INDEX

Page No.



Article 1         Definitions

Article 2         Formation

Article 3         Principal Office

Article 4         Term and Duration

Article 5         Purpose

Article 6         Capital Contributions by the Members

Article 7         Additional Capital Contributions

Article 8         Distributions of Net Proceeds

Article 9         Tax Allocations and Distributions

Article 10        Rights, Powers and Representations of  the Investment

                  Manager and Administrative Manager; Management Fee

Article 11        Books, Records and Reports

Article 12        Indemnification

Article 13-       Tax Matters

Article 14-       Death, Dissolution or Bankruptcy of A Member

Article 15-       Assignability, Transfer or Pledge of

                  Interests; Resignation of A Member

Article 16-       Admission of Substituted Members;

                  Incapacity; Further Condition

Article 17        Liquidation

Article 18        Miscellaneous



Schedule A -      Members' Percentage Interests and Capital

                  Contributions



{PAGE}



                               OPERATING AGREEMENT



                                       FOR



                             FEDERAL HOLDINGS L.L.C.



AGREEMENT made June 12,1995 by and among the members listed on Schedule A

annexed hereto (individually, a "Member" and collectively, the "Members").



W I T N E S S E T H:



WHEREAS, the Members desire to form a limited liability company pursuant to the

New York Limited Liability Company Law (the "Law") and adopt this Agreement in

connection therewith; and



WHEREAS, by executing this Agreement, each Member represents that it has

sufficient right and authority to execute this Agreement and is not acting on

behalf of any undisclosed or partially disclosed principal.



NOW, THEREFORE, in consideration of ten ($10) dollars and for other good and

valuable consideration, the receipt and sufficiency of which is hereby

acknowledged, the parties hereto agree as follows effective as of the date first

written above.



                                    ARTICLE 1



                                   DEFINITIONS



1.1     For purposes of this Agreement, the following terms shall have the

definitions set forth below:



"Account": As defined in Section 10.4



"Additional Member": Means any person or entity other than the Members of the

Company as of the date hereof who acquires an interest in the Company.



"Administrative Manager': Kevin Moore.



"Advance": As defined in Section 7.2.



{PAGE}



"Agreement": This Operating Agreement as originally executed and as amended,

modified, supplemented or restated from time to time.



"Articles of Organization": The Articles of Organization of the Company filed

with the Secretary of State of the State of New York, pursuant to the Law to

form the Company, as originally executed and as amended, modified, supplemented

or restated from time to time.



"Capital Account" or "Capital Accounts": As defined in Section 6.4.



"Capital Contributions": The respective capital contributions, including any

additional Capital Contribution,of each Member to the Company.



"Capital Transaction" or "Capital Transactions": Any transaction which, in

accordance with generally accepted accounting principles consistently applied,

is treated as a capital transaction including, without limitation, any sale of

all or substantially all of the assets of the Company.



"Closing Price": As defined in Section 16.4



"Code": The Internal Revenue Code of 1986, as amended, and any reference to a

particular section of the Code shall be deemed to include any successor section

to such section.



"Company": FEDERAL HOLDINGS L.L.C., a New York limited liability company.



"Contributing Member": A Member which has made its additional Capital

Contribution.



"Current Market Value": As defined in Section 16.4.



"Fair Market Value": As defined in Section 16.4.



"Gain from a Capital Transaction": The gain recognized by the Company

attributable to a Capital Transaction, determined in accordance with the method

of accounting used by the Company for federal income tax purposes.



"Interest": The respective percentage interest of each Member as set forth on

Schedule A.



"Investment Manager": Shall mean Lawrence Seidman, subject to the provisions of

Section 10.5.



{PAGE}



"Loss from a Capital Transaction": The loss recognized by the Company

attributable to a Capital Transaction, determined in accordance with the method

of accounting used by the Company for federal income tax purposes.



"Management Fee": As defined in Section 10.2.



"Member": Means each of the parties who has executed this Agreement and any

party who may hereafter become an Additional Member or a Substitute Member

pursuant to this Agreement.



"Net Proceeds": As defined in Section 8.1.



"Net Profit" and "Net Loss": The net income (including income exempt from tax)

and net loss (including expenditures that can neither be capitalized nor

deducted), respectively, of the Company, determined in accordance with the

method of accounting used by the Company for federal income tax purposes, but

computed without regard for Gain from Capital Transactions, Loss from Capital

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