Exhibit 10.13

                        PSB Bancorp, Inc.
                    2001 Stock Incentive Plan



                        Table of Contents

                                                            Page

1.   Purpose                                                  1
2.   Definitions                                              1
3.   Administration of the Plan                               3
     3.1  Board of Directors                                  3
     3.2  Grants                                              3
     3.3  Deferral Arrangement                                4
     3.4  No Liability                                        5
4.   Stock Subject to the Plan                                5
5.   Grant Eligibility                                        5
     5.1  Employees, Officers and Directors of the Company    5
     5.2  Successive Grants                                   5
     5.3  Limitations on Incentive Stock Options              5
6.   Award Agreement                                          5
7.   Terms and Conditions of Options                          6
     7.1  Option Price                                        6
     7.2  Vesting and Option Period                           6
     7.3  Term                                                6
     7.4  Exercise of Options on Termination of Service       6
     7.5  Limitations on Exercise of Option                   6
     7.6  Exercise Procedure                                  7
     7.7  Right of Holders of Options                         7
     7.8  Delivery of Stock Certificates                      7
8.  Transferability of Options                                7
     8.1  In General                                          7
     8.2  Family Transfers                                    7
9.  Restricted Stock                                          7
     9.1  Grant of Restricted Stock                           7
     9.2  Restrictions                                        7
     9.3  Restricted Stock Certificates                       8
     9.4  Rights of Holders of Restricted Stock               8
     9.5  Termination of Service                              8
     9.6  Delivery of Stock                                   8
10.  Form of Payment                                          8
     10.1  General Rule                                       8
     10.2  Surrender of Stock                                 9
     10.3  Cashless Exercise                                  9
11.  Withholding Taxes                                        9
12.  Cutback Provision Authorized                             9
13.  Requirements of Law                                     10
     13.1  General                                           10
     13.2  Rule 16b-3                                        10
     13.3  Financial Reports                                 11
14.  Effect of Changes in Capitalization                     11
     14.1  Changes in Stock                                  11
     14.2  Reorganization in which the Company is the
           Surviving Entity and in which No Change of
           Control Occurs                                    11
     14.3  Reorganization, Sale of Assets, or Sale of
           Stock which Involves a Change of Control          11
     14.4  Adjustments                                       12
     14.5  No Limitations on Company                         12
15.  Duration and Amendments                                 12
     15.1  Term of the Plan                                  12
     15.2  Amendment and Termination of the Plan             12
16.  General Provisions                                      13
     16.1  Disclaimer of Rights                              13
     16.2  Nonexclusivity of the Plan                        13
     16.3  Captions                                          13
     16.4  Other Award Agreement Provisions                  13
     16.5  Number and Gender                                 13
     16.6  Severability                                      13
     16.7  Governing law                                     13
17.  Execution                                               14



                        PSB Bancorp, Inc.

                    2001 Stock Incentive Plan

          PSB BANCORP, INC. (the "Company"), a Pennsylvania
corporation, sets forth herein the terms of its 2001 Stock
Incentive Plan (the "Plan") as follows:

          1.  Purpose.  The Plan is intended to enhance the
Company's and its Affiliates' ability to attract and retain
highly qualified officers, directors, and employees, and to
motivate such officers, directors, and employees to serve the
Company and its Affiliates and to expend maximum effort to
improve the business results and earnings of the Company, by
providing to such officers, directors, and employees an
opportunity to acquire or increase a direct proprietary interest
in the operations and future success of the Company.  To this
end, the Plan provides for the grant of Stock Options and
Restricted Stock in accordance with the terms hereof.  Stock
Options granted under the Plan may be Nonqualified Stock Options
or Incentive Stock Options, as provided herein.

          2.  Definitions.  For purposes of interpreting the
Plan and related documents (including Award Agreements), the
following definitions shall apply:

               2.1  "Affiliate" means, with respect to the
Company, any company or other trade or business that controls,
is controlled by, or is under common control with the Company
within the meaning of Rule 405 of Regulation C under the
Securities Act, including, without limitation, any Subsidiary.

               2.2  "Award Agreement" means the Stock Option
agreement, Restricted Stock agreement, or other written
agreement between the Company and a Grantee that evidences and
sets out the terms and conditions of a Grant.

               2.3  "Benefit Arrangement" shall have the meaning
set forth in Section 12.

               2.4  "Board" means the Board of Directors of the
Company.

               2.5  "Cause" means, unless otherwise provided in
an applicable employment agreement with the Company or an
Affiliate or in an Award Agreement, (i) negligence or willful
misconduct in connection with the performance of duties; (ii)
conviction of a criminal offense (other than minor traffic
offenses); or (iii) material breach of any term of any
employment, confidentiality, intellectual property, or non-
competition agreements, if any, between the employee and the
Company or an Affiliate.

               2.6  "Change of Control" means (i) the
dissolution or liquidation of the Company or a merger,
consolidation, or reorganization of the Company with one or more
other entities in which the Company is not the surviving entity,
(ii) a sale of substantially all of the assets of the Company to
another person or entity, or (iii) any transaction (including
without limitation a merger, consolidation, or reorganization in
which the Company is the surviving entity) that results in any
person or entity (other than persons who are shareholders or
Affiliates immediately prior to the transaction) owning 50% or
more of the combined voting power of all classes of stock of the
Company.

               2.7  "Code" means the Internal Revenue Code of
1986, as now in effect or as hereafter amended.

               2.8  "Covered Employee" means an employee who is,
or is likely to become a  "covered employee" within the meaning
of Section 162(m) of the Code (or any successor provision).

               2.9  "Company" means PSB Bancorp, Inc.

               2.10  "Disability" means the Grantee is unable to
perform each of the essential duties of such Grantee's position
by reason of a medically determinable physical or mental
impairment that is potentially permanent in character or that
can be expected to last for a continuous period of not less than
12 months; provided, however, that, with respect to rules
regarding expiration of an Incentive Stock Option following
termination of the Grantee's Service, Disability shall mean the
Grantee is unable to engage in any substantial gainful activity
by reason of a medically determinable physical or mental
impairment that can be expected to result in death or that has
lasted or can be expected to last for a continuous period of not
less than 12 months.

               2.11  "Effective Date" means December 19, 2001,
the date the Plan was approved by the Board.

               2.12  "Exchange Act" means the Securities
Exchange Act of 1934, as now in effect or as hereafter amended.

               2.13  "Fair Market Value" means with respect to a
share of Stock, the closing price of the Stock on the Nasdaq
National Market (or such other exchange or market on which the
Stock may hereafter be listed for trading) on the Grant Date or,
if no sale of Stock is reported for such trading day, on the
next preceding day on which any sale shall have been reported.
Notwithstanding the preceding sentence, in the event the Stock
of the Company is traded in a manner for which there is
typically no closing price, then  "fair market value" shall be
determined by the Board in good faith.

               2.14  "Family Member" means, with respect to the
Grantee of an Option, his spouse, children, step children,
sisters, brothers, grandchildren, and persons bearing an
adoptive relationship to him (and, for this purpose, shall also
include the Grantee).  Such term also includes a trust,
partnership, or limited liability company for the benefit of one
or more of such persons.

               2.15  "Grant" means an award of an Option or
Restricted Stock under the Plan.

               2.16  "Grant Date" means, as determined by the
Board, the latest to occur of (i) the date as of which the Board
approves a Grant, (ii) the date on which the recipient of a
Grant first becomes eligible to receive a Grant under Section 5,
or (iii) such other date as may be specified by the Board.

               2.17  "Grantee" means a person who receives or
holds an Option or Restricted Stock under the Plan.

               2.18  "Incentive Stock Option" means an
"incentive stock option" within the meaning of Section 422 of
the Code, or the corresponding provision of any subsequently
enacted tax statute, as amended from time to time.

               2.19  "Nonqualified Stock Option" means a Stock
Option that is not an Incentive Stock Option.

               2.20  "Option" means an option to purchase one or
more shares of Stock pursuant to the Plan.

               2.21  "Option Price" means the purchase price for
each share of Stock subject to an Option.

               2.22  "Other Agreement" shall have the meaning
set forth in Section 13.

               2.23  "Plan" means this PSB Bancorp, Inc. 2001
Stock Incentive Plan.

               2.24 [Reserved.]

               2.25  "Restricted Stock" means shares of Stock,
awarded to a Grantee pursuant to Section 9, that are subject to
restrictions and to a risk of forfeiture.

               2.26  "Securities Act" means the Securities Act
of 1933, as now in effect or as hereafter amended.

               2.27  "Service" means service as a employee,
officer, or director of the Company or an Affiliate.  Unless
otherwise stated in the applicable Award Agreement, a Grantee's
change in position or duties shall not result in interrupted or
terminated Service, so long as such Grantee continues to be an
employee, officer, or director of the Company or an Affiliate.
Subject to the preceding sentence, whether a termination of
Service shall have occurred for purposes of the Plan shall be
determined by the Board, which determination shall be final,
binding, and conclusive.

               2.28  "Stock" means the common stock (no par
value) of the Company.

               2.29  "Subsidiary" means any  "subsidiary
corporation" of the Company within the meaning of Section 424(f)
of the Code.

               2.30  "Ten-Percent Shareholder" means an
individual who owns more 10% of the total combined voting power
of all classes of outstanding stock of the Company, its
"parent" (within the meaning of Section 424(e) of the Code) or
any of its Subsidiaries.  In determining stock ownership, the
attribution rules of Section 424(d) of the Code shall be
applied.

          3.  Administration of the Plan.

               3.1  Board of Directors.  The Board will
administer the Plan consistent with the Company's articles of
incorporation, by-laws, and applicable law.

               3.2  Grants.  Subject to the other terms and
conditions of the Plan, the Board shall have full and final
authority to:

                    (i)  designate Grantees,

                    (ii)  determine the type or types of Grants
     to be made to a Grantee,

                    (iii)  determine the number of shares of
     Stock to be subject to a Grant (provided however, that the
     number of shares pursuant to a Grant made to any Grantee
     who is a Covered Employee not exceed 500,000 shares in any
     12-month month period, where such action would result in
     the loss of the otherwise available exemption of the award
     under Section 162(m) of the Code),

                    (iv)  establish the terms and conditions of
     each Grant (including, but not limited to, the Option Price
     of any Option (provided however, that the Option Price on
     any shares pursuant to a Grant made to any Grantee who is a
     Covered Employee shall not be less than the Fair Market
     Value on the date of grant where such action would result
     in the loss of the otherwise available exemption of the
     award under Section 162(m) of the Code), the nature and
     duration of any restriction or condition (or provision for
     lapse thereof) relating to the vesting, exercise, transfer,
     or forfeiture of a Grant or the shares of Stock subject
     thereto, and any terms or conditions that may be necessary
     to qualify Options as Incentive Stock Options),

                    (v)  prescribe the form of each Award
     Agreement evidencing a Grant, and

                    (vi)  amend, modify, or supplement the terms
     of any outstanding Grant; provided however, that the Board
     may not reduce the term, extend the vesting period, raise
     the exercise price or otherwise amend, modify, or
     supplement the terms of any outstanding Grant in a matter
     that adversely affects the Grantee without the prior
     written consent of the Grantee.

Such authority specifically includes the authority, in order to
effectuate the purposes of the Plan but without amending the
Plan, to modify Grants to eligible individuals who are foreign
nationals or are individuals who are employed outside the United
States to recognize differences in local law, tax policy, or
custom.  The Board shall have the right, in its discretion, to
make Grants in substitution or exchange for any other Grant
under another plan of the Company, any Affiliate, or any
business entity to be acquired by the Company or an Affiliate.
The Company may retain the right in an Award Agreement to cause
a forfeiture of the gain realized by a Grantee on account of
actions taken by the Grantee in violation or breach of or in
conflict with any non-competition agreement, any agreement
prohibiting solicitation of employees or clients of the Company
or any Affiliate thereof, or any confidentiality obligation with
respect to the Company or any Affiliate thereof, to the extent
specified in such Award Agreement applicable to the Grantee.
Furthermore, the Company may annul a Grant if the Grantee is an
employee of the Company or an Affiliate thereof and is
terminated for Cause as defined in any employment agreement
between the Grantee and the Company or any Affiliate, the
applicable Award Agreement, or this Plan, as applicable.

               3.3  Deferral Arrangement.  The Board may permit
or require the deferral of any award payment into a deferred
compensation arrangement, subject to such rules and procedures
as it may establish, which may include provisions for the
payment or crediting of interest or dividend equivalents,
including converting such credits into deferred Stock
equivalents and restricting deferrals to comply with any
relevant provision of tax, employee benefits or other law.

              3.4 No Liability.  No member of the Board shall be
liable for any action or determination made in good faith with
respect to the Plan or any Grant or Award Agreement.

          4.  Stock Subject to the Plan.  Subject to adjustment
as provided in Section 14, the number of shares of Stock
available for issuance under the Plan shall not exceed 1,375,000
shares of Stock of the Company.  Furthermore, of such 1,375,000
shares available for issuance under this Plan, no more than
350,000 shares may be issued as Restricted Stock.  Stock issued
or to be issued under the Plan shall be authorized but unissued
shares or, to the extent permitted by applicable law, issued
shares that have been reacquired by the Company.  If any shares
covered by a Grant are not purchased or are forfeited, or if a
Grant otherwise terminates without delivery of any Stock subject
thereto, then the number of shares of Stock counted against the
aggregate number of shares available under the Plan with respect
to such Grant shall, to the extent of any such forfeiture or
termination, again be available for making Grants under the
Plan.

          5.  Grant Eligibility.

               5.1  Employees, Officers and Directors of the
Company.  Grants (including Grants of Incentive Stock Options,
but subject to the restrictions pertaining thereto in
Section 5.3) may be made under the Plan to any employee,
officer, or director providing services to the Company or an
Affiliate.

               5.2  Successive Grants.  An eligible person may
receive more than one Grant, subject to such restrictions as are
provided herein.

               5.3  Limitations on Incentive Stock Options.  An
Option shall constitute an Incentive Stock Option only (i) if
the Grantee of such Option is an employee of the Company or any
Subsidiary of the Company (or any "parent" of the Company within
the meaning of Section 424(e) of the Code); (ii) to the extent
specifically provided in the related Award Agreement; and (iii)
to the extent that the aggregate Fair Market Value (determined
at the time the Option is granted) of the shares of Stock with
respect to which all Incentive Stock Options held by such
Grantee become exercisable for the first time during any
calendar year (under the Plan and all other plans of the
Grantee's employer and its Subsidiaries and such parent
companies) does not exceed $100,000.  This limitation shall be
applied by taking Options into account in the order in which
they were granted.

          6.  Award Agreement.  Each Grant pursuant to the Plan
shall be evidenced by an Award Agreement, in such form or forms
as the Board shall from time to time determine, which specifies
the number of shares subject to the Grant and provides for
adjustment in accordance with Section 14.  Award Agreements
granted from time to time or at the same time need not contain
similar provisions but shall be consistent with the terms of the
Plan.  Each Award Agreement evidencing a Grant of Options shall
specify whether such Options are intended to be Nonqualified
Stock Options or Incentive Stock Options, and in the absence of
such specification such Options shall be deemed Nonqualified
Stock Options.

          7.  Terms and Conditions of Options.

               7.1  Option Price.  The Option Price of each
Option shall be fixed by the Board and stated in the Award
Agreement evidencing such Option.  The Option Price shall be at
least the Fair Market Value on the Grant Date of a share of
Stock; provided, however, that in the event that a Grantee is a
Ten-Percent Shareholder, the Option Price of an Incentive Stock
Option granted to such Grantee shall be not less than 110% of
the Fair Market Value of a share of Stock on the Grant Date.

               7.2  Vesting and Option Period.  Subject to
Sections 7.3 and 14.3, each Option granted under the Plan shall
become exercisable at such times and under such conditions as
shall be determined by the Board and stated in the Award
Agreement.  For purposes of this Section 7.2, fractional numbers
of shares of Stock subject to an Option shall be rounded down to
the next nearest whole number.  Subject to the vesting terms
outlined in individual Award Agreements, the Board may provide
in the Award Agreement for (i) accelerated exercisability of the
Option in the event the Grantee's Service terminates on account
of death, Disability, or another event, (ii) expiration of the
Option prior to its term in the event of the termination of the
Grantee's Service, (iii) immediate forfeiture of the Option
(whether or not otherwise vested) in the event the Grantee's
Service is terminated for Cause.

               7.3  Term.  Each Option granted under the Plan
shall terminate, and all rights to purchase shares of Stock
thereunder shall cease, upon the expiration of ten years from
the Grant Date, or under such circumstances and on such date
prior thereto as is set forth in the Plan or as may be fixed by
the Board and stated in the Award Agreement relating to such
Option; provided, however, that in the event that the grantee is
a Ten-Percent Shareholder, an Option granted to such Grantee
that is intended to be an Incentive Stock Option shall not be
exercisable after the expiration of five years from its Grant
Date.

               7.4  Exercise of Options on Termination of
Service.  Each Award Agreement shall set forth the extent to
which the Grantee shall have the right to exercise the Option
following termination of the Grantee's Service.  Such provisions
shall be determined in the sole discretion of the Board, need
not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for
termination of Service.  Notwithstanding the foregoing, each
Option shall provide that the Grantee shall have the right to
exercise the vested portion of any Option held at termination
for at least 30 days following termination of Service with the
Company for any reason (other than for Cause), and that the
Grantee shall have the right to exercise the Option for at least
24 months if the Grantee's Service terminates due to retirement
at the normal retirement age, death or Disability.  For purposes
of this Section 7.4, retirement at the normal retirement age
shall mean termination on or after age 65, other than for Cause.

               7.5  Limitations on Exercise of Option.
Notwithstanding any other provision of the Plan, in no event may
any Option be exercised, in whole or in part, prior to the date
the Plan is approved by the shareholders of the Company, or
after ten years following the Grant Date, or after the
occurrence of an event referred to in Section 14 that results in
termination of the Option.

               7.6  Exercise Procedure.  An Option that is
exercisable may be exercised by the Grantee's delivery to the
Company of written notice of exercise on any business day, at
the Company's principal office, on the form specified by the
Company.  Such notice shall specify the number of shares of
Stock with respect to which the Option is being exercised and
shall be accompanied by payment in full of the Option Price of
the shares for which the Option is being exercised.  The minimum
number of shares of Stock with respect to which an Option may be
exercised, in whole or in part, at any time shall be the lesser
of (i) 100 shares or such lesser number set forth in the
applicable Award Agreement and (ii) the maximum number of shares
available for purchase under the Option at the time of exercise.
The Option Price shall be payable in a form described in
Section 10.

               7.7  Right of Holders of Options.  An individual
holding or exercising an Option shall have none of the rights of
a shareholder (for example, the right to cash or dividend
payments or distributions attributable to the subject shares of
Stock or to direct the voting of shares of Stock) until the
shares of Stock covered thereby are fully paid and issued to
such individual.

               7.8  Delivery of Stock Certificates.  Promptly
after the exercise of an Option by a Grantee and the payment in
full of the Option Price, such Grantee shall be entitled to the
issuance of a stock certificate or certificates evidencing such
Grantee's ownership of the shares of Stock purchased upon such
exercise of the Option.

          8.  Transferability of Options.

               8.1  In General.  Except as provided in Section
8.2, during the lifetime of a Grantee, only the Grantee (or, in
the event of legal incapacity or incompetency, the Grantee's
guardian or legal representative) may exercise an Option.
Except as provided in Section 8.2, no Option shall be assignable
or transferable by the Grantee to whom it is granted, other than
by will or the laws of descent and distribution.

               8.2  Family Transfers.  The Grantee of an Option,
with the prior approval of the Board, may transfer a
Nonqualified Stock Option for no consideration to or for the
benefit of one or more of his Family Members, subject to such
conditions and limitations as the Board may impose, and the
transferee shall remain subject to all terms and conditions
applicable to the Option prior to its transfer.

          9.  Restricted Stock.

               9.1  Grant of Restricted Stock.  The Board may
from time to time grant Restricted Stock to persons eligible to
receive Grants under Section 5 hereof, subject to such
restrictions, conditions, and other terms as the Board may
determine and further subject to the limitation that the Board
may make Grants of Restricted Stock under this Plan in a maximum
amount of 350,000 shares.

               9.2  Restrictions.  At the time a Grant of
Restricted Stock is made, the Board shall establish a
restriction period applicable to such Restricted Stock.  Each
Grant of Restricted Stock may be subject to a different
restriction period.  The Board may, in its sole discretion, at
the time a Grant of Restricted Stock is made, prescribe
conditions that must be satisfied prior to the expiration of the
restriction period, including the satisfaction of corporate or
individual performance objectives or continued Service, in order
that all or any portion of the Restricted Stock shall vest.  The
restrictions applicable to a Grant of Restricted Stock shall
lapse at such times and under such conditions as shall be
determined by the Board and stated in the Award Agreement.

               The Board also may, in its sole discretion,
shorten or terminate the restriction period or waive any of the
conditions applicable to all or a portion of the Restricted
Stock.  The Restricted Stock may not be sold, transferred,
assigned, pledged, or otherwise encumbered or disposed of during
the restriction period or prior to the satisfaction of any other
conditions prescribed by the Board with respect to such
Restricted Stock.

               9.3  Restricted Stock Certificates.  The Company
shall issue, in the name of each Grantee to whom Restricted
Stock has been granted, Stock certificates representing the
total number of shares of Restricted Stock granted to the
Grantee, as soon as reasonably practicable after the Grant Date.
The Board may provide in an Award Agreement that either (i) the
Secretary of the Company shall hold such certificates for the
Grantee's benefit until such time as the Restricted Stock is
forfeited to the Company, or the restrictions lapse, or (ii)
such certificates shall be delivered to the Grantee, provided,
however, that such certificates shall bear a legend or legends
that comply with the applicable securities laws and regulations
and makes appropriate reference to the restrictions imposed
under the Plan and the Award Agreement.

               9.4  Rights of Holders of Restricted Stock.
Unless the Board otherwise provides in an Award Agreement,
holders of Restricted Stock shall have the right to vote such
Stock and the right to receive any dividends declared or paid
with respect to such Stock.  The Board may provide that any
dividends paid on Restricted Stock must be reinvested in shares
of Stock, which may or may not be subject to the same vesting
conditions and restrictions applicable to such Restricted Stock.
All distributions, if any, received by a Grantee with respect to
Restricted Stock as a result of any stock split, stock dividend,
combination of shares, or other similar transaction shall be
subject to the restrictions applicable to the original Grant.

               9.5  Termination of Service.  Unless otherwise
provided by the Board in the applicable Award Agreement, upon
the termination of a Grantee's Service with the Company or an
Affiliate, any shares of Restricted Stock held by such Grantee
that have not vested, or with respect to which all applicable
restrictions and conditions have not lapsed, shall immediately
be deemed forfeited.  Upon forfeiture of Restricted Stock, the
Grantee shall have no further rights with respect to such Grant,
including but not limited to any right to vote Restricted Stock
or any right to receive dividends with respect to shares of
Restricted Stock.

               9.6  Delivery of Stock.  Upon the expiration or
termination of the restriction period and the satisfaction of
any other conditions prescribed by the Board, the restrictions
applicable to shares of Restricted Stock shall lapse, and,
unless otherwise provided in the Award Agreement, a stock
certificate for such shares shall be delivered, free of all such
restrictions, to the Grantee.

          10.  Form of Payment.

               10.1  General Rule.  Payment of the Option Price
for the shares of stock purchased pursuant to the exercise of an
Option shall be made in cash or in cash equivalents acceptable
to the Company.

               10.2  Surrender of Stock.  Payment of the Option
Price for shares purchased pursuant to the exercise of an Option
may be made all or in part through the tender to the Company of
shares of Stock, which shares, if acquired from the Company,
shall have been held for at least six months at the time of
tender and which shall be valued, for purposes of determining
the extent to which the Option Price has been paid thereby, at
their Fair Market Value on the date of exercise.
Notwithstanding the preceding sentence, shares of Stock acquired
through the exercise of an Incentive Stock Option may not be
used in payment of the exercise price of an Option unless such
shares have been held for a period not less than the periods
described in Section 422(a)(1) of the Code.

               10.3  Cashless Exercise.  With respect to an
Option only (and not with respect to Restricted Stock), and for
so long as the shares of Stock are publicly traded, payment of
the Option Price for shares purchased pursuant to the exercise
of an Option may be made all or in part by delivery (on a form
acceptable to the Board) of an irrevocable direction to a
licensed securities broker acceptable to the Company to sell
shares of Stock and to deliver all or part of the sales proceeds
to the Company in payment of the Option Price and any
withholding taxes described in Section 11.

          11.  Withholding Taxes.  The Company or any Affiliate,
as the case may be, shall have the right to deduct from payments
of any kind otherwise due to a Grantee any Federal, state, or
local taxes of any kind required by law to be withheld with
respect to the vesting of or other lapse or restrictions
applicable to Restricted Stock or upon the issuance of any
shares of Stock upon the exercise of an Option.  At the time of
such vesting, lapse, or exercise, the Grantee shall pay to the
Company or Affiliate, as the case may be, any amount that the
Company or Affiliate may reasonably determine to be necessary to
satisfy such withholding obligation.  Subject to the prior
approval of the Company or the Affiliate, which may be withheld
by the Company or the Affiliate, as the case may be, in its sole
discretion, the Grantee may elect to satisfy such obligations,
in whole or in part, (i) by causing the Company or the Affiliate
to withhold shares of Stock otherwise issuable to the Grantee or
(ii) by delivering to the Company or the Affiliate shares of
Stock already owned by the Grantee.  The shares of Stock so
delivered or withheld shall have an aggregate Fair Market Value
equal to such withholding obligations.  The Fair Market Value of
the shares of Stock used to satisfy such withholding obligation
shall be determined by the Company or the Affiliate as of the
date that the amount of tax to be withheld is to be determined.
A Grantee who has made an election pursuant to this Section 11
may satisfy his or her withholding obligation only with shares
of Stock that are not subject to any repurchase, forfeiture,
unfulfilled vesting, or other similar requirements.

          12. Cutback Provision Authorized.  Notwithstanding any
other provision of this Plan or of any other agreement,
contract, or understanding heretofore or hereafter entered into
by a Grantee with the Company or any Affiliate, except an
agreement, contract, or understanding hereafter entered into
that expressly modifies or excludes application of this
paragraph (an "Other Agreement"), and notwithstanding any formal
or informal plan or other arrangement for the direct or indirect
provision of compensation to the Grantee (including groups or
classes of participants or beneficiaries of which the Grantee is
a member), whether or not such compensation is deferred, is in
cash, or is in the form of a benefit to or for the Grantee (a
"Benefit Arrangement"), if the Grantee is a "disqualified
individual," as defined in Section 280G(c) of the Code, any
Options or Restricted Stock held by that Grantee and any right
to receive any payment or other benefit under this Plan shall
not become exercisable or vested to the extent and as may be
provided in the related Award Agreement.  The decision whether
to include such a provision in any Award Agreement, and the
specific terms thereof, shall be made by the Board in its sole
discretion.

          13.  Requirements of Law.

               13.1  General.  The Company shall not be required
to sell or issue any shares of Stock under any Grant if the sale
or issuance of such shares would constitute a violation by the
Grantee, any other individual exercising a right emanating from
such Grant, or the Company of any provision of any law or
regulation of any governmental authority, including without
limitation any federal or state securities laws or regulations.
If at any time the Company shall determine, in its discretion,
that the listing, registration or qualification of any shares
subject to a Grant upon any securities exchange or under any
governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance or purchase of
shares hereunder, no shares of Stock may be issued or sold to
the Grantee or any other individual exercising an Option
pursuant to such Grant unless such listing, registration,
qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Company,
and any delay caused thereby shall in no way affect the date of
termination of the Grant.  Specifically, in connection with the
Securities Act, upon the exercise of any right emanating from
such Grant or the delivery of any shares of Restricted Stock,
unless a registration statement under the Securities Act is in
effect with respect to the shares of Stock covered by such
Grant, the Company shall not be required to sell or issue such
shares unless the Board has received evidence satisfactory to it
that the Grantee or any other individual exercising an Option
may acquire such shares pursuant to an exemption from
registration under the Securities Act.  Any determination in
this connection by the Board shall be final, finding, and
conclusive.  The Company may, but shall in no event be obligated
to, register any securities covered hereby pursuant to the
Securities Act.  The Company shall not be obligated to take any
affirmative action in order to cause the exercise of an Option
or the issuance of shares of Stock pursuant to the Plan to
comply with any law or regulation of any governmental authority.
As to any jurisdiction that expressly imposes the requirement
that an Option shall not be exercisable until the shares of
Stock covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances
in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the
availability of such an exemption.  The provisions of this
Section 13.1 shall apply notwithstanding anything in this Plan
document to the contrary.

               13.2  Rule 16b-3.  During any time when the
Company has a class of equity security registered under
Section 12 of the Exchange Act, it is the intent of the Company
that Grants pursuant to the Plan and the exercise of Options
granted hereunder will qualify for the exemption provided by
Rule 16b-3 under the Exchange Act.  To the extent that any
provision of the Plan or action by the Board does not comply
with the requirements of Rule 16b-3, it shall be deemed
inoperative to the extent permitted by law and deemed advisable
by the Board, and shall not affect the validity of the Plan.  In
the event that Rule 16b-3 is revised or replaced, the Board may
exercise its discretion to modify this Plan in any respect
necessary to satisfy the requirements of, or to take advantage
of any features of, the revised exemption or its replacement.

               13.3  Financial Reports.  To the extent required
by applicable law, not less often than annually, the Company
shall furnish to Grantees summary financial information,
including a balance sheet, regarding the Company's financial
condition and results of operations, unless such Grantees have
duties with the Company that assure them access to equivalent
information.  Such financial statements need not be audited.

          14.  Effect of Changes in Capitalization.

               14.1  Changes in Stock.  The number of shares for
which Grants of Options and Restricted Stock may be made under
the Plan shall be proportionately increased or decreased for any
increase or decrease in the number or shares of Stock on account
of any recapitalization, reclassification, stock split, reverse
split, combination of shares, exchange of shares, stock dividend
or other distribution payable in capital stock, or for any other
increase or decrease in such shares effected without receipt of
consideration by the Company occurring after the Effective Date
(any such event hereafter referred to as a Corporate Event).  In
addition, subject to the exception set forth in the last
sentence of Section 14.4, the number of shares for which Grants
are outstanding shall be proportionately increased or decreased
for any increase or decrease in the number of shares of Stock on
account of any Corporate Event.  Any such adjustment in
outstanding Options shall not change the aggregate consideration
payable with respect to shares that are subject to the
unexercised portion of an Option outstanding but shall include a
corresponding proportionate adjustment in the Option Price.  The
conversion of any convertible securities of the Company shall
not be treated as an increase in shares effected without receipt
of consideration.

               14.2  Reorganization in which the Company is the
Surviving Entity and in which No Change of Control Occurs.
Subject to the exception set forth in the last sentence of
Section 14.4, if the Company shall be the surviving entity in
any reorganization, merger, or consolidation of the Company with
one or more other entities and in which no Change of Control
occurs, any Grant theretofore made pursuant to the Plan shall
pertain to and apply solely to the common stock shares to which
a holder of the number of shares of Stock subject to such Grant
would have been entitled immediately following such
reorganization, merger, or consolidation, and in the case of
Options, with a corresponding proportionate adjustment of the
Option Price so that the aggregate consideration thereafter
shall be the same as the aggregate consideration of the shares
remaining subject to the Option immediately prior to such
reorganization, merger, or consolidation.  Subject to any
contrary language in an Award Agreement evidencing a Grant of
Restricted Stock, any restrictions applicable to such Restricted
Stock shall apply as well to any replacement shares received by
the Grantee as a result of the reorganization, merger, or
consolidation.

               14.3  Reorganization, Sale of Assets, or Sale of
Stock which Involves a Change of Control.  Subject to the
exceptions set forth in the last sentence of this Section 14.3
and the last sentence of Section 14.4, (i) upon the occurrence
of a Change of Control, all outstanding shares of Restricted
Stock shall be deemed to have vested and all restrictions and
conditions applicable to such shares of Restricted Stock shall
be deemed to have lapsed, immediately prior to the occurrence of
such Change of Control, and (ii) either of the following two
actions shall be taken:  (A) 15 days prior to the scheduled
consummation of a Change of Control, all Options outstanding
hereunder shall become immediately exercisable and shall remain
exercisable for a period of 15 days, or (B) the Board may elect,
in its sole discretion, to cancel any outstanding Grants and pay
or deliver, or cause to be paid or delivered, to the holder
thereof an amount in cash or securities having a value (as
determined by the Board acting in good faith), in the case of
Restricted Stock, equal to the formula or fixed price per share
paid to holders of shares of Stock and, in the case of Options,
equal to the product of the number of shares of Stock subject to
the Option (the "Option Shares") multiplied by the amount, if
any, by which (I) the formula or fixed price per share paid to
holders of shares of Stock pursuant to such transaction exceeds
(II) the Option Price applicable to such Option Shares.  With
respect to the Company's establishment of an exercise window,
(i) any exercise of an Option during such 15-day period shall be
conditioned upon the consummation of the event, and (ii) upon
consummation of any Change of Control, the Plan, and all
outstanding but unexercised Options, shall terminate.  The Board
shall send written notice of an event that will result in such a
termination to all individuals who hold Options not later than
the time at which the Company gives notice thereof to its
shareholders.  This Section 14.3 shall not apply to any Change
of Control to the extent that provision is made in writing in
connection with such Change of Control for the assumption or
continuation of the Options and Restricted Stock theretofore
granted, or for the substitution for such Options and Restricted
Stock for new common stock options and new common stock relating
to the stock of a successor entity, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and
prices, in which event the Plan and Options and Restricted Stock
theretofore granted shall continue in the manner and under the
terms so provided.

               14.4  Adjustments.  Adjustments under Section 14
related to shares of Stock or securities of the Company shall be
made by the Board, whose determination in that respect shall be
final, binding, and conclusive.  No fractional shares or other
securities shall be issued pursuant to any such adjustment, and
any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest
whole share.  The Board may provide in the Award Agreements at
the time of Grant, or any time thereafter with the consent of
the Grantee, for different provisions to apply to a Grant in
place of those described in Sections 14.1, 14.2, and 14.3

               14.5  No Limitations on Company.  The making of
Grants pursuant to the Plan shall not affect or limit in any way
the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or
business structure or to merge, consolidate, dissolve, or
liquidate, or to sell or transfer all or any part of its
business or assets.

          15.  Duration and Amendments.

               15.1  Term of the Plan.  The Effective Date of
this Plan is the date of its adoption by the Board, subject to
the approval of the Plan by the Company's shareholders.  In the
event that the shareholders fail to approve the Plan within 12
months after its adoption by the Board, any Grants already made
shall be null and void, and no additional Grants shall be made
after such date.  The Plan shall terminate automatically ten
years after its adoption by the Board and may be terminated on
any earlier date, as provided by the Board pursuant to
Section 15.2.

               15.2  Amendment and Termination of the Plan.  The
Board may, at any time and from time to time, suspend or
terminate the Plan as to any shares of Stock as to which Grants
have not been made.  An amendment to the Plan shall be
contingent upon approval of the Company's shareholders only to
the extent required by applicable law, regulations, or rules.
No Grants shall be made after the termination of the Plan.  No
amendment, suspension, or termination of the Plan shall, without
the consent of the Grantee, alter or impair rights or
obligations under any Grant theretofore awarded under the Plan.

          16.  General Provisions.

               16.1  Disclaimer of Rights.  No provision in the
Plan or in any Grant or Award Agreement shall be construed to
confer upon any individual the right to remain in the employ or
service of the Company or any Affiliate, or to interfere in any
way with any contractual or other right or authority of the
Company either to increase or decrease the compensation or other
payments to any individual at any time, or to terminate any
employment or other relationship between any individual and the
Company or any Affiliate.  The obligation of the Company to pay
any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed
herein.  The Plan shall in no way be interpreted to require the
Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any
participant or beneficiary under the terms of the Plan.

               16.2  Nonexclusivity of the Plan.  Neither the
adoption of the Plan nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as
creating any limitations upon the right and authority of the
Board to adopt such other incentive compensation arrangements
(which arrangements may be applicable either generally to a
class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its
discretion determines desirable, including, without limitation,
the granting of stock options otherwise than under the Plan.

               16.3  Captions.  The use of captions in this Plan
or any Award Agreement is for the convenience of reference only
and shall not affect the meaning of any provision of the Plan or
such Award Agreement.

               16.4  Other Award Agreement Provisions.  Each
Grant awarded under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined
by the Board, in its sole discretion.

               16.5  Number and Gender.  With respect to words
used in this Plan, the singular form shall include the plural
form, and the masculine gender shall include the feminine
gender, etc., as the context requires.

               16.6  Severability.  If any provision of the Plan
or any Award Agreement shall be determined to be illegal or
unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.

               16.7  Governing law.  The validity and
construction of this Plan and the instruments evidencing the
Grants awarded hereunder shall be governed by the laws of the
Commonwealth of Pennsylvania, other than any conflicts or choice
of law, rule or principle that might otherwise refer
construction or interpretation of this Plan and the instruments
evidencing the Grants awarded hereunder to the substantive laws
of any other jurisdiction.

          17.  Execution.  To record adoption of the Plan by the
Board as of December 19, 2001, and approval of the Plan by the
shareholders on February 7, 2002, the Company has caused its
authorized officer to execute the Plan.

                              PSB Bancorp, Inc.

                              By:_______________________________
                                 Anthony DiSandro,
                                 President