AGREEMENT AND PLAN
                        OF REORGANIZATION


                              among


                        PSB BANCORP, INC.

                    PENNSYLVANIA SAVINGS BANK


                               and


                   FIRST BANK OF PHILADELPHIA


                         March 19, 1999<PAGE>
                            AGREEMENT

                        TABLE OF CONTENTS

                                                            Page

BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . .  1

AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . .  1
     ARTICLE I

THE MERGERS

Section 1.01  Definitions. . . . . . . . . . . . . . . . . . .  1

Section 1.02  The Merger . . . . . . . . . . . . . . . . . . .  6
     
                           ARTICLE II
             REPRESENTATIONS AND WARRANTIES OF FBKP


Section 2.01  Organization . . . . . . . . . . . . . . . . . . 13

Section 2.02  Capitalization . . . . . . . . . . . . . . . . . 13

Section 2.03  Authority; No Violation. . . . . . . . . . . . . 14

Section 2.04  Consents . . . . . . . . . . . . . . . . . . . . 15

Section 2.05  Financial Statements . . . . . . . . . . . . . . 16

Section 2.06  Taxes. . . . . . . . . . . . . . . . . . . . . . 16

Section 2.07  No Material Adverse Effect . . . . . . . . . . . 17

Section 2.08  Contracts. . . . . . . . . . . . . . . . . . . . 17

Section 2.09  Ownership of Property; Insurance Coverage. . . . 18

Section 2.10  Legal Proceedings. . . . . . . . . . . . . . . . 19

Section 2.11  Compliance With Applicable Law . . . . . . . . . 20

Section 2.12  ERISA. . . . . . . . . . . . . . . . . . . . . . 20

Section 2.13  Brokers, Finders and Financial Advisors. . . . . 21

Section 2.14  Environmental Matters. . . . . . . . . . . . . . 22

Section 2.15  Allowance for Loan Losses. . . . . . . . . . . . 22

Section 2.16  Information to be Supplied . . . . . . . . . . . 22

Section 2.17  Securities Documents . . . . . . . . . . . . . . 22

Section 2.18  Related Party Transactions . . . . . . . . . . . 23
Section 2.19  Loans. . . . . . . . . . . . . . . . . . . . . . 23

Section 2.20  Accounting for the Merger; Reorganization. . . . 23

Section 2.21  Fairness Opinion . . . . . . . . . . . . . . . . 23

Section 2.22  Quality of Representations . . . . . . . . . . . 23

Section 2.23  Year 2000 Compliance . . . . . . . . . . . . . . 24
     
                           ARTICLE III
              REPRESENTATIONS AND WARRANTIES OF PSB

Section 3.01  Organization . . . . . . . . . . . . . . . . . . 24

Section 3.02  Capital Structure. . . . . . . . . . . . . . . . 25

Section 3.03  Authority; No Violation. . . . . . . . . . . . . 25

Section 3.04  Consents . . . . . . . . . . . . . . . . . . . . 26

Section 3.05  Financial Statements . . . . . . . . . . . . . . 27

Section 3.06  Taxes. . . . . . . . . . . . . . . . . . . . . . 27

Section 3.07  No Material Adverse Effect . . . . . . . . . . . 28

Section 3.08  Ownership of Property; Insurance Coverage. . . . 28

Section 3.09  Legal Proceedings. . . . . . . . . . . . . . . . 28

Section 3.10  Compliance With Applicable Law . . . . . . . . . 29

Section 3.11  Information to be Supplied . . . . . . . . . . . 29

Section 3.12  ERISA. . . . . . . . . . . . . . . . . . . . . . 30

Section 3.13  Securities Documents . . . . . . . . . . . . . . 31

Section 3.14  Environmental Matters. . . . . . . . . . . . . . 31

Section 3.15  Allowance for Loan Losses. . . . . . . . . . . . 31

Section 3.16  Brokers and Finders. . . . . . . . . . . . . . . 31

Section 3.17  Loans. . . . . . . . . . . . . . . . . . . . . . 31

Section 3.18  Accounting for the Merger; Reorganization. . . . 32

Section 3.19  Quality of Representations . . . . . . . . . . . 32

Section 3.20  Year 2000 Compliance . . . . . . . . . . . . . . 32
     
                           ARTICLE IV
                    COVENANTS OF THE PARTIES

Section 4.01  Conduct of FBKP's Business . . . . . . . . . . . 32

Section 4.02  Access; Confidentiality. . . . . . . . . . . . . 35

Section 4.03  Regulatory Matters and Consents. . . . . . . . . 36

Section 4.04  Taking of Necessary Action . . . . . . . . . . . 37

Section 4.05  Indemnification; Insurance . . . . . . . . . . . 38

Section 4.06  No Other Bids and Related Matters. . . . . . . . 39

Section 4.07  Duty to Advise; Duty to Update Disclosure
     Schedule. . . . . . . . . . . . . . . . . . . . . . . . . 40

Section 4.08  Conduct of PSB's Business. . . . . . . . . . . . 40

Section 4.09  Current Information. . . . . . . . . . . . . . . 40

Section 4.10  Undertakings by PSB and FBKP . . . . . . . . . . 40

Section 4.11  Employee Benefits and Termination Benefits . . . 42

Section 4.12   Stock Exchange Listing. . . . . . . . . . . . . 43

Section 4.13   Affiliate Letters . . . . . . . . . . . . . . . 43

Section 4.14 . . . . . . . . . . . . . . . . . . . . . . . . . 43
     
                            ARTICLE V
                           CONDITIONS

Section 5.01  Conditions to FBKP's Obligations under this
     Agreement . . . . . . . . . . . . . . . . . . . . . . . . 43

Section 5.02  Conditions to PSB's Obligations under this
     Agreement . . . . . . . . . . . . . . . . . . . . . . . . 45
     
                           ARTICLE VI
                TERMINATION, WAIVER AND AMENDMENT

Section 6.01  Termination. . . . . . . . . . . . . . . . . . . 47

Section 6.02  Effect of Termination. . . . . . . . . . . . . . 48
     
                           ARTICLE VII
                          MISCELLANEOUS

Section 7.01  Expenses . . . . . . . . . . . . . . . . . . . . 48

Section 7.02  Non-Survival of Representations and
     Warranties. . . . . . . . . . . . . . . . . . . . . . . . 48

Section 7.03  Amendment, Extension and Waiver. . . . . . . . . 48

Section 7.04  Entire Agreement . . . . . . . . . . . . . . . . 49

Section 7.05  No Assignment. . . . . . . . . . . . . . . . . . 49

Section 7.06  Notices. . . . . . . . . . . . . . . . . . . . . 49

Section 7.07  Captions . . . . . . . . . . . . . . . . . . . . 51

Section 7.08  Counterparts . . . . . . . . . . . . . . . . . . 51

Section 7.09  Severability . . . . . . . . . . . . . . . . . . 51

Section 7.10  Governing Law. . . . . . . . . . . . . . . . . . 51


Exhibit 1      Articles and Plan of Merger
Exhibit 2      FBKP's Affiliate Agreement 
Exhibit 3      Stock Option Agreement   
Exhibit 4      Form of Opinion of PSB's Counsel
Exhibit 5      Matters to be Covered in Tax Opinion of 
               Counsel to PSB
Exhibit 6      Form of Opinion of FBKP's Counsel
Exhibit 7      Amendment to PSB Articles of Incorporation
<PAGE>
                            AGREEMENT

          THIS AGREEMENT AND PLAN OF REORGANIZATION, dated as of
March 19, 1999, is made by and among PSB BANCORP, INC. ("PSB"), a
Pennsylvania corporation and its wholly-owned subsidiary
PENNSYLVANIA SAVINGS BANK (the "Bank"), each having its principal
place of business in Philadelphia, Pennsylvania, and FIRST BANK
OF PHILADELPHIA ("FBKP"), a Pennsylvania bank, having its
principal place of business in Philadelphia, Pennsylvania.

                           BACKGROUND

          1.   PSB and FBKP desire for the Bank to merge with and
into FBKP, with FBKP surviving such merger and FBKP shareholders
receiving PSB Common Stock in exchange for FBKP Common Stock in
accordance with the applicable laws of the Commonwealth of
Pennsylvania, and in accordance with the articles and plan of
merger in the form attached hereto as Exhibit 1.

          2.   PSB and FBKP desire that the merger constitute a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and be accounted for
as a pooling-of-interests under generally accepted accounting
principles.

          3.   As a condition and inducement to PSB's willingness
to enter into this Agreement, (a) the directors and certain
officers of FBKP are concurrently executing a Letter Agreement in
the form attached hereto as Exhibit 2, and (b) FBKP is
concurrently granting to PSB an option to acquire, under certain
circumstances, FBKP Common Stock (the "PSB Option") pursuant to a
Stock Option Agreement between PSB and FBKP in the form attached
hereto as Exhibit 3.

          4.   PSB and FBKP desire to provide the terms and
conditions governing the transactions contemplated herein.

                            AGREEMENT

          NOW, THEREFORE, in consideration of the premises and of
the mutual covenants, agreements, representations and warranties
herein contained, the parties hereto, intending to be legally
bound, do hereby agree as follows:

ARTICLE I
THE MERGERS

          Section 1.01  Definitions.  As used in this Agreement,
the following terms shall have the indicated meanings (such
meanings to be equally applicable to both the singular and plural
forms of the terms defined):

               Affiliate means, with respect to any Person, any
     Person who directly, or indirectly, through one or more 
     <PAGE 1> intermediaries, controls, or is controlled by, or
     is under common control with, such Person and, without
     limiting the generality of the foregoing, includes any
     executive officer or director of such Person and any
     Affiliate of such executive officer or director. 

               Agreement means this agreement, and any amendment
     or supplement hereto, which constitutes a "plan of merger"
     among PSB, the Bank and FBKP.

               Applicable Exchange Ratio shall have the meaning
     given to such term in Section 1.02(e)(ii)(A).

               Applications means the applications for regulatory
     approval which are required by the transactions contemplated
     hereby.

               Articles of Merger means the articles of merger to
     be executed by the Bank and FBKP and to be filed in the PDS,
     in accordance with the applicable laws of the Commonwealth
     of Pennsylvania.

               Banking Code means the Pennsylvania Banking Code
     of 1965, as amended.

               BCL means the Pennsylvania Business Corporation
     Law of 1988, as amended.

               BHCA means the Bank Holding Company Act of 1956,
     as amended.

               Closing Date means the earlier of (i) the day
     specified by PSB to FBKP upon five (5) days written notice,
     that follows the satisfaction or waiver, to the extent
     permitted hereunder, of the conditions to the consummation
     of the Merger specified in Article V of this Agreement
     (other than the delivery of certificates, opinions and other
     instruments and documents to be delivered at the Closing),
     (ii) thirty (30) days after the satisfaction or waiver, to
     the extent permitted hereunder, of the conditions to the
     consummation of the Merger specified in Article V of this
     Agreement (other than the delivery of certificates, opinions
     and other instruments and documents to be delivered at the
     Closing) or (iii) such other date as PSB and FBKP may
     mutually agree.

               Dissenting Shares shall have the meaning set forth
     in Section 1.02(e)(ii)(E) hereof.

               DOJ means the United States Department of Justice.

               Effective Date means the date upon which the
     Articles of Merger shall be filed in the PDS, and shall be
     the same as the Closing Date.  <PAGE 2>

               Environmental Law means any federal, state, local
     or foreign law, statute, ordinance, rule, regulation, code,
     license, permit, authorization, approval, consent, order,
     judgment, decree, injunction or agreement with any
     Regulatory Authority relating to (i) the protection,
     preservation or restoration of the environment (including,
     without limitation, air, water vapor, surface water,
     groundwater, drinking water supply, surface soil, subsurface
     soil, plant and animal life or any other natural resource),
     and/or (ii) the use, storage, recycling, treatment,
     generation, transportation, processing, handling, labeling,
     production, release or disposal of any substance presently
     listed, defined, designated or classified as hazardous,
     toxic, radioactive or dangerous, or otherwise regulated,
     whether by type or by quantity, including any material
     containing any such substance as a component.

               ERISA means the Employee Retirement Income
     Security Act of 1974, as amended.

               Exchange Act means the Securities Exchange Act of
     1934, as amended, and the rules and regulations promulgated
     from time to time thereunder.

               FDIA means the Federal Deposit Insurance Act, as
     amended.

               FDIC means the Federal Deposit Insurance
     Corporation.

               FBKP Common Stock means the common stock of FBKP
     described in Section 2.02(a).

               FBKP Disclosure Schedule means a disclosure
     schedule delivered by FBKP to PSB pursuant to Article II of
     this Agreement.

               FBKP Financials means (i) the audited consolidated
     financial statements of FBKP as of December 31, 1998,
     including the notes, and (ii) the unaudited interim
     consolidated financial statements of FBKP as of each
     calendar quarter thereafter included in Securities Documents
     filed by FBKP.

               FBKP Options means options to purchase shares of
     FBKP Common Stock granted pursuant to the FBKP Stock Option
     Plan and the FBKP Standby Options.

               FBKP Standby Options means the options
certificates issued pursuant to the Standby Purchase Agreement
dated December 15, 1994 and the Option Certificates issued
thereunder.

  <PAGE 3>
               FBKP Regulatory Reports means the annual and
     quarterly reports of FBKP filed with the FRB since
     December 31, 1996 through the Closing Date.

               FBKP Stock Option Plan means the First Bank of
     Philadelphia 1998 Stock Option Plan.

               FBKP Subsidiaries means (i) any corporation, 50%
     or more of the capital stock of which is owned, either
     directly or indirectly, by FBKP, except any corporation the
     stock of which is held in the ordinary course of the lending
     activities of FBKP.

               FRB means the Board of Governors of the Federal
     Reserve System.

               GAAP means generally accepted accounting
     principles as in effect at the relevant date.

               IRC means the Internal Revenue Code of 1986, as
     amended.

               IRS means the Internal Revenue Service.

               Material Adverse Effect shall mean, with respect
     to PSB or FBKP, respectively, any effect that is material
     and adverse to its assets, financial condition or results of
     operations on a consolidated basis, provided, however, that
     Material Adverse Effect shall not be deemed to include
     (a) any change in the value of the respective investment and
     loan portfolios of PSB or FBKP resulting from a change in
     interest rates generally, (b) any change occurring after the
     date hereof in any federal or state law, rule or regulation
     or in GAAP, which change affects banking institutions
     generally, (c) reasonable expenses incurred in connection
     with this Agreement and the transactions contemplated
     hereby, (d) actions or omissions of a party (or any of its
     Subsidiaries) taken with the prior informed written consent
     of the other party in contemplation of the transactions
     contemplated hereby, and (e) any effect with respect to a
     party hereto caused, in whole or in part, by the other
     party.   

               Merger means the merger of the Bank with and into
     FBKP, with FBKP surviving such merger, and the exchange of
     shares of FBKP Common Stock for shares of PSB Common Stock,
     contemplated by this Agreement.

               NASD means the National Association of Securities
     Dealers, Inc.

               PDOB means the Pennsylvania Department of Banking.
  <PAGE 4>
               PDS means the Department of State of the
     Commonwealth of Pennsylvania.

               Person means any individual, corporation, limited
     liability company, partnership, joint venture, association,
     trust or "group" (as that term is defined in
     Section 13(d)(3) of the Exchange Act).

               Prospectus/Proxy Statement means the
     prospectus/proxy statement, together with any amendments and
     supplements thereto, to be transmitted to holders of FBKP
     Common Stock and PSB Common Stock in connection with the
     transactions contemplated by this Agreement.

               PSB Common Stock has the meaning given to that
     term in Section 3.02(a) of this Agreement.

               PSB Disclosure Schedule means a disclosure
     schedule delivered by PSB to FBKP pursuant to Article III of
     this Agreement.

               PSB Financials means (i) the audited consolidated
     financial statements of PSB as of December 31, 1998 and for
     the three years ended December 31, 1998, including the notes
     thereto, and (ii) the unaudited interim consolidated
     financial statements of PSB as of each calendar quarter
     thereafter included in Securities Documents filed by PSB.

               PSB Market Price means, as of any date, the
     average between the closing high bid and low asked prices of
     a share of PSB Common Stock on the Nasdaq National Market
     System (as reported in The Wall Street Journal, or if not
     reported therein, in another authoritative source).

               PSB Market Value means the average of the PSB
     Market Prices for the twenty (20) consecutive trading days
     ending on the trading day three (3) trading days preceding
     the Closing Date.

               PSB Option means the option granted to PSB to
     acquire shares of FBKP Common Stock referenced in the
     recitals to this Agreement.

               PSB Regulatory Reports means the annual and
     quarterly reports of PSB and the Bank with the FRB and the
     FDIC since December 31, 1996 through the Closing Date.

               PSB Subsidiaries means any corporation, 50% or
     more of the capital stock of which is owned, either directly
     or indirectly, by PSB, except any corporation the stock of
     which is held in the ordinary course of the lending
     activities of a bank.
  <PAGE 5>
               Registration Statement means the registration
     statement on Form S-4, including any pre-effective or
     post-effective amendments or supplements thereto, as filed
     with the SEC under the Securities Act with respect to the
     PSB Common Stock to be issued in connection with the
     transactions contemplated by this Agreement.

               Regulatory Agreement has the meanings given to
     that term in Sections 2.11 and 3.10 of this Agreement.

               Regulatory Authority means any banking agency or
     department of any federal or state government, including
     without limitation the FRB, the FDIC, the PDOB, or the
     respective staffs thereof.

               Rights means warrants, options, rights,
     convertible securities and other capital stock equivalents
     which obligate an entity to issue its securities.

               SEC means the Securities and Exchange Commission.

               Securities Act means the Securities Act of 1933,
     as amended, and the rules and regulations promulgated from
     time to time thereunder.

               Securities Documents means all registration
     statements, schedules, statements, forms, reports, proxy
     material, and other documents required to be filed under the
     Securities Laws.

               Securities Laws means the Securities Act, the
     Exchange Act, the Investment Company Act of 1940, as
     amended, the Investment Advisors Act of 1940, as amended,
     the Trust Indenture Act of 1939, as amended, and in each
     case the rules and regulations promulgated from time to time
     thereunder.

               Subsidiary means any corporation, 50% or more of
     the capital stock of which is owned, either directly or
     indirectly, by another entity, except any corporation the
     stock of which is held in the ordinary course of the lending
     activities of a bank.

          Section 1.02  The Merger.

               (a)  Closing.  The closing will take place at
10:00 a.m. on the Closing Date at the offices of Stevens & Lee,
1818 Market Street, Philadelphia, Pennsylvania, unless another
time and place are agreed to by the parties hereto; provided, in
any case, that all conditions to closing set forth in Article V
(other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing) have
been satisfied or waived at or prior to the Closing Date.  On the 
<PAGE 6> Closing Date, FBKP, PSB and the Bank shall cause the
Articles of Merger to be duly executed and to be filed in the
PDS.   

               (b)  The Merger.  Subject to the terms and
conditions of this Agreement, on the Effective Date, the Bank
shall merge with and into FBKP in accordance with the provisions
of the Banking Code and the BCL and the outstanding shares of
FBKP Common Stock shall be converted into shares of PSB Common
Stock as provided in Section 1.02(e).  FBKP shall be the
surviving corporation of the Merger and shall continue its
corporate existence under the laws of the Commonwealth of
Pennsylvania.  From and after the Effective Date, the Merger
shall have the effects set forth in Section 1606 of the Banking
Code.

               (c)  Articles of Incorporation and Bylaws.  On and
after the Effective Date, the articles of incorporation and the
bylaws of PSB, as in effect immediately prior to the Effective
Date, shall automatically be and remain the articles of
incorporation and bylaws of PSB, until thereafter altered,
amended or repealed.  On and after the Effective Date, the
Articles of Incorporation and Bylaws of FBKP, as in effect
immediately prior to the Effective Date, shall automatically be
and remain the Articles of Incorporation and Bylaws of the
surviving bank, until altered, amended or repealed.

               (d)  Board of Directors and Officers of the Bank.

                    (i)  On the Effective Date, the Board of
Directors of FBKP shall resign and the existing Board of
Directors of the Bank shall be elected the Board of Directors of
FBKP.

                    (ii)  On the Effective Date the newly elected
Board of Directors of FBKP shall elect the following officers:

           Chairman                 - Vincent J. Fumo
           President                - Anthony DiSandro
           Vice President           - Carl A. Lingle
           Treasurer                - Gary Polimeno

and such other officers as such Board may determine.

               (e)  Conversion of Shares.

                    (i)  PSB Common Stock.

                         (A)  Each share of PSB Common Stock
     issued and outstanding immediately prior to the Effective
     Date shall, on and after the Effective Date, continue to be
     issued and outstanding as an identical share of PSB Common
     Stock.  Shares of PSB Common Stock owned by FBKP (other than
     shares held in trust, managed, custodial or nominee accounts 
     <PAGE 7> and the like, that in any such case are
     beneficially owned by third parties (any such shares, "trust
     account shares") and shares acquired in respect of debts
     previously contracted (any such shares, "DPC shares")) shall
     become treasury stock of PSB on the Effective Date.

                         (B)  Each share of PSB Common Stock
     issued and held in the treasury of PSB as of the Effective
     Date, if any, shall, on and after the Effective Date,
     continue to be issued and held in the treasury of PSB.

                    (ii)  FBKP Common Stock.

                         (A)   Subject to the provisions of
     subparagraphs (B), (C), (D) and (E) of this Section
     1.02(e)(ii), each share of FBKP Common Stock issued and
     outstanding immediately prior to the Effective Date (other
     than shares of FBKP Common Stock, if any, then owned by PSB
     or FBKP or any FBKP Subsidiary) shall, on the Effective
     Date, by reason of the Merger and without any action on the
     part of the holder thereof, be converted into and become a
     right to receive:

                              (i)  if the PSB Market Value is
          greater than or equal to $7.00 and less than or equal
          to $9.00, then that number of shares of fully paid and
          nonassessable shares of PSB Common Stock as shall equal
          $6.00 divided by the PSB Market Value;

                              (ii)  if the PSB Market Value is
          less than $7.00, then .857 shares of fully paid and
          nonassessable shares of PSB Common Stock, provided that
          if the PSB Market Value is less than $6.50 and FBKP
          exercises its rights under Section 6.01(c) hereof, PSB
          shall have the option to elect, by written notice to
          FBKP, within 3 business days of FBKP exercise, to have
          the Exchange Ratio be equal to that number (rounded to
          the nearest thousandth) of shares of fully paid and
          nonassessable shares of PSB Common Stock, equal to
          $6.00 divided by the PSB Market Value; or

                              (iii)  if the PSB Market Value is
          greater than $9.00, then .667 shares of fully paid and
          nonassessable shares of PSB Common Stock.  

     The Exchange Ratio, as determined pursuant to any of
     Sections 1.02(e)(ii)(A)(i), 1.02(e)(ii)(A)(ii) or
     1.02(e)(ii)(A)(iii), is hereinafter referred to as the
     "Applicable Exchange Ratio".

                         (B)  Each share of FBKP Common Stock
     (other than trust account shares or DPC shares) owned by PSB
     or a PSB Subsidiary on the Effective Date, if any, shall be
     cancelled.  <PAGE 8>

                         (C)  Each share of FBKP Common Stock
     issued and held in the treasury of FBKP or owned by FBKP or
     any FBKP Subsidiary (other than trust account shares or DPC
     shares) as of the Effective Date, if any, shall be
     cancelled, and no cash, stock or other property shall be
     delivered in exchange therefor.

                         (D)  No fraction of a whole share of PSB
     Common Stock and no scrip or certificates therefor shall be
     issued in connection with the Merger.  Any former holder of
     FBKP Common Stock who would otherwise be entitled to receive
     a fraction of a share of PSB Common Stock shall receive, in
     lieu thereof, cash in an amount equal to such fraction of a
     share multiplied by the PSB Market Price determined as of
     the Effective Date.

                         (E)  Each outstanding share of FBKP
     Common Stock the holder of which has perfected his right to
     dissent under Section 1607 of the Banking Code and the BCL
     and has not effectively withdrawn or lost such right as of
     the Effective Date shall not be converted into or represent
     a right to receive shares of PSB Common Stock hereunder, and
     the holder thereof shall be entitled only to such rights as
     are granted by the BCL.  FBKP shall give PSB prompt notice
     upon receipt by FBKP of any such written demands for payment
     of the fair value of such shares of FBKP Common Stock
     ("Dissenting Shares") and of withdrawals of such demands and
     any other instruments provided pursuant to the BCL (any
     shareholder duly making such demand being hereinafter called
     a "Dissenting Shareholder").  If any Dissenting Shareholder
     shall effectively withdraw or lose (through failure to
     perfect or otherwise) his right to such payment at any time,
     such holder's shares of FBKP Common Stock shall be converted
     into the right to receive PSB Common Stock in accordance
     with Section 1.02(e)(ii) of this Agreement.  Any payments
     made in respect of Dissenting Shares shall be made by FBKP,
     as the surviving corporation of the Merger.

               (f)  Stock Options.

                    (i)  On the Effective Date, each FBKP Option
     which is then outstanding, whether or not exercisable, shall
     cease to represent a right to acquire shares of FBKP Common
     Stock and shall be converted automatically into an option to
     purchase shares of PSB Common Stock, and PSB shall assume
     each FBKP Option, in accordance with the terms of the FBKP
     Stock Option Plan, the FBKP Standby Options and the stock
     option agreements and certificates by which they are
     evidenced, except that from and after the Effective Date,
     (i) PSB and its Board of Directors or a duly authorized
     committee thereof shall be substituted for FBKP and FBKP's
     Board of Directors or duly authorized committee thereof
     administering such FBKP Stock Option Plan, (ii) each FBKP
     Option assumed by PSB may be exercised solely for shares of 
     <PAGE 9> PSB Common Stock, (iii) the number of shares of PSB
     Common Stock subject to such FBKP Option shall be equal to
     the number of shares of FBKP Common Stock subject to such
     FBKP Option immediately prior to the Effective Date
     multiplied by the Applicable Exchange Ratio, provided that
     any fractional shares of PSB Common Stock resulting from
     such multiplication shall be rounded to the nearest share,
     and (iv) the per share exercise price under each such FBKP
     Option shall be adjusted by dividing the per share exercise
     price under each such FBKP Option by the Applicable Exchange
     Ratio, provided that such exercise price shall be rounded 
     to the nearest cent.  Notwithstanding clauses (iii) and (i
     v) of the preceding sentence, each FBKP Option which is an
     "incentive stock option" shall be adjusted as required by
     Section 424 of the IRC, and the regulations promulgated
     thereunder, so as not to constitute a modification,
     extension or renewal of the option within the meaning of
     Section 424(h) of the IRC.  PSB and FBKP agree to take all
     necessary steps to effect the foregoing provisions of this
     Section 1.02(f).

                    (ii)  On the Effective Date, PSB shall
     deliver an assumption agreement expressly assuming the FBKP
     Standby Options in accordance with the terms of this
     Section 1.02(f)(i).  As soon as practicable after the
     Effective Date, PSB shall deliver to each holder of the
     other FBKP Options an appropriate notice setting forth such
     participant's rights pursuant thereto and the grants subject
     to such FBKP Options shall continue in effect on the same
     terms and conditions, including without limitation the
     duration thereof, subject to the adjustments required by
     Section 1.02(f)(i) hereof after giving effect to the Merger. 
     Within 30 days after the Effective Date, PSB shall file a
     registration statement on Form S-3 or Form S-8, as the case
     may be (or any successor or other appropriate forms), with
     respect to the shares of PSB Common Stock subject to such
     options and shall use its reasonable best efforts to
     maintain the current status of the prospectus or
     prospectuses contained therein for so long as such options
     remain outstanding.

               (g)  Surrender and Exchange of FBKP Stock
Certificates.

                    (i)  Exchange of Certificates.  Each holder
     of shares of FBKP Common Stock who surrenders to PSB (or its
     agent) the certificate or certificates representing such
     shares will be entitled to receive, as soon as practicable
     after the Effective Date, in exchange therefor a certificate
     or certificates for the number of whole shares of PSB Common
     Stock into which such holder's shares of FBKP Common Stock
     have been converted pursuant to the Merger, together with a
     check for cash in lieu of any fractional share in accordance
     with Section 1.02(e)(ii)(D) hereof.  <PAGE 10>

                    (ii)  Rights Evidenced by Certificates.  Each
     certificate for shares of PSB Common Stock issued in
     exchange for certificates for FBKP Common Stock pursuant to
     Section 1.02(g)(i) hereof will be dated the Effective Date
     and be entitled to dividends and all other rights and
     privileges pertaining to such shares of stock from and after
     the Effective Date.  Until surrendered, each certificate
     theretofore evidencing shares of FBKP Common Stock will,
     from and after the Effective Date, evidence solely the right
     to receive certificates for shares of PSB Common Stock
     pursuant to Section 1.02(g)(i) hereof and a check for cash
     in lieu of any fractional share in accordance with
     Section 1.02(e)(ii)(D) hereof.  If certificates for shares
     of FBKP Common Stock are exchanged for PSB Common Stock at a
     date following one or more record dates for the payment of
     dividends or of any other distribution on the shares of PSB
     Common Stock, PSB will pay cash in an amount equal to
     dividends theretofore payable on such PSB Common Stock and
     pay or deliver any other distribution to which holders of
     shares of PSB Common Stock have theretofore become entitled. 
     Upon surrender of certificates for shares of FBKP Common
     Stock in exchange for certificates for PSB Common Stock, PSB
     also shall pay any dividends to which such holder of FBKP
     Common Stock may be entitled as a result of the declaration
     of a dividend on the FBKP Common Stock by FBKP in accordance
     with the terms of this Agreement with a record date prior to
     the Effective Date and a payment date after the Effective
     Date.  No interest will accrue or be payable in respect of
     dividends or cash otherwise payable under this
     Section 1.02(g) upon surrender of certificates for shares of
     FBKP Common Stock.  Notwithstanding the foregoing, no party
     hereto will be liable to any holder of FBKP Common Stock for
     any amount paid in good faith to a public official or agency
     pursuant to any applicable abandoned property, escheat or
     similar law.  Until such time as certificates for shares of
     FBKP Common Stock are surrendered by a FBKP shareholder to
     PSB for exchange, PSB shall have the right to withhold
     dividends or any other distributions on the shares of PSB
     Common Stock issuable to such shareholder.

                    (iii)  Exchange Procedures.  Each certificate
     for shares of FBKP Common Stock delivered for exchange under
     this Section 1.02(g) must be endorsed in blank by the
     registered holder thereof or be accompanied by a power of
     attorney to transfer such shares endorsed in blank by such
     holder.  If more than one certificate is surrendered at one
     time and in one transmittal package for the same shareholder
     account, the number of whole shares of PSB Common Stock for
     which certificates will be issued pursuant to this
     Section 1.02(g) will be computed on the basis of the
     aggregate number of shares represented by the certificates
     so surrendered.  If shares of PSB Common Stock or payments
     of cash are to be issued or made to a person other than the
     one in whose name the surrendered certificate is registered, 
     <PAGE 11> the certificate so surrendered must be properly
     endorsed in blank, with signature(s) guaranteed, or
     otherwise in proper form for transfer, and the person to
     whom certificates for shares of PSB Common Stock is to be
     issued or to whom cash is to be paid shall pay any transfer
     or other taxes required by reason of such issuance or
     payment to a person other than the registered holder of the
     certificate for shares of FBKP Common Stock which are
     surrendered.  As promptly as practicable after the Effective
     Date, PSB shall send or cause to be sent to each shareholder
     of record of FBKP Common Stock transmittal materials for use
     in exchanging certificates representing FBKP Common Stock
     for certificates representing PSB Common Stock into which
     the former have been converted in the Merger.  Certificates
     representing shares of PSB Common Stock and checks for cash
     in lieu of fractional shares shall be mailed to former
     shareholders of FBKP as soon as reasonably possible but in
     no event later than thirty (30) business days following the
     receipt of certificates representing former shares of FBKP
     Common Stock duly endorsed or accompanied by the materials
     referenced herein and delivered by certified mail, return
     receipt requested (but in no event earlier than the second
     business day following the Effective Date).

                    (iv)  Closing of Stock Transfer Books;
     Cancellation of FBKP Certificates.  Upon the Effective Date,
     the stock transfer books for FBKP Common Stock will be
     closed and no further transfers of shares of FBKP Common
     Stock will thereafter be made or recognized.  All
     certificates for shares of FBKP Common Stock surrendered
     pursuant to this Section 1.02(g) will be cancelled by PSB.

               (h)  Anti-Dilution Provisions.  If, PSB has, at
any time after the date hereof and before the Effective Date,
(A) issued a dividend in shares of PSB Common Stock, (B) combined
the outstanding shares of PSB Common Stock into a smaller number
of shares, (C) subdivided the outstanding shares of PSB Common
Stock, or (D) reclassified the shares of PSB Common Stock, then
the number of shares of PSB Common Stock to be delivered to FBKP
shareholders who are entitled to receive shares of PSB Common
Stock in exchange for shares of FBKP Common Stock shall be
adjusted so that each FBKP shareholder shall be entitled to
receive such number of shares of PSB Common Stock as such
shareholder would have been entitled to receive if the Effective
Date had occurred prior to the happening of such event.  (By way
of illustration, if PSB shall declare a stock dividend of 7%
payable with respect to a record date on or prior to the
Effective Date and the conditions set forth above are satisfied,
the Applicable Exchange Ratio shall be adjusted upward by 7%).
  <PAGE 12>
                           ARTICLE II
             REPRESENTATIONS AND WARRANTIES OF FBKP

          FBKP hereby represents and warrants to PSB that, except
as specifically set forth in the FBKP Disclosure Schedule
delivered to PSB by FBKP on the date hereof:

          Section 2.01  Organization.

               (a)  FBKP is a banking corporation duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania.  FBKP has the corporate power and
authority to carry on its business and operations as now being
conducted and to own and operate the properties and assets now
owned and being operated by it.  FBKP is not qualified or
licensed to do business as a foreign corporation in any other
jurisdiction and is not required to be so qualified or licensed
as the result of the ownership or leasing of property or the
conduct of its business except where the failure to be so
qualified or licensed would not have a Material Adverse Effect on
FBKP.

               (b)  There are no FBKP Subsidiaries other than
those identified in the FBKP Disclosure Schedule.

               (c)  The deposits of FBKP are insured by the FDIC
to the extent provided in the FDIA.

               (d)  The respective minute books of FBKP and each
FBKP Subsidiary accurately record, in all material respects, all
material corporate actions of their respective shareholders and
boards of directors (including committees).

               (e)  Prior to the date of this Agreement, FBKP has
delivered to PSB true and correct copies of the articles of
incorporation and bylaws of FBKP.

          Section 2.02  Capitalization.

               (a)  The authorized capital stock of FBKP consists
of (a) 3,500,000 shares of common stock, $0.25 par value ("FBKP
Common Stock"), of which 1,676,875 shares are outstanding,
validly issued, fully paid and nonassessable and free of
preemptive rights, and (b) 500,000 shares of preferred stock,
$2.00 par value, none of which are issued or outstanding. 
Neither FBKP nor any FBKP Subsidiary has or is bound by any
subscription, option, warrant, call, commitment, agreement, plan
or other Right of any character relating to the purchase, sale or
issuance or voting of, or right to receive dividends or other
distributions on any shares of FBKP Common Stock, FBKP preferred
stock or any other security of FBKP or any securities
representing the right to vote, purchase or otherwise receive any
shares of FBKP Common Stock, FBKP preferred stock or any other
security of FBKP, other than (i) shares issuable under the PSB 
<PAGE 13> Option and (ii) 1,612,500 shares of FBKP Common Stock
issuable under the FBKP Options.

               (b)  FBKP owns all of the outstanding shares of
capital stock of each FBKP Subsidiary free and clear of all
liens, security interests, pledges, charges, encumbrances,
agreements and restrictions of any kind or nature.

               (c)  Except as set forth in the FBKP Disclosure
Schedule, neither (i) FBKP, nor (ii) any FBKP Subsidiary, owns
any equity interest, directly or indirectly, other than treasury
stock, in any other company or controls any other company, except
for equity interests held in the investment portfolios of FBKP
Subsidiaries, equity interests held by FBKP Subsidiaries in a
fiduciary capacity, and equity interests held in connection with
the commercial loan activities of FBKP.  There are no
subscriptions, options, warrants, calls, commitments, agreements
or other Rights outstanding and held by FBKP with respect to any
other company's capital stock or the equity of any other person.

               (d)  To the best of FBKP's knowledge, except as
disclosed in FBKP's proxy statement dated June 18, 1998, no
person or "group" (as that term is used in Section 13(d)(3) of
the Exchange Act), is the beneficial owner (as defined in Section
13(d) of the Exchange Act) of 5% or more of the outstanding
shares of FBKP Common Stock.

          Section 2.03  Authority; No Violation.

               (a)  FBKP has full corporate power and authority
to execute and deliver this Agreement and to complete the
transactions contemplated hereby.  The execution and delivery of
this Agreement by FBKP and the completion by FBKP of the
transactions contemplated hereby have been duly and validly
approved by the Board of Directors of FBKP and, except for
approval by the shareholders of FBKP as required under the
Banking Code, FBKP's articles of incorporation and bylaws and
Nasdaq requirements applicable to it, no other corporate
proceedings on the part of FBKP are necessary to complete the
transactions contemplated hereby.  This Agreement has been duly
and validly executed and delivered by FBKP and, subject to
approval of the shareholders of FBKP as required under the
Banking Code, FBKP's articles of incorporation and bylaws and
Nasdaq requirements applicable to it and receipt of the required
approvals from Regulatory Authorities described in Section 3.04
hereof, constitutes the valid and binding obligation of FBKP,
enforceable against FBKP in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and subject, as to enforceability, to
general principles of equity.

               (b)  (A) The execution and delivery of this
Agreement by FBKP, (B) subject to receipt of approvals from the
Regulatory Authorities referred to in Section 3.04 hereof and 
<PAGE 14> FBKP's and PSB's compliance with any conditions
contained therein, the completion of the transactions
contemplated hereby, and (C) compliance by FBKP with any of the
terms or provisions hereof, will not (i) conflict with or result
in a breach of any provision of the articles of incorporation or
other organizational document or bylaws of FBKP or any FBKP
Subsidiary; (ii) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction
applicable to FBKP or any FBKP Subsidiary or any of their
respective properties or assets; or (iii) except as set forth in
the FBKP Disclosure Schedule, violate, conflict with, result in a
breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the
performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest,
charge or other encumbrance upon any of the properties or assets
of FBKP or any FBKP Subsidiary under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement, commitment or other
instrument or obligation to which FBKP or any FBKP Subsidiary is
a party, or by which they or any of their respective properties
or assets may be bound or affected, except for such violations,
conflicts, breaches or defaults under clause (ii) or (iii) hereof
which, either individually or in the aggregate, will not have a
Material Adverse Effect on FBKP.

          Section 2.04  Consents.  Except for the consents,
approvals, filings and registrations from or with the Regulatory
Authorities referred to in Section 3.04 hereof and compliance
with any conditions contained therein, and the approval of this
Agreement by the shareholders of FBKP under the Banking Code,
FBKP's articles of incorporation and bylaws and Nasdaq
requirements applicable to it, and except as disclosed in the
FBKP Disclosure Schedule, no consents or approvals of, or filings
or registrations with, any public body or authority are
necessary, and no consents or approvals of any third parties are
necessary, or will be, in connection with (a) the execution and
delivery of this Agreement by FBKP, and (b) the completion by
FBKP of the transactions contemplated hereby.  As of the date
hereof, FBKP has no reason to believe that (i) any required
consents or approvals will not be received or will be received
with conditions, limitations or restrictions unacceptable to it
or which would adversely impact FBKP's ability to complete the
transactions contemplated by this Agreement or that (ii) any
public body or authority, the consent or approval of which is not
required or any filing with which is not required, will object to
the completion of the transactions contemplated by this
Agreement.
  <PAGE 15>
          Section 2.05  Financial Statements.

               (a)  FBKP has made available to PSB the FBKP
Regulatory Reports.  The FBKP Regulatory Reports have been, or
will be, prepared in all material respects in accordance with
applicable regulatory accounting principles and practices
throughout the periods covered by such statements, and fairly
present, or will fairly present in all material respects, the
financial position, results of operations and changes in
shareholders' equity of FBKP as of and for the periods ended on
the dates thereof, in accordance with applicable regulatory
accounting principles applied on a consistent basis.

               (b)  FBKP has previously delivered to PSB the FBKP
Financials.  The FBKP Financials have been, or will be, prepared
in accordance with GAAP applied on a consistent basis throughout
the periods covered by such statements, and fairly present, or
will fairly present, the consolidated financial position, results
of operations, changes in shareholders' equity and cash flows of
FBKP as of and for the periods ending on the dates thereof, in
accordance with generally accepted accounting principles applied
on a consistent basis, except as noted therein.

               (c)  At the date of each balance sheet included in
the FBKP Financials or the FBKP Regulatory Reports, FBKP did not
have, or will not have any liabilities, obligations or loss
contingencies of any nature (whether absolute, accrued,
contingent or otherwise) of a type required to be reflected in
such FBKP Financials or FBKP Regulatory Reports or in the
footnotes thereto which are not fully reflected or reserved
against therein or fully disclosed in a footnote thereto, except
for liabilities, obligations and loss contingencies which are not
material in the aggregate and which are incurred in the ordinary
course of business, consistent with past practice and except for
liabilities, obligations and loss contingencies which are within
the subject matter of a specific representation and warranty
herein and subject, in the case of any unaudited statements, to
normal, recurring audit adjustments and the absence of footnotes.

               (d)  All amounts payable as of any date under the
First Bank of Philadelphia Deferred Compensation Plan upon a
Change in Control (as defined therein) have been accrued as
compensation expense on each income statement heretofore
delivered to PSB.

          Section 2.06  Taxes.

               (a)  FBKP has duly filed, and will file, all
federal, state and local tax returns required to be filed by or
with respect to FBKP and all FBKP Subsidiaries on or prior to the
Closing Date (all such returns being accurate and correct in all
material respects) and has duly paid or will pay, or made or will
make, provisions for the payment of all federal, state and local
taxes which have been incurred by or are due or claimed to be due 
<PAGE 16> from FBKP and any FBKP Subsidiary by any taxing
authority or pursuant to any tax sharing agreement or arrangement
(written or oral) on or prior to the Closing Date other than
taxes which (i) are not delinquent or (ii) are being contested in
good faith.

               (b)  No consent pursuant to IRC Section 341(f) has
been filed (or will be filed prior to the Closing Date) by or
with respect to FBKP or any FBKP Subsidiary.

          Section 2.07  No Material Adverse Effect.  FBKP has not
suffered any Material Adverse Effect since December 31, 1998.

          Section 2.08  Contracts.

               (a)  Except as described in FBKP's proxy statement
dated June 18, 1998 and Annual Reports on Form 10-K for the years
ended December 31, 1996, 1997 and 1998, previously delivered to
PSB, in the footnotes to the audited consolidated financial
statements of FBKP as of December 31, 1998, and for the three
years ended December 31, 1998, or in the FBKP Disclosure
Schedule, neither FBKP nor any FBKP Subsidiary is a party to or
subject to:  (i) any employment, consulting or severance contract
or arrangement with any past or present officer, director or
employee of FBKP or any FBKP Subsidiary, except for "at will"
arrangements; (ii) any plan, arrangement or contract providing
for bonuses, pensions, options, deferred compensation, retirement
payments, profit sharing or similar arrangements for or with any
past or present officers, directors or employees of FBKP or any
FBKP Subsidiary; (iii) any collective bargaining agreement with
any labor union relating to employees of FBKP or any FBKP
Subsidiary; (iv) any agreement which by its terms limits the
payment of dividends by any FBKP Subsidiary; (v) any instrument
evidencing or related to indebtedness for borrowed money whether
directly or indirectly, by way of purchase money obligation,
conditional sale, lease purchase, guaranty or otherwise, in
respect of which FBKP or any FBKP Subsidiary is an obligor to any
person, which instrument evidences or relates to indebtedness
other than deposits, repurchase agreements, Federal Home Loan
Bank advances, bankers acceptances and "treasury tax and loan"
accounts established in the ordinary course of business and
transactions in "federal funds" or which contains financial
covenants or other restrictions (other than those relating to the
payment of principal and interest when due) which would be
applicable on or after the Closing Date to PSB or any PSB
Subsidiary; or (vi) any contract (other than this Agreement)
limiting the freedom of any FBKP Subsidiary to engage in any type
of banking or bank-related business permissible under law.

               (b)  True and correct copies of agreements, plans,
arrangements and instruments referred to in Section 2.08(a),
described in the FBKP proxy statement dated June 18, 1998 or in a
footnote to the FBKP Financials, have been provided to PSB on or
before the date hereof, are listed on the FBKP Disclosure 
<PAGE 17> Schedule and are in full force and effect on the date
hereof and neither FBKP nor any FBKP Subsidiary (nor, to the
knowledge of FBKP, any other party to any such contract, plan,
arrangement or instrument) has breached any provision of, or is
in default in any respect under any term of, any such contract,
plan, arrangement or instrument which breach has resulted in or
will result in a Material Adverse Effect with respect to FBKP. 
Except as set forth in the FBKP Disclosure Schedule, no party to
any material contract, plan, arrangement or instrument will have
the right to terminate any or all of the provisions of any such
contract, plan, arrangement or instrument as a result of the
transactions contemplated by this Agreement.  Except as set forth
in the FBKP Disclosure Schedule, none of the employees (including
officers) of FBKP or any FBKP Subsidiary have written employment
contracts which include the right to terminate their employment
as a result of the execution of this Agreement.  Except as set
forth in the FBKP Disclosure Schedule, no plan, employment
agreement, termination agreement, or similar agreement or
arrangement to which FBKP or any FBKP Subsidiary is a party or
under which FBKP or any FBKP Subsidiary may be liable contains
provisions which permit an employee or independent contractor to
terminate it without cause and continue to accrue future benefits
thereunder.  Except as set forth in the FBKP Disclosure Schedule,
no such agreement, plan or arrangement (x) provides for
acceleration in the vesting of benefits or payments due
thereunder upon the occurrence of a change in ownership or
control of FBKP or any FBKP Subsidiary absent the occurrence of a
subsequent event; (y) provides for benefits which may cause the
disallowance of a federal income tax deduction under IRC
Section 280G; or (z) requires FBKP or any FBKP Subsidiary to
provide a benefit in the form of FBKP Common Stock or determined
by reference to the value of FBKP Common Stock.

          Section 2.09  Ownership of Property; Insurance
Coverage.

               (a)  Except as disclosed in the FBKP Disclosure
Schedule, FBKP and the FBKP Subsidiaries have, or will have as to
property acquired after the date hereof, good and, as to real
property, marketable title to all assets and properties owned by
FBKP or any FBKP Subsidiary in the conduct of their businesses,
whether such assets and properties are real or personal, tangible
or intangible, including assets and property reflected in the
balance sheets contained in the FBKP Regulatory Reports and in
the FBKP Financials or acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of for
fair value, in the ordinary course of business, since the date of
such balance sheets), subject to no encumbrances, liens,
mortgages, security interests or pledges, except (i) those items
which secure repurchase agreements and liabilities for borrowed
money from a Federal Home Loan Bank, (ii) statutory liens for
amounts not yet delinquent or which are being contested in good
faith and (iii) items permitted under Article IV.  FBKP and the
FBKP Subsidiaries, as lessee, have the right under valid and 
<PAGE 18> subsisting leases of real and personal properties used
by FBKP and its Subsidiaries in the conduct of their businesses
to occupy or use all such properties as presently occupied and
used by each of them.  Except as disclosed in the FBKP Disclosure
Schedule, such existing leases and commitments to lease
constitute or will constitute operating leases for both tax and
financial accounting purposes and the lease expense and minimum
rental commitments with respect to such leases and lease
commitments are as disclosed in the notes to the FBKP Financials.

               (b)  With respect to all agreements pursuant to
which FBKP or any FBKP Subsidiary has purchased securities
subject to an agreement to resell, if any, FBKP or such FBKP
Subsidiary, as the case may be, has a valid, perfected first lien
or security interest in the securities or other collateral
securing the repurchase agreement, and the value of such
collateral equals or exceeds the amount of the debt secured
thereby.

               (c)  FBKP and the FBKP Subsidiaries currently
maintain insurance considered by FBKP to be reasonable for their
respective operations and similar in scope and coverage to that
maintained by other businesses similarly engaged.  Neither FBKP
nor any FBKP Subsidiary has received notice from any insurance
carrier that (i) such insurance will be cancelled or that
coverage thereunder will be reduced or eliminated, or
(ii) premium costs with respect to such policies of insurance
will be substantially increased.  There are presently no material
claims pending under such policies of insurance and no notices
have been given by FBKP under such policies.  All such insurance
is valid and enforceable and in full force and effect, and within
the last three years FBKP has received each type of insurance
coverage for which it has applied and during such periods has not
been denied indemnification for any material claims submitted
under any of its insurance policies.

          Section 2.10  Legal Proceedings.  Except as disclosed
in the FBKP Disclosure Schedule, neither FBKP nor any FBKP
Subsidiary is a party to any, and there are no pending or, to the
best of FBKP's knowledge, threatened legal, administrative,
arbitration or other proceedings, claims (whether asserted or
unasserted), actions or governmental investigations or inquiries
of any nature (i) against FBKP or any FBKP Subsidiary, (ii) to
which FBKP or any FBKP Subsidiary's assets are or may be subject,
(iii) challenging the validity or propriety of any of the
transactions contemplated by this Agreement, or (iv) which could
adversely affect the ability of FBKP to perform under this
Agreement, except for any proceedings, claims, actions,
investigations or inquiries referred to in clauses (i) or (ii)
which, if adversely determined, individually or in the aggregate,
could not be reasonably expected to have a Material Adverse
Effect on FBKP.
  <PAGE 19>
          Section 2.11  Compliance With Applicable Law.

               (a)  FBKP and FBKP Subsidiaries hold all licenses,
franchises, permits and authorizations necessary for the lawful
conduct of their businesses under, and have complied in all
material respects with, applicable laws, statutes, orders, rules
or regulations of any federal, state or local governmental
authority relating to them, other than where such failure to hold
or such noncompliance will neither result in a limitation in any
material respect on the conduct of their businesses nor otherwise
have a Material Adverse Effect on FBKP.

               (b)  Except as disclosed in the FBKP Disclosure
Schedule, neither FBKP nor any FBKP Subsidiary has received any
notification or communication from any Regulatory Authority
(i) asserting that FBKP or any FBKP Subsidiary is not in
compliance with any of the statutes, regulations or ordinances
which such Regulatory Authority enforces; (ii) threatening to
revoke any license, franchise, permit or governmental
authorization which is material to FBKP or any FBKP Subsidiary;
(iii) requiring or threatening to require FBKP or any FBKP
Subsidiary, or indicating that FBKP or any FBKP Subsidiary may be
required, to enter into a cease and desist order, agreement or
memorandum of understanding or any other agreement restricting or
limiting, or purporting to restrict or limit, in any manner the
operations of FBKP or any FBKP Subsidiary, including without
limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct,
restrict or limit, in any manner the operations of FBKP or any
FBKP Subsidiary, including without limitation any restriction on
the payment of dividends (any such notice, communication,
memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement").  Neither
FBKP nor any FBKP Subsidiary has consented to or entered into any
Regulatory Agreement, except as heretofore disclosed to PSB.

          Section 2.12  ERISA.  FBKP has previously delivered to
PSB true and complete copies of all employee pension benefit
plans within the meaning of ERISA Section 3(2), profit sharing
plans, stock purchase plans, deferred compensation and
supplemental income plans, supplemental executive retirement
plans, employment agreements, annual or long term incentive
plans, severance plans, policies and agreements, group insurance
plans, and all other employee welfare benefit plans within the
meaning of ERISA Section 3(1) (including vacation pay, sick
leave, short-term disability, long-term disability, and medical
plans) and all other employee benefit plans, policies, agreements
and arrangements, all of which are set forth in the FBKP
Disclosure Schedule, maintained or contributed to for the benefit
of the employees or former employees (including retired
employees) and any beneficiaries thereof or directors or former
directors of FBKP or any FBKP Subsidiary, together with (i) the
most recent actuarial (if any) and financial reports relating to
those plans which constitute "qualified plans" under IRC 
<PAGE 20> Section 401(a), (ii) the most recent annual reports
relating to such plans filed by them, respectively, with any
government agency, and (iii) all rulings and determination
letters which pertain to any such plans.  Neither FBKP, any FBKP
Subsidiary nor any pension plan maintained by FBKP or any FBKP
Subsidiary, has incurred, directly or indirectly, within the past
six (6) years any liability under Title IV of ERISA (including to
the Pension Benefit Guaranty Corporation) or to the IRS with
respect to any pension plan qualified under IRC Section 401(a)
which liability has resulted in or will result in a Material
Adverse Effect with respect to FBKP, except liabilities to the
Pension Benefit Guaranty Corporation pursuant to ERISA
Section 4007, all of which have been fully paid, nor has any
reportable event under ERISA Section 4043 occurred with respect
to any such pension plan.  With respect to each of such plans
that is subject to Title IV of ERISA, the present value of the
accrued benefits under such plan, based upon the actuarial
assumptions used for funding purposes in the plan's most recent
actuarial report did not, as of its latest valuation date, exceed
the then current value of the assets of such plan allocable to
such accrued benefits.  Neither FBKP nor any FBKP Subsidiary has
incurred or is subject to any liability under ERISA Section 4201
for a complete or partial withdrawal from a multi-employer plan. 
All "employee benefit plans," as defined in ERISA Section 3(3),
comply and within the past six (6) years have complied in all
material respects with (i) relevant provisions of ERISA and
(ii) in the case of plans intended to qualify for favorable
income tax treatment, provisions of the IRC relevant to such
treatment.  No prohibited transaction (which shall mean any
transaction prohibited by ERISA Section 406 and not exempt under
ERISA Section 408 or any transaction prohibited under IRC
Section 4975) has occurred within the past six (6) years with
respect to any employee benefit plan maintained by FBKP or any
FBKP Subsidiary which would result in the imposition, directly or
indirectly, of an excise tax under IRC Section 4975 or other
penalty under ERISA or the IRC, which, individually or in the
aggregate, has resulted in or will result in a Material Adverse
Effect with respect to FBKP.  FBKP and the FBKP Subsidiaries
provide continuation coverage under group health plans for
separating employees and "qualified beneficiaries" in accordance
with the provisions of IRC Section 4980B(f).  Such group health
plans are in compliance with Section 1862(b)(1) of the Social
Security Act.  Neither FBKP nor any FBKP Subsidiary is aware of
any existing or contemplated audit of any of its employee benefit
plans by the Internal Revenue Service or U.S. Department of
Labor.  

          Section 2.13  Brokers, Finders and Financial Advisors. 
Except for FBKP's engagement of Berwind Financial L.P. in
connection with the transactions contemplated by this Agreement,
neither FBKP nor any FBKP Subsidiary, nor any of their respective
officers, directors, employees or agents, has employed any
broker, finder or financial advisor in connection with the
transactions contemplated by this Agreement or in connection with 
<PAGE 21> any transaction other than the Merger, or, except for
its  commitments disclosed in the FBKP Disclosure Schedule,
incurred any liability or commitment for any fees or commissions
to any such person in connection with the transactions
contemplated by this Agreement or in connection with any
transaction other than the Merger, which has not been reflected
in the FBKP Financials.  The FBKP Disclosure Schedule shall
contain as an exhibit the engagement letter between FBKP and
Berwind Financial L.P.

          Section 2.14  Environmental Matters.  To the knowledge
of FBKP, neither FBKP nor any FBKP Subsidiary, nor any properties
owned or operated by FBKP or any FBKP Subsidiary has been or is
in violation of or liable under any Environmental Law which
violation or liability, individually or in the aggregate,
resulted in, or will result, in a Material Adverse Effect with
respect to FBKP.  There are no actions, suits or proceedings, or
demands, claims, notices or investigations (including without
limitation notices, demand letters or requests for information
from any environmental agency) instituted or pending, or to the
knowledge of FBKP, threatened, relating to the liability of any
property owned or operated by FBKP or any FBKP Subsidiary under
any Environmental Law.

          Section 2.15  Allowance for Loan Losses.  The allowance
for loan losses reflected, and to be reflected, in the FBKP
Regulatory Reports, and shown, and to be shown, on the balance
sheets contained in the FBKP Financials have been, and will be,
established in accordance with the requirements of GAAP and all
applicable regulatory criteria.

          Section 2.16  Information to be Supplied.  The
information to be supplied by FBKP for inclusion in the
Registration Statement (including the Prospectus/Proxy Statement)
will not, at the time the Registration Statement is declared
effective pursuant to the Securities Act and as of the date the
Prospectus/Proxy Statement is mailed to shareholders of PSB and
FBKP and up to and including the date(s) of the meetings of
shareholders of PSB and FBKP to which such Prospectus/Proxy
Statement relates, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements therein not misleading.  The information
supplied, or to be supplied, by FBKP for inclusion in the
Applications will, at the time such documents are filed with any
Regulatory Authority and up to and including the date(s) of the
obtainment of any required regulatory approvals or consents, be
accurate in all material aspects.

          Section 2.17  Securities Documents.  FBKP has made
available to PSB copies of its (i) annual reports on SEC
Form 10-K for the years ended December 31, 1998, 1997 and 1996,
and (ii) proxy materials used in connection with its meetings of
shareholders held in 1998, 1997 and 1996.  Such reports and such
proxy materials complied, at the time filed with the FRB, in all 
<PAGE 22> material respects, with the Exchange Act and all
applicable rules and regulations of the FRB.

          Section 2.18  Related Party Transactions.  Except as
disclosed (i) in the FBKP Disclosure Schedule, (ii) in the FBKP
proxy statement dated June 18, 1998 or (iii) in the footnotes to
the FBKP Financials, FBKP is not a party to any transaction
(including any loan or other credit accommodation but excluding
deposits in the ordinary course of business) with any Affiliate
of FBKP (except an FBKP Subsidiary); and all such transactions
(a) were made in the ordinary course of business, (b) were made
on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other Persons, and (c) did not involve more
than the normal risk of collectability or present other
unfavorable features.  Except as set forth on the FBKP Disclosure
Schedule, no loan or credit accommodation to any Affiliate of
FBKP is presently in default or, during the three year period
prior to the date of this Agreement, has been in default or has
been restructured, modified or extended.  FBKP has not been
notified that principal and interest with respect to any such
loan or other credit accommodation will not be paid when due or
that the loan grade classification accorded such loan or credit
accommodation by FBKP is inappropriate.

          Section 2.19  Loans.  Each loan reflected as an asset
in the FBKP Financial Statements (i) is evidenced by notes,
agreements or other evidences of indebtedness which are true,
genuine and correct (ii) to the extent secured, has been secured
by valid liens and security interests which have been perfected,
and (ii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles, in each case
other than loans as to which the failure to satisfy the foregoing
standards would not have a Material Adverse Effect on FBKP.

          Section 2.20  Accounting for the Merger;
Reorganization.  As of the date hereof, FBKP does not have any
reason to believe that the Merger will fail to qualify (i) for
pooling-of-interests accounting treatment under GAAP, or (ii) as
a reorganization under Section 368(a) of the IRC.

          Section 2.21  Fairness Opinion.  FBKP has received a
written opinion from Berwind Financial L.P. to the effect that,
as of the date hereof, the consideration to be received by
shareholders of FBKP pursuant to this Agreement is fair, from a
financial point of view, to such shareholders.

          Section 2.22  Quality of Representations.  The
representations made by FBKP in this Agreement are true, correct
and complete in all material respects, and do not omit statements 
<PAGE 23> necessary to make them not misleading under all facts
and circumstances.

          Section 2.23  Year 2000 Compliance.  To the best of
FBKP's knowledge, the advent of the year 2000 will not adversely
effect the FBKP's operations or the performance of information
technology used by FBKP.  Without limiting the generality of the
foregoing, (i) the hardware and software used by FBKP is designed
to be used prior to, during, and after the calendar 2000 A.D. and
such hardware and software will operate during each time period
without error relating to date data which represents or
references different centuries or more than one century, (ii) the
hardware and software will not abnormally end or provide invalid
or incorrect results as a result of date data, and (iii) the
hardware and software used by FBKP will be designed to ensure
year 2000 A.D. compatibility, including date data, century
recognition, leap year, calculations which accommodate same
century and multi-century formulae in date values, and date data
interface values that reflect the century.

                           ARTICLE III
              REPRESENTATIONS AND WARRANTIES OF PSB

          PSB hereby represents and warrants to FBKP that, except
as set forth in the PSB Disclosure Schedule delivered by PSB to
FBKP on or prior to the date hereof:

          Section 3.01  Organization.

               (a)  PSB is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Pennsylvania.  PSB is a bank holding company duly registered
under the BHCA.  PSB has the corporate power and authority to
carry on its business and operations as now being conducted and
to own and operate the properties and assets now owned and being
operated by it.  Each PSB Subsidiary is duly organized, validly
existing, and in good standing under the laws of the jurisdiction
of its incorporation and each possesses full corporate power and
authority to carry on its respective business and to own, lease
and operate its properties as presently conducted.  Neither PSB
nor any PSB Subsidiary is required by the conduct of its business
or the ownership or leasing of its assets to qualify to do
business as a foreign corporation in any jurisdiction other than
the Commonwealth of Pennsylvania except where the failure to be
so qualified would not have a Material Adverse Effect on PSB.

               (b)  The Bank is a state savings bank, duly
organized and validly existing under the laws of the Commonwealth
of Pennsylvania.  The Bank has the corporate power and authority
to carry on its business and operations as now being conducted
and to own and operate the properties and assets now owned and
being operated by it.
  <PAGE 24>
               (c)  The deposits of the Bank are insured by the
FDIC to the extent provided in the FDIA.

               (d)  The respective minute books of PSB and the
Bank accurately record in all material respects all material
corporate action of their respective shareholders and boards of
directors (including committees).

               (e)  Prior to the execution of this Agreement, PSB
has delivered to FBKP true and correct copies of the articles of
incorporation and the bylaws of PSB and the Bank, respectively,
as in effect on the date hereof.

          Section 3.02  Capital Structure.

               (a)  The authorized capital stock of PSB consists
of (a) 10,000,000 shares of common stock, no par value ("PSB
Common Stock"), of which, at the date of this Agreement, no
shares were issued and held by PSB as treasury stock and
3,101,140 shares are outstanding, validly issued, fully paid and
nonassessable, and (b) 5,000,000 shares of preferred stock, no
par value, of which no shares are issued or outstanding.  No
shares of PSB Common Stock were issued in violation of any
preemptive rights.  PSB has no Rights authorized, issued or
outstanding, other than options to acquire 92,242 shares of PSB
Common Stock under PSB's stock option plan.

               (b)  To the best of PSB's knowledge, except as
disclosed in the PSB Disclosure Schedule, no person or "group"
(as that term is used in Section 13(d)(3) of the Exchange Act) is
the beneficial owner (as defined in Section 13(d) of the Exchange
Act) of 5% or more of the outstanding shares of PSB Common Stock.

               (c)  PSB owns all of the capital stock of the
Bank, free and clear of any lien or encumbrance.  Except for the
PSB Subsidiaries, PSB does not possess, directly or indirectly,
any material equity interest in any corporation, except for
equity interests held in the investment portfolios of PSB
Subsidiaries, equity interests held by PSB Subsidiaries in a
fiduciary capacity, and equity interests held in connection with
the commercial loan activities of the Bank.

          Section 3.03  Authority; No Violation.

               (a)  PSB has full corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby.  The Bank has full corporate
power and authority to execute and deliver the plan of merger and
to consummate the Merger.  The execution and delivery of this
Agreement by PSB and the completion by PSB of the transactions
contemplated hereby have been duly and validly approved by the
Board of Directors of PSB and, except for approval of the
shareholders of PSB under Nasdaq requirements applicable to it,
no other corporate proceedings on the part of PSB are necessary 
<PAGE 25> to complete the transactions contemplated hereby.  This
Agreement has been duly and validly executed and delivered by PSB
and, subject to approval by the shareholders of PSB under Nasdaq
requirements applicable to it and receipt of the required
approvals of Regulatory Authorities described in Section 3.04
hereof, constitutes the valid and binding obligation of PSB,
enforceable against PSB in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and subject, as to enforceability, to
general principles of equity.

               (b)  (A) The execution and delivery of this
Agreement by PSB, (B) subject to receipt of approvals from the
Regulatory Authorities referred to in Section 3.04 hereof and
FBKP's and PSB's compliance with any conditions contained
therein, the consummation of the transactions contemplated
hereby, and (C) compliance by PSB with any of the terms or
provisions hereof or of the plan of merger will not (i) conflict
with or result in a breach of any provision of the articles of
incorporation or other organizational document or bylaws of PSB
or any PSB Subsidiary; (ii) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction
applicable to PSB or any PSB Subsidiary or any of their
respective properties or assets; or (iii) violate, conflict with,
result in a breach of any provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would
constitute a default), under, result in the termination of,
accelerate the performance required by, or result in a right of
termination or acceleration or the creation of any lien, security
interest, charge or other encumbrance upon any of the properties
or assets of PSB or any PSB Subsidiary under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other investment or
obligation to which PSB or any PSB Subsidiary is a party, or by
which they or any of their respective properties or assets may be
bound or affected, except for such violations, conflicts,
breaches or defaults under clause (ii) or (iii) hereof which,
either individually or in the aggregate, will not have a Material
Adverse Effect on PSB.

          Section 3.04  Consents.  Except for consents,
approvals, filings and registrations from or with the FRB, the
DOJ, the SEC, the PDOB, the PDS, the NASD and state "blue sky"
authorities, and compliance with any conditions contained
therein, and the approval of this Agreement by the shareholders
of PSB in accordance with Nasdaq requirements applicable to it,
and the approval of the plan of merger by PSB as the sole
shareholder of the Bank, no consents or approvals of, or filings
or registrations with, any public body or authority are
necessary, and no consents or approvals of any third parties are
necessary, or will be, in connection with (a) the execution and
delivery of this Agreement by PSB and (b) the completion by PSB
of the transactions contemplated hereby.  As of the date hereof,
PSB has no reason to believe that (i) any required consents or 
<PAGE 26> approvals will not be received or will be received with
conditions, limitations or restrictions unacceptable to it or
which would adversely impact PSB's or the Bank's ability to
complete the transactions contemplated by this Agreement or that
(ii) any public body or authority, the consent or approval of
which is not required or any filing with which is not required,
will object to the completion of the transactions contemplated by
this Agreement.

          Section 3.05  Financial Statements.

               (a)  PSB has made, or will make, the PSB
Regulatory Reports available to FBKP for inspection.  The PSB
Regulatory Reports have been, or will be, prepared in all
material respects in accordance with applicable regulatory
accounting principles and practices throughout the periods
covered by such statements, and fairly present, or will fairly
present in all material respects, the financial position, results
of operations, and changes in shareholders' equity of PSB as of
and for the periods ended on the dates thereof, in accordance
with applicable regulatory accounting principles applied on a
consistent basis.

               (b)  PSB has previously delivered, or will
deliver, to FBKP the PSB Financials.  The PSB Financials have
been, or will be, prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered by such
statements, except as noted therein, and fairly present, or will
fairly present, the consolidated financial position, results of
operations and cash flows of PSB as of and for the periods ending
on the dates thereof, in accordance with GAAP applied on a
consistent basis, except as noted therein.

               (c)  At the date of each balance sheet included in
the PSB Financials or PSB Regulatory Reports, PSB did not have
any liabilities, obligations or loss contingencies of any nature
(whether absolute, accrued, contingent or otherwise) of a type
required to be reflected in such PSB Financials or PSB Regulatory
Reports or in the footnotes thereto which are not fully reflected
or reserved against therein or disclosed in a footnote thereto,
except for liabilities, obligations or loss contingencies which
are not material in the aggregate and which are incurred in the
ordinary course of business, consistent with past practice, and
except for liabilities, obligations or loss contingencies which
are within the subject matter of a specific representation and
warranty herein and subject, in the case of any unaudited
statements, to normal recurring audit adjustments and the absence
of footnotes.

          Section 3.06  Taxes.  PSB and the PSB Subsidiaries are
members of the same affiliated group within the meaning of IRC
Section 1504(a).  PSB has duly filed, and will file, all federal,
state and local tax returns required to be filed by or with
respect to PSB and all PSB Subsidiaries on or prior to the 
<PAGE 27> Closing Date (all such returns being accurate and
correct in all material respects) and has duly paid or will pay,
or made or will make, provisions for the payment of all federal,
state and local taxes which have been incurred by or are due or
claimed to be due from PSB and any PSB Subsidiary by any taxing
authority or pursuant to any tax sharing agreement or arrangement
(written or oral) on or prior to the Closing Date other than
taxes which (i) are not delinquent or (ii) are being contested in
good faith.

          Section 3.07  No Material Adverse Effect.  PSB has not
suffered any Material Adverse Effect since December 31, 1998.

          Section 3.08  Ownership of Property; Insurance
Coverage.

               (a)  PSB and the PSB Subsidiaries have good and,
as to real property, marketable title to all assets and
properties owned by PSB or any of its Subsidiaries in the conduct
of their businesses, whether such assets and properties are real
or personal, tangible or intangible, including assets and
property reflected in the balance sheets contained in the PSB
Regulatory Reports and in the PSB Financials or acquired
subsequent thereto (except to the extent that such assets and
properties have been disposed of for fair value, in the ordinary
course of business, since the date of such balance sheets),
subject to no encumbrances, liens, mortgages, security interests
or pledges, except (i) those items that secure liabilities for
borrowed money and that are described in the PSB Disclosure
Schedule or permitted under Article IV hereof, and (ii) statutory
liens for amounts not yet delinquent or which are being contested
in good faith.  PSB and the PSB Subsidiaries, as lessee, have the
right under valid and subsisting leases of real and personal
properties used by PSB and its Subsidiaries in the conduct of
their businesses to occupy and use all such properties as
presently occupied and used by each of them.

               (b)  PSB and the PSB Subsidiaries currently
maintain insurance in amounts considered by PSB to be reasonable
for their respective operations, and such insurance is similar in
scope and coverage to that maintained by other businesses
similarly engaged.  Neither PSB nor any PSB Subsidiary has
received notice from any insurance carrier that (i) such
insurance will be cancelled or that coverage thereunder will be
reduced or eliminated or (ii) premium costs with respect to such
insurance will be substantially increased. 

          Section 3.09  Legal Proceedings.  Neither PSB nor any
PSB Subsidiary is a party to any, and there are no pending or, to
the best of PSB's knowledge, threatened legal, administrative,
arbitration or other proceedings, claims, actions or governmental
investigations or inquiries of any nature (i) against PSB or any
PSB Subsidiary, (ii) to which PSB's or any PSB Subsidiary's
assets are or may be subject, (iii) challenging the validity or 
<PAGE 28> propriety of any of the transactions contemplated by
this Agreement, or (iv) which could adversely affect the ability
of PSB to perform under this Agreement, except for any
proceedings, claims, actions, investigations or inquiries
referred to in clauses (i) or (ii) which, individually or in the
aggregate, could not be reasonably expected to have a Material
Adverse Effect on PSB.

          Section 3.10  Compliance With Applicable Law.  

               (a)  PSB and the PSB Subsidiaries hold all
licenses, franchises, permits and authorizations necessary for
the lawful conduct of their businesses under, and have complied
in all material respects with, applicable laws, statutes, orders,
rules or regulations of any federal, state or local governmental
authority relating to them, other than where such failure to hold
or such noncompliance will neither result in a limitation in any
material respect on the conduct of their businesses nor otherwise
have a Material Adverse Effect on PSB.

               (b)  Neither PSB nor any PSB Subsidiary has
received any notification or communication from any Regulatory
Authority (i) asserting that PSB or any PSB Subsidiary is not in
compliance with any of the statutes, regulations or ordinances
which such Regulatory Authority enforces; (ii) threatening to
revoke any license, franchise, permit or governmental
authorization which is material to PSB or any PSB Subsidiary;
(iii) requiring or threatening to require PSB or any PSB
Subsidiary, or indicating that PSB or any PSB Subsidiary may be
required, to enter into a cease and desist order, agreement or
memorandum of understanding or any other agreement restricting or
limiting, or purporting to restrict or limit, in any manner the
operations of PSB or any PSB Subsidiary, including without
limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct,
restrict or limit, in any manner the operations of PSB or any PSB
Subsidiary, including without limitation any restriction on the
payment of dividends (any such notice, communication, memorandum,
agreement or order described in this sentence is hereinafter
referred to as a "Regulatory Agreement").  Neither PSB nor any
PSB Subsidiary has consented to or entered into any Regulatory
Agreement, except as heretofore disclosed to FBKP.

          Section 3.11  Information to be Supplied.  The
information to be supplied by PSB for inclusion in the
Registration Statement (including the Prospectus/Proxy Statement)
will not, at the time the Registration Statement is declared
effective pursuant to the Securities Act and as of the date the
Prospectus/Proxy Statement is mailed to shareholders of PSB and
FBKP and up to and including the date(s) of the meetings of
shareholders of PSB and FBKP to which such Prospectus/Proxy
Statement relates, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements therein not misleading.  The information 
<PAGE 29> supplied, or to be supplied, by PSB for inclusion in
the Applications will, at the time such documents are filed with
any Regulatory Authority and up to and including the date(s) of
the obtainment of any required regulatory approvals or consents,
be accurate in all material aspects.

          Section 3.12  ERISA.  PSB has previously made available
to FBKP true and complete copies of the employee pension benefit
plans within the meaning of ERISA Section 3(2), profit sharing
plans, stock purchase plans, deferred compensation and
supplemental income plans, supplemental executive retirement
plans, annual incentive plans, group insurance plans, and all
other employee welfare benefit plans within the meaning of ERISA
Section 3(1) (including vacation pay, sick leave, short-term
disability, long-term disability, and medical plans), and all
other employee benefit plans, policies, agreements and
arrangements, all of which are set forth on the PSB Disclosure
Schedule, maintained or contributed to for the benefit of the
employees or former employees (including retired employees) and
any beneficiaries thereof or directors or former directors of PSB
or any PSB Subsidiary, together with (i) the most recent
actuarial (if any) and financial reports relating to those plans
which constitute "qualified plans" under IRC Section 401(a),
(ii) the most recent annual reports relating to such plans filed
by them, respectively, with any government agency, and (iii) all
rulings and determination letters which pertain to any such
plans.  Neither PSB nor any PSB Subsidiary, and no pension plan
maintained by PSB or any PSB Subsidiary, has incurred, directly
or indirectly, within the past six (6) years any liability under
Title IV of ERISA (including to the Pension Benefit Guaranty
Corporation) or to the IRS with respect to any pension plan
qualified under IRC Section 401(a) which liability has resulted
in or will result in a Material Adverse Effect with respect to
PSB, except liabilities to the Pension Benefit Guaranty
Corporation pursuant to ERISA Section 4007, all of which have
been fully paid, nor has any reportable event under ERISA Section
4043 occurred with respect to any such pension plan.  With
respect to each of such plans that is subject to Title IV of
ERISA, the present value of the accrued benefits under such plan,
based upon the actuarial assumptions used for funding purposes in
the plan's most recent actuarial report did not, as of its latest
valuation date, exceed the then current value of the assets of
such plan allocable to such accrued benefits.  Neither PSB nor
any PSB Subsidiary has incurred or is subject to any liability
under ERISA Section 4201 for a complete or partial withdrawal
from a multi-employer plan.  All "employee benefit plans," as
defined in ERISA Section 3(3), comply and within the past six
(6) years have complied in all material respects with
(i) relevant provisions of ERISA, and (ii) in the case of plans
intended to qualify for favorable income tax treatment,
provisions of the IRC relevant to such treatment.  No prohibited
transaction (which shall mean any transaction prohibited by ERISA
Section 406 and not exempt under ERISA Section 408 or any
transaction prohibited under IRC Section 4975) has occurred 
<PAGE 30> within the past six (6) years with respect to any
employee benefit plan maintained by PSB or any PSB Subsidiary
that would result in the imposition, directly or indirectly, of
an excise tax under IRC Section 4975 or other penalty under ERISA
or the IRC, which individually or in the aggregate, has resulted
in or will result in a Material Adverse Effect with respect to
PSB.  PSB and the PSB Subsidiaries provide continuation coverage
under group health plans for separating employees and "qualified
beneficiaries" in accordance with the provisions of IRC Section
4980B(f).  Such group health plans are in compliance with Section
1862(b)(1) of the Social Security Act.

          Section 3.13  Securities Documents.  PSB has made, or
will make, available to FBKP copies of its annual reports on SEC
Form 10-K for the years ended December 31, 1996, 1997 and 1998. 
Such reports complied, at the time filed with the FDIC, in all
material respects, with the Exchange Act and the applicable rules
and regulations of the FDIC and the SEC.  

          Section 3.14  Environmental Matters.  To the knowledge
of PSB, neither PSB nor any PSB Subsidiary, nor any properties
owned or operated by PSB or any PSB Subsidiary has been or is in
violation of or liable under any Environmental Law which
violation or liability, individually or in the aggregate,
resulted in or will result in a Material Adverse Effect with
respect to PSB.  There are no actions, suits or proceedings, or
demands, claims, notices or investigations (including without
limitation notices, demand letters or requests for information
from any environmental agency) instituted or pending, or to the
knowledge of PSB, threatened, relating to the liability of any
property owned or operated by PSB or any PSB Subsidiary under any
Environmental Law.

          Section 3.15  Allowance for Loan Losses.  The allowance
for loan losses reflected, and to be reflected, in the PSB
Regulatory Reports, and shown, and to be shown, on the balance
sheets contained in the PSB Financials have been, and will be,
established in accordance with the requirements of GAAP and all
applicable regulatory criteria.

          Section 3.16  Brokers and Finders.  Except for PSB's
engagement of Hopper Soliday in connection with the transactions
contemplated by this Agreement, neither PSB nor any PSB
Subsidiary, nor any of their respective officers, directors,
employees or agents, has employed any broker, finder or financial
advisor, or incurred any liability for any fees or commissions to
any such person, in connection with the transactions contemplated
by this Agreement.

          Section 3.17  Loans.  Each loan reflected as an asset
in the PSB Financials (i) is evidenced by notes, agreements or
other evidences of indebtedness which are true, genuine and
correct (ii) to the extent secured, has been secured by valid
liens and security interests which have been perfected, and 
<PAGE 31> (ii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles, in each case
other than loans as to which the failure to satisfy the foregoing
standards would not have a Material Adverse Effect on PSB.

          Section 3.18  Accounting for the Merger;
Reorganization.  As of the date hereof, PSB does not have any
reason to believe that the Merger will fail to qualify (i) for
pooling-of-interests treatment under GAAP, or (ii) as a
reorganization under Section 368(a) of the IRC.

          Section 3.19  Quality of Representations.  The
representations made by PSB in this Agreement are true, correct
and complete in all material respects and do not omit statements
necessary to make the representations not misleading under the
circumstances.

          Section 3.20  Year 2000 Compliance.  To the best of
PSB's knowledge, the advent of the year 2000 will not adversely
effect PSB's or the Bank's operations or the performance of
information technology used by PSB or the Bank.  Without limiting
the generality of the foregoing, (i) the hardware and software
used by PSB or the Bank is designed to be used prior to, during,
and after the calendar 2000 A.D. and such hardware and software
will operate during each time period without error relating to
date data which represents or references different centuries or
more than one century, (ii) the hardware and software will not
abnormally end or provide invalid or incorrect results as a
result of date data, and (iii) the hardware and software used by
PSB or the Bank will be designed to ensure year 2000 A.D.
compatibility, including date data, century recognition, leap
year, calculations which accommodate same century and multi-
century formulae in date values, and date data interface values
that reflect the century."


                           ARTICLE IV
                    COVENANTS OF THE PARTIES

          Section 4.01  Conduct of FBKP's Business.

               (a)  From the date of this Agreement to the
Closing Date, FBKP and each FBKP Subsidiary will conduct its
business and engage in transactions, including extensions of
credit, only in the ordinary course and consistent with past
practice and policies, except as otherwise required by this
Agreement or with the written consent of PSB.  FBKP will use its
reasonable good faith efforts, to (i) preserve its business
organizations intact, (ii) maintain good relationships with
employees, and (iii) preserve for itself the good will of
customers of FBKP and FBKP Subsidiaries and others with whom 
<PAGE 32> business relationships exist.  From the date hereof to
the Closing Date, except as otherwise consented to or approved by
PSB in writing or as permitted or required by this Agreement,
FBKP will not, and FBKP will not permit any FBKP Subsidiary to:

                    (i)  amend or change any provision of its
     articles of incorporation or bylaws;

                    (ii)  change the number of authorized or
     issued shares of its capital stock or issue or grant any
     option, warrant, call, commitment, subscription, Right or
     agreement of any character relating to its authorized or
     issued capital stock or any securities convertible into
     shares of such stock, or split, combine or reclassify any
     shares of capital stock, or declare, set aside or pay any
     dividend or other distribution in respect of capital stock,
     or redeem or otherwise acquire any shares of capital stock,
     except that (A) FBKP may issue up to an aggregate of
     1,612,500 shares of FBKP Common Stock upon the valid
     exercise of FBKP Options, and (B) FBKP may issue shares of
     FBKP Common Stock pursuant to the PSB Option.  

                    (iii)  grant any severance or termination pay
     (other than pursuant to written policies or written
     agreements of FBKP or FBKP Subsidiaries in effect on the
     date hereof and provided to PSB prior to the date hereof)
     to, or enter into any new or amend any existing employment
     agreement with, or increase the compensation of, any
     employee, officer or director of FBKP or any FBKP
     Subsidiary, except for routine periodic increases,
     individually and in the aggregate, in accordance with past
     practice;

                    (iv)  merge or consolidate FBKP or any FBKP
     Subsidiary with any other corporation; sell or lease all or
     any substantial portion of the assets or business of FBKP or
     any FBKP Subsidiary; make any acquisition of all or any
     substantial portion of the business or assets of any other
     person, firm, association, corporation or business
     organization other than in connection with the collection of
     any loan or credit arrangement between any FBKP Subsidiary
     and any other person; enter into a purchase and assumption
     transaction with respect to deposits and liabilities; permit
     the revocation or surrender by any FBKP Subsidiary of its
     certificate of authority to maintain, or file an application
     for the relocation of, any existing branch office, or file
     an application for a certificate of authority to establish a
     new branch office;

                    (v)  Sell or otherwise dispose of any asset
     of FBKP or of any FBKP Subsidiary other than in the ordinary
     course of business consistent with past practice; subject
     any asset of FBKP or of any FBKP Subsidiary to a lien,
     pledge, security interest or other encumbrance (other than 
     <PAGE 33> in connection with deposits, repurchase
     agreements, bankers acceptances, "treasury tax and loan"
     accounts established in the ordinary course of business and
     transactions in "federal funds" and the satisfaction of
     legal requirements in the exercise of trust powers) other
     than in the ordinary course of business consistent with past
     practice; incur any indebtedness for borrowed money (or
     guarantee any indebtedness for borrowed money), except in
     the ordinary course of business consistent with past
     practice;

                    (vi)  take any action which would result in
     any of the representations and warranties of FBKP set forth
     in this Agreement becoming untrue as of any date after the
     date hereof or in any of the conditions set forth in
     Article V hereof not being satisfied, except in each case as
     may be required by applicable law;

                    (vii)  change any method, practice or
     principle of accounting, except as may be required from time
     to time by GAAP (without regard to any optional early
     adoption date) or any Regulatory Authority responsible for
     regulating FBKP;

                    (viii)  waive, release, grant or transfer any
     rights of value or modify or change in any material respect
     any existing material agreement to which FBKP or any FBKP
     Subsidiary is a party, other than in the ordinary course of
     business consistent with past practice;

                    (ix)  implement any pension, retirement,
     profit sharing, bonus, welfare benefit or similar plan or
     arrangement that was not in effect on the date of this
     Agreement, or, except as required by law, materially amend
     any existing plan or arrangement except to the extent such
     amendments do not result in an increase in cost; 

                    (x)  purchase any security for its investment
     portfolio not rated "A" or higher by either Standard &
     Poor's Corporation or Moody's Investor Services, Inc.;

                    (xi)  amend or otherwise modify the
     underwriting and other lending guidelines and policies of
     FBKP in effect as of the date hereof or otherwise fail to
     conduct its lending activities in the ordinary course of
     business consistent with past practice; 
 
                    (xii)  enter into, renew, extend or modify
     any other transaction with any Affiliate, other than deposit
     and loan transactions in the ordinary course of business and
     which are in compliance with the requirements of applicable
     laws and regulations; 
  <PAGE 34>
                    (xiii)  enter into any interest rate swap,
     floor or cap or similar commitment, agreement or
     arrangement;

                    (xiv)  except for the execution of this
     Agreement, take any action that would give rise to a right
     of payment to any individual under any employment agreement;

                    (xv)  take any action that would preclude the
     Merger from qualifying (A) for pooling-of-interests
     accounting treatment under GAAP or (B) as a reorganization
     within the meaning of Section 368 of the IRC, provided,
     however, that nothing contained herein shall limit the
     ability of FBKP to comply with its obligations under the PSB
     Option; or

                    (xvi)  agree to do any of the foregoing.

          For purposes of this Section 4.01, it shall not be
considered in the ordinary course of business for FBKP or any
FBKP Subsidiary to do any of the following:  (i) make any capital
expenditure of $10,000 or more not disclosed on FBKP Disclosure
Schedule 4.01, without the prior written consent of PSB;
(ii) make any sale, assignment, transfer, pledge, hypothecation
or other disposition of any assets having a book or market value,
whichever is greater, in the aggregate in excess of $100,000,
other than pledges of assets to secure government deposits, to
exercise trust powers, sales of assets received in satisfaction
of debts previously contracted in the normal course of business,
issuance and sales of loans, or transactions in the investment
securities portfolio by FBKP or a FBKP Subsidiary or repurchase
agreements, in each case, in the ordinary course of business; or
(iii) undertake or enter any lease, contract or other commitment
for its account, other than in the normal course of providing
credit to customers as part of its banking business, involving a
payment by FBKP or any FBKP Subsidiary of more than $10,000
annually, or containing a material financial commitment and
extending beyond 12 months from the date hereof.  

          Section 4.02  Access; Confidentiality.

               (a)  From the date of this Agreement through the
Closing Date, FBKP or PSB, as the case may be, shall afford to,
the other party and its authorized agents and representatives,
complete access to their respective properties, assets, books and
records and personnel, at reasonable hours and after reasonable
notice; and the officers of FBKP and PSB will furnish any person
making such investigation on behalf of the other party with such
financial and operating data and other information with respect
to the businesses, properties, assets, books and records and
personnel as the person making such investigation shall from time
to time reasonably request.
  <PAGE 35>
               (b)  FBKP and PSB each agree to conduct such
investigation and discussions hereunder in a manner so as not to
interfere unreasonably with normal operations and customer and
employee relationships of the other party.

               (c)  In addition to the access permitted by
subparagraph (a) above, from the date of this Agreement through
the Closing Date, FBKP shall permit employees of PSB reasonable
access to and participation in matters relating to problem loans,
loan restructurings and loan work-outs of FBKP and the FBKP
Subsidiaries, provided that nothing contained in this
subparagraph shall be construed to grant PSB or any PSB employee
any decision-making authority with respect to such matters.  PSB
shall have the right, however, at PSB's expense, to cause FBKP or
any FBKP Subsidiary to obtain an appraisal by an independent
third party experienced in such matters, and mutually
satisfactory to PSB and FBKP, of the assets or property securing
any loan made by FBKP or any FBKP Subsidiary, with a principal
balance of $250,000 or more.

               (d)  All information furnished to PSB by FBKP or
by FBKP to PSB previously in connection with the transactions
contemplated by this Agreement or pursuant hereto shall be held
in confidence to the extent required by, and in accordance with,
the confidentiality agreement executed between FBKP and PSB (the
"Confidentiality Agreement").

          Section 4.03  Regulatory Matters and Consents.

               (a)  FBKP and PSB shall promptly prepare a
Prospectus/Proxy Statement to be mailed to their respective
shareholders in connection with the meetings of their respective
shareholders and transactions contemplated hereby, which
Prospectus/Proxy Statement shall conform to all applicable legal
requirements.  PSB shall, as promptly as practicable following
the preparation thereof, file the Registration Statement with the
SEC and FBKP and PSB shall use all reasonable efforts to have the
Registration Statement declared effective under the Securities
Act as promptly as practicable after such filing.  PSB will
advise FBKP, promptly after PSB receives notice thereof, of the
time when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of the shares
of capital stock issuable pursuant to the Registration Statement,
or the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or
supplement of the Registration Statement or for additional
information.  PSB shall use its reasonable best efforts to
obtain, prior to the effective date of the Registration
Statement, all necessary state securities laws or "Blue Sky"
permits and approvals required to carry out the transactions
contemplated by this Agreement.  PSB will provide FBKP with as
many copies of such Registration Statement and all amendments 
<PAGE 36> thereto promptly upon the filing thereof as FBKP may
reasonably request.

               (b)  PSB and FBKP will prepare all Applications to
Regulatory Authorities and make all filings for, and use their
reasonable best efforts to obtain as promptly as practicable
after the date hereof, all necessary permits, consents,
approvals, waivers and authorizations of all Regulatory
Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement.

               (c)  FBKP will furnish PSB with all information
concerning FBKP and FBKP Subsidiaries as may be reasonably
necessary or advisable in connection with the Registration
Statement and any Application or filing made by or on behalf of
PSB to any Regulatory Authority in connection with the
transactions contemplated by this Agreement.  

               (d)  PSB and FBKP shall have the right to review
in advance, and to the extent practicable each will consult with
the other on, all information which appears in any filing made
with or written materials submitted to the SEC, any Regulatory
Authority or any third party in connection with the transactions
contemplated by this Agreement.  In exercising the foregoing
right, each of the parties hereto shall act reasonably and as
promptly as practicable.  The parties hereto agree that they will
consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of the SEC,
Regulatory Authorities and third parties necessary or advisable
to consummate the transactions contemplated by this Agreement and
each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated hereby
and thereby.

               (e)  PSB will promptly furnish FBKP with copies of
all Applications and other written communications to, or received
by PSB or any PSB Subsidiary from, any Regulatory Authority in
respect of the transactions contemplated hereby.

          Section 4.04  Taking of Necessary Action.  PSB and FBKP
shall each use its reasonable best efforts in good faith, and
each of them shall cause its Subsidiaries to use their reasonable
best efforts in good faith, to take or cause to be taken all
action necessary or desirable on its part so as to permit
completion of the Merger as soon as practicable after the date
hereof, including, without limitation, (A) obtaining the consent
or approval of each individual, partnership, corporation,
association or other business or professional entity whose
consent or approval is required or desirable for consummation of
the transactions contemplated hereby (including assignment of
leases without any change in terms), provided that neither FBKP
nor any FBKP Subsidiary shall agree to make any payments or
modifications to agreements in connection therewith without the
prior written consent of PSB, and (B) requesting the delivery of 
<PAGE 37> appropriate opinions, consents and letters from its
counsel and independent auditors.  No party hereto shall take, or
cause, or to the best of its ability permit to be taken, any
action that would substantially impair the prospects of
completing the Merger pursuant to this Agreement; provided that
nothing herein contained shall preclude PSB or FBKP or from
exercising its rights under this Agreement or the PSB Option.

          Section 4.05  Indemnification; Insurance.

               (a)  In the event of any threatened or actual
claim, action, suit, proceeding or investigation, whether civil,
criminal or administrative, in which any person who is now, or
has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Date, a director or officer or
employee of FBKP or any of its Subsidiaries (the "Indemnified
Parties") is, or is threatened to be, made a party to a suit
based in whole or in part on, or arising in whole or in part out
of, or pertaining to (i) the fact that he is or was a director,
officer or employee of FBKP, any of the FBKP Subsidiaries or any
of their respective predecessors or (ii) this Agreement or any of
the transactions contemplated hereby, whether in any case
asserted or arising before or after the Effective Date, the
parties hereto agree to cooperate and use their best efforts to
defend against and respond thereto to the extent permitted by the
BCL and the Articles of Incorporation and Bylaws of FBKP.  On and
after the Effective Date, PSB shall indemnify, defend and hold
harmless all prior and then-existing directors and officers of
FBKP or of any FBKP Subsidiary, against (i) all losses, claims,
damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement (with the prior approval of PSB) of
or in connection with any claim, action, suit, proceeding or
investigation ("Indemnified Liabilities") based in whole or in
part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of FBKP or any
FBKP Subsidiary, whether pertaining to any matter existing or
occurring at or prior to the Effective Date and whether asserted
or claimed prior to, or at or after, the Effective Date and
(ii) all Indemnified Liabilities based in whole or in part on, or
arising in whole or in part out of, or pertaining to this
Agreement or the transactions contemplated hereby, to the same
extent as such officer, director or employee may be indemnified
by FBKP or any FBKP Subsidiary as of the date hereof including
the right to advancement of expenses, provided, however, that any
such officer, director or employee of FBKP or any FBKP Subsidiary
may not be indemnified by PSB and/or the Bank if such
indemnification is prohibited by applicable law.

               (b)  PSB shall maintain FBKP's existing directors'
and officers' liability insurance policy (or a policy providing
comparable coverage amounts on terms generally no less favorable,
including PSB's existing policy if it meets the foregoing
standard) covering persons who are currently covered by such
insurance for a period of five years after the Effective Date; 
<PAGE 38> provided, however, that in no event shall PSB be
obligated to expend, in order to maintain or provide insurance
coverage pursuant to this Section 4.05(b), any amount per annum
in excess of 125% of the amount of the annual premiums paid as of
the date hereof by FBKP for such insurance (the "Maximum
Amount").  If the amount of the annual premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum
Amount, PSB shall use all reasonable efforts to maintain the most
advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Amount.  

               (c)  In the event that PSB or any of its
respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger
or (ii) transfers all or substantially all of its properties and
assets to any Person, then, and in each such case the successors
and assigns of such entity shall assume the obligations set forth
in this Section 4.05.

          Section 4.06  No Other Bids and Related Matters.  So
long as this Agreement remains in effect, FBKP shall not and FBKP
shall not authorize or permit any of its directors, officers,
employees or agents, to directly or indirectly (i) respond to,
solicit, initiate or encourage any inquiries relating to, or the
making of any proposal which relates to, an Acquisition
Transaction (as defined below), (ii) recommend or endorse an
Acquisition Transaction, (iii) participate in any discussions or
negotiations regarding an Acquisition Transaction, (iv) provide
any third party (other than PSB or an affiliate of PSB) with any
nonpublic information in connection with any inquiry or proposal
relating to an Acquisition Transaction or (v) enter into an
agreement with any other party with respect to an Acquisition
Transaction.  Notwithstanding the foregoing, (i) the Board of
Directors of FBKP may respond to unsolicited inquiries relating
to an Acquisition Transaction or (ii) the Board of Directors of
FBKP may recommend or endorse an Acquisition Transaction, in each
case, if it receives a written opinion of outside counsel that
the failure to do so would constitute a breach of their fiduciary
duty.  FBKP will immediately cease and cause to be terminated any
existing activities, discussions or negotiations previously
conducted with any parties other than PSB with respect to any of
the foregoing, and will take all actions necessary or advisable
to inform the appropriate individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this
Section 4.06.  FBKP will notify PSB orally (within one day) and
in writing (as promptly as practicable) if any inquiries or
proposals relating to an Acquisition Transaction are received by,
any such information is requested from, or any such negotiations
or discussions are sought to be initiated or continued with,
FBKP.  As used in this Agreement, "Acquisition Transaction" shall
mean one of the following transactions with a party other than
PSB or an affiliate of PSB:  (i) a merger or consolidation, or
any similar transaction, involving FBKP or an FBKP Subsidiary, 
<PAGE 39> (ii) a purchase, lease or other acquisition of all or a
substantial portion of the assets or liabilities of FBKP or an
FBKP Subsidiary or (iii) a purchase or other acquisition
(including by way of share exchange, tender offer, exchange offer
or otherwise) of a substantial interest in any class or series of
equity securities of FBKP (other than as permitted by Section
4.01(a)(ii) hereof) or an FBKP Subsidiary.

          Section 4.07  Duty to Advise; Duty to Update Disclosure
Schedule.  Each party shall promptly advise the other party of
any change or event having a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations,
warranties or covenants set forth herein.  Each party shall
update its respective Disclosure Schedule as promptly as
practicable after the occurrence of an event or fact which, if
such event or fact had occurred prior to the date of this
Agreement, would have been disclosed in such Disclosure Schedule. 
The delivery of such updated Schedule shall not relieve a party
from any breach or violation of this Agreement and shall not have
any effect for the purposes of determining the satisfaction of
the condition set forth in Section 5.01(c) or 5.02(c) hereof, as
applicable.

          Section 4.08  Conduct of PSB's Business.  From the date
of this Agreement to the Closing Date, PSB will use its best
efforts to (x) preserve its business organizations intact,
(y) maintain good relationships with employees, and (z) preserve
for itself the goodwill of customers of PSB and PSB Subsidiaries
and others with whom business relationships exist. 

          Section 4.09  Current Information.

               (a)  During the period from the date of this
Agreement to the Effective Date, the respective Presidents shall
confer on a monthly or more frequent basis with representatives
of the other party regarding its financial condition, operations
and business and matters relating to the completion of the
transactions contemplated hereby.  As soon as reasonably
available, but in no event more than 45 days after the end of
each calendar quarter ending after the date of this Agreement,
and within 25 days after the end of each month, FBKP and PSB will
deliver to the other party a consolidated balance sheet and a
consolidated statement of operations, without related notes, for
such month.

          Section 4.10  Undertakings by PSB and FBKP.

               (a)  From and after the date of this Agreement,
FBKP shall:

                    (i)  Phase I Environmental Audit.  Permit
     PSB, if PSB elects to do so, at its own expense, to cause a
     "phase I environmental audit" to be performed at any 
     <PAGE 40> physical location owned or occupied by FBKP or any
     FBKP Subsidiary on the date hereof;

                    (ii)  Timely Review.  If requested by PSB at
     PSB's sole expense, cause its independent certified public
     accountants to perform a review of its unaudited
     consolidated financial statements as of the end of any
     calendar quarter, in accordance with Statement of Auditing
     Standards No. 36, and to issue its report on such financial
     statements as soon as is practicable thereafter; and

                    (iii)  List of Nonperforming Assets.  Provide
     PSB, within fifteen (15) days after each quarter a written
     list of nonperforming assets;

               (b)  From and after the date of this Agreement,
PSB and FBKP shall each:

                    (i)  Shareholders Meetings.  Take all action
     necessary to properly call and convene a special meeting of
     its shareholders as soon as practicable after the date
     hereof to consider and vote upon this Agreement and the
     transactions contemplated hereby.  Subject to the provisions
     of Section 4.06, the Board of Directors of FBKP and the
     Board of Directors of PSB will recommend that the
     shareholders of FBKP and PSB, respectively, approve this
     Agreement and the transactions contemplated hereby.  

                    (ii)  Public Announcements.  Cooperate and
     cause its respective officers, directors, employees and
     agents to cooperate in good faith, consistent with their
     respective legal obligations, in the preparation and
     distribution of, and agree upon the form and substance of,
     any press release related to this Agreement and the
     transactions contemplated hereby, and any other public
     disclosures related thereto, including without limitation,
     communications to FBKP shareholders and FBKP's internal
     announcements and customer disclosures, but nothing
     contained herein shall prohibit either party from making any
     disclosure which its counsel deems necessary under
     applicable law;

                    (iii)  Maintenance of Insurance.  Maintain,
     and cause their respective Subsidiaries to maintain,
     insurance in such amounts as are reasonable to cover such
     risks as are customary in relation to the character and
     location of its properties and the nature of its business;

                    (iv)  Maintenance of Books and Records. 
     Maintain, books of account and records in accordance with
     GAAP applied on a basis consistent with those principles
     used in preparing the financial statements heretofore
     delivered;
  <PAGE 41>
                    (v)  Delivery of Securities Documents. 
     Deliver to the other, copies of all Securities Documents
     simultaneously with the filing thereof; and

                    (vi)  Taxes.  File all federal, state, and
     local tax returns required to be filed by them or their
     respective Subsidiaries on or before the date such returns
     are due (including any extensions) and pay all taxes shown
     to be due on such returns on or before the date such payment
     is due.

          Section 4.11  Employee Benefits and Termination
Benefits.

               (a)  Employee Benefits.  On and after the
Effective Date, the employee pension and welfare benefit plans of
PSB and FBKP (as well as any other plan of FBKP providing for
benefits not subject to ERISA) may, at PSB's election and subject
to the requirements of the IRC, continue to be maintained
separately or consolidated, except as set forth below.  In
connection with implementation of the foregoing, the following
provisions and guidelines shall apply:

                    (i)  PSB Employee Stock Ownership Plan
     ("ESOP").  Employees of FBKP and FBKP Subsidiaries who
     become employees of PSB or a PSB Subsidiary shall become
     entitled to participate in the PSB ESOP in accordance with
     its terms by treating them as newly employed individuals
     without any prior service credit under such plan.

                    (ii)  PSB 401(k) Retirement Savings Plan
     ("401(k) Plan") and Profit Sharing Plan.  Employees of FBKP
     and FBKP Subsidiaries who become employees of PSB or a PSB
     Subsidiary shall become entitled to participate in the PSB
     401(k) Plan and the PSB Profit Sharing Plan in accordance
     with their terms.  In this regard, each such employee shall
     (A) receive, for purposes of participation and vesting only,
     credit for all service with FBKP or an FBKP Subsidiary, and
     (B) enter the PSB 401(k) Plan and the PSB Profit Sharing
     Plan on the entry date concurrent with or next following the
     employee's satisfaction of such plan's minimum participation
     requirements.

                    (iii)  Welfare Benefit Plans.  Following the
     Merger, the welfare benefit plans of PSB and FBKP (and their
     respective subsidiaries) shall initially remain unchanged. 
     PSB shall undertake a study, in consultation with
     appropriate professional advisors, with a view toward the
     possible combination of some or all of such plans or the
     benefits provided thereunder.  Following such study, PSB
     shall take such action with respect to such plans (which may
     include the implementation of new benefits, reduction or
     elimination of some benefits, and the alteration of the 
     <PAGE 42> respective cost allocation between employer and
     employee) as it deems appropriate under the circumstances.

               (b)  Severance Policy.  PSB agrees to cause the
Bank to adopt the severance policy dated October 1, 1998 adopted
by FBKP for executive officers named therein.

               (c)  Deferred Compensation Plan.  PSB agrees to
pay all amounts due under the First Bank of Philadelphia Deferred
Compensation Plan in accordance with its terms.

          Section 4.12   Stock Exchange Listing.  PSB shall use
all reasonable efforts to cause the shares of PSB Common Stock to
be issued in connection with the Merger to be approved for
quotation on the Nasdaq Stock Market's National Market, subject
to official notice of issuance, as of or prior to the Effective
Date.

          Section 4.13   Affiliate Letters.

               (a)  FBKP has provided to PSB a schedule of each
person that, to the best of its knowledge, is deemed to be an
"Affiliate" of it, as that term is used in Rule 145 under the
Securities Act or Accounting Series Releases 130 and 135 of the
Commission.

               (b)  FBKP shall use its reasonable best efforts to
cause each person who may be deemed to be an Affiliate of FBKP to
execute and deliver to PSB as soon as practicable after the date
of this Agreement, and in any event prior to the date of the
meetings of shareholders of FBKP and PSB to be called pursuant to
Section 4.10(b)(i) hereof, a written agreement in the form of
Exhibit 2.  

          Section 4.14   Covenant of PSB. Neither PSB or the Bank
shall take any action that would preclude the Merger from
qualifying (A) for pooling-of-interests accounting treatment
under GAAP or (B) as a reorganization within the meaning of
Section 368 of the IRC.

                            ARTICLE V
                           CONDITIONS

          Section 5.01  Conditions to FBKP's Obligations under
this Agreement.  The obligations of FBKP hereunder shall be
subject to satisfaction at or prior to the Closing Date of each
of the following conditions, unless waived by FBKP pursuant to
Section 7.03 hereof:

               (a)  Corporate Proceedings.  All action required
to be taken by, or on the part of, PSB and the Bank to authorize
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement
shall have been duly and validly taken by PSB and the Bank; and 
<PAGE 43> FBKP shall have received certified copies of the
resolutions evidencing such authorizations;

               (b)  Covenants.  The obligations and covenants of
PSB required by this Agreement to be performed by PSB at or prior
to the Closing Date shall have been duly performed and complied
with in all material respects; 

               (c)  Representations and Warranties.  The
representations and warranties of PSB set forth in this Agreement
shall be true and correct, as  of the date of this Agreement, and
as of the Closing Date as though made on and as of the Closing
Date, except as to any representation or warranty (i) which
speaks only as of an earlier date or (ii) where the breach of the
representation or warranty would not, either individually or in
the aggregate, constitute a Material Adverse Effect with respect
to PSB;

               (d)  Approvals of Regulatory Authorities.  PSB
shall have received all required approvals of Regulatory
Authorities of the Merger, and delivered copies thereof to FBKP;
and all notice and waiting periods required thereunder shall have
expired or been terminated;

               (e)  No Injunction.  There shall not be in effect
any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits consummation of the
transactions contemplated hereby;

               (f)  Officer's Certificate.  PSB shall have
delivered to FBKP a certificate, dated the Closing Date and
signed, without personal liability, by its chairman or president,
to the effect that the conditions set forth in subsections (a)
through (e) of this Section 5.01 have been satisfied, to the best
knowledge of the officer executing the same;

               (g)  Opinion of PSB's Counsel.  FBKP shall have
received an opinion of Stevens & Lee, counsel to PSB, dated the
Closing Date, in form and substance reasonably satisfactory to
FBKP and its counsel to the effect set forth on Exhibit 4
attached hereto;

               (h)  Registration Statement.  The Registration
Statement shall be effective under the Securities Act and no
proceedings shall be pending or threatened by the SEC to suspend
the effectiveness of the Registration Statement; all required
approvals by state securities or "blue sky" authorities with
respect to the transactions contemplated by this Agreement, shall
have been obtained; and neither the Registration Statement nor
any such approval by state securities or "blue sky" authorities
shall be subject to a stop order or threatened stop order by the
SEC or any such authority.
  <PAGE 44>
               (i)  Tax Opinion.  FBKP shall have received an
opinion of Stevens & Lee as to federal tax matters substantially
to the effect set forth on Exhibit 5 attached hereto; and

               (j)  Approval of FBKP's Shareholders.  This
Agreement shall have been approved by the shareholders of FBKP by
such vote as is required under the Banking Code, FBKP's articles
of incorporation and bylaws or under Nasdaq requirements
applicable to it;

               (k)  Fairness Opinion.  As of the date of this
Agreement, the Board of Directors of FBKP shall have received a
written or oral fairness opinion from its financial advisor,
Berwind Financial, L.P., that the transaction contemplated by
this Agreement is fair from a financial viewpoint to FBKP
shareholders.

               (l)  Employment Agreements.  Carl A. Lingle and
James T. Schaeffer each shall have executed employment agreements
with the Bank reasonably acceptable to them and the Bank.  

          Section 5.02  Conditions to PSB's Obligations under
this Agreement.  The obligations of PSB hereunder shall be
subject to satisfaction at or prior to the Closing Date of each
of the following conditions, unless waived by PSB pursuant to
Section 7.03 hereof:

               (a)  Corporate Proceedings.  All action required
to be taken by, or on the part of, FBKP to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement
shall have been duly and validly taken by FBKP; and PSB shall
have received certified copies of the resolutions evidencing such
authorizations;

               (b)  Covenants.  The obligations and covenants of
FBKP required by this Agreement to be performed by FBKP at or
prior to the Closing Date shall have been duly performed and
complied with in all material respects;

               (c)  Representations and Warranties.  The
representations and warranties of FBKP set forth in this
Agreement shall be true and correct as of the date of this
Agreement, and as of the Closing Date as though made on and as of
the Closing Date, except as to any representation or warranty
(i) which specifically relates to an earlier date or (ii) where
the breach of the representation or warranty would not, either
individually or in the aggregate, result in a Material Adverse
Effect with respect to FBKP;

               (d)  Approvals of Regulatory Authorities.  PSB
shall have received all required approvals of Regulatory
Authorities for the Merger, without the imposition of any term or
condition that would have a Material Adverse Effect on PSB upon 
<PAGE 45> completion of the Merger; and all notice and waiting
periods required thereunder shall have expired or been
terminated;

               (e)  No Injunction.  There shall not be in effect
any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits consummation of the
transactions contemplated hereby;

               (f)  Officer's Certificate.  FBKP shall have
delivered to PSB a certificate, dated the Closing Date and
signed, without personal liability, by its chairman of the board
or president, to the effect that the conditions set forth in
subsections (a) through (c) and (e) of this Section 5.02 have
been satisfied, to the best knowledge of the officer executing
the same;

               (g)  Opinions of FBKP's Counsel.  PSB shall have
received an opinion of Pepper Hamilton L.L.P., special counsel to
FBKP, dated the Closing Date, in form and substance reasonably
satisfactory to PSB and its counsel to the effect set forth on
Exhibit 6 attached hereto;

               (h)  Registration Statement.  The Registration
Statement shall be effective under the Securities Act and no
proceedings shall be pending or threatened by the SEC to suspend
the effectiveness of the Registration Statement; all required
approvals by state securities or "blue sky" authorities with
respect to the transactions contemplated by this Agreement, shall
have been obtained; and neither the Registration Statement nor
any such approval by state securities or "blue sky" authorities
shall be subject to a stop order or threatened stop order by the
SEC or any such authority;

               (i)  Tax Opinion.  PSB shall have received an
opinion of Stevens & Lee as to federal tax matters substantially
to the effect set forth on Exhibit 5 attached hereto;

               (j)  Pooling Letter.  PSB shall have received a
letter from Stockton Bates & Company to the effect that, based on
a review of this Agreement and related agreements and the facts
and circumstances then known to it, the Merger shall be accounted
for as a pooling-of-interests under GAAP.

               (k)  Fairness Opinion.  As of the date of this
Agreement, the Board of Directors of PSB shall have received a
written or oral fairness opinion from its financial advisor,
Hopper Soliday, that the transaction contemplated by this
Agreement is fair from a financial viewpoint to PSB shareholders.

               (l)  Approval of PSB's Shareholders.  This
Agreement shall have been approved by the shareholders of PSB by
such vote as is required under PSB's articles of incorporation
and bylaws or under Nasdaq requirements applicable to it; 
<PAGE 46>

               (m)  Approval of Amendment to PSB Articles of
Incorporation.  PSB shareholders shall have approved the
amendment to the PSB Articles of Incorporation attached hereto as
Exhibit 7.

               (n)  Other.  FBKP shall have furnished PSB with
such certificates of its officers or others and such documents to
evidence fulfillment of the conditions set forth in this
Section 5.02 as PSB may reasonably request.

                           ARTICLE VI
                TERMINATION, WAIVER AND AMENDMENT

          Section 6.01  Termination.  This Agreement may be
terminated on or at any time prior to the Closing Date:

               (a)  By the mutual written consent of the parties
hereto;

               (b)  By PSB or FBKP:

                    (i)  if the Closing Date shall not have
     occurred on or before December 31 1999, unless the failure
     of such occurrence shall be due to the failure of the party
     seeking to terminate this Agreement to perform or observe in
     any material respect its agreements set forth in this
     Agreement required to be performed or observed by such party
     on or before the Closing Date; or

                    (ii)  if either party has received a final
     unappealable administrative order from a Regulatory
     Authority whose approval or consent has been requested that
     such approval or consent will not be granted, or in the case
     of a termination by PSB, will not be granted absent the
     imposition of terms and conditions which would permit
     satisfaction of the condition set forth at Section 5.02(d)
     hereof, unless the failure of such occurrence shall be due
     to the failure of the party seeking to terminate this
     Agreement to perform or observe in any material respect its
     agreements set forth herein required to be performed or
     observed by such party on or before the Closing Date;

               (c)  By FBKP if the PSB Market Value is less than
$6.50 and PSB shall not make the election specified in the
proviso clause to Section 1.02(e)(ii)(A)(ii) hereof; 

               (d)  at any time on or prior to the Effective
Date, by FBKP in writing if PSB has, or by PSB in writing if FBKP
has, in any material respect, breached (i) any material covenant
or undertaking contained herein or (ii) any representation or
warranty contained herein, which in the case of a breach by PSB 
<PAGE 47> would have a Material Adverse Effect on PSB and in the
case of a breach by FBKP would have a Material Adverse Effect on
FBKP, in any case if such breach has not been substantially cured
by the earlier of (i) 30 days after the date on which written
notice of such breach is given to the party committing such
breach or (ii) or if on such date such breach no longer causes a
Material Adverse Effect; or

               (e)  by either the Board of Directors of PSB or
the Board of Directors of FBKP if the Board of Directors of the
other party shall have withdrawn, modified or changed in a manner
adverse to the terminating party its approval or recommendation
of this Agreement and the transactions contemplated hereby.

               (f)  By PSB on or before April 30, 1999 if either
Mr. Lingle or Mr. Schaeffer shall fail to confirm in writing
(which confirmation shall be deemed satisfaction of the condition
to closing set forth in Section 5.01(l)) that the form of
employment agreement tendered to them is acceptable.

          Section 6.02  Effect of Termination.  If this Agreement
is terminated pursuant to Section 6.01 hereof, this Agreement
shall forthwith become void (other than Section 4.02(d) and
Section 7.01 hereof, which shall remain in full force and
effect), and there shall be no further liability on the part of
PSB or FBKP to the other, except for any liability arising out of
any uncured willful breach of any covenant or other agreement
contained in this Agreement, any fraudulent breach of a
representation or warranty, in this Agreement and any obligation
or liability arising under the PSB Option.  Nothing contained in
this Section 6.02 shall be deemed to prohibit PSB or FBKP from
maintaining an action against a third party for tortious
interference or otherwise.

                           ARTICLE VII
                          MISCELLANEOUS

          Section 7.01  Expenses.  Except for the cost of
printing and mailing the Proxy Statement/Prospectus which shall
be shared equally, each party hereto shall bear and pay all costs
and expenses incurred by it in connection with the transactions
contemplated hereby, including fees and expenses of its own
financial consultants, accountants and counsel.

          Section 7.02  Non-Survival of Representations and
Warranties.  All representations, warranties and, except to the
extent specifically provided otherwise herein, agreements and
covenants, other than those covenants that by their terms are to
be performed after the Effective Date, including without
limitation the covenants set forth in Sections 1.02(f) and (g)
and 4.05 hereof, which will survive the Merger, shall terminate
on the Closing Date.  
  <PAGE 48>
          Section 7.03  Amendment, Extension and Waiver.  Subject
to applicable law, at any time prior to the consummation of the
transactions contemplated by this Agreement, the parties may
(a) amend this Agreement, (b) extend the time for the performance
of any of the obligations or other acts of either party hereto,
(c) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, or
(d) waive compliance with any of the agreements or conditions
contained in Articles IV and V hereof or otherwise, provided that
any amendment, extension or waiver granted or executed after
shareholders of FBKP or PSB have approved this Agreement shall
not modify either the amount or the form of the consideration to
be provided hereby to holders of FBKP Common Stock upon
consummation of the Merger or otherwise materially adversely
affect the shareholders of FBKP or PSB without the approval of
the shareholders who would be so affected.  This Agreement may
not be amended except by an instrument in writing authorized by
the respective Boards of Directors and signed, by duly authorized
officers, on behalf of the parties hereto.  Any  agreement on the
part of a party hereto to any extension or waiver shall be valid
only if set forth in an instrument in writing signed by a duly
authorized officer on behalf of such party, but such waiver or
failure to insist on strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.

          Section 7.04  Entire Agreement.  This Agreement,
including the documents and other writings referred to herein or
delivered pursuant hereto, contains the entire agreement and
understanding of the parties with respect to its subject matter. 
This Agreement supersedes all prior arrangements and
understandings between the parties, both written or oral with
respect to its subject matter.  This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective successors; provided, however, that nothing in this
Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto and their respective
successors, any rights, remedies, obligations or liabilities
other than pursuant to Sections 1.02(f) and (g) and 4.05.   

          Section 7.05  No Assignment.  Neither party hereto may
assign any of its rights or obligations hereunder to any other
person, without the prior written consent of the other party
hereto.

          Section 7.06  Notices.  All notices or other
communications hereunder shall be in writing and shall be deemed
given if delivered personally, mailed by prepaid registered or
certified mail (return receipt requested), or sent by telecopy,
addressed as follows:
  <PAGE 49>
               (a)  If to PSB, to:
                    PSB Bancorp, Inc.
                    1835 Market Street
                    Eleven Penn Center
                    Suite 2601
                    Philadelphia, Pennsylvania  19103

                    Attention:  Anthony DiSandro, President and
                                 Chief Executive Officer

                    Telecopy No.:  (610) 979-7979

                    with a copy to:

                    Stevens & Lee
                    One Glenhardie Corporate Center
                    Suite 202
                    1275 Drummers Lane
                    P.O. Box 236
                    Wayne, Pennsylvania 19087-0236

                    Attention:  Jeffrey P. Waldron, Esquire

                    Telecopy No.:  (610) 687-1384

               (b)  If to FBKP, to:

                    First Bank of Philadelphia
                    1424 Walnut Street
                    Philadelphia, Pennsylvania 19102

                    Attention:  Carl A. Lingle,
                                President and Chief
                                Executive Officer

                    Telecopy No.:  (215) 790-5209
  <PAGE 50>
                    with copies to:

                    Hal Jonathan Shaffer, Esquire
                    Shaffer, Bonfigleo, Scerni & D'Elia, L.L.C.
                    Pleasant Valley Building
                    921 Pleasant Valley Avenue, 2nd Floor
                    Mt. Laurel, New Jersey  08054

                    Telecopy No.:  (609) 866-1188

                              and

                    Pepper Hamilton, L.L.P.
                    3000 Two Logan Square
                    Eighteenth and Arch Streets
                    Philadelphia, Pennsylvania 19103

                    Attention:  L. Garrett Dutton, Jr., Esquire

                    Telecopy No.:  (215) 981-4750

          Section 7.07  Captions.  The captions contained in this
Agreement are for reference purposes only and are not part of
this Agreement.

          Section 7.08  Counterparts.  This Agreement may be
executed in any number of counterparts, and each such counterpart
shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.

          Section 7.09  Severability.  If any provision of this
Agreement or the application thereof to any person or
circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent
permitted by law.

          Section 7.10  Governing Law.  This Agreement shall be
governed by and construed in accordance with the domestic 
<PAGE 51> internal law (including the law of conflicts of law) of
the Commonwealth of Pennsylvania.

          IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.

                              PSB BANCORP, INC.

                              By                                 
                                   Anthony DiSandro,
                                        President and Chief 
                                        Executive Officer


                              PENNSYLVANIA SAVINGS BANK

                              By                                 
                                        Anthony DiSandro,
                                        President and Chief
                                        Executive Officer


                              FIRST BANK OF PHILADELPHIA

                              By                                 
                                        Carl A. Lingle,
                                        President and Chief
                                        Executive Officer 
                                        <PAGE 52>
<PAGE>
                                                  Exhibit 1

               ARTICLES AND PLAN OF REORGANIZATION


          THESE ARTICLES AND Plan of Reorganization ("Plan of
Reorganization") dated ____________, 1999, is by and between
PENNSYLVANIA SAVINGS BANK, a Pennsylvania-chartered savings bank
(the "Bank"), with offices at 1835 Market Street, Eleven Penn
Center, Philadelphia, Pennsylvania 19103, and FIRST BANK OF
PHILADELPHIA, a Pennsylvania-chartered bank ("FBKP"), with
offices at 1424 Walnut Street, Philadelphia, Pennsylvania 19102.

                           BACKGROUND

          1.   The Bank is a Pennsylvania bank and a wholly-owned
subsidiary of PSB Bancorp, Inc., a Pennsylvania corporation
("PSB").  The authorized capital stock of the Bank consists of
3,000 shares of common stock, par value $1.00 per share ("Bank
Common Stock"), of which at the date hereof 3,000 shares are
issued and outstanding, and 3,000 shares of preferred stock, none
of which are outstanding.

          2.   FBKP is a Pennsylvania bank.  The authorized
capital stock of FBKP consists of 3,500,000 shares of common
stock, par value $.25 per share ("FBKP Common Stock"), of which
at the date hereof 1,676,875 shares are issued and outstanding,
and 500,000 shares of preferred stock $2.00 par value, none of
which are outstanding.

          3.   The respective Boards of Directors of PSB, the
Bank and FBKP deem the merger of the Bank with and into FBKP,
pursuant to the terms and conditions set forth or referred to
herein, to be desirable and in the best interests of the
respective corporations and their respective shareholders.

          4.   The respective Boards of Directors of PSB, the
Bank and FBKP have adopted resolutions approving this Plan of
Merger and approving an Agreement dated March __, 1999 (the
"Agreement") between the Bank, PSB, and FBKP, pursuant to which
this Plan of Reorganization is being executed by the Bank and
FBKP.

                            AGREEMENT

          In consideration of the premises and of the mutual
covenants and agreements herein contained, and in accordance with
the applicable laws and regulations of the Commonwealth of 
<PAGE 53> Pennsylvania, the Bank and FBKP, intending to be
legally bound hereby, agree: 

                            ARTICLE I
                             MERGER 

          Subject to the terms and conditions of this Plan of
Reorganization and in accordance with the applicable laws and
regulations of the Commonwealth of Pennsylvania, on the Effective
Date (as that term is defined in Article V hereof):  the Bank
shall merge with and into FBKP; the separate existence of the
Bank shall cease; and FBKP shall be the surviving corporation
(such transaction referred to herein as the "Reorganization" and
FBKP, as the surviving corporation in the Reoriganization,
referred to herein as the "Surviving Bank").  The name of the
Surviving Bank shall be "________" and it shall have its home
office at 1835 Market Street, Eleven Penn Center, Philadelphia,
Pennsylvania 19103.

                           ARTICLE II
              ARTICLES OF INCORPORATION AND BYLAWS

          On and after the Effective Date, the Articles of
Incorporation and Bylaws of FBKP, as in effect immediately prior
to the Effective Date, shall automatically be and remain the
Articles of Incorporation and Bylaws of the Surviving Bank, until
altered, amended or repealed.

                           ARTICLE III
                 BOARD OF DIRECTORS AND OFFICERS

          3.1  Board of Directors.  On and after the Effective
Date, the directors of the Surviving Bank shall consist of the
directors of the Bank duly elected and holding office immediately
prior to the Effective Date.  Directors shall be elected annually
and shall hold office until their successors are elected and
qualified.  The names and residence addresses of the directors
are:

     Name                          Residence Address

P. Charles DeRita
Sylvia M. DiBona
Anthony DiSandro
James W. Eastwood
Thomas J. Finley, Jr.
Jane Scaccetti Fumo
Vincent J. Fumo
James F. Kenney  <PAGE 54>
S. Michael Palermo
Rosanne Pauciello
Alfonso Tumini

          3.2  Officers.  On and after the Effective Date, the
officers of the Surviving Bank shall consist of the officers of
the Bank duly elected and holding office immediately prior to the
Effective Date and such other officers as the Board of Directors
of FBKP may elect.

                           ARTICLE IV
                      CONVERSION OF SHARES

          4.1  Stock of the Bank.  Each share of FBKP Common
Stock issued and outstanding immediately prior to the Effective
Date shall be automatically converted into ________ shares of
common stock of PSB pursuant to the provisions of Section 1.02(e)
of the Agreement.

          4.2  Stock of FBKP.  Each share of the Bank Common
Stock issued and outstanding immediately prior to the Effective
Date, shall, on the Effective Date, be cancelled, and no cash,
stock or other property shall be delivered in exchange therefor.

          4.3  FBKP Stock Options.  Each option to acquire FBKP
Common Stock issued and outstanding immediately prior to the
Effective Date shall be automatically converted into an option to
acquire PSB common stock pursuant to the provisions of
Section 1.02(f) of the Agreement.

                            ARTICLE V
                  EFFECTIVE DATE OF THE MERGER

          The Merger shall be effective on the date on which
articles of merger executed by the Bank and FBKP are filed with
the Secretary of State of the Commonwealth of Pennsylvania,
unless a later date is specified in such articles (the "Effective
Date").

                           ARTICLE VI
                      EFFECT OF THE MERGER

          6.1  Separate Existence.  On the Effective Date:  the
separate existence of the Bank shall cease; and all of the
property (real, personal and mixed), rights, powers, duties and
obligations of the Bank shall be taken and deemed to be
transferred to and vested in the Surviving Bank, without further
act or deed, as provided by applicable laws and regulations.
  <PAGE 55>
          
                           ARTICLE VII
                            APPROVALS

          The approval of this Plan of Reorganization has been
received by (i) PSB, as sole shareholder of the Bank, (ii) a vote
of ______ issued and outstanding shares of FBKP which constitutes
more than 2/3 of the issued and outstanding shares of FBKP Common
Stock (iii) the Board of Governors of the Federal Reserve System,
and (iv) the Pennsylvania Department of Banking.  

                          ARTICLE VIII
                            AMENDMENT

          Subject to applicable law, this Plan of Reorganization
may be amended, by action of the respective Boards of Directors
of the parties hereto, at any time prior to consummation of the
Merger, but only by an instrument in writing signed by duly
authorized officers on behalf of the parties hereto.

                           ARTICLE IX
                          MISCELLANEOUS

          10.1 Extensions; Waivers.  Any of the terms and
conditions of this Plan of Reorganization may be waived at any
time by whichever of the parties hereto is, or the shareholders
of which are, entitled to the benefit thereof by a written
instrument signed by a duly authorized officer of such party.

          10.2 Notices.  Any notice or other communication
required or permitted under this Plan of Reorganization shall be
given, and shall be effective, in accordance with the provisions
of Section 7.06 of the Agreement.

          10.3 Captions.  The headings of the several Articles
and Sections herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning
or interpretation of, this Plan of Reorganization.

          10.4 Counterparts.  For the convenience of the parties
hereto, this Plan of Reorganization may be executed in several
counterparts, each of which shall be deemed the original, but all
of which together shall constitute one and the same instrument.
  <PAGE 56>
          10.5 Governing Law.  This Plan of Reorganization shall
be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.

          IN WITNESS WHEREOF, the Bank and FBKP have caused this
Plan of Reorganization to be executed by their duly authorized
officers and their corporate seals to be hereunto affixed on the
date first written above.

                              PENNSYLVANIA SAVINGS BANK

                              By________________________________
                                   Anthony DiSandro,
                                   President and Chief Executive
                                   Officer

                              Attest:____________________________


                              FIRST BANK OF PHILADELPHIA

                              By_________________________________
                                   Carl A. Lingle,
                                   President and Chief Executive
                                   Officer

                              Attest:____________________________ 
PAGE 57
<PAGE>
                                                  EXHIBIT 2


                         March 19, 1999




PSB Bancorp, Inc.
1835 Market Street
Eleven Penn Center
Philadelphia, Pennsylvania 19103

Ladies and Gentlemen:

     PSB Bancorp, Inc. ("PSB") and First Bank of Philadelphia
("FBKP") desire to enter into an agreement dated March 19, 1999
("Agreement"), pursuant to which, subject to the terms and
conditions set forth therein, (a) Pennsylvania Savings Bank, a
wholly owned subsidiary of PSB, will merge with and into FBKP
with FBKP surviving the merger, and (b) shareholders of FBKP will
receive  common stock of PSB outstanding on the closing date (the
foregoing, collectively, referred to herein as the "Merger").

     PSB has required, as a condition to its execution and
delivery to FBKP of the Agreement, that the undersigned execute
and deliver to PSB this Letter Agreement.

     In consideration of the foregoing, each of the undersigned
hereby irrevocably:

          (a)  Agrees to be present (in person or by proxy) at
all meetings of shareholders of FBKP called to vote for approval
of the Agreement and the Merger so that all shares of common
stock of FBKP then owned by the undersigned will be counted for
the purpose of determining the presence of a quorum at such
meetings and to vote or cause to be voted all such shares in
favor of approval and adoption of the Agreement and the
transactions contemplated thereby (including any amendments or
modifications of the terms thereof approved by the Board of
Directors of FBKP);

          (b)  Agrees not to vote or execute any written consent
to rescind or amend in any manner any prior vote or written
consent, as a shareholder of FBKP, to approve or adopt the
Agreement;

          (c)  Agrees to use reasonable best efforts to cause the
Merger to be consummated;  <PAGE 58>

          (d)  Agrees not to offer, sell, transfer or otherwise
dispose of any shares of common stock of PSB received in the
Merger, except (i) at such time as a registration statement under
the Securities Act of 1933, as amended ("Securities Act")
covering sales of such PSB common stock is effective and a
prospectus is made available under the Securities Act,
(ii) within the limits, and in accordance with the applicable
provisions of, Rule 145(d) under the Securities Act, or (iii) in
a transaction which, in the opinion of counsel satisfactory to
PSB or as described in a "no-action" or interpretive letter from
the staff of the Securities and Exchange Commission ("SEC"), is
not required to be registered under the Securities Act; and
acknowledges and agrees that PSB is under no obligation to
register the sale, transfer or other disposition of PSB common
stock by the undersigned or on behalf of the undersigned, or to
take any other action necessary to make an exemption from
registration available;

          (e)  Notwithstanding the foregoing, agrees not to sell,
or in any other way reduce the risk of the undersigned relative
to, any shares of common stock of FBKP or of common stock of PSB,
during the period commencing thirty days prior to the effective
date of the Merger and ending on the date on which financial
results covering at least thirty days of post-Merger combined
operations of PSB and FBKP have been published within the meaning
of Section 201.01 of the SEC's Codification of Financial
Reporting Policies; 

          (f)  Agrees that neither FBKP nor PSB shall be bound by
any attempted sale of any shares of FBKP common stock or PSB
common stock, respectively, and FBKP's and PSB's transfer agents
shall be given appropriate stop transfer orders and shall not be
required to register any such attempted sale, unless the sale has
been effected in compliance with the terms of this Letter
Agreement; and further agrees that the certificate representing
shares of PSB common stock owned by the undersigned may be
endorsed with a restrictive legend consistent with the terms of
this Letter Agreement;

          (g)  Acknowledges and agrees that the provisions of
subparagraphs (d), (e) and (f) hereof also apply to shares of PSB
common stock and FBKP common stock owned by (i) his or her
spouse, (ii) any of his or her relatives or relatives of his or
her spouse occupying his or her home, (iii) any trust or estate
in which he or she, his or her spouse, or any such relative owns
at least a 10% beneficial interest or of which any of them serves
as trustee, executor or in any similar capacity, and (iv) any
corporation or other organization in which the undersigned, any
affiliate of the undersigned, his or her spouse, or any such 
<PAGE 59> relative owns at least 10% of any class of equity
securities or of the equity interest;

          (h)  Represents that the undersigned has no plan or
intention to sell, exchange, or otherwise dispose of any shares
of common stock of PSB prior to expiration of the time period
referred to in subparagraph (e) hereof; and

          (i)  Represents that the undersigned has the capacity
to enter into this Letter Agreement and that it is a valid and
binding obligation enforceable against the undersigned in
accordance with its terms, subject to bankruptcy, insolvency and
other laws affecting creditors' rights and general equitable
principles.
                    _________________________

     It is understood and agreed that the provisions of this
Letter Agreement relate solely to the capacity of the undersigned
as a shareholder or other beneficial owner of shares of FBKP
Common Stock and is not in any way intended to affect the
exercise by the undersigned of the undersigned's responsibilities
as a director or officer of FBKP.  It is further understood and
agreed that this Letter Agreement is not in any way intended to
affect the exercise by the undersigned of any fiduciary
responsibility which the undersigned may have in respect of any
shares of FBKP common stock held by the undersigned as of the
date hereof.

                    _________________________

     This Letter Agreement may be executed in two or more
counterparts, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the
same Letter Agreement.

                    _________________________

     This Letter Agreement shall terminate concurrently with any
termination of the Agreement in accordance with its terms.

                    _________________________
  <PAGE 60>
     The undersigned intend to be legally bound hereby.


                              Sincerely,

                              ___________________________________
                              Hal Jonathan Shaffer

                              ___________________________________
                              Carl A. Lingle

                              ___________________________________
                              Alvin B. Heller

                              ___________________________________
                              Thomas J. Hessert, Jr.

                              ___________________________________
                              Ronald H. Portnoy

                              ___________________________________
                              James T. Schaeffer  <PAGE 61>

<PAGE>
                                                       EXHIBIT 3


                     STOCK OPTION AGREEMENT

          THIS STOCK OPTION AGREEMENT ("Stock Option Agreement")
dated March 19, 1999, is by and between PSB BANCORP, INC., a
Pennsylvania corporation ("PSB") and FIRST BANK OF PHILADELPHIA,
INC., a Pennsylvania banking corporation ("FBKP").

                           BACKGROUND

          1.   PSB and FBKP desire to enter into an Agreement and
Plan of Reorganization, dated March 19, 1999 (the "Agreement"),
providing, among other things, for the acquisition by PSB of FBKP
(the "Merger").

          2.   As a condition to PSB to enter into the Plan, FBKP
is granting to PSB an option to purchase up to 210,625 shares of
common stock, par value $.25 per share (the "Common Stock") of
FBKP, on the terms and conditions hereinafter set forth.

                            AGREEMENT

          In consideration of the foregoing and the mutual
covenants and agreements set forth herein, PSB and FBKP,
intending to be legally bound hereby, agree:

          1.   Grant of Option.  FBKP hereby grants to PSB, on
the terms and conditions set forth herein, the option to purchase
(the "Option") up to 210,625 shares of Common Stock of FBKP (as
adjusted as set forth herein, the "Option Shares") at a price per
share (as adjusted as set forth herein, the "Option Price") equal
to $5.75.

          2.   Exercise of Option.

               (a)  Provided that (i) PSB shall not be, on the
date of exercise, in material breach of the agreements or
covenants contained in the Agreement or this Stock Option
Agreement, and (ii) no preliminary or permanent injunction or
other order against the delivery of shares covered by the Option
issued by any court of competent jurisdiction in the United
States shall be in effect on the date of exercise, upon or after
the occurrence of a Triggering Event (as such term is hereinafter
defined) PSB may exercise the Option, in whole or in part, at any
time or one or more times, from time to time; provided that the
Option shall terminate and be of no further force and effect upon
the earliest to occur of (A) the Effective Date of the Merger, as 
<PAGE 62> provided in the Agreement, (B) termination of the
Agreement in accordance with the terms thereof prior to the
occurrence of a Triggering Event or a Preliminary Triggering
Event, other than a termination of the Agreement pursuant to
Section 6.01(d), unless in the case of termination by FBKP
pursuant to Section 6.01(d), such termination is as a result of a
willful breach of the Agreement by PSB (a termination pursuant to
Section 6.01(d), except a termination by FBKP as a result of a
willful breach by PSB, being referred to herein as a "Default
Termination"), (C) 18 months after the termination of the
Agreement by PSB or FBKP pursuant to a Default Termination, and
(D) 18 months after termination of the Agreement (other than
pursuant to a Default Termination) following the occurrence of a
Triggering Event or a Preliminary Triggering Event; and provided,
further, that any purchase of shares upon exercise of the Option
shall be subject to compliance with applicable securities and
banking laws.  The rights set forth in Section 3 hereof shall
terminate when the right to exercise the Option terminates (other
than as a result of a complete exercise of the Option) as set
forth above.

               (b)  As used herein, the term "Triggering Event"
means the occurrence of any of the following events:

                    (i)  a person or group (as such terms are
     defined in the Securities Exchange Act of 1934, as amended
     (the "Exchange Act"), and the rules and regulations
     thereunder), other than PSB or an affiliate of PSB, acquires
     beneficial ownership (within the meaning of Rule 13d-3 under
     the Exchange Act) of 25% or more of the then outstanding
     shares of Common Stock (excluding any shares eligible to be
     reported on Schedule 13G of the Securities and Exchange
     Commission); or

                    (ii)  a person or group, other than PSB or an
     affiliate of PSB, enters into an agreement or letter of
     intent or memorandum of understanding with FBKP pursuant to
     which such person or group or any affiliate of such person
     or group would (i) merge or consolidate, or enter into any
     similar transaction, with FBKP, (ii) acquire all or
     substantially all of the assets or liabilities of FBKP or
     (iii) acquire beneficial ownership of securities
     representing, or the right to acquire beneficial ownership
     or to vote securities representing, 25% or more of the then
     outstanding shares of Common Stock (excluding any shares
     eligible to be reported on Schedule 13G of the Securities
     and Exchange Commission) or the then outstanding shares of
     common stock of FBKP Bank, or FBKP shall have authorized,
     recommended or publicly proposed, or publicly announced an 
     <PAGE 63> intention to authorize, recommend or propose, such
     an agreement or letter of intent or memorandum of
     understanding.

               (c)  As used herein, the term "Preliminary
Triggering Event" means the occurrence of any of the following
events:

                    (i)  a person or group (as such terms are
     defined in the Exchange Act and the rules and regulations
     thereunder), other than PSB or an affiliate of PSB, acquires
     beneficial ownership (within the meaning of Rule 13d-3 under
     the Exchange Act) of 10% or more of the then outstanding
     shares of Common Stock (excluding any shares eligible to be
     reported on Schedule 13G of the Securities and Exchange
     Commission);

                    (ii)  a person or group, other than PSB or an
     affiliate of PSB, publicly announces a bona fide proposal
     (including a written communication that is or becomes the
     subject of public disclosure) for (i) any merger,
     consolidation or acquisition of all or substantially all the
     assets or liabilities of FBKP or all or substantially all
     the assets or liabilities of FBKP Bank, or any other
     business combination involving FBKP or FBKP Bank, or (ii) a
     transaction involving the transfer of beneficial ownership
     of securities representing, or the right to acquire
     beneficial ownership or to vote securities representing, 10%
     or more of the then outstanding shares of Common Stock or
     the then outstanding shares of Common Stock of FBKP Bank
     (collectively, a "Proposal"), and thereafter, if such
     Proposal has not been Publicly Withdrawn (as such term is
     hereinafter defined) at least 30 days prior to the meeting
     of shareholders of FBKP called to vote on the Merger, FBKP's
     shareholders fail to approve the Merger by the vote required
     by applicable law at the meeting of shareholders called for
     such purpose or such meeting has been cancelled; or

                    (iii)  the Board of Directors of FBKP shall
     (A) fail to recommend the Merger, (B) recommend an
     Acquisition Transaction or (C)  have withdrawn or modified
     in a manner adverse to PSB the recommendation of the Board
     of Directors of FBKP with respect to the Agreement and
     thereafter FBKP's shareholders fail to approve the Merger by
     the vote required by law at the meeting of shareholders
     called for such purpose or such meeting is not scheduled or
     is cancelled; or 
  <PAGE 64>
                    (iv)  a person or group, other than PSB or an
     affiliate of PSB, makes a bona fide Proposal and thereafter,
     but before such Proposal has been Publicly Withdrawn, FBKP
     shall have breached any representation, warranty, covenant
     or obligation contained in the Agreement and such breach
     would entitle PSB to terminate the Agreement under Section
     6.01(d) thereof (without regard to the cure period provided
     for therein unless such cure is promptly effected without
     jeopardizing consummation of the Merger pursuant to the
     Agreement).

If more than one of the transactions giving rise to a Triggering
Event or a Preliminary Triggering Event under this Section 2 is
undertaken or effected, then all such transactions shall give
rise only to one Triggering Event or Preliminary Triggering
Event, as applicable, which Triggering Event or Preliminary
Triggering Event shall be deemed continuing for all purposes
hereunder until all such transactions are abandoned.

          "Publicly Withdrawn" for purposes of this Section 2
shall mean an unconditional bona fide withdrawal of the Proposal
coupled with a public announcement of no further interest in
pursuing such Proposal or in acquiring any controlling influence
over FBKP or in soliciting or inducing any other person (other
than PSB or an affiliate of PSB) to do so.

          Notwithstanding the foregoing, the obligation of FBKP
to issue Option Shares upon exercise of the Option shall be
deferred (but shall not terminate):  (i) until the receipt of all
required governmental or regulatory approvals or consents
necessary for FBKP to issue the Option Shares or PSB to exercise
the Option, or until the expiration or termination of any waiting
period required by law, or (ii) so long as any injunction or
other order, decree or ruling issued by any federal or state
court of competent jurisdiction is in effect which prohibits the
sale or delivery of the Option Shares, and, in each case,
notwithstanding any provision to the contrary set forth herein,
the Option shall not expire or otherwise terminate.

          FBKP shall notify PSB promptly in writing of the
occurrence of any Triggering Event known to it, it being
understood that the giving of such notice by FBKP shall not be a
condition to the right of PSB to exercise the Option.  FBKP will
not take any action which would have the effect of preventing or
disabling FBKP from delivering the Option Shares to PSB upon
exercise of the Option or otherwise performing its obligations
under this Stock Option Agreement, except to the extent required
by applicable securities and banking laws and regulations.  In
the event PSB wishes to exercise the Option, PSB shall send a 
<PAGE 65> written notice to FBKP (the date of which is
hereinafter referred to as the "Notice Date") specifying the
total number of Option Shares it wishes to purchase and a place
and date between two and  ten business days inclusive from the
Notice Date for the closing of such a purchase (a "Closing");
provided, however, that a Closing shall not occur prior to two
days after the later of receipt of any necessary regulatory
approvals or the expiration of any legally required notice or
waiting period, if any.

          3.   Repurchase of Option by FBKP.  

               (a)  Subject to the last sentence of Section 2(a),
at the request of PSB at any time commencing upon the first
occurrence of a Repurchase Event (as defined in Section 3(d)) and
ending 18 months immediately thereafter, FBKP shall repurchase
from PSB (x) the Option and (y) all shares of Common Stock
purchased by PSB pursuant hereto with respect to which PSB then
has beneficial ownership.  The date on which PSB exercises its
rights under this Section 3 is referred to as the "Request Date." 
Such repurchase shall be at an aggregate price (the "Section 3
Repurchase Consideration") equal to the sum of:

                    (i)  the aggregate Purchase Price paid by PSB
     for any shares of Common Stock acquired pursuant to the
     Option with respect to which PSB then has beneficial
     ownership;

                    (ii)  the excess, if any, of (x) the
     Applicable Price (as defined below) for each share of Common
     Stock over (y) the Option Price (subject to adjustment
     pursuant to Section 6), multiplied by the number of shares
     of Common Stock with respect to which the Option has not
     been exercised; and

                    (iii)  the excess, if any, of the Applicable
     Price over the Option Price (subject to adjustment pursuant
     to Section 6) paid (or, in the case of Option Shares with
     respect to which the Option has been exercised, but the
     Closing has not occurred, payable) by PSB for each share of
     Common Stock with respect to which the Option has been
     exercised and with respect to which PSB then has beneficial
     ownership, multiplied by the number of such shares.

               (b)  If PSB exercises it rights under this
Section 3, FBKP shall, within ten (10) business days after the
Request Date, pay the Section 3 Repurchase Consideration to PSB
in immediately available funds, and contemporaneously with such
payment, PSB shall surrender to FBKP the Option and the 
<PAGE 66> certificate evidencing the shares of Common Stock
purchased thereunder with respect to which PSB then has
beneficial ownership, and PSB shall warrant that it has sole
record and beneficial ownership of such shares, and that the same
are then free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever.  Notwithstanding the
foregoing, to the extent that prior notification to or approval
of any banking agency or department of any federal or state
government, or the respective staffs thereof (the "Regulatory
Authority"), is required in connection with the payment of all or
any portion of the Section 3 Repurchase Consideration, PSB shall
have the ongoing option to revoke its request for repurchase
pursuant to Section 3, in whole or in part, or to require that
FBKP deliver from time to time that portion of the Section 3
Repurchase Consideration that it is not then so prohibited from
paying and promptly file the required notice or application for
approval and expeditiously process the same (and each party shall
cooperate with the other in the filing of any such notice or
application and the obtaining of any such approval), in which
case the ten (10) business day period of time that would
otherwise run pursuant to the preceding sentence for the payment
of the portion of the Section 3 Repurchase Consideration shall
run instead from the date on which, as the case may be, any
required notification period has expired or been terminated or
such approval has been obtained and, in either event, any
requisite waiting period shall have passed.  If any Regulatory
Authority disapproves of any part of FBKP's proposed repurchase
pursuant to this Section 3, FBKP shall promptly give notice of
such fact to PSB.  If any Regulatory Authority prohibits the
repurchase pursuant to this Section 3, FBKP shall promptly give
notice of such fact to PSB.  If any Regulatory Authority
prohibits the repurchase in part but not in whole, then PSB shall
have the right (i) to revoke the repurchase request or (ii) to
the extent permitted by such Regulatory Authority, determine
whether the repurchase should apply to the Option and/or Option
Shares and to what extent to each, and PSB shall thereupon have
the right to exercise the Option as to the number of Option
Shares for which the Option was exercisable at the Request Date
less the sum of the number of shares covered by the Option in
respect of which payment has been made pursuant to
Section 3(a)(ii) and the number of shares covered by the portion
of the Option (if any) that has been repurchased.  PSB shall
notify FBKP of its determination under the preceding sentence
within five (5) business days of receipt of notice of disapproval
of the repurchase.

               (c)  For purposes of this Agreement, the
"Applicable Price" means the highest of (i) the highest price per
share of Common Stock paid for any such share by the person or 
<PAGE 67> groups described in Section 3(d)(i), (ii) the price per
share of Common Stock received by a holder of Common Stock in
connection with any merger or other business combination
transaction described in Section 3(d)(ii), (iii) or (iv), or
(iii) the highest closing sales price per share of Common Stock
quoted on the Nasdaq Stock Market during the 40 business days
preceding the Request Date; provided, however, that in the event
of a sale of less than all of FBKP's assets, the Applicable Price
shall be the sum of the price paid in such sale for such assets
and the current market value of the remaining assets of FBKP as
determined by a nationally-recognized investment banking firm
selected by PSB, divided by the number of shares of Common Stock
outstanding at the time of such sale.  If the consideration to be
offered, paid or received pursuant to either of the foregoing
clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an
independent nationally-recognized investment banking firm
selected by PSB and reasonably acceptable to FBKP, which
determination shall be conclusive for all purposes of this
Agreement.

               (d)  As used herein, a Repurchase Event shall
occur if (i) any person or group (as such terms are defined in
the Exchange Act and the rules and regulations thereunder), other
than PSB or an affiliate of PSB, acquires beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of, or
the right to acquire beneficial ownership of, 25% or more of the
then-outstanding shares of Common Stock, (ii) FBKP shall have
merged or consolidated with any person, other than PSB or an
affiliate of PSB, and shall not be the surviving or continuing
corporation of such merger or consolidation, (iii) any person,
other than PSB or an affiliate of PSB, shall have merged into
FBKP and FBKP shall be the surviving corporation, but, in
connection with such merger, the then-outstanding shares of
Common Stock have been changed into or exchanged for stock or
other securities of FBKP or any other person or cash or any other
property or the outstanding shares of Common Stock immediately
prior to such merger shall after such merger represent less than
50% of the outstanding shares and share equivalents of the
surviving corporation or (iv) FBKP shall have sold or otherwise
transferred more than 25% of its consolidated assets to any
person, other than PSB or an affiliate of PSB.

          4.   Payment and Delivery of Certificates.  At any
Closing hereunder, (a) PSB will make payment to FBKP of the
aggregate price for the Option Shares so purchased by wire
transfer of immediately available funds to an account designated
by FBKP, (b) FBKP will deliver to PSB a stock certificate or
certificates representing the number of Option Shares so 
<PAGE 68> purchased, registered in the name of PSB or its
designee, in such denominations as were specified by PSB in its
notice of exercise, and (c) PSB will pay any transfer or other
taxes required by reason of the issuance of the Option Shares so
purchased.

          A legend will be placed on each stock certificate
evidencing Option Shares issued pursuant to this Stock Option
Agreement, which legend will read substantially as follows:

               "The shares of stock evidenced by this
     certificate have not been the subject of a registration
     statement filed under the Securities Act of 1933, as
     amended (the "Act"), and declared effective by the
     Securities and Exchange Commission.  These shares may
     not be sold, transferred or otherwise disposed of prior
     to such time unless FBKP Bancorp, Inc. receives an
     opinion of counsel acceptable to it stating that an
     exemption from the registration provisions of the Act
     is available for such transfer."

          5.   Adjustment Upon Changes in Capitalization.  In the
event of any change in the Common Stock by reason of stock
dividends, split-ups, recapitalizations, combinations,
conversions, divisions, exchanges of shares or the like, then the
number and kind of Option Shares and the Option Price shall be
appropriately adjusted.

          6.   Filings and Consents.  Each of PSB and FBKP will
use its reasonable best efforts to make all filings with, and to
obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions
contemplated by this Stock Option Agreement.  Within 10 days from
the date hereof, PSB shall file a report of beneficial ownership
on Form 13D with the Securities and Exchange Commission under the
Exchange Act which discloses the rights of PSB hereunder.

          7.   Representations and Warranties of FBKP.  FBKP
hereby represents and warrants to PSB as follows:

               (a)  Due Authorization.  FBKP has full corporate
power and authority to execute, deliver and perform this Stock
Option Agreement and all corporate action necessary for
execution, delivery and performance of this Stock Option
Agreement has been duly taken by FBKP.  This Stock Option 
Agreement constitutes a legal, valid and binding obligation of
FBKP, enforceable against FBKP in accordance with its terms
(except as may be limited by applicable bankruptcy, insolvency,
Reorganization, moratorium, fraudulent transfer and similar laws 
<PAGE 69> of general applicability relating to or affecting
creditors' rights or by general equity principles).

               (b)  Authorized Shares.  FBKP has taken all
necessary corporate action to authorize and reserve for issuance
all shares of Common Stock that may be issued pursuant to any
exercise of the Option.

          8.   Representations and Warranties of PSB.  PSB hereby
represents and warrants to FBKP that PSB has full corporate power
and authority to execute, deliver and perform this Stock Option
Agreement and all corporate action necessary for execution,
delivery and performance of this Stock Option Agreement has been
duly taken by PSB.  This Stock Option  Agreement constitutes a
legal, valid and binding obligation of PSB, enforceable against
PSB in accordance with its terms (except as may be limited by
applicable bankruptcy, insolvency, Reorganization, moratorium,
fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity
principles).

          9.   Specific Performance.  The parties hereto
acknowledge that damages would be an inadequate remedy for a
breach of this Stock Option Agreement and that the obligations of
the parties hereto shall be specifically enforceable.

          10.  Entire Agreement.  This Stock Option Agreement and
the Agreement constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, among
the parties or any of them with respect to the subject matter
hereof.

          11.  Assignment or Transfer.  PSB may not sell, assign
or otherwise transfer its rights and obligations hereunder, in
whole or in part, to any person or group of persons other than to
a subsidiary of PSB.  PSB represents that it is acquiring the
Option for PSB's own account and not with a view to, or for sale
in connection with, any distribution of the Option or the Option
Shares.  PSB is aware that neither the Option nor the Option
Shares is the subject of a registration statement filed with, and
declared effective by, the Securities and Exchange Commission
pursuant to Section 5 of the Securities Act, but instead each is
being offered in reliance upon the exemption from the
registration requirement provided by Section 4(2) thereof and the
representations and warranties made by PSB in connection
therewith.
  <PAGE 70>
          12.  Amendment of Stock Option Agreement.  By mutual
consent of the parties hereto, this Stock Option Agreement may be
amended in writing at any time, for the purpose of facilitating
performance hereunder or to comply with any applicable regulation
of any governmental authority or any applicable order of any
court or for any other purpose.

          13.  Validity.  The invalidity or unenforceability of
any provision of this Stock Option Agreement shall not affect the
validity or enforceability of any other provisions of this Stock
Option Agreement, which shall remain in full force and effect.

          14.  Notices.  All notices, requests, consents and
other communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given when
delivered personally, by telegram or telecopy, or by registered
or certified mail (postage prepaid, return receipt requested) to
the respective parties as follows:

               (i)  If to PSB, to:

                    PSB Bancorp, Inc.
                    1835 Market Street
                    Eleven Penn Center - Suite 2601
                    Philadelphia, Pennsylvania  19103

                    Attention:  Anthony DiSandro, President
                                and Chief Executive Officer

                    Telecopy No.:  (215) 979-7979

                    with a copy to:

                    Stevens & Lee
                    One Glenhardie Corporate Center
                    1275 Drummers Lane
                    P.O. Box 236
                    Wayne, Pennsylvania  19087-0236

                    Attention:  Jeffrey P. Waldron, Esquire

                    Telecopy No.:  (610) 687-1384

               (ii) If to FBKP, to:

                    First Bank of Philadelphia
                    1424 Walnut Street 
                    Philadelphia, Pennsylvania  19102
  <PAGE 71>
                    Attention:  Carl A. Lingle,
                                President and Chief Executive
                                Officer

                    Telecopy No.:  (215) 790-5209

                    with copies to:

                    Pepper Hamilton, L.L.P.
                    3000 Two Logan Square
                    Eighteenth and Arch Streets
                    Philadelphia, Pennsylvania  19103

                    Attention:  L. Garrett Dutton, Jr., Esquire
                    
                    Telecopy No.:  (215) 981-4750

or to such other address as the person to whom notice is to be
given may have previously furnished to the others in writing in
the manner set forth above (provided that notice of any change of
address shall be effective only upon receipt thereof).

          15.  Governing Law.  This Stock Option Agreement shall
be governed by and construed in accordance with the domestic
internal law (but not the law of conflicts of law) of the
Commonwealth of Pennsylvania.

          16.  Captions.  The captions in this Stock Option
Agreement are inserted for convenience and reference purposes,
and shall not limit or otherwise affect any of the terms or
provisions hereof.

          17.  Waivers and Extensions.  The parties hereto may,
by mutual consent, extend the time for performance of any of the
obligations or acts of either party hereto.  Each party may waive
(i) compliance with any of the covenants of the other party
contained in this Stock Option Agreement and/or (ii) the other
party's performance of any of its obligations set forth in this
Stock Option Agreement.

          18.  Parties in Interest.  This Stock Option Agreement
shall be binding upon and inure solely to the benefit of each
party hereto, and, nothing in this Stock Option Agreement,
express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by
reason of this Stock Option Agreement.

          19.  Counterparts.  This Stock Option Agreement may be
executed in two or more counterparts, each of which shall be 
<PAGE 72> deemed to be an original, but all of which shall
constitute one and the same agreement.

          20.  Expenses.  Except as otherwise provided herein,
all costs and expenses incurred by the parties hereto in
connection with the transactions contemplated by this Stock
Option Agreement or the Option shall be paid by the party
incurring such cost or expense.

          21.  Defined Terms.  Capitalized terms which are used
but not defined herein shall have the meanings ascribed to such
terms in the Agreement. 

          IN WITNESS WHEREOF, each of the parties hereto,
pursuant to resolutions adopted by its Board of Directors, has
caused this Stock Option Agreement to be executed by its duly
authorized officer and has caused its corporate seal to be
affixed hereunto and to be duly attested, all as of the day and
year first above written.

                              PSB BANCORP, INC.

                              By________________________________
                                     Anthony DiSandro,
                                     President and Chief
                                     Executive Officer 


                              FIRST BANK OF PHILADELPHIA

                              By_________________________________
                                     Carl A. Lingle,
                                     President and Chief Executive
                                     Officer  <PAGE 73>


<PAGE>
                                                  EXHIBIT 4

                FORM OF OPINION OF COUNSEL TO PSB


          FBKP shall have received from counsel to PSB, an
opinion, dated as of the Closing Date, substantially to the
effect that, subject to normal exceptions and qualifications:

          (a)  PSB and the Bank have full corporate power to
carry out the transactions contemplated in the Agreement.  The
execution and delivery of the Agreement and the consummation of
the transactions contemplated thereunder have been duly and
validly authorized by all necessary corporate action on the part
of PSB and the Bank, and constitutes valid and legally binding
obligations of PSB and the Bank, respectively, except as may be
limited by (i) bankruptcy, insolvency, Reorganization,
moratorium, receivership, conservatorship, and other laws now or
hereafter in effect relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of federal
savings institutions or their holding companies, (ii) general
equitable principles, and (iii) laws relating to the safety and
soundness of insured depository institutions, and except that no
opinion need be rendered as to the effect or availability of
equitable remedies or injunctive relief (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).  Subject to satisfaction of the conditions set forth in the
Agreement, neither the transactions contemplated in the
Agreement, nor compliance by PSB and the Bank with any of the
provisions thereof, will (i) conflict with or result in a breach
or default under (A) the articles of incorporation or bylaws of
PSB or of the Bank, or, (B) to the knowledge of such counsel, any
note, bond, mortgage, indenture, license, agreement or other
material instrument or obligation to which PSB or the Bank is a
party; or (ii) based on certificates of officers and without
independent verification, to the knowledge of such counsel,
result in the creation or imposition of any material lien or
encumbrance upon the property of PSB or the Bank, except such
material lien, instrument or obligation that has been disclosed
pursuant to the Agreement; or (iii) violate in any material
respect any order, writ, injunction or decree known to such
counsel, or any federal or Pennsylvania statute, rule or
regulation applicable to PSB or the Bank.

          (b)  The Bank is a validly existing savings bank
organized under the laws of the Commonwealth of Pennsylvania. 
The deposits of the Bank are insured to the maximum extent
provided by law by the Federal Deposit Insurance Corporation.
  <PAGE 74>
          (c)  There is, to the knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or
investigation pending or threatened to which PSB or the Bank is a
party which would, if determined adversely to PSB or the Bank,
have a material adverse effect on the financial condition or
results of operation of PSB and the Bank taken as a whole, or
which presents a claim to restrain or prohibit the transactions
contemplated by the Agreement.

          (d)  No consent, approval, authorization or order of
any federal or state court or federal or state governmental
agency or body, or to such counsel's knowledge is required for
the consummation by PSB or the Bank of the transactions
contemplated by the Agreement, except for such consents,
approvals, authorizations or orders as have been obtained or
which would not have a Material Adverse Effect upon PSB upon
consummation of the Merger.

          (e)  Upon the filing and effectiveness of the Articles
of Merger with the PDS in accordance with the Agreement, the
merger of FBKP and of the Bank contemplated by the Agreement,
respectively, will have been effected in compliance with all
applicable federal and Pennsylvania laws and regulations in all
material respects.

          (f)  The shares of PSB Common Stock to be issued in
connection with the merger have been duly authorized and will,
when issued in accordance with the terms of the Agreement, be
validly issued, fully paid and nonassessable, free and clear of
any mortgage, pledge, lien, encumbrance or claim (legal or
equitable).

          (g)  In addition to the foregoing opinions, counsel
shall state that the sole basis of such counsel's participation
in conferences with officers and employees of PSB in connection
with the Proxy Statement/Prospectus, and without other
independent investigation or inquiry, such counsel has no reason
to believe that the Proxy Statement/Prospectus, including any
amendments or supplements thereto (except for the financial
information, financial statements, notes to financial statements,
financial schedules and other financial or statistical data and
stock valuation information contained or incorporated by
reference therein and except for any information supplied by FBKP
for inclusion therein, as to which counsel need express no
belief), as of the date of mailing thereof, contained any untrue
statement of a material fact with respect to PSB or omitted to
state any material fact with respect to PSB necessary to make any
statement therein with respect to PSB, in light of the
circumstances under which it was made, not misleading.  Counsel 
<PAGE 75> may state in connection with the foregoing, that such
counsel has not independently verified and does not assume the
responsibility for the accuracy, completeness or fairness of any
information or statements  contained in the Proxy
Statement/Prospectus, except with respect to identified
statements of law or regulations or legal conclusions relating to
PSB or the transactions contemplated in the Agreement and that it
is relying as to materiality as to factual matters on
certificates of officers and representatives of the parties to
the Agreement and other factual representations by FBKP.  

          such counsel's opinion shall be limited to matters
governed by federal banking and securities laws and by the
Banking Code and BCL.
  PAGE 76
<PAGE>
                                                       EXHIBIT 5

                    PENNSYLVANIA SAVINGS BANK
                   FIRST BANK OF PHILADELPHIA

                          TAX OPINIONS


          1.   The Merger (a) will constitute a "Reorganization"
within the meaning of IRC Section 368(a)(1)(A), and (b) will not
be disqualified by reason of the fact that stock of PSB is issued
in the transaction, as permitted by IRC Section 368(a)(2)(E).

          2.   PSB, Bank and FBKP will each be "a party to a
Reorganization" within the meaning of IRC Section 368(b).

          3.   No gain or loss will be recognized by PSB on the
constructive receipt of FBKP Common Stock in exchange for Bank
Common Stock surrendered in the Merger.

          4.   The basis of the FBKP Common Stock to be received
by PSB in the Merger will be determined pursuant to Treasury
regulation Section 1.358-6(c)(2).

          5.   No gain or loss will be recognized by the Bank or
FBKP by reason of the Merger and upon (a) the transfer of the
assets of the Bank to FBKP, and (b) the assumption by FBKP of the
liabilities of the Bank.

          6.   The basis of the assets of the Bank in the hands
of FBKP will be the same as the basis of such assets in the hands
of the Bank immediately prior to the Merger.

          7.   The holding period of the assets of the Bank in
the hands of FBKP will include the period during which such
assets were held by the Bank.

          8.   No gain or loss will be recognized by the
shareholders of FBKP on the receipt of PSB Common Stock
(including fractional share interests) solely in exchange for
their shares of FBKP Common Stock.

          9.   The basis of the PSB Common Stock (including
fractional share interests) to be received by the FBKP
shareholders in the Merger will be the same as the basis of the
FBKP Common Stock surrendered in exchange therefor.

          10  The holding period of the PSB Common Stock
(including fractional share interests) to be received by the FBKP 
<PAGE 77> shareholders in the Merger will include the period
during which the FBKP shareholders held their FBKP Common Stock,
provided the shares of FBKP Common Stock are held as a capital
asset on the [Effective Date] of the Merger.

          11.  The payment of cash in lieu of fractional share
interests of PSB Common Stock will be treated as if the
fractional share interests were distributed as part of the Merger
and then redeemed by PSB.  Such cash payments will be treated as
having been received as distributions in full payment in exchange
for the fractional share interests redeemed, as provided in IRC
Section 302(a).

          12.  As provided in IRC Section 381(a)(2) and related
Treasury regulations, FBKP will succeed to and take into account
the earnings and profits, or deficit in earnings and profits, of
the Bank as of the Effective Date of the Merger.  Any deficit in
the earnings and profits of the Bank or FBKP will be used only to
offset the earnings and profits accumulated after the Merger.

          13.  Pursuant to IRC Section 381(a) and related
Treasury regulations, FBKP will succeed to and take into account
the items of the Bank described in IRC Section 381(c).  Such
items will be taken into account by FBKP subject to the
conditions and limitations of IRC Sections 269, 381, 382, 383,
384 and 1502 and the Treasury regulations thereunder.

          Certain portions of the opinions relating to the
federal income tax treatment of FBKP shareholders may not be
applicable to persons who received their FBKP common Stock
pursuant to the exercise of employee stock options or otherwise
as compensation, or to foreign persons or persons who, because of
their circumstances or status, are subject to special federal
income tax treatment.
  PAGE 78
<PAGE>
                                                  EXHIBIT 6


               FORM OF OPINION OF COUNSEL TO FBKP


          PSB shall have received from counsel to FBKP, an
opinion, dated as of the Closing Date, substantially to the
effect that, subject to normal exceptions and qualifications:

          (a)  FBKP has full corporate power to carry out the
transactions contemplated in the Agreement.  The execution and
delivery of the Agreement and the consummation of the
transactions contemplated thereunder have been duly and validly
authorized by all necessary corporate action on the part of FBKP
and the Agreement constitutes a valid and legally binding
obligation, in accordance with its terms, of FBKP, except as may
be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, receivership, conservatorship, and other laws now or
hereafter in effect relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of federal
savings institutions or their holding companies, (ii) general
equitable principles, and (iii) laws relating to the safety and
soundness of insured depository institutions, and except that no
opinion need be rendered as to the effect or availability of
equitable remedies or injunctive relief (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).  Subject to satisfaction of the conditions set forth in the
Agreement, neither the transactions contemplated in the
Agreement, nor compliance by FBKP with any of the respective
provisions thereof, will (i) conflict with or result in a breach
or default under (A) the articles of incorporation or bylaws of
FBKP, or (B) based on certificates of officers and without
independent verification, to the knowledge of such counsel, any
note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which FBKP is a party; or (ii) to the
knowledge of such counsel, result in the creation or imposition
of any material lien, instrument or encumbrance upon the property
of FBKP, except such material lien, instrument or obligation that
has been disclosed to PSB pursuant to the Agreement, or
(iii) violate in any material respect any order, writ,
injunction, or decree known to such counsel, or any statute, rule
or regulation applicable to FBKP.

          (b)  FBKP is a validly existing bank organized under
the laws of the Commonwealth of Pennsylvania.  The deposits of
FBKP are insured to the maximum extent provided by law by the
Federal Deposit Insurance Corporation.
  <PAGE 79>
          (c)  There is, to the knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or
investigation pending or threatened to which FBKP is a party
which would, if determined adversely to FBKP, have a material
adverse effect on the business, properties, results of
operations, or condition, financial or otherwise, of FBKP taken
as a whole or which presents a claim to restrain or prohibit the
transactions contemplated by the Agreement, respectively.

          (d)  No consent, approval, authorization, or order of
any federal or state court or federal or state governmental
agency or body, or to such counsel's knowledge of any third
party, is required for the consummation by FBKP of the
transactions contemplated by the Agreement, except for such
consents, approvals, authorizations or orders as have been
obtained or which would not have a Material Adverse Effect upon
PSB upon consummation of the Merger.

          In addition to the foregoing opinions, counsel shall
state that on the sole basis of such counsel's participation in
conferences with officers and employees of FBKP in connection
with the preparation of the Prospectus/Proxy Statement and
without other independent investigation or inquiry, such counsel
has no reason to believe that the Prospectus/Proxy Statement,
including any amendments or supplements thereto (except for the
financial information, financial statements, notes to financial
statements, financial schedules and other financial or
statistical data and stock valuation information contained or
incorporated by reference therein and except for any information
supplied by PSB for inclusion therein, as to which counsel need
express no belief), as of the date of mailing thereof and as of
the date of the meeting of shareholders of FBKP to approve the
Merger, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make any statement
therein, in light of the circumstances under which it was made,
not misleading.  Counsel may state in connection with the
foregoing that such counsel has not independently verified and
does not assume any responsibility for the accuracy, completeness
or fairness of any information or statements contained in the
Prospectus/Proxy Statement, except with respect to identified
statements of law or regulations or legal conclusions relating to
FBKP or the transactions contemplated in the Agreement and that
it is relying as to materiality as to factual matters on
certificates of officers and representatives of the parties to
the Agreement and other factual representations by FBKP.

          Such counsel's opinion shall be limited to matters
governed by federal banking and securities laws and by the
Banking Code and the BCL.  <PAGE 80>

<PAGE>
                                                  EXHIBIT 7

*  Article TENTH of PSB Bancorp's Articles of Incorporation shall
be amended as follows:


          TENTH:  The affirmative vote of both directors and
     shareholders of the Corporation as set forth in this
     ARTICLE NINTH shall be required to approve any of the
     following (each a "Transaction"):

               (a)  any merger or consolidation of the
          Corporation with or into any other corporation or
          any division involving the Corporation;

          (b)  any share exchange in which a corporation, person
     or entity acquires the issued or outstanding shares of
     capital stock of the Corporation pursuant to a vote of
     shareholders;

          (c)  any sale, lease, exchange or other transfer of
     all, or substantially all, of the assets of the Corporation
     to any other corporation, person or entity;

          (d)  a liquidation or dissolution involving the
     Corporation; or

          (e)  any transaction similar to, or having similar
     effect as, any of the foregoing transactions.

          In the event of any proposed Transaction, then the
     following voting requirements shall apply during the
     following applicable time periods:  (A) on or before
     January 1, 2006, the affirmative vote of both (i) 80%
     of the total number of directors then in office
     (rounding up to the nearest whole number) and (ii) 80%
     of the total votes which all shareholders of the
     Corporation are entitled to cast, and if any class of
     shares is entitled to vote as a separate class, the
     affirmative vote of at least a majority of the votes
     entitled to be cast by the outstanding shares of such
     class shall be required to approve any Transaction; and
     (B) after January 1, 2006, the affirmative vote of both
     (i) 66-2/3% of the total number of directors then in
     office (rounding up to the nearest whole number) and
     (ii) at least a majority of the total votes which all
     shareholders are entitled to cast, and if any class of
     shares is entitled to vote as a separate class, the
     affirmative vote of at least a majority of the votes 
     <PAGE 81> entitled to be cast by the outstanding shares
     of such class shall be required to approve any
     Transaction.

          The provisions of this ARTICLE TENTH shall not
     apply to (A) any Transaction occurring prior to
     January 1, 2006 in which members of the Corporation's
     Board of Directors immediately prior to the Transaction
     continue to constitute at least a majority of the Board
     of Directors of the resulting or surviving corporation
     upon completion thereof provided the transaction is
     approved by both (i) 80% of the total number of
     directors then in office (rounding up to the nearest
     whole number) and (ii) at least a majority of the total
     vote which all shareholders are entitled to cast, and
     if any class of shares is entitled to vote as a
     separate class, the affirmative vote of at least a
     majority of the votes entitled to be cast by the
     outstanding shares of such class or (B) any Transaction
     approved in advance by the unanimous vote of all
     directors of the Corporation then in office.

          An affirmative vote as provided in the foregoing
     provisions shall be in addition to any vote of the
     shareholders otherwise required by law.

          The Board of Directors of the Corporation shall
     have the power and duty to determine, for purposes of
     this ARTICLE TENTH, if any transaction is similar to,
     or has a similar effect as, any of the Transactions
     identified above in this ARTICLE TENTH.  Any such
     determination shall be conclusive and binding for all
     purposes of this ARTICLE TENTH.

A new Section 2.16 shall be added to PSB Bancorp's Bylaws as
follows:

          Section 2.16.  Special Director Voting
     Requirements.  Notwithstanding anything contained
     herein to the contrary, until January 1, 2006, approval
     of any of the following actions shall require a vote of
     80% of the total number of directors of the Corporation
     then in office (rounding up to the nearest whole
     number):

                    (i)  adopting a motion or resolution to
          study sale of the Corporation as a strategic
          alternative, or engaging a financial advisor with
          respect thereto;  <PAGE 82>

                    (ii)  adopting a motion or resolution
          approving a fundamental transaction (a
          "Fundamental Transaction") involving the
          Corporation within the meaning of Chapter 19 of
          Title 15 of the Pennsylvania Business Corporation
          Law of 1988, as amended, or any successor
          provisions (whether by merger, consolidation,
          share exchange or otherwise), or calling a special
          meeting of shareholders of the Corporation to
          consider any such proposal or placing any such
          proposal on the agenda for an annual meeting of
          shareholders of the Corporation;

                    (iii)  recommending that shareholders of
          the Corporation (A) accept a transaction or tender
          their shares of the Corporation's voting
          securities in connection with a tender or exchange
          offer for the Corporation's voting securities or
          (B) cast votes with respect to their voting
          securities in a proxy solicitation conducted by a
          party other than the Corporation's Board of
          Directors contrary to the recommendation of the
          Board of Directors;

                    (iv)  soliciting indications of interest
          or responding to proposals relating to a
          Fundamental Transaction in which the Corporation,
          upon completion of such Fundamental Transaction,
          would not be the surviving or controlling entity;
          or

                    (v)  amending or repealing this 
          Section 209 of these Bylaws.<PAGE 83>