicable following the Effective Time or, if    
later in the case of any holder of an Outstanding Company Option, the date on   
which such holder delivers to the Parent his written acceptance of an Option    
Cashout Payment as full and complete consideration for the cancellation of each 
Outstanding Company Option held by him. The Company shall take such action as is
necessary or appropriate under the terms of Company's Option Plans to convert   
each Outstanding Company Option, as of the Effective Time, into the right to    
receive an Option Cashout Payment upon the terms and conditions set forth       
herein. Payment hereunder shall be subject to withholding for applicable        
federal, state and local taxes.                                                 

  (b) Mr. Gerard C. Keegan and any two other officers of the Company to be
designated by Mr. Keegan or any one or more of them may, by written notice to   
the Parent received by the Parent not less than the day that is ten (10)        
business days prior to the Effective Time, elect to convert all or any portion  
of the Outstanding Company Options held by them into options ("Parent Options") 
to purchase shares of Parent Common Stock. Any such election shall identify the 
Outstanding Company Options to be converted into Parent Options and shall become
irrevocable upon receipt by the Parent of the notice of election. Any conversion
pursuant to this Section 1.09(b) shall be effected by issuing to the electing   
individual Parent Options to purchase the number of shares of Parent Common     
Stock (rounded down to the nearest whole share) equal to the product of (i) the 
number of shares of Company Common Stock subject to the Outstanding Company     
Options being converted, and (ii) the Stock Consideration. The exercise price   
per share for each share of Parent Common Stock subject to a Parent Option      
issued under this Section 1.09(b) shall be equal to the quotient of the per     
share exercise price of the Outstanding Company Option being converted into such
Parent Options divided by the Stock Consideration, rounded up to the next whole 
cent. Each such Parent Option (i) shall be fully vested and non-forfeitable,    
(ii) shall be exercisable at the same time and for the same terms as the related
Outstanding Company Options, (iii) shall not be subject to any condition, except
as may be required under applicable securities laws, including without          
limitation the continued employment by the Parent of the holder thereof, and    
(iv) shall be evidenced by a Parent Option agreement in a form to be provided by
the Parent that is reasonably acceptable to the Company, and that shall provide 
for reasonable registration rights. No payment shall be made pursuant to Section
1.09(a) with respect to any portion of a Outstanding Company Option that is     
converted into a Parent Option as aforesaid. At or prior to the Effective Time, 
Parent shall (i) take all corporate action necessary to reserve for issuance a  
sufficient number of shares of Parent Common Stock for delivery upon exercise of
Outstanding Company Options converted into Parent Options in accordance with    
this Section and (ii) file a registration statement on Form S-8 (or any         
successor or other appropriate form)                                            

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with respect to the Parent Common Stock subject to such Parent Options. Parent  
shall use its best efforts to maintain the effectiveness of such registration   
statement (and maintain the current status of the prospectus or prospectuses    
contained therein) for so long as such Parent Options remain outstanding.       

 (c) Any holder of an Outstanding Company Option not included in Section
1.09(b) may request a conversion identical to that described in Section 1.09(b);
provided, however, that the Parent may, in its sole and absolute discretion,    
determine whether to accept or deny such request. If the Parent denies such     
request, the holder of the Outstanding Company Option shall be subject to       
Section 1.09(a).                                                                

 SECTION 1.10  Directors and Officers of the Association after Effective
Time.  At the Effective Time, the directors of the Association shall consist of 
(a) the Directors of the Association serving immediately prior to the Effective 
Time and (b) such additional persons who shall become directors of the Parent in
accordance with Section 4.15.                                                   

    SECTION 1.11  Liquidation Account.  The Association shall expressly assume
the Company's liquidation account and its obligations related thereto in the    
Merger. In the event of a complete liquidation of the Association, and only in  
such event, any amounts distributable from such liquidation account will be     
determined in accordance with the rules and regulations pertaining to           
conversions by a thrift from mutual to stock form of organization set forth in  
Section 86.4(f) of the General Regulations of the Banking Board of the State of 
New York. No merger, consolidation, purchase of bulk assets with assumption of  
savings accounts and other liabilities, or similar transaction, whether or not  
the Association is the surviving institution, will be deemed to be a complete   
liquidation for this purpose, and, in any such transaction, the liquidation     
account shall be assumed by the surviving institution.                          

ARTICLE II

REPRESENTATIONS AND WARRANTIES

     SECTION 2.01  Disclosure Letters.  On or prior to the execution hereof, the
Company and the Parent have delivered to each other a letter (its "Disclosure   
Letter") setting forth, among other items, the disclosure of which is required  
or appropriate in relation to any or all of its representations and warranties  
(and making specific reference to the Section of this Agreement to which they   
relate), other than Section 2.03(h); provided, that (a) no such fact,           
circumstance or event is required to be set forth in the Disclosure Letter as an
exception to a representation or warranty if its absence is not reasonably      
likely to result in the related representation or warranty being deemed untrue  
or incorrect under the standards established by Section 2.02, and (b) the mere  
inclusion of an item in the Disclosure Letter shall not be deemed an admission  
by a party that such item represents a material exception or that such item is  
reasonably likely to result in a Material Adverse Effect (as defined in Section 
2.02(b)).                                                                       

    SECTION 2.02  Standards.  (a) No representation or warranty of the Company
or the Parent contained in Section 2.03 or 2.04, respectively, shall be deemed  
untrue or incorrect, and no party hereto shall be deemed to have breached a     
representation or warranty, on account of the existence of any fact,            
circumstance or event unless, as a consequence of such fact, circumstance or    
event, individually or taken together with all other facts, circumstances or    
events inconsistent with any paragraph of Section 2.03 or 2.04, as applicable,  
there is reasonably likely to exist a Material Adverse Effect. The Company's    
representations, warranties and covenants contained in this Agreement shall not 
be deemed to be untrue or breached as a result of effects arising solely from   
actions taken in compliance with a written request of the Parent.               

 (b) As used in this Agreement, the term "Material Adverse Effect" means
either (i) an effect which is material and adverse to the business, financial   
condition or results of operations of the Company or the Parent, as the context 
may dictate, and its subsidiaries taken as a whole; provided, however, that any 
such effects resulting from any changes (A) in law, rule or regulation or       
generally accepted accounting principles or interpretations thereof that applies
to both the Parent and the Association and the Company, as the case may be, or  
(B) changes in interest rates shall not be considered in determining if a       
Material Adverse Effect has occurred; or (ii) the failure of (x) a              
representation or warranty contained in Section 2.03(a)(iv), 2.03(d),           
2.03(h)(iii), 2.04(a)(iv), 2.04(d), 2.04(i)(iii) or 2.04(l) to be true and      
correct or (y) a representation or                                              

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warranty contained in the last sentence of each of Section 2.03(f) or 2.04(f),  
the second sentence of each of 2.03(g)(i) or 2.04(h)(i) and the first two       
sentences of each of Section 2.03(bb) or 2.04(v) to be true and correct in all  
material respects.                                                              

     (c) For purposes of this Agreement, "knowledge" shall mean, with respect to
a party hereto, actual knowledge of the members of the Board of Directors of    
that party, its counsel, any officer of that party with the title ranking not   
less than senior vice president and that party's in-house counsel.              

  SECTION 2.03  Representations and Warranties of the Company.  Subject to
Sections 2.01 and 2.02, the Company represents and warrants to the Parent that, 
except as specifically disclosed in the Disclosure Letter of the Company:       

    (a) Organization.  (i) The Company is a stock savings bank duly organized,
validly existing and in good standing under the laws of the State of New York.  
Each Subsidiary of the Company is a corporation, limited liability company or   
partnership duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization. Each of the Company and   
its Subsidiaries has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. As used in  
this Agreement, unless the context requires otherwise, the term "Subsidiary"    
when used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, which is consolidated with such party   
for financial reporting purposes or which is controlled, directly or indirectly,
by such party.                                                                  

     (ii) The Company and each Subsidiary of the Company is duly qualified
and is in good standing to do business in each jurisdiction in which the nature 
of its business or the ownership or leasing of its properties makes such        
qualification necessary.                                                        

     (iii) The Disclosure Letter sets forth all of the Subsidiaries of the
Company and all entities (whether corporations, partnerships, or similar        
organizations), including the corresponding percentage ownership in which the   
Company owns, directly or indirectly, 5% or more of the ownership interests as  
of the date of this Agreement and indicates for each Subsidiary, as of such     
date, its jurisdiction of organization and the jurisdiction wherein it is       
qualified to do business. All such Subsidiaries and ownership interests are in  
compliance with all applicable laws, rules and regulations relating to direct   
investments in equity ownership interests. The Company owns, either directly or 
indirectly, all of the outstanding capital stock of each of its Subsidiaries. No
Subsidiary of the Company is an "insured depositary institution" as defined in  
the Federal Deposit Insurance Act, as amended (the "FDIA"), and applicable      
regulations thereunder. All of the shares of capital stock of each of the       
Subsidiaries held by the Company or by another Subsidiary of the Company are    
fully paid, nonassessable and not subject to any preemptive rights and are owned
by the Company or a Subsidiary of the Company free and clear of any claims,     
liens, encumbrances or restrictions (other than those imposed by applicable     
federal and state securities laws) and there are no agreements or understandings
with respect to the voting or disposition of any such shares.                   

       (iv) The deposits of the Company are insured by the Bank Insurance Fund
of the Federal Deposit Insurance Corporation (the "FDIC") to the extent provided
in the FDIA.                                                                    

 (b) Capital Structure.  (i) The authorized capital stock of the Company
consists of 45,000,000 shares of Company Common Stock and 10,000,000 shares, par
value $1.00 per share, of preferred stock (the "Company Preferred Stock"). As of
the date of this Agreement: (A) 13,676,065 shares of Company Common Stock were  
issued and outstanding, (B) 1,478,077 shares of Company Series A ESOP Preferred 
Stock, and 2,000,000 shares of 12% Noncumulative Perpetual Preferred Stock,     
Series B were issued and outstanding, (C) no shares of Company Common Stock were
reserved for issuance except that 770,710 shares of Company Common Stock were   
reserved for issuance pursuant to the Company Long-Term Incentive Program,      
1,000,000 shares of Company Common Stock were reserved for issuance pursuant to 
the Company 1996 Equity Incentive Plan, 200,000 shares of Company Common Stock  
were reserved for issuance pursuant to Company 1996 Non-Employee Directors'     
Stock Option Plan, a sufficient number of shares of Company Common Stock were   
reserved for issuance to allow for the conversion of the Company Series A ESOP  
Preferred Stock, a sufficient number of shares of Company Common Stock were     
reserved for issuance                                                           

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pursuant to the Rights Agreement between the Company and The Chase Manhattan    
Bank (as successor in interest to the Manufacturers Hanover Trust Company),     
dated as of June 14, 1990, as amended, as in effect on the date hereof (the     
"Rights Agreement"), and a sufficient number of shares of Company Common Stock  
were reserved for issuance pursuant to the Option Agreement (D) no shares of    
Company Preferred Stock were reserved for issuance except pursuant to the Rights
Agreement, and (E) no shares of Company Common Stock were held by the Company in
its treasury or by its Subsidiaries. All outstanding shares of Company Common   
Stock and Company Preferred Stock are validly issued, fully paid and            
nonassessable and not subject to any preemptive rights and, with respect to     
shares held by the Company in its treasury or by its Subsidiaries, are free and 
clear of all liens, claims, encumbrances or restrictions (other than those      
imposed by applicable federal and state securities laws) and there are no       
agreements or understandings with respect to the voting or disposition of any   
such shares. The Disclosure Letter sets forth a complete and accurate list of   
all options to purchase Company Common Stock that have been issued pursuant to  
the Company Option Plans including the dates of grant, exercise prices, dates of
vesting, dates of termination and shares subject to option for each grant.      

     (ii) As of the date of this Agreement, except for this Agreement, the
Option Agreement and as set forth in the Disclosure Letter, neither the Company 
nor any of its Subsidiaries has or is bound by any outstanding options,         
warrants, calls, rights, convertible securities, commitments or agreements of   
any character obligating the Company or any of its Subsidiaries to issue,       
deliver or sell, or cause to be issued, delivered or sold, any additional shares
of capital stock of the Company or any of its Subsidiaries or obligating the    
Company or any of its Subsidiaries to grant, extend or enter into any such      
option, warrant, call, right, convertible security, commitment or agreement. As 
of the date hereof, there are no outstanding contractual obligations of the     
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire   
any shares of capital stock of the Company or any of its Subsidiaries.          

     (c) Authority.  The Company has all requisite corporate power and authority
to enter into this Agreement and, subject to approval of this Agreement by the  
requisite vote of the stockholders of the Company and receipt of all required   
regulatory or governmental approvals as contemplated by Section 5.01(b) of this 
Agreement, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement, and, subject to the approval of this Agreement by   
the stockholders of the Company, the consummation of the transactions           
contemplated hereby, have been duly authorized by all necessary corporate       
actions on the part of the Company. This Agreement has been duly executed and   
delivered by the Company and constitutes a valid and binding obligation of the  
Company, enforceable in accordance with its terms subject to applicable         
bankruptcy, insolvency and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of equity,   
whether applied in a court of law or a court of equity.                         

(d) Fairness Opinion.  The Company has received the opinion of Sandler
O'Neill & Partners, L.P. to the effect that, as of the date hereof, the Merger  
Consideration to be received by the stockholders of the Company is fair, from a 
financial point of view, to such stockholders.                                  

    (e) No Violations.  Subject to approval of this Agreement by the Company's
stockholders, the execution, delivery and performance of this Agreement by the  
Company do not, the execution, delivery and performance of the Option Agreement 
by the Company will not and the consummation of the transactions contemplated   
hereby or thereby by the Company will not, constitute (i) a breach or violation 
of, or a default under, any law, including any Environmental Law (as defined in 
Section 2.03(s)), rule or regulation or any judgment, decree, order,            
governmental permit or license, or agreement, indenture or instrument of the    
Company or any Subsidiary of the Company or to which the Company or any of its  
Subsidiaries (or any of their respective properties) is subject, (ii) a breach  
or violation of, or a default under, the organization certificate or articles of
incorporation or bylaws of the Company or any Subsidiary of the Company or (iii)
a breach or violation of, or a default under (or an event which with due notice 
or lapse of time or both would constitute a default under), or result in the    
termination of, accelerate the performance required by, or result in the        
creation of any lien, pledge, security interest, charge or other encumbrance    
upon any of the properties or assets of the Company or any Subsidiary of the    
Company under, any of the terms, conditions or provisions of any note, bond,    
indenture, deed of trust, loan agreement or other agreement, instrument or      
obligation to which                                                             

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the Company or any Subsidiary of the Company is a party, or to which any of     
their respective properties or assets may be bound or affected; and the         
consummation of the transactions contemplated hereby by the Company or, upon its
execution and delivery, by the Option Agreement will not require any approval,  
consent or waiver under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or the approval, consent or waiver of any other  
party to any such agreement, indenture or instrument, other than (i) the        
required approvals, consents and waivers referred to in Section 5.01(b), (ii)   
the approval of the stockholders of the Company referred to in Section 2.01(d)  
and (iii) such approvals, consents or waivers as are required under the federal 
and state securities or "blue sky" laws in connection with the transactions     
contemplated by this Agreement or the Option Agreement.                         

(f) Consents.  Except as referred to herein or in connection, or in   
compliance, with the provisions of the Hart-Scott-Rodino Antitrust Improvements 
Act of 1976 (the "HSR Act"), the Securities Act of 1933, as amended (the        
"Securities Act"), the Securities Exchange Act of 1934, as amended (the         
"Exchange Act"), the Home Owners' Loan Act of 1933, as amended (the "HOLA"), the
Bank Merger Act, as amended (the "BMA"), the FDIA, the NYBL, the rules and      
regulations of the OTS, and the environmental, corporation, securities or "blue 
sky" laws or regulations of the various states, no filing or registration with, 
or authorization, consent or approval of, any other party is necessary for the  
consummation by the Company of the Merger or the other transactions contemplated
by this Merger Agreement. As of the date hereof, the Company knows of no reason 
why the approvals, consents and waivers of governmental authorities referred to 
in this Section 2.03(f) that are required to be obtained should not be obtained 
without the imposition of any condition or restriction referred to in the last  
sentence in Section 5.01(b).                                                    

(g) Reports.  (i) As of their respective dates, neither the Company's 
Annual Report on Form F-2 for the fiscal year ended December 31, 1996, nor any  
other document filed subsequent to December 31, 1996 under Section 13(a), 13(c),
14 or 15(d) of the Exchange Act, each in the form (including exhibits and any   
documents specifically incorporated by reference therein) filed with the FDIC or
the Securities and Exchange Commission (the "SEC") (collectively, the "Company's
Reports"), contained or will contain any untrue statement of a material fact or 
omitted or will omit to state a material fact required to be stated therein or  
necessary to make the statements made therein, in light of the circumstances    
under which they were made, not misleading. Each of the balance sheets contained
or incorporated by reference in the Company's Reports (including in each case   
any related notes and schedules) fairly presented the financial position of the 
entity or entities to which it relates as of its date and each of the statements
of income and of changes in stockholders' equity and of cash flows, contained or
incorporated by reference in the Company's Reports (including in each case any  
related notes and schedules), fairly presented the results of operations,       
stockholders' equity and cash flows, as the case may be, of the entity or       
entities to which it relates for the periods set forth therein (subject, in the 
case of unaudited interim statements, to normal year-end audit adjustments that 
are not material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein.                                                 

        (ii) The Company and each of its Subsidiaries have each timely filed all
material reports, registrations and statements, together with any amendments    
required to be made with respect thereto, that they were required to file since 
December 31, 1992 with (A) the Banking Department of the State of New York, (B) 
the FDIC, (C) the National Association of Securities Dealers, Inc. (the "NASD"),
and (D) any other self-regulatory organization ("SRO"), and have paid all fees  
and assessments due and payable in connection therewith.                        

(h) Absence of Certain Changes or Events.  Except as disclosed in the 
Company's Reports filed on or prior to the date of this Agreement, true and     
complete copies of which have been provided by the Company to the Parent, since 
December 31, 1996, and except in connection with the formation of a holding     
company for the Company (which exception shall not include the consummation of  
such holding company formation) (i) the Company and its Subsidiaries have not   
incurred any liability, except in the ordinary course of their business         
consistent with past practice, (ii) the Company and its Subsidiaries have       
conducted their respective businesses only in the ordinary and usual course of  
such businesses and (iii) there has not been any condition, event, change or    
occurrence that, individually or in the aggregate, has had, or is reasonably    
likely to have, a Material Adverse Effect on the Company.                       

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   (i) Taxes.  All federal, state, local and foreign tax returns required to
be filed by or on behalf of the Company or any of its Subsidiaries have been    
timely filed or requests for extensions have been timely filed and any such     
extension shall have been granted and not have expired, and all such filed      
returns are complete and accurate in all material respects. All taxes shown on  
such returns, all taxes required to be shown on returns for which extensions    
have been granted, and all other taxes required to be paid by the Company or any
of its Subsidiaries, have been paid in full or adequate provision has been made 
for any such taxes on the Company's balance sheet (in accordance with generally 
accepted accounting principles). For purposes of this Section 2.03(i), the term 
"taxes" shall include all income, franchise, gross receipts, real and personal  
property, real property transfer and gains, wage and employment taxes. As of the
date of this Agreement, there is no audit examination, deficiency, or refund    
litigation with respect to any taxes of the Company or any of its Subsidiaries, 
and no claim has been made by any authority in a jurisdiction where the Company 
or any of its Subsidiaries do not file tax returns that the Company or any such 
Subsidiary is subject to taxation in that jurisdiction. All taxes, interest,    
additions, and penalties due with respect to completed and settled examinations 
or concluded litigation relating to the Company or any of its Subsidiaries have 
been paid in full or adequate provision has been made for any such taxes on the 
Company's balance sheet (in accordance with generally accepted accounting       
principles). The Company and its Subsidiaries have not executed an extension or 
waiver of any statute of limitations on the assessment or collection of any     
material tax due that is currently in effect. The Company and each of its       
Subsidiaries has withheld and paid all taxes required to have been withheld and 
paid in connection with amounts paid or owing to any employee, independent      
contractor, creditor, stockholder or other third party, and the Company and each
of its Subsidiaries has timely complied with all applicable information         
reporting requirements under Part III, Subchapter A of Chapter 61 of the        
Internal Revenue Code of 1986 (the "Code") and similar applicable state and     
local information reporting requirements.                                       

  (j) Absence of Claims.  No litigation, proceeding, controversy, claim or
action before any court or governmental agency is pending, against the Company  
or any of its Subsidiaries and, to the best of the Company's knowledge, no such 
litigation, proceeding, controversy, claim or action has been threatened.       

(k) Absence of Regulatory Actions.  Neither the Company nor any of its
Subsidiaries is a party to any cease and desist order, written agreement or     
memorandum of understanding with, or a party to any commitment letter or similar
undertaking to, or is subject to any action, proceeding, order or directive by, 
or is a recipient of any extraordinary supervisory letter from, federal or state
governmental authorities charged with the supervision or regulation of          
depository institutions or depository institution holding companies or engaged  
in the insurance of bank and/or savings and loan deposits (the "Government      
Regulators") nor has it been advised by any Government Regulator that it is     
contemplating issuing or requesting (or is considering the appropriateness of   
issuing or requesting) any such action, proceeding, order, directive, written   
agreement, memorandum of understanding, extraordinary supervisory letter,       
commitment letter or similar undertaking.                                       

    (l) Agreements.  (i) Except for the Option Agreement and arrangements made
in the ordinary course of business, the Company and its Subsidiaries are not    
bound by any material contract (as defined in Section 335.312 of the rules and  
regulations of the FDIC) to be performed after the date hereof that has not been
filed with or incorporated by reference in the Company's Reports. Except as     
disclosed in the Company's Reports filed prior to the date of this Agreement,   
neither the Company nor any of its Subsidiaries is a party to an oral or written
(A) consulting agreement (other than data processing, software programming and  
licensing contracts entered into in the ordinary course of business) not        
terminable on thirty (30) days' or less notice, (B) agreement with any executive
officer or other key employee of the Company or any of its Subsidiaries the     
benefits of which are contingent, or the terms of which are materially altered, 
upon the occurrence of a transaction involving the Company or any of its        
Subsidiaries of the nature contemplated by this Agreement or the Option         
Agreement, (C) agreement with respect to any employee or director of the Company
or any of its Subsidiaries providing any term of employment or compensation     
guarantee extending for a period longer than sixty (60) days or for the payment 
of in excess of $30,000 per annum, (D) agreement or plan, including any stock   
option plan, stock appreciation rights plan, restricted stock plan or stock     
purchase plan, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the      
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of any of the benefits of which will be calculated on the basis of any of the   
transactions contemplated by this Agreement or the Option Agreement or (E)      
agreement containing covenants that limit the ability of the Company or any of  
its Subsidiaries to compete in any line of business or with any person, or that 
involve any restriction on the geographic area in which, or method by which, the
Company (including any successor thereof) or any of its Subsidiaries may carry  
on its business (other than as may be required bylaw or any regulatory agency). 

        (ii) Neither the Company nor any of its Subsidiaries is in default under
or in violation of any provision, and is not aware of any fact or circumstance  
that would constitute a default or violation, of any note, bond, indenture,     
mortgage, deed of trust, loan agreement or other agreement to which it is a     
party or by which it is bound or to which any of its respective properties or   
assets is subject.                                                              

      (iii) The Company and each of its Subsidiaries owns or possesses valid
and binding license and other rights to use without payment all patents,        
copyrights, trade secrets, trade names, servicemarks and trademarks used in its 
businesses and neither the Company nor any of its Subsidiaries has received any 
notice of conflict with respect thereto that asserts the right of others. Each  
of the Company and its Subsidiaries has performed all the obligations required  
to be performed by it and are not in default under any contact, agreement,      
arrangement or commitment relating to any of the foregoing.                     

   (m) Labor Matters.  Neither the Company nor any of its Subsidiaries is or
has ever been a party to, or is or has ever been bound by, any collective       
bargaining agreement, contract, or other agreement or understanding with a labor
union or labor organization with respect to its employees, nor is the Company or
any of its Subsidiaries the subject of any proceeding asserting that it has     
committed an unfair labor practice or seeking to compel it or any such          
Subsidiary to bargain with any labor organization as to wages and conditions of 
employment, nor is the management of the Company aware of any strike, other     
labor dispute or organizational effort involving the Company or any of its      
Subsidiaries pending or threatened. The Company and its Subsidiaries are in     
compliance with applicable laws regarding employment of employees and retention 
of independent contractors, and are in compliance with applicable employment tax
laws.                                                                           

    (n) Employee Benefit Plans.  The Disclosure Letter contains a complete and
accurate list of all pension, retirement, stock option, stock purchase, stock   
ownership, savings, stock appreciation right, profit sharing, deferred          
compensation, consulting, bonus, group insurance, severance and other benefit   
plans, contracts, agreements, arrangements, including, but not limited to,      
"employee benefit plans," as defined in Section 3(3) of the Employee Retirement 
Income Security Act of 1974, as amended ("ERISA"), incentive and welfare        
policies, contracts, plans and arrangements and all trust agreements related    
thereto with respect to any present or former directors, officers, or other     
employees of the Company or any of its Subsidiaries (hereinafter referred to    
collectively as the "Employee Plans"). All of the Employee Plans comply in all  
material respects with all applicable requirements of ERISA, the Code and other 
applicable laws; there has occurred no "prohibited transaction" (as defined in  
Section 406 of ERISA or Section 4975 of the Code) which is likely to result in  
the imposition of any penalties or taxes under Section 502(i) of ERISA or       
Section 4975 of the Code upon the Company or any of its Subsidiaries. No        
liability, to the Pension Benefit Guaranty Corporation, has been or is expected 
by the Company or any of its Subsidiaries to be incurred with respect to any    
Employee Plan which is subject to Title IV of ERISA ("Pension Plan"), or with   
respect to any "single-employer plan" (as defined in Section 4001(a) of ERISA)  
currently or formerly maintained by the Company or any entity which is          
considered one employer with the Company under Section 4001(b)(1) of ERISA or   
Section 414 of the Code (an "ERISA Affiliate"). No Pension Plan had an          
"accumulated funding deficiency" (as defined in Section 302 of ERISA (whether or
not waived)) as of the last day of the end of the most recent plan year ending  
prior to the date hereof; the fair market value of the assets of each Pension   
Plan exceeds the present value of the "benefit liabilities" (as defined in      
Section 4001(a)(16) of ERISA) under such Pension Plan as of the end of the most 
recent plan year with respect to the respective Pension Plan ending prior to the
date hereof, calculated on the basis of the actuarial assumptions used in the   
most recent actuarial valuation for such Pension Plan as of the date hereof; and
no notice of a "reportable event" (as defined in Section 4043 of ERISA) for     
which the 30-day reporting requirement has not been waived has been required to 
be filed for any Pension Plan within the 12-month period ending on the date     
hereof. Neither the Company nor any Subsidiary of the Company has provided, or  
is required to provide, security to any Pension Plan or to any single-employer  

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plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code. Neither  
the Company, its Subsidiaries, nor any ERISA Affiliate has contributed to any   
"multiemployer plan", as defined in Section 3(37) of ERISA, on or after         
September 26, 1980. Each Employee Plan of the Company or of any of its          
Subsidiaries which is an "employee pension benefit plan" (as defined in Section 
3(2) of ERISA) and which is intended to be qualified under Section 401(a) of the
Code (a "Qualified Plan") has received a favorable determination letter from the
Internal Revenue Service (the "IRS") and the Company and its Subsidiaries are   
not aware of any circumstances likely to result in revocation of any such       
favorable determination letter. Each Qualified Plan which is an "employee stock 
ownership plan" (as defined in Section 4975(e)(7) of the Code) has satisfied all
of the applicable requirements of Sections 409 and 4975(e)(7) of the Code and   
the regulations thereunder in all material respects and any assets of any such  
Qualified Plan that are not allocated to participants' individual accounts are  
pledged as security for, and may be applied to satisfy, any securities          
acquisition indebtedness. There is no pending or, to the knowledge of the       
Company, threatened litigation, administrative action or proceeding relating to 
any Employee Plan. There has been no announcement or commitment by the Company  
or any Subsidiary of the Company to create an additional Employee Plan, or to   
amend an Employee Plan except for amendments required by applicable law which do
not materially increase the cost of such Employee Plan; and except as           
specifically identified on the Disclosure Letter, the Company and its           
Subsidiaries do not have any obligations for post-retirement or post-employment 
benefits under any Employee Plan that cannot be amended or terminated upon no   
more than sixty (60) days' notice without incurring any liability thereunder,   
except for coverage required by Part 6 of Title I of ERISA or Section 4980B of  
the Code. With respect to the Company or any of its Subsidiaries, except as     
specifically identified on the Disclosure Letter, the execution and delivery of 
this Agreement and the consummation of the transactions contemplated hereby will
not result in any payment or series of payments by the Company or any Subsidiary
of the Company to any person which is an "excess parachute payment" (as defined 
in Section 280G of the Code), increase or secure (by way of a trust or other    
vehicle) any benefits payable under any Employee Plan other than a Pension Plan,
or except to the extent contemplated by Sections 1.09 and 4.03 accelerate the   
time of payment or vesting of any such benefit. With respect to each Employee   
Plan, the Company has supplied to the Parent a true and correct copy of (A) the 
annual report on the applicable form of the Form 5500 series filed with the IRS 
for the most recent three plan years, (B) such Employee Plan, including         
amendments thereto, (C) each trust agreement, insurance contract or other       
funding arrangement relating to such Employee Plan, including amendments        
thereto, (D) the most recent summary plan description and summary of material   
modifications thereto for such Employee Plan, including amendments thereto, if  
the Employee Plan is subject to Title I of ERISA, (E) the most recent actuarial 
report or valuation if such Employee Plan is a Pension Plan and any subsequent  
changes to the actuarial assumptions contained therein and (F) the most recent  
determination letter issued by the IRS if such Employee Plan is a Qualified     
Plan.                                                                           

  (o) Termination Benefits.  The Disclosure Letter contains a complete and
accurate schedule showing the present value as of September 30, 1997 of the     
monetary amounts payable and identifying the in-kind benefits due under the     
Specified Compensation and Benefit Programs (as defined herein) for each Named  
Individual (as defined herein) individually and for all persons other than the  
Named Individuals as a group. For purposes hereof, "Specified Compensation and  
Benefit Programs" shall include all employment agreements, change in control    
agreements, severance or special termination agreements, severance plans,       
pension, retirement or deferred compensation plans for non-employee directors,  
supplemental executive retirement programs, tax indemnification agreements,     
outplacement programs, cash bonus programs, stock appreciation right, phantom   
stock or stock unit plan, and health, life, disability and other insurance or   
welfare plans, but shall not include any tax-qualified pension, profit-sharing  
or employee stock ownership plan or any Outstanding Company Options. For        
purposes hereof, "Named Individual" shall include each non-employee director of 
the Company or any of its subsidiaries and each executive officer of the        
Company. For purposes of preparing the Disclosure Letter, the present value of  
the benefits payable under the Specified Compensation and Benefit Programs shall
be determined as follows: (i) it shall be assumed that a change of control of   
the Company occurs on September 30, 1997 and that each person entitled to       
benefits under the Specified Compensation and Benefit Programs is discharged as 
of September 30, 1997; (ii) it shall be assumed that all compensation levels    
remain constant; (iii) it shall be assumed that the present value of any payment
or benefit which would be due and payable before November'1, 1997 is equal to   
the amount of such payment or the cost                                          

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of such benefit; (iv) the present value of any payment or benefit that would be 
due and payable after November 1, 1997 shall be computed using the interest rate
specified by the applicable plan for purposes of valuing lump sum payments or if
no rate is specified an assumed interest rate of 6% per annum, compounded       
annually; and (v) that all accrued benefits under all tax-qualified plans are   
100% vested. Except as set forth in the Disclosure Letter, the entire present   
value of the benefits payable under the Specified Compensation and Benefit      
Programs has been accrued as a liability on the financial statements of the     
Company as of December 31, 1996.                                                

     (p) Title to Assets.  The Company and each of its Subsidiaries has good and
marketable title to its properties and assets other than property as to which it
is lessee, in which case the related lease is valid and in full force and       
effect. Each lease pursuant to which the Company or any of its Subsidiaries is  
lessor is valid and in full force and effect and no lessee under any such lease 
is in default or in violation of any provisions of any such lease. All material 
tangible properties of the Company and each of its Subsidiaries are in a good   
state of maintenance and repair, conform with all applicable ordinances,        
regulations and zoning laws and are considered by the Company to be adequate for
the current business of the Company and its Subsidiaries.                       

     (q) Compliance with Laws.  The Company and each of its Subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of, and has  
made all filings, applications and registrations with, federal, state, local and
foreign governmental or regulatory bodies that are required in order to permit  
it to carry on its business as it is presently conducted; all such permits,     
licenses, certificates of authority, orders and approvals are in full force and 
effect, and, to the best knowledge of the Company, no suspension or cancellation
of any of them is threatened. Since the date of its incorporation, the corporate
affairs of the Company have not been conducted in violation of any law,         
ordinance, regulation, order, writ, rule, decree or approval of any federal or  
state regulatory authority having jurisdiction over insured depositary          
institutions or their holding companies, the SEC, the NASD, or any other SRO    
(each, a "Governmental Entity"). The business of the Company and its            
Subsidiaries are not being conducted in violation of any law, ordinance,        
regulation, order, writ, rule or decree approval of any Governmental Entity.    

     (r) Fees.  Other than financial advisory services performed for the Company
by Sandler O'Neill & Partners, L.P., pursuant to an agreement, a true and       
complete copy of which has been previously delivered to the Parent, neither the 
Company nor any of its Subsidiaries, nor any of their respective officers,      
directors, employees or agents, has employed any broker or finder or incurred   
any liability for any financial advisory fees, brokerage fees, commissions, or  
finder's fees, and no broker or finder has acted directly or indirectly for the 
Company or any Subsidiary of the Company, in connection with the Agreement or   
the transactions contemplated hereby.                                           

     (s) Environmental Matters.  (i) With respect to the Company and each of its
Subsidiaries:                                                                   

     (A) Each of the Company and its Subsidiaries, the Participation
Facilities, and, to the Company's knowledge, the Loan Properties (each as       
defined herein) are, and have been, in substantial compliance with all          
Environmental Laws (as defined herein);                                         

(B) There is no suit, claim, action, demand, executive or 
administrative order, directive, investigation or proceeding pending or, to the 
Company's knowledge, threatened, before any court, governmental agency or board 
or other forum against it or any of its Subsidiaries or any current or, to the  
Company's knowledge, former Participation Facility (x) for alleged noncompliance
(including by any predecessor) with, or liability under, any Environmental Law  
or (y) relating to the Release (as defined herein) into the environment of any  
Hazardous Material (as defined herein), whether or not occurring at or on a site
owned, leased or operated by it or any of its Subsidiaries or any Participation 
Facility;                                                                       

      (C) To the Company's knowledge, there is no suit, claim, action,
demand, executive or administrative order, directive, investigation or          
proceeding pending or threatened, before any court, governmental agency or board
or other forum relating to or against any Loan Property (or the Company or any  
of its Subsidiaries in respect of such Loan Property) (x) relating to alleged   
noncompliance (including by any predecessor) with, or liability under, any      
Environmental Law or (y) relating to the Release into the                       

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environment of any Hazardous Material whether or not occurring at or on a site  
owned, leased or operated by a Loan Property;                                   

          (D) To the Company's knowledge, the properties currently or formerly
owned or operated by the Company or any of its Subsidiaries (including, without 
limitation, soil, groundwater or surface water on, under or adjacent to the     
properties, and buildings thereon) do not contain any Hazardous Material other  
than in compliance with applicable Environmental Law (provided, however, that   
with respect to properties formerly owned or operated by the Company or any of  
its Subsidiaries, such representation is limited to the period the Company or   
any such Subsidiary owned or operated such properties);                         

         (E) None of the Company or any of its Subsidiaries has received any
notice, demand letter, executive or administrative order, directive or request  
for information from any federal, state, local or foreign governmental entity or
any third party relating to Hazardous Materials or Remediation (as defined      
herein) thereof or indicating that it may be in violation of, or liable under,  
any Environmental Law, or any actual or, to the Company's knowledge, potential  
administrative or judicial proceedings in connection with any of the foregoing; 

      (F) To the Company's knowledge, there are no underground storage
tanks on, in or under any properties currently or formerly owned or operated by 
the Company or any of its Subsidiaries, any Participation Facility or any Loan  
Property and no underground storage tanks have been closed or removed from any  
properties currently or formerly owned or operated by the Company or any of its 
Subsidiaries, any Participation Facility or any Loan Property which are or have 
been in the ownership of the Company or any of its Subsidiaries; and            

          (G) To the Company's knowledge, during the period of (l) the Company
or any of its Subsidiaries' ownership or operation of any of their respective   
current or formerly owned properties, (m) the Company's or any of its           
Subsidiaries' participation in the management of any Participation Facility, or 
(n) its or any of its Subsidiaries' holding of a security interest in a Loan    
Property, there has been no Release and there is currently no threatened Release
of Hazardous Material in, on, under, affecting or migrating to such properties. 
To the Company's knowledge, prior to the period of (x) the Company's or any of  
its Subsidiaries' ownership or operation of any of their respective current     
properties, (y) the Company's or any of its Subsidiaries' participation in the  
management of any Participation Facility, or (z) the Company's or any of its    
Subsidiaries' holding of a security interest in a Loan Property, there was no   
Release of Hazardous Material in, on, under, affecting or migrating to any such 
property, Participation Facility or Loan Property.                              

 (ii) The following definitions apply for purposes of this Section
2.03(s): (u) "Loan Property" means any property in which the applicable party   
(or a Subsidiary of it) holds a security interest, and, where required by the   
context, includes the owner or operator of such property, but only with respect 
to such property; (v) "Participation Facility" means any facility in which the  
applicable party (or a Subsidiary of it) participates in the management         
(including all property held as trustee or in any other fiduciary capacity) and,
where required by the context, includes the owner or operator of such property, 
but only with respect to such property; (w) "Environmental Law" means (i) any   
federal, state or local law, statute, ordinance, rule, regulation, code,        
license, permit, authorization, approval, consent, legal doctrine, order,       
directive, executive or administrative order, judgment, decree, injunction,     
legal requirement or agreement with any governmental entity, (A) relating to the
protection, preservation or restoration of the environment (which includes,     
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, structures, soil, surface land, subsurface land, plant and animal life  
or any other natural resource), or to human health or safety as it relates to   
Hazardous Materials, or (B) the exposure to, or the use, storage, recycling,    
treatment, generation, transportation, processing, handling, labeling,          
production, release or disposal of, Hazardous Materials, in each case as amended
and as now in effect. The term Environmental Law includes, without limitation,  
(i) the Federal Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act, the Federal Water
Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean     
Water Act, the Federal Resource Conservation and Recovery Act of 1976           
(including, but not limited to, the Hazardous and Solid Waste Amendments thereto
and Subtitle I relating to underground storage tanks), the Federal Solid Waste  
Disposal and the Federal Toxic Substances Control Act,                          

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the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational
Safety and Health Act of 1970 as it relates to Hazardous Materials, the Federal 
Hazardous Substances Transportation Act, the Emergency Planning and Community   
Right-To-Know Act, the Safe Drinking Water Act, the Endangered Species Act, the 
National Environmental Policy Act, the Rivers and Harbors Appropriation Act or  
any so-called "Superfund" or "Superlien" law, each as amended and as now or     
hereafter in effect, (ii) any common law or equitable doctrine (including,      
without limitation, injunctive relief and tort doctrines such as negligence,    
nuisance, trespass and strict liability) that may impose liability or           
obligations for injuries or damages due to, or threatened as a result of, the   
presence of or exposure to any Hazardous Material and (iii) any state and local 
laws, statutes, ordinances, rules, regulations and the like, as well as common  
law: conditioning transfer of property upon a negative declaration or other     
approval of a governmental authority of the environmental condition of the      
property; requiring notification or disclosure of Releases of "Hazardous        
Substances" or other environmental condition of the Loan Property to any        
governmental authority or other person or entity, whether or not in connection  
with transfer of title to or interest in property; imposing conditions or       
requirements in connection with permits or other authorization for lawful       
activity; relating to nuisance, trespass or other causes of action related to   
the Loan Property; and relating to wrongful death, personal injury, or property 
or other damage in connection with any physical condition or use of the Loan    
Property; (x) "Hazardous Material" means any substance (whether solid, liquid or
gas) which is listed, defined, designated or classified as hazardous, toxic,    
radioactive or dangerous, or otherwise regulated, under any Environmental Law,  
whether by type or by quantity, including any substance containing any such     
substance as a component. Hazardous Material includes, without limitation, any  
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,      
hazardous waste, special waste, extremely hazardous wastes, or words of similar 
meanings or regulatory effect under any Environmental Laws, including, but not  
limited to, oil or petroleum or any derivative or by-product thereof, radon,    
radioactive material, asbestos, asbestos-containing material, urea formaldehyde 
foam insulation, lead and polychlorinated biphenyl, flammables and explosives;  
(y) "Release" of any Hazardous Material includes, but is not limited to, any    
release, deposit, discharge, emission, leaking, spilling, seeping, migrating,   
injecting, pumping, pouring, emptying, escaping, dumping, disposing or other    
movement of Hazardous Materials in violation of or requiring action under any   
applicable Environmental Law; and (z) "Remediation" includes, but is not limited
to, any response, remedial, removal, or corrective action, any activity to      
cleanup, detoxify, decontaminate, contain or otherwise remediate any Hazardous  
Material, any actions to prevent, cure or mitigate any Release of Hazardous     
Materials, any action to comply with any Environmental Laws or with any permits 
issued pursuant thereto, any inspection, investigation, study, monitoring,      
assessment, audit, sampling and testing, laboratory or other analysis, or       
evaluation relating to any Hazardous Materials.                                 

 (t) Loan Portfolio; Allowance; Asset Quality.  (i) With respect to each
loan owned by the Company or its Subsidiaries in whole or in part (each, a      
"Loan"), to the best knowledge of the Company:                                  

           (A) the note and the related security documents are each legal, valid
and binding obligations of the maker or obligor thereof, enforceable against    
such maker or obligor in accordance with their terms;                           

       (B) neither the Company nor any of its Subsidiaries nor any prior
holder of a Loan has modified the note or any of the related security documents 
in any material respect or satisfied, cancelled or subordinated the note or any 
of the related security documents except as otherwise disclosed by documents in 
the applicable Loan file;                                                       

     (C) the Company or a Subsidiary is the sole holder of legal and
beneficial title to each Loan (or the Company's applicable participation        
interest, as applicable), except as otherwise referenced on the books and       
records of the Company;                                                         

          (D) the note and the related security documents, copies of which are
included in the Loan files, are true and correct copies of the documents they   
purport to be and have not been suspended, amended, modified, cancelled or      
otherwise changed except as otherwise disclosed by documents in the applicable  
Loan file;                                                                      

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    (E) there is no pending, threatened condemnation proceeding or
similar proceeding affecting the property which serves as security for a Loan,  
except as otherwise referenced on the books and records of the Company;         

   (F) there is no litigation or proceeding pending, threatened,
relating to the property which serves as security for a Loan that would have a  
Material Adverse Effect upon the related Loan; and                              

         (G) with respect to a Loan held in the form of a participation, the
participation documentation is legal, valid, binding and enforceable.           

 (ii) The allowance for possible losses reflected in the Company's
audited statement of condition at December 31, 1996 was, and the allowance for  
possible losses shown on the balance sheets in its Reports for periods ending   
after December 31, 1996 will be, adequate, as of the dates thereof, under       
generally accepted accounting principles applicable to savings banks            
consistently applied.                                                           

     (iii) The Disclosure Letter sets forth by category the amounts of all
loans, leases, advances, credit enhancements, other extensions of credit,       
commitments and interest-bearing assets of the Company and its Subsidiaries that
have been classified by any bank examiner (whether regulatory or internal) as   
"Other Loans Specially Mentioned," "Special Mention," "Substandard," "Doubtful,"
"Loss," "Classified," "Criticized," "Credit Risk Assets," "Concerned Loans" (in 
the latter two cases, to the extent available) or words of similar import, and  
the Company and its Subsidiaries shall promptly after the end of any month      
inform the Parent of any such classification arrived at any time after the date 
hereof. The Other Real Estate Owned ("OREO") included in any non-performing     
assets of the Company or any of its Subsidiaries is carried net of reserves at  
the lower of cost or fair value, less estimated selling costs, based on current 
independent appraisals or evaluations or current management appraisals or       
evaluations; provided, however, that "current" shall mean within the past 12    
months.                                                                         

(u) Deposits.  None of the deposits of the Company or any of its      
Subsidiaries is a "brokered" deposit.                                           

     (v) Antitakeover Provisions Inapplicable.  The Company and its Subsidiaries
have taken all actions required to exempt the Company, the Agreement, the Merger
and the Option Agreement from any provisions of an antitakeover nature in their 
organization certificate and bylaws and the provisions of any federal or state  
"antitakeover," "fair price," "moratorium," "control share acquisition" or      
similar laws or regulations.                                                    

(w) Material Interests of Certain Persons.  Except as disclosed in the
Company's Proxy Statement for its 1997 Annual Meeting of Stockholders, no       
officer or director of the Company, or any "associate" (as such term is defined 
in Rule 12b-2 under the Exchange Act) of any such officer or director, has any  
material interest in any material contract or property (real or personal),      
tangible or intangible, used in or pertaining to the business of the Company or 
any of its Subsidiaries. No such interest has been created or modified since the
date of the last regulatory examination of the Company.                         

     (x) Insurance.  The Company and its Subsidiaries are presently insured, and
since December 31, 1994, have been insured, for reasonable amounts with         
financially sound and reputable insurance companies, against such risks as      
companies engaged in a similar business would, in accordance with good business 
practice, customarily be insured. All of the insurance policies and bonds       
maintained by the Company and its Subsidiaries are in full force and effect, the
Company and its Subsidiaries are not in default thereunder and all material     
claims thereunder have been filed in due and timely fashion.                    

(y) Investment Securities; Borrowings.  (i) Except for investments in 
Federal Home Loan Bank Stock and pledges to secure Federal Home Loan Bank       
borrowings and reverse repurchase agreements entered into in arms-length        
transactions pursuant to normal commercial terms and conditions and entered into
in the ordinary course of business and restrictions that exist for securities to
be classified as "held to maturity," none of the investments reflected in the   
consolidated balance sheet of the Company included in the Company's Report on   
Form F-2 for the quarter ended December 31, 1996, and none of the investment    
securities held by it or any of its Subsidiaries since December 31, 1996, is    
subject to any restriction (contractual or statutory) that would materially     
impair the ability of the entity holding such investment freely to dispose of   
such investment at any time.                                                    

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      (ii) Except as set forth in the Disclosure Letter, neither the Company
nor any Subsidiary is a party to or has agreed to enter into an exchange-traded 
or over-the-counter equity, interest rate, foreign exchange or other swap,      
forward, future, option, cap, floor or collar or any other contract that is not 
included on the consolidated statements of condition and is a derivative        
contract (including various combinations thereof) (each, a "Derivatives         
Contract") or owns securities that (A) are referred to generically as           
"structured notes," "high risk mortgage derivatives," "capped floating rate     
notes" or "capped floating rate mortgage derivatives" or (B) are likely to have 
changes in value as a result of interest or exchange rate changes that          
significantly exceed normal changes in value attributable to interest or        
exchange rate changes, except for those Derivatives Contracts and other         
instruments legally purchased or entered into in the ordinary course of         
business, consistent with safe and sound banking practices and regulatory       
guidance, and listed (as of the date hereof) in the Disclosure Letter or        
disclosed in its Reports filed on or prior to the date hereof.                  

      (iii) Set forth in the Disclosure Letter is a true and correct list of
the Company's borrowed funds (excluding deposit accounts) as of the date hereof.

(z) Indemnification.  Except as provided in the Company's Employment  
Agreements or the organization certificate or bylaws of the Company, neither the
Company nor any Company Subsidiary is a party to any indemnification agreement  
with any of its present or future directors, officers, employees, agents or     
other persons who serve or served in any other capacity with any other          
enterprise at the request of the Company (a "Covered Person"), and, except as   
set forth in the Disclosure Letter, to the best knowledge of the Company, there 
are no claims for which any Covered Person would be entitled to indemnification 
under the organization certificate or bylaws of the Company or any Subsidiary of
the Company, applicable law regulation or any indemnification agreement.        

(aa) Books and Records.  The books and records of the Company and its 
Subsidiaries have been, and are being, maintained in accordance with applicable 
legal and accounting requirements and reflect in all material respects the      
substance of events and transactions that should be included therein.           

     (bb) Corporate Documents.  The Company has delivered to the Parent true and
complete copies of its organization certificate and bylaws. The minute books of 
the Company constitute a complete and correct record of all actions taken by the
board of directors of the Company (and each committee thereof) and the          
stockholders of the Company. The minute books of each of the Company's          
Subsidiaries constitutes a complete and correct record of all actions taken by  
the respective boards of directors (and each committee thereof) and the         
stockholders of each such Subsidiary.                                           

 (cc) Liquidation Account.  The Merger will not result in any payment or
distribution payable out of the Liquidation Account of the Company.             

   (dd) Tax Treatment of the Merger.  As of the date hereof, the Company has
no knowledge of any fact or circumstance that would prevent the transactions    
contemplated by this Agreement from qualifying as a tax-free reorganization     
under the Code.                                                                 

SECTION 2.04 Representations and Warranties of the Parent.  Subject to
Sections 2.01 and 2.02, the Parent represents and warrants to the Company that: 

(a) Organization.  (i) The Parent is a corporation duly incorporated, 
validly existing and in good standing under the laws of the State of Delaware   
and is a savings and loan holding company duly registered with the OTS under the
HOLA. The Association is a savings and loan association duly incorporated,      
validly existing and in good standing under the laws of the United States of    
America. Each Subsidiary of the Association is a corporation, limited liability 
company or partnership duly organized, validly existing and in good standing    
under the laws of its jurisdiction of incorporation or organization. Each of the
Parent, the Association and the Association's Subsidiaries has all requisite    
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. The only Subsidiary of the Parent is the       
Association.                                                                    

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       (ii) The Parent, the Association and each Subsidiary of the Association
is duly qualified and is in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its properties  
makes such qualification necessary.                                             

     (iii) The Disclosure Letter sets forth all of the Subsidiaries of the
Association and all entities (whether corporations, partnerships, or similar    
organizations), including the corresponding percentage ownership in which the   
Association owns, directly or indirectly, 5% or more of the ownership interests 
as of the date of this Agreement and indicates for each Subsidiary, as of the   
such date, its jurisdiction of organization and the jurisdiction wherein it is  
qualified to do business. All such Subsidiaries and ownership interests are in  
compliance with all applicable laws, rules and regulations relating to direct   
investments in equity ownership interests. The Association owns, either directly
or indirectly, all of the outstanding capital stock of each of its Subsidiaries.
No Subsidiary of the Association is an "insured depositary institution" as      
defined in the Federal Deposit Insurance Act, as amended (the "FDIA"), and      
applicable regulations thereunder. All of the shares of capital stock of each of
the Subsidiaries held by the Association or by another Subsidiary of the        
Association are fully paid, nonassessable and not subject to any preemptive     
rights and are owned by the Association or a Subsidiary of the Association free 
and clear of any claims, liens, encumbrances or restrictions (other than those  
imposed by applicable federal and state securities laws) and there are no       
agreements or understandings with respect to the voting or disposition of any   
such shares.                                                                    

(iv) The deposits of the Association are insured by the Savings 
Association Insurance Fund of the FDIC to the extent provided in the FDIA.      

(b) Capital Structure.  (i) The authorized capital stock of the Parent
consists of 70,000,000 shares of Parent Common Stock and 5,000,000 shares of    
preferred stock, par value $.01 per share (the "Parent Series B Preferred       
Stock"). As of the date of this Agreement, (A) 26,361,704 shares of Parent      
Common Stock were issued and 21,230,708 were outstanding, (B) no shares of      
Parent Series B Preferred Stock were outstanding; (C) no shares of Parent Common
Stock were reserved for issuance except that 300,000 shares of Parent Common    
Stock were reserved for issuance pursuant to the Parent's dividend reinvestment 
plan, (D) no shares of Parent Series B Preferred Stock were reserved for        
issuance except pursuant to Parent's rights agreement and (E) 5,130,996 shares  
of Parent Common Stock were held by the Parent in its treasury or by its        
subsidiaries. The authorized capital stock of the Association consists of       
35,000,000 shares of common stock, par value $1.00 per share, and 5,000,000     
shares of preferred stock, par value $1.00 per share. As of the date of this    
Agreement, 1,000 shares of such common stock were outstanding, no shares of such
preferred stock were outstanding and all outstanding shares of such common stock
were, and as of the Effective Time will be, owned by the Parent. All outstanding
shares of capital stock of the Parent and the Association are, validly issued,  
fully paid and nonassessable and not subject to any preemptive rights and, with 
respect to shares held by the Parent in its treasury or by its Subsidiaries, are
free and clear of all liens, encumbrances or restrictions (other than those     
imposed by applicable federal or state securities laws) and there are no        
agreements or understandings with respect to the voting or disposition of such  
shares.                                                                         

        (ii) As of the date of this Agreement, except for this Agreement, and as
set forth in the Disclosure Letter, neither the Parent nor any of its           
Subsidiaries has or is bound by any outstanding options, warrants, calls,       
rights, convertible securities, commitments or agreements of any character      
obligating the Parent or any of its Subsidiaries to issue, deliver or sell, or  
cause to be issued, delivered or sold, any additional shares of capital stock of
the Parent or any of its Subsidiaries or obligating the Parent or any of its    
Subsidiaries to grant, extend or enter into any such option, warrant, call,     
right, convertible security, commitment or agreement. As of the date hereof,    
there are no outstanding contractual obligations of the Parent or any of its    
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital   
stock of the Parent or any of its Subsidiaries.                                 

  (c) Authority.  Each of the Parent and the Association has the requisite
corporate power and authority and subject to approval of this Agreement by the  
requisite vote of the stockholders of the Parent and receipt of all required    
regulatory or governmental approvals as contemplated by Section 5.01(b) of this 
Agreement, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement, and, subject to the approval of this Agreement by   
the stockholders of the Parent, the consummation of the transactions            
contemplated hereby, have been duly authorized by all necessary corporate       
actions on the part of                                                          

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the Parent and the Association. This Agreement has been duly executed and       
delivered by the Parent and the Association and constitutes a valid and binding 
obligation of the Parent and the Association, enforceable in accordance with its
terms subject to applicable bankruptcy, insolvency and similar laws affecting   
creditors' rights and remedies generally and subject, as to enforceability, to  
general principles of equity, whether applied in a court of law or a court of   
equity.                                                                         

(d) Fairness Opinion.  The Parent has received the written opinion of 
Merrill Lynch & Co. to the effect that, as of the date hereof, the Merger       
Consideration is fair, from a financial point of view, to the stockholders of   
the Parent.                                                                     

   (e) No Violations.  Subject to approval of this Agreement by the Parent's
stockholders, the execution, delivery and performance of this Agreement by the  
Parent or the Association do not, and the consummation of the transactions      
contemplated hereby will not, constitute (i) a breach or violation of, or a     
default under, any law, including any Environmental Law rule or regulation or   
any judgment, decree, order, governmental permit or license, or agreement,      
indenture or instrument of the Parent or the Association or to which the Parent 
or the Association (or any of their respective properties) is subject, or enable
any person to enjoin the Merger or the other transactions contemplated hereby,  
(ii) a breach or violation of, or a default under, the certificate or articles  
of incorporation or bylaws of the Parent or the Association or (iii) a breach or
violation of, or a default under (or an event which with due notice or lapse of 
time or both would constitute a default under), or result in the termination of,
accelerate the performance required by, or result in the creation of any lien,  
pledge, security interest, charge or other encumbrance upon any of the          
properties or assets of the Parent or the Association under, any of the terms,  
conditions or provisions of any note, bond, indenture, deed of trust, loan      
agreement or other agreement, instrument or obligation to which the Parent or   
the Association is a party, or to which any of its respective properties or     
assets may be bound or affected; and the consummation of the transactions       
contemplated hereby will not require any approval, consent or waiver under any  
such law, rule, regulation, judgment, decree, order, governmental permit or     
license or the approval, consent or waiver of any other party to any such       
agreement, indenture or instrument, other than (i) the required approvals,      
consents and waivers of governmental authorities referred to in Section 5.01(b),
(ii) the approval of the stockholders as the Parent referred to in Section      
2.04(d). The Parent and the Association know of no reason why the approvals,    
consents and waivers of governmental authorities referred to in Section 5.01(b) 
should not be obtained without the imposition of any material conditions or     
restrictions.                                                                   

(f) Consents.  Except as referred to herein or in connection, or in   
compliance, with the provisions of the HSR Act, the Securities Act, the Exchange
Act, the HOLA, the BMA, the FDIA, the rules and regulations of the OTS, and the 
environmental, corporation, securities or blue sky laws or regulations of the   
various states, no filing or registration with, or authorization, consent or    
approval of, any other party is necessary for the consummation by the Parent or 
the Association of the Merger or the other transactions contemplated by this    
Merger Agreement. As of the date hereof, the Parent knows of no reason why the  
approvals, consents and waivers of governmental authorities referred to in this 
Section 2.04(f) that are required to be obtained should not be obtained without 
the imposition of any material condition or restriction referred to in the last 
sentence of 5.01(b).                                                            

(g) Access to Funds.  The Parent and the Association have, or on the  
Closing Date (as defined herein) will have, access to all funds necessary to    
consummate the Merger and pay the aggregate Merger Consideration.               

     (h) Reports.  (i) As of their respective dates, neither the Parent's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, nor any other  
document filed subsequent to December 31, 1996 under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, each in the form (including exhibits and any         
documents specifically incorporated by reference therein) filed with the SEC    
(collectively, the "Parent Reports"), contained or will contain any untrue      
statement of a material fact or omitted or will omit to state a material fact   
required to be stated therein or necessary to make the statements made therein, 
in light of the circumstances under which they were made, not misleading. Each  
of the balance sheets contained or incorporated by reference in the Parent's    
Reports (including in each case any related notes and schedules) fairly         
presented the financial position of the entity or entities to which it relates  
as of its date and each of the                                                  

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statements of income and of changes in stockholders' equity and of cash flows,  
contained or incorporated by reference in the Parent's Reports (including in    
each case any related notes and schedules), fairly presented the results of     
operations, stockholders' equity and cash flows, as the case may be, of the     
entity or entities to which it relates for the periods set forth therein        
(subject, in the case of unaudited interim statements, to normal year-end audit 
adjustments that are not material in amount or effect), in each case in         
accordance with generally accepted accounting principles consistently applied   
during the periods involved, except as may be noted therein.                    

       (ii) The Parent and each of its Subsidiaries have each timely filed all
material reports, registrations and statements, together with any amendments    
required to be made with respect thereto, that they were required to file since 
December 31, 1992 with (A) the OTS, (B) the SEC, (C) the NASD and (D) any other 
self-regulatory organization, and have paid all fees and assessments due and    
payable in connection therewith.                                                

(i) Absence of Certain Changes or Events.  Except as disclosed in the 
Parent's Reports filed on or prior to the date of this Agreement, true and      
complete copies of which have been provided by the Parent to the Company, since 
December 31, 1996, (i) the Parent and its Subsidiaries have not incurred any    
liability, except in the ordinary course of their business consistent with past 
practice, (ii) the Parent and its Subsidiaries have conducted their respective  
businesses only in the ordinary and usual course of such businesses and (iii)   
there has not been any condition, event, change or occurrence that, individually
or in the aggregate, has had, or is reasonably likely to have, a Material       
Adverse Effect on the Parent.                                                   

   (j) Absence of Claims.  No litigation, proceeding or controversy claim or
action before any court or governmental agency is pending against the Parent,   
the Association or any of its Subsidiaries, and, to the best of the Parent's    
knowledge, no such litigation, proceeding, controversy, claim or action has been
threatened.                                                                     

     (k) Absence of Regulatory Actions.  Neither the Parent, the Association nor
any of its Subsidiaries is a party to any cease and desist order, written       
agreement or memorandum of understanding with, or a party to any commitment     
letter or similar written undertaking to, or is subject to any action,          
proceeding order or directive by, or is a recipient of any extraordinary        
supervisory letter from any Government Regulator, nor has it been advised by any
Governmental Regulator that it is contemplating issuing or requesting (or is    
considering the appropriateness of issuing or requesting) any such order,       
directive, written agreement, memorandum of understanding, extraordinary        
supervisory letter, commitment letter or similar written undertaking.           

   (l) Parent Common Stock.  The shares of Parent Common Stock and shares of
Parent Series B Preferred Stock to be issued pursuant to this Agreement, when   
issued in accordance with the terms of this Agreement, will be duly authorized, 
validly issued, fully paid and non-assessable and subject to no preemptive      
rights.                                                                         

(m) Labor Matters.  Neither the Parent, the Association nor any of its
Subsidiaries is or has ever been a party to, or is or has ever been bound by,   
any collective bargaining agreement, contract, or other agreement or            
understanding with a labor union or labor organization with respect to its      
employees, nor is the Parent, the Association or any of its Subsidiaries the    
subject of any proceeding asserting that it has committed an unfair labor       
practice or seeking to compel the Parent, the Association or any of its         
Subsidiaries to bargain with any labor organization as to wages and conditions  
of employment, nor is the management of the Parent aware of any strike, other   
labor dispute or organizational effort involving the Parent, the Association or 
any of its Subsidiaries pending or threatened. The Parent, the Association and  
its Subsidiaries are in compliance with applicable laws regarding employment of 
employees and retention of independent contractors, and are in compliance with  
applicable employment tax laws.                                                 

    (n) Employee Benefit Plans.  The Disclosure Letter contains a complete and
accurate list of all pension, retirement, stock option, stock purchase, stock   
ownership, savings, stock appreciation right, profit sharing, deferred          
compensation, consulting, bonus, group insurance, severance and other benefit   
plans, contracts, agreements, arrangements, including, but not limited to,      
"employee benefit plans," as defined in Section 3(3) of ERISA, incentive and    
welfare policies, contracts, plans and arrangements and all trust agreements    
related thereto with respect to any present or former directors, officers, or   
other employees of the Parent or any of its                                     

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Subsidiaries (hereinafter referred to collectively as the "Parent Employee      
Plans"). All of the Parent Employee Plans comply in all material respects with  
all applicable requirements of ERISA, the Code and other applicable laws; there 
has occurred no "prohibited transaction" (as defined in Section 406 of ERISA or 
Section 4975 of the Code) which is likely to result in the imposition of any    
penalties or taxes under Section 502(i) of ERISA or Section 4975 of the Code    
upon the Parent or any of its subsidiaries. No liability, to the Pension Benefit
Guaranty Corporation, has been or is expected by the Parent or any of its       
Subsidiaries to be incurred with respect to any Parent Employee Plan which is   
subject to Title IV of ERISA ("Parent Pension Plan"), or with respect to any    
"single-employer plan" (as defined in Section 4001(a) of ERISA) currently or    
formerly maintained by the Parent or any entity which is considered one employer
with the Parent under Section 4001(b)(1) of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). No Parent Pension Plan had an "accumulated funding          
deficiency" (as defined in Section 302 of ERISA (whether or not waived)) as of  
the last day of the end of the most recent plan year ending prior to the date   
hereof; the fair market value of the assets of each Parent Pension Plan exceeds 
the present value of the "benefit liabilities" (as defined in Section           
4001(a)(16) of ERISA) under such Parent Pension Plan as of the end of the most  
recent plan year with respect to the respective Parent Pension Plan ending prior
to the date hereof, calculated on the basis of the actuarial assumptions used in
the most recent actuarial valuation for such Parent Pension Plan as of the date 
hereof; and no notice of a "reportable event" (as defined in Section 4043 of    
ERISA) for which the 30-day reporting requirement has not been waived has been  
required to be filed for any Parent Pension Plan within the 12-month period     
ending on the date hereof. Neither the Parent nor any Subsidiary of the Parent  
has provided, or is required to provide, security to any Parent Pension Plan or 
to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29)
of the Code. Neither the Parent, its Subsidiaries, nor any ERISA Affiliate has  
contributed to any "multiemployer plan", as defined in Section 3(37) of ERISA,  
on or after September 26, 1980. Each Parent Employee Plan of the Parent or of   
any of its Subsidiaries which is an "employee pension benefit plan" (as defined 
in Section 3(2) of ERISA) and which is intended to be qualified under Section   
401(a) of the Code (a "Parent Qualified Plan") has received a favorable         
determination letter from the IRS and the Parent and its Subsidiaries are not   
aware of any circumstances likely to result in revocation of any such favorable 
determination letter. There is no pending or, to the knowledge of the Parent,   
threatened litigation, administrative action or proceeding relating to any      
Parent Employee Plan.                                                           

(o) Compliance with Laws.  The Parent, the Association and each of its
Subsidiaries has all permits, licenses, certificates of authority, orders and   
approvals of, and has made all filings, applications and registrations with,    
federal, state, local and foreign governmental or regulatory bodies that are    
required in order to permit it to carry on its business as it is presently      
conducted; all such permits, licenses, certificates of authority, orders and    
approvals are in full force and effect, and, to the best knowledge of the       
Parent, no suspension or cancellation of any of them is threatened. Since the   
date of its incorporation, the corporate affairs of the Parent have not been    
conducted in violation of any law, ordinance, regulation, order, writ, rule,    
decree or approval of any Governmental Entity. The business of the Parent and   
its Subsidiaries are not being conducted in violation of any law, ordinance,    
regulation, order, writ, rule or decree approval of any Governmental Entity.    

 (p) Fees.  Other than the financial advisory services performed for the
Parent by Merrill Lynch & Co., pursuant to an agreement, a true and complete    
copy of which has been previously delivered to the Company, neither the Parent, 
the Association nor any of its Subsidiaries, nor any of their respective        
officers, directors, employees or agents, has employed any broker or finder or  
incurred any liability for any financial advisory fees, brokage fees,           
commissions, or finder's fee, and no broker or finder has acted directly or     
indirectly for the purchase of any Subsidiary of the Parent, in connection with 
the Agreement or the transactions contemplated hereby.                          

    (q) Environmental Matters.  (i) With respect to the Parent and each of its
Subsidiaries:                                                                   

    (A) Each of the Parent and its Subsidiaries, the Participation
Facilities, and, to the Parent's knowledge, the Loan Properties (each as defined
herein) are, and have been, in substantial compliance with all Environmental    
Laws (as defined herein);                                                       

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(B) There is no suit, claim, action, demand, executive or 
administrative order, directive, investigation or proceeding pending or, to the 
Parent's knowledge, threatened, before any court, governmental agency or board  
or other forum against it or any of its Subsidiaries or any current or, to the  
Parent's knowledge, former Participation Facility (x) for alleged noncompliance 
(including by any predecessor) with, or liability under, any Environmental Law  
or (y) relating to the Release (as defined herein) into the environment of any  
Hazardous Material (as defined herein), whether or not occurring at or on a site
owned, leased or operated by it or any of its Subsidiaries or any Participation 
Facility;                                                                       

     (C) To the Parent's knowledge, there is no suit, claim, action,
demand, executive or administrative order, directive, investigation or          
proceeding pending or threatened, before any court, governmental agency or board
or other forum relating to or against any Loan Property (or the Parent or any of
its Subsidiaries in respect of such Loan Property) (x) relating to alleged      
noncompliance (including by any predecessor) with, or liability under, any      
Environmental Law or (y) relating to the Release into the environment of any    
Hazardous Material whether or not occurring at or on a site owned, leased or    
operated by a Loan Property;                                                    

         (D) To the Parent's knowledge, the properties currently or formerly
owned or operated by the Parent or any of its Subsidiaries (including, without  
limitation, soil, groundwater or surface water on, under or adjacent to the     
properties, and buildings thereon) do not contain any Hazardous Material other  
than in compliance with applicable Environmental Law (provided, however, that   
with respect to properties formerly owned or operated by the Parent or any of   
its Subsidiaries, such representation is limited to the period the Parent or any
such Subsidiary owned or operated such properties);                             

        (E) None of the Parent or any of its Subsidiaries has received any
notice, demand letter, executive or administrative order, directive or request  
for information from any federal, state, local or foreign governmental entity or
any third party relating to Hazardous Materials or Remediation (as defined      
herein) thereof or indicating that it may be in violation of, or liable under,  
any Environmental Law, or any actual or, to the Parent's knowledge, potential   
administrative or judicial proceedings in connection with any of the foregoing; 

           (F) To the Parent's knowledge, there are no underground storage tanks
on, in or under any properties currently or formerly owned or operated by the   
Parent or any of its Subsidiaries, any Participation Facility or any Loan       
Property and no underground storage tanks have been closed or removed from any  
properties currently or formerly owned or operated by the Parent or any of its  
Subsidiaries, any Participation Facility or any Loan Property which are or have 
been in the ownership of the Parent or any of its Subsidiaries; and             

           (G) To the Parent's knowledge, during the period of (l) the Parent or
any of its Subsidiaries' ownership or operation of any of their respective      
current or formerly owned properties, (m) the Parent's or any of its            
Subsidiaries' participation in the management of any Participation Facility, or 
(n) its or any of its Subsidiaries' holding of a security interest in a Loan    
Property, there has been no Release and there is currently no threatened Release
of Hazardous Material in, on, under, affecting or migrating to such properties. 
To the Parent's knowledge, prior to the period of (x) the Parent's or any of its
Subsidiaries' ownership or operation of any of their respective current         
properties, (y) the Parent's or any of its Subsidiaries' participation in the   
management of any Participation Facility, or (z) the Parent's or any of its     
Subsidiaries' holding of a security interest in a Loan Property, there was no   
Release of Hazardous Material in, on, under, affecting or migrating to any such 
property, Participation Facility or Loan Property.                              

 (ii) The following definitions apply for purposes of this Section
2.04(q): (u) "Loan Property" means any property in which the applicable party   
(or a Subsidiary of it) holds a security interest, and, where required by the   
context, includes the owner or operator of such property, but only with respect 
to such property; (v) "Participation Facility" means any facility in which the  
applicable party (or a Subsidiary of it) participates in the management         
(including all property held as trustee or in any other fiduciary capacity) and,
where required by the context, includes the owner or operator of such property, 
but only with respect to such property; (w) "Environmental Law" means (i) any   
federal, state or local law, statute, ordinance, rule, regulation, code,        
license, permit, authorization, approval, consent, legal doctrine, order,       
directive, executive or                                                         

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administrative order, judgment, decree, injunction, legal requirement or        
agreement with any governmental entity, (A) relating to the protection,         
preservation or restoration of the environment (which includes, without         
limitation, air, water vapor, surface water, groundwater, drinking water supply,
structures, soil, surface land, subsurface land, plant and animal life or any   
other natural resource), or to human health or safety as it relates to Hazardous
Materials, or (B) the exposure to, or the use, storage, recycling, treatment,   
generation, transportation, processing, handling, labeling, production, release 
or disposal of, Hazardous Materials, in each case as amended and as now in      
effect. The term Environmental Law includes, without limitation, (i) the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,   
the Superfund Amendments and Reauthorization Act, the Federal Water Pollution   
Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the
Federal Resource Conservation and Recovery Act of 1976 (including, but not      
limited to, the Hazardous and Solid Waste Amendments thereto and Subtitle I     
relating to underground storage tanks), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and    
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970 as it   
relates to Hazardous Materials, the Federal Hazardous Substances Transportation 
Act, the Emergency Planning and Community Right-To-Know Act, the Safe Drinking  
Water Act, the Endangered Species Act, the National Environmental Policy Act,   
the Rivers and Harbors Appropriation Act or any so-called "Superfund" or        
"Superlien" law, each as amended and as now or hereafter in effect, (ii) any    
common law or equitable doctrine (including, without limitation, injunctive     
relief and tort doctrines such as negligence, nuisance, trespass and strict     
liability) that may impose liability or obligations for injuries or damages due 
to, or threatened as a result of, the presence of or exposure to any Hazardous  
Material and (iii) any state and local laws, statutes, ordinances, rules,       
regulations and the like, as well as common law: conditioning transfer of       
property upon a negative declaration or other approval of a governmental        
authority of the environmental condition of the property; requiring notification
or disclosure of Releases of Hazardous Substances or other environmental        
condition of the Loan Property to any governmental authority or other person or 
entity, whether or not in connection with transfer of title to or interest in   
property; imposing conditions or requirements in connection with permits or     
other authorization for lawful activity; relating to nuisance, trespass or other
causes of action related to the Loan Property; and relating to wrongful death,  
personal injury, or property or other damage in connection with any physical    
condition or use of the Loan Property; (x) "Hazardous Material" means any       
substance (whether solid, liquid or gas) which is listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise          
regulated, under any Environmental Law, whether by type or by quantity,         
including any substance containing any such substance as a component. Hazardous 
Material includes, without limitation, any toxic waste, pollutant, contaminant, 
hazardous substance, toxic substance, hazardous waste, special waste, extremely 
hazardous wastes, or words of similar meanings or regulatory effect under any   
Environmental Laws, including, but not limited to, oil or petroleum or any      
derivative or by-product thereof, radon, radioactive material, asbestos,        
asbestos-containing material, urea formaldehyde foam insulation, lead and       
polychlorinated biphenyl, flammables and explosives; (y) "Release" of any       
Hazardous Material includes, but is not limited to, any release, deposit,       
discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, 
pouring, emptying, escaping, dumping, disposing or other movement of Hazardous  
Materials in violation of or requiring action under any applicable Environmental
Law; and (z) "Remediation" includes, but is not limited to, any response,       
remedial, removal, or corrective action, any activity to cleanup, detoxify,     
decontaminate, contain or otherwise remediate any Hazardous Material, any       
actions to prevent, cure or mitigate any Release of Hazardous Materials, any    
action to comply with any Environmental Laws or with any permits issued pursuant
thereto, any inspection, investigation, study, monitoring, assessment, audit,   
sampling and testing, laboratory or other analysis, or evaluation relating to   
any Hazardous Materials.                                                        

 (r) Loan Portfolio; Allowance; Asset Quality.  (i) With respect to each
loan owned by the Parent, the Association or its Subsidiaries in whole or in    
part (each, a "Loan"), to the best knowledge of the Parent:                     

           (A) the note and the related security documents are each legal, valid
and binding obligations of the maker or obligor thereof, enforceable against    
such maker or obligor in accordance with their terms;                           

         (B) neither the Parent, the Association nor any of its Subsidiaries
nor any prior holder of a Loan has modified the note or any of the related      
security documents in any material respect or satisfied,                        

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cancelled or subordinated the note or any of the related security documents     
except as otherwise disclosed by documents in the applicable Loan file;         

           (C) the Parent, the Association or a Subsidiary is the sole holder of
legal and beneficial title to each Loan (or the Association's applicable        
participation interest, as applicable); except as otherwise referenced on the   
books and records of the Association;                                           

          (D) the note and the related security documents, copies of which are
included in the Loan files, are true and correct copies of the documents they   
purport to be and have not been suspended, amended, modified, cancelled or      
otherwise changed except as otherwise disclosed by documents in the applicable  
Loan file;                                                                      

    (E) there is no pending, threatened condemnation proceeding or
similar proceeding affecting the property which serves as security for a Loan;  
except as otherwise referenced on the books and records of the Association;     

   (F) there is no litigation or proceeding pending, threatened,
relating to the property which serves as security for a Loan that would have a  
Material Adverse Effect upon the related Loan; and                              

         (G) with respect to a Loan held in the form of a participation, the
participation documentation is legal, valid, binding and enforceable.           

        (ii) The allowance for possible losses reflected in the Parent's audited
statement of condition at December 31, 1996 was, and the allowance for possible 
losses shown on the balance sheets in its Reports for periods ending after      
December 31, 1996 will be, adequate, as of the dates thereof, under generally   
accepted accounting principles applicable to federal savings and loan           
associations consistently applied.                                              

     (iii) The Disclosure Letter sets forth by category the amounts of all
loans, leases, advances, credit enhancements, other extensions of credit,       
commitments and interest-bearing assets of the Association and its Subsidiaries 
that have been classified by any bank examiner (whether regulatory or internal) 
as "Other Loans Specially Mentioned," "Special Mention," "Substandard,"         
"Doubtful," "Loss," "Classified," "Criticized," "Credit Risk Assets," "Concerned
Loans" (in the latter two cases, to the extent available) or words of similar   
import, and the Association and its Subsidiaries shall promptly after the end of
any month inform the Company of any such classification arrived at any time     
after the date hereof. The OREO included in any non-performing assets of the    
Association or any of its Subsidiaries is carried net of reserves at the lower  
of cost or fair value, less estimated selling costs, based on current           
independent appraisals or evaluations or current management appraisals or       
evaluations; provided, however, that "current" shall mean within the past 12    
months.                                                                         

     (s) Investment Securities.  (i) Except for investments in Federal Home Loan
Bank Stock and pledges to secure Federal Home Loan Bank borrowings and reverse  
repurchase agreements entered into in arms-length transactions pursuant to      
normal commercial terms and conditions and entered into in the ordinary course  
of business and restrictions that exist for securities to be classified as "held
to maturity," none of the investments reflected in the consolidated balance     
sheet of the Parent included in the Parent's Report on Form 10-K for the year   
ended December 31, 1996, and none of the investment securities held by it or any
of its Subsidiaries since December 31, 1996, is subject to any restriction      
(contractual or statutory) that would materially impair the ability of the      
entity holding such investment freely to dispose of such investment at any time.

     (ii) Except as set forth in the Disclosure Letter, neither the Parent
nor any Subsidiary is a party to or has agreed to enter into an exchange-traded 
or over-the-counter equity, interest rate, foreign exchange or other swap,      
forward, future, option, cap, floor or collar or any other contract that is not 
included on the consolidated statements of condition and is a derivative        
contract (including various combinations thereof) (each, a "Derivatives         
Contract") or owns securities that (A) are referred to generically as           
"structured notes," "high risk mortgage derivatives," "capped floating rate     
notes" or "capped floating rate mortgage derivatives" or (B) are likely to have 
changes in value as a result of interest or exchange rate changes that          
significantly exceed normal changes in value attributable to interest or        
exchange rate changes, except for those Derivatives                             

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Contracts and other instruments legally purchased or entered into in the        
ordinary course of business, consistent with safe and sound banking practices   
and regulatory guidance, and listed (as of the date hereof) in the Disclosure   
Letter or disclosed in its Reports filed on or prior to the date hereof.        

(t) Registration Statement.  The information to be supplied by it for 
inclusion in (i) the Registration Statement on Form S-4 and/or such other       
form(s) as may be appropriate to be filed under the Securities Act, with the SEC
by the Parent for the purpose of, among other things, registering the Parent    
Common Stock to be issued to the Stockholders of the Company in the Merger (the 
"Registration Statement"), or (ii) the proxy statement to be filed with the FDIC
by the Company under the Exchange Act and distributed in connection with the    
Company's meeting of its Stockholders to vote upon this Agreement (as amended or
supplemented from time to time, the "Proxy Statement", and together with the    
prospectus included in the Registration Statement, as amended or supplemented   
from time to time, the "Proxy Statement-Prospectus") will not, at the time such 
Registration Statement becomes effective, contain any untrue statement of a     
material fact or omit to state any material fact required to be stated therein  
or necessary in order to make the statements therein, in light of the           
circumstances under which they are made, not misleading.                        

(u) Books and Records.  The books and records of the Parent and its   
Subsidiaries have been, and are being, maintained in accordance with applicable 
legal and accounting requirements and reflect in all material respects the      
substance of events and transactions that should be included therein.           

    (v) Corporate Documents.  The Parent has delivered to the Company true and
complete copies of its certificate of incorporation and bylaws and of the       
Association's charter and bylaws. The minute books of the Parent and the        
Association constitute a complete and correct record of all actions taken by the
respective boards of directors (and each committee thereof) and the stockholders
of the Parent and the Association. The minute books of each of the Parent's     
Subsidiaries constitutes a complete and correct record of all actions taken by  
the respective boards of directors (and each committee thereof) and the         
stockholders of each Subsidiary.                                                

   (w) Beneficial Ownership of Company Common Stock.  As of the date hereof,
the Parent beneficially owns 240,000 shares of Company Common Stock and, other  
than as contemplated by the Option Agreement, does not have any option, warrant 
or right of any kind to acquire the beneficial ownership of any shares of       
Company Common Stock.                                                           

    (x) Tax Treatment of the Merger.  As of the date hereof, the Parent has no
knowledge of any fact or circumstance that would prevent the transactions       
contemplated by this Agreement from qualifying as a tax-free reorganization     
under the Code.                                                                 

ARTICLE III 

CONDUCT PENDING THE MERGER

SECTION 3.01  Conduct of the Company's Business Prior to the Effective
Time.  Except as expressly provided in this Agreement, during the period from   
the date of this Agreement to the Effective Time, the Company shall use         
commercially reasonable efforts to, and shall cause its Subsidiaries to use     
commercially reasonable efforts to, (i) conduct its business in the ordinary and
usual course consistent with prudent banking practice; (ii) maintain and        
preserve intact its business organization, properties, leases, employees and    
advantageous business relationships and retain the services of its officers and 
key employees, (iii) take no action which would adversely affect or delay the   
ability of the Company, the Parent or the Association to perform its covenants  
and agreements on a timely basis under this Agreement, (iv) take no action which
would adversely affect or delay the ability of the Company, the Parent or the   
Association to obtain any necessary approvals, consents or waivers of any       
governmental authority required for the transactions contemplated hereby or     
which would reasonably be expected to result in any such approvals, consents or 
waivers containing any material condition or restriction, and (v) take no action
that results in or is reasonably likely to have a Material Adverse Effect on the
Company.                                                                        

  SECTION 3.02 Forbearance by the Company.  Without limiting the covenants
set forth in Section 3.01 hereof, during the period from the date of this       
Agreement to the Effective Time the Company shall not, and                      

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shall not permit any of its Subsidiaries, without the prior written consent of  
the Parent which shall not be unreasonably withheld, to:                        

(a) complete any reorganization into a holding company structure or   
otherwise change its corporate structure from that in effect on the date hereof,
or put into effect any change in any provisions of the organization certificate 
or bylaws of the Company, or any similar governing documents of the Company's   
Subsidiaries;                                                                   

(b) issue any shares of capital stock or change the terms of any      
outstanding stock options or warrants or issue, grant or sell any option,       
warrant, call, commitment, stock appreciation right, right to purchase or       
agreement of any character relating to the authorized or issued capital stock of
the Company except pursuant to (i) the exercise of stock options or warrants as 
set forth in the Disclosure Letter, (ii) the Option Agreement; (iii) the terms  
of the certificate of designations of the Series A Preferred Stock (the "Series 
A Certificate of Designations") or (iv)'pursuant to the terms of the Rights     
Agreement; adjust, split, combine or reclassify any capital stock; make, declare
or pay any dividend or make any other distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of its capital stock or any   
securities or obligations convertible into or exchangeable for any shares of its
capital stock except for the Company's regular quarterly dividend of $0.05 per  
share and dividends payable pursuant to the Series A Certificate of Designations
and the certificate of designations of the Series B Preferred Stock. As promptly
as practicable following the date of this Agreement, the Board of Directors of  
the Company shall cause its regular quarterly dividend record dates and payment 
dates to be the same as Parent's regular quarterly dividend record dates and    
payments dates for Parent Common Stock, and the Company shall not thereafter    
change its regular dividend payment dates and record dates. Nothing contained in
this Section 3.02(b) or in any other Section of this Agreement shall be         
construed to permit holders of shares of the Company to receive two dividends   
either from the Company or from Parent or the Company and Parent in any one     
quarter or to deny or prohibit such holders from receiving one dividend from the
Company or Parent in any quarter;                                               

(c) other than in the ordinary course of business consistent with past
practice and pursuant to policies currently in effect, sell, transfer, mortgage,
encumber or otherwise dispose of any of its material properties, leases or      
assets to any individual, corporation or other entity other than a direct or    
indirect wholly owned Subsidiary of the Company or cancel, release or assign any
indebtedness of any such person, except pursuant to contracts or agreements in  
force at the date of this Agreement and which have been described to the Parent;

     (d) except to the extent required by law or as disclosed in Section 3.02(d)
of the Company's Disclosure Letter or specifically provided for elsewhere       
herein, increase in any manner the compensation or fringe benefits of any of its
employees or directors other than general increases in compensation for         
non-officer employees in the ordinary course of business consistent with past   
practice that do not cause the aggregate annualized compensation of all of the  
Company's non-officer employees participating in the increase being granted,    
immediately following such increase, to exceed by more than 5% the aggregate    
total annual compensation expense of the Company with respect to such persons   
for the twelve month period ended March 31, 1997 and that do not cause the      
aggregate annual rates of base salaries of all of the Company's non-officer     
employees participating in the increase being granted to increase by more than  
5% over such aggregate base salaries at March 31, 1997, or pay any pension or   
retirement allowance not required by any existing plan or agreement to any such 
employees or directors, or become a party to, amend or commit itself to or fund 
or otherwise establish any trust or account related to any Employee Plan (as    
defined in Section 2.03(n)) with or for the benefit of any employee or director;
voluntarily accelerate the vesting of any stock options or other compensation or
benefit; terminate or increase the costs to the Company or any Subsidiary of any
Employee Plan; hire any employee with an annual compensation in excess of       
$50,000 or enter into any employment contract; or make any discretionary        
contributions to any Employee Plan;                                             

     (e) except as contemplated by Section 4.02, change its method of accounting
as in effect at December 31, 1996, except as required by changes in generally   
accepted accounting principles as concurred in writing by the Company's         
independent auditors;                                                           

(f) other than in the ordinary course of business consistent with past
practice in individual amounts not to exceed $50,000 and other than investments 
for the Company's portfolio made in accordance with                             

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Section 3.02(g), make any investment either by purchase of stock or securities, 
contributions to capital, property transfers, or purchase of any property or    
assets of any other individual, corporation or other entity;                    

     (g) make any investment in any debt security, including mortgage-backed and
mortgage related securities, other than US government and US government agency  
securities with final maturities not greater than five years or mortgage-backed 
or mortgage related securities which would not be considered "high risk"        
securities pursuant to Thrift Bulletin Number 52 issued by the OTS, that are    
purchased in the ordinary course of business consistent with past practice;     

   (h) enter into or terminate any contract or agreement, or make any change
in any of its leases or contracts, other than with respect to those involving   
aggregate payments of less than, or the provision of goods or services with a   
market value of less than, $100,000 per annum and other than contracts or       
agreements covered by Section 3.02(k);                                          

   (i) settle any claim, action or proceeding involving any liability of the
Company or any of its Subsidiaries for money damages in excess of $500,000 or   
material restrictions upon the operations of the Company or any of its          
Subsidiaries;                                                                   

(j) except in the ordinary course of business and in amounts less than
$500,000, waive or release any material right or collateral or cancel or        
compromise any extension of credit or other debt or claim;                      

  (k) make, renegotiate, renew, increase, extend or purchase any (i) loan,
lease (credit equivalent), advance, credit enhancement or other extension of    
credit, or make any commitment in respect of any of the foregoing, except (A) in
conformity with existing lending practices in amounts not to exceed $1,000,000  
to any individual borrower or (B) loans or advances as to which the Company has 
a legally binding obligation to make such loan or advances as of the date hereof
and a description of which has been provided by the Company in writing to the   
Parent prior to the execution of this Agreement; provided, however, that the    
Company may not make, renegotiate, renew, increase, extend or purchase any loan 
that is underwritten based on either no or limited verification of income or    
otherwise without full documentation customary for such a loan; or (ii) loans,  
advances or commitments to directors, officers or other affiliated parties of   
the Company or any of its Subsidiaries;                                         

  (l) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the     
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise     
acquire or agree to acquire any assets, in each case which are material,        
individually or in the aggregate, to the Company except in satisfaction of debts
previously contracted;                                                          

(m) incur any additional borrowings beyond those set forth on the     
Disclosure Letter other than short-term (two years or less) Federal Home Loan   
Bank borrowings and reverse repurchase agreements consistent with past practice,
or pledge any of its assets to secure any borrowings other than as required     
pursuant to the terms of borrowings of the Company or any Subsidiary in effect  
at the date hereof or in connection with borrowings or reverse repurchase       
agreements permitted hereunder. Deposits shall not be deemed to be borrowings   
within the meaning of this paragraph;                                           

 (n) make any capital expenditures in excess of $100,000 per expenditure
from the date of this Agreement until the Effective Date other than pursuant to 
binding commitments existing on the date hereof, other than expenditures        
necessary to maintain existing assets in good repair;                           

  (o) make any investment or commitment to invest in real estate or in any
real estate development project, other than real estate acquired in satisfaction
of defaulted mortgage loans and investments or commitments approved by the Board
of Directors of the Company prior to the date of this Agreement and disclosed in
writing to the Parent;                                                          

   (p) except pursuant to commitments existing at the date hereof which have
previously been disclosed in writing to the Parent, make any real estate loans  
secured by undeveloped land or real estate located outside the State of New York
or make any construction loan;                                                  

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   (q) establish or make any commitment relating to the establishment of any
new branch or other office facilities other than those for which all regulatory 
approvals have been obtained; with respect to any such new branch or other      
office facility for which regulatory approval has been received, make any       
capital expenditures that in the aggregate would exceed the aggregate capital   
expenditures for such facilities indicated in the Company's 1997 capital budget,
a copy of which has been provided to the Parent;                                

     (r) organize, capitalize, lend to or otherwise invest in any Subsidiary, or
invest in or acquire a 10% or greater equity or voting interest in any firm,    
corporation or business enterprise;                                             

    (s) elect to the Board of Directors of the Company any person who is not a
member of the Board of Directors of the Company as of the date of this          
Agreement; or                                                                   

   (t) agree or make any commitment to take any action that is prohibited by
this Section 3.02.                                                              

 In the event that the Parent does not respond in writing to the Company
within five business days of a written request for the Company to engage in any 
of the actions for which the Parent's prior written consent is required pursuant
to this Section 3.02, the Parent shall be deemed to have consented to such      
action. Any request by the Company or response thereto by the Parent shall be   
made in accordance with the notice provisions of Section 8.07.                  

SECTION 3.03  Conduct of the Parent's Business Prior to the Effective 
Time.  Except as expressly provided in this Agreement, during the period from   
the date of this Agreement to the Effective Time, the Parent shall use          
commercially reasonable efforts to, and shall cause its Subsidiaries to use     
commercially reasonable efforts to, (i) conduct its business in the ordinary and
usual course consistent with prudent banking practice; (ii) maintain and        
preserve intact its business organization, properties, leases, employees and    
advantageous business relationships and retain the services of its officers and 
key employees, (iii) take no action which would adversely affect or delay the   
ability of the Company, the Parent or the Association to perform its covenants  
and agreements on a timely basis under this Agreement, (iv) take no action which
would adversely affect or delay the ability of the Company, the Parent or the   
Association to obtain any necessary approvals, consents or waivers of any       
governmental authority required for the transactions contemplated hereby or     
which would reasonably be expected to result in any such approvals, consents or 
waivers containing any material condition or restriction, and (v) take no action
that results in or is reasonably likely to have a Material Adverse Effect on the
Parent. Without limiting the foregoing, during the period from the date of this 
Agreement to the Effective Time, the Parent shall not, without the prior written
consent of the Company, which shall not be unreasonably withheld, make, declare 
or pay any cash dividends in an amount in excess of $0.25 per share quarter.    

ARTICLE IV

COVENANTS 

  SECTION 4.01  Acquisition Proposals.  The Company agrees that neither it
nor any of its Subsidiaries nor any of the respective officers and directors of 
the Company or its Subsidiaries shall, and the Company shall direct and use its 
best efforts to cause its employees, agents and representatives (including,     
without limitation, any investment banker, attorney or accountant retained by it
or any of its Subsidiaries) not to, (a) initiate, solicit or encourage, directly
or indirectly, any inquiries or the making of any proposal or offer (including, 
without limitation, any proposal or offer to stockholders of the Company) with  
respect to a merger, consolidation or similar transaction involving, or any     
purchase of all or more than 10% of the assets or any equity securities of, the 
Company or any of its material Subsidiaries (any such proposal or offer being   
hereinafter referred to as an "Acquisition Proposal") or, (b) except to the     
extent legally required for the discharge by the board of directors of its      
fiduciary duties as advised in writing by such board's counsel, engage in any   
negotiations concerning, or provide any confidential information or data to, or 
have any discussions with, any person relating to an Acquisition Proposal, or   
otherwise facilitate any effort or attempt to make or implement an Acquisition  
Proposal. The Company will notify the Parent immediately if any such inquiries, 
proposals or offers are received by, any such information is requested from, or 
any such negotiations or discussions are sought to be initiated or continued    
with the Company after the date hereof, and the identity of                     

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the person making such inquiry, proposal or offer and the substance thereof.    
Subject to the foregoing, the Company will immediately cease and cause to be    
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. The Company will take
the necessary steps to inform the appropriate individuals or entities referred  
to in the first sentence hereof of the obligations undertaken in this Section   
4.01. The Company will promptly request each person (other than the Parent) that
has executed a confidentiality agreement prior to the date hereof in connection 
with its consideration of a business combination with the Company or any        
Subsidiary of the Company to return or destroy all confidential information     
previously furnished to such person by or on behalf of the Company or any of its
Subsidiaries.                                                                   

  SECTION 4.02 Certain Policies of the Company.  (a) At the request of the
Parent, the Company shall modify and change its loan, litigation, real estate   
valuation policies and practices (including loan classifications and levels of  
reserves) and investment and asset/liability management policies and practices  
after the date on which all required regulatory approval and shareholder        
approvals are received and after receipt of written confirmation from the Parent
that it is not aware of any fact or circumstance that would prevent completion  
of the Merger and prior to the Effective Time so as to be consistent on a       
mutually satisfactory basis with those of the Association; provided, that such  
policies and procedures are not prohibited by generally accepted accounting     
principles or all applicable laws and regulations.                              

  (b) The Company's representations, warranties and covenants contained in
this Agreement shall not be deemed to be untrue or breached in any respect for  
any purpose as a consequence of any modifications or changes undertaken solely  
on account of this Section 4.02.                                                

     SECTION 4.03 Employees; Benefit Plans and Programs.  (a) Each person who is
employed by the Company immediately prior to the Effective Time (a "Company     
Employee") shall, at the Effective Time, become an employee (but not an officer)
of the Association. Beginning at the Effective Time, each of the Company        
Employees shall serve the Association in the same capacity in which he or she   
served the Company immediately prior to the Effective Time and upon the same    
terms and conditions generally applicable to other employees of the Association 
with comparable positions, with the following special provisions:               

    (i) If it is not practical to enroll the Company Employees as of the
Effective Time in a particular employee benefit plan or program maintained by   
the Association for its employees (the "Association Plans"), the Association    
shall continue any comparable plan or program of the Company in effect          
immediately prior to the Effective Time (the "Company Plans") for a transition  
period. During the transition period, the Company Employees shall continue to   
participate in the Company Plans which are continued, and all other employees of
the Association will participate only in the comparable Association Plans.      

       (ii) The Parent and the Association will amend each of their respective
employee benefit plans and programs to recognize the service of each of the     
Company Employees with the Company as service with the Parent and the           
Association for all purposes. Each of the Company's tax-qualified plans will be 
amended, if necessary, to provide that all benefits accrued by Continuing       
Employees through the Effective Time will be fully vested without regard to     
their length of service.                                                        

       (iii) The Association will amend its tax-qualified defined benefit plan
to recognize the service of each of the Company Employees with the Company as   
service with the Association for purposes of benefit accrual, with an offset for
vested benefits accrued under the Company's tax-qualified defined benefit plan. 
The Company will take all necessary action to amend its tax-qualified defined   
benefit plan, effective no later than the Effective Time, to cease all future   
benefit accruals.                                                               

(iv) If Continuing Employees become eligible to participate in a
medical, dental or health plan of the Parent or the Association, the Parent     
shall cause such plan to (A) waive any preexisting condition limitations for    
conditions covered under the applicable medical, health or dental plans of the  
Company and (B) honor any deductible and out of pocket expenses incurred by the 
Continuing Employees and their beneficiaries under such plans during the portion
of the calendar year prior to such participation. If Continuing Employees of the
Company become eligible to participate in a life insurance plan maintained by   
the Parent or the Association, Parent shall cause such plan to waive any medical
certification for the Continuing Employees                                      

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up to the amount of coverage the Continuing Employees had under the life        
insurance plan of the Company (but subject to any limits on the maximum amount  
of coverage under the life insurance plan of the Parent or the Association).    

      (v) The Company shall amend its Supplemental Executive Retirement Plan
to provide that amounts includable in the wages of a Company Employee reportable
on IRS Form W-2 as a result of stock option exercises that occur after the date 
of execution of this Agreement and payments in settlement of the Company        
obligations under any employment agreement or change of control agreement will  
not be included as compensation for purposes of benefit accrual under such plan.
The Company shall amend its Supplemental Executive Retirement Plan to cease all 
future benefit accruals effective no later than the Effective Time, but such    
amendment shall not affect the calculation of any "make-up" payment provided for
under any employment agreement or change in control severance agreement.        

     (b) (i) The Parent shall assume the obligations of the Company with respect
to the employment agreements between the Company and the persons identified on  
the Disclosure Schedule as having such agreements and with respect to the change
in control severance agreements between the Company and the persons identified  
in the Disclosure Schedule as having such agreements. The Company shall use     
reasonable efforts to secure from each Named Individual and deliver to the      
Association within ten (10) business days after the execution of this Agreement 
an agreement substantially in the form attached hereto as Exhibit A (the        
"Settlement Agreement") to (A) accept as full settlement of his or her rights   
in, to and under the Specified Compensation and Benefit Programs the monetary   
amount and in-kind benefits reflected for such person on the Disclosure Schedule
and (B) agree to deliver in exchange for such payment and benefits a written    
release, substantially in the form attached hereto as Exhibit B (the "Release"),
of any further claim in, to and under the Specified Compensation and Benefit    
Programs.                                                                       

    (ii) As soon as practicable following the Effective Time, the Parent
shall pay to each of Messrs. Keegan, Harris and Henchy whose Settlement         
Agreement has been timely delivered to the Association the monetary payment and 
benefits set forth in Settlement Agreement in exchange for his Release.         

    (c) The Company shall amend its retirement plan for non-employee directors
to cease all future benefit accruals, and shall terminate its deferred          
compensation plan for non-employee directors, in each case effective no later   
than the Effective Time, but such amendment shall not prevent the application of
Section 4.4 of the retirement plan for non-employee directors providing for     
immediate, unreduced benefits.                                                  

(d) Parent shall pay, in accordance with the terms of the 1997 Annual 
Incentive Plan, the cash awards provided thereunder based, if applicable, on    
performance through the Effective Time or if the Effective Time occurs prior to 
September 30, 1997, a pro rata portion of such amount.                          

SECTION 4.04 Access and Information.  (a) Upon reasonable notice, the 
Company and the Parent shall (and shall cause its respective Subsidiaries to)   
afford to each other and their respective representatives (including, without   
limitation, directors, officers and employees of such party and its affiliates, 
and counsel, accountants and other professionals retained) such reasonable      
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work 
papers of independent auditors), properties, personnel and to such other        
information as either party may reasonably request; provided, however, that no  
investigation pursuant to this Section 4.04 shall affect or be deemed to modify 
any representation or warranty made herein. The Parent, the Association and the 
Company will not, and will cause its respective representatives not to, use any 
information obtained pursuant to this Section 4.04 for any purpose unrelated to 
the consummation of the transactions contemplated by this Agreement. Subject to 
the requirements of law, each of the Parent, the Association and the Company    
will keep confidential, and will cause its respective representatives to keep   
confidential, all information and documents obtained pursuant to this Section   
4.04 unless such information (i) was already known to such party or an affiliate
of such party, other than pursuant to a confidentiality agreement or other      
confidential relationship, (ii) becomes available to such party or an affiliate 
of such party from other sources not known by such party to be bound by a       
confidentiality obligation or agreement, (iii) is disclosed with the prior      
written approval of the other party or (iv) is or becomes readily ascertainable 
from published information or trade                                             

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sources. In the event that this Agreement is terminated or the transactions     
contemplated by this Agreement shall otherwise fail to be consummated, each     
party shall promptly cause all copies of documents or extracts thereof          
containing information and data as to another party hereto (or an affiliate of  
any party hereto) to be returned to the party which furnished the same.         

  (b) During the period of time beginning on the day application materials
are initially filed with the OTS and continuing to the Effective Time, including
weekends and holidays, the Company shall provide the Association and its        
authorized agents and representatives full access to the Company's offices for  
the purpose of installing necessary wiring and equipment to be utilized by the  
Association after the Effective Time; provided, that:                           

 (i) reasonable advance notice of each entry shall be given to the
Company,and the Company approves of each entry, which approval shall not be     
unreasonably withheld;                                                          

(ii) the Company shall have the right to have its employees or  
contractors present to inspect the work being done;                             

    (iii) to the extent practicable, such work shall be done in a manner
that will not interfere with the Company's business conducted at the Branch;    

       (iv) all such work shall be done in compliance with all applicable laws
and government regulation, and the Association shall be responsible for the     
procurement, at the Association's expense, of all required governmental or      
administrative permits and approvals;                                           

        (v) the Association shall maintain appropriate insurance satisfactory to
the Company in connection with any work done by the Association's agents and    
representatives pursuant to this Section 4.13;                                  

 (vi) the Association shall reimburse the Company for any material
out-of-pocket costs or expenses incurred by the Company in connection with this 
undertaking; and                                                                

  (vii) in the event this Agreement is Terminated in accordance with
Article VI hereof, the Association, within a reasonable time period and at its  
sole cost and expense, will restore such offices to their condition prior to the
commencement of any such installation.                                          

   SECTION 4.05 Certain Filings, Consents and Arrangements.  The Parent, the
Association and the Company shall (a) as soon as practicable (and in any event  
within 75 days after the date hereof) make (or cause to be made) any filings and
applications and provide any notices, required to be filed or provided in order 
to obtain all approvals, consents and waivers of governmental authorities and   
third parties necessary or appropriate for the consummation of the transactions 
contemplated hereby or by the Option Agreement, (b) cooperate with one another  
(i) in promptly determining what filings and notices are required to be made or 
approvals, consents or waivers are required to be obtained under any relevant   
federal, state or foreign law or regulation or under any relevant agreement or  
other document and (ii) in promptly making any such filings and notices,        
furnishing information required in connection therewith and seeking timely to   
obtain any such approvals, consents or waivers and (c) deliver to the other     
copies of the publicly available portions of all such filings, notices and      
applications promptly after they are filed.                                     

     SECTION 4.06 Antitakeover Provisions.  (a) The Company and its Subsidiaries
shall take all steps (i) to exempt or continue to exempt the Company, the       
Agreement, the Merger and the Option Agreement from any provisions of an        
antitakeover nature in the Company's or its Subsidiaries' organization          
certificates and bylaws and the provisions of any federal or state antitakeover 
laws, and (ii) upon the request of the Parent, to assist in any challenge by the
Parent to the applicability to the Agreement, the Merger or the Option Agreement
of any state antitakeover law.                                                  

(b) Except for the Amendment and amendments approved in writing by the
Parent, the Company will not, following the date hereof, amend or waive any of  
the provisions of or take any action to exempt any other persons from the       
provisions of the Rights Agreement in any manner that adversely affects the     
Parent or the Association with respect to the consummation of the Merger or     
except as provided in the next sentence redeem the rights thereunder provided,  
however, that nothing herein shall prevent the Company from                     

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amending or otherwise taking any action under the Rights Agreement to delay the 
Distribution Date (as defined in the Rights Agreement). If requested by the     
Parent, the Company will redeem all outstanding Rights at a redemption price of 
not more than $.01 per Right effective immediately prior to the Effective Time  
with respect to the consummation of the Merger.                                 

  SECTION 4.07 Additional Agreements.  Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take promptly, or cause to be taken promptly, all actions and to do promptly,
or cause to be done promptly, all things necessary, proper or advisable under   
applicable laws and regulations to consummate and make effective the            
transactions contemplated by this Agreement as expeditiously as possible,       
including using efforts to obtain all necessary actions or non-actions,         
extensions, waivers, consents and approvals from all applicable governmental    
entities, effecting all necessary registrations, applications and filings       
(including, without limitation, filings under any applicable state securities   
laws) and obtaining any required contractual consents and regulatory approvals; 
it being understood and agreed that the Company may delay the Closing for up to 
thirty (30) days after all conditions set forth in Article V have been met if   
the provisions of Section 6.01(e) are in effect.                                

SECTION 4.08 Publicity.  The initial press release announcing this    
Agreement shall be a joint press release and thereafter the Company and the     
Parent shall consult with each other in issuing any press releases or otherwise 
making public statements with respect to the acquisition contemplated hereby and
in making any filings with any governmental entity or with any national         
securities exchange with respect thereto.                                       

    SECTION 4.09 Stockholders' Meeting.  The Company and the Parent each shall
take all action necessary, in accordance with applicable law and its corporate  
documents, to convene a meeting of its respective stockholders (each,           
"Stockholder Meeting") as promptly as practicable for the purpose of considering
and voting on approval and adoption of the transactions provided for in this    
Agreement. Except to the extent legally required for the discharge by the board 
of directors of its fiduciary duties as advised in writing by such board's      
counsel, the board of directors of each of the Company and the Parent shall (a) 
recommend at its Stockholder Meeting that the stockholders vote in favor of and 
approve the transactions provided for in this Agreement, and (b) use its best   
efforts to solicit such approvals.                                              

   SECTION 4.10 Proxy; Registration Statement.  As soon as practicable after
the date hereof, the Parent and the Company shall cooperate with respect to the 
preparation of a Proxy Statement-Prospectus for the purpose of taking           
stockholder action on the Merger and this Agreement, file the Proxy             
Statement-Prospectus with the SEC and the FDIC, respond to comments of the staff
of the SEC and the FDIC and promptly thereafter mail the Proxy                  
Statement-Prospectus to all holders of record (as of the applicable record date)
of shares of voting stock. The Parent and the Company each represents and       
covenants to the other party that the Proxy Statement-Prospectus and any        
amendment or supplement thereto, with respect to the information pertaining to  
it or its subsidiaries at the date of mailing to its stockholders and the date  
of its meeting of its stockholders to be held in connection with the Merger,    
will be in compliance with the Exchange Act and all relevant rules and          
regulations of the SEC and the FDIC and will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated or     
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Parent and the Company, in      
consultation with the other, shall employ professional proxy solicitors to      
assist it in contacting stockholders in connection with soliciting votes on the 
Merger.                                                                         

     SECTION 4.11 Registration of Parent Common Stock.  (a) The Parent shall, as
promptly as practicable following the preparation thereof, and in any event     
within 60 days after the date hereof, file the Proxy Statement-Prospectus with  
the SEC under the Exchange Act or Registration Statement, which includes the    
Proxy Statement-Prospectus on Form S-4 (including any pre-effective or          
post-effective amendments or supplements thereto) with the SEC under the        
Securities Act in connection with the transactions contemplated by this         
Agreement, and the Parent and the Company shall use all reasonable efforts to   
have the Registration Statement declared effective under the Securities Act as  
promptly as practicable after such filing. The Parent will advise the Company   
promptly after the Parent receives notice of the time when the Registration     
Statement has become effective or any supplement or amendment has been filed, of
the issuance of any stop order or the suspension of the qualification of the    
shares of capital stock issuable pursuant to the                                

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Registration Statement, or the initiation or threat of any proceeding for any   
such purpose, or of any request by the SEC for the amendment or supplement of   
the Registration Statement or for additional information. The Parent will       
provide the Company with as many copies of such Registration Statement and all  
amendments thereto promptly upon the filing thereof as the Company may          
reasonably request.                                                             

     (b) The Parent shall use its best efforts to obtain, prior to the effective
date of the Registration Statement, all necessary state securities laws or "blue
sky" permits and approvals required to carry out the transactions contemplated  
by this Agreement.                                                              

   (c) The Parent shall use its best efforts to list, prior to the Effective
Time, on the Nasdaq National Market, subject only to official notice of         
issuance, the shares of Parent Common Stock to be issued by the Parent in       
exchange for the shares of Company Common Stock.                                

SECTION 4.12 Affiliate Letters.  No later than the tenth business day 
following the mailing of the Proxy Statement-Prospectus referred to in Section  
4.10, the Company shall deliver to the Parent, after consultation with legal    
counsel, a list of the names and addresses of those persons it deems to be      
"Affiliates" of the Company within the meaning of Rule 145 promulgated under the
Securities Act and a letter in the form attached hereto as Exhibit C restricting
the disposition of shares of Parent Common Stock to be received by such         
Affiliate in exchange for such Affiliate's shares of Company Common Stock.      

     SECTION 4.13 Notification of Certain Matters.  Each party shall give prompt
notice to the others of: (a) any event or notice of, or other communication     
relating to, a default or event that, with notice or lapse of time or both,     
would become a default, received by it or any of its Subsidiaries subsequent to 
the date of this Agreement and prior to the Effective Time, under any contract  
material to the financial condition, properties, businesses or results of       
operations of the Company and its Subsidiaries taken as a whole to which the    
Company or any Subsidiary is a party or is subject; and (b) any event,          
condition, change or occurrence which individually or in the aggregate has, or  
which, so far as reasonably can be foreseen at the time of its occurrence, is   
reasonably likely to result in a Material Adverse Event. Each of the Company and
the Parent shall give prompt notice to the other party of any notice or other   
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this  
Agreement.                                                                      

SECTION 4.14 Advisory Board.  The Parent shall, promptly following the
Effective Time, cause all of the non-officer members of the Company's Board as  
of the date of this Agreement who are willing to so serve to be elected or      
appointed as members of an advisory board (the "Advisory Board") established by 
the Parent, the function of which shall be to advise the Parent with respect to 
deposit and lending activities in the Company's former market area and to       
maintain and develop customer relationships. The members of the Advisory Board  
who are willing to so serve shall be elected to serve a three year term         
beginning on the Effective Date. Each member of the Advisory Board who is not a 
director of the Parent and who is not an employee of the Parent shall receive a 
retainer fee for such service at an annual rate of $24,000, payable in monthly  
installments or in one lump sum at any time in advance at the option of the     
Parent. Within 30 days after the Effective Date, each member of the Advisory    
Board shall receive a grant of options to purchase 4,000 shares of the Parent   
Common Stock which subject to the terms of an option agreement to be provided by
the Parent and reasonably acceptable to the Company shall extend for a term of  
ten (10) years beginning on the Effective Date; shall be exercisable at any time
after the Effective Date at an exercise price per share equal to the closing    
sales price for a share of Parent Common Stock on the date of grant as reported 
in The Wall Street Journal and shall provide for reasonable registration rights.
At or prior to the Effective Time, Parent shall (i) take all corporate action   
necessary to reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of options granted in accordance with this     
Section and (ii) file a registration statement on Form S-8 (or any successor or 
other appropriate form) with respect to the Parent Common Stock subject to such 
options. Parent shall use its best efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus or    
prospectuses contained therein) for so long as such Options remain outstanding. 

  SECTION 4.15 Directors.  The Parent agrees to cause Mr. Gerard C. Keegan
and one other member of the Company's board of directors (on the date hereof)   
selected by the Company and acceptable to the Parent,                           

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who are willing so to serve ("Former Company Directors"), to be elected or      
appointed as directors of the Parent and Association at, or as promptly as      
practicable after, the Effective Time (such appointment or election of Former   
Company Directors to be as evenly distributed as possible among the classes of  
the Parent directors).                                                          

     SECTION 4.16 Indemnification; Directors' and Officers' Insurance.  (a) From
and after the Effective Time through the sixth anniversary of the Effective     
Date, the Parent agrees to indemnify and hold harmless each present and former  
director and officer of the Company or its Subsidiaries and each officer or     
employee of the Company or its Subsidiaries that is serving or has served as a  
director or trustee of another entity expressly at the Company's request or     
direction (each, an "Indemnified Party"), against any costs or expenses         
(including reasonable attorneys' fees), judgments, fines, losses, claims,       
damages or liabilities (collectively, "Costs") incurred in connection with any  
claim, action, suit, proceeding or investigation, whether civil, criminal,      
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time (including the transactions contemplated by this 
Agreement, including the entering into of the Stock Option Agreement), whether  
asserted or claimed prior to, at or after the Effective Time, and to advance any
such Costs to each Indemnified Party as they are from time to time incurred, in 
each case to the fullest extent then permitted under applicable law.            

  (b) Any Indemnified Party wishing to claim indemnification under Section
4.16(a), upon learning of any such claim, action, suit, proceeding or           
investigation, shall promptly notify the Parent thereof, but the failure to so  
notify shall not relieve the Parent of any liability it may have hereunder to   
such Indemnified Party if such failure does not materially and substantially    
prejudice the indemnifying party. In the event of any such claim, action, suit, 
proceeding or investigation, (i) the Parent shall have the right to assume the  
defense thereof with counsel reasonably acceptable to the Indemnified Party and 
the Parent shall not be liable to such Indemnified Party for any legal expenses 
of other counsel subsequently incurred by such Indemnified Party in connection  
with the defense thereof, except that if the Parent does not elect to assume    
such defense within a reasonable time or counsel for the Indemnified Party at   
any time advises that there are issues which raise conflicts of interest between
the Parent and the Indemnified Party, the Indemnified Party may retain counsel  
satisfactory to such Indemnified Party, and the Parent shall remain responsible 
for the reasonable fees and expenses of such counsel as set forth above, to be  
paid promptly as statements therefor are received; provided, however, that the  
Parent shall be obligated pursuant to this paragraph (b) to pay for only one    
firm of counsel for all Indemnified Parties in any one jurisdiction with respect
to any given claim, action, suit, proceeding or investigation unless the use of 
one counsel for such Indemnified Parties would present such counsel with a      
conflict of interest; (ii) the Indemnified Party will reasonably cooperate in   
the defense of any such matter; and (iii) the Parent shall not be liable for any
settlement effected by an Indemnified Party without its prior written consent,  
which consent may not be withheld unless such settlement is unreasonable in     
light of such claims, actions, suits, proceedings or investigations against, or 
defenses available to, such Indemnified Party.                                  

    (c) Parent shall pay all reasonable Costs, including attorneys' fees, that
may be incurred by any Indemnified Party in successfully enforcing the indemnity
and other obligations provided for in this Section 4.16 to the fullest extent   
permitted under applicable law. The rights of each Indemnified Party hereunder  
shall be in addition to any other rights such Indemnified Party may have under  
applicable law.                                                                 

  (d) For a period of six years after the Effective Time, the Parent shall
cause to be maintained in effect the current policies of directors' and         
officers' liability insurance maintained by the Company (provided that the      
Parent may substitute therefor policies with reputable and financially sound    
carriers of at least the same coverage and amount containing terms which are no 
less advantageous to the beneficiaries thereof); provided, however, that in no  
event shall the Parent be obligated to expend, in order to maintain or provide  
insurance coverage pursuant to this Subsection 4.16(d), any premium per annum in
excess of 200% of the amount of the annual premiums paid as of the date hereof  
by the Company for such insurance (the "Maximum Agreement"); provided, further, 
that if the amount of the annual premiums necessary to maintain or procure such 
insurance coverage exceeds the Maximum Amount, the Parent shall maintain the    
most advantageous policies of directors' and officers' insurance obtainable for 
an annual premium equal to the Maximum Amount; and provided, further, that      
officers and directors of the Company may be required to make                   

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application and provide customary representations and warranties to the Parent's
insurance carrier for the purpose of obtaining such insurance.                  

    SECTION 4.17 Transition Committee.  The Parent recognizes that the Company
has a talented group of officers and employees that will be important to the    
future growth of the combined companies. In recognition of the foregoing,       
immediately after the execution of this Agreement, the Parent shall form an     
Employee Merger Transition Committee consisting of Mr. George L. Engelke, Jr.   
and Mr. Gerard C. Keegan, who shall each serve as co-chairman, and such other   
persons, if any, as they shall mutually select. The Employee Merger Transition  
Committee shall have sole responsibility for all decisions affecting the        
employees of the Company and its Subsidiaries after the Merger.                 

SECTION 4.18 Series A ESOP Convertible Preferred Stock.  If the       
stockholders of the Company and the Parent have each approved the transactions  
contemplated hereby and all requisite regulatory approvals have been obtained,  
the Company, within 5 business days of receiving a notice (the "Redemptive      
Notice") from the Parent that it has waived all conditions to its obligations to
consummate the Merger, shall take all appropriate steps to call the Series A    
ESOP Convertible Preferred Stock for redemption as long as, as of the date of   
the Redemptive Notice the closing price of the Parent Common Stock is not less  
than $34.125; it being understood that there is no obligation to redeem the     
Series A Convertible Preferred Stock except as set forth in this Section 4.18.  

ARTICLE V 

CONDITIONS TO CONSUMMATION

SECTION 5.01  Conditions to Each Party's Obligations.  The respective 
obligations of each party to effect the Merger shall be subject to the          
fulfillment of the following conditions:                                        

  (a) this Agreement shall have been approved by the requisite vote of the
Company's stockholders and the Parent's stockholders in accordance with         
applicable law;                                                                 

     (b) all necessary regulatory or governmental approvals, consents or waivers
required to consummate the transactions contemplated hereby shall have been     
obtained and shall remain in full force and effect and all statutory waiting    
periods in respect thereof shall have expired; and all other consents, waivers  
and approvals of any third parties which are necessary to permit the            
consummation of the Merger and the other transactions contemplated hereby shall 
have been obtained or made except for those the failure to obtain would not have
a Material Adverse Effect (i) on the Company and its subsidiaries taken as a    
whole or (ii) on the Parent and its Subsidiaries taken as a whole. None of the  
approvals or waivers referred to herein shall contain any term or condition     
which would have a Material Adverse Effect on (x) the Company and its           
Subsidiaries taken as a whole or (y) the Parent and its Subsidiaries taken as a 
whole;                                                                          

    (c) no party hereto shall be subject to any order, decree or injunction of
a court or agency of competent jurisdiction which enjoins or prohibits the      
consummation of the Merger;                                                     

(d) no statute, rule or regulation, shall have been enacted, entered, 
promulgated, interpreted, applied or enforced by any governmental authority     
which prohibits, restricts or makes illegal consummation of the Merger;         

  (e) the Registration Statement shall have been declared effective by the
SEC and no proceedings shall be pending or threatened by the SEC to suspend the 
effectiveness of the Registration Statement; all required approvals by state    
securities or "blue sky" authorities with respect to the transactions           
contemplated by this Agreement shall have been obtained; and the shares of      
Parent Common Stock issuable pursuant to this Agreement shall have been approved
for listing on the Nasdaq National Market, subject to official notice of        
issuance; and                                                                   

 (f) the Parent shall have received the agreement referred to in Section
4.12 from each affiliate of the Company, and the letters from the three persons 
referred to in the last sentence of Section 4.03(b).                            

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SECTION 5.02  Conditions to the Obligations of the Parent and the     
Association Under this Agreement.  The obligations of the Parent and the        
Association to effect the Merger shall be further subject to the satisfaction of
the following additional conditions, any one or more of which may be waived by  
the Parent:                                                                     

   (a) each of the obligations of the Company required to be performed by it
at or prior to the Closing pursuant to the terms of this Agreement shall have   
been duly performed and complied with in all material respects and the          
representations and warranties of the Company contained in this Agreement shall 
be true and correct, subject to Sections 2.01 and 2.02, as of the date of this  
Agreement and as of the Effective Time as though made at and as of the Effective
Time (except as to any representation or warranty which specifically relates to 
an earlier date). The Parent shall have received a certificate to the foregoing 
effect signed by the president and the chief financial or principal accounting  
officer of the Company;                                                         

   (b) all action required to be taken by, or on the part of, the Company to
authorize the execution, delivery and performance of this Agreement and the     
consummation by the Company of the transactions contemplated hereby shall have  
been duly and validly taken by the Board of Directors and stockholders of the   
Company, and the Parent shall have received certified copies of the resolutions 
evidencing such authorization;                                                  

  (c) the Parent shall have received certificates (such certificates to be
dated as of a day as close as practicable to the date of the Closing) from      
appropriate authorities as to the good standing of the Company;                 

   (d) the Parent shall have received an opinion of Thacher Proffitt & Wood,
counsel to the Parent, dated as of the Effective Date in form and substance     
customary in transactions of the type contemplated hereby, and reasonably       
satisfactory to the Parent, substantially to the effect that on the basis of the
facts, representations and assumptions set forth in such opinion which are      
consistent with the state of facts existing at the Effective Time, the Merger   
will be treated for Federal income tax purposes as a reorganization within the  
meaning of Section 368(a) of the Code and that accordingly:                     

        (i) No gain or loss will be recognized by the Parent, the Association or
the Company as a result of the Merger;                                          

      (ii) Except to the extent of any cash received in lieu of a fractional
share interest in Parent Common Stock or of any Cash Consideration received, no 
gain or loss will be recognized by the stockholders of the Company who exchange 
their Company Stock for Parent Common Stock pursuant to the Merger;             

       (iii) The tax basis of the Parent Common Stock received by stockholders
who exchange their Company Common Stock for Parent Common Stock in the Merger   
will be the same as the tax basis of the Company Common Stock surrendered       
pursuant to the Merger, reduced by any amount allocable to a fractional share   
interest for which cash is received and by the amount of any Cash Consideration 
received and increased by any gain recognized on the exchange;                  

        (iv) The holding period of the Parent Stock received by each stockholder
in the Merger will include the holding period of the Company Common Stock       
exchanged therefor, provided that such stockholder held such Company Common     
Stock as a capital asset on the date of the Merger;                             

 (v) No gain or loss will be recognized by the stockholders of the
Company who exchange their Company Series B Preferred Stock solely for Parent   
Series A Preferred Stock pursuant to the Merger;                                

     (vi) The tax basis of the Parent Series A Preferred Stock received by
stockholders who exchange their Company Series B Preferred Stock solely for     
Parent Series A Preferred Stock in the Merger will be the same as the tax basis 
of the Company Series B Preferred Stock surrendered pursuant to the Merger; and 

        (vii) The holding period of the Parent Series A Preferred Stock received
by each stockholder in the Merger will include the holding period of the Company
Series B Preferred Stock exchanged therefor, provided that such stockholder held
such Company Series B Preferred Stock as a capital asset on the date of the     
Merger.                                                                         

    Such opinion may be based on, in addition to the review of such matters of
fact and law as Thacher Proffitt & Wood considers appropriate, (i)              
representations made at the request of Thacher Proffitt & Wood by               

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the Parent, the Association, the Company, stockholders of the Parent or the     
Company, or any combination of such persons and (ii) certificates provided at   
the request of Thacher Proffitt & Wood by officers of the Parent, the           
Association, the Company and other appropriate persons;                         

(e) the Company shall have caused to be delivered to the Parent "cold 
comfort" letters or letters of procedures from the Company's independent        
certified public accountants, dated (i) the date of the mailing of the Proxy    
Statement to the Company's stockholders and (ii) a date not earlier than five   
business days preceding the date of the Closing and addressed to the Parent,    
concerning such matters as are customarily covered in transactions of the type  
contemplated hereby;                                                            

     (f) the Parent shall have received all state securities laws and "blue sky"
permits and other authorizations necessary to consummate the transactions       
contemplated hereby; and                                                        

    (g) neither the Parent nor the Association shall have become an "Acquiring
Person" and no "Stock Acquisition Date" or "Distribution Date" shall have       
occurred under the Rights Agreement, and the rights reserved thereunder shall   
not have become distributable, unredeemable or exercisable.                     

    (h) The Company shall have provided to the trustee of the ESOP a notice of
its intention to redeem the Series A ESOP Convertible Preferred Stock, in       
accordance with the terms thereof, sufficiently in advance of the Closing Date  
to permit redemption prior to the Effective Time.                               

SECTION 5.03  Conditions to the Obligations of the Company.  The      
obligations of the Company to effect the Merger shall be further subject to the 
satisfaction of the following additional conditions, any one or more of which   
may be waived by the Company:                                                   

(a) each of the obligations of the Parent and the Association,        
respectively, required to be performed by it at or prior to the Closing pursuant
to the terms of this Agreement shall have been duly performed and complied with 
in all material respects and the representations and warranties of the Parent   
and the Association contained in this Agreement shall be true and correct,      
subject to Sections 2.01 and 2.02, as of the date of this Agreement and as of   
the Effective Time as though made at and as of the Effective Time (except as to 
any representation or warranty which specifically relates to an earlier date).  
The Company shall have received a certificate to the foregoing effect signed by 
the president and the chief financial officer of the Parent;                    

   (b) all action required to be taken by, or on the part of, the Parent and
the Association to authorize the execution, delivery and performance of this    
Agreement and the consummation by the Parent and the Association of the         
transactions contemplated hereby shall have been duly and validly taken by the  
Board of Directors and stockholders of the Parent, and the Company shall have   
received certified copies of the resolutions evidencing such authorization;     

   (c) the Company shall have received certificates (such certificates to be
dated as of a day as close as practicable to the date of the Closing) from      
appropriate authorities as to the good standing of the Parent;                  

(d) the Company shall have received an opinion of Sullivan & Cromwell,
counsel to the Company, dated as of the Effective Date, in form and substance   
customary in transactions of the type contemplated hereby, and reasonably       
satisfactory to the Company, substantially to the effect that on the basis of   
the facts, representations and assumptions set forth in such opinion which are  
consistent with the state of facts existing at the Effective Time, the Merger   
will be treated for Federal income tax purposes as a reorganization within the  
meaning of Section 368(a) of the Code and that accordingly:                     

        (i) No gain or loss will be recognized by the Parent, the Association or
the Company as a result of the Merger;                                          

      (ii) Except to the extent of any cash received in lieu of a fractional
share interest in Parent Common Stock or of any Cash Consideration received, no 
gain or loss will be recognized by the stockholders of the Company who exchange 
their Company Common Stock for Parent Common Stock pursuant to the Merger;      

    (iii) The tax basis of the Parent Stock received by stockholders who
exchange their Company Common Stock for Parent Common Stock in the Merger will  
be the same as the tax basis of the Company                                     

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Common Stock surrendered pursuant to the Merger, reduced by any amount allocable
to a fractional share interest for which cash is received and by the amount of  
any Cash Consideration received and increased by any gain recognized on the     
exchange;                                                                       

        (iv) The holding period of the Parent Stock received by each stockholder
in the Merger will include the holding period of the Company Common Stock       
exchanged therefor, provided that such stockholder held such Company Common     
Stock as a capital asset on the date of the Merger;                             

 (v) No gain or loss will be recognized by the shareholders of the
Company who exchange their Company Series B Preferred Stock solely for Parent   
Series A Preferred Stock pursuant to the Merger;                                

     (vi) The tax basis of the Parent Series A Preferred Stock received by
stockholders who exchange their Company Series B Preferred Stock solely for     
Parent Series A Preferred Stock in the Merger will be the same as the tax basis 
of the Company Series B Preferred Stock surrendered pursuant to the Merger;     

        (vii) The holding period of the Parent Series A Preferred Stock received
by each stockholder in the Merger will include the holding period of the Company
Series B Preferred Stock exchanged therefore, provided that such stockholder    
held such Company Series B Preferred Stock as a capital asset on the date of the
Merger.                                                                         

    Such opinion may be based on, in addition to the review of such matters of
fact and law as Sullivan & Cromwell considers appropriate, (i) representations  
made at the request of Sullivan & Cromwell by the Parent, the Association, the  
Company, stockholders of the Parent or the Company, or any combination of such  
persons and (ii) certificates provided at the request of Sullivan & Cromwell by 
officers of the Parent, the Association, the Company and other appropriate      
persons;                                                                        

(e) the Parent shall have caused to be delivered to the Company "cold 
comfort" letters or letters of procedures from the Parent's independent         
certified public accountants, dated (i) the date of the mailing of the Proxy    
Statement to the Parent's stockholders and (ii) a date not earlier than five    
business days preceding the date of the Closing and addressed to the Company,   
concerning such matters as are the customarily covered in transactions of the   
type contemplated hereby;                                                       

     (f) the Parent shall have filed with the Secretary of State of the State of
Delaware the amendment to the certificate of incorporation changing the par     
value of the shares of Parent Preferred Stock to $1.00 per share and the        
certificate of designations with respect to Parent Series B Preferred Stock and 
such document shall have become effective under the DGCL; and                   

     (g) No "Shares Acquisition Date" or "Distribution Date" shall have occurred
under the Parent Rights Agreement, and the rights reserved thereunder shall not 
have become distributable, unredeemable or exercisable.                         

ARTICLE VI

TERMINATION 

SECTION 6.01  Termination.  This Agreement may be terminated, and the 
Merger abandoned, at or prior to the Effective Date, either before or after its 
approval by the stockholders of the Company and the Parent:                     

  (a) by the mutual consent of the Parent and the Company, if the board of
directors of each so determines by vote of a majority of the members of its     
entire board;                                                                   

   (b) by the Parent or the Company, if its board of directors so determines
by vote of a majority of the members of its entire board, in the event of (i)   
the failure of the stockholders of the Company or the Parent, as the case may   
be, to approve the Agreement at its meeting called to consider such approval;   
provided, however, that the Company or the Parent, as the case may be, shall    
only be entitled to terminate the Agreement pursuant to this clause (i) if it   
has complied in all material respects with its obligations under Sections 4.09  
and 4.10, or (ii) a material breach by the other party hereto of any            
representation, warranty,                                                       

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covenant or agreement contained herein which causes the conditions set forth in 
Section 5.02(a) (in the case of termination by the Parent) and Section 5.03(a)  
(in the case of the termination by the Company) not to be satisfied and such    
breach is not cured within 25 business days after written notice of such breach 
is given to the party committing such breach by the other party; or which breach
is not capable of being cured by the date set forth in Section 6.01(d) or any   
extension thereof;                                                              

  (c) by the Parent or the Company by written notice to the other party if
either (i) any approval, consent or waiver of a governmental agency required to 
permit consummation of the transactions contemplated hereby shall have been     
denied or (ii) any governmental authority of competent jurisdiction shall have  
issued a final, unappealable order enjoining or otherwise prohibiting           
consummation of the transactions contemplated by this Agreement;                

   (d) by the Parent or the Company, if its board of directors so determines
by vote of a majority of the members of its entire board, in the event that the 
Merger is not consummated by March 31, 1998, unless the failure to so consummate
by such time is due to the breach of any representation, warranty or covenant   
contained in this Agreement by the party seeking to terminate; provided, that   
such date shall be extended for a period of 30 days following the Valuation     
Date, as such term is defined in Section 1.02(a)(iv), in the event the Company  
delivers the written notice referred to in Section 6.01(e); or                  

   (e) by the Company, if its board of directors so determines by a majority
vote of members of its entire board, at any time during the five-day period     
commencing with the Valuation Date, such termination to be effective on the 30th
day following such Valuation Date (the "Effective Termination Date"), if both of
the following conditions are satisfied:                                         

      (i) the Parent Market Value on such Valuation Date of shares of Parent
Common Stock shall be less than an amount equal to $30.30, adjusted as indicated
in the last sentence of this Section 6.01(e); and                               

        (ii) (A) the number (the "Parent Ratio") obtained by dividing the Parent
Market Value on such Valuation Date by $37.88 (the "Initial Parent Market       
Value") shall be less than (B) the number obtained by dividing the Final Index  
Price by the Initial Index Price and subtracting .15 from the quotient in this  
clause (ii)(B) (the "Index Ratio");                                             

subject, however, to the following three sentences. If the Company elects to    
exercise its termination right pursuant to this Section 6.01(e), it shall give  
prompt written notice to the Parent (provided that such notice of election to   
terminate may be withdrawn at any time prior to the Effective Termination Date).
During the seven-day period commencing with its receipt of such notice, the     
Parent shall have the option to increase the consideration to be received by the
holders of Company Common Stock hereunder, by adjusting the Stock Consideration 
to equal the lesser of (x) a number equal to a fraction, the numerator of which 
is $15.15 and the denominator of which is the Parent Market Value, and (y) a    
number equal to a fraction, the numerator of which is the Index Ratio multiplied
by .50 and the denominator of which is the Parent Ratio. If the Parent so elects
it shall give prompt written notice to the Company of such election and the     
revised Stock Consideration, whereupon no termination shall have occurred       
pursuant to this Section 6.01(e) and this Agreement shall remain in effect in   
accordance with its terms (except as the Stock Consideration shall have been so 
modified).                                                                      

  For purposes of this Section 6.01(e), the following terms shall have the
meanings indicated below:                                                       

      "Final Index Price" means the sum of the Final Prices for each company
comprising the Index Group multiplied by the appropriate weighting.             

        "Final Price," with respect to any company belonging to the Index Group,
means the average of the daily closing sales prices of a share of common stock  
of such company, as reported on the consolidated transaction reporting system   
for the market or exchange on which such common stock is principally traded,    
during the period of 30 trading days ending on the Valuation Date.              

  "Index Group" means the 15 financial institution holding companies
listed below, the common stock of all of which shall be publicly traded and as  
to which there shall not have been a publicly announced proposal at any time    
during the period beginning on the date of this Agreement and ending on the     
Valuation Date for any such company to be acquired. In the event that the common
stock of any such company ceases to                                             

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be publicly traded or a proposal to acquire any such company is announced at any
time during the period beginning on the date of this Agreement and ending on the
Valuation Date, such company will be removed from the Index Group, and the      
weights attributed to the remaining companies will be adjusted proportionately  
for purposes of determining the Final Index Price and the Initial Index Price.  
The 15 financial institution holding companies and the weights attributed to    
them are as follows:                                                            

                                                                [Download Table]

HOLDING COMPANY                                            WEIGHTING
---------------------------------------------------------  ---------
                                                                    
ALBANK Financial Corporation.............................      2.4% 
Bank United Corp.........................................      5.9% 
Charter One Financial....................................      8.6% 
Commercial Federal Corporation...........................      4.0% 
GreenPoint Financial Corp................................      8.8% 
Sovereign Bancorp, Inc...................................     11.8% 
First Financial Corp.....................................      6.8% 
North Fork Bancorporation Inc............................      6.0% 
Dime Bancorp,Inc.........................................     19.4% 
Long Island Bancorp, Inc.................................      4.5% 
New York Bancorp Inc.....................................      3.1% 
Peoples Heritage Finl Group..............................      5.2% 
RCSB Financial, Inc......................................      2.8% 
St. Paul Bancorp, Inc....................................      4.2% 
TCF Financial Corp.......................................      6.4% 

      "Initial Index Price" means the sum of each per share closing price of
the common stock of each company comprising the Index Group multiplied by the   
applicable weighting, as such prices are reported on the consolidated           
transactions reporting system for the market or exchange on which such common   
stock is principally traded on the trading day immediately preceding the public 
announcement of this Agreement.                                                 

 "Parent Market Value" shall have the meaning set forth in Section
1.02(a)(iv) hereof.                                                             

"Valuation Date" means the Valuation Date, as defined in Section
1.02(a)(iv) hereof.                                                             

If the Parent or any company belonging to the Index Group declares or effects a 
stock dividend, reclassification, recapitalization, split-up, combination,      
exchange of shares or similar transaction between the date of this Agreement and
the Valuation Date, the prices for the common stock of such company shall be    
appropriately adjusted for the purposes of applying this Section 6.01(e);       

(f) by the Parent or the Company if (i) the Board of Directors of the 
Company shall have withdrawn or adversely modified its approval or              
recommendation of this Agreement at a time when an Acquisition Transaction (as  
defined in Section 6.03(b)) has been proposed or (ii) the Board of Directors of 
the Parent shall have withdrawn or adversely modified its approval or           
recommendation of this Agreement or the Parent has not convened a meeting of    
stockholders at which a vote was taken to approve the transactions contemplated 
by the Merger prior to the termination of this Agreement pursuant to the terms  
hereof. In the event of such termination, the party referred to in clause (i) or
clause (ii), whichever is applicable, shall pay to the other party the          
termination fee of five million and 00/100 Dollars ($5,000,000) in cash on      
demand in recognition of the efforts, expenses and other opportunities foregone 
by the other party while structuring the Merger, and if the Company makes the   
payment as set forth herein, it shall have no further obligations to pay any    
termination fee pursuant to Section 6.03. Such payment shall have no effect on  
the ability of the Parent to exercise its then existing rights, if any, under   
the Option Agreement.                                                           

  SECTION 6.02  Effect of Termination.  In the event of the termination of
this Agreement by either the Parent or the Company, as provided above, this     
Agreement shall thereafter become void and, subject to the provisions of Section
8.02, there shall be no liability on the part of any party hereto or their      
respective officers or directors, except that any such termination shall be     
without prejudice to the rights of any party hereto                             

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arising out of the willful breach by any other party of any covenant or willful 
misrepresentation contained in this Agreement.                                  

    SECTION 6.03  Third Party Termination Fee.  In recognition of the efforts,
expenses and other opportunities foregone by the Parent while structuring the   
Merger, the parties agree that the Company shall pay to the Parent the          
termination fee of five million and 00/100 Dollars ($5,000,000) in cash on      
demand if, during a period of eighteen (18) months after the date hereof, any of
the following occurs:                                                           

    (a) the acquisition by any person other than the Parent or an affiliate of
the Parent of beneficial ownership of 20% or more of the then outstanding voting
power of the Company;                                                           

 (b) the Company or any of its Subsidiaries, without having received the
Parent's prior written consent, shall have entered into an agreement to engage  
in an Acquisition Transaction (as defined herein) with any person (the term     
"person" for purposes of this Agreement having the meaning assigned thereto in  
Sections 3(a)(9) and 13(d)(3) of the Exchange Act and the rules and regulations 
thereunder) other than the Parent or any of its Subsidiaries or the Board of    
Directors of the Company shall have recommended that the stockholders of the    
Company approve or accept any Acquisition Transaction with any person other than
the Parent or any of its Subsidiaries. For purposes of this Agreement,          
"Acquisition Transaction" shall mean (x) a merger or consolidation, or any      
similar transaction, involving the Company, (y) a purchase, lease or other      
acquisition of all or substantially all of the assets of the Company or (z) a   
purchase or other acquisition (including by way of merger, consolidation, share 
exchange or otherwise) of securities representing 20% or more of the voting     
power of the Company; provided, that the term "Acquisition Transaction" does not
include any internal merger or consolidation involving only the Company and/or  
its Subsidiaries; or                                                            

   (c) after a bona fide proposal is made by a third party to the Company or
its stockholders to engage in an Acquisition Transaction, (i) the Company shall 
have breached any covenant or obligation contained in the Agreement and such    
breach would entitle the Parent to terminate the Agreement or (ii) the holders  
of Company stock shall not have approved the Agreement at the meeting of such   
stockholders held for the purpose of voting on the Agreement, or such meeting   
shall not have been held or shall have been canceled prior to termination of the
Agreement or (iii) the Company's Board of Directors shall have withdrawn or     
modified in a manner adverse to the Parent the recommendation of the Company's  
Board of Directors with respect to the Agreement.                               

Any fee payable to the Parent pursuant to this Section 6.03 or Section
6.01(f) shall be reduced dollar for dollar (but shall not be reduced to a       
negative number) to the extent that the Total Profit (as defined in the Option  
Agreement) exceeds $10,000,000. Notwithstanding the foregoing, the Company shall
not be obligated to pay to the Parent such termination fees in the event that   
(i) the Company or Parent validly terminate this Agreement pursuant to Section  
6.01(a), 6.01(c) or 6.01(b)(i) if the stockholders of the Parent fail to approve
the transactions contemplated by this Agreement, (ii) the Parent shall have     
received the termination fee set forth in Section 6.01(f), (iii) the Company    
terminates this Agreement pursuant to Section 6.01(b)(ii) or 6.01(e) or (iv) the
Merger is terminated under Section 6.01(d) as a result of the failure to satisfy
the conditions set forth in Section 5.02(h).                                    

ARTICLE VII 

CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME

SECTION 7.01 Effective Date and Effective Time.  The closing of the   
transactions contemplated hereby shall take place at the offices of Thacher     
Proffitt & Wood, Two World Trade Center, New York, New York 10048, on such date 
(the "Closing Date") and at such time as the Parent reasonably selects that is  
not later than the last business day of the month in which the expiration of the
last applicable waiting period in connection with approvals of governmental     
authorities shall occur and all conditions to the consummation of this Agreement
are satisfied or waived, or on such earlier or later date as may be agreed by   
the parties. On the Closing Date, the Association and the Company shall execute 
articles of merger in accordance with all appropriate legal requirements and    
shall be filed as required by law, and the Merger provided for herein shall     
become effective upon such filing or on such date as may be specified in such   
articles of merger. The date of                                                 

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such filing or such later effective date is herein called the "Effective Date." 
The "Effective Time" of the Merger shall be as set forth in such articles of    
merger.                                                                         

SECTION 7.02 Deliveries at the Closing.  Subject to the provisions of 
Articles V and VI, on the Closing Date there shall be delivered to the Parent   
and the Company the documents and instruments required to be delivered under    
Article V.                                                                      

ARTICLE VIII

OTHER MATTERS 

SECTION 8.01 Certain Definitions; Interpretation.  As used in this    
Agreement, the following terms shall have the meanings indicated:               

       "material" means material to the Parent or the Company (as the case may
be) and its respective subsidiaries, taken as a whole.                          

        "person" includes an individual, corporation, limited liability company,
partnership, association, trust or unincorporated organization.                 

When a reference is made in this Agreement to Sections, Exhibits or   
Schedules, such reference shall be to a Section of, Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings        
contained in this Agreement are for ease of reference only and shall not affect 
the meaning or interpretation of this Agreement. Whenever the words "include",  
"includes", or "including" are used in this Agreement, they shall be deemed     
followed by the words "without limitation." Any singular term in this Agreement 
shall be deemed to include the plural, and any plural term the singular. Any    
reference to gender in this Agreement shall be deemed to any other gender.      

    SECTION 8.02 Survival.  Only those agreements and covenants of the parties
that are by their terms applicable in whole or in part after the Effective Time,
including without limitation Sections 4.03, 4.04(a), 4.14, 4.15, 4.16, 4.17 and 
8.06 of this Agreement, shall survive the Effective Time. All other             
representations, warranties, agreements and covenants shall be deemed to be     
conditions of the Agreement and shall not survive the Effective Time. If the    
Agreement shall be terminated, the agreements of the parties in the last three  
sentences of Section 4.04 and Section 8.06 shall survive such termination.      

     SECTION 8.03 Waiver; Amendment.  Prior to the Effective Time, any provision
of this Agreement may be: (i) waived in writing by the party benefitted by the  
provision; or (ii) amended or modified at any time (including the structure of  
the transaction) by an agreement in writing between the parties hereto except   
that, after the vote by the stockholders of the Company or the Parent, no       
amendment may be made that would reduce the aggregate Merger Consideration or   
contravene applicable New York or federal banking laws, rules and regulations.  

    SECTION 8.04 Counterparts.  This Agreement may be executed in counterparts
each of which shall be deemed to constitute an original, but all of which       
together shall constitute one and the same instrument.                          

SECTION 8.05 Governing Law.  This Agreement shall be governed by, and 
interpreted in accordance with, the laws of the State of New York, without      
regard to conflicts of laws principles.                                         

SECTION 8.06 Expenses.  Except as provided in Section 6.03, each party
hereto will bear all expenses incurred by it in connection with this Agreement  
and the transactions contemplated hereby.                                       

  SECTION 8.07 Notices.  All notices, requests, acknowledgements and other
communications hereunder to a party shall be in writing and shall be deemed to  
have been duly given when delivered by hand, overnight courier or facsimile     
transmission (confirmed in writing) to such party at its address or facsimile   
number set forth below or such other address or facsimile transmission as such  
party may specify by notice to the other party hereto.                          

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If to the Company, to:                                                

The Greater New York Savings Bank                   

One Penn Plaza                                      

New York, New York 10119                            

Facsimile: (212) 613-4195                           

Attention: Gerard C. Keegan                         

Chairman, President and Chief     

Executive Officer                 

With copies to:                                                       

Sullivan & Cromwell                                 

125 Broad Street                                    

New York, New York 10004                            

Facsimile: (212) 558-3345                           

Attention:Mark J. Menting, Esq.                     

and                               

Sonnenschein Nath & Rosenthal                       

1221 Avenue of the Americas                         

New York, New York 10020                            

Facsimile: (212) 391-1247                           

Attention: Robert E. Curry, Jr., Esq.               

If to the Parent or the Association, to:                              

Astoria Financial Corporation                       

One Astoria Federal Plaza                           

Lake Success, New York 11042-1805                   

Facsimile: (516) 327-7860                           

Attention:Mr. George L. Engelke, Jr.                

   President and Chief Executive Officer

With copies to:                                                 

Thacher Proffitt & Wood                             

Two World Trade Center                              

New York, New York 10048                            

Facsimile: (212) 912-7751                           

Attention: Omer S. J. Williams, Esq.                

SECTION 8.08 Entire Agreement; etc.  This Agreement, together with the
Option Agreement, the Disclosure Letters and the Confidentiality Agreements,    
represents the entire understanding of the parties hereto with reference to the 
transactions contemplated hereby and supersedes any and all other oral or       
written agreements heretofore made. All terms and provisions of the Agreement   
shall be binding upon and shall inure to the benefit of the parties hereto and  
their respective successors and assigns. Except for Sections 1.09(b),           
4.03(b)(ii), 4.14, 4.15 and 4.16, nothing in this Agreement is intended to      
confer upon any other person any rights or remedies of any nature whatsoever    
under or by reason of this Agreement.                                           

   SECTION 8.09 Assignment.  This Agreement may not be assigned by any party
hereto without the written consent of the other parties.                        

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 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above   
written.                                                                        

                                 ASTORIA FINANCIAL CORPORATION

                                 By:/s/ GEORGE L. ENGELKE, JR.

                                            ------------------------------------

                              George L. Engelke, Jr.

                                     President and Chief Executive
                 Officer

                                    ASTORIA FEDERAL SAVINGS AND LOAN
               ASSOCIATION

                                 By:/s/ GEORGE L. ENGELKE, JR.

                                            ------------------------------------

                              George L. Engelke, Jr.

                                     President and Chief Executive
                 Officer

                                     THE GREATER NEW YORK SAVINGS BANK

                            By: /s/ GERARD C. KEEGAN

                                            ------------------------------------

                        Gerard C. Keegan

                                         Chairman, President and Chief
                             Executive Officer

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                                                                      APPENDIX B

THE TRANSFER OF THIS AGREEMENT IS 
SUBJECT TO CERTAIN PROVISIONS CONTAINED 
HEREIN AND MAY BE SUBJECT TO TRANSFER 
RESTRICTIONS UNDER
FEDERAL AND STATE BANKING LAW 

STOCK OPTION AGREEMENT

  STOCK OPTION AGREEMENT, dated as of March 29, 1997 (the "Agreement"), by
and between The Greater New York Savings Bank, a New York chartered stock       
savings bank ("Issuer"), and Astoria Financial Corporation, a Delaware          
corporation ("Grantee").                                                        

RECITALS

A. The Plan.  Grantee, Issuer and the Association have entered into an
Agreement and Plan of Merger, dated as of March 29, 1997 (the "Plan"), providing
for, among other things, the merger of Issuer with and into a wholly-owned      
subsidiary of Grantee, with such subsidiary being the surviving corporation.    

B. Condition to Plan.  As a condition and an inducement to Grantee's  
execution and delivery of the Plan, Grantee has required that Issuer agree, and 
Issuer has agreed, to grant Grantee the Option (as hereinafter defined).        

NOW, THEREFORE, in consideration of the foregoing and the respective  
representations, warranties, covenants and agreements set forth herein and in   
the Plan, and intending to be legally bound hereby, Issuer and Grantee agree as 
follows:                                                                        

    1. Defined Terms.  Capitalized terms which are used but not defined herein
shall have the meanings ascribed to such terms in the Plan.                     

    2. Grant of Option.  Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 2,721,536 shares of common stock, par value $1.00 per share ("Issuer      
Common Stock"), of Issuer (as adjusted as set forth herein, the "Option Shares,"
which shall include the Option Shares before and after any transfer of such     
Option Shares, but in no event shall the number of Option Shares for which this 
Option is exercisable exceed 19.9% of the issued and outstanding shares of      
Issuer Common Stock), at a purchase price per Option Share (as adjusted as set  
forth herein, the "Purchase Price") equal to $17.875. Each Option Share issued  
upon exercise of the Option shall be accompanied by the related preferred share 
purchase right ("Company Rights") issued pursuant to the Rights Agreement       
between the Company and The Chase Manhattan Bank (as successor in interest to   
Manufacturers Hanover Trust Company), dated as of June 14, 1990, as amended     
("Company Rights Agreement").                                                   

3. Exercise of Option.  (a) Provided that (i) Grantee or Holder (as   
hereinafter defined), as applicable, shall not be in material breach of the     
agreements or covenants contained in this Agreement or the Plan, and (ii) no    
preliminary or permanent injunction or other order against the delivery of      
shares covered by the Option issued by any court of competent jurisdiction in   
the United States shall be in effect, the Holder may exercise the Option, in    
whole or in part, at any time and from time to time, following the occurrence of
a Purchase Event (as hereinafter defined); provided that the Option shall       
terminate and be of no further force or effect upon the earliest to occur of (A)
the Effective Time, (B) termination of the Plan in accordance with the terms    
thereof prior to the occurrence of a Purchase Event or a Preliminary Purchase   
Event other than a termination thereof by Grantee pursuant to Section           
6.01(b)(ii) of the Plan (a termination of the Plan by Grantee pursuant to       
Section 6.01(b)(ii) of the Plan, being referred to herein as a "Default         
Termination"), (C) 15 months after a Default Termination or (D) 15 months after 
termination of the Plan (other than a Default Termination) following the        
occurrence of a Purchase Event or a Preliminary Purchase Event;                 

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provided, however, that any purchase of shares upon exercise of the Option shall
be subject to compliance with applicable law. The term "Holder" shall mean the  
holder or holders of the Option from time to time, and which initially is       
Grantee. The rights set forth in Section 8 of this Agreement shall terminate    
when the right to exercise the Option terminates (other than as a result of a   
complete exercise of the Option) as set forth herein.                           

   (b) As used herein, a "Purchase Event" means any of the following events:

  (i) Without Grantee's prior written consent, Issuer shall have
recommended, publicly proposed or publicly announced an intention to  
authorize, recommend or propose, or Issuer shall have entered into an 
     agreement with any person (other than Grantee or any subsidiary of Grantee)
to effect (A) a merger, consolidation or similar transaction involving
Issuer or any of its significant subsidiaries, (B) the disposition, by
    sale, lease, exchange or otherwise, of assets or deposits of Issuer or any
    of its significant subsidiaries representing in either case 25% or more of
   the consolidated assets or deposits of Issuer and its subsidiaries or (C)
   the issuance, sale or other disposition by Issuer of (including by way of
merger, consolidation, share exchange or any similar transaction)     
     securities representing 25% or more of the voting power of Issuer or any of
  its significant subsidiaries, other than, in the case of (A) or (C), any
transaction involving Issuer or any of its significant subsidiaries in
     which the voting securities of Issuer outstanding immediately prior thereto
   continue to represent (by either remaining outstanding or being converted
     into the voting securities of the surviving entity of any such transaction)
   at least 65% of the combined voting power of the voting securities of the
Issuer or the surviving entity outstanding immediately after the      
consummation of such transaction (provided any such transaction is not
violative of the Plan) (each of (A), (B) or (C), an "Acquisition      
Transaction"); or                                                     

     (ii) Any person (other than Grantee or any subsidiary of Grantee)
   shall have acquired beneficial ownership (as such term is defined in Rule
13d-3, promulgated under the Securities and Exchange Act of 1934 (the 
     "Exchange Act") of, or the right to acquire beneficial ownership of, or any
    "group" (as such term is defined in Section 13(d)(3) of the Exchange Act),
other than a group of which Grantee or any subsidiary of Grantee is a 
    member, shall have been formed which beneficially owns or has the right to
    acquire beneficial ownership of, 20% or more of the voting power of Issuer
or any of its significant subsidiaries.                               

(c) As used herein, a "Preliminary Purchase Event" means any of the   
following events:                                                               

          (i) Any person (other than Grantee or any subsidiary of Grantee) shall
  have commenced (as such term is defined in Rule 14d-2, promulgated under
  the Exchange Act) or shall have filed a registration statement under the
     Securities Act of 1933, as amended (the "Securities Act"), with respect to,
  a tender offer or exchange offer to purchase any shares of Issuer Common
    Stock such that, upon consummation of such offer, such person would own or
control 20% or more of the voting power of Issuer (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer,"        
respectively); or                                                     

 (ii) The stockholders shall not have approved the Plan by the
  requisite vote at the stockholders meeting of the Issuer called for that
   purpose ("Company Meeting"), the Company Meeting shall not have been held
  or shall have been canceled prior to termination of the Plan or Issuer's
    Board of Directors shall have withdrawn or modified in a manner adverse to
   Grantee the recommendation of Issuer's Board of Directors with respect to
     the Plan, in each case after it shall have been publicly announced that any
 person (other than Grantee or any subsidiary of Grantee) shall have (A)
    made, or disclosed an intention to make, a bona fide proposal to engage in
an Acquisition Transaction, (B) commenced a Tender Offer or filed a   
     registration statement under the Securities Act with respect to an Exchange
    Offer or (C) filed an application (or given a notice), whether in draft or
   final form, under the Home Owners' Loan Act of 1933, as amended, the Bank
 Holding Company Act, as amended, the Bank Merger Act, as amended or the
   Change in Bank Control Act of 1978, as amended, for approval to engage in
an Acquisition Transaction; or                                        

      (iii) Any person (other than Grantee or any subsidiary of Grantee)
shall have made a bona fide proposal to Issuer or its stockholders by 
public announcement, or written communication that is or becomes the  
   subject of public disclosure, to engage in an Acquisition Transaction; or

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   (iv) After a proposal is made by a third party to Issuer or its
   stockholders to engage in an Acquisition Transaction, or such third party
states its intention to the Issuer to make such a proposal if the Plan
terminates, Issuer shall have breached any representation, warranty,  
   covenant or agreement contained in the Plan and such breach would entitle
     Grantee to terminate the Plan under Section 6.01(b) thereof (without regard
to the cure period provided for therein unless such cure is promptly  
  effected without jeopardizing consummation of the Merger pursuant to the
terms of the Plan).                                                   

As used in this Agreement, the term "person" shall have the meaning   
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.                 

  (d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Preliminary Purchase Event or Purchase Event, it being understood that the  
giving of such notice by Issuer shall not be a condition to the right of Holder 
to exercise the Option.                                                         

 (e) In the event Holder wishes to exercise the Option, it shall send to
Issuer a written notice (the "Stock Exercise Notice," the date of which being   
herein referred to as the "Notice Date") specifying (i) the total number of     
Option Shares it intends to purchase pursuant to such exercise and (ii) a place 
and date not earlier than three business days nor later than 15 business days   
from the Notice Date for the closing (the "Closing") of such purchase (the      
"Closing Date"); provided that the first notice of exercise shall be sent to    
Issuer within 180 days after the first Purchase Event of which Grantee has been 
notified. If prior notification to or approval of any Regulatory Authority is   
required in connection with any such purchase, Issuer shall cooperate with the  
Holder in the filing of the required notice of application for approval and the 
obtaining of such approval, and the Closing shall occur immediately following   
such regulatory approvals and any mandatory waiting periods. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.            

    4. Payment and Delivery of Certificates.  (a) On each Closing Date, Holder
shall (i) pay to Issuer, in immediately available funds by wire transfer to a   
bank account designated by Issuer, an amount equal to the Purchase Price        
multiplied by the number of Option Shares to be purchased on such Closing Date  
and (ii) present and surrender this Agreement to the Issuer at the address of   
the Issuer specified in Section 12(f) of this Agreement.                        

(b) At each Closing, simultaneously with the delivery of immediately  
available funds and surrender of this Agreement as provided in Section 4(a) of  
this Agreement, (i) Issuer shall deliver to Holder (A) a certificate or         
certificates representing the Option Shares to be purchased at such Closing,    
which Option Shares shall be free and clear of all Liens (as defined in the     
Plan) and subject to no preemptive rights, and (B) if the Option is exercised in
part only, an executed new agreement with the same terms as this Agreement      
evidencing the right to purchase the balance of the shares of Issuer Common     
Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a letter   
agreeing that Holder shall not offer to sell or otherwise dispose of such Option
Shares in violation of applicable federal and state law or of the provisions of 
this Agreement.                                                                 

 (c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be endorsed  
with a restrictive legend which shall read substantially as follows:            

 THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT 
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF MARCH 29, 1997. A COPY OF  
SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT
BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.                                    

It is understood and agreed that the portion of the above legend relating to the
Securities Act shall be removed by delivery of substitute certificate(s) without
such legend if Holder shall have delivered to Issuer a copy of a letter from the
staff of the Securities Exchange Commission (the "SEC"), or an opinion of       
counsel in form and substance reasonably satisfactory to Issuer and its counsel,
to the effect that such legend is not required for purposes of the Securities   
Act.                                                                            

   (d) Upon the giving by Holder to Issuer of the written notice of exercise
of the Option provided for under Section 3(e) of this Agreement, the tender of  
the applicable purchase price in immediately available                          

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funds and the tender of this Agreement to Issuer, Holder shall be deemed to be  
the holder of record of the shares of Issuer Common Stock issuable upon such    
exercise, notwithstanding that the stock transfer books of Issuer shall then be 
closed or that certificates representing such shares of Issuer Common Stock     
shall not then be actually delivered to Holder. Issuer shall pay all expenses,  
and any and all United States federal, state and local taxes and other charges  
that may be payable in connection with the preparation, issuance and delivery of
stock certificates under this Section 4 in the name of Holder or its assignee,  
transferee or designee.                                                         

(e) Issuer agrees (i) that it shall at all times maintain, free from  
preemptive rights, sufficient authorized but unissued or treasury shares of     
Issuer Common Stock so that the Option may be exercised without additional      
authorization of Issuer Common Stock after giving effect to all other options,  
warrants, convertible securities and other rights to purchase Issuer Common     
Stock, (ii) that it will not, by charter amendment or through reorganization,   
consolidation, merger, dissolution or sale of assets, or by any other voluntary 
act, avoid or seek to avoid the observance or performance of any of the         
covenants, stipulations or conditions to be observed or performed hereunder by  
Issuer, (iii) promptly to take all action as may from time to time be required  
(including (A) complying with all premerger notification, reporting and waiting 
period requirements and (B) in the event prior approval of or notice to any     
Regulatory Authority is necessary before the Option may be exercised,           
cooperating fully with Holder in preparing such applications or notices and     
providing such information to such Regulatory Authority as it may require) in   
order to permit Holder to exercise the Option and Issuer duly and effectively to
issue shares of the Issuer Common Stock pursuant hereto and (iv) promptly to    
take all action provided herein to protect the rights of Holder against         
dilution.                                                                       

    5. Representations and Warranties of Issuer.  Issuer hereby represents and
warrants to Grantee (and Holder, if different than Grantee) as follows:         

 (a) Corporate Authority.  Issuer has full corporate power and
authority to execute and deliver this Agreement and to consummate the 
transactions contemplated hereby; the execution and delivery of this  
     Agreement and the consummation of the transactions contemplated hereby have
   been duly and validly authorized by the Board of Directors of Issuer, and
no other corporate proceedings on the part of Issuer are necessary to 
     authorize this Agreement or to consummate the transactions so contemplated;
    this Agreement has been duly and validly executed and delivered by Issuer.

         (b) Beneficial Ownership.  To the best knowledge of Issuer, as of the
     date of this Agreement, no person or group has beneficial ownership of more
than 15% of the issued and outstanding shares of Issuer Common Stock. 

          (c) Shares Reserved for Issuance; Capital Stock.  Issuer has taken all
     necessary corporate action to authorize and reserve and permit it to issue,
and at all times from the date hereof through the termination of this 
 Agreement in accordance with its terms, will have reserved for issuance
 upon the exercise of the Option, that number of shares of Issuer Common
   Stock equal to the maximum number of shares of Issuer Common Stock at any
     time and from time to time purchasable upon exercise of the Option, and all
     such shares, upon issuance pursuant to the Option, will be duly authorized,
  validly issued, fully paid and nonassessable, and will be delivered free
    and clear of all claims, liens, encumbrances and security interests (other
 than those created by this Agreement) and not subject to any preemptive
rights.                                                               

       (d) No Violations.  The execution, delivery and performance of this
   Agreement does not and will not, and the consummation by Issuer of any of
    the transactions contemplated hereby will not, constitute or result in (i)
a breach or violation of, or a default under, its certificate of      
    incorporation or bylaws, or the comparable governing instruments of any of
     its subsidiaries, or (ii) a breach or violation of, or a default under, any
     agreement, lease, contract, note, mortgage, indenture, arrangement or other
    obligation of it or any of its subsidiaries (with or without the giving of
 notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or       
   non-governmental permit or license to which it or any of its subsidiaries
   is subject, that would, in any case, give any other person the ability to
     prevent or enjoin Issuer's performance under this Agreement in any material
respect.                                                              

  6. Representations and Warranties of Grantee.  Grantee hereby represents
and warrants to Issuer that Grantee has full corporate power and authority to   
enter into this Agreement and, subject to obtaining the                         

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approvals referred to in this Agreement, to consummate the transactions         
contemplated by this Agreement; the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly         
authorized by all necessary corporate action on the part of Grantee; and this   
Agreement has been duly executed and delivered by Grantee.                      

     7. Adjustment upon Changes in Issuer Capitalization, Etc.  (a) In the event
of any change in Issuer Common Stock by reason of a stock dividend, stock split,
split-up, recapitalization, combination, exchange of shares, exercise of the    
Company Rights or similar transaction, the type and number of shares or         
securities subject to the Option, and the Purchase Price therefor, shall be     
adjusted appropriately, and proper provision shall be made in the agreements    
governing any such transaction so that Holder shall receive, upon exercise of   
the Option, the number and class of shares or other securities or property that 
Holder would have received in respect of Issuer Common Stock if the Option had  
been exercised immediately prior to such event, or the record date therefor, as 
applicable. If any additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described in the first  
sentence of this Section 7(a), upon exercise of any option to purchase Issuer   
Common Stock outstanding on the date hereof or upon conversion into Issuer      
Common Stock of any convertible security of Issuer outstanding on the date      
hereof), the number of shares of Issuer Common Stock subject to the Option shall
be adjusted so that, after such issuance, it, together with any shares of Issuer
Common Stock previously issued pursuant hereto, equals 19.9% of the number of   
shares of Issuer Common Stock then issued and outstanding, without giving effect
to any shares subject to or issued pursuant to the Option. No provision of this 
Section 7 shall be deemed to affect or change, or constitute authorization for  
any violation of, any of the covenants or representations in the Plan.          

(b) In the event that Issuer shall enter into an agreement (i) to     
consolidate with or merge into any person, other than Grantee or one of its     
subsidiaries, and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any person, other than Grantee or  
one of its subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then         
outstanding shares of Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other person or cash or any other    
property, or the outstanding shares of Issuer Common Stock immediately prior to 
such merger shall after such merger represent less than 50% of the outstanding  
shares and share equivalents of the merged company, or (iii) to sell or         
otherwise transfer all or substantially all of its assets or deposits to any    
person, other than Grantee or one of its subsidiaries, then, and in each such   
case, the agreement governing such transaction shall make proper provisions so  
that the Option shall, upon the consummation of any such transaction and upon   
the terms and conditions set forth herein, be converted into, or exchanged for, 
an option (the "Substitute Option"), at the election of Holder, of either (A)   
the Acquiring Corporation (as hereinafter defined), (B) any person that controls
the Acquiring Corporation or (C) in the case of a merger described in clause    
(ii), Issuer (such person being referred to as "Substitute Option Issuer").     

(c) The Substitute Option shall have the same terms as the Option,    
provided, that, if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no 
event less advantageous to Holder. Substitute Option Issuer shall also enter    
into an agreement with Holder in substantially the same form as this Agreement, 
which shall be applicable to the Substitute Option.                             

     (d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock (as hereinafter defined) as is equal to the Assigned    
Value (as hereinafter defined) multiplied by the number of shares of Issuer     
Common Stock for which the Option was theretofore exercisable, divided by the   
Average Price (as hereinafter defined). The exercise price of the Substitute    
Option per share of Substitute Common Stock (the "Substitute Option Price")     
shall then be equal to the Purchase Price multiplied by a fraction in which the 
numerator is the number of shares of Issuer Common Stock for which the Option   
was theretofore exercisable and the denominator is the number of shares of the  
Substitute Common Stock for which the Substitute Option is exercisable.         

(e) The following terms have the meanings indicated:                  

          (i) "Acquiring Corporation" shall mean (A) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than   
Issuer), (B) Issuer in a merger in which Issuer is the continuing     

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   or surviving person, or (C) the transferee of all or substantially all of
  Issuer's assets (or a substantial part of the assets of its subsidiaries
taken as a whole).                                                    

         (ii) "Substitute Common Stock" shall mean the shares of capital stock
   (or similar equity interest) with the greatest voting power in respect of
the election of directors (or persons similarly responsible for the   
 direction of the business and affairs) of the Substitute Option Issuer.

      (iii) "Assigned Value" shall mean the highest of (A) the price per
   share of Issuer Common Stock at which a Tender Offer or an Exchange Offer
   therefor has been made, (B) the price per share of Issuer Common Stock to
  be paid by any third party pursuant to an agreement with Issuer, (C) the
highest closing price for shares of Issuer Common Stock within the    
     six-month period immediately preceding the consolidation, merger or sale in
question and (D) in the event of a sale of all or substantially all of
  Issuer's assets or deposits, an amount equal to (x) the sum of the price
    paid in such sale for such assets (and/or deposits) and the current market
value of the remaining assets of Issuer, as determined by a nationally
   recognized investment banking firm selected by Holder, divided by (y) the
  number of shares of Issuer Common Stock outstanding at such time. In the
  event that a Tender Offer or an Exchange Offer is made for Issuer Common
Stock or an agreement is entered into for a merger or consolidation   
 involving consideration other than cash, the value of the securities or
    other property issuable or deliverable in exchange for Issuer Common Stock
shall be determined by a nationally recognized investment banking firm
selected by Holder.                                                   

        (iv) "Average Price" shall mean the average closing price of a share
of Substitute Common Stock for the one year immediately preceding the 
    consolidation, merger or sale in question, but in no event higher than the
     closing price of the shares of Substitute Common Stock on the day preceding
     such consolidation, merger or sale; provided, that, if Issuer is the issuer
    of the Substitute Option, the Average Price shall be computed with respect
     to a share of common stock issued by Issuer, the person merging into Issuer
or by any company which controls such person, as Holder may elect.    

 (f) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the    
shares of Substitute Common Stock outstanding prior to exercise of the          
Substitute Option. In the event that the Substitute Option would be exercisable 
for more than 19.9% of the aggregate of the shares of Substitute Common Stock   
but for the limitation in the first sentence of this Section 7(f), Substitute   
Option Issuer shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in the   
first sentence of this Section 7(f) over (ii) the value of the Substitute Option
after giving effect to the limitation in the first sentence of this Section     
7(f). This difference in value shall be determined by a nationally recognized   
investment banking firm selected by Holder.                                     

   (g) Issuer shall not enter into any transaction described in Section 7(b)
of this Agreement unless the Acquiring Corporation and any person that controls 
the Acquiring Corporation assume in writing all the obligations of Issuer       
hereunder and take all other actions that may be necessary so that the          
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the holders of the other   
shares of common stock issued by Substitute Option Issuer are not entitled to   
exercise any rights by reason of the issuance or exercise of the Substitute     
Option and the shares of Substitute Common Stock are otherwise in no way        
distinguishable from or have lesser economic value (other than any diminution in
value resulting from the fact that the shares Substitute Common Stock are       
restricted securities, as defined in Rule 144, promulgated under the Securities 
Act ("Rule 144"), or any successor provision) than other shares of common stock 
issued by Substitute Option Issuer).                                            

(h) Notwithstanding anything herein to the contrary and in lieu of any
other adjustments provided for herein, in the event that the Issuer completes a 
reorganization involving the formation of a holding company for the Issuer, the 
agreement governing such transaction shall make proper provisions so that the   
Option shall, upon the consummation of any such transaction and upon the terms  
and conditions set forth herein, be converted into, or exchanged for, an option 
of such holding company with terms substantially identical to those contained   
herein.                                                                         

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     8. Repurchase at the Option of Holder.  (a) Subject to the last sentence of
Section 3(a) of this Agreement, at the request of Holder at any time commencing 
upon the first occurrence of a Repurchase Event (as defined in Section 8(d)     
hereof) and ending 12 months immediately thereafter, Issuer shall repurchase    
from Holder (i) the Option and (ii) all shares of Issuer Common Stock purchased 
by Holder pursuant hereto with respect to which Holder then has beneficial      
ownership. The date on which Holder exercises its rights under this Section 8 is
referred to as the "Request Date." Such repurchase shall be at an aggregate     
price (the "Section 8 Repurchase Consideration") equal to the sum of:           

     (i) The aggregate Purchase Price paid by Holder for any shares of
   Issuer Common Stock acquired pursuant to the Option with respect to which
Holder then has beneficial ownership;                                 

    (ii) The excess, if any, of (A) the Applicable Price (as defined
  below) for each share of Issuer Common Stock over (B) the Purchase Price
     (subject to adjustment pursuant to Section 7 of this Agreement), multiplied
  by the number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and                                    

       (iii) The excess, if any, of the Applicable Price over the Purchase
    Price (subject to adjustment pursuant to Section 7 of this Agreement) paid
     (or, in the case of Option Shares with respect to which the Option has been
 exercised but the Closing Date has not occurred, payable) by Holder for
     each share of Issuer Common Stock with respect to which the Option has been
   exercised and with respect to which Holder then has beneficial ownership,
multiplied by the number of such shares.                              

(b) If Holder exercises its rights under this Section 8, Issuer shall,
within 10 business days after the Request Date, pay the Section 8 Repurchase    
Consideration to Holder in immediately available funds, and contemporaneously   
with such payment, Holder shall surrender to Issuer the Option and the          
certificates evidencing the shares of Issuer Common Stock purchased thereunder  
with respect to which Holder then has beneficial ownership, and Holder shall    
warrant that it has sole record and beneficial ownership of such shares and that
the same are then free and clear of all Liens. Notwithstanding the foregoing, to
the extent that prior notification to or approval of any Regulatory Authority is
required in connection with the payment of all or any portion of the Section 8  
Repurchase Consideration, Holder shall have the ongoing option to revoke its    
request for repurchase pursuant to this Section 8, in whole or in part, or to   
require that Issuer deliver from time to time that portion of the Section 8     
Repurchase Consideration that it is not then so prohibited from paying and      
promptly file the required notice or application for approval and expeditiously 
process the same (and each party shall cooperate with the other in the filing of
any such notice or application and the obtaining of any such approval). If any  
Regulatory Authority disapproves of any part of Issuer's proposed repurchase    
pursuant to this Section 8, Issuer shall promptly give notice of such fact to   
Holder and Holder shall have the right (i) to revoke the repurchase request or  
(ii) to the extent permitted by such Regulatory Authority, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent to
each, and Holder shall thereupon have the right to exercise the Option as to the
number of Option Shares for which the Option was exercisable at the Request Date
less the number of shares covered by the Option in respect of which payment has 
been made pursuant to Section 8(a)(ii) of this Agreement. Holder shall notify   
Issuer of its determination under the preceding sentence within five business   
days of receipt of notice of disapproval of the repurchase. Notwithstanding     
anything herein to the contrary, in the event that Issuer delivers to the Holder
written notice accompanied by a certification of Issuer's independent auditor   
each stating that a requested repurchase of the Option or Issuer Common Stock   
would result in the recapture of Issuer's bad debt reserves under the Internal  
Revenue Code of 1986, as amended, Holder's repurchase request shall be deemed to
be automatically revoked and be of no effect.                                   

 Notwithstanding anything herein to the contrary, all of Holder's rights
under this Section 8 shall terminate on the date of termination of this Option  
pursuant to Section 3(a) of this Agreement.                                     

(c) For purposes of this Agreement, the "Applicable Price" means the  
highest of (i) the highest price per share of Issuer Common Stock paid for any  
such share by the person or groups described in Section 8(d)(i) hereof, (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common     
Stock in connection with any merger, sale or other business combination         
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of this         
Agreement, or (iii) the highest closing sales price per share of                

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Issuer Common Stock quoted on the Nasdaq (or if Issuer Common Stock is not      
quoted on the Nasdaq, the highest bid price per share as quoted on the principal
trading market or securities exchange on which such shares are traded as        
reported by a recognized source chosen by Holder) during the 40 business days   
preceding the Request Date; provided, however, that in the event of a sale of   
less than all of Issuer's assets, the Applicable Price shall be the sum of the  
price paid in such sale for such assets and the current market value of the     
remaining assets of Issuer as determined by a nationally recognized investment  
banking firm selected by Holder, divided by the number of shares of the Issuer  
Common Stock outstanding at the time of such sale. If the consideration to be   
offered, paid or received pursuant to either of the foregoing clauses (i) or    
(ii) shall be other than in cash, the value of such consideration shall be      
determined in good faith by an independent nationally recognized investment     
banking firm selected by Holder and reasonably acceptable to Issuer, which      
determination shall be conclusive for all purposes of this Agreement.           

     (d) As used herein, "Repurchase Event" shall occur if (i) any person (other
than Grantee or any subsidiary of Grantee) shall have acquired beneficial       
ownership of (as such term is defined in Rule 13d-3, promulgated under the      
Exchange Act), or the right to acquire beneficial ownership of, or any "group"  
(as such term is defined under the Exchange Act) shall have been formed which   
beneficially owns or has the right to acquire beneficial ownership of, 50% or   
more of the then outstanding shares of Issuer Common Stock, or (ii) any of the  
transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of this        
Agreement shall be consummated.                                                 

 9. Registration Rights.  (a) Demand Registration Rights.  Issuer shall,
subject to the conditions of Section 9(c) of this Agreement, if requested by any
Holder, including Grantee and any permitted transferee ("Selling Shareholder"), 
as expeditiously as possible, prepare and file a registration statement under   
the Securities Act or equivalent statements under the rules and regulations of  
the Federal Deposit Insurance Corporation ("FDIC") or the Banking Law of the    
State of New York ("NYBL"), as applicable, if such registration is necessary in 
order to permit the sale or other disposition of any or all shares of Issuer    
Common Stock or other securities that have been acquired by or are issuable to  
the Selling Shareholder upon exercise of the Option in accordance with the      
intended method of sale or other disposition stated by the Selling Shareholder  
in such request, including without limitation a "shelf" registration statement  
under Rule 415, promulgated under the Securities Act, or any successor          
provision, and Issuer shall use its best efforts to qualify such shares or other
securities for sale under any applicable state securities laws.                 

(b) Additional Registration Rights.  If Issuer at any time after the  
exercise of the Option proposes to register any shares of Issuer Common Stock   
under the Securities Act, the NYBL or the rules and regulations of the FDIC in  
connection with an underwritten public offering of such Issuer Common Stock,    
Issuer will promptly give written notice to the Selling Shareholders of its     
intention to do so and, upon the written request of any Selling Shareholder     
given within 30 days after receipt of any such notice (which request shall      
specify the number of shares of Issuer Common Stock intended to be included in  
such underwritten public offering by the Selling Shareholder), Issuer will cause
all such shares for which a Selling Shareholder requests participation in such  
registration, to be so registered and included in such underwritten public      
offering; provided, however, that Issuer may elect to not cause any such shares 
to be so registered (i) if the underwriters in good faith object for valid      
business reasons, or (ii) in the case of a registration solely to implement an  
employee benefit plan or a registration filed on Form S-4 of the Securities Act 
or any equivalent or successor Form; provided, further, however, that such      
election pursuant to (i) may only be made two times. If some, but not all the   
shares of Issuer Common Stock, with respect to which Issuer shall have received 
requests for registration pursuant to this Section 9(b), shall be excluded from 
such registration, Issuer shall make appropriate allocation of shares to be     
registered among the Selling Shareholders desiring to register their shares pro 
rata in the proportion that the number of shares requested to be registered by  
each such Selling Shareholder bears to the total number of shares requested to  
be registered by all such Selling Shareholders then desiring to have Issuer     
Common Stock registered for sale.                                               

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   (c) Conditions to Required Registration.  Issuer shall use all reasonable
efforts to cause each registration statement referred to in Section 9(a) of this
Agreement to become effective and to obtain all consents or waivers of other    
parties which are required therefor and to keep such registration statement     
effective, provided, however, that Issuer may delay any registration of Option  
Shares required pursuant to Section 9(a) of this Agreement for a period not     
exceeding 90 days provided Issuer shall in good faith determine that any such   
registration would adversely affect an offering or contemplated offering of     
other securities by Issuer, and Issuer shall not be required to register Option 
Shares under the Securities Act pursuant to Section 9(a) hereof:                

        (i) Prior to the earliest of (A) termination of the Plan pursuant to
Article VI thereof, (B) failure to obtain the requisite stockholder   
approval pursuant to Section 6.01 of Article VI of the Plan, and (C) a
Purchase Event or a Preliminary Purchase Event;                       

(ii) On more than one occasion during any calendar year;    

   (iii) Within 90 days after the effective date of a registration
     referred to in Section 9(b) of this Agreement pursuant to which the Selling
     Shareholder or Selling Shareholders concerned were afforded the opportunity
to register such shares under the Securities Act and such shares were 
registered as requested; and                                          

(iv) Unless a request therefor is made to Issuer by Selling 
Shareholders that hold at least 25% or more of the aggregate number of
Option Shares (including shares of Issuer Common Stock issuable upon  
exercise of the Option) then outstanding.                             

    In addition to the foregoing, Issuer shall not be required to maintain the
effectiveness of any registration statement after the expiration of nine months 
from the effective date of such registration statement. Issuer shall use all    
reasonable efforts to make any filings, and take all steps, under all applicable
state securities laws to the extent necessary to permit the sale or other       
disposition of the Option Shares so registered in accordance with the intended  
method of distribution for such shares; provided, however, that Issuer shall not
be required to consent to general jurisdiction or qualify to do business in any 
state where it is not otherwise required to so consent to such jurisdiction or  
to so qualify to do business.                                                   

   (d) Expenses.  Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,   
qualification fees, blue sky fees and expenses (including the fees and expenses 
of counsel), legal expenses, including the reasonable fees and expenses of one  
counsel to the holders whose Option Shares are being registered, printing       
expenses and the costs of special audits or "cold comfort" letters, expenses of 
underwriters, excluding discounts and commissions but including liability       
insurance if Issuer so desires or the underwriters so require, and the          
reasonable fees and expenses of any necessary special experts) in connection    
with each registration pursuant to Section 9(a) or 9(b) of this Agreement       
(including the related offerings and sales by holders of Option Shares) and all 
other qualifications, notifications or exemptions pursuant to Section 9(a) or   
9(b) of this Agreement.                                                         

 (e) Indemnification.  In connection with any registration under Section
9(a) or 9(b) of this Agreement, Issuer hereby indemnifies the Selling           
Shareholders, and each underwriter thereof, including each person, if any, who  
controls such holder or underwriter within the meaning of Section 15 of the     
Securities Act, against all expenses, losses, claims, damages and liabilities   
caused by any untrue, or alleged untrue, statement of a material fact contained 
in any registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not   
misleading, except insofar as such expenses, losses, claims, damages or         
liabilities of such indemnified party are caused by any untrue statement or     
alleged untrue statement that was included by Issuer in any such registration   
statement or prospectus or notification or offering circular (including any     
amendments or supplements thereto) in reliance upon and in conformity with,     
information furnished in writing to Issuer by such indemnified party expressly  
for use therein, and Issuer and each officer, director and controlling person of
Issuer shall be indemnified by such Selling Shareholders, or by such            
underwriter, as the case may be, for all such expenses, losses, claims, damages 
and liabilities caused by any untrue, or alleged untrue, statement, that was    
included by Issuer in any such registration statement or                        

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prospectus or notification or offering circular (including any amendments or    
supplements thereto) in reliance upon, and in conformity with, information      
furnished in writing to Issuer by such holder or such underwriter, as the case  
may be, expressly for such use.                                                 

 Promptly upon receipt by a party indemnified under this Section 9(e) of
notice of the commencement of any action against such indemnified party in      
respect of which indemnity or reimbursement may be sought against any           
indemnifying party under this Section 9(e), such indemnified party shall notify 
the indemnifying party in writing of the commencement of such action, but the   
failure so to notify the indemnifying party shall not relieve it of any         
liability which it may otherwise have to any indemnified party under this       
Section 9(e). In case notice of commencement of any such action shall be given  
to the indemnifying party as above provided, the indemnifying party shall be    
entitled to participate in and, to the extent it may wish, jointly with any     
other indemnifying party similarly notified, to assume the defense of such      
action at its own expense, with counsel chosen by it and satisfactory to such   
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees 
and expenses of such counsel (other than reasonable costs of investigation)     
shall be paid by the indemnified party unless (i) the indemnifying party either 
agrees to pay the same, (ii) the indemnifying party fails to assume the defense 
of such action with counsel satisfactory to the indemnified party, or (iii) the 
indemnified party has been advised by counsel that one or more legal defenses   
may be available to the indemnifying party that may be contrary to the interest 
of the indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to bear fees
and expenses of such counsel. No indemnifying party shall be liable for any     
settlement entered into without its consent, which consent may not be           
unreasonably withheld.                                                          

    If the indemnification provided for in this Section 9(e) is unavailable to
a party otherwise entitled to be indemnified in respect of any expenses, losses,
claims, damages or liabilities referred to herein, then the indemnifying party, 
in lieu of indemnifying such party otherwise entitled to be indemnified, shall  
contribute to the amount paid or payable by such party to be indemnified as a   
result of such expenses, losses, claims, damages or liabilities in such         
proportion as is appropriate to reflect the relative benefits received by       
Issuer, the Selling Shareholders and the underwriters from the offering of the  
securities and also the relative fault of Issuer, the Selling Shareholders and  
the underwriters in connection with the statements or omissions which resulted  
in such expenses, losses, claims, damages or liabilities, as well as any other  
relevant equitable considerations. The amount paid or payable by a party as a   
result of the expenses, losses, claims, damages and liabilities referred to     
above shall be deemed to include any legal or other fees or expenses reasonably 
incurred by such party in connection with investigating or defending any action 
or claim; provided, however, that in no case shall any Selling Shareholder be   
responsible, in the aggregate, for any amount in excess of the net offering     
proceeds attributable to its Option Shares included in the offering. No person  
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of  
the Securities Act) shall be entitled to contribution from any person who was   
not guilty of such fraudulent misrepresentation. Any obligation by any holder to
indemnify shall be several and not joint with other holders.                    

 In connection with any registration pursuant to Section 9(a) or 9(b) of
this Agreement, Issuer and each Selling Shareholder (other than Grantee) shall  
enter into an agreement containing the indemnification provisions of Section    
9(e) of this Agreement.                                                         

(f) Miscellaneous Reporting.  Issuer shall comply with all reporting  
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Selling Shareholders   
thereof in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule   
144. Issuer shall at its expense provide the Selling Shareholders with any      
information necessary in connection with the completion and filing of any       
reports or forms required to be filed by them under the Securities Act or the   
Exchange Act, or required pursuant to any state securities laws or the rules of 
any stock exchange.                                                             

  (g) Issue Taxes.  Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise  
of the Option, and will save the Selling Shareholders harmless, without         
limitation as to time, against any and all liabilities, with respect to all such
taxes.                                                                          

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    10. Quotation; Listing.  If Issuer Common Stock or any other securities to
be acquired in connection with the exercise of the Option are then authorized   
for quotation or trading or listing on the Nasdaq or any securities exchange,   
Issuer, upon the request of Holder, will promptly file an application, if       
required, to authorize for quotation or trading or listing the shares of Issuer 
Common Stock or other securities to be acquired upon exercise of the Option on  
the Nasdaq or such other securities exchange and will use its best efforts to   
obtain approval, if required, of such quotation or listing as soon as           
practicable.                                                                    

     11. Division of Option.  This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Holder, upon presentation and   
surrender of this Agreement at the principal office of Issuer for other         
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common 
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein  
include any other Agreements and related Options for which this Agreement (and  
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence 
reasonably satisfactory to it of the loss, theft, destruction or mutilation of  
this Agreement, and (in the case of loss, theft or destruction) of reasonably   
satisfactory indemnification, and upon surrender and cancellation of this       
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute  
an additional contractual obligation on the part of Issuer, whether or not the  
Agreement so lost, stolen, destroyed or mutilated shall at any time be          
enforceable by anyone.                                                          

 12. Profit Limitation.  (a) Notwithstanding any other provision of this
Agreement, in no event shall the Grantee's Total Profit (as hereinafter defined)
exceed $10 million and, if it otherwise would exceed such amount, the Grantee,  
at its sole election, shall either (a) deliver to the Issuer for cancellation   
Shares previously purchased by Grantee, (b) pay cash or other consideration to  
the Issuer or (c) undertake any combination thereof, so that Grantee's Total    
Profit shall not exceed $10 million after taking into account the foregoing     
actions.                                                                        

    (b) Notwithstanding any other provision of this Agreement, this Option may
not be exercised for a number of Shares as would, as of the Notice Date, result 
in a Notional Total Profit (as defined below) of more than $10 million and, if  
exercise of the Option otherwise would exceed such amount, the Grantee, at its  
discretion, may increase the Purchase Price for that number of Shares set forth 
in the Stock Exercise Notice so that the Notional Total Profit shall not exceed 
$10 million; provided, that nothing in this sentence shall restrict any exercise
of the Option permitted hereby on any subsequent date at the Purchase Price set 
forth in Section 2 hereof.                                                      

     (c) As used herein, the term "Total Profit" shall mean the aggregate amount
(before taxes) of the following: (i) the amount of cash received by Grantee     
pursuant to Section 6.01(f) or 6.03 of the Merger Agreement and Section 8(a)(ii)
hereof, (ii) (x) the amount received by Grantee pursuant to the Issuer's        
repurchase of Option Shares pursuant to Section 8 hereof, less (y) the Grantee's
purchase price for such Option Shares, and (iii) (x) the net cash amounts       
received by Grantee pursuant to the sale of Option Shares (or any other         
securities into which such Option Shares are converted or exchanged) to any     
unaffiliated party, less (y) the Grantee's purchase price for such Option       
Shares.                                                                         

  (d) As used herein, the term "Notional Total Profit" with respect to any
number of Option Shares as to which Grantee may propose to exercise this Option 
shall be the Total Profit determined as of the date of the Stock Exercise Notice
assuming that this Option was exercised on such date for such number of Shares  
and assuming that such Option Shares, together with all other Option Shares held
by Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Common Stock as of the close of business on the preceding  
trading day (less customary brokerage commissions).                             

  13. Miscellaneous.  (a) Expenses.  Each of the parties hereto shall bear
and pay all costs and expenses incurred by it or on its behalf in connection    
with the transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants and counsel.         

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     (b) Waiver and Amendment.  Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This  
Agreement may not be modified, amended, altered or supplemented except upon the 
execution and delivery of a written agreement executed by the parties hereto.   

 (c) Entire Agreement: No Third-Party Beneficiaries; Severability.  This
Agreement, together with the Plan and the other documents and instruments       
referred to herein and therein, between Grantee and Issuer (i) constitutes the  
entire agreement and supersedes all prior agreements and understandings, both   
written and oral, between the parties with respect to the subject matter hereof 
and (ii) is not intended to confer upon any person other than the parties hereto
(other than the indemnified parties under Section 9(e) of this Agreement and any
transferees of the Option Shares or any permitted transferee of this Agreement  
pursuant to Section 12(h) of this Agreement) any rights or remedies hereunder.  
If any term, provision, covenant or restriction of this Agreement is held by a  
court of competent jurisdiction or Regulatory Authority to be invalid, void or  
unenforceable, the remainder of the terms, provisions, covenants and            
restrictions of this Agreement shall remain in full force and effect and shall  
in no way be affected, impaired or invalidated. If for any reason such court or 
Regulatory Authority determines that the Option does not permit Holder to       
acquire, or does not require Issuer to repurchase, the full number of shares of 
Issuer Common Stock as provided in Section 3 of this Agreement (as may be       
adjusted herein), it is the express intention of Issuer to allow Holder to      
acquire or to require Issuer to repurchase such lesser number of shares as may  
be permissible without any amendment or modification hereof.                    

(d) Governing Law.  This Agreement shall be governed and construed in 
accordance with the laws of the State of New York without regard to any         
applicable conflicts of law rules.                                              

  (e) Descriptive Headings.  The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.                                               

  (f) Notices.  All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with     
confirmation) or mailed by registered or certified mail (return receipt         
requested) to the parties at the addresses set forth in the Plan (or at such    
other address for a party as shall be specified by like notice).                

     (g) Counterparts.  This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same         
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.          

     (h) Assignment.  Neither this Agreement nor any of the rights, interests or
obligations hereunder or under the Option shall be assigned by any of the       
parties hereto (whether by operation of law or otherwise) without the prior     
written consent of the other party, except that Holder may assign this Agreement
to a wholly-owned subsidiary of Holder and Holder may assign its rights         
hereunder in whole or in part after the occurrence of a Purchase Event. Subject 
to the preceding sentence, this Agreement shall be binding upon, inure to the   
benefit of and be enforceable by the parties and their respective successors and
assigns.                                                                        

    (i) Further Assurances.  In the event of any exercise of the Option by the
Holder, Issuer, and the Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order 
to consummate the transactions provided for by such exercise.                   

     (j) Specific Performance.  The parties hereto agree that this Agreement may
be enforced by either party through specific performance, injunctive relief and 
other equitable relief. Both parties further agree to waive any requirement for 
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other      
rights that the parties hereto may have for any failure to perform this         
Agreement.                                                                      

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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option  
Agreement to be signed by their respective officers thereunto duly authorized,  
all as of the day and year first written above.                                 

                                     THE GREATER NEW YORK SAVINGS BANK

                                By:     /s/ GERARD C. KEEGAN
                                            ------------------------------------
                                            Gerard C. Keegan
                                           Chairman, President and
                                           Chief Executive Officer

                                 ASTORIA FINANCIAL CORPORATION

                                   By:  /s/ GEORGE L. ENGELKE, JR.
                                            ------------------------------------
                                            George L. Engelke, Jr.
                                           President and Chief Executive
                                             Officer

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                                                                      APPENDIX C

PLAN OF BANK MERGER 

   THIS PLAN OF BANK MERGER ("Plan of Merger") dated             , 1997 (the
"Agreement"), is by and between Astoria Federal Savings and Loan Association    
(the "Association"), a federally chartered savings and loan association and a   
wholly-owned subsidiary of Astoria Financial Corporation, a Delaware corporation
("AFC"), and The Greater New York Savings Bank, a New York State chartered      
savings bank ("GNYSB"), pursuant to an Agreement and Plan of Merger dated as of 
March 29, 1997, as amended (the "Agreement") by and among AFC, the Association  
and GNYSB. Capitalized terms not otherwise defined herein shall have the        
meanings set forth in the Agreement.                                            

BACKGROUND

   1. The authorized capital stock of the Association consists of 35,000,000
shares of common stock, par value $1.00 per share ("Association Common Stock"), 
of which 1,000 shares are issued and outstanding, and 5,000,000 shares of       
preferred stock, par value $1.00 per share, of which none are issued and        
outstanding.                                                                    

   2. The authorized capital stock of GNYSB consists of 45,000,000 shares of
common stock, par value $1.00 per share ("GNYSB Common Stock"), of which        
13,676,065 shares are issued and outstanding, and 10,000,000 shares of preferred
stock, par value $1.00 per share, of which 2,000,000 shares of 12% Noncumulative
Perpetual Preferred Stock, Series B, are issued and outstanding.                

     3. The respective Boards of Directors of the Association and GNYSB deem the
merger of GNYSB with and into the Association, pursuant to the terms and        
conditions set forth or referred to herein, to be desirable and in the best     
interests of the respective corporations and their respective shareholders.     

 4. The respective Boards of Directors of the Association and GNYSB have
adopted resolutions approving this Plan of Merger. The respective Boards of     
Directors of AFC, the Association, and GNYSB have adopted resolutions approving 
the Agreement, pursuant to which this Plan of Merger is being executed by the   
Association and GNYSB.                                                          

AGREEMENT 

     In consideration of the premises and of the mutual covenants and agreements
herein contained, and in accordance with the applicable laws and regulations of 
the United States of America and the State of New York, the Association and     
GNYSB, intending to be legally bound hereby, agree:                             

ARTICLE I 

MERGER

Subject to the terms and conditions of this Plan of Merger and in     
accordance with the applicable laws and regulations of the United States of     
America and the State of New York, on the Effective Date (as that term is       
defined in Article V hereof) GNYSB shall merge with and into the Association;   
the separate existence of GNYSB shall cease; and the Association shall be the   
surviving corporation (such transaction is referred to herein as the "Merger"   
and the Association, as the surviving corporation in the Merger, is referred to 
herein as the "Surviving Bank"). The Association will have its home office at   
One Astoria Federal Plaza, Lake Success, New York 11042-1085 and its branch     
offices at the locations listed on Exhibit "A."                                 

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ARTICLE II

CHARTER AND BYLAWS

  On and after the Effective Date, the Federal Stock Charter and Bylaws of
the Association, as in effect immediately prior to the Effective Date, shall    
automatically be and remain the Federal Stock Charter and Bylaws of the         
Surviving Bank, until altered, amended, or repealed; provided, that prior to the
Effective Time (as defined in Section 7.01 of the Agreement), the Association   
will amend its Bylaws to increase the size of the Board of Directors to 11      
persons in accordance with the applicable rules and regulations of the Office of
Thrift Supervision.                                                             

ARTICLE III 

BOARD OF DIRECTORS

    3.1 Board of Directors.  On and after the Effective Date, the directors of
the Surviving Bank shall consist of the directors of the Association duly       
elected and holding office immediately prior to the Effective Date, and Mr.     
Gerard C. Keegan and one other member of GNYSB's Board of Directors (on March   
29, 1997) selected by GNYSB and acceptable to AFC who is willing so to serve.   
The names and residence addresses of the directors are:                         

                                                                [Download Table]

NAME                                                         RESIDENCE ADDRESS      
-----------------------------------------------------  -----------------------------
                                                                                    
George L. Engelke, Jr................................  83 Chelsea Road              
                                                       Garden City, New York 11530  
Robert G. Bolton.....................................  RD4 Box 83                   
                                                       Oneonta, New York 13820      
Andrew M. Burger.....................................  83 Puritan Avenue            
                                                       Yonkers, New York 10710      
Denis J. Connors.....................................  51 Garner Lane               
                                                       Bayshore, New York 11706     
Thomas J. Donahue....................................  201 Cashel Drive             
                                                       Aberdeen, New Jersey 07747   
William J. Fendt.....................................  211 Nassau Boulevard         
                                                       Garden City, New York 11530  
Ralph F. Palleschi...................................  12 Auerbach Lane             
                                                       Lawrence, New York 11559     
Thomas V. Powderly...................................  83 Hunt Drive                
                                                       Jericho, New York 11753      
Gerard C. Keegan.....................................  151 Brixton Road             
                                                       Garden City, New York 11530  
[person to be named by GNYSB]                                                       

ARTICLE IV

CONVERSION OF SHARES

     4.1 Stock of the Association.  Each share of the Association's Common Stock
issued and outstanding immediately prior to the Effective Date shall, on and    
after the Effective Date, continue to be issued and outstanding as a share of   
common stock of the Surviving Bank.                                             

    4.2 Common Stock of GNYSB.  (a) By virtue of the Merger, automatically and
without any action on the part of the holder thereof, each share of GNYSB Common
Stock issued and outstanding at the Effective Time (other than (i) shares the   
holder of which pursuant to any applicable law providing for dissenters' or     
appraisal rights is entitled to receive payment in accordance with the          
provisions of any such law, such holder to have only the rights provided in any 
such law (the "Dissenters' Shares"), (ii) shares held directly or indirectly    

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by the AFC (other than shares held in a fiduciary capacity or in satisfaction of
a debt previously contracted), and (iii) shares held as treasury stock of GNYSB 
(the "Excluded Shares") shall become and be converted into, at the election of  
the holder thereof (subject to the provisions of Article I of the Agreement),   
the right to receive: (x) the "Cash Consideration," described below, or (y) the 
"Stock Consideration" consisting of shares of AFC Common Stock, together with   
the related preferred share purchase right issued pursuant to the rights        
agreement between the AFC and ChaseMellon Shareholder Services, L.L.C. dated as 
of July 17, 1996 (collectively, the "Merger Consideration").                    

   (i) The Cash Consideration shall be $19.00 for each share of GNYSB Common
Stock.                                                                          

   (ii) The Stock Consideration shall be 0.50 of a share of AFC Common Stock
for each share of GNYSB Common Stock.                                           

(iii) If between the date of the Agreement and the Effective Time the 
outstanding shares of AFC Common Stock shall have been changed into a different 
number of shares or into a different class, by reason of any stock dividend,    
subdivision, reclassification, recapitalization, split, combination or exchange 
of shares (each, a "Stock Adjustment"), the Merger Consideration shall be       
adjusted correspondingly to the extent appropriate to reflect the Stock         
Adjustment.                                                                     

  (iv) As used herein, "AFC Market Value" shall be the average of the mean
between the closing high bid and low asked prices of a share of AFC Common      
Stock, as reported on the National Association of Securities Dealers Automated  
Quotation System National Market System, for the 30 consecutive trading days    
immediately preceding the day which is the day that is the latest of (i) the day
of expiration of the last waiting period with respect to any of the required    
regulatory approvals, as defined in Section 5.01(b) of the Agreement, (ii) the  
day on which the last of the required regulatory approvals, as defined in       
Section 5.01(b) of the Agreement, is obtained and (iii) the day on which the    
last of the required stockholder approvals have been received.                  

   (b) As of the Effective Time, each Excluded Share, other than Dissenters'
Shares, shall be cancelled and retired and cease to exist, and no exchange or   
payment shall be made with respect thereto.                                     

   (c) As of the Effective Time, all shares of GNYSB Common Stock other than
Excluded Shares shall no longer be outstanding and shall be automatically       
cancelled and retired and shall cease to exist, and each holder of a certificate
formerly representing any such shares of GNYSB Common Stock shall cease to have 
any rights with respect thereto, except the right to receive the Merger         
Consideration. After the Effective Time, there shall be no transfers on the     
stock transfer books of AFC.                                                    

 4.3 Preferred Stock of GNYSB.  At or immediately prior to the Effective
Time, the Certificate of Incorporation of AFC shall be amended to (i) change the
par value of the authorized shares of the AFC Preferred Stock from $0.01 per    
share to $1.00 per share and (ii) fix the preferences of a newly-created Series 
B Preferred Stock of AFC (the "AFC Series B Preferred Stock") to have terms     
substantially identical, and in any event no less favorable, to those of the 12%
Noncumulative Preferred Stock, Series B of GNYSB (the "GNYSB Series B Preferred 
Stock") and agreeable to GNYSB; provided, that, AFC may, in its sole discretion,
effect such an amendment provided for in clause (ii) above through a Certificate
of Designations filed pursuant to Section 151 of the Delaware General           
Corporation Law. At the Effective Time, each share of the GNYSB Series B        
Preferred Stock issued and outstanding immediately prior to the Effective Time  
shall, by virtue of the Merger and without any action on the part of the holder 
thereof, be converted into, and shall become, one share of the AFC Series B     
Preferred Stock, as provided in Article I of the Agreement.                     

4.4 Fractional Shares.  Notwithstanding any other provision hereof, no
fraction of a whole share of the AFC Common Stock and no certificates or scrip  
therefor will be issued in the Merger; instead, the AFC shall pay to each holder
of the GNYSB Common Stock who would otherwise be entitled to a fractional share 
an amount in cash, rounded to the nearest cent, determined by multiplying such  
fraction by the AFC Market Value.                                               

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ARTICLE V 

EFFECTIVE DATE OF THE MERGER

The Merger shall be effective on the date on which all filings with   
government agencies, as may be required under applicable laws and regulations   
for the Merger to become effective, are made and accepted by the applicable     
agencies (the "Effective Date").                                                

ARTICLE VI

EFFECT OF THE MERGER

  6.1 Separate Existence.  On the Effective Date the separate existence of
GNYSB shall cease and all of the property (real, personal and mixed), rights,   
powers, duties and obligations of GNYSB shall be taken and deemed to be         
transferred to and vested in the Surviving Bank, without further act or deed, as
provided by applicable laws and regulations.                                    

6.2 Savings Accounts.  After the Effective Date, the Association will 
continue to issue savings accounts on the same basis as immediately prior to the
Effective Date.                                                                 

  6.3 Liquidation Account.  After the Effective Date, the Association will
continue to maintain the Association's liquidation account for the benefit of   
eligible account holders on the same basis as immediately prior to the Effective
Date, and GNYSB's liquidation account for the benefit of eligible account       
holders shall automatically be expressly assumed by the Association, as of the  
Effective Date, on the same basis as it existed immediately prior to the        
Effective Date.                                                                 

ARTICLE VII 

CONDITIONS PRECEDENT

    The obligations of the Association and GNYSB to effect the Merger shall be
subject to satisfaction, unless duly waived by the party permitted to do so, of 
the conditions precedent set forth in the Agreement.                            

ARTICLE VIII

TERMINATION 

   This Plan of Merger shall terminate upon any termination of the Agreement
in accordance with its terms; provided, however, that any such termination of   
this Plan of Merger shall not relieve any party hereto from liability on account
of a breach by such party of any of the terms hereof or thereof.                

ARTICLE IX

AMENDMENT 

   Subject to applicable law, this Plan of Merger may be amended at any time
prior to consummation of the Merger, but only by an instrument in writing signed
by duly authorized officers on behalf of the parties hereto.                    

ARTICLE X 

MISCELLANEOUS 

    10.1 Extensions; Waivers.  Each party, by a written instrument signed by a
duly authorized officer, may extend the time for the performance of any of the  
obligations or other acts of the other party hereto and may waive compliance    
with any of the covenants, or performance of any of the obligations, of the     
other party contained in this Plan of Merger.                                   

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10.2 Notices.  Any notice or other communication required or permitted
under this Plan of Merger shall be given, and shall be effective, in accordance 
with the provisions of Section 8.07 of the Agreement.                           

  10.3 Captions.  The headings of the several Articles and Sections herein
are inserted for convenience of reference only and are not intended to be part  
of, or to affect the meaning or interpretation of, this Plan of Merger.         

     10.4 Counterparts.  For the convenience of the parties hereto, this Plan of
Merger may be executed in several counterparts, each of which shall be deemed   
the original, but all of which together shall constitute one and the same       
instrument.                                                                     

     10.5 Governing Law.  This Plan of Merger shall be governed by and construed
in accordance with the laws of the United States of America and, in the absence 
of controlling Federal law, in accordance with the laws of the State of New     
York.                                                                           

IN WITNESS WHEREOF, the Association and GNYSB have caused this Plan of
Merger to be executed by their duly authorized officers and their corporate     
seals to be hereunto affixed on the date first written above.                   

                                    ASTORIA FEDERAL SAVINGS AND LOAN
               ASSOCIATION

      By
                                            ------------------------------------
             Name:
              Title:

                                     THE GREATER NEW YORK SAVINGS BANK

      By
                                            ------------------------------------
             Name:
              Title:

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EXHIBIT "A" 
TO PLAN OF MERGER 

ASSOCIATION 
BRANCH LOCATIONS

37-16 30th Avenue, Long Island City, New York 11103                             
29-34 30th Avenue, Long Island City, New York 11102                             
31-24 Ditmars Boulevard, Long Island City, New York 11105                       
46-08 Francis Lewis Boulevard, Flushing, New York 11361                         
63-72 108th Street, Forest Hills, New York 11375                                
68-17 Myrtle Avenue, Glendale, New York 11385                                   
116-22 Metropolitan Avenue, Kew Gardens, New York 11418                         
71-20 Kissena Boulevard, Flushing, New York 11367                               
57-07 Junction Boulevard, Elmhurst, New York 11373                              
30-33 Stratton Street, Pathmark Shopping Center, Flushing, New York 11354       
72-25 Metropolitan Avenue, Middle Village, New York 11379                       
153-17 Cross Island Parkway, Whitestone, New York 11357                         
60-20 Woodside Avenue, New York 11377                                           
464 Atlantic Avenue, East Rockaway, New York 11518                              
1622 Hempstead Turnpike, East Meadow, New York 11554                            
1585 Dutch Broadway, Elmont, New York 11003                                     
99 Covert Avenue, Floral Park, New York 11001                                   
155 Jericho Turnpike, Floral Park, New York 11001                               
955 Hempstead Turnpike, Franklin Square, New York 11010                         
711 Franklin Avenue, Franklin Square, New York 11010                            
1000 Franklin Avenue, Garden City, New York 11530                               
44 Cedar Swamp Road, Glen Cove, New York 11542                                  
260 Glen Head Road, Glen Head, New York 11545                                   
4 Great Neck Road, Great Neck, New York 11021                                   
114 Northern Boulevard, Greenvale, New York 11548                               
360 Merrick Road, Lynbrook, New York 11563                                      
363 Hempstead Avenue, Malverne, New York 11565                                  
995 Hicksville Road, Massapequa, New York 11758                                 
52 Manetto Hill Mall, Plainview, New York 11801                                 
490 Hempstead Turnpike, West Hempstead, New York 11552                          
162 Hillside Avenue, Williston Park, New York 11596                             
320 Walt Whitman Road, Huntington Station, New York 11746                       
33 Main Street, Kings Park, New York 11754                                      
361 Sunrise Highway, Patchogue, New York 11772                                  
1015 Route 112, Port Jefferson Station, New York 11776                          
1880 Middle County Road, Ridge, New York 11961                                  
861 Montauk Highway, West Babylon, New York 11704                               
729 Saw Mill River Road, Ardsley, New York 10502                                
560 Warburton Avenue, Hastings-on-Hudson, New York 10706                        
Towne Centre at Somers, Somers, New York 10589                                  
18 South Broad Street, Norwich, New York 13815                                  
62 Pioneer Street, Cooperstown, New York 13326                                  
107 Oneida Street, Oneonta, New York 13820                                      
Southside Mall, Oneonta, New York 13820                                         
One Wall Street, Oneonta, New York 13820                                        
451 5th Avenue at 9th Street, Park Slope, New York 11215                        
110 7th Avenue at President Street, Park Slope, New York 11215                  

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101 Church Avenue at McDonald Avenue, Kensington, New York 11218                
1045 Flatbush Avenue at Duryea Place, Flatbush, New York 11226                  
1550 Flatbush Avenue at Nostrand Avenue, Flatbush, New York 11210               
5220 13th Avenue at 53rd Street, Borough Park, New York 11219                   
4302 18th Avenue at East 2nd Street, Borough Park, New York 11218               
489 Neptune Avenue at West 5th Street, Coney Island, New York 11224             
1672 Sheepshead Bay Road at Voorhies Avenue, Sheepshead Bay, New York 11235     
179-25 Hillside Avenue at 179th Street, Hillside, New York 11432                
222 Station Plaza North, Mineola, New York 11501                                
Sands Shopping Center, 3535 Long Beach Road, Oceanside, New York 11572          
102 Broadway Mall, Route 106/107, Hicksville, New York 11801                    
King Kullen Shopping Center, 2775 Route 112, Medford, New York 11763            
401 Avenue M, Midwood, New York 11230                                           
2239/45 65th Street, Bensonhurst, New York 11204                                
2133 Knapp Street, Midwood, New York 11229                                      

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                                                                      APPENDIX D

[LETTERHEAD OF SANDLER O'NEILL & PARTNERS, L.P.]

June 24, 1997                                                                   

Board of Directors                                                              
The Greater New York Savings Bank                                               
One Penn Plaza                                                                  
New York, New York 10119                                                        

Ladies and Gentlemen:                                                           

    The Greater New York Savings Bank ("GNYSB"), Astoria Financial Corporation
("Astoria") and Astoria Federal Savings and Loan Association, a wholly-owned    
subsidiary of Astoria (the "Association"), have entered into an Agreement and   
Plan of Merger, dated as of March 29, 1997 (the "Agreement"), pursuant to which 
GNYSB will be merged with and into the Association (the "Merger"). Upon         
consummation of the Merger, each outstanding share of GNYSB common stock, par   
value $1.00 per share (including any shares that are issued upon the conversion 
of shares of GNYSB Series A 8.25% ESOP Cumulative Convertible Preferred Stock,  
par value $1.00 per share, the "GNYSB Shares"), other than certain GNYSB Shares 
specified in the Agreement, will be converted into the right to receive, at the 
election of the holder thereof, either .50 of a share of common stock, par value
$.01 per share, of Astoria (the "Astoria Shares") or $19.00 in cash, subject in 
each case to proration so that 75% of the entire consideration payable by       
Astoria will be common stock and 25% will be cash. In addition, each share of   
GNYSB 12% Noncumulative Perpetual Preferred Stock, Series B, par value $1.00 per
share (the "Series B Preferred"), will be converted into one share of a newly   
created series of preferred stock of Astoria (the "Astoria Preferred") having   
substantially identical, and in any event no less favorable, terms and          
conditions as the Series B Preferred (the "Preferred Exchange"). The terms and  
conditions of the Merger are more fully set forth in the Agreement. You have    
requested our opinion as to the fairness, from a financial point of view, of the
consideration to be received by the holders of the GNYSB Shares and the Series B
Preferred.                                                                      

Sandler O'Neill & Partners, L.P., as part of its investment banking   
business, is regularly engaged in the valuation of financial institutions and   
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other    
things: (i) the Agreement and exhibits thereto; (ii) the Stock Option Agreement,
dated as of March 29, 1997, by and between Astoria and GNYSB; (iii) the Joint   
Proxy Statement-Prospectus of GNYSB and Astoria dated as of the date hereof;    
(iv) Astoria's audited consolidated financial statements and management's       
discussion and analysis of the financial condition and results of operations as 
contained in its annual report to shareholders for the year ended December 31,  
1996; (v) GNYSB's audited consolidated financial statements and management's    
discussion and analysis of the financial condition and results of operations as 
contained in its annual report to shareholders for the year ended December 31,  
1996; (vi) the Proxy Statement of GNYSB dated March 14, 1997; (vii) Astoria's   
unaudited consolidated financial statements and management's discussion and     
analysis of the financial condition and results of operations contained in its  
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; (viii)      
GNYSB's unaudited consolidated financial statements and management's discussion 
and analysis of the financial condition and results of operations contained in  
its Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; (ix)    
certain financial analyses and forecasts of GNYSB prepared by and reviewed with 
management of GNYSB and the views of senior management of GNYSB regarding       
GNYSB's past and current business operations, results thereof, financial        
condition and future prospects; (x) certain financial analyses and forecasts of 
Astoria prepared by and reviewed with management of Astoria and the views of    
senior management of Astoria regarding Astoria's past and current business      
operations, results thereof, financial condition and future prospects; (xi) the 
pro forma impact of the Merger on Astoria, including discussions with senior    
management of Astoria regarding their dividend philosophy and policy with       
respect to the Astoria Shares and the Astoria Preferred; (xii) the historical   
reported price and trading activity for Astoria's and GNYSB's common stock,     
including a                                                                     

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comparison of certain financial and stock market information for Astoria and    
GNYSB with similar information for certain other companies the securities of    
which are publicly traded; (xiii) the financial terms of recent business        
combinations in the savings institution and banking industries; (xiv) the       
current market environment generally and the banking environment in particular; 
and (xv) such other information, financial studies, analyses and investigations 
and financial, economic and market criteria as we considered relevant. We were  
not asked to, and did not, solicit indications of interest in a potential       
transaction from other third parties other than one third party specifically    
identified to us by GNYSB's Board of Directors.                                 

In performing our review, we have assumed and relied upon, without    
independent verification, the accuracy and completeness of all the financial    
information, analyses and other information reviewed by and discussed with us,  
and we did not make an independent evaluation or appraisal of the specific      
assets, the collateral securing assets or the liabilities of Astoria or GNYSB or
any of their subsidiaries, or the collectibility of any such assets (relying,   
where relevant, on the analyses and estimates of Astoria and GNYSB). With       
respect to the financial projections reviewed with management, we have assumed  
that they have been reasonably prepared on bases reflecting the best currently  
available estimates and judgments of the respective managements of the          
respective future financial performances of Astoria and GNYSB and that such     
performances will be achieved. We have also assumed that there has been no      
material change in Astoria's or GNYSB's assets, financial condition, results of 
operations, business or prospects since March 31, 1997, the date of the last    
financial statements noted above. We have assumed that Astoria will remain as a 
going concern for all periods relevant to our analyses and that the conditions  
precedent in the Agreement are not waived. With respect to the Preferred        
Exchange, we have also assumed that the terms and conditions of the Astoria     
Preferred are substantially identical to the Series B Preferred and that there  
are no material and adverse differences in the rights and privileges of the     
holders of the Astoria Preferred under Delaware law as compared to the rights   
and privileges of holders of the Series B Preferred under New York law.         

   Our opinion is necessarily based on economic, market and other conditions
as in effect on, and the information made available to us as of, the date       
hereof. Events occurring after the date hereof could materially affect the      
assumptions used in preparing this opinion. We have not undertaken to reaffirm  
or revise this opinion or otherwise comment upon events occurring after the date
hereof.                                                                         

  We have acted as GNYSB's financial advisor in connection with the Merger
and will receive a fee for our services, a significant portion of which is      
contingent upon consummation of the Merger. We have also received a fee for     
rendering this opinion. We have also provided and continue to provide general   
financial advisory services for GNYSB and have received and will continue to    
receive fees for such services.                                                 

  In the ordinary course of our business, we may actively trade the equity
securities of Astoria and GNYSB for our own account and for the accounts of our 
customers and, accordingly, may at any time hold a long or short position in    
such securities.                                                                

 Our opinion is directed to the Board of Directors of GNYSB and does not
constitute a recommendation to any stockholder of GNYSB as to how such          
stockholder should vote at the special meeting of stockholders called to        
consider and vote upon the Merger. Our opinion is not to be quoted or referred  
to, in whole or in part, in a registration statement, prospectus, proxy         
statement or in any other document, nor shall this opinion be used for any other
purposes, without Sandler O'Neill's prior written consent; provided, however,   
that we hereby consent to the inclusion of this opinion as an exhibit to the    
Joint Proxy Statement-Prospectus of GNYSB and Astoria dated the date hereof.    

Based upon and subject to the foregoing, it is our opinion that the   
consideration to be received by the holders of the GNYSB Shares and the Series B
Preferred is fair, from a financial point of view, to the holders of such       
shares.                                                                         

                     Very truly yours,

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                                                                      APPENDIX E

[LETTERHEAD OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED]

                                                                   June 24, 1997

Board of Directors                                                              
Astoria Financial Corporation                                                   
One Astoria Federal Plaza                                                       
Lake Success, NY 11042-1085                                                     

Members of the Board:                                                           

We understand that Astoria Financial Corporation (along with its      
subsidiaries, "Astoria"), Astoria Federal Savings and Loan Association, a wholly
owned subsidiary of Astoria (along with its subsidiaries, "Astoria Federal") and
The Greater New York Savings Bank (along with its subsidiaries, "Greater") have 
entered into an Agreement and Plan of Merger, dated as of March 29, 1997 (the   
"Agreement"), pursuant to which Greater will be merged with and into Astoria    
Federal in a transaction (the "Merger") in which each outstanding share of      
Greater common stock, par value $1.00 per share (the "Greater Shares"), will be 
converted into the right to receive, at the option of the holder of such share  
(subject to certain proration limitations set forth below) either (i) 0.50 of a 
share of the common stock, par value $0.01 per share, of Astoria (the "Astoria  
Shares") or (ii) $19.00 in cash (such fraction of an Astoria Share or such      
amount of cash being referred to herein as the "Merger Consideration"); that    
proration limitations will apply to any stockholder's election to choose Astoria
Shares or cash such that the number of Greater Shares to be converted into      
Astoria Shares in the Merger shall be equal to 75% of the number of Greater     
Shares outstanding on the effective date of the Merger; and that each           
outstanding share of Greater Series A ESOP Convertible Preferred Stock will be  
redeemed prior to the Merger (subject to the rights of the holders thereof to   
convert into Greater Shares) and each outstanding share of Greater 12%          
Noncumulative Preferred Stock, Series B (the "Greater Series B Preferred") will 
become and be converted into one share of a new series of preferred stock of    
Astoria having terms substantially identical to those of the Greater Series B   
Preferred, all as set forth more fully in the Agreement.                        

You have asked us whether, in our opinion, the proposed Merger        
Consideration is fair to Astoria from a financial point of view.                

  In arriving at the opinion set forth below, we have, among other things:

    (1) reviewed certain publicly available business and financial information
 relating to Astoria and Greater which we deemed to be relevant;

   (2) reviewed certain information, including financial forecasts, relating
         to the business, earnings, cash flow, assets, liabilities and prospects
      of Astoria and Greater, as well as the amount and timing of the cost
   savings and related expenses and revenue enhancements expected to
       result from the Merger (the "Expected Synergies"), furnished to us by
senior management of Astoria and Greater;                     

    (3) conducted discussions with members of senior management of Astoria and
        Greater concerning the foregoing, including the respective businesses,
  prospects, regulatory condition and contingencies of Astoria and
         Greater, before and after giving effect to the Merger, and the Expected
Synergies;                                                    

(4) reviewed the market prices and valuation multiples for the Astoria
       Shares and the Greater Shares and compared them with those of certain
publicly traded companies which we deemed to be relevant;     

    (5) reviewed the results of operations of Astoria and Greater and compared
         them with those of certain publicly traded companies which we deemed to
be relevant;                                                  

    (6) reviewed the proposed financial terms of the Merger with the financial
     terms of certain other transactions which we deemed to be relevant;

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(7) reviewed the pro forma impact of the Merger;                      

(8) reviewed the Agreement and Plan of Merger; and                    

(9) reviewed such other financial studies and analyses and took into  
  account such other matters as we deemed necessary, including our
 assessment of general economic, market and monetary conditions.

 In preparing our opinion we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,     
discussed with or reviewed by or for us, or publicly available, and we have not 
assumed responsibility for independently verifying such information or          
undertaken an independent evaluation or appraisal of any of the assets or       
liabilities, contingent or otherwise, of Astoria or Greater or any of their     
subsidiaries, nor have we been furnished with any such evaluation or appraisal. 
We are not experts in the evaluation of allowances for loan losses and we have  
not made an independent evaluation of the adequacy of the allowance for loan    
losses of Astoria or Greater, nor have we reviewed any individual credit files  
relating to Greater or Astoria and we have assumed that the aggregate allowance 
for loan losses for each of Greater and Astoria is adequate to cover such losses
and will be adequate on a pro forma basis for the combined entity, utilizing    
Astoria's ordinary course practice for such allowances. In addition, we have not
conducted any physical inspection of the properties or facilities of Astoria or 
Greater. With respect to the financial forecast information, including, without 
limitation, financial forecasts, evaluations of contingencies and projections   
regarding under-performing and non-performing assets, net charge-offs, adequacy 
of reserves and future economic conditions, and the Expected Synergies,         
furnished to or discussed with us by Astoria or Greater, we have assumed that   
they have been reasonably prepared and reflect the best currently available     
estimates, allocations and judgment of Astoria's or Greater's management as to  
the expected future financial performance of Astoria or Greater, as the case may
be, and the Expected Synergies. We express no opinion as to such financial      
forecast information or the Expected Synergies or the assumptions on which they 
were based. We have further assumed that the Merger will be accounted for as a  
purchase under generally accepted accounting principles and that it will qualify
as a tax-free reorganization for United States federal income tax purposes.     

     Our opinion is necessarily based upon market, economic and other conditions
as in effect on, and the information made available to us as of, the date       
hereof. For purposes of rendering this opinion we have assumed, in all respects 
material to our analysis, that the representations and warranties of each party 
in the Agreement and all related documents and instruments (collectively, the   
"Documents") contained therein are true and correct, that each party to the     
Documents will perform all of the covenants and agreements required to be       
performed by such party under such Documents, and that all conditions to the    
consummation of the Merger will be satisfied without waiver thereof. We have    
also assumed that in the course of obtaining the necessary regulatory or other  
consents or approvals (contractual or otherwise) for the Merger, no             
restrictions, including any divestiture requirements or amendments or           
modifications, will be imposed that will have a material adverse effect on the  
contemplated benefits of the Merger.                                            

     We are acting as financial advisor to Astoria in connection with the Merger
and will receive a fee from Astoria for our services, a significant portion of  
which is contingent upon the consummation of the Merger. In addition, Astoria   
has agreed to indemnify us for certain liabilities arising out of our           
engagement. We have, in the past, provided financial advisory and/or financing  
services to Astoria and Greater and may continue to do so and have received, and
may receive, fees for the rendering of such services. In addition, in the       
ordinary course of our business, we may actively trade debt and/or equity       
securities of Astoria and Greater and their respective affiliates for our own   
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.                                    

This opinion is for the use and benefit of the Board of Directors of  
Astoria. Our opinion does not address the merits of the underlying decision by  
Astoria to engage in the Merger, and does not constitute a recommendation to any
shareholder as to how such shareholder should vote on or with respect to the    
proposed Merger.                                                                

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We are not expressing any opinion herein as to the prices at which the
Astoria Shares will trade following the announcement or consummation of the     
Merger.                                                                         

   On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Merger Consideration is fair from a financial point  
of view to Astoria.                                                             

                     Very truly yours,

                                       MERRILL LYNCH, PIERCE, FENNER & SMITH

                          INCORPORATED

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                                                                      APPENDIX F

SEC.6022. PROCEDURE TO ENFORCE STOCKHOLDER'S RIGHT TO RECEIVE PAYMENT FOR SHARES

 1. A stockholder intending to enforce his right under a section of this
chapter to receive payment for his shares if the proposed corporate action      
referred to therein is taken shall file with the corporation, before the meeting
of stockholders at which the action is submitted to a vote, or at such meeting  
but before the vote, written objection to the action. The objection shall       
include a statement that he intends to demand payment for his shares if the     
action is taken. Such objection is not required from any stockholder to whom the
corporation did not give notice of such meeting in accordance with this chapter 
or where the proposed action is authorized by written consent of stockholders   
without a meeting.                                                              

   2. Within ten days after the stockholders' authorization date, which term
as used in this section means the date on which the stockholders' vote          
authorizing such action was taken, or the date on which such consent without a  
meeting was obtained from the requisite stockholders, the corporation shall give
written notice of such authorization or consent by registered mail to each      
stockholder who filed written objection or from whom written objection was not  
required, excepting any who voted for or consented in writing to the proposed   
action.                                                                         

     3. Within twenty days after the giving of notice to him, any stockholder to
whom the corporation was required to give such notice and who elects to dissent 
shall file with the corporation a written notice of such election, stating his  
name and residence address, the number and classes of shares as to which he     
dissents and a demand for payment of the fair value of his shares.              

     4. A stockholder may not dissent as to less than all of the shares, held by
him of record, that he owns beneficially. A nominee or fiduciary may not dissent
on behalf of any beneficial owner as to less than all of the shares of such     
owner held of record by such nominee or fiduciary.                              

     5. Upon filing a notice of election to dissent, the stockholder shall cease
to have any of the rights of a stockholder except the right to be paid the fair 
value of his shares and any other rights under this section. Withdrawal of a    
notice of election shall require the written consent of the corporation. If a   
notice of election is withdrawn, or the proposed corporate action is abandoned  
or rescinded, or a court shall determine that the stockholder is not entitled to
receive payment for his shares, or the stockholder shall otherwise lose his     
dissenter's rights, he shall not have the right to receive payment for his      
shares and he shall be reinstated to all his rights as a stockholder as of the  
filing of his notice of election, including any intervening preemptive rights   
and the right to payment of any intervening dividend or other distribution or,  
if any such rights have expired or any such dividend or distribution other than 
in cash has been completed, in lieu thereof, at the election of the corporation,
the fair value thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any corporate      
proceedings that may have been taken in the interim.                            

  6. At the time of filing the notice of election to dissent or within one
month thereafter the stockholder shall submit the certificates representing his 
shares to the corporation, or to its transfer agent, which shall forthwith note 
conspicuously thereon that a notice of election has been filed and shall return 
the certificates to the stockholder or other person who submitted them on his   
behalf. Any stockholder who fails to submit his certificates for such notation  
as herein specified shall, at the option of the corporation exercised by written
notice to him within forty-five days from the date of filing of such notice of  
election to dissent, lose his dissenter's rights unless a court, for good cause 
shown, shall otherwise direct. Upon transfer of a certificate bearing such      
notation, each new certificate issued therefor shall bear a similar notation    
together with the name of the original dissenting holder of the shares and a    
transferee shall acquire no rights in the corporation except those which the    
original dissenting stockholder had after filing his notice of election.        

7. Within seven days after the expiration of the period within which  
stockholders may file their notices of election to dissent, or within seven days
after the proposed corporate action is consummated, whichever is later, the     
corporation or, in the case of a merger, the receiving corporation, shall make a
written offer by registered mail to each stockholder who has filed such notice  
of election to pay for his shares at a specified price which the corporation    
considers to be their fair value. Such offer shall be made at the same price per
share to all dissenting stockholders of the same class, or if divided into      
series, of the same series and shall be                                         

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accompanied by a balance sheet of the corporation whose shares the dissenting   
stockholder holds as of the latest available date, which shall not be earlier   
than twelve months before the making of such offer, and a profit and loss       
statement or statements for not less than a twelve month period ended on the    
date of such balance sheet or, if the corporation was not in existence          
throughout such twelve month period, for the portion thereof during which it was
in existence. If within thirty days after the making of such offer, the         
corporation making the offer and any stockholder agree upon the price to be paid
for his shares, payment therefor shall be made within sixty days after the      
making of such offer upon the surrender of the certificates representing such   
shares.                                                                         

 8. The following procedure shall apply if the corporation fails to make
such offer within such period of seven days, or if it makes the offer and any   
dissenting stockholder or stockholders fail to agree with it within the period  
of thirty days thereafter upon the price to be paid for their shares:           

  (a) The corporation or, in the case of a merger, the receiving
    corporation shall, within twenty days after the expiration of whichever is
applicable of the two periods last mentioned, institute a special     
proceeding in the supreme court in the judicial district in which the 
    office of the corporation is located to determine the rights of dissenting
stockholders and to fix the fair value of their shares.               

         (b) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting stockholder may institute such  
proceeding for the same purpose not later than thirty days after the  
    expiration of such twenty day period. If such proceeding is not instituted
    within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.      

        (c) All dissenting stockholders, excepting those who, as provided in
  subdivision seven, have agreed with the corporation upon the price to be
paid for their shares, shall be made parties to such proceeding, which
   shall have the effect of an action quasi in rem against their shares. The
     corporation shall serve a copy of the petition in such proceeding upon each
dissenting stockholder who is a resident of this state in the manner  
 provided by law for the service of a summons, and upon each nonresident
 dissenting stockholder either by registered mail and publication, or in
 such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.                                       

         (d) The court shall determine whether each dissenting stockholder, as
   to whom the corporation requests the court to make such determination, is
 entitled to receive payment for his shares. If the corporation does not
  request any such determination or if the court finds that any dissenting
stockholder is so entitled, it shall proceed to fix the value of the  
     shares, which, for the purposes of this section, shall be the fair value as
of the close of business on the day prior to the stockholders'        
    authorization date, excluding any appreciation or depreciation directly or
     indirectly induced by such corporate action or its proposal. The court may,
   if it so elects, appoint an appraiser to receive evidence and recommend a
decision on the question of fair value. Such appraiser shall have the 
   power, authority and duties specified in the order appointing him, or any
amendment thereof.                                                    

      (e) The final order in the proceeding shall be entered against the
   corporation in favor of each dissenting stockholder who is a party to the
proceeding and is entitled thereto for the value of his shares so     
determined.                                                           

       (f) The final order shall include an allowance for interest at such
rate as the court finds to be equitable, from the stockholders'       
authorization date to the date of payment. If the court finds that the
     refusal of any stockholder to accept the corporate offer of payment for his
     shares was arbitrary, vexatious or otherwise not in good faith, no interest
shall be allowed to him.                                              

        (g) The costs and expenses of such proceeding shall be determined by
     the court and shall be assessed against the corporation, or, in the case of
  a merger, the receiving corporation, except that all or any part of such
costs and expenses may be apportioned and assessed, as the court may  
determine, against any or all of the dissenting stockholders who are  
   parties to the proceeding if the court finds that their refusal to accept
the corporate offer was arbitrary, vexatious or otherwise not in good 
faith. Such expenses shall include reasonable compensation for and the
reasonable expenses of the appraiser, but shall exclude               

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the fees and expenses of counsel for and experts employed by any party
unless the court, in its discretion, awards such fees and expenses. In
    exercising such discretion, the court shall consider any of the following:
    (A) that the fair value of the shares as determined materially exceeds the
     amount which such corporation offered to pay; (B) that no offer was made by
 such corporation; and (C) that such corporation failed to institute the
special proceeding within the period specified therefor.              

          (h) Within sixty days after final determination of the proceeding, the
  corporation or, in the case of a merger, the receiving corporation shall
 pay to each dissenting stockholder the amount found to be due him, upon
surrender of the certificates representing his shares.                

    9. Shares acquired by the corporation upon the payment of the agreed value
therefor or of the amount due under the final order, as provided in this        
section, shall be dealt with as provided in section five thousand fourteen,     
except that, in the case of a merger, they shall be disposed of as provided in  
the plan of merger or consolidation.                                            

  10. The enforcement by a stockholder of his right to receive payment for
his shares in the manner provided herein shall exclude the enforcement by such  
stockholder of any other right to which he might otherwise be entitled by virtue
of share ownership, except as provided in subdivision five, and except that this
section shall not exclude the right of such stockholder to bring or maintain an 
appropriate action to obtain relief on the ground that such corporate action    
will be or is illegal or fraudulent as to him.                                  

   11. Except as otherwise expressly provided in this section, any notice to
be given by a corporation to a stockholder under this section shall be given in 
the manner provided in section six thousand five.                               

Added L.1964, c. 849, sec.1, eff. Sept. 1, 1964.                                

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PROXY                                                                           

ASTORIA FINANCIAL CORPORATION 

REVOCABLE PROXY 

      THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ASTORIA
FINANCIAL CORPORATION FOR USE AT A SPECIAL MEETING OF STOCKHOLDERS TO BE HELD   
ON AUGUST 1, 1997 AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.               

   The undersigned stockholder of Astoria Financial Corporation hereby
authorizes and appoints John M. Graham, Jr., William M. Thomas, Jr., or either  
of them, proxy of the undersigned, with full power of substitution, to attend   
and act as proxy for the undersigned and to vote as designated below all shares 
of common stock of Astoria Financial Corporation which the undersigned may be   
entitled to vote at the Special Meeting of Stockholders of Astoria Financial    
Corporation to be held on August 1, 1997 at 9:30 a.m., Eastern Time, at the New 
Hyde Park Inn, 214 Jericho Turnpike, New Hyde Park, New York 11040, and at any  
adjournment or postponement thereof.                                            

(CONTINUED ON REVERSE SIDE. PLEASE COMPLETE, SIGN AND DATE ON THE REVERSE 
SIDE AND PROMPTLY RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE.)

--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -

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                                                     PLEASE MARK
                                                            YOUR VOTES AS  /X/
                                                      INDICATED IN
                                                      THIS EXAMPLE

THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS              
A VOTE "FOR" PROPOSALS NOS. 1, 2 AND 3. 

1. Approval of the issuance by Astoria Financial Corporation of shares of its   
common stock pursuant to an Agreement and Plan of Merger, dated as of the 
29th day of March, 1997, as amended, by and between Astoria Financial     
   Corporation, Astoria Federal Savings and Loan Association and The Greater New
York Savings Bank.                                                        

     FOR     AGAINST       ABSTAIN
   / /       / /           / /

2. Approval of the amendment of Astoria Financial Corporation's Certificate of  
Incorporation to change the par value of Astoria Financial Corporation    
authorized preferred stock from $0.01 to $1.00 per share.                 

     FOR     AGAINST       ABSTAIN
   / /       / /           / /

3. The authorization of the Board of Directors of Astoria Financial             
Corporation, in its discretion, to vote upon such other business as may   
   properly come before the Special Meeting, and any adjournment or postponement
thereof, including, without limitation, a motion to adjourn the Special   
Meeting.                                                                  

     FOR     AGAINST       ABSTAIN
   / /       / /           / /

                             THIS PROXY IS REVOCABLE. THIS PROXY, WHEN
                                  PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
                      DIRECTED HEREIN BY THE UNDERSIGNED
                              STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
                              PROXY WILL BE VOTED FOR PROPOSAL NOS. 1, 2
AND 3.      

                                The undersigned hereby acknowledges receipt,
                              prior to the execution of this proxy, of a
                                Notice of Special Meeting of Stockholders of
                             Astoria Financial Corporation and a Joint
                               Proxy Statement / Prospectus dated June 24,
                 1997 for the Special Meeting.

                                 PLEASE SIGN AND DATE BELOW AND RETURN
                                 PROMPTLY IN THE ENCLOSED POSTAGE-PAID
                                   ENVELOPE.

X                                                  Date:                  , 1997
------------------------------------------------       -----------------        
Please sign name exactly as it appears hereon. If shares are registered in more 
than one name, all should sign, but if one signs, it binds the others. When     
signing as attorney, executor, administrator, trustee or guardian, please give  
your full title as such. If a corporation, please sign in full corporate name by
an authorized officer. If a partnership, please sign in partnership name by an  
authorized person.                                                              
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -

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ASTORIA FINANCIAL CORPORATION   

CONFIDENTIAL VOTING INSTRUCTION   

SOLICITED BY THE EMPLOYEE STOCK OWNERSHIP COMMITTEE,
AS PLAN ADMINISTRATOR, FOR THE ASTORIA FEDERAL SAVINGS AND
LOAN ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN  

       As a "Named Fiduciary", the undersigned participant, former participant
or beneficiary of a deceased former participant in the Astoria Federal Savings  
and Loan Association Employee Stock Ownership Plan (the "ESOP") hereby          
provides the voting instructions hereinafter specified to State Street Bank &   
Trust Company, the trustee of the ESOP (the "Trustee"), which instructions      
shall be taken into account by the Trustee in voting, in person, by limited or  
general power of attorney or by proxy, the shares and fractional shares of      
common stock of Astoria Financial Corporation that are held by the Trustee, in  
its capacity as Trustee, as of June 23, 1997, at the Special Meeting of         
Shareholders of Astoria Financial Corporation to be held on August 1, 1997 at   
9:30 a.m., Eastern Time, at the New Hyde Park Inn, 214 Jericho Turnpike, New    
Hyde Park, New York 11042, and at any adjournment or postponement thereof.      

      As to the proposals listed below which are more particularly described
in the Joint Proxy Statement / Prospectus dated June 24, 1997, the Trustee      
will vote the common stock of Astoria Financial Corporation held by the ESOP    
Trust to reflect the voting instructions on this Confidential Voting            
Instruction, in the manner described in the accompanying letter from the ESOP   
Committee dated June 24, 1997.                                                  

     If the duly executed Confidential Voting Instruction is returned, but
no instruction is given, for purposes of providing voting instructions, such    
shares shall be treated as described in the letter from the Plan Administrator  
dated June 24, 1997.                                                            

(CONTINUED ON REVERSE SIDE. PLEASE COMPLETE, SIGN AND DATE ON THE REVERSE       
SIDE AND PROMPTLY RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE.)        

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                                                   Please mark     [X]
                                             your votes as
                                            indicated in
                                            this example

The Board of Directors of Astoria Financial Corporation recommends a vote       
"FOR" Proposals Nos. 1, 2 and 3. The directions, if any, given in this          
Confidential Voting Instruction will be kept confidential from all directors,   
officers and employees of Astoria Financial Corporation or the Association.     

1.      Approval of the issuance by Astoria Financial Corporation of shares of  
      its common stock pursuant to an Agreement and Plan of Merger, dated as
  of the 29th day of March, 1997, as amended, by and between Astoria
   Financial Corporation, Astoria Federal Savings and Loan Association
and The Greater New York Savings Bank.                          

FOR          AGAINST         ABSTAIN                            
[ ]            [ ]             [ ]                              

2.      Approval of the amendment of Astoria Financial Corporation's            
Certificate of Incorporation to change the par value of Astoria 
    Financial Corporation authorized preferred stock from $0.01 to $1.00
per share.                                                      

FOR          AGAINST         ABSTAIN                            
[ ]            [ ]             [ ]                              

3.      The authorization of the Board of Directors of Astoria Financial        
   Corporation, in its discretion, to vote upon such other business as
    may properly come before the Special Meeting, and any adjournment or
postponement thereof, including, without limitation, a motion to
adjourn the Special Meeting.                                    

FOR          AGAINST         ABSTAIN                            
[ ]            [ ]             [ ]                              

  All proposals listed above in this Confidential Voting Instruction
were proposed by Astoria Financial Corporation.                 

The undersigned hereby instructs the Trustee to vote in accordance with the     
voting instruction indicated above and hereby acknowledges receipt, prior to    
the execution of this Confidential Voting Instruction, of a Notice of Special   
Meeting of Shareholders and a Joint Proxy Statement / Prospectus dated          
June 24, 1997 for the Special Meeting.                                          

PLEASE SIGN AND DATE BELOW AND RETURN PROMPTLY IN THE ENCLOSED  
POSTAGE-PAID ENVELOPE.    

X                                                      Date:              , 1997
-----------------------------------------------------        -------------      
Signature of participant, former participant or                                 
designated beneficiary of deceased former participant.                          
Please sign name exactly as it appears herein.                                  

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ASTORIA FINANCIAL CORPORATION 
CONFIDENTIAL VOTING INSTRUCTION 

SOLICITED BY ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION,
AS PLAN ADMINISTRATOR, FOR THE ASTORIA
FEDERAL SAVINGS AND LOAN ASSOCIATION INCENTIVE SAVINGS PLAN 

   The undersigned participant, former participant or beneficiary of a
deceased former participant in the Astoria Federal Savings and Loan Association 
Incentive Savings Plan (the "401k Plan") hereby provides the voting instructions
hereinafter specified to ChaseMellon Shareholder Services, Inc., as the designee
of Astoria Federal Savings and Loan Association, as Plan Administrator (the     
"Plan Administrator"), which instructions shall be taken into account in        
directing the trustee of the 401k Plan (the "Trustee") to vote in person, by    
limited or general power of attorney or by proxy the shares and fractional      
shares of common stock of Astoria Financial Corporation that are held by the    
Trustee, in its capacity as Trustee, as of June 23, 1997, at the Special Meeting
of Shareholders of Astoria Financial Corporation to be held on August 1, 1997 at
9:30 a.m., Eastern Time, at the New Hyde Park Inn, 214 Jericho Turnpike, New    
Hyde Park, New York, 11042, and at any adjournment or postponement thereof.     

      As to the proposals listed below which are more particularly described
in the Joint Proxy Statement / Prospectus dated June 24, 1997, the Plan         
Administrator of the 401k Plan, will give voting directions to the Trustee. Such
directions will reflect the voting instructions on this Confidential Voting     
Instruction, in the manner described in the accompanying letter from the Plan   
Administrator dated June 24, 1997.                                              

        If the duly executed Confidential Voting Instruction is returned, but no
instruction is given, for purposes of providing voting instructions, such       
shares shall be treated as described in the letter from the Plan Administrator  
dated June 24, 1997.                                                            

(CONTINUED ON REVERSE SIDE. PLEASE COMPLETE, SIGN AND DATE ON THE REVERSE 
SIDE AND PROMPTLY RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE.)

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                                                           Please mark
                                                             your votes as
                                                            indicated in
                                                            this example

THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL CORPORATION RECOMMENDS A VOTE "FOR" 
PROPOSALS NOS. 1, 2 AND 3. THE DIRECTIONS, IF ANY, GIVEN IN THIS CONFIDENTIAL   
VOTING INSTRUCTION WILL BE KEPT CONFIDENTIAL FROM ALL DIRECTORS, OFFICERS AND   
EMPLOYEES OF ASTORIA FINANCIAL CORPORATION OR THE ASSOCIATION.                  

1.  Approval of the issuance by Astoria Financial Corporation of shares of its  
 common stock pursuant to an Agreement and Plan of Merger, dated as of the
29th day of March, 1997, as amended, by and between Astoria Financial   
 Corporation, Astoria Federal Savings and Loan Association and The Greater
New York Savings Bank.                                                  

FOR        AGAINST        ABSTAIN*                              
[ ]          [ ]            [ ]                                 

2.  Approval of the amendment of Astoria Financial Corporation's Certificate of 
Incorporation to change the par value of Astoria Financial Corporation  
authorized preferred stock from $0.01 to $1.00 per share.               

FOR        AGAINST        ABSTAIN*                              
[ ]          [ ]            [ ]                                 

3.  The authorization of the Board of Directors of Astoria Financial            
Corporation, in its discretion, to vote upon such other business as may 
properly come before the Special Meeting, and any adjournment or        
    postponement thereof, including, without limitation, a motion to adjourn the
Special Meeting.                                                        

FOR        AGAINST        ABSTAIN*                              
[ ]          [ ]            [ ]                                 

       All proposals listed above in this Confidential Voting Instruction were
proposed by Astoria Financial Corporation.                                      

*  Abstention has the same effect as not filing a Confidential Voting           
Instruction.                                                              

     The undersigned hereby instructs the Plan Administrator to direct the
Trustee to vote in accordance with the voting instruction indicated above and   
hereby acknowledges receipt, prior to execution of this Confidential Voting     
Instruction, of a Notice of Special Meeting of Shareholders and a Joint Proxy   
Statement / Prospectus dated June 24, 1997 for the Special Meeting.             

PLEASE SIGN AND DATE BELOW AND RETURN PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.

X________________________________________________________ Date: __________, 1997
Signature of participant, former participant or designated beneficiary of       
deceased former participant. Please sign name exactly as it appears herein.     

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                                                                   June 24, 1997

TO:  ALL ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION INCENTIVE SAVINGS         
PLAN ("401K PLAN") PARTICIPANTS WITH A PORTION OF HIS OR HER          
ACCOUNT BALANCE INVESTED IN THE EMPLOYER STOCK FUND                   

Re:  Special Meeting of Shareholders to be held on August 1, 1997               

Dear Participants:                                                              

     In connection with the Special Meeting of Shareholders of Astoria Financial
Corporation to be held on August 1, 1997, enclosed please find the following    
documents:                                                                      

a) Confidential Voting Instruction card;                    

        b) Joint Proxy Statement/Prospectus dated June 24, 1997, including a
Notice of Special Meeting of Shareholders; and                        

          c) a postage-paid return envelope addressed to ChaseMellon Shareholder
Services, Inc., Proxy Tabulation Department (ChaseMellon Shareholder  
 Services, Inc. is the Confidential Voting Instruction tabulator for the
401k Plan).                                                           

 As a participant in the 401k Plan with all or a portion of your account
balance invested in the Employer Stock Fund, you have the right to participate  
in directing how the Plan Administrator (Astoria Federal Savings and Loan       
Association) instructs the 401k Trustee (T. Rowe Price Trust Company) to vote   
the shares of Astoria Financial Corporation Common Stock (the "Shares") held by 
the 401k Plan as of June 23, 1997, the meeting record date (provided that you   
had all or a portion of your account invested in the Employer Stock Fund as of  
the most recent valuation date on or before the meeting record date). In        
general, the 401k Trustee will be directed to vote the Shares held in the       
Employer Stock Fund "FOR" or "AGAINST" as to each proposal listed on the        
Confidential Voting Instruction card in the same proportions as instructions to 
cast votes "FOR" and "AGAINST" each proposal are given by those individuals with
the right to give directions. Each individual's instructions are weighted       
according to the value of the participant's interest in the Employer Stock Fund 
as of the most recent valuation available prior to the record date. If you do   
not file a Confidential Voting Instruction card on or before July 25, 1997, or  
if you ABSTAIN, your directions will not count.                                 

UNANTICIPATED PROPOSALS                                                         

 It is possible, although very unlikely, that proposals other than those
specified on the Confidential Voting Instruction card will be presented for     
shareholder action at the Special Meeting of Shareholders. If this should       
happen, the 401k Trustee will be instructed to vote upon such matters in the    
401k Trustee's discretion, or to cause such matters to be voted upon in the     
manner provided in any proxies executed by the 401k Trustee.                    

Your instruction is very important. You are encouraged to review the  
enclosed material carefully and to complete, sign and date the enclosed         
Confidential Voting Instruction card to signify your direction to the Plan      
Administrator. You should then seal the card in the enclosed envelope and return
it to ChaseMellon Shareholder Services, Inc. To direct the voting of your       
Shares, your instruction card must be received by ChaseMellon Shareholder       
Services, Inc. no later than July 25, 1997.                                     

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    PLEASE NOTE THAT THE INSTRUCTION OF INDIVIDUAL PARTICIPANTS ARE TO BE KEPT
CONFIDENTIAL BY CHASEMELLON SHAREHOLDER SERVICES, INC. AND THE 401K TRUSTEE, WHO
HAVE BEEN INSTRUCTED NOT TO DISCLOSE THEM TO ANYONE AT ASTORIA FEDERAL SAVINGS  
AND LOAN ASSOCIATION OR ASTORIA FINANCIAL CORPORATION.                          

    This memorandum is subject in its entirety to the information set forth in
the enclosed Joint Proxy Statement-Prospectus, which you are encouraged to read 
and study thoroughly.                                                           

                     Very truly yours,

                                    Astoria Federal Savings and Loan
               Association

                       By: /s/ Rhoda Baisi
                                            ------------------------------------
                                      Plan Administrator

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                                                                   June 24, 1997

TO:  ALL ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION                           
EMPLOYEE STOCK OWNERSHIP PLAN (THE "ESOP") PARTICIPANTS               

Re:  Special Meeting of Shareholders to be held on August 1, 1997               

Dear Participants:                                                              

     In connection with the Special Meeting of Shareholders of Astoria Financial
Corporation to be held on August 1, 1997, enclosed please find the following    
documents:                                                                      

a) Confidential Voting Instruction card;                    

        b) Joint Proxy Statement/Prospectus dated June 24, 1997, including a
Notice of Special Meeting of Shareholders; and                        

          c) a postage-paid return envelope addressed to ChaseMellon Shareholder
Services, Inc., Proxy Tabulation Department (ChaseMellon Shareholder  
 Services, Inc. is the Confidential Voting Instruction tabulator for the
ESOP).                                                                

     As a participant in the ESOP, you have the right to direct the ESOP Trustee
(State Street Bank & Trust Company) how to vote the shares of Astoria Financial 
Corporation Common Stock ("Shares") held by the ESOP as of June 23, 1997, the   
meeting record date. Pursuant to the terms of the ESOP, each participant has the
right to instruct the ESOP Trustee how to vote the Shares allocated to that     
person's account in the ESOP as of the record date. That number is shown on the 
enclosed Confidential Voting Instruction card. In general, the ESOP Trustee will
be directed to vote the Shares held by the ESOP Trust and allocated to you by   
casting votes "FOR", "AGAINST", or "ABSTAIN" as to each proposal as specified in
the Confidential Voting Instruction card accompanying this letter. The ESOP     
generally states that if you do not direct the Trustee how to vote the Shares   
allocated to your account, and as to the unallocated Shares held by the ESOP    
trust, the Trustee shall vote such Shares in a manner calculated to most        
accurately reflect the instructions received from participants regarding        
allocated Shares to the extent consistent with its fiduciary duties. The        
Trustee's fiduciary duties require it to vote any shares which are either       
unallocated or as to which the Trustee receives no voting instructions in the   
manner determined by the Trustee to be prudent and solely in the interest of the
participants and beneficiaries. To be considered by the Trustee in determining  
how to vote the Shares held by the ESOP Trust, your voting instruction must be  
received by ChaseMellon Shareholder Services, Inc. not later than by July 25,   
1997.                                                                           

UNANTICIPATED PROPOSALS                                                         

 It is possible, although very unlikely, that proposals other than those
specified on the Confidential Voting Instruction card will be presented for     
shareholder action at the Special Meeting of Shareholders. If this should       
happen, the ESOP Trustee will be instructed to vote upon such matters, in the   
ESOP Trustee's discretion, or to cause such matters to be voted upon in the     
manner provided in any proxies executed by the ESOP Trustee.                    

Your instruction is very important. You are encouraged to review the  
enclosed material carefully and to complete, sign and date the enclosed         
Confidential Voting Instruction card to signify your direction to the Trustee.  
You should then seal the card in the enclosed envelope and return it to         
ChaseMellon Shareholder Services, Inc. To direct the voting of Shares within the
ESOP, the Confidential Voting Instruction card must be received by ChaseMellon  
Shareholder Services, Inc. no later than July 25, 1997.                         

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    PLEASE NOTE THAT THE INSTRUCTION OF INDIVIDUAL PARTICIPANTS ARE TO BE KEPT
CONFIDENTIAL BY CHASEMELLON SHAREHOLDER SERVICES, INC. AND THE TRUSTEE, WHO HAVE
BEEN INSTRUCTED NOT TO DISCLOSE THEM TO ANYONE AT ASTORIA FEDERAL SAVINGS AND   
LOAN ASSOCIATION OR ASTORIA FINANCIAL CORPORATION.                              

    This memorandum is subject in its entirety to the information set forth in
the enclosed Joint Proxy Statement/Prospectus, which you are encouraged to read 
and study thoroughly.                                                           

                     Very truly yours,

                      The ESOP Committee

                       By: /s/ Rhoda Baisi
                                          --------------------------------------
                               Rhoda Baisi