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                         Catskill Financial Corporation
                              Holding Company for
                             Catskill Savings Bank

October 2, 1996

Dear Fellow Stockholder:

On  September 4, 1996,  we mailed you proxy  materials  in  connection  with our
Special Meeting of  Stockholders,  to be held on Thursday,  October 24, 1996. At
the meeting, stockholders will be asked to vote to approve our stock option plan
and management recognition plan. Our board of directors has recommended that the
two plans be approved and I urge you to vote in favor of the two plans.

With those materials, we enclosed a proxy card for you to complete. According to
our latest records, we have not received your proxy for this meeting.

Your vote is important.  We ask that you sign and return the enclosed duplicated
proxy  card in the  postage  paid  envelope  provided  so that your  shares  are
represented at the meeting.

Because  there are  sometimes  delays in the mail  deliveries,  please  sign and
return the enclosed proxy even if you returned the original.

Again, I urge you to vote in favor of the two plans.

Sincerely,

/s/ Wilbur J. Cross
- -------------------
Wilbur J. Cross
President, Chairman of the Board
and Chief Executive Officer

You should  review the proxy  statement  before  casting your vote.  If you need
another copy,  please call David L.  Guldenstern at  1-518-943-3600  and we will
send one to you.






               341 Main Street, Catskill, NY 12414 - 518-943-3600