UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION

                     Washington, D.C.  20549

                           FORM 10-KSB

(X)  Annual report pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934 for the year ended
     December 31, 1998 or

( )  Transition report pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934 for the transition period
     from ________ to ________.

                          No. 000-24601
                    (Commission File Number)

                        PSB BANCORP, INC.
     (Exact Name of Registrant as Specified in its Charter)

Pennsylvania                            23-2930740
(State of Incorporation)           (IRS Employer ID Number)

     11 Penn Center, Suite 2601         
1835 Market Street,  Philadelphia, PA                19103
(Address of Principal Executive Offices)     (Zip Code)

                         (215) 979-7900
                (Registrant's  Telephone Number)


Securities registered pursuant to Section 12(b) of the Exchange
Act:  None.

Securities registered pursuant to Section 12(g) of the Exchange
Act:  Common Stock, no par value per share.

Check whether the issuer (1) has filed all reports required to be
filed by section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.

Yes __x___     No _______

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [ ]

Issuer's revenues for its most recent fiscal year:  $11,412,154.

The aggregate market value of common stock of the issuer held by
non-affiliates, based on a sale price of $7.50 on March 18, 1999
was $16,045,493.

As of March 18, 1999, the issuer had 3,101,140 shares of Common
Stock outstanding.  The registrant  originally issued shares as
of July 17, 1998, and the registrant had no shares outstanding
prior to such date.
<PAGE>
                        PSB BANCORP, INC.

                            FORM 10-K

              For the Year Ended December 31, 1998


                            Contents                     Page No.

PART I
  Item 1.  Description of Business....................       
  Item 2.  Description of Property....................      
  Item 3.  Legal Proceedings..........................      
  Item 4.  Submission of Matters to a Vote of
           Securities Holders.........................      

PART II
  Item 5.  Market for Common Equity and Related
           Stockholder Matters........................      
  Item 6.  Selected Financial Data....................      
  Item 7.  Management's Discussion and Analysis of
           Financial Condition and Results of
           Operations.................................      
  Item 8.  Financial Statements.......................      
  Item 9.  Changes In and Disagreements With
           Accountants on Accounting and Financial
           Disclosure.................................      

PART III
  Item 10. Directors, Executive Officers, Promoters
           and Control Persons; Compliance With
           Section 16(a) of the Exchange Act..........      
  Item 11. Executive Compensation.....................      
  Item 12. Security Ownership of Certain Beneficial
           Owners and Management......................      
  Item 13. Certain Relationships and Related
           Transactions...............................      
  Item 14. Exhibits and Reports on Form 8-K (F-3).....      
<PAGE>
Item 1.   Description of Business.

     General. 

     Effective July 18, 1998, Pennsylvania Savings Bank (the
"Savings Bank") and PSB Mutual Holding Company ("MHC") completed
the Plan of Conversion and Reorganization from Mutual Holding
Company to Stock Holding Company.  Under the Plan of Conversion,
the newly formed holding company, PSB Bancorp, Inc. ("Holding
Company"), issued 1,610,732 shares of common stock, no par value,
at a price of $10.00 per share.  Existing shareholders of the
Savings Bank exchanged their shares for 2.572374 shares of PSB
Bancorp, Inc. shares and the Mutual Holding Company merged with
and into the Savings Bank.

     The Holding Company was organized as a Pennsylvania business
corporation on October 3, 1997 at the direction of the Savings
Bank for the purpose of becoming a holding company for the
Savings Bank upon completion of the Conversion and
Reorganization.  The Holding Company is subject to regulation by
the Federal Reserve, and its principal business is the ownership
of the Savings Bank.  In the future, the Holding Company may
acquire or organize other operating subsidiaries, although there
are no current plans, arrangements or understandings, written or
oral, to do so.

     The Savings Bank is a Pennsylvania-chartered stock savings
bank headquartered in Philadelphia, Pennsylvania. The Savings
Bank is a community-oriented institution offering traditional
deposit and loan products. The Savings Bank  operates five
full-service offices in Philadelphia, Pennsylvania and one
full-service office in Glenside, Montgomery County, Pennsylvania.

     At December 31, 1998, the Savings Bank had total assets of
$164.01 million, total deposits of $128.16 million and
shareholders' equity of $30.39 million.

     The Savings Bank is primarily engaged in the business of
attracting deposits from the general public in the Savings Bank's
market area and investing such deposits in loans secured by one-
to four-family residential real estate, commercial real estate
loans, commercial business loans, construction loans and
investment and mortgage-backed securities. The Savings Bank's
deposits are insured by the SAIF of the FDIC to the extent that
such deposits were assumed from the mutual savings bank in the
MHC Reorganization.  Deposits accepted by the Savings Bank after
the MHC Reorganization are insured by the FDIC's BIF, up to
applicable limits.

Lending Activities

     General.  The Savings Bank historically focused its lending
activities primarily on the origination of loans secured by first
mortgages on owner-occupied, one-to four-family residences for
retention in the Savings Bank's portfolio. The Savings Bank has
expanded origination of one-to four-family residential mortgage
loans for resale in the secondary market through expansion of its
mortgage banking operations.  As part of a strategy to diversify
its loan portfolio, achieve a higher net interest margin and
reduce interest rate risk, the Savings Bank has increased its
origination of construction loans, commercial real estate loans,
commercial business loans, and multifamily real estate loans
which together totalled 30.77% of the Savings Bank's total loans
at December 31, 1998.  To a lesser extent, the Savings Bank and
its subsidiaries also originate consumer loans, including home
equity, second mortgage, and other consumer loans. The Savings
Bank expects this diversification trend to continue.

     One-to-four-family residential mortgage loans originated for
resale in the secondary market are underwritten according to
standards that conform to FNMA and/or FHLMC guidelines.  One-to-
four-family residential mortgage loans originated and held in
portfolio are generally underwritten to conform to secondary
market standards but from time to time the Savings Bank
originates non-conforming loans if, in the Savings Bank's
judgment, the borrower does not present an unreasonable risk of
default.  The Savings Bank and Transnational Mortgage Company
("TNMC"), its mortgage banking subsidiary, have sold residential
mortgage loans in the secondary market.  The Savings Bank has
begun to expand its mortgage banking capabilities through TNMC
and anticipates that its origination of loans for sale in the
secondary market in Southeastern Pennsylvania, Southern New
Jersey and Northern Delaware will increase significantly.

     Analysis of Loan Portfolio.  Set forth below is selected
data relating to the composition of the Savings Bank's loan
portfolio by type of loan as of the dates indicated, including
data regarding the portion of the Savings Bank's loans that bear
fixed and adjustable interest rates, respectively.  TNMC has
originated and sold mortgage loans to third party investors
within the Savings Bank's financial reporting periods.  Such
mortgage loans are not reflected in the financial tables and
financial statements pertaining to a particular period to the
extent that such loans were sold prior to any period end.

<TABLE>
<CAPTION>
                                                    At December 31,                                      At September 30,         
                                          1998               1997               1996               1995                1994
                                   Amount   Percent   Amount   Percent   Amount   Percent   Amount  Percent     Amount    Percent
<S>                                <C>      <C>       <C>      <C>       <C>      <C>       <C>     <C>         <C>       <C> 
Real Estate Loans:
    One-to-four family             $49,796    67.64%  $44,940    71.59%  $45,018    84.47%  $43,033   82.93%     $43,105    84.28%
    Construction loans               3,286     4.46     2,597     4.14       661     1.24       829    1.60          339     0.66
    Five or more family residence    1,576     2.14       702     1.12       654     1.23       508    0.98          405     0.79
    Nonresidential                  14,722    20.00    11,421    18.20     5,575    10.46     5,940   11.45        5,819    11.38

Commercial loans                     3,074     4.17     1,908     3.04       369     0.69       602    1.16          780     1.53
Consumer loans (1)                   1,168     1.59     1,201     1.91     1,016     1.91       977    1.88          696     1.36
        Total loans(2)             $73,622   100.00%  $62,769   100.00%  $53,293   100.00%  $51,889  100.00%     $51,144   100.00%
                                   =======   ======   =======   ======   =======   ======   =======  ======      =======   ======

Less:
    Unearned fees and discounts       $431               $478               $495               $464                   $0
    Undisbursed loan proceeds            7                138                  5                  5                   24
    Allowance for loan losses          304                238                207                208                  208
    Net Loans                      $72,880            $61,915            $52,586            $51,212              $50,912
                                   =======            =======            =======            =======              ======= 

Total loans with:
    Fixed rates                    $64,651    87.81%  $55,289    88.08%  $48,701    91.38%  $47,632   91.80%     $46,740    91.39%
    Adjustable rate                  8,971    12.19     7,480    11.92     4,592     8.62     4,257    8.20        4,404     8.61
        Total loans(2)              73,622   100.00%   62,769   100.00%  $53,293   100.00%  $51,889  100.00%     $51,144   100.00%
                                   =======   ======    ======   ======   =======   ======   =======  ======      =======   ======
_________________________
</TABLE>

(1)  Consists of both secured and unsecured personal loans.

(2)  Does not include loans originated and held for sale by TNMC,
     the Savings Bank's subsidiary, which amounted to
     $6.94 million, $6.57 million and $4.60 million, at
     December 31, 1998, 1997 and 1996, respectively and
     $1.04 million and $185,000 at September 30, 1995 and 1994,
     respectively.

     One-to Four-Family Residential Real Estate Loans.  The
primary lending activity of the Savings Bank historically
consisted of the origination for retention in the Savings Bank's
portfolio of owner-occupied one-to four-family residential
mortgage loans secured by properties located in the Savings
Bank's market area.  In 1998, consistent with the Savings Bank's
strategy regarding diversification of its loan portfolio,
origination of loans other than residential mortgages loans
totalled $33.86 million, or 58.73%, of originations in 1998.
However, at December 31, 1998, $49.80 million, or 67.64%, of the
Savings Bank's total loan portfolio still consisted of one-to
four-family residential mortgage loans.

     The Savings Bank currently offers one- to four-family
residential mortgage loans with terms typically ranging from 10
to 30 years, with either adjustable or fixed interest rates. 
Originations of fixed-rate mortgage loans versus adjustable-rate
mortgage loans are affected by such things as interest rate risk
policies, customer preferences and competition.  In the Savings
Bank's market area borrowers strongly prefer fixed-rate mortgage
loans as opposed to adjustable-rate mortgage loans.

     The Savings Bank's fixed-rate loans are generally originated
and underwritten according to standards that permit sale in the
secondary mortgage market.  Secondary mortgage market loans
typically conform to FNMA and/or FHLMC guidelines.  The Savings
Bank has, from time to time, originated loans that do not conform
to such secondary market standards.  Such nonconforming loans
include loans exceeding the maximum loan amounts acceptable to
FNMA and FHLMC and loans as to which the Savings Bank's
underwriting indicates that the particular borrower does not
present an unreasonable risk of default in view of underwriting
criteria that differ from secondary mortgage market standards. 
Whether the Savings Bank can or will sell fixed-rate loans in the
secondary market, however, depends on a number of factors
including the yield and the term of the loan, market conditions,
and the Savings Bank's current interest rate risk position.  The
Savings Bank has primarily been a portfolio lender, and at any
one time the Savings Bank holds only a nominal amount of loans
for immediate sale.

     The Savings Bank's one-to four-family mortgage loans are
amortized on a monthly basis with principal and interest due each
month.  One- to four-family residential real estate loans often
remain outstanding for significantly shorter periods than their
contractual terms because borrowers may refinance or prepay loans
at their option.

     The Savings Bank currently offers adjustable-rate mortgage
loans with initial interest rate adjustment periods of one and
three years, based on changes in a designated market index. 
After the initial interest rate adjustment, each adjustable-rate
mortgage loan adjusts either annually or every third year within
a periodic interest rate adjustment limit of 200 basis points and
within a maximum interest rate adjustment limit of 600 basis
points above the initial rate.  Adjustable-rate mortgage loans
are currently priced at a fixed margin above the weekly average
yield on United States Treasury securities adjusted to a constant
term to maturity of one year (or three years in the case of loans
with three year interest rate adjustment periods), as published
by the Federal Reserve.  The Savings Bank originates adjustable-
rate mortgage loans with initially discounted rates, which vary
depending upon market conditions and whether the initial rate
adjustment period is one or three years.  Adjustable-rate loans
represented 12.19% of the Savings Bank's total loan portfolio at
December 31, 1998 due to the difficulty of originating
adjustable-rate mortgage loans in the Savings Bank's primary
market.  Traditionally, the Savings Bank's older, low to moderate
income residential customer base has not been receptive to
adjustable rate mortgage loans and this tendency was exacerbated
in recent years because of the comparatively low interest rate
environment for fixed rate mortgage loans.

     The Savings Bank's one- to four-family residential first
mortgage loans customarily include due-on-sale clauses, which are
provisions giving the Savings Bank the right to declare a loan
immediately due and payable in the event, among other things,
that the Borrower sells or otherwise disposes of the underlying
real property serving as security for the loan.  Due-on-sale
clauses are an important means of adjusting the rates on the
Savings Bank's fixed-rate mortgage loan portfolio, and the
Savings Bank has usually exercised its rights under these
clauses.

     Regulations limit the amount that a savings bank may lend
relative to the appraised value of the real estate securing the
loan, as determined by an appraisal at the time of loan
origination.  Appraisals are performed by appraisers approved by
the Savings Bank's Board of Trustees.  Such regulations permit a
maximum loan-to-value ratio of 95% for residential property and
80% for all other real estate loans.  The Savings Bank's lending
policies limit the maximum loan-to-value ratio on both fixed-rate
and adjustable-rate mortgage loans without private mortgage
insurance to 80% of the lesser of the appraised value or the
purchase price of the real estate that serves as collateral for
the loan.  For one- to four-family real estate loans with loan-
to-value ratios in excess of 80%, the Savings Bank requires the
borrower to obtain private mortgage insurance.  The Savings Bank
requires fire and casualty insurance, as well as title insurance
on all properties securing real estate loans made by the Savings
Bank.

     Construction Loans.  The Savings Bank's loan portfolio
included $3.3 million of construction loans at December 31, 1998,
which amounted to 4.46% of the Savings Bank's total loan
portfolio.  The Savings Bank offers fixed and adjustable rate
residential construction loans primarily for the construction of
owner-occupied one-to four-family residences in the Savings
Bank's market area to builders or to owners who have a contract
for construction.  The Savings Bank generally does not make a
construction loan to a builder unless the housing unit is under
an agreement of sale.  Construction loans to owners are generally
structured to become permanent loans, and are originated with
terms up to 30 years with an allowance of up to one year for
construction.  The Savings Bank's largest construction loan at
December 31, 1998 had a principal balance of approximately
$899,000.  Construction loans at December 31, 1998 were located
in Philadelphia County, Montgomery County and Bucks County,
Pennsylvania.

     Construction lending generally involves a greater degree of
credit risk than other one- to four-family residential mortgage
lending.  The repayment of the construction loan is often
dependent upon the successful completion of the construction
project.  Construction delays or the inability of the borrower to
sell the property once construction is completed may impair the
borrower's ability to repay the loan.

     Five or More Family Residential Real Estate Loans.  Loans
secured by five or more family residential real estate
constituted approximately $1.58 million, or 2.14%, of the Savings
Bank's total loan portfolio at December 31, 1998.  The Savings
Bank's five or more family residential real estate loans are
secured by residence buildings with over 4 family units, which
are generally rental properties. At December 31, 1998, all of the
Savings Bank's five or more family residential real estate loans
were secured by properties located within the Savings Bank's
market area.  The Savings Bank's largest five or more family
residential real estate loan at December 31, 1998, had a
principal balance of approximately $616,000.

     Five or more family residential real estate loans are
offered with both adjustable interest rates and fixed interest
rates.  The terms of each five or more family residential real
estate loan are negotiated on a case-by-case basis.  The Savings
Bank generally makes five or more family residential real estate
loans up to 80% of the lesser of property cost or the appraised
value of the mortgaged property. Loans secured by five or more
family residential real estate generally involve a greater degree
of credit risk than one-to four-family residential mortgage
loans.  This increased credit risk is a result of several
factors, including the concentration of larger balances in a
limited number of loans and borrowers, the effects of general
economic conditions on income producing properties, and the
increased difficulty of evaluating and monitoring these types of
loans.  Furthermore, the repayment of loans secured by five or
more family residential real estate is typically dependent upon
the successful operation of related real estate property.  If the
cash flow from the project is reduced, the borrower's ability to
repay the loan may be impaired.

     Nonresidential Real Estate Loans.  Loans secured by
nonresidential real estate constituted approximately
$14.72 million, or 20.00%, of the Savings Bank's total loan
portfolio at December 31, 1998.  The Savings Bank's
nonresidential real estate loans are secured by nonresidential
properties such as retail establishments, office buildings, and
industrial buildings.  The Savings Bank also originates
nonresidential real estate loans through its subsidiary, PSA
Financial Corp.  See "SUBSIDIARIES."  A significant portion of
the Savings Bank's nonresidential real estate loans are secured
by properties located within the Savings Bank's market area. The
Savings Bank's largest nonresidential real estate loan, which is
secured by a business property in the Savings Bank's market area,
had a principal balance of approximately $1.10 million at
December 31, 1998, and was performing in accordance with its
terms.

     Nonresidential real estate loans are offered with both
adjustable interest rates and fixed interest rates.  The terms of
each nonresidential real estate loan are negotiated on a case-by-
case basis.  The Savings Bank generally makes nonresidential real
estate loans up to 75% of the lesser of property cost or the
appraised value of the mortgaged property.  As in the case of
five or more family loans, nonresidential real estate loans
generally involve a greater degree of credit risk than one-to
four-family residential mortgage loans and carry larger loan
balances.  This increased credit risk results from the
concentration of principal in a more limited number of loans and
borrowers, the effects of general economic conditions on income
producing properties, and the increased difficulty of evaluating
and monitoring nonresidential loans.  The repayment of loans
secured by nonresidential real estate is typically dependent upon
the success of the related business operation.  If the cash flow
from the business is impaired, the borrower's ability to repay
the loan may also be impaired.

     Commercial Loans.  The Savings Bank currently offers
commercial loans to finance various activities in the
Philadelphia metropolitan area, some of which are secured in part
by additional real estate collateral, such as business property
and/or personal residences.  The Savings Bank originates
commercial loans through its subsidiary, PSA Financial Corp. See
"SUBSIDIARIES."  At December 31, 1998, commercial loans totalled
approximately $3.07 million or 4.17% of the total loan portfolio. 
Commercial loans are offered with either adjustable or fixed
interest rates.  Adjustable rates are tied to the Savings Bank's
prime rate plus a margin.

     Underwriting standards employed by the Savings Bank for
commercial loans include a determination of the applicant's
ability to meet existing obligations and payments on the proposed
loan from normal cash flows generated by the applicant's
business.  The financial strength of each applicant also is
assessed through a review of financial statements provided by the
applicant.  Commercial loans generally bear higher interest rates
than residential loans, but they also may involve a higher risk
of default since their repayment is generally dependent on the
successful operation of the borrower's business.  The Savings
Bank generally obtains personal guarantees from the borrower or a
third party as a condition to originating its commercial loans.

     Consumer Loans.  As of December 31, 1998, consumer loans
totalled $1.17 million, or 1.59%, of the Savings Bank's total
loan portfolio.  The principal types of consumer loans offered by
the Savings Bank are home equity loans and lines of credit,
unsecured personal loans, and loans secured by deposit accounts.
The Savings Bank's subsidiary, PSA Consumer Discount Company,
offers secured and unsecured personal loans.  See "SUBSIDIARIES." 
Consumer loans are offered with maturities generally of less than
ten years.  The Savings Bank's home equity loans and lines of
credit are secured by the borrower's principal residence with a
maximum loan-to-value ratio, including the principal balances of
both the first and second mortgage loans, of 80% in the case of
home equity loans and 70% in the case of lines of credit. Such
loans are offered on both a fixed-rate and an adjustable-rate
basis with terms of up to fifteen years.

     The underwriting standards employed by the Savings Bank for
consumer loans include a determination of the applicant's credit
history and an assessment of ability to meet existing obligations
and payments on the proposed loan.  The stability of the
applicant's monthly income may be determined by verification of
gross monthly income from primary employment, and additionally
from any verifiable secondary income.  Creditworthiness of the
applicant is of primary consideration; however, the underwriting
process also includes a comparison of the value of the collateral
in relation to the proposed loan amount, and in the case of home
equity loans or lines of credit, the Savings Bank either obtains
title insurance or obtains a title search report, depending on
the particular loan.

     Consumer loans entail greater credit risk than do
residential first mortgage loans, particularly in the case of
consumer loan that are unsecured or secured by assets that
depreciate rapidly.  In such cases, repossessed collateral for a
defaulted consumer loan may not provide an adequate source of
repayment for the outstanding loan and the remaining deficiency
often does not warrant further substantial collection efforts
against the borrower.  See "--Delinquencies and Classified Assets
-- Nonperforming Assets," "-- Loans Past Due and Nonperforming
Assets," and "-- Classification of Assets" for information
regarding the Savings Bank's loan loss experience and reserve
policy.

Mortgage Banking Operations

     Through its subsidiary, TNMC, the Savings Bank has conducted
a mortgage banking operation since 1989.  Mortgage banking
consists primarily of the origination, purchase, sale and
servicing of first mortgage loans secured by one-to-four family
homes.  Such loans are sold either as individual loans, as
mortgage-backed securities, or as participation certificates
issued or guaranteed by FNMA or FHLMC.  Loans may be sold either
on a servicing retained or servicing released basis.

     As of December 31, 1998, the Savings Bank's equity
investment in TNMC totaled $74,000.  For the year ended
December 31, 1998, TNMC's loan originations totaled $21.45
million and net income totaled $134,000.  For the year ended
December 31, 1998, 1997 and 1996, TNMC sold 98.30%, 89.10% and
81.79%, respectively, of the loans originated in that year.

     The Savings Bank plans to expand into the Philadelphia
metropolitan market, including counties of New Jersey and
Delaware, because management believes this market is more
accustomed to obtaining mortgages from mortgage brokers as well
as directly from banks and thrifts.  The Savings Bank has
implemented a strategy in this area to expand TNMC's operations
in order to increase the origination of loans for sale in the
secondary market and for its own portfolio and the expansion of
its servicing portfolio.

     The Savings Bank expects that it will serve as the principal
funding source for TNMC pursuant to a credit arrangement between
the parties.  TNMC originates loans in accordance with FNMA and
FHLMC underwriting criteria or the criteria of private investors.

     During 1998, the Savings Bank established loan servicing
capabilities.  Loan servicing income provides a predictable
source of fee income and servicing values are generally
countercyclical to the origination side of the mortgage banking
business.  At December 31, 1998, the Savings Bank mortgage
servicing portfolio consisted of $9.46 million in loans serviced
for FNMA.

     Because mortgage originations fluctuate significantly with
economic conditions, mortgage banking revenues are very cyclical. 
To the extent TNMC revenues and profits become, as expected, a
significant component of the Savings Bank's consolidated revenues
and net income, earnings of the Savings Bank could fluctuate
materially.

     Loan Maturity and Re-pricing Schedule.  The following table
set forth the maturity or period of re-pricing of the Savings
Bank's loan portfolio at December 31, 1998.  Demand loans and
loans having no stated schedule of repayments and no stated
maturity are reported as due in one year or less. Adjustable and
floating-rate loans are included in the period in which interest
rates are next scheduled to adjust rather than the period in
which they contractually mature, and fixed-rate loans are
included in the period in which the final contractual repayment
is due.

<TABLE>
<CAPTION>
                                                 Amounts At December 31, 1998

                                         Multi-Family                Consumer
                                             and                        and
                            One to Four   Commercial                Commercial
                              Family      Real Estate  Construction  Business    Total Loans
<S>                         <C>           <C>          <C>          <C>          <C>
Amounts due:
Non-accrual                     $1,239           $370           $0          $0      $1,609

Within one year                  1,739          1,817        3,286       3,361      10,203

After one year:
   1-3 years                       578          3,261            0         309       4,148
   3 to 5 years                  2,269          5,877            0         348       8,494
   5 to 10 years                 5,288          3,201            0         224       8,713
   Over 10 years                38,683          1,772            0           0      40,455

Total due after one year        46,818         14,111            0         881      61,810

Total amounts due              $49,796        $16,298       $3,286      $4,242     $73,622

</TABLE>

     Loan Origination, Purchase and Sale Schedule. The following
table shows total loans originated, purchased, sold and repaid
during the periods indicated for the Savings Bank and its
subsidiaries.

<TABLE>
<CAPTION>
                                                                            For the Year Ended          For the Years Ended
                                                                                December 31,               September 30,
                                                                       1998       1997        1996      1995       1994
<S>                                                                   <C>        <C>          <C>      <C>        <C>
Loans receivable,net and loans held for sale at beginning of period   $68,490    $57,183      $54,318  $51,097    $52,816

Originations
    1-4 Family Residential Real Estate                                 45,237     28,318       20,038    4,447     14,041
    Other Real Estate                                                   5,649      5,377           24    4,214          0
    Consumer and commercial business loans                              6,761      3,248        1,033      961        398
        Total loan originations                                        57,647     36,943       21,095    9,622     14,439

Loans purchased                                                             0          0            0        0          0

Transfer to REO                                                          (443)
Principal repayments                                                  (25,171)    (9,648)      (8,821)  (5,996)   (11,526)
Sales of loans                                                        (21,083)   (16,152)      (9,378)  (2,451)    (4,667)

Increase(decrease) in loans in process                                   (131)       133          (31)     (19)        14
Increase(decrease) in allowance for loan losses                            66         31            0        0         21

Net increase(decrease) in loans                                        11,328     11,307        2,865    1,156     (1,719)

Loans receivable,net and loans held for sale at end of period         $79,818    $68,490      $57,183  $52,253    $51,097
                                                                      =======    =======      =======  =======    ======= 
</TABLE>

     Loans-to-One Borrower.  Savings banks are subject to the
same loans-to-one borrower limits as those applicable to national
banks, which under current regulations restrict loans to one
borrower to an amount equal to 15% of unimpaired capital and
unimpaired surplus on an unsecured basis, and an additional
amount equal to 10% of unimpaired capital and unimpaired surplus
if the loan is secured by readily marketable collateral
(generally, financial instruments and bullion, but not real
estate).  As of December 31, 1998, the Savings Bank's largest
loan to one borrower consisted of three loans to one borrower. 
Of the three loans, two loans were commercial loans which had an
aggregate outstanding balance of $441,000 and one loans was
construction loan with an aggregate outstanding balance of
$899,000 at December 31, 1998 and each of these loans is
performing according to its terms.

Delinquencies and Classified Assets

     Collection Procedures.  The Savings Bank's collection
procedures provide that when a mortgage loan is unpaid within its
grace period (either ten or fifteen days depending on the loan),
a late notice will be sent to the borrower requesting payment. 
If delinquency continues for approximately fifteen days, then a
second notice may be sent and contact efforts are attempted to
strengthen the collection process and obtain reasons for the
delinquency. Plans to arrange a repayment plan may be made.  If a
loan becomes two months delinquent, the property is inspected in
anticipation of foreclosure, a collection letter is sent,
personal contact may be attempted, and the loan becomes subject
to possible legal action if suitable arrangements to repay have
not been made.  In addition, the borrower is given information
regarding consumer counseling services, to the extent required by
regulations of the PDOB, or the Pennsylvania Department of
Housing and Urban Development.  When a loan continues in a
delinquent status for 60 to 90 days and a repayment schedule has
not been made or kept by the borrower, generally a notice of
intent to foreclose is sent to the borrower, giving 30 days to
cure the delinquency.  If the default is not cured, foreclosure
proceedings are initiated.

     Nonperforming Assets.  All loans, including residential
mortgage loans, are placed on nonaccrual status when past due
90 days or more unless the loan is in the process of collection
and the value of the collateral well exceeds the loan balance. 
Prior to 1997, residential mortgage loans were not placed on
nonaccrual status unless the loan was delinquent for 12 months
and the value of the mortgaged property did not exceed the loan
balance.  Consumer and unsecured loans are placed on nonaccrual
upon becoming three months delinquent.  Although the Savings Bank
viewed its nonaccrual policy as justified based on historical
experience, in 1997 it adopted a more conservative nonaccrual
policy that it believes is more consistent with peer bank
practice.  No adjustment is made for interest accrued and unpaid
at the time a loan is placed on nonaccrual status. Interest is
discontinued and income is subsequently recognized only to the
extent that cash payments are received, or until in management's
judgment, the borrower's ability to make periodic interest and
principal payments is back to normal, in which case the loan is
returned to accrual status.

     Real estate acquired by the Savings Bank as a result of
foreclosure or by deed in lieu of foreclosure is classified as
REO until such time as it is sold.  When real estate is acquired
through foreclosure, by deed in lieu of foreclosure, it is
recorded at its fair value, less estimated costs of disposal. If
the value of the property is less than the loan, less any related
specific loan loss provisions, the difference is charged against
the allowance for loan losses.  Any subsequent write-down of REO
is charged against earnings.  At December 31, 1998, the Savings
Bank had approximately $629,000 of property acquired as a result
of foreclosure.

     At December 31, 1998, the Savings Bank had nonperforming
loans of $1.61 million, and a ratio of nonperforming loans to
total loans of 2.19%.  Of the total nonperforming loans, $1.24
million are single-family residential mortgage loans.  At
December 31, 1998, the Savings Bank had nonperforming assets of
$2.24 million and a ratio of nonperforming assets to total assets
of 1.36%.  From 1994 to 1996 the Savings Bank's ratio of
nonperforming loans to total loans exceeded 4%.  This was due in
large part to ineffective implementation of the Savings Bank's
stated collection practices by Savings Bank personnel and outside
counsel. New collection personnel were hired in 1997, resulting
in the decline in the ratios of nonperforming loans to total
loans and nonperforming assets to total assets.

     Loans Past Due and Nonperforming Assets.  The following
table sets forth information regarding the Savings Bank's loans
90 days or more past due, loans 90 days or more past due and
accruing interest, and real estate acquired or deemed acquired by
foreclosure at the dates indicated.  For all the dates indicated,
the Savings Bank did not have any material restructured loans
within the meaning of SFAS No. 15.

<TABLE>
<CAPTION>
                                                                  At December 31,        At September 30,
                                                         1998       1997      1996       1995        1994
<S>                                                      <C>        <C>       <C>        <C>         <C>
Loans past due 90 days or more as to interest or 
    principal and accruing interest                          $0       $200    $2,009     $1,565      $1,417
Nonaccrual loans(1)                                       1,609      1,894       770        770         738
Loans restructured to provide a reduction or deferral
of interest or principal                                      0          0         0          0           0
Total nonperforming loans                                 1,609      2,094     2,779      2,335       2,155
Real estate owned (REO)                                     629        457       465        482         330
    Total nonperforming assets                           $2,238     $2,551    $3,244     $2,817      $2,485
                                                         ======     ======    ======     ======      ======


Nonperforming loans to total loans                         2.19%      3.34%     5.21%      4.50%       4.21%
Nonperforming assets to total assets                       1.36       1.97      2.74       2.49        2.49
Allowance for loan losses to total
    loans                                                  0.41       0.38      0.39       0.40        0.41
Allowance for loan losses to 
    nonperforming loans                                   18.89      11.37      7.45       8.91        9.65
Allowance for loan losses to
    nonperforming assets                                  13.58       9.33      6.38       7.38        8.37
Net charge-offs as a percentage of 
    total loans                                            0.37       0.05      0.25       0.05           0

</TABLE>
__________________
(1)  The Savings Bank classifies as nonaccrual all loans three
     months or more delinquent.  Prior to 1997, residential
     mortgage loans were classified as nonaccrual when the loan
     was delinquent 12 months and the value of the mortgaged
     property did not well exceed the loan balance.

     For the years ended December 31, 1998, 1997 and 1996, gross
interest income of approximately $41,019, $49,696, and $157,000,
respectively, would have been recorded on loans accounted for on
a nonaccrual basis if the loans had been current throughout the
related periods.  No interest income on nonaccrual loans was
included in income during such periods.

     In May 1993, the FASB issued SFAS No. 114 "Accounting by
Creditors for Impairment of a Loan."  SFAS No. 114 requires that
certain impaired loans be measured based on the present value of
expected future cash flows discounted at the loan's effective
interest rate or, as a practical expedient, at the loan's
observable market price or the fair value of the collateral if
the loan is collateral dependent.  In October 1994, the FASB
issued SFAS No. 118 "Accounting by Creditors for Impairment of a
Loan -- Income Recognition and Disclosure," that amends SFAS
No. 114 and eliminates its provision regarding how a creditor
should report income on an impaired loan.  Originally, SFAS
No. 114 would have required creditors to apply one of two
allowable methods.  As a result of the amendment, creditors may
now continue to use existing methods for recognizing income on
impaired loans, including methods that are required by certain
industry regulators.  SFAS No. 114 and SFAS No. 118 were adopted
by Savings Bank beginning January 1, 1996.  At December 31, 1998,
the Bank's impaired loans consisted of two commercial real estate
loans with a total recorded balance of $325,537 for which
specific allowances of $16,227 have been established.  At
December 31, 1997, the Savings Bank's impaired loans consisted of
two commercial real estate loans with a total balance of $321,052
for which specific allowances of $16,053 has been established. 
At December 31, 1996, the Savings Bank's impaired loans consisted
of smaller balance residential mortgage loans.

     Classification of Assets.  The Savings Bank's policies,
consistent with regulatory guidelines, provide for the
classification of loans and other assets such as debt and equity
securities, considered to be of lesser quality as "substandard,"
"doubtful," or "loss" assets.  An asset is considered
"substandard" if it is inadequately protected by the current net
worth and paying capacity of the obligor or by the collateral
pledged, if any.  "Substandard" assets include those
characterized by the "distinct possibility" that the savings
institution will sustain "some loss" if the deficiencies are not
corrected.  Assets classified as "doubtful" have all of the
weaknesses inherent in those classified "substandard" with the
added characteristic that the weaknesses present make "collection
or liquidation in full," on the basis of currently existing
facts, conditions, and values, "highly questionable and
improbable."  Assets classified as "loss" are those considered
"uncollectible" and of such little value that their continuance
as assets without the establishment of a specific loss reserve is
not warranted.  Assets that do not expose the savings institution
to risk sufficient to warrant classification in one of the
aforementioned categories, but which possess some weaknesses, are
required to be designated "special mention" by management.  At
December 31, 1998, the Savings Bank had $681,000 of substandard
loans and $977,000 of "special mention" loans.

     When a savings bank classifies problem assets as either
substandard or doubtful, it is required to establish general
valuation allowances or "loss reserves" in an amount deemed
prudent by management.  General allowances represent loss
allowances that have been established to recognize the inherent
risk associated with lending activities, but which, unlike
specific allowances, have not been allocated to particular
problem assets.  When a savings bank classifies problem assets as
"loss," it is required either to establish a specific allowance
for losses equal to 100% of the amount of the assets so
classified, or to charge off such amount.  A savings bank's
determination as to the classification of its assets and the
amount of its valuation allowance is subject to review by its
regulatory agencies, which can order the establishment of
additional general or specific loss allowances.  The Savings Bank
regularly reviews its asset portfolio to determine whether any
assets require classification in accordance with applicable
regulations.

     At December 31, 1998, the Savings Bank had no foreign loans
and no loan concentrations exceeding 10% of total loans in the
table "Analysis of Loan Portfolio."  Loan concentrations are
considered to exist when there are amounts loaned to a multiple
number of borrowers engaged in similar activities that would
cause them to be similarly impacted by economic or other
conditions.

     Potential problem loans consist of loans that are included
in performing loans, but for which potential credit problems of
the borrowers have caused management to have serious doubts as to
the ability of such borrowers to continue to comply with present
repayment terms.  At December 31, 1998, loans past due between 30
and 89 days that are not included in the preceding table totalled
$423,000.

     Allowance for Loan Losses.  The allowance for loan losses is
established through a provision for loan losses based on
management's evaluation of the known and inherent risks in its
loan portfolio and current economic conditions.  Accordingly, the
Savings Bank consistently applies a methodology to determine both
the adequacy of the allowance for loan losses and the necessary
provision for loan losses to be charged against earnings.  This
methodology includes:

     --   a detailed review of all classified assets to determine
          if any specific reserve allocations (which includes
          impaired loans) are required on an individual loan
          basis.

     --   the application of reserve allocations to all
          criticized and classified assets, based upon allocation
          percentages, with  an "olem" (other loans especially
          mentioned), substandard or doubtful rating.

     --   the application of reserve allocations to installment
          and mortgage loans based upon historical charge-off
          experience for those loan types.  The  application of
          reserve allocations to all performing loans based upon 
          historical actual losses incurred from all loan review
          categories.

     The Savings Bank provided $283,000, $60,000 and $132,000 to
its allowance for loan losses for the years ended December 31,
1998, 1997 and 1996, respectively.  At December 31, 1998, the
total allowance for loan losses was $304,000, which amounted to
13.58% of nonperforming assets.  The Savings Bank will continue
to monitor and modify the level of its allowance for loan losses
in order to maintain it at a level that management considers
adequate to provide for potential loan losses.  As the Savings
Bank continues to diversify its loan portfolio into commercial,
commercial real estate and construction lending, the Savings Bank
expects to increase its provisions for loan losses in future
periods in order to increase the allowance for loan losses.  For
the years ended December 31, 1998, 1997 and 1996, respectively,
the Savings Bank had $270,000, $29,000 and  $133,000 in
charge-offs against this allowance.

     Analysis of the Allowance For Loan Losses.  The following
table sets forth the analysis of the allowance for loan losses
for the periods indicated.

<TABLE>
<CAPTION>
                                                        Year Ended 
                                                        December 31,               Years Ended September 30,
                                           1998           1997         1996          1995             1994
<S>                                        <C>            <C>          <C>           <C>              <C>
Allowance, beginning of period             $238           $207         $208           $208            $187
Charge-offs:
  Real Estate: One-to-four-family           270             29          125             27
  Consumer                                                                8                                
Total charge-offs                           270             29          133             27               0
Total recoveries                             53              0            0              0               0
    Net charge-offs (recoveries)            217             29          133             27               0
Provision charged to operations             283             60          132             27              21
Allowance, end of period                   $304           $238         $207           $208            $208
                                           ====           ====         ====           ====            ====  
</TABLE>


     Allocation of Allowance for Loan Losses.  The following
table sets forth the allocation of allowance for loan losses by
loan category for the periods indicated.

<TABLE>
<CAPTION>
                                            At December 31,                                       At September 30, 
                                   1998                1997                1996                1995               1994
                             Amount  Percent(1)  Amount  Percent(1)  Amount  Percent(1)  Amount  Percent(1) Amount  Percent(1)

<S>                          <C>     <C>         <C>     <C>         <C>     <C>         <C>     <C>        <C>     <C>
Residential including 
    multifamily real estate   $109      69.78%   $166       72.71%   $150       85.70%   $150      83.91%    $149       85.07%
Commercial real estate
    and commercial 
    business                    88      28.63      67       25.38      44       12.39      39      14.21       46       13.57
Consumer                         4       1.59       5        1.91      13        1.91      16       1.88        3        1.36
Unallocated                    103          0                           0           0       3          0        9           0
    Total                     $304     100.00%   $238      100.00%   $207      100.00%   $208     100.00%    $207      100.00%
                              ====     ======    ====      ======    ====      ======    ====     ======     ====      ======  
</TABLE>
_______________
(1)  Represents percentage in each category to total loans.

Investment Activities

     The Savings Bank's investment portfolio is comprised of
mortgage-backed securities, investment securities, and cash and
cash equivalents. The carrying value of the Savings Bank's
investment securities and mortgage-backed securities portfolio
totalled $44.30 million at December 31, 1998 compared to $27.62
million at December 31, 1997.  The Savings Bank's cash and cash
equivalents, consisting of cash and due from banks, and interest-
earning deposits with other financial institutions, totalled
$34.96 million at December 31, 1998 compared to $27.89 million at
December 31, 1997, a increase of $7.07 million or 25.35%. The
majority of the Savings Bank's mortgage-backed securities are
issued or guaranteed by the United States Government or agencies
thereof.  At December 31, 1998, mortgage-backed securities
totalled $23.40 million.  The majority of this amount represents
securities that were issued or guaranteed by either FNMA, FHLMC
or the Government National Mortgage Association ("GNMA").  The
Savings Bank historically maintains high levels of interest-
earning deposits as part of its strategy for meeting liquidity
requirements and improving interest sensitivity.

     The Savings Bank is required under federal regulations to
maintain a minimum amount of liquid assets that may be invested
in specified short term securities and certain other investments.
See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- Liquidity and Capital Resources." 
The Savings Bank generally has maintained a portfolio of liquid
assets that exceeds regulatory requirements.  Liquidity levels
may be increased or decreased depending upon the yields on
investment alternatives and upon management's judgment as to the
attractiveness of the yields then available in relation to other
opportunities and its expectation of the level of yield that will
be available in the future, as well as management's projections
as to the short-term demand for funds to be used in the Savings
Bank's loan origination and other activities.

     Pursuant to SFAS No. 115, which the Savings Bank adopted in
1994, the Savings Bank classifies its investment securities and
mortgage-backed securities as either held-to-maturity, available
for sale or trading. Available for sale and trading securities
are carried at market value, while held-to-maturity securities
are carried at amortized cost.  At December 31, 1998,
$5.32 million of the Savings Bank's investment securities and
mortgaged-backed securities were classified held-to-maturity and
$38.98 million of the Savings Bank's investment securities and
mortgaged-backed securities were classified available for sale. 
The Savings Bank did not carry any trading securities at
December 31, 1998.

     The Savings Bank's Board of Trustees has also adopted an
investment policy which identifies acceptable types of
investments for the Savings Bank and establishes criteria to
guide management in classifying investments as prescribed by SFAS
No. 115.  The policy also authorizes the Savings Bank's
investment officer to make single investments of up to
$1 million.  Under the investment policy the Savings Bank may
invest in certain AAA rated derivative securities.  As of
December 31, 1998, the Savings Bank had no collateralized
mortgage obligations.  The Savings Bank may not invest in high-
risk collateralized mortgage obligations ("CMOs") and the Savings
Bank's investment officer must periodically analyze the risk of
any CMO held by the Savings Bank to determine that such
securities are not within the high-risk category.

     On January 29, 1999, the Holding Company purchased 1,600,000
shares of Series A Convertible Preferred Stock, $.01 par value
per share, of McGuire Performance Solutions, Inc. ("MPS").  The
Holding Company purchased the shares for $.78125 per share for a
total cost of $1,250,000.  The Holding Company owns 100% of MPS's
Series A Convertible Preferred Stock.  MPS is a nationally
recognized firm delivering cost-effective solutions for high
performance total balance sheet management to banks, thrifts,
credit unions and other financial institutions.

     Carrying and Market Value of Investment and Mortgage-Backed
Securities.  The following table sets forth certain information
regarding the carrying and market values of the Savings Bank's
investment securities and mortgage-backed securities in the
Savings Bank's held-to-maturity portfolio for the periods
indicated.

<TABLE>
<CAPTION>
                                                Held to Maturity
                                                 At December 31,
                                                      1998                   
                                    Gross        Gross 
                                  Amortized   Unrealized   Unrealized  Fair
                                     Cost        Gains       Losses    Value
                                                 (In Thousands)
<S>                               <C>         <C>          <C>         <C>
Investment Securities:
Debt:
  FNMA                             $ 1,000        $  1         $-      $ 1,001
  FHLMC                              2,996           8          -        3,004
    Total Debt Securities held
      to maturity                    3,996           9          -        4,005
Mortgage-backed securities:
  GNMA                               1,269          74                   1,343
  FHLMC                                 58           4          -           62
    Total mortgage-backed
      securities held to
      maturity                       1,327          78          -        1,405
    Total securities held to
      maturity                     $ 5,323        $ 87         $-      $ 5,410

<CAPTION>
                                                Held to Maturity
                                                 At December 31,
                                                      1997                   
                                    Gross        Gross 
                                  Amortized   Unrealized   Unrealized  Fair
                                     Cost        Gains       Losses    Value
                                                 (In Thousands)
<S>                               <C>         <C>          <C>         <C>
Investment Securities:
Debt:
  FNMA                             $ 7,219        $  8          $-     $ 7,227
  FHLMC                              1,000           8           -       1,008
    Total Debt Securities held
      to maturity                    8,219          16           -       8,235
Mortgage-backed securities:
  GNMA                               1,980         105           -       2,085
  FHLMC                                 88           9           -          97
    Total mortgage-backed
      securities held to
      maturity                       2,068         114           -       2,182
    Total securities held to
      maturity                     $10,287        $130          $-     $10,417
</TABLE>

     The following table presents the estimated fair value of
investment securities and mortgage-backed securities available
for sale and the net unrealized gain or loss at the periods
indicated:

<TABLE>
<CAPTION>
                                              Available for Sale
                                             At December 31, 1998             
                                               Gross        Gross 
                                 Amortized   Unrealized   Unrealized     Fair
                                    Cost        Gains       Losses      Value
                                                (In Thousands)
<S>                              <C>         <C>          <C>          <C>
Investment Securities:
  Equity:
    Investments in mutual funds   $ 2,354        $ -          $1       $ 2,353
  Debt:
    FNMA Notes                      3,500         11           -         3,511
    Municipal Tax-exempt            3,544          -           -         3,544
    FHLB Notes                      6,498          -           -         6,498
    SLMA                            1,000          1           -         1,001
      Total Debt Securities held
        to maturity                14,542         12           -        14,554
  Mortgage-backed securities:
    FNMA                           11,884          -           6        11,878
    GNMA                           10,195          -           -        10,195
    Total mortgage-backed
      securities available
      for sale                     22,079          -           6        22,073
    Total available-for-sale
      securities                  $38,975        $12          $7       $38,980


<CAPTION>
                                              Available for Sale
                                             At December 31, 1997             
                                               Gross        Gross 
                                 Amortized   Unrealized   Unrealized     Fair
                                    Cost        Gains       Losses      Value
                                                (In Thousands)
<S>                              <C>         <C>          <C>          <C>
Investment Securities:
  Equity:
    Investments in mutual funds   $ 2,354        $12         $ -       $ 2,366
  Debt:
    FHLB Notes                      7,995         23           -         8,018
    Federal Farm Credit             2,000         12           -         2,012
    FNMA                              998         13           -         1,011
    SLMA                            1,000          -           6           994
      Total Debt Securities
        available for sale         11,993         48           6        12,035
  Mortgage-backed securities:
    FNMA                            2,227          -          65         2,162
    FHLMC                             778          -           6           772
    Total mortgage-backed
      securities available
      for sale                      3,005          -          71         2,934
    Total available-for-sale
      securities                  $17,352        $60         $77       $17,335
</TABLE>

     Investment Portfolio Maturities.  The following table sets
forth the scheduled maturities, carrying values, and weighted
average yields for the Savings Bank's investment securities and
mortgage-backed securities portfolios classified as being held to
maturity and available for sale at December 31, 1998. 
Adjustable-rate, mortgage-backed securities are included in the
period in which interest rates are next scheduled to adjust.

<TABLE>
<CAPTION>
                                                                      At December 31, 1998                                         

                                In one year         After one year      After five years
                                  or less            to five years        to ten years        Over ten years  
                                                                                                                 No Stated
                             Carrying   Average   Carrying   Average   Carrying   Average   Carrying   Average    Maturity
                               Value     Yield      Value     Yield      Value     Yield      Value     Yield    or Rate     Total 
<S>                          <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>      <C>         <C>
Held to maturity:
  Investment Securities       $    -        -       1,996      6.37%    $1,000     6.50%     $ 1,000     7.09%    $    -    $ 3,996
  Mortgage-backed
    securities                     -        -           -         -          -        -        1,327     8.50%         -      1,327
      Total held to
        maturity              $    -        -      $1,996      6.37%    $1,000        0      $ 2,327    15.59%    $    -    $ 5,323

Available for sale:
  Investment Securities       $    -               $5,998      5.78%    $4,000     6.80%     $ 4,544     5.41%    $2,354    $16,896
  Mortgage-backed securities   1,182     5.50%        589      5.50%         -        -       20,308     6.75%         -     22,079
    Total available for sale  $1,182     5.50%     $6,587     11.28%    $4,000     6.80%     $24,852    12.16%    $2,354    $38,975
</TABLE>

Sources of Funds

     General.  Deposits are the major source of the Savings
Bank's funds for lending and other investment purposes.  In
addition to deposits, the Savings Bank derives funds from the
amortization and prepayment of loans and mortgage-backed
securities, the maturity of investment securities, operations
and, if needed, advances from the FHLB. Scheduled loan principal
repayments are a relatively stable source of funds, while deposit
inflows and outflows and loan prepayments are influenced
significantly by general interest rates and market conditions. 
Borrowings may be used on a short-term basis to compensate for
reductions in the availability of funds from other sources or on
a longer term basis for general business purposes.

     Deposits.  Consumer and commercial deposits are attracted
principally from within the Savings Bank's market area through
the offering of a broad selection of deposit instruments
including checking accounts, passbook savings accounts, statement
savings accounts, money market deposit accounts, term certificate
accounts and individual retirement accounts.  Deposit account
terms vary according to the minimum balance required, the period
of time during which the funds must remain on deposit, and the
interest rate, among other factors.  The Savings Bank regularly
evaluates its internal cost of funds, surveys rates offered by
competing institutions, reviews the Savings Bank's cash flow
requirements for lending and liquidity, and executes rate changes
when deemed appropriate.  The Savings Bank does not obtain
deposits through brokers, nor does it solicit funds outside its
market area.

     The Savings Bank's deposit pricing strategy seeks to retain
passbook savings deposit accounts as an important funding source.
Management's experience is that its customer base finds the
traditional passbook savings account attractive even though
higher yields may be available from alternative deposit products. 
Accordingly, the Savings Bank typically prices its passbook
product above its large commercial bank competitors whose pricing
strategy is designed for a larger and more diverse market.

     The following table sets forth the savings account
activities for the Savings Bank for the periods indicated.

                              Year Ended            Year Ended
                             December 31,          September 30, 
                        1998     1997     1996     1995     1994 
Increase before
  Interest credited   $15,003   $4,249   $  527   $3,187   $  587
Interest credited       4,424    3,911    3,571    3,437    3,038
  Net deposit
    increase          $19,427   $8,160   $4,098   $6,624   $3,625


     The following tables set forth the composition of savings
deposits in the various types of savings accounts offered by the
Savings Bank between the dates indicated.
<TABLE>
<CAPTION>
                                                  At December 31,
                                                        1998                 
                                                                     Weighted
                                                                      Average
                                                        % of          Nominal
                                        Balance       Deposits         Rate  
<S>                                    <C>            <C>            <C>  
Savings deposit accounts               $ 28,952         22.59%         2.50%
NOW Accounts                             13,016         10.16          0.38
Money market accounts                     8,705          6.79          3.53
Retail certificate of deposit            72,096         56.25          5.42
Jumbo certificates of deposit(1)          5,391          4.21          5.58
Total deposits                         $128,160        100.00%
</TABLE>
<TABLE>
<CAPTION>
                                       At December 31,                  At December 31,
                                            1997                              1996            

                                                      Weighted                        Weighted
                                                       Average                        Average
                                             % of      Nominal                % of    Nominal
                                 Balance   Deposits     Rate      Balance   Deposits    Rate  
<S>                             <C>        <C>        <C>        <C>        <C>        <C>
Savings deposit accounts        $ 29,694     27.31%     2.50%    $ 28,992     28.83%     2.49%
NOW Accounts                       8,535      7.85      0.90        9,105      9.05      1.09
Money market accounts              7,201      6.62      3.57        6,266      6.23      3.63
Retail certificate of deposit     57,536     52.91      5.57       50,175     49.89      5.41
Jumbo certificates of
  deposit(1)                       5,768      5.31      5.81        6,036      6.00      5.72 
    Total deposits              $108,734    100.00%              $100,574    100.00%
</TABLE>
_______________________
(1)  Includes only certificates of deposit of $100,000 or more
     bearing negotiated rates.

     Time Deposit Maturities.  The following table sets forth the
amount and maturities of time deposits at December 31, 1998.

                     Period to Maturity from December 31, 1998  
                    Within       One to 
                   One Year   Three Years   Thereafter    Total 
                                  (In Thousands)

Less than 4.00%     $   770      $   29       $  263     $ 1,062
4.001% - 6.000%      62,627       8,928        1,501      73,056
6.001%  -  8.000%     1,958         575          789       3,322
8.001%  -  10.000%       25          22          -            47
over 10.000%            -           -            -           -  
  Total             $65,380      $9,554       $2,553     $77,487

     Large Certificates of Deposit Maturities.  The following
table indicates the amount of the Savings Bank's certificates of
deposit of $100,000 or more by time remaining until maturity at
December 31, 1998.

                                                    Certificates
          Maturity Period                            of Deposit  
                                                   (In thousands)

One year or less                                       $11,991
Over one year though two years                           1,179
Over two years through three years                         159
Over three years through five years                        566
Over five years through ten years                          -
Over ten years                                             -  
                                                       $13,895


Borrowings

     Savings deposits are the primary source of funds for the
Savings Bank's lending and investment activities and for its
general business purposes.  If the need arises, the Savings Bank
may rely upon advances from the FHLB to supplement its supply of
lendable funds and to meet deposit withdrawal requirements.  At
December 31, 1998, the Savings Bank had no FHLB advances
outstanding.

Market Area and Competition

     The Savings Bank's market area includes the Philadelphia and
metropolitan area and all counties contiguous thereto as well as
counties of New Jersey and Delaware.  This area has a large
concentration of financial institutions, many of which are
significantly larger and have greater financial resources than
the Savings Bank, and all of which are competitors of the Savings
Bank to varying degrees.  As a result, the Savings Bank
encounters strong competition both in attracting deposits and in 
originating real estate and other loans.  Its most direct
competition for deposits has come historically from commercial
banks, brokerage houses, other savings associations and credit
unions in its market area, and the Savings Bank expects continued
strong competition from such financial institutions in the
foreseeable future.  The Savings Bank's market area includes
branches of several commercial banks that are substantially
larger than the Savings Bank.  The Savings Bank competes for
savings deposits by offering depositors a high level of personal
service.

     The competition for real estate and other loans comes
principally from commercial banks, mortgage banking companies and
other savings institutions.  This competition for loans has
increased substantially in recent years as a result of the large
number of institutions competing in the Savings Bank's market
area, as well as the increased efforts by commercial banks to
expand mortgage loan originations.

     The Savings Bank competes for loans primarily through the
interest rates and loan fees it charges and the efficiency and
quality of services it provides borrowers, real estate brokers
and builders.  Factors that affect competition include general
and local economic conditions, interest rate levels and
volatility of the mortgage markets.

Subsidiaries

     The Savings Bank owns three direct subsidiaries and one
indirect subsidiary.  See "Business of the Savings Bank --
Mortgage Banking Activities."  TNMC is engaged in a mortgage
banking business.  See "Business of the Savings Bank -- Mortgage
Banking Operations."  PSA Service Corp. conducts real estate
appraisals, processes credit applications and provides other
services in connection with the origination of loans.  PSA
Financial Corp. primarily originates business loans and 
commercial real estate loans.  Its subsidiary, PSA Consumer
Discount Company, primarily originates consumer loans.

Personnel

     As of December 31, 1998, the Savings Bank had 48 full-time
and no part-time employees.  None of the Savings Bank's employees
are represented by a collective bargaining group.  The Savings
Bank believes its relationship with its employees to be good. 

Environmental Matters

     Environmental hazards have become a source of substantial
risk and potential liability in the loan portfolios of financial
institutions.  If a property securing one or more of an
institutions loans is environmentally contaminated, the
institution may be adversely affected in several different ways. 
The value of the collateral could be impaired, environmental
clean-up costs may impair the borrower's repayment ability, liens
held by the institution against the contaminated property may be
subordinated to state and/or federal liens securing clean-up
costs, and the institution against the contaminated property may
be subordinated to state and/or federal liens securing clean-up
costs if it has foreclosed on the property or if it is deemed to
have become involved in management of the borrower.  To minimize
these risks, the Savings Bank may require an environmental
examination of the property of any borrower or prospective
borrower if consideration of the potential loss to the Savings
Bank in relation to the burdens to the borrower.  The costs of
such examinations and reports are generally the responsibility of
the borrower.  These costs may be substantial and may deter a
prospective borrower from entering into a loan transaction with
the Savings Bank.  The Savings Bank is not aware of any borrower
who is currently subject to any environmental investigation or
clean-up proceeding which is likely to have a material adverse
impact on the financial condition or results of operations of the
Savings Bank.

                           REGULATION

General

     The Savings Bank is a Pennsylvania-chartered stock savings
bank and its deposit accounts are insured up to applicable limits
by the FDIC under the SAIF (to the extent such deposits were
assumed from the Savings Bank's mutual savings bank predecessor)
or the BIF (in the case of other insured deposits).  The Savings
Bank is subject to extensive regulation by the PDOB, as its
chartering agency, and by the FDIC, as its primary federal
regulator and deposit insurer.  The Savings Bank must file
reports with the PDOB and the FDIC concerning its activities and
financial condition in addition to obtaining regulatory approvals
prior to engaging in certain activities and transactions
including, but not limited to, mergers and acquisitions.  The
PDOB and the FDIC periodically examine the Savings Bank to assess
its compliance with various regulatory requirements.  State and
federal regulation and supervision create a framework within
which the Savings Bank must operate and are intended primarily
for the protection of the FDIC insurance funds and depositors
rather than shareholders.

Regulation of the Holding Company

     General.  The Holding Company is a bank holding company
subject to supervision and regulation by the Federal Reserve
under the Bank Holding Company Act of 1956, as amended.  As a
bank holding company, the Holding Company's activities and those
of its subsidiary are limited to the business of banking and
activities closely related or incidental to banking, and the
Holding Company may not directly or indirectly acquire the
ownership or control or more than 5% of any class of voting
shares or substantially all of the assets of any company,
including the bank, without prior approval of the Federal
Reserve.

     The Savings Bank is subject to supervision and examination
by applicable federal and state banking agencies.  The Savings
Bank is also a Pennsylvania-chartered bank subject to supervision
and regulation by the PDOB.  In addition, because the deposits of
the Savings Bank are insured by the FDIC, the Savings Bank is
subject to regulation by the FDIC.  The Savings Bank is also
subject to requirements and restrictions under federal and state
law, including requirements to maintain reserves against
deposits, restrictions on the types of investments that may be
made and the types of services that may be offered.  Various
consumer laws and regulations also affect the operations of the
Savings Bank.  In addition to the impact of regulation,
commercial banks are affected significantly by the actions of the
Federal Reserve in attempting to control the money supply and
credit availability in order to influence the economy.

     Holding Company Structure.  The Savings Bank is subject to
restrictions under federal law which limit its ability to
transfer funds to the Holding Company, whether in the form of
loans, other extensions of credit, investments and asset
purchases.  Such transfers by the Savings Bank to the Holding
Company are generally limited in amount to 10% of the Savings
Bank's capital and surplus.  Furthermore, such loans and
extensions of credit are required to be secured in specific
amounts, and all transactions are required to be on an arm's
length basis.  The Savings Bank has never made any loan or
extension of credit to the Holding Company nor has it purchased
any assets from the Holding Company.

      Under Federal Reserve policy, a bank holding company is
expected to act as a source of financial strength to the Savings
Bank and to commit resources to support the Savings Bank, i.e.,
to downstream funds to the Savings Bank.  This support may be
required at times when, absent such policy, the bank holding
company might not otherwise provide such support.  Any capital
loans by a bank holding company to the Savings Bank are
subordinate in right of payment to deposits and to certain other
indebtedness of the Savings Bank.  In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company
to a federal bank regulatory agency to maintain the capital of
the Savings Bank will be assumed by the bankruptcy trustee and
entitled to a priority of payment.

Regulation of the Savings Bank

     Pennsylvania Savings Bank Law.  The Savings Bank is
incorporated under the Pennsylvania Banking Code of 1965, as
amended (the "Banking Code").  The Banking Code contains detailed
provisions governing the Bank's organization, the location of its
offices, the rights and responsibilities of its trustees,
officers, employees, depositors and shareholders, and its
savings, investment and other operations.  The Banking Code
delegates extensive rulemaking power and administrative
discretion to the PDOB.

     The PDOB generally examines each savings bank not less
frequently than once every two years.  Although the PDOB may
accept the examinations and reports of the FDIC in lieu of the
PDOB's examination, the current practice is for the PDOB to
conduct individual examinations.  The PDOB may order any savings
bank to discontinue any violation of law or unsafe or unsound
business practice and may direct any trustee, officer, employee
or attorney of a savings bank engaged in an objectionable
activity, after the PDOB has ordered the activity to be
terminated, to show cause at a hearing before the PDOB why such
person should not be removed.

     Interstate Acquisitions.  The Commonwealth of Pennsylvania
has enacted legislation regarding the acquisition of commercial
banks, bank holding companies, savings banks and savings and loan
associations located in Pennsylvania by institutions located
outside of Pennsylvania.  The statute dealing with savings
institutions authorizes (i) a savings bank, savings and loan
association or holding company thereof located in another state
(a "foreign institution") to acquire the voting stock of, merge
or consolidate with, or purchase assets and assume liabilities
of, a Pennsylvania-chartered savings bank and (ii) the
establishment of branches in Pennsylvania by foreign
institutions, in each case subject to certain conditions
including (A) reciprocal legislation in the state in which the
foreign institution seeking entry into Pennsylvania is located
permitting comparable entry by Pennsylvania savings institutions
and (B) approval by the PDOB.  Pennsylvania law also provides for
nationwide branching by Pennsylvania-chartered savings banks and
savings and loan associations, subject to the PDOB's approval and
certain other conditions.

     On September 29, 1994, the United States Congress enacted
the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 (the "Interstate Banking Law"), which amended various
federal banking laws to provide for nationwide interstate
banking, interstate bank mergers and interstate branching.  The
Interstate Banking Law currently allows the acquisition by a bank
holding company of a bank located in another state, interstate
bank mergers and branch purchase and assumption transactions. 
Only a few states have "opted-out" of the merger and purchase and
assumption provisions by enacting laws that specifically prohibit
such interstate transactions.

     Pursuant to the Interstate Banking Law, states may also
enact legislation to allow for de novo interstate branching by
out of state banks.

     Capital Maintenance.  FDIC regulations require FDIC-insured
state-chartered savings banks, such as the Savings Bank, to
maintain minimum levels of capital.  The regulations establish a
minimum leverage capital requirement of not less than 3% Tier 1
capital to total assets for institutions in the strongest
financial and managerial condition, with a CAMEL rating of "1"
(the highest rating of the FDIC for banks).  For all other banks,
the minimum leverage ratio is at least 4% to 5%.  Tier I capital
consists principally of common shareholders' equity (including
retained earnings), noncumulative perpetual preferred stock and
related surplus, and minority interests in consolidated
subsidiaries, minus all intangible assets other than certain
supervisory goodwill, purchased mortgage servicing rights and
purchased credit card relationships.

     The FDIC also requires that savings banks meet a risk-based
capital standard.  The risk-based capital standard for savings
banks requires the maintenance of total capital (which is defined
as Tier 1 capital plus supplementary (Tier 2) capital) to risk-
weighted assets of 8%.  In determining the amount of risk-
weighted assets, all assets, plus certain off balance sheet
assets, are multiplied by a risk weight of 0% to 100%, based on
the risks the FDIC believes are inherent in the type of asset or
item.

     Tier 2 capital includes certain perpetual preferred stock,
hybrid capital instruments, including certain mandatory
convertible securities, certain subordinated debt and
intermediate preferred stock and a limited amount of the general
allowance for loan and lease losses.  The amount of the allowance
for loan and lease losses includable in Tier 2 capital is limited
to a maximum of 1.25% of risk-weighted assets and 100% of Tier 1
capital.  Overall, the amount of capital counted toward Tier 2
capital cannot exceed 100% of Tier 1 capital.  At December 31,
1998, the Savings Bank met its capital requirements.

     FDICIA requires the Federal banking agencies to revise their
risk-based capital guidelines to, among other things, take
adequate account of interest rate risk, concentration of credit
risk, and risks of nontraditional activities.  The agencies have
adopted a specific rule applicable to institutions whose
investment portfolio trading activity exceeds 10% of total assets
or $1 billion.  The Savings Bank is not subject to this rule. 
The agencies have stated that they will also consider the effects
of market and credit risk and nontraditional activities on a
case-by-case basis, and could impose higher capital requirements
on any institution.

     Virtually identical capital requirements are imposed on the
Holding Company and enforced by the FRB.  The Savings Bank is
also subject to PDOB capital guidelines.  Although not adopted in
regulation form, the PDOB utilizes capital standards requiring a
minimum of 6% leverage capital and 10% risk-based capital.  The
components of leverage and risk-based capital are substantially
the same as those defined by the FDIC.

     Insurance of Deposit Accounts.  The FDIC has implemented a
risk-related premium schedule for all insured depository
institutions that results in the assessment of premiums based on
capital and supervisory measures.  Under the risk-related premium
schedule, the FDIC assigns, on a semiannual basis, each
institution to one of three capital groups (well-capitalized,
adequately capitalized or undercapitalized) and further assigns
such institution to one of three subgroups within a capital
group.  The institution's subgroup assignment is based upon the
FDIC's judgment of the institution's strength in light of
supervisory evaluations, including examination reports,
statistical analyses and other information relevant to measuring
the risk posed by the institution.  Only institutions with a
total capital to risk-adjusted assets ratio of 10.00% or greater,
a Tier 1 capital to risk-based assets ratio of 6% or greater, and
a Tier 1 leverage ratio of 5.0% or greater, are assigned to the
well-capitalized group.  As of December 31, 1998, the Savings
Bank was well capitalized for purposes of calculating insurance
assessments.

     On September 30, 1996, the President signed into law the
Omnibus Appropriations' Act that included legislation to
capitalize the Savings Association Insurance Fund with a one-time
special assessment.  The special assessment was paid on the
amount of SAIF-assessable deposits held by the institution as of
March 31, 1995 and the amount of any SAIF assessable deposits
acquired by the institution after that date.  The Savings Bank
recognized an expense of $567,000 in the third quarter of 1996. 
Since the SAIF was deemed recapitalized as of October 1, 1996,
the FDIC also set a new premium range for the fourth quarter of
1996.  Consequently, the Savings Bank received a refund of
$58,000 for the fourth quarter of 1996.  The FDIC approved a
final rule establishing a new range of premiums for SAIF and BIF
insured deposits effective January 1, 1997.  The FDIC calculated
deposit insurance assessments at the rate of $0.00 for every $100
of deposits for banks in the lowest risk-based premium category
and $0.27 for every $100 of insured deposits for banks in the
highest risk-based category.  The Savings Bank is presently in
the lowest premium category.

     While the Savings Bank presently pays no premium for deposit
insurance, it is subject to assessments to pay the interest on
Financing Corporation ("FICO") bonds.  FICO was created by
Congress in 1989 to issue bonds to finance the resolution of
failed thrift institutions.  Prior to 1997, only thrift
institutions were subject to assessments to raise funds to pay
the FICO bonds.  The Omnibus Budget Act also provided that the
BIF deposits would be subject to 1/5 of the assessment to which
SAIF deposits are subject for FICO bond payments through 1999. 
Beginning in 2000, BIF and SAIF deposits will be subject to the
same assessment for FICO bonds.  The FICO assessment for the
Savings Bank for 1998 is $.012 for each $100 of BIF deposits and
$.0588 for each $100 of SAIF deposits.

     The Savings Bank was chartered as a BIF-insured institution;
however, it will continue to pay premiums to the SAIF at SAIF
rates with respect to the deposits that it assumed in the MHC
Reorganization.  Therefore, a substantial portion of the Savings
Bank's deposits are assessed at SAIF rates.

     Restrictions on Dividends.  Dividend payments by the Savings
Bank are subject to the Banking Code.  Under the Banking Code, no
dividends may be paid except from "accumulated net earnings"
(generally, undivided profits).  Under the FDI Act, no dividends
may be paid by an insured bank if the bank is in arrears in the
payment of any insurance assessment due to the FDIC.

     State and federal regulatory authorities have adopted
standards for the maintenance of adequate levels of capital by
banks.  Adherence to such standards further limits the ability of
the Savings Bank to pay dividends.

     Restrictions on Investment Authority of State-Chartered
Banks.  Section 24 of the FDI Act, and the FDIC regulations
promulgated thereunder, generally limit the activities and equity
investments of FDIC insured savings banks and their subsidiaries
to those permissible for national banks and their subsidiaries,
unless such activities and investments are specifically exempted
or consented to by the FDIC.  FDIC regulations governing the
equity investments of FDIC insured savings banks generally
prohibit equity investments by such banks and required the
divestiture of such investments by December 19, 1996, unless
certain conditions are met.  The Savings Bank has no
impermissible investments and does not conduct impermissible
activities.  Savings banks that do not engage in such activities
but that desire to engage in other impermissible activities may
apply for approval from the FDIC to do so.

     Transactions with Affiliates.  Extensions of credit by the
Savings Bank to executive officers, trustees, and principal
shareholders and related interests of such persons are subject to
Sections 22(g) and 22(h) of the FRA and the Federal Reserve's
Regulation O.  These rules limit the aggregate amount of loans to
any such individual and their related interests, and require that
all such loans be pre-approved by the full Board of the Holding
Company voting without such person being present.  These rules
also provide that no institution shall make any loan or extension
of credit in any manner to any of such persons, unless such loan
or extension of credit is made on substantially the same terms,
including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons, does not
involve more than the normal risk of repayment or present other
unfavorable features, and the institution follows underwriting
procedures that are not less stringent than those applicable to
comparable transactions by the institution with persons who are
not executive officers, trustees, principal shareholders, or
employees of the institution.  Loans can be made to employees,
including executives and trustees, on more favorable terms than
to the general public, if all employees are eligible for such
preferential terms.  Regulation O also sets forth additional
limitations on extensions of credit by an institution to its
executive officers.  Management believes that the Savings Bank is
in compliance with Sections 22(g) and 22(h) of the FRA and the
Federal Reserve's Regulation O.

     Federal Reserve System.  Under Federal Reserve regulations,
the Savings Bank is required to maintain noninterest-earning
reserves against its transaction accounts (primarily NOW and
regular checking accounts).  The Federal Reserve regulations
generally require that reserves of 3% must be maintained against
net transaction accounts of $47.8 million or less (subject to
adjustment by the Federal Reserve) and $1.43 million plus 10% of
net transaction accounts in excess of $47.8 million.  The Savings
Bank is in compliance with the foregoing requirements.  Because
required reserves must be maintained in the form of either vault
cash, a noninterest-bearing account at a Federal Reserve Bank or
a pass-through account as defined by the Federal Reserve, the
effect of this reserve requirement is to reduce the Savings
Bank's interest-earning assets.

     Federal Home Loan Bank System.  As a condition of approval
to the Savings Bank's conversion from a state-chartered savings
association to a state-chartered savings bank in 1990, the
Savings Bank is required to retain its membership in the FHLB
System, which consists of 12 regional FHLBs.  The FHLB provides a
central credit facility primarily for member institutions.  The
Savings Bank, as a member of the FHLB of Pittsburgh, is required
to acquire and hold shares of capital stock in that FHLB 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, or 1/20 of its advances (borrowings)
from the FHLB of Pittsburgh, whichever is greater.  The Savings
Bank is in compliance with this requirement, with an investment
in FHLB of Pittsburgh stock at December 31, 1998 of $572,200. 
FHLB advances must be secured by specified types of collateral
and may only be obtained for the purpose of providing funds for
residential housing finance.

     The FHLBs are required to provide funds for the resolution
of insolvent thrifts and to contribute funds for affordable
housing programs.  These requirements could reduce the amount of
dividends that the FHLBs pay to their members and could also
result in the FHLBs imposing a higher rate of interest on
advances to their members.  If dividends were reduced, or
interest on future FHLB advances increased, the Savings Bank's
net interest income would likely also be reduced.

                        FEDERAL TAXATION

     General.  Upon consummation of the Conversion and
Reorganization, the Holding Company and the Savings Bank reports
their income on a fiscal year basis using the accrual method of
accounting and will be subject to federal income taxation in the
same manner as other corporations with some exceptions, including
particularly the Savings Bank's reserve for bad debts discussed
below.  The following discussion of tax matters is intended only
as a summary and does not purport to be a comprehensive
description of the tax rules applicable to the Savings Bank or
the Holding Company.

     Bad Debt Reserve.  Historically, savings institutions such
as the Savings Bank which met certain definitional tests
primarily related to their assets and the nature of their
business ("qualifying thrift") were permitted to establish a
reserve for bad debts and to make annual additions thereto, which
may have been deducted in arriving at their taxable income.  The
Savings Bank's deductions with respect to "qualifying real
property loans," which are generally loans secured by certain
interest in real property, were computed using an amount based on
the Savings Bank's actual loss experience, or a percentage equal
to 8% of the Savings Bank's taxable income, computed with certain
modifications and reduced by the amount of any permitted
additions to the non-qualifying reserve.  Due to the Savings
Bank's loss experience, the Savings Bank generally recognized a
bad debt deduction equal to 8% of taxable income.

     The provisions repealing the current thrift bad debt rules
were passed by Congress as part of "The Small Business Job
Protection Act of 1996, as amended by the Taxpayer Relief Act of
1997 (for qualifying thrifts which are S corporations)." The new
rules eliminate the 8% of taxable income method for deducting
additions to the tax bad debt reserves for all thrifts for tax
years beginning after December 31, 1995.  These rules also
require that all institutions recapture all or a portion of their
bad debt reserves added since the base year (last taxable year
beginning before January 1, 1988).  The Savings Bank has
previously recorded a deferred tax liability equal to the bad
debt recapture and as such the new rules will have no effect on
net income or federal income tax expense.  For taxable years
beginning after December 31, 1995, the Savings Bank's bad debt
deduction will be determined under the experience method using a
formula based on actual bad debt experience over a period of
years or, if the Savings Bank is a "large" association (assets in
excess of $500 million) on the basis of net charge-offs during
the taxable year.  The new rules allow an institution to suspend
bad debt reserve recapture for the 1996 and 1997 tax years if the
institution's lending activity for those years is equal to or
greater than the institutions average mortgage lending activity
for the six taxable years preceding 1996 adjusted for inflation. 
For this purpose, only home purchase or home improvement loans
are included and the institution can elect to have the tax years
with the highest and lowest lending activity removed from the
average calculation.  If an institution is permitted to postpone
the reserve recapture, it must begin its six year recapture no
later than the 1998 tax year.  The unrecaptured base year
reserves will not be subject to recapture as long as the
institution continues to carry on the business of banking.  In
addition, the balance of the pre-1988 bad debt reserves continue
to be subject to provisions of present law referred to below that
require recapture in the case of certain excess distributions to
shareholders.

     Distributions.  To the extent that the Savings Bank makes
"nondividend distributions" to the Holding Company, such
distributions will be considered to result in distributions from
the balance of its bad debt reserve as of December 31, 1987 (or a
lesser amount if the Savings Bank's loan portfolio decreased
since December 31, 1987) and then from the supplemental reserve
for losses on loans ("Excess Distributions"), and an amount based
on the Excess Distributions will be included in the Savings
Bank's taxable income.  Nondividend distributions include
distributions in excess of the Savings Bank's current and
accumulated earnings and profits, distributions in redemption of
stock and distributions in partial or complete liquidation. 
However, dividends paid out of the Bank's current or accumulated
earnings and profits, as calculated for federal income tax
purposes, will not be considered to result in a distribution from
the Savings Bank's bad debt reserve.  The amount of additional
taxable income created from an Excess Distribution is an amount
that, when reduced by the tax attributable to the income, is
equal to the amount of the distribution.  Thus, if, after the
Conversion, the Savings Bank makes a "nondividend distribution,"
then approximately one and one-half times the Excess Distribution
would be includable in gross income for federal income tax
purposes, assuming a 34% corporate income tax rate (exclusive of
state and local taxes).  See "REGULATION" and "DIVIDEND POLICY"
for limits on the payment of dividends by the Savings Bank.  The
Savings Bank does not intend to pay dividends that would result
in a recapture of any portion of its tax bad debt reserve.

     Corporate Alternative Minimum Tax.  The Code imposes a tax
on the alternative minimum taxable income  ("AMTI") of certain
corporations at a rate of 20%.  The excess of the tax bad debt
reserve deduction using the percentage of taxable income method
over the deduction that would have been allowable under the
experience method is treated as a preference item for purposes of
computing the AMTI.  In addition, only 90% of AMTI can be offset
by net operating loss carryovers.  AMTI is increased by an amount
equal to 75% of the amount by which the Savings Bank's adjusted
current earnings exceeds its OMIT (determined without regard to
this preference and prior to reduction for net operating losses). 
For taxable years beginning after December 31, 1986, and before
January 1, 1996, an environment tax of 0.12% of the excess of
AMTI (with certain modification) over $2.0 million is imposed on
corporations, including the Savings Bank, whether or not an
Alternative Minimum Tax is paid.

     Dividends-Received Deduction.  The Holding Company may
exclude from its income 100% of dividends received from the
Savings Bank as a member of the same affiliated group of
corporations which elect to file a consolidated return.  The
corporate dividends-received deduction is generally 70% in the
case of dividends received from unaffiliated corporations with
which the Holding Company and the Savings Bank will not file a
consolidated tax return, except that if the Holding Company or
the Savings Bank owns more than 20% of the stock of a corporation
distributing a dividend, then 80% of any dividends received may
be deducted assuming the applicable holding period has been
satisfied.

Item 2.   Description of Property.

     As of December 31, 1998, the Savings Bank conducted its
business through an executive/administrative office and six full-
service offices.  In December 1998, the Savings Bank sold its 
branch administrative office for $220,000 and recognized a loss
of $9,000.  The Savings Bank owns five of the six full-service
offices.  The aggregate net book value of the Savings Bank's
office premises and equipment was $990,000 as of December 31,
1998.  The Savings Bank is leasing its Center City full-service
office and executive office for a term of eleven years.  Lease
expense for the years ended December 31, 1998, 1997 and 1996 was
$281,698, $ 265,118 and $79,908, respectively.

Item 3.   Legal Proceedings.

     Periodically, there have been various claims and lawsuits
involving the Savings Bank, such as claims to enforce liens,
condemnation proceedings on properties in which the Savings Bank
holds security interests, claims involving the making and
servicing of real property loans and other issues incident to the
Savings Bank's business.  The Savings Bank is not a party to any
pending legal proceedings that it believes would have a material
adverse effect on the financial condition or operations of the
Savings Bank.

Item 4.   Submission of Matters to a Vote of Securities Holders.

     None.
<PAGE>
                             PART II

Item 5.   Market for Common Equity and Related Stockholder
          Matters.

     The common stock of PSB Bancorp, Inc. is traded over-the-
counter and is quoted in the NASDAQ Stock Market.  The NASDAQ
symbol is PSBi.   Prior to the Reorganization and Conversion, the
Public Savings Bank Shares traded on the OTC Bulletin Board under
the symbol "PSBI."  The following table sets forth the high and
low trading prices, as reported by NASDAQ, since the Conversion
and Reorganization on July 17, 1998.  As the table indicates, the
Holding Company has never declared cash dividends.
                                                                  
                                                          Cash
                                                        Dividend
                                         High    Low    Declared
Year ended December 31, 1998 

Quarter ended September 30, 1998        9.188   6.500       -
Quarter ended December 31, 1998         8.000   6.250       -

January 1, 1999 to Present

Quarter ended March 31, 1999
  (through March 18, 1999)              8.000   7.500       -


     Dividend payments by the Savings Bank are subject to the
restrictions of the Banking Code.  Under the Banking Code, no
dividends may be paid except from "accumulated net earnings"
(generally, undivided profits).  Under the Federal Deposit
Insurance Act, no dividends may be paid by an insured bank if the
bank is in arrears in the payment of any insurance assessment due
to the FDIC.  State and federal regulatory authorities have
adopted standards for the maintenance of adequate levels of
capital by banks.  Adherence to such standards further limits the
ability of the Savings Bank to pay dividends.  
<PAGE>
Item 6.   Selected Financial Data.
<TABLE>
<CAPTION>
                                         At and for the                 At and for the 
                                           Year Ended                    Year Ended
                                          December 31,                  September 30,
                                  1998        1997        1996        1995        1994
<S>                             <C>         <C>         <C>         <C>         <C> 
BALANCE SHEET DATA:
Total assets                    $164,007    $129,338    $118,435    $113,232    $ 99,696
Cash and cash equivalents         34,957      27,888      31,622      29,777      21,371
Loans receivable, net             72,880      61,915      52,586      51,212      50,912
Loans held for sale                6,938       6,575       4,598       1,041         185
Investment securities             20,903      22,621      18,973      20,737      16,362
Mortgage-backed securities        23,400       5,002       5,942       6,905       7,382
Deposits                         128,160     108,734     100,574      94,588      89,429
Retained earnings or 
  Shareholders' equity(1)         30,393      14,998      14,169       9,491       8,339
Book value per share                9.80       12.55       11.94         -           -
SUMMARY STATEMENT OF
  OPERATIONS:
Interest Income                   10,097       8,740       8,039       7,270       6,714
Interest Expense                   5,090       4,564       4,118       3,443       3,045
  Net interest income              5,007       4,176       3,921       3,827       3,669
Provision for loan losses            283          60         133          27          21
Net interest income after
  provision for loan losses        4,724       4,116       3,788       3,800       3,648
Noninterest income                 1,315       1,071         915         876         674
Noninterest expense (2)            4,625       4,134       4,363       3,584       3,211
Income before income taxes         1,414       1,053         340       1,092       1,111
Income tax provision                 502         345         201         433         470
Net Income                           912         708         139         659         641
Earnings per share - basic(3)   $   0.31    $   0.61    $   0.12    $    -      $    -  
Earnings per share - diluted    $   0.31    $   0.60    $   0.12    $    -      $    -  
PERFORMANCE DATA:
Return on average assets(4)         0.62%       0.57%       0.12%       0.60%       0.63%
Return on average equity(4)         4.00%       4.83%       0.98%       6.94%       7.24%
Dividend payout                      -           -         31.25%        -           -
Equity to assets                   15.62%      11.88%      12.29%       8.65%       8.74%
Interest rate spread                2.65%       3.01%       3.00%       3.32%       3.61%
ASSET QUALITY RATIOS:
Nonperforming loans to total
  loans                             2.19%       3.34%       5.21%       4.50%       4.21%
Nonperforming assets to total
  assets                            1.36%       1.97%       2.74%       2.49%       2.49%
Allowance for loan losses to
  total loans                       0.41%       0.38%       0.39%       0.40%       0.41%
Allowance for loan losses to
  nonperforming loans              18.89%      11.37%       7.45%       8.91%       9.65%
Allowance for loan losses to
  nonperforming assets             13.58%       9.33%       6.38%       7.38%       8.37%
Net charge-offs as a percentage
  of total loans                    0.37%       0.05%       0.25%       0.05%        -
Loans past due 90 days or more
  as to interest or principal
  and accruing interest         $    -      $    200    $  2,009    $  1,565    $  1,417
Nonaccrual loans                   1,609       1,894         770         770         738
Total nonperforming loans          1,609       2,094       2,779       2,335       2,155
Real estate owned (REO)              629         457         465         482         330
Total nonperforming assets         2,238       2,551       3,244       2,817       2,485
</TABLE>
_________________
(1)  Includes only retained earnings prior to the MHC
     Reorganization completed on October 20, 1995.

(2)  The Savings Bank was assessed a one-time fee of $567,000 in
     1996 to recapitalize the SAIF.

(3)  Represents earnings per share for the Savings Bank for
     periods prior to the period ended December 31, 1998.

(4)  Ratios annualized.
<PAGE>
Item 7.   Management's Discussion and Analysis of Financial
Condition and Results of Operations.

Business Strategy of the Savings Bank

     The Savings Bank's strategy is to maximize profitability by
providing quality deposit and loan products in an efficient
manner as a well-capitalized and independent (financial
institution).  Generally, the Savings Bank seeks to implement
this strategy by emphasizing retail deposits as its primary
source of funds and by maintaining a substantial part of its
assets in locally-originated residential first mortgage loans,
commercial real estate loans, commercial business loans,
construction loans and consumer loans, mortgage-backed securities
and other liquid investment securities.  The Savings Bank started
an expansion of its branch network by opening a branch in Center
City Philadelphia on June 14, 1996.  The Savings Bank plans
further expansion of its branch network in areas contiguous to
its current market and then into the suburbs of Philadelphia by
opening branch offices or acquiring the branches of other
institutions.  On March 19, 1999, the Holding Company and the
Savings Bank signed a definitive agreement to acquire First Bank
of Philadelphia ("FBKP"), a one branch bank located in
Philadelphia with $63.5 million in assets and $57.5 million in
deposits.

     The Savings Bank is also expanding the operations of TNMC,
its mortgage banking subsidiary, in an effort to increase its fee
income.  Retail mortgage origination is being expanded by
maintaining a staff of six commissioned sales people to solicit
mortgage loans throughout the Philadelphia metropolitan area and
surrounding counties in Pennsylvania, New Jersey and Delaware;
wholesale mortgage origination is being expanded by originating,
processing and servicing loans for other mortgage companies;
alternative mortgage lending is being expanded through
telemarketing origination programs for B through D quality paper
and FHA streamline programs.  See "SUBSIDIARIES." 

     The Savings Bank is increasing loan originations through its
existing office network and is increasing origination of other
loan products separate from TNMC such as commercial real estate
loans, commercial business loans, construction loans and consumer
loans.  During the year ended December 31, 1998, loan
originations other than residential mortgage loans totalled
$33.86 million or 58.73% of originations during the period.  This
increased origination of loans other than residential mortgage
loans reflects management's effort to diversify the Savings
Bank's loan portfolio, achieve a higher net interest margin and
reduce interest rate risk through the origination of higher
yielding assets.  This diversification strategy represents a
conscious effort by management to migrate over time from the
profile of a thrift institution to a profile more typical of a
commercial bank.
The Savings Bank expects this diversification trend to continue
and accelerate with the acquisition of FBKP.  In connection with
that transaction, the Savings Bank will merge into FBKP which
will be the surviving subsidiary of the Holding Company.  As a
result the Holding Company's operating subsidiary will hold a
commercial bank charter rather than a savings bank charter.

     The Savings Bank's business strategy incorporates the
following elements: (1) increasing assets by expanding its retail
branch network  to include other contiguous segments of the
metropolitan Philadelphia market; (2) expanding its mortgage
banking operations through the metropolitan Philadelphia area and
the adjacent counties of Pennsylvania, New Jersey and Delaware,
and (3) increasing net interest income and reducing interest rate
risk by emphasizing the origination for portfolio of commercial
real estate, construction, commercial business and consumer loans
which generally bear higher interest rates and have shorter terms
than residential mortgage loans.  The Savings Bank's expansion
strategy has resulted in materially increased operating expenses
associated with the lease of the Center City Philadelphia office
space, related equipment expense and salary and benefit expenses
for personnel expansion.  Also as expected, the generation of
increased revenues from the new branch and the mortgage banking
operation has lagged recognition of these additional expenses.

Financial Condition -- December 31, 1998 Compared to December 31,
1997

     The Savings Bank's total assets increased $34.67 million or
26.81% to $164.01 million at December 31, 1998 from
$129.34 million at December 31, 1997.  The increase in assets was
primarily the result of higher levels of cash and cash
equivalents, net loans, loans held for sale and mortgage-backed
securities which were partially offset by a decrease in
investment securities and office properties and equipment. 

     Net loans increased by $10.96 million to $72.88 million at
December 31, 1998 from $61.92 million at December 31, 1997.  The
increase of 17.70% was primarily the result of increased loan
origination of other loan products such as commercial real
estate, commercial business loans, construction loans and
consumer loans as well as modest growth in residential mortgage
loans.  Commercial real estate (nonresidential) increased by
$3.30 million to $14.72 million at December 31, 1998 from
$11.42 million at December 31, 1997.  Commercial business loans
increased by $1.17 million to $3.07 million at December 31, 1998
from $1.91 million at December 31, 1997.  Construction loans
increased by $689,000 to $3.29 million at December 31, 1998 from
$2.60 million at December 31, 1997.

     Total investment securities (including mortgage-backed
securities) increased $16.68 million, or 60.39%, to
$44.30 million at December 31, 1998 from $27.62 million at
December 31, 1997.  The increase occurred because the Savings
Bank transferred cash and cash equivalents and new deposit funds
into higher yielding, one to five year maturity investment
securities during the year ended December 31, 1998.

     Cash and cash equivalents, including interest-bearing
deposits with banks, increased $7.07 million to $34.96 million at
December 31, 1998 from $27.89 million at December 31, 1997.  This
increase was the result of cash provided from proceeds from the
stock conversion, new deposits, maturities of investments and
loan payments net of cash used for the purchase of investments,
capital expenditures and disbursements of loan proceeds.

     Total liabilities increased to $133.61 million at
December 31, 1998 from $114.34 million at December 31, 1997. 
This $19.27 million, or 16.85% increase reflected an increase in
the Savings Bank's primary source of funds, saving deposits,
which aggregated $128.16 million at December 31, 1998, an
increase of $19.43 million, or 17.87% from $108.73 million at
December 31, 1997. 

     Shareholder's equity increased by $15.39 million, or 102.6%,
from $15.00 million at December 31, 1997 to $30.39 million at
December 31, 1998.  This increase reflects the sale of stock by
the Holding Company and the Savings Bank's earnings for the year
ended December 31, 1998 and a decrease of $14,000 in unrealized
gain (losses) (net of taxes) on investment and mortgage-backed
securities held in the Savings Bank's available for sale
portfolio as well as the release of uncommitted ESOP shares.

Results of Operations for the Years Ended December 31, 1998 and
December 31,1997

     General.  The Savings Bank's net income is primarily
dependent on its net interest income, which is the difference
between interest income earned on its interest-earning assets
(such as investments and mortgage-backed securities, other
investment securities and loans), and its cost of funds
(consisting of interest paid on deposits).  The Savings Bank's
net income also is affected by its provision for loan losses, as
well as by the amount of noninterest income, including income
from fees and services charges, net gains and losses on sales of
mortgage-backed securities and other investments, and noninterest
expense such as employee compensation and benefits, deposit
insurance premiums, occupancy and equipment costs, and income
taxes.  Earnings of the Savings Bank also are affected
significantly by general economic and competitive conditions,
particularly changes in market interest rates, government
policies and actions of regulatory authorities, which events are
beyond the control of the Savings Bank.  In particular, the
general level of market interest rates tends to be highly
cyclical.  In periods of high interest rates, earnings of the
Savings Bank are likely to be depressed, which in turn would be
likely to have a detrimental effect on the market value of any
investment in the Holding Company's Common Stock.

     Average Balance Sheet.  The following table provides an
analysis on a monthly basis of net interest income, setting forth
for the periods (i) average assets, liabilities and shareholders'
equity, (ii) interest income earned on interest-earning assets
and interest expense paid on interest-bearing liabilities,
(iii) average yields earned on interest-earning assets and
average rates paid on interest-bearing liabilities, and (iv) the
Savings Bank's net interest margin (net interest income as a
percentage of average total interest-earning assets).

<TABLE>
<CAPTION>
                                                                              Years Ended December 31, 
                                                      1998                          1997                       1996
                                              Average             Yield/    Average            Yield/  Average            Yield/
                                              Balance   Interest   Rate     Balance   Interest  Rate   Balance   Interest  Rate 
                                             (Dollars in Thousands)        (Dollars in Thousands)     (Dollars in Thousands)
<S>                                           <C>       <C>       <C>       <C>       <C>      <C>     <C>       <C>      <C>
ASSETS
Interest-earning assets:
    Interest-earning deposits(1)               $40,396    $1,895    4.69%    $25,648   $1,210   4.72%   $27,803   $1,207   4.34%
    Investment securities                       18,029     1,201    6.66      23,182    1,616   6.97     18,880    1,183   6.27
    Mortgage-backed securities                   6,326       327    5.17       5,696      374   6.57      6,494      431   6.64
    Net loans(2)                                75,571     6,674    8.83      62,213    5,540   8.90     56,048    5,218   9.31
        Total interest-earning assets          140,322   $10,097    7.20%    116,739   $8,740   7.49%   109,225   $8,039   7.36%
Noninterest-earning assets                       5,604                         6,565                      6,777
    Total assets                              $145,926                      $123,304                   $116,002
                                              ========                      ========                   ========

LIABILITIES
Interest-bearing liabilities:
    Savings deposits                           $41,474     1,196    2.88%    $40,061    1,137   2.84%   $40,677    1,122   2.76%
    Certificates                                67,776     3,869    5.71      59,178    3,397   5.74     52,253    2,960   5.66
        Total deposits                         109,250     5,065    4.64      99,239    4,534   4.57     92,930    4,082   4.39
    Borrowed money                               2,737        25    0.91       2,621       31   1.18      1,505       36   2.39
        Total interest-bearing liabilities     111,987     5,090    4.55%    101,860    4,565   4.48%    94,435    4,118   4.36%
Non-interest-bearing liabilities                11,139                         6,798                      7,313
    Total liabilities                          123,126                       108,658                    101,748
Retained earnings or shareholders' equity       22,800                        14,646                     14,254
    Total liabilities and retained 
        earnings or shareholders' equity      $145,926                      $123,304                   $116,002
                                              ========                      ========                   ========
Net interest income                                       $5,007                       $4,175                     $3,921
                                                          ======                       ======                     ======
Interest rate spread(3)                                             2.65%                       3.01%                      3.00%
Net yield on interest-earning assets(4)                             3.57%                       3.58%                      3.59%
Ratio of interest-earning assets to 
    interest-bearing liabilities                                    1.25                        1.15                       1.16

</TABLE>

__________________

(1)  Includes interest-earning deposits with the Federal Home
     Loan Bank of Pittsburgh.
(2)  Includes nonaccrual loans.
(3)  Represents the difference between the average yield on
     interest-earning assets and the average cost of interest-
     bearing liabilities.
(4)  Represents net interest earnings divided by average
     interest-earning assets.

     Rate/Volume Analysis.  Net interest income is affected by
changes in the mix of the volume and sales of interest-earning
assets and interest-earning liabilities.  The following table
represents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-
bearing liabilities have affected the Savings Bank's interest
income and interest expense during the periods indicated. 

<TABLE>
<CAPTION>
                                                  Year  Ended December 31,       Year  Ended December 31, 
                                                        1998 vs. 1997                  1997 vs. 1996
                                                    Increase/(Decrease)            Increase/(Decrease)
                                                Volume     Rate    Total       Volume    Rate      Total
                                                      (In Thousands)                (In Thousands)
<S>                                             <C>        <C>     <C>         <C>       <C>       <C>
Interest earning assets:
    Investments(1)                                $348      ($78)    $270       $198      $238     $436
    Mortgage-backed securities                      33       (80)     (47)       (52)       (5)     (57)
    Loans(2)                                     1,109        25    1,134        549      (227)     322
        Total interest earning assets            1,490      (133)   1,357        695         6      701

Interest bearing liabilities:
    Deposits                                       532        (1)     531        380        72      452
    Borrowings                                       1        (7)      (6)        (6)        1       (5)
        Total interest bearing 
            liabilities                            533        (8)     525        374        73      447
    Net change in net interest income             $957     ($125)    $832       $321      ($67)    $254
                                                 =====     =====    =====       ====      ====     ==== 
</TABLE>

______________ 

(1)  Includes interest-earning deposits and investment
     securities.
(2)  Includes non-accrual loans and loans held for sale.

     Net Income.  The Savings Bank's net income totaled $912,000
and $708,000 for the year ended December 31, 1998 and
December 31, 1997, respectively.  Holding Company earnings per
share for the year ended December 31, 1998 was $.31.  Savings
Bank earnings per share for the year ended December 31, 1997 was
$.61.  The decrease in earnings per share reflects the increased
number of shares outstanding as a result of the completion of the
Conversion and Reorganization.  

     Interest Income.  Total interest income increased by
$1.36 million, or 15.56%, to $10.10 million for the year ended
December 31, 1998, from $8.74 million for the year ended
December 31, 1997.  This reflected a $23.58 million, or 20.20%,
increase in average interest-earning assets.  The increase in
average interest-earning assets was comprised of a $14.75 million
increase in average interest-earning deposits and a
$13.36 million increase in average net loans.  The increase in
interest-earning assets generally reflected management's strategy
of pursuing diversification of the Savings Bank's loan
composition while maintaining adequate margins over minimum
required capital levels. 

     Interest Expense.  Total interest expense increased to
$5.09 million for the year ended December 31, 1998, from
$4.56 million for the year ended December 31, 1997, representing
an increase of $530,000 or 11.62%.  Higher interest expense
resulted from a $4.34 million increase in average-interest
bearing liabilities and a 7 basis point increase in the average
yield on interest-bearing liabilities.  This increase in
interest-bearing liabilities was comprised of a $8.60 million
increase in higher yielding average certificates of deposit and 
a $1.41 million increase in average savings deposits.  The
Savings Bank attracts a significant portion of its deposits from
its passbook product.  Management's experience is that its
customer base still finds the traditional passbook savings
account attractive even though higher yields may be available
from alternative deposit products.  Accordingly, the Savings Bank
prices its passbook product above its large commercial bank
competitors.  As a result, the Savings Bank has been able to fund
operations with a significant percentage of passbook savings
accounts and thereby achieve a comparatively low cost of funds. 

     Provision for Loan Losses.  The Savings Bank makes a
provision to its allowance for loan losses to protect the Savings
Bank against possible but not yet identified losses inherent in
the Savings Bank's loan portfolio.  This provision is recognized
for financial reporting purposes as a reduction of income.  In
making such provision, management of the Savings Bank considers,
among other factors, the nature and volume of the loan portfolio,
overall portfolio quality, review of specific problem loans and
current economic conditions that may affect the borrower's
ability to pay.  Effective January 1, 1997, interest is
discontinued on all loans that are contractually past due 3
months.  Prior to January 1, 1997, interest was discontinued on
residential loans that were contractually past due 12 months,
unless the value of the mortgaged property well exceeded the loan
balance in which case interest continued to accrue until the loan
balance plus accrued interest equaled the fair market value of
the property securing the loan.  Interest was discontinued on
commercial, consumer and unsecured loans that were contractually
past due 3 months.  During the years ended December 31, 1998,
1997 and 1996, the Savings Bank had charge-offs against the
allowance for loan losses of $270,000, $29,000 and $133,000,
respectively, reflecting write-offs on several different loans in
both periods.  During such periods, the Savings Bank provided
$283,000, $60,000 and $133,000, respectively, for loan losses in
order to protect against future losses.  The provision for loan
losses was higher in 1998 compared to prior periods.   This
occurred because of the planning and implementation of the loan
diversification strategy.   Management expects the provision for
loan losses to increase in future periods as the Savings Bank
achieves its diversification strategy.  In addition, the
provision for loan losses may increase in 1999 if management
determines that losses inherent in the existing portfolio of
nonaccrual loans exceeds anticipated recoveries.

     Net Interest Income After Provision for Loan Losses.  Net
interest income after the provision for loan losses for the year
ended December 31, 1998, increased to $4.72 million from
$4.12 million for the year ended December 31, 1997, an increase
of $600,000, or 14.56%. 

     Noninterest Income.  Noninterest income consists of gain on
sale of loans, loan fees, service charges, rental income and
other income.  Noninterest income increased by $250,000, or
23.36%, to $1.32 million for the year ended December 31, 1998
from $1.07 million for the year ended December 31, 1997.  The
principal reasons for the increase in noninterest income was a
$307,000 increase in gain on sale of loans to $863,000 in 1998
from $556,000 in 1997 due to an increase in the number of loans
sold by TNMC in 1998 and a $14,000 increase in service charges.  
This increase was offset by a $55,000 decrease in loan fees and a
$22,000 decrease in other income. 

     Noninterest Expense.  Noninterest expense principally
consists of employees' compensation and benefits, deposit
insurance premiums and premises and occupancy costs.  Noninterest
expense increased by $500,000, or 12.11%, to $4.63 million for
the year ended December 31, 1998, from $4.13 million for the year
ended December 31, 1997.  The principal reasons for the increase
was a $249,000 increase in compensation and employee benefits due
to normal salary increases, a $21,000 increase in data processing
costs, a $78,000 increase in expenses of real estate owned due to
a write-down of REO and a $109,000 increase in other expenses. 

     Income Taxes.  Income tax provisions for the year ended
December 31, 1998 and 1997 of $502,000 and $345,000,
respectively, generally reflect the Savings Bank's pre-tax income
at rates then in effect, except that a $37,000 and $37,000
deferred tax expense as a result of timing differences in the
recognition of revenue and expenses for tax and financial 
statement purposes were realized in the December 31, 1998 and
1997 period, respectively. 

Liquidity and Capital Resources

     The Savings Bank is required to maintain a sufficient level
of liquid assets, as determined by management and defined and
reviewed for adequacy by the FDIC during its regular
examinations.  The FDIC, however, does not prescribe, by
regulation a minimum amount or percentage of liquid assets.  The
FDIC allows any marketable security, whose sale would not impair
the capital adequacy of the Savings Bank, to be eligible for
liquidity.  The Savings Bank's liquidity is quantified through
the use of a standard liquidity ratio of liquid assets (cash and
cash equivalents, investment securities available-for-sale,
mortgage-backed securities available-for-sale and Federal Home
Loan Bank stock) to short-term borrowings plus deposits.  Using
this formula, the Savings Bank's liquidity ratio was 58.14% as of
December 31, 1998.  The Savings Bank adjusts its liquidity levels
in order to meet funding needs of deposit outflows and loan
commitments.  The Savings Bank also adjusts liquidity as
appropriate to meet its asset/liability management objectives.

     The Savings Bank's primary source of funds are deposits, the
amortization and prepayment of loans and mortgage-backed
securities, maturities of investments securities, the sale of
mortgage loans as part of TNMC's mortgage banking business and
earnings provided from operations.  While scheduled principal
repayments on loans and mortgage-backed securities are a
relatively predictable source of funds, deposit flows and loan
prepayments are greatly influenced by general interest rate
levels, economic conditions and competition.  The Savings Bank
manages the pricing of its deposits to maintain a desired deposit
balance.  In addition, the Savings Bank invests excess funds in
short-term, interest-earning assets and other assets that provide
liquidity to meet lending requirements and interest rate risk
management objectives.  Short-term, interest-earning deposits
with the FHLB of Pittsburgh amounted to $33.54 million at
December 31, 1998.  At December 31, 1998, the Savings Bank had
unfunded loan commitments of $2.23 million and certificates of
deposit due to mature within one year of $65.67 million.  The
Savings Bank believes it has sufficient liquidity to meet these
obligations.  For additional information about cash flows from
the Savings Bank, operating, financing and investment activities,
see Item 8 herein.

Asset/Liability Management and Interest Rate Sensitivity Analysis

     Interest rate risk may be analyzed by examining the extent
to which an institution's assets and liabilities are "interest
rate sensitive" and by monitoring an institution's interest rate
sensitivity "gap." An asset or liability is said to be interest
rate sensitive within a specific time period if it will mature or
re-price within that time period.  The interest rate sensitivity
gap is defined as the difference between the amount of interest-
earning assets maturing or re-pricing within a specific time
period and the amount of interest-bearing liabilities maturing or
re-pricing within that time period.  A gap is considered positive
when the amount of interest rate sensitive assets exceeds the
amount of interest rate sensitive liabilities.  A gap is
considered negative when the amount of interest rate sensitive
liabilities exceeds the amount of interest rate sensitive assets. 
During a period of rising interest rates, a negative gap would
tend to adversely affect net interest income while a positive gap
would tend to positively affect net interest income.  Conversely,
during a period of falling interest rates, a negative gap would
tend to positively affect net interest income while a positive
gap would tend to adversely affect net interest income.

     The Savings Bank's portfolio of adjustable rate loans
constituted only 12.19% of the total loan portfolio at
December 31, 1998.  Accordingly, the Savings Bank's policy in
recent years has been to reduce its exposure to interest rate
risk by maintaining high asset liquidity through the purchase of
short-term or adjustable-rate investment securities and mortgage-
backed securities.  Although this requires the Savings Bank to
accept lower yields on these assets, it permits the Savings Bank
to frequently reinvest proceeds of repayments and maturing
securities to take advantage of changing interest rates.  As part
of its strategy to expand commercial, commercial real estate and
consumer lending, the Savings Bank has also experienced growth in
short-term loans that re-price more frequently and therefore more
closely match market interest rates. 

     Of the Savings Bank's $128.16 million in deposits at
December 31, 1998, $50.67 million consisted of deposit accounts
that are immediately withdrawable.  The Savings Bank nevertheless
believes that, based upon historical experience, a substantial
portion of these deposits represent inelastic deposits and are
not likely to be withdrawn because of changes in interest rates,
nor are they likely to re-price as rapidly as changes in market
interest rates.

     The following table sets forth the amounts of interest-
earning assets and interest-bearing liabilities outstanding at
December 31, 1998, that are expected to re-price or mature, based
upon certain assumptions, in each of the future time periods
shown.  Except as stated below, the amounts of assets and
liabilities shown that re-price or mature during a particular
period were determined in accordance with the earlier of the term
of re-pricing or the contractual term of the asset or liability. 
Management believes that these assumptions approximate the
standards used in the savings industry and considers them
appropriate and reasonable.
<PAGE>
<TABLE>
<CAPTION>
                                                    More than   More Than   More Than   More Than
                                                    One Year    Two Years     Three    Five Years
                                       Within One    To Two     To Three    Years To     To Ten     More Than
                                          Year        Years       Years    Five Years     Years     Ten Years    Total
<S>                                    <C>          <C>         <C>        <C>         <C>          <C>          <C>  
                                                         (Dollars in Thousands)
Interest Earning Assets:
    Loans(1)(2)
    Mortgage loans:
        Residential                        $2,978        $334        $245      $2,267      $5,288     $38,685    $49,797
        Commercial                          2,187         747       2,514       5,877       3,201       1,772     16,298
        Land and construction
            loans                           3,286                                                                  3,286
        Consumer loans                        501          83         226         348         224           0      1,382
        Other loans                         2,859                                                                  2,859
            Total loans                    11,811       1,164       2,985       8,492       8,713      40,457     73,622
        Mortgage-backed
            securities(3)                   3,243       2,764       2,364       8,823       6,206           0     23,400
        Mortgage loans held for 
            sale                            6,938                                                                  6,938
         Investment securities(4)               0       3,497           0       4,500       5,013       5,540     18,550
        Other interest earning 
            assets                         32,526                                                                 32,526
            Total interest-earning
                assets                    $54,518      $7,425      $5,349     $21,815     $19,932     $45,997   $155,036
                                          =======      ======      ======     =======     =======     =======   ========

Interest Bearing Liabilities:
    Transaction accounts                   $5,360                                                                 $5,360
    Money Market accounts                   8,705                                                                  8,705
    Other Savings Accounts                  1,345                                                                  1,345
    Passbook accounts(5)                    4,138       3,518       2,990       5,083      11,860           0     27,589
    Certificate of deposit over
        100,000-                           11,991       1,177         159         566           0           0     13,893
    Certificate of deposit under
        100,000-                           53,866       6,983       1,038       1,478         412           0     63,777
    Repurchase agreement                    1,154       1,175         166           0           0           0      2,495
        Total interest-bearing 
            liabilities                   $86,559     $12,853      $4,353      $7,127     $12,272          $0   $123,164
                                          =======     =======      ======      ======     =======     =======   ========

Interest-bearing assets net of 
    interest-bearing liabilities          (32,041)     (5,428)        996      14,688       7,660      45,997     31,872
Cumulative excess (deficiency)
    interest-bearing assets over
    interest-bearing liabilities.         (32,041)    (37,469)    (36,473)    (21,785)    (14,125)     31,872
Cumulative excess (deficiency)
    of interest-earning assets
    over interest-bearing 
    liabilities as a percentage 
    of total assets                       (19.54%)    (22.85%)    (22.24%)    (13.28%)     (8.61%)      19.43%
</TABLE>
_________________

(1)  Net of deferred loan fees and the allowance for loan losses.
(2)  Adjustable-rate loans are included in the period in which
     interest rates are next scheduled to adjust rather than in
     the period in which they are contractually due to mature. 
     Fixed-rate loans are included in the period in which they
     are contractually due to mature.  
(3)  Reflects the repricing of the underlying loans and/or the
     expected average life of the mortgage-backed security.
(4)  Reflects repricing or contractual maturity.
(5)  For passbook accounts, which totalled $27.31 million, or
     21.31% of total deposits at December 31, 1998, assumes an
     annual decay rate of 15% through the fifth year, based upon
     historical trends.

     Significant shortcomings are inherent in the analysis
presented by the foregoing table.  For example, although certain
assets and liabilities may have similar maturities or periods to
re-pricing, they may react in different degrees to changes in
market interest rates.  Also, interest rates on certain types of
assets and liabilities may fluctuate in advance of or lag behind
changes in market interest rates.  Additionally, certain assets,
such as some adjustable rate loans, have features that restrict
changes in interest rates on a short term basis and over the life
of the asset.  Moreover, in the event of a change in interest
rates, prepayment and early withdrawal levels would likely
deviate significantly from those assumed in calculating the
table.

Impact of Accounting Pronouncements and Regulatory Policies

     Accounting for Employee Stock Ownership Plans.  In
November 1993 the American Institute of Certified Public
Accountants issued SOP 93-6, which requires an employer to record
compensation expense in an amount equal to the fair value of
shares committed to be released to employees from an employee
stock ownership plan and to exclude unallocated shares from
earnings per share computations.  The effect of SOP 93-6 on net
income and book value per share in future periods cannot be
predicted due to the uncertainty of the fair value of the shares
at the time they will be committed to be released.

     Accounting for Stock-Based Compensation.  In October 1995,
FASB issued SFAS No. 123.  This statement encourages all entities
to adopt a fair value-based method of accounting for employee
stock compensation plans, whereby compensation cost is measured
at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting
period.  However, it also allows an entity to continue to measure
compensation cost for those plans using the intrinsic value-based
method of accounting prescribed by Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," whereby compensation cost is the excess, if any, of
the quoted market price of the stock at the grant date (or other
measurement date) over the amount an employee must pay to acquire
the stock.  Entities electing to remain with the accounting in
APB Opinion No. 25 must make pro forma disclosures of net income
and earnings per share, as if the fair value-based method of
accounting had been applied.

     Generally, stock options issued under the 1995 Stock Option
Plan have no intrinsic value at the grant date, and under APB
Opinion No. 25, no compensation cost is recognized for them.  The
accounting requirements of this statement are generally effective
for transactions entered into in fiscal years that begin after
December 15, 1995.  The disclosure requirements of this statement
are generally effective for financial statements for fiscal years
beginning after December 15, 1995.  The Savings Bank has
continued accounting for stock options under APB Opinion No. 25
and has made the pro forma disclosures prescribed by this
Statement.

     Earnings Per Share.  SFAS No. 128, "Earnings Per Share,"
issued in February 1997, establishes standards for computing and
presenting earnings per share ("EPS") and applies to entities
with publicly-held common stock or potential common stock.  It
replaces the presentation of primary EPS with a presentation of
basic EPS and requires the dual presentation of basic and diluted
EPS on the face of the income statement.  SFAS No. 128 is
effective for the financial statements for the periods ending
after December 15, 1997.  SFAS No. 128 requires restatement of
all prior period EPS data presented.  The impact of its adoption
has not been material to the Savings Bank.

     Disclosure of Information About Capital Structure.  SFAS No.
129, "Disclosure of Information About Capital Structure,"
establishes standards for disclosing information about an
entity's capital structure and applies to all entities.  SFAS No.
129 continues the previous requirements to disclose certain
information about an entity's capital structure found in APB
Opinions No. 10, "Omnibus Opinion - 1966," and No. 15, "Earnings
Per Share," and SFAS No. 47, "Disclosure of Long-Term
Obligations," for entities that were subject to those standards. 
SFAS No. 129 is effective for financial statements for periods
ending after December 15, 1997.  SFAS No. 129 contains no change
in disclosure requirements for entities that were previously
subject to the requirements of APB Opinions Nos. 10 and 15 and
SFAS No. 47.  The adoption of the provisions of SFAS No. 129 did
not have a material impact on the Savings Bank.

     Disclosure About Comprehensive Income.  SFAS No. 130,
"Reporting Comprehensive Income," issued in July 1997,
establishes standards for reporting and presentation of
comprehensive income and its components (revenues, expenses,
gains, and losses) in a full set of general-purpose financial
statements.  It requires that all items that are required to be
recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is
presented with the same prominence as other financial statements. 
SFAS No. 130 requires that companies (i) classify items of other
comprehensive income by their nature in a financial statement and
(ii) display the accumulated balance of other   comprehensive
income separately from retained earnings and additional paid-in
capital in the equity section of the statement of financial
condition.  SFAS No. 130 is effective for fiscal years beginning
after December 15, 1997.   Reclassification of financial
statements for earlier periods provided for comprehensive
purposes is required.

Effect of Inflation and Changing Prices

     The consolidated financial statements and related financial
data presented herein have been prepared in accordance with GAAP,
which require the measurement of financial position and operating
results in terms of historical dollars without considering the
change in the relative purchasing power of money over time due to
inflation.  The primary impact of inflation is reflected in the
increased cost of the Savings Bank's operations.  Unlike most
industrial companies, virtually all the assets and liabilities of
a financial institution are monetary in nature.  As a result,
interest rates generally have a more significant impact on a
financial institution's performance than do general levels of
inflation.  Interest rates do not necessarily move in the same
direction or to the same extent as the prices of goods and
services. 

Disclosure Regarding Year 2000 Compliance

     The Holding Company and the Savings Bank's Board of
Directors and management are aware of the possible consequences
the Year 2000 ("Y2K") may pose with regard to the computer system
utilized to conduct business on a daily basis.  The Y2K presents
several potential risks to the Holding Company and the Savings
Bank:

     1.   The Banking transactions of the Savings Bank's
          customers are processed by an external data processing
          service bureau.  The failure of the service bureau's
          system to function as a result of the millennium date
          change could result in the Savings Bank's inability to
          properly process customer transactions.

     2.   Concern on the part of certain depositors that Y2K
          related problems could impair access to their deposit
          balances following the millennium date change could
          result in the Savings Bank experiencing a deposit
          outflow prior to December 31, 1999.

     3.   A number of the Savings Bank's borrowers utilize
          computers and computer software to varying degrees in
          conjunction with the operation of their businesses.  
          The customers and suppliers of those businesses may
          utilize computers as well.  Should the Savings Bank's
          borrowers, or the businesses on which they depend,
          experience Y2K related computer problems, such
          borrowers' cash flow could be disrupted, adversely
          affecting their ability to repay their loans with the
          Savings Bank.

     4.   Certain utility services, such as electrical  power and
          telecommunications services could be disrupted if those
          service experience Y2K related problems.


    The Holding Company and Savings Bank's Board of Directors
and management have addressed the Y2K issue by developing a Y2K
Compliance Plan.  This plan involves five separate phases:
awareness, assessment, renovation, validation and implementation. 

    During 1997, the Savings Bank completed the systems
assessment phase, identifying each internal and external system
that could potentially be affected by the Y2K issue.  Those
systems include the Savings Bank's external data processing
system as well as equipment such as elevators, bank alarms, vault
locks, etc. that may contain imbedded microprocessors.  For each
such system, a determination was made whether or not the system
is Y2K compliant.  Those determinations involved obtaining Y2K
compliant certification from third-party processors and outside
vendors.

    The Savings Bank outsources all major data processing
applications related to customers' banking transactions to
Intrieve, Incorporated ("Intrieve").  Under the agreement with
Intrieve, Intrieve is obligated to incur all software related
costs to make its system Y2K compliant.  Intrieve has prepared a
detailed schedule of functions to be performed in its compliance
project.  As of December 31, 1998, Intrieve has completed its
"awareness", "assessment" and "renovation" and "validation"
phases.  In October 1998, Intrieve conducted internal testing of
its data processing system.  Results of these tests were
distributed to their customers in November 1998.  In March 1999,
Intrieve will conduct additional internal testing.  On
November 8, 1998, the Savings Bank conducted testing in-house
using Intrieve's data processing system.  The Savings Bank
performed various banking transactions on customers' accounts
using the date of January 10, 2000.  All transactions were
completed successfully.  Intrieve has completed much of its Y2K
testing but will continue testing and renovation throughout 1999. 
The Savings Bank is obligated to incur only the hardware costs
associated with implementing the changes required by Intrieve,
however hardware costs are not expected to be material.

    The Savings Bank expects that all other outside vendors will
be Y2K compliant by March 31, 1999.  If any vendor is not
compliant by this date the Savings Bank will consider contracting
with alternative vendors.

    In certain cases, however, such as the potential loss of
electrical power or telecommunications services due to Y2K
problems, testing by the Savings Bank is either not practical or
not possible.  In those cases, contingency plans are being
designed that specify how the Savings Bank will deal with each
such potential situation.  The Savings Bank has developed a
contingency plan which will address failure of the data
processing service bureau system.  The Savings Bank has
determined that if the service bureau system were to fail, the
Savings Bank would implement manual systems until such systems
could be re-established.  The Savings Bank does not anticipate
that such short-term manual systems would have a material impact
upon the operations of the Savings Bank.  Intrieve, Inc. has also
developed their own contingency plan.

    The total costs associated with becoming Year 2000 compliant
are expected to be less than $15,000 and are not expected to have
a material effect on the results of operation.  As of December
31, 1998, the Savings Bank had spent approximately $7,000 to
become Year 2000 compliant.  Money to fund Year 2000 compliance
will come from normal operating cash flow.  Expenses associated
with Year 2000 compliance will directly reduce otherwise reported
net income of the Savings Bank in the period incurred.

    The costs of the project and the date on which the Savings
Bank plans to complete the Year 2000 modification are based on
management's best estimates, which were derived utilizing
numerous assumptions of future events including the continued
availability of certain resources, third party modifications
plans and other factors. However, there can be no assurances that
these estimates will be achieved and actual results could differ
from those plans.

Item 7A  Quantitative and Qualitative Disclosures About Market  
         Risk

    Incorporated herein by reference from Part II, Item 7
"Management Discussion and Analysis of Financial Condition and
Results of Operations - Asset and Liability Management" hereof.

Item 8.  Financial Statements.

    The audited financial statements of PSB Bancorp, Inc. as of
December 31, 1998, 1997 and 1996 and for the years ended
December 31, 1998, 1997 and 1996, including the report of
Stockton Bates & Company, P.C. thereon, which are included at
Exhibit 99 to this Annual Report on Form 10-K, are hereby
incorporated herein by reference.

Item 9.  Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure.

    None.
<PAGE>
                            PART III

Item 10. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16 (a) of the Exchange Act.

    Directors and Executive Officers of PSB Bancorp, Inc.  The
Holding Company's Bylaws require that the Board of Directors of
the Holding Company consist of  at least six and not more than
twenty-five directors, and that the Board of directors shall set
the exact number from time to time.  The Holding Company's Board
of Directors has fixed the number of directors at six members. 
Such Bylaws establish three classes of directors.  Directors are
elected for three year terms, with one class to be elected each
year.

    The following table sets forth information, as of
December 31, 1998, with respect to the directors and executive
officers of PSB Bancorp, Inc.:
<TABLE>
<CAPTION>

Class I Directors (Term expiring 1999)

                                  Year First
                                  Elected        Principal Occupation During Past
Name                         Age  Director       Past Five Years                 
<S>                          <C>  <C>            <C>
Anthony DiSandro, Director, President511997      President and Chief Operating Officer
 and Chief Operating Officer                     of PSB Bancorp, Inc. and Pennsylvania
                                                 Savings Bank

Rosanne Pauciello, Director and54 1997           Corporate Secretary of PSB Bancorp, 
 Corporate Secretary                             Inc., and Pennsylvania Savings Bank;
                                                 School District of Philadelphia Home
                                                 and School Visitor
<CAPTION>
Class II Directors (Term expiring 2000)

                                  Year First
                                  Elected        Principal Occupation During Past
Name                         Age  Director       Past Five Years                 
<S>                          <C>  <C>            <C>
Jane Scaccetti Fumo, Director(2)(3)441997        Certified Public Accountant, Drucker &
                                                 Scaccetti, P.C.

James W. Eastwood, Director  53   1997           President of Granary Associates
                                                 (hospital development and consulting
                                                 firm)
<CAPTION>
Class III Director (Term expiring 2001)

                                  Year First
                                  Elected        Principal Occupation During Past
Name                         Age  Director       Past Five Years                 
<S>                          <C>  <C>            <C>
Vincent J. Fumo, Chairman and55   1997           Chairman and Chief Executive Officer
Chief Executive Officer (2)                      of PSB Bancorp, Inc. and Pennsylvania
                                                 Savings Bank and Pennsylvania State
                                                 Senator

Thomas J. Finley, Jr., Director78 1997           Retired
</TABLE>

(1) Each Director was elected as an initial director of PSB
    Bancorp, Inc. in connection with the Conversion and
    Reorganization.

(2) Vincent J. Fumo and Jane Scaccetti Fumo are husband and
    wife.

(3) Jane Scaccetti Fumo also serves as a director of Nutrition
    Management Corp., which has a class of securities registered
    or subject to the Securities Exchange Act of 1934, as
    amended ("Exchange Act").

    The following table sets forth information, as of
December 31, 1998, with respect to the directors and executive
officers of the Savings Bank. 

<TABLE>
<CAPTION>
                            Year Term First ElectedPrincipal Occupation During
Name                   Age   Expires   Trustee(1)      Past Five Years      
<S>                    <C>  <C>       <C>       <C>
Sylvia M. DiBona, Trustee44 2000      1998      Chairman and Chief Executive
                                                Officer of the William Penn
                                                Agency (insurance agency)

James W. Eastwood, Trustee532000      1998      President of Granary
                                                Associates (hospital
                                                development and consulting
                                                firm)

P. Charles DeRita, Trustee872000      1998      Vice President and Manager
                                                of Hallmark Abstract Co.

Vincent J. Fumo, Chairman and552000   1998      Chairman and Chief Executive
Chief Executive Officer (2)                     Officer of Pennsylvania
                                                Savings Bank, and
                                                Pennsylvania State Senator

James F. Kenney, Trustee40  2001      1998      City of Philadelphia
                                                Councilman since 1992.  

Rosanne Pauciello, Trustee542001      1998      Corporate Secretary of
and Corporate Secretary                         Pennsylvania Savings Bank;
                                                School District  of
                                                Philadelphia Home and School
                                                Visitor

Thomas J. Finley, Jr., Trustee782001  1998      Retired

S. Michael Palermo, Trustee582001     1998      Assistant Executive Director
                                                of Pennsylvania Turnpike
                                                Commission

Jane Scaccetti Fumo, Trustee (2)(3)4419991998   Certified Public Accountant,
                                                Drucker & Scaccetti, P.C. 

Alfonso Tumini, Trustee48   1999      1998      Attorney

Anthony DiSandro, Trustee,511999      1998      President and Chief 
President and Chief Operating                   Operating Officer of
Officer                                         Pennsylvania Savings Bank. 
_______________
</TABLE>
(1)  Period indicated excludes service as a trustee of the Bank's
     predecessors; each Trustee was elected as an initial trustee
     of the Savings Bank in connection with the Conversion and
     Reorganization.
(2)  Vincent J. Fumo and Jane Scaccetti Fumo are husband and
     wife.
(3)  Jane Scaccetti Fumo also serves as a director of Nutrition
     Management Corp., which has a class of securities registered
     or subject to the Securities Exchange Act of 1934, as
     amended ("Exchange Act").

Executive Officers Who are Not Trustees

<TABLE>
<CAPTION>
                              Principal Occupation During
Name                     Age        Past Five Years      
<S>                      <C>  <C>
Gary Polimeno, Vice President46Vice President of Pennsylvania
and Treasurer                 Savings Bank.  Also Treasurer of 
                              Pennsylvania Savings Bank since 1994.
</TABLE>

Stock Ownership of Management as of December 31, 1998

                                    Amount and      Percent of 
                                    Nature of       Outstanding 
                                    Beneficial      Shares of 
Name of Beneficial Owner             Ownership      Common Stock

Anthony DiSandro                     372,784 (1)        12.02%

James W. Eastwood                     30,949             *

Thomas J. Finley, Jr.                 18,515             *

Jane Scaccetti Fumo                  289,276 (2)         9.32%

Vincent J. Fumo                      526,890 (2)        16.99%

Rosanne Pauciello                     10,731              *



All executive officers and 
trustees as a  group (6 persons)     1,249,145          40.28%    
      
______________
* Ownership percentage is less than 1%.

(1)  Amount includes 50,511 shares held indirectly through the
     401(k) Plan, 25,724 shares held through the Profit Sharing
     Plan, 26,135 shares held by the 1995 MRP that have been
     awarded to Mr. DiSandro, 15,727 shares held by  Mr. DiSandro
     directly and 17,073 shares subject to immediately
     exercisable options.  Also includes 237,614 shares held by
     the ESOP of which Mr. DiSandro is a trustee.

(2)  Vincent Fumo and Jane Scaccetti Fumo are husband and wife. 
     Amount includes 46,303 shares held through the 401(k) Plan,
     20,265 shares held through the Profit Sharing Plan, 109,668
     held in IRA accounts, 26,138 shares held by the 1995 MRP
     that have been awarded to Mr. Fumo, 6,014 shares held by 
     Jane Scaccetti Fumo, 772 shares held on behalf of the
     daughter of Vincent and Jane Scaccetti Fumo and 17,073
     shares subject to immediately exercisable options.  Also
     includes 237,614 shares held by the ESOP of which Mr. Fumo
     is a trustee.


Meetings and Committees of the Board of Trustees

     The business of the Savings Bank is conducted at regular and
special meetings of the full Board of Trustees and its standing
committees.  The standing committees consist of the Executive,
Asset/Liability Management, Budget, Compensation, Loan,
Investment, Strategic Planning, Audit and Nominating Committees. 
During 1998, the Board of Trustees met at twelve regular
meetings.  No member of the Board or any committee thereof
attended less than 75% of said meetings.

     The Executive Committee of the Board of Trustees consists of
Trustee DiSandro, who serves as Chairman, and Trustees Pauciello
and Palermo.  The Executive Committee meets immediately prior to
meetings of the full Board.  All significant actions of the
Executive Committee are reviewed by the entire Board; however,
the Executive Committee has  decision-making authority as
assigned by the Board, such as loan approval authority up to
$350,000.  The Executive Committee met twelve times during 1998.

     The Asset/Liability Committee consists of Vincent J. Fumo,
who serves as Chairman, Trustees DiSandro, Eastwood, Jane
Scaccetti Fumo and Gary Polimeno, the Savings Bank's Treasurer. 
This committee meets to review the maturity and repricing of the
Savings Bank's assets and liabilities in an effort to manage the
Savings Bank's interest rate risk in accordance with the Savings
Bank's interest rate risk policy and otherwise reviews the Bank's
strategies for interest rate risk management.  This committee met
four times during 1998. 

     The Audit Committee of the Savings Bank consists of Trustee
James W. Eastwood, who serves as Chairman, and Trustees Kenney
and DiBona.  The Audit Committee reviews the Savings Bank's
general financial condition and the results of the annual audit. 
The Audit Committee is authorized to retain the services of
outside independent auditors of the Savings Bank.  The Audit
Committee met twelve times in 1998.

     The Nominating Committee consists of Trustee Vincent J.
Fumo, who serves as Chairman, and Trustees Anthony DiSandro,
Rosanne Pauciello and Jane Scaccetti Fumo.  The Nominating
Committee, which met once in 1998, is responsible for selecting
and submitting nominees for trustees to the Board at its meeting
for the purpose of appointing trustees.  Shareholder nominations
for trustee must be made in accordance with the Savings Bank's
Bylaws.

     The Budget Committee of the Savings Bank consists of Trustee
Tumini, who serves as Chairman, and Trustees Kenney and Jane
Scaccetti Fumo.  The Budget Committee participates in the
formulation of the Savings Bank's budget and supervises the
Savings Bank's adherence to its budget.  The Budget Committee met
twelve times in 1998.

     The Savings Bank's Strategic Planning Committee consists of
Trustee Jane Scaccetti Fumo, who serves as Chairperson, and
Trustees DiBona and Pauciello.  The Savings Bank's Strategic
Planning Committee conducts analyses of the Savings Bank's status
and performance to produce recommendations to the Board for
strategies for growth and profitability.  The Strategic Planning
Committee met three times in 1998.

     The Savings Bank's Loan Committee consists of Trustee
Pauciello, who serves as Chairman, together with Trustees DeRita,
Eastwood, DiSandro and Tumini.  The Loan Committee approves loans
of up to $1 million.  It submits larger loans to the Board of
Trustees for approval.  The Loan Committee met at least once each
month in 1998.

     Trustee Eastwood serves as Chairman of the Savings Bank's
Compensation Committee, which is responsible for establishing and
monitoring compensation levels in view of management's
performance and coordinating and instituting special compensation
plans.  Trustees DeRita and Pauciello also serve on the
Compensation Committee, which met four times in 1998.

     The Savings Bank's investment portfolio is managed by the
Investment Committee.  The Investment Committee makes and
monitors investments in accordance with the Savings Bank's
Investment Policy.  Trustee Vincent J. Fumo serves as Investment
Committee Chairman, and Trustee DiSandro and officer Gary
Polimeno are members.  The committee met four times in 1998.

Trustee Compensation

     For the year ended December 31, 1998, trustees were paid
$700 per Board meeting attended.  In addition, trustees were paid
$350 per committee meeting attended.  Directors of the Savings
Bank's subsidiaries and affiliates PSA Financial Corp., PSA
Service Corp., PSA Consumer Discount Company, Transnational
Mortgage Corp. and PSB Mutual Holding Company, were paid $250,
$150, $150, $250 and $200, respectively, per board meeting
attended.

Item 11.  Executive compensation.

     The following table sets forth, for the years ended
December 31, 1998, 1997 and 1996 certain information as to the
total remuneration paid by the Savings Bank to executive officers
who received salary and bonuses in excess of $100,000 during such
fiscal year. 

<TABLE>
<CAPTION>
                                                          Annual Compensation                   Long Term Compensation     
                                                                           Other                                  All
                                                                           Annual                  Security      Other
                                       Fiscal       Salary              Compensation   Restricted Underlying  Compensation
Name and Principal Position            Year          (1)      Bonuses       (2)        Stock(3)     Option      (4) (5)   
<S>                                    <C>         <C>        <C>       <C>            <C>        <C>         <C>  
Vincent J. Fumo                         1998       $147,788   $150,000      $67,876            0           0      $22,750
Chairman and Chief Executive Officer    1997       $139,987   $117,500      $60,671            0         0      $23,800
                                        1996       $130,478   $117,500      $19,174     $120,713      42,683      $40,758

Anthony DiSandro                        1998       $165,115   $150,000      $61,104            0           0      $27,650
President and Chief Operating Officer   1997       $147,456   $125,000      $56,540            0           0      $27,650
                                        1996       $145,782   $125,000      $18,263     $120,701      42,683      $47,250

Gary Polimeno                           1998       $102,942    $35,000       $5,671            0           0       $8,400
President and Treasurer                 1997        $87,282    $35,000       $2,966            0           0       $8,400
                                        1996        $87,282    $45,000           $0      $12,700       6,876      $17,660
</TABLE>
____________
(1)  Includes the portion of salary deferred by the executive
     pursuant to the 401(k) Plan.

(2)  Consists of lease payments paid by the Savings Bank with
     respect to vehicle provided by the Savings Bank for the
     executive's use and compensation income related to
     restricted stock awards.  For the year ended December 31,
     1998, Mr. Fumo, Mr. DiSandro and Mr. Polimeno recognized
     compensation expense of $47,209, $47,209 and $5,671 for 
     those shares which were vested as of December 31, 1998.

(3)  Mr. Fumo, Mr. DiSandro and Mr. Polimeno hold 26,138 shares,
     26,135 shares, and 2,750 shares of restricted stock,
     respectively, which, as of December 31, 1998, had a fair
     market value of $199,302, $199,279 and $20,969,
     respectively.  Of such shares, 13,754, 13,754 and 2,750
     shares of each of Messrs. Fumo, DiSandro  and Polimeno,
     respectively, were awarded at April 30, 1996 and vest at a
     rate of 20% per year over a five (5) year period and 12,383
     and 12,381 shares of Messrs. Fumo and DiSandro, repectively,
     were granted on December 31, 1996 and vest at a rate of 20%
     per year over a five (5) year period. 

(4)  Includes trustees fees of $14,350 and $19,250 paid to
     Mr. Fumo and Mr. DiSandro, respectively, for the year ended
     December 31, 1998, and directors fees paid by the Savings
     Bank's subsidiaries to Mr. Fumo, Mr. DiSandro and
     Mr. Polimeno of $8,400, $8,400 and $8,400, respectively, for 
     the year ended December 31, 1998.  Includes trustees fees of
     $15,400 and $19,250 paid to Mr. Fumo and Mr. DiSandro,
     respectively, for the year ended December 31, 1998, and
     directors fees paid by the Savings Bank's subsidiaries to
     Mr. Fumo, Mr. DiSandro and Mr. Polimeno of $8,400, $8,400
     and $8,400, respectively, for the year  ended December 31,
     1997.  Includes trustees fees of $12,200 and $17,100 paid to
     Mr. Fumo and Mr. DiSandro, respectively, for the year ended
     December 31, 1996, and directors fees paid by the Bank's
     subsidiaries to Mr. Fumo, Mr. DiSandro and Mr. Polimeno of
     $11,200, $11,200 and $8,400, respectively, for the year
     ended December 31, 1996. 

(5)  Includes contributions of $17,358, $18,950 and $9,260 made
     by the Savings Bank to the accounts of Mr. Fumo,
     Mr. DiSandro and Mr. Polimeno, respectively, pursuant to the
     Profit Sharing Plan for the year ended December 31, 1996 and
     contributions of $25,713, $28,028 and $15,131 to the 
     accounts of Mr. Fumo, Mr. DiSandro and Mr. Polimeno,
     respectively, for fiscal year 1995. Also includes $2,858,
     $1,315 and $3,668 in contributions to  the accounts of
     Mr. Fumo, Mr. DiSandro and Mr. Polimeno, respectively,
     pursuant to the 401(k) Plan for the year ended December 31,
     1995. During the year ended December 31, 1996, the Savings
     Bank made no 401(k) contributions to the accounts of
     Mr. Fumo, Mr.  DiSandro, and Mr. Polimeno, respectively. 
     For the year ended December 31, 1998 and 1997, no
     contributions were made to either the Profit Sharing or the
     401k Plan.    
 
      Employment Agreements. In connection with the MHC
Reorganization, the Savings Bank entered into employment
agreements (the "Employment Agreements") with Vincent J. Fumo,
Chairman and Chief Executive Officer and Anthony DiSandro,
President and Chief Operating Officer.  These agreements were
assumed by the Holding Company upon completion of the Conversion. 
Under the terms of his Employment Agreement, Mr. Fumo serves as
Chairman and Chief Executive Officer of the Holding Company and
the Savings Bank at a base salary of $145,000.  Under the terms
of his Employment Agreement, Mr. DiSandro serves as President and
Chief Operating Officer of the Holding Company and the Savings
Bank at a base salary of $162,000.  Each Employment Agreement
provides for an initial term of three years, which will
thereafter be automatically renewed for an additional three years
on each anniversary date unless terminated pursuant to its terms
by the respective parties.

     Each Employment Agreement provides for the payment of
certain severance benefits in the event of the executive's
resignation for specified reasons or as a result of his
termination by the Holding Company or the Savings Bank without
"Cause" (as defined in each Employment Agreement).  The executive
would be entitled to severance payments if: (1) he terminates
employment during the term of such agreement following any breach
of the Employment Agreement by the Savings Bank or Holding
Company, loss of title, office or significant authority,
reduction in annual compensation or benefits, or relocation of
the executive's principal place of employment by more than 30
miles, or (2) if the Savings Bank or the Holding Company
terminates his employment, other than for Cause. 

     If either executive becomes entitled to receive severance
payments under his Employment Agreement, he would receive, over a
period of 36 months, a cash payment equal to three times his
average annual compensation during the five-year period preceding
termination of employment.  Payments would be made in equal
monthly installments.  In addition to the severance payments, the
executive would be entitled to continue to receive life, medical,
dental and other insurance coverages (or a dollar amount equal to
the cost of obtaining each such coverage) for a period of up to
36 months from the date of termination.  Payments under the
Employment Agreements are limited, however, to the extent
(i) that they will constitute excess parachute payments under
Section 280G of the Internal Revenue Code of 1986, as amended
("Code"), or (ii) not permitted under the Federal Deposit
Insurance Act. 

Compensation of Officers and Directors Through Benefit Plans

     Defined Benefit Retirement Plan.  The Savings Bank has
maintained a noncontributory defined benefit retirement plan
("Retirement Plan").  Under the terms of the Retirement Plan, all
employees age 21 or older who have worked at the Savings Bank for
a period of one year and have been credited with 1,000 or more
hours of employment with the Savings Bank during the year are
eligible to accrue benefits under the Retirement Plan.  The
Savings Bank would annually contribute an amount to the
Retirement Plan necessary to satisfy the actuarially determined
minimum funding requirements in accordance with the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").  At
December 31, 1998, the Retirement Plan fully met its funding
requirements under Section 412 of the Code.  Employee
contributions are not permitted under the Retirement Plan.  The
Retirement Plan was "frozen" as of September 30, 1994 and
benefits no longer accrue thereunder.  Since the Retirement Plan
is fully funded, the Savings Bank will generally not be required
to make any additional contributions unless asset depreciation
from investment occurs.  Participants will continue to vest in
accordance with the provisions of the Retirement Plan.  No new
employees will be eligible for participation.  The Plan, however,
remains subject to all other requirements of the Code .

     Benefits under the Retirement Plan begin to vest after three
years in accordance with the following schedule:

          Years of Service       Percentage Vested

          3 years or less                 0%
          After 3 years                  20%
          After 4 years                  40%
          After 5 years                  60%
          After 6 years                  80%
          After 7 years                 100%

     The following table indicates the annual retirement benefit
that would be payable under the Retirement Plan upon retirement
at age 65 in calendar year 1998, expressed in the form of a
single life annuity for the final average salary and benefit
service classifications specified below. 

<TABLE>
<CAPTION>

                          Years of Service and Benefits Payable at Retirement

Final Average
Compensation       15       20        25         30       35       40   
<S>             <C>       <C>       <C>        <C>      <C>      <C>
$ 50,000        $13,804   $18,405   $23,006    $27,608  $27,608  $27,608
$ 75,000        $21,950   $29,267   $36,583    $43,900  $43,900  $43,900
$100,000        $30,096   $40,128   $50,160    $60,192  $60,192  $60,192
$125,000        $38,242   $50,990   $63,827    $65,827  $65,827  $65,827
$150,000*       $46,388   $61,851   $65,827    $65,827  $65,827  $65,827
</TABLE>
______________
*    Represents the limit on plan compensation imposed by the
     Code effective  January 1, 1994.

     As of December 31, 1998, Mr. Fumo, Mr. DiSandro, and
Mr. Polimeno had 19, 18 and 20 years of credited service (i.e.
benefit service), respectively. 

     Pennsylvania Savings Bank Cash or Deferred Profit Sharing
Plan (401(k)).  The Savings Bank also maintains the Pennsylvania
Savings Cash or Deferred Profit Sharing Plan, which is a
qualified, tax-exempt profit sharing plan with a cash-or-deferred
feature under Section 401(k) of the Code (the"401(k) Plan").  All
employees who have attained age 21 and have completed two years
of employment during which they worked at least 1,000 hours are
eligible to participate.  Assets of the 401(k) Plan are managed
by the 401(k) Plan's trustees.  Mr. Fumo and Mr. DiSandro
presently serve as trustees to the 401(k) Plan.

     Under the 401(k) Plan, participants are permitted to make
pre-tax salary reduction contributions to the plan equal to a
percentage of up to 15% of compensation.  Additional after-tax
contributions of up to 10% of compensation may be made to the
Plan.  For these purposes, "compensation" includes total
compensation (including salary reduction contributions made under
the 401(k) Plan sponsored by the Savings Bank), but does not
include compensation in excess of the Code
Section 401(a)(17) limits (presently $160,000).  The Savings Bank
may also annually make a discretionary profit sharing
contribution to the 401(k) Plan.  A participant must complete
1,000 hours of service during the plan year and be employed on
the last day of the plan year to receive an allocation of the
profit sharing contribution.  For the 1998, 1997 and 1996 plan
years, the Savings Bank made profit sharing contributions of $0,
$0 and $45,568. 

     All employee contributions and profit sharing contributions
to the 401(k) plan and earnings thereon are fully and immediately
vested. 

     Plan benefits will be paid to each participant as a joint
and survivor or single life annuity.  In addition, a participant
may, under certain circumstances, elect a lump sum or period
certain payment upon normal retirement, death or disability, or
after termination of employment. 

     Pennsylvania Savings Bank Profit Sharing Plan.  The Savings
Bank also maintains the Pennsylvania Savings Bank Profit Sharing
Plan, which is a qualified plan pursuant to Section 401(a) of the
Code.  Employees who have completed at least two years of service
during which they have worked 1,000 hours or more and who have
attained age 21 are eligible to participate in the Profit Sharing
Plan.  Pursuant to the Profit Sharing Plan the Savings Bank, in
its discretion, makes contributions to the accounts of eligible
employees.  Employee contributions are neither permitted nor
required.  Benefits under the Profit Sharing Plan become 100%
vested upon entry to the Plan. 

     Employee Stock Ownership Plan.  In 1995, the Savings Bank
ESOP acquired 42,780 shares of the Savings Bank Common Stock with
the proceeds of a $427,800 loan from an unaffiliated financial
institution ("1995 Loan").  Due to the Conversion and
Reorganization, the Savings Bank Common Stock held by the ESOP
was converted into 110,046 shares of PSB Bancorp, Inc. Common
Stock. 
In connection with the Conversion and Reorganization, the ESOP
borrowed $1,288,540 from the Holding Company to purchase an
additional 128,854 shares of PSB Bancorp, Inc. Common Stock.  The
Holding Company will lend sufficient funds to the ESOP to enable
the ESOP to repay the 1995 Loan which had an outstanding
principal balance of  $234,000 at December 31, 1998.  The loan by
the Holding company to the ESOP will be repaid principally from
the Savings Bank's contributions to the ESOP and dividends
payable on Common Stock held by the ESOP over the anticipated
10-year term of the loan.  The interest rate for the ESOP loan is
8.5%.  

     Shares purchased by the ESOP with the proceeds of the loan
(including shares originally acquired by the ESOP with the
proceeds of the 1995 Loan) will be held in a suspense account and
released on a pro rata basis as the loan is repaid. 
Discretionary contributions to the ESOP and shares released from
the suspense account will be allocated among participants on the
basis of each participant's proportional share of total
compensation.  Forfeitures will be reallocated among the
remaining plan participants. 

     In any plan year, the Savings Bank may make additional
discretionary contributions to the ESOP for the benefit of plan
participants in either cash or shares of Common Stock, which may
be acquired through the purchase of outstanding shares in the
market or from individual shareholders or which constitute
authorized but unissued shares or shares held in treasury by
Holding Company.  The timing, amount, and manner of such
discretionary contributions will be affected by several factors,
including applicable regulatory policies, the requirements of
applicable laws and regulations, and market conditions.
 
     Employees of the Savings Bank who have completed 1,000 hours
of service during 12 consecutive months and who have attained age
21 are eligible to participate in the ESOP.

     Benefits under the ESOP generally become 100% vested after
the third year of service or upon normal retirement (as defined
in the ESOP), disability or death of the participant.  If a
participant terminates employment for any other reason prior to
fully vesting, his nonvested account balance will be forfeited. 
Forfeitures will be reallocated among remaining participating
employees in the same proportion as contribution.  Benefits may
be payable upon death, retirement, early retirement, disability
or separation from service.  The Savings Bank's contribution to
the ESOP will not be fixed, so benefits payable under the ESOP
cannot be estimated.  See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Impact of New
Accounting Standards."

     A committee consisting of the Savings Bank's Chairman and
Chief Executive Officer, President and Vice President and
Treasurer, administers the ESOP (the "ESOP Committee").  Messrs.
Fumo and DiSandro serve as trustees of the ESOP.  The ESOP
Committee may instruct the trustee regarding investment of funds
contributed to the ESOP.  The ESOP trustees must vote all
allocated shares held in the suspense account in a manner
calculated to most accurately reflect the instructions the ESOP
trustees have received from participants regarding the allocated
stock, subject to and in accordance with the fiduciary duties
under ERISA owed by the ESOP trustee to the ESOP participants. 

     Pursuant to SOP 93-6, compensation expense for a leveraged
ESOP is recorded at the fair market value of the ESOP shares when
committed to be released to participants' accounts.  See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS -- Comparison of Operating Results for the
Years Ended December 31, 1998 and 1997."

     The ESOP is subject to the requirements of  ERISA and the
regulations of the IRS and the Department of Labor issued
thereunder.  The Savings Bank has received a favorable
determination letter from the IRS regarding the tax-qualified
status of the ESOP. 

     1995 Stock Option and Incentive Plan.  In connection with
the MHC Reorganization, the Savings Bank adopted the 1995 Stock
Option Plan.  Options for all shares reserved for issuance under
the 1995 Stock Option Plan have been granted to officers and
employees of the Savings Bank.  In connection with the Conversion
and Reorganization, the 1995 Stock Option Plan was assumed by the
Holding Company and appropriate adjustments were made to the
exercise price and the number of shares underlying each option to
reflect the exchange ratio.

     There was no exercise of options by any of Messrs. Fumo,
DiSandro and Polimeno under the 1995 Stock Option Plan at and for
the fiscal year ended December 31, 1998.

     1995 Management Development and Recognition Plans.  In
connection with the MHC Reorganization, the Savings Bank adopted
Management Development and Recognition Plans (collectively, the
"1995 MRPs") for officers, employees and nonemployee directors of
the Savings Bank.  All shares under the 1995 MRP have been
awarded.  For purposes of the Conversion and Reorganization, the
shares awarded under the 1995 MRP participants were treated in
the same manner as shares held by other minority shareholders. 

Item 12.  Security Ownership of Certain Beneficial Owners and
Management. 
     
      The Holding Company is not aware of any holder of 5% or
more of Holding Company Common Stock other than the management
personnel identified in Item 10 herein.

Item 13.  Certain Relationships and Related Transactions.

     Federal regulations require that all loans or extensions of
credit to executive officers and directors must generally be made
on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other persons (unless the loan or extension of
credit is made under a benefit program generally available to all
other employees and does not give preference to any insider over
any other employee) and must not involve more than the normal
risk of repayment or present other unfavorable features. 
Pursuant to the above regulations, the Savings Bank adopted an
Insiders' Loan Policy in December 1996 pursuant to which
trustees/directors, officers and employees of the Savings Bank or
any of its subsidiaries are eligible to receive a 1% reduction of
the interest rate of mortgage loans.  Federal regulations also
require that loans made to a director or executive officer in an
amount that, when aggregated with the amount of all other loans
to such person and his related interests, are in excess of the
greater of $25,000 or 5% of the Savings Bank's capital and
surplus (up to a maximum of $500,000) must be approved in advance
by a majority of the disinterested members of the Board of
Directors.  See "REGULATION -- Federal Regulation of Savings
Banks -- Transactions with Affiliates." The aggregate amount of
loans by the Savings Bank to its executive officers and directors
was $1.38 million at December 31, 1998, which is 4.54% of
shareholders' equity.

     The Savings Bank's Insiders' Loan Policy applies to the
following loans: (1) a first mortgage on an employee's residence,
(2) a first mortgage on the employee's secondary home when it is
used by the employee as a vacation home and not as an investment
property, and (3) a second mortgage home equity loan on the
employee's personal residence.  The interest rate discount is
subject to increase by 1% if the employee does not complete five
years of continuous service with the Savings Bank or its
subsidiaries.  In December 1998, mortgage loans were extended to
Mr. Fumo and Mr. DiSandro on the following terms: (1) principal
amount of $200,000 at an interest rate of 7.5% for a term of 360
months to Mr. Fumo; and (2) principal amount of $400,000 at an
interest rate of 6.0% for a term of 360 months to Mr. DiSandro.  
In December 1997, mortgage loans were extended to Mr. Fumo and
Mr. DiSandro on the following terms: (1) principal amount of
$750,000 at an interest rate of 6.5% for a term of 360 months to
Mr. Fumo; and (2) principal amount of $250,000 at an interest
rate of 6.5% for a term of 360 months to Mr. DiSandro.  As of
December 31, 1998, Mr. Fumo's mortgage loan balance was $927,652
and Mr. DiSandro's mortgage loan balance was $397,989.  No
additional similar loans were extended through the year ended
December 31, 1997.
<PAGE>
Item 14.  Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.

     (a)  Exhibits.

Exhibit No.    Document

2.1       Agreement and Plan of Reorganization, dated as of March
          19, 1999, between PSB Bancorp, Inc. and First Bank of
          Philadelphia. (filed herewith)

3.1       Articles of Incorporation of Pennsylvania Savings Bank
          (incorporated herein by reference to Exhibit 3.1 of the
          SB-2 Registration Statement of PSB Bancorp, Inc. filed
          October 9, 1997).

3.2       Bylaws of Pennsylvania Savings Bank (incorporated
          herein by reference to Exhibit 3.2 of the SB-2
          Registration Statement of PSB Bancorp, Inc. filed
          October 9, 1997).

10.1*     Pennsylvania Savings Bank Retirement Plan (incorporated
          herein by reference to Exhibit 10.1 of the SB-2
          Registration Statement of PSB Bancorp, Inc. filed
          October 9, 1997).

10.2*     Pennsylvania Savings Cash or Deferred Profit Sharing
          Plan (incorporated herein by reference to Exhibit 10.2
          of the SB-2 Registration Statement of PSB Bancorp, Inc.
          filed October 9, 1997).

10.3*     Pennsylvania Savings Bank Profit Sharing Plan
          (incorporated herein by reference to Exhibit 10.3 of
          the SB-2 Registration Statement of PSB Bancorp, Inc.
          filed October 9, 1997).

10.4*     Employment Agreement with Vincent J. Fumo (incorporated
          herein by reference to Exhibit 7.1 of the SB-2
          Registration Statement of PSB Bancorp, Inc. filed
          October 9, 1997).

10.5*     Employment Agreement with Anthony DiSandro
          (incorporated herein by reference to Exhibit 7.2 of SB-
          2 Registration Statement of PSB Bancorp, Inc. filed
          October 9, 1997).

10.6*     Pennsylvania Savings Bank Employee Stock Ownership Plan
          (incorporated herein by reference to Exhibit 10.4 of
          the SB-2 Registration Statement of PSB Bancorp, Inc.
          filed on October 9, 1997).

10.7      Lease Agreement between Eleven Colonial Penn Plaza
          Associates and Pennsylvania Savings Bank, dated as of
          October 10, 1995(incorporated herein by reference to
          Exhibit 10.7 of Form S-1, Amendment No. 3 of PSB
          Bancorp, Inc. filed May 5, 1998).

10.8      Lease Agreement between Eleven Colonial Penn Plaza
          Associates and Pennsylvania Savings Bank, dated as of
          October 12, 1995 (incorporated herein by reference to
          Exhibit 10.8 of Form S-1, Amendment No. 3 of PSB
          Bancorp, Inc. filed on May 5, 2998).

10.9*     Pennsylvania Savings Bank Stock Option Plan (filed
          herewith).

10.10*    Pennsylvania Savings Bank Management Recognition Plan
          (filed herewith).

21        Schedule of Subsidiaries (filed herewith).

27        Financial Data Schedules

99        Financial Statements( filed herewith).

_______________________________

*    Denotes a management contract or compensatory plan or
     arrangement.

     (b)  Reports on Form 8-K 

          None.
<PAGE>
                           SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

March 18, 1999                PSB BANCORP, INC.

                              By  /s/ Anthony DiSandro           
                                   Anthony DiSandro
                                   President and Chief Operating
                                   Officer

     In accordance with the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates
indicated.

Signature                Title                    Date

/s/ Vincent J. Fumo      Chairman and Chief       March 18, 1999
Vincent J. Fumo          Executive Officer        

/s/  Anthony DiSandro    President and Chief      March 18, 1999
Anthony DiSandro         Operating Officer


/s/Jane Scaccetti Fumo   Director                 March 18, 1999
Jane Scaccetti Fumo

/s/ Rosanne Pauciello    Corporate Secretary      March 18, 1999
Rosanne Pauciello        and Director

/s/James W. Eastwood                    Director  March 18, 1999
James W. Eastwood

/s/Thomas J. Finley, Jr. Director                 March 18, 1999
Thomas J. Finley, Jr.   
                             
/s/ Gary Polimeno        Vice President and       March 18, 1999
Gary Polimeno            Treasurer (Principal 
                         Accounting and Financial
                         Officer)
<PAGE>
                          EXHIBIT INDEX

Exhibit No.    Document

2.1       Agreement and Plan of Reorganization, dated as of March
          19, 1999, between PSB Bancorp, Inc. and First Bank of
          Philadelphia. (filed herewith)

3.1       Articles of Incorporation of Pennsylvania Savings Bank
          (incorporated herein by reference to Exhibit 3.1 of the
          SB-2 Registration Statement of PSB Bancorp, Inc. filed
          October 9, 1997).

3.2       Bylaws of Pennsylvania Savings Bank (incorporated
          herein by reference to Exhibit 3.2 of the SB-2
          Registration Statement of PSB Bancorp, Inc. filed
          October 9, 1997).

10.1*     Pennsylvania Savings Bank Retirement Plan (incorporated
          herein by reference to Exhibit 10.1 of the SB-2
          Registration Statement of PSB Bancorp, Inc. filed
          October 9, 1997).

10.2*     Pennsylvania Savings Cash or Deferred Profit Sharing
          Plan (incorporated herein by reference to Exhibit 10.2
          of the SB-2 Registration Statement of PSB Bancorp, Inc.
          filed October 9, 1997).

10.3*     Pennsylvania Savings Bank Profit Sharing Plan
          (incorporated herein by reference to Exhibit 10.3 of
          the SB-2 Registration Statement of PSB Bancorp, Inc.
          filed October 9, 1997).

10.4*     Employment Agreement with Vincent J. Fumo (incorporated
          herein by reference to Exhibit 7.1 of the SB-2
          Registration Statement of PSB Bancorp, Inc. filed
          October 9, 1997).

10.5*     Employment Agreement with Anthony DiSandro
          (incorporated herein by reference to Exhibit 7.2 of SB-
          2 Registration Statement of PSB Bancorp, Inc. filed
          October 9, 1997).

10.6*     Pennsylvania Savings Bank Employee Stock Ownership Plan
          (incorporated herein by reference to Exhibit 10.4 of
          the SB-2 Registration Statement of PSB Bancorp, Inc.
          filed on October 9, 1997).

10.7      Lease Agreement between Eleven Colonial Penn Plaza
          Associates and Pennsylvania Savings Bank, dated as of
          October 10, 1995(incorporated herein by reference to
          Exhibit 10.7 of Form S-1, Amendment No. 3 of PSB
          Bancorp, Inc. filed on May 5, 1998).

10.8      Lease Agreement between Eleven Colonial Penn Plaza
          Associates and Pennsylvania Savings Bank, dated as of
          October 12, 1995 (incorporated herein by reference to
          Exhibit 10.8 of Form S-1, Amendment No. 3 of PSB
          Bancorp, Inc. filed on May 5, 1998).

10.9*     Pennsylvania Savings Bank Stock Option Plan. (filed
          herewith)

10.10*    Pennsylvania Savings Bank Management Recognition Plan 
          (filed herewith)

21        Schedule of Subsidiaries (filed herewith).

27        Financial Data Schedules

99        Financial Statements (filed herewith).

_______________________________

*    Denotes a management contract or compensatory plan or
     arrangement.