For further information, contact:                          FOR IMMEDIATE RELEASE
AMBANC: Bud Barnett, President (518) 842-7200              August 11, 1998
AFSALA:   John Lisicki, President (518) 842-5700


               AMBANC AND AFSALA ANNOUNCE SETTLEMENT WITH HOLTZMAN

         Amsterdam, New York.  Ambanc Holding Co., Inc. (Nasdaq AHCI) and AFSALA
Bancorp, Inc. (Nasdaq AFED) announced today that they have reached an agreement
with Seymour Holtzman, a stockholder of both companies, regarding the pending
merger of the two companies.


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

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

         Lauren T. Barnett,  acting  President of Ambanc,  stated:  "We are very
pleased to have this expensive  litigation  behind us and to be working with Mr.
Holtzman in a cooperative  fashion for the benefit of all the  stockholders.  We
believe  that  working  together,  and with the  anticipated  benefits of AFSALA
becoming  part of our company and bringing with it superb  management  talent in
John Lisicki, we can maximize the value of our shareholders' investment."

         John M. Lisicki,  President of AFSALA,  stated: "With this action today
we can focus on achieving  the  synergies and cost savings that make our pending
merger  with  Ambanc so  attractive.  Our focus  will be on  achieving  the best
possible results for the  shareholders of the combined  institutions and we look
forward to working with Mr.
Holtzman in a very constructive and positive way."

         The special  meetings of the  shareholders of Ambanc and AFSALA will be
held on September 1 and September 3, respectively.  Closing is expected to occur
early in the fourth quarter.