Pennsylvania Savings Bank


                     Management Recognition
                    Plan and Trust Agreement
<PAGE>
                             SUMMARY


I.   PLAN PURPOSE

     This management recognition plan is adopted by Pennsylvania
Savings Bank, a wholly-owned subsidiary of PSB Mutual Holding
Company.  The Bank is adopting the Plan in connection with (i) of
the Bank's predecessor (Pennsylvania Savings Bank in mutual form)
the reorganization, consisting of:  (i) the conversion of PSB
Mutual Holding Company into a mutual bank holding company,
(ii) the creation of the Bank as a new stock savings bank called
Pennsylvania Savings Bank; (iii) the purchase and assumption by
the Bank of substantially all of the existing mutual bank's
assets and liabilities in exchange for a majority of the Common
Stock of the Bank; and (iv) the issuance of a minority of the
Bank's common stock to certain depositors and potentially to
officers, trustees, and employees of the Bank and the public. 
This reorganization was completed on October 20, 1995.  (As the
context requires, the "Bank" refers either to the mutual savings
bank or the newly formed stock savings bank.)

     The purpose of the Plan is to retain employees of the Bank
with experience and ability in key positions by providing them
with a proprietary interest in the Bank (in the form of shares of
Common Stock).  Awards of Common Stock will be made in
recognition of service to the Bank and its subsidiaries and
affiliates and as encouragement to continue such contributions in
the future.

II.  PLAN SHARE AWARDS

     A.   Aggregate Number:  The total number of Plan Shares that
may be issued pursuant to the Plan will be equal to the number of
shares of Common Stock that are purchased by the Trust, not to
exceed 4% of the shares of Common Stock issued in connection with
the Bank's minority stock offering (i.e., 21,390 shares).  The
Trust will acquire Common Stock with funds contributed to it by
the Bank.

     B.   Individual Awards:  All trustees, executive officers
and employees of the Bank and its subsidiaries are eligible to
receive awards; however, it is anticipated that Plan Share Awards
will be made primarily to executive officers of the Bank.  The
Compensation Committee of the Board of Trustees of the Bank will
determine which eligible persons will be granted Plan Share
Awards and the number of shares covered by each Plan Share Award. 
Such determinations will be based upon the position and
responsibilities of the eligible person, the value of their
services, and any other fact the Compensation Committee deems
relevant.

     Plan Share Awards will not be made until the Bank's
shareholders have approved the Plan.  <PAGE MRP-1>

     C.   Conditions Upon Earning of Plan Shares Subject to
Awards:  Plan Shares covered by Plan Share Awards are earned
(i.e., become vested) at the rate determined by the Compensation
Committee and as provided herein.

     Awards are nontransferable and nonassignable.

     Recipients of Plan Share Awards may direct the voting of all
shares of Common Stock allocated to them, and will receive
dividends paid on Plan Shares when shares are distributed.

     D.   Distribution of Earned Plan Shares:  Earned Plan Shares
are distributed to recipients as soon as practicable following
the date on which they are earned.  The Plan Trustee may withhold
cash distributions as needed for tax purposes and, if necessary,
can require distributees to provide funds required to satisfy tax
obligations as a condition to distributing Plan Shares.

     E.   Forfeitures:  Plan Shares forfeited in accordance with
Section 7.01(b) will be returned to the pool of Plan Shares with
respect to which additional Plan Share Awards may be granted.

III. Plan Administration

     A.   Plan Administration:  The Plan will be administered by
the Compensation Committee of the Bank's Board of Trustees and a
Plan Trustee appointed by the Board.  The Board may designate as
Plan Trustee one or more persons or an entity, subject to
replacement by the Board at any time.  Expenses of administering
the Plan and the Trust will be borne by the Bank.  The Bank shall
indemnify the Plan Trustee and Board members as to activities
with respect to the Plan.

     B.   ERISA:  The Plan is not "qualified" within the meaning
of the Internal Revenue Code, and is not subject to ERISA's
requirements and restrictions.

     C.   Duration:  The Plan will become effective upon
execution and will continue until the earliest of (1) 21 years
from such Effective Date, (2) the time at which the Board
terminates the Plan, or (3) the time at which all of the Trust
assets have been expended.  The Board may amend or terminate the
Plan at any time.
  PAGE MRP-2
<PAGE>
                            ARTICLE I

               ESTABLISHMENT OF THE PLAN AND TRUST

     1.01  The Bank hereby establishes the Pennsylvania Savings
Bank Management Recognition Plan (the "Plan") and Trust upon the
terms and conditions hereinafter stated in this Agreement.

     1.02  The Plan Trustee hereby accepts this Trust and agrees
to hold legal title to the Trust assets existing on the date of
this Agreement and all additions and accretions thereto on the
terms and conditions hereinafter stated.

                           ARTICLE II

                       PURPOSE OF THE PLAN

     2.01  The purpose of the Plan is to retain personnel of
experience and ability in key positions by providing such key
employees with a proprietary interest in the Bank in
consideration for, and in recognition of, their contributions to
the Bank, its subsidiaries and its affiliates and as an incentive
to make such contributions in the future.

                           ARTICLE III

                           DEFINITIONS

     The following words and phrases when used in this Agreement
with an initial capital letter, unless the context clearly
indicates otherwise, shall have the meanings set forth below. 
Wherever appropriate, the masculine pronoun shall include the
feminine pronoun and the singular shall include the plural.  All
terms used herein and not defined shall have the meanings given
such terms in the Plan of Reorganization.

     3.01  "Agreement" means this Management Recognition Plan and
Trust Agreement between the Bank and the Plan Trustee.

     3.02  "Bank" means Pennsylvania Savings Bank, a wholly-owned
subsidiary of PSB Mutual Holding Company.

     3.03  "Beneficiary" means the person or persons designated
by a Recipient to receive any benefits payable under the Plan in
the event of such Recipient's death.  Such person or persons
shall be designated in writing on forms provided for this purpose
by the Board and may be changed from time to time by similar
written notice to the Board.  In the absence of a written
designation, the Beneficiary shall be the recipient's surviving
spouse, if any, or if none, his estate.

     3.04  "Board" means, for purposes of administering the Plan,
the Board of Trustees of the Bank.
  <PAGE MRP-3>
     3.05  "Cause" means:

               (i)  willful violation of any law, rule or
     regulation (other than traffic violations or similar
     offenses that would not in the Board's good faith reasonable
     determination effect the ability to perform and discharge
     one's duties to the Bank or a subsidiary);

               (ii)  breach of fiduciary duty involving personal
     profit or an act of personal dishonesty in connection with
     the performance of one's duties; or

               (iii)  willful failure to follow the lawful
     instructions of the Board of Trustees after receipt of
     written notice of such instructions, other than a failure
     resulting from the incapacity because of physical or mental
     illness.

     3.06  "Common Stock" means shares of the Bank's common
stock, par value $1.00 per share.

     3.07  "Disability" means any physical or mental impairment
which qualifies an employee for disability benefits under the
applicable long-term disability plan maintained by the Bank, or a
subsidiary, or, if no such plan applies to the employee, which
would qualify such employee for disability benefits under the
long-term disability plan maintained by the Bank, if such
employee were covered by that Plan.

     3.08  "Eligible Person" means any person who is currently
employed by the Bank or a subsidiary or affiliate of the Bank.

     3.09  "Plan of Reorganization" means the Bank's Plan of
Reorganization and Stock Issuance in Connection With the
Formation of a Mutual Savings Bank Holding Company.

     3.010  "Plan Shares" means shares of Common Stock held in
the Trust and issued or issuable to a Recipient pursuant to the
Plan.

     3.11  "Plan Share Award" means a right granted under this
Agreement to earn Plan Shares.

     3.12  "Plan Share Reserve" means the shares of Common Stock
held by the Trustee as determined pursuant to Sections 5.03 and
5.04.

     3.13  "Plan Trustee" means that person(s) or entity
nominated and approved by the Board pursuant to Section 4.01 and
4.02 to hold legal title to the Plan assets for the purposes set
forth herein.

     3.14  "Recipient" means an Eligible Person who receives a
Plan Share Award under the Plan.
  <PAGE MRP-4>
     3.15  "Retirement" means a termination of employment which
constitutes a "retirement" under any applicable qualified pension
benefit plan maintained by the Bank or any subsidiary which
employs the Recipient, or, if no such Plan is maintained,
pursuant to the retirement policy of the Bank.

     3.16  "Trust" means the trust established pursuant to this
Agreement.

                           ARTICLE IV

                   ADMINISTRATION OF THE PLAN

     4.01  Role and Powers of the Board.  The Plan shall be
administered and interpreted by the Compensation Committee of the
Board.  The interpretation and construction by the Compensation
Committee of any provisions of this Agreement or of any Plan
Share Award granted hereunder shall be final and binding. 
Subject to the express provisions and limitations of this
Agreement, the Compensation Committee may adopt such rules,
regulations and procedures as it deems appropriate for the Plans'
affairs.  The Board shall appoint one or more persons (excluding
Eligible Persons) or an entity to act as Plan Trustee in
accordance with this Agreement and the terms of Article VIII
hereof.  The Board may reverse or override any action taken or
decision made with respect to the Plan, provided, however, except
as provided in Section 7.01(b) hereof, that the Board may not
revoke any Plan Share Award already made.

     4.02  Limitation on Liability.  No member of the Board or
Plan Trustee shall be liable for any determination made in good
faith with respect to the Plan or any Plan Shares or Plan Share
Awards granted under it.  If a member of the Board or any Plan
Trustee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of anything done or not done by him in such capacity under
or with respect to the Plan, the Bank shall indemnify such member
or Plan Trustee against expenses (including, but not limited to,
attorneys' fees and disbursements), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if 1) he acted in
good faith and in a manner he reasonably believed to be in the
best interests of the Bank (in the case of a member of the Board)
or in the best interests of the beneficiaries of the Trust (in
the case of the Plan Trustee), and 2) with respect to any
criminal action or proceeding, he had no reasonable cause to
believe his conduct was unlawful.
  <PAGE MRP-5>
                            ARTICLE V

                CONTRIBUTIONS; PLAN SHARE RESERVE

     5.01  Amount and Timing of Contributions.  The Board shall
determine the amounts (or the method of computing the amounts) to
be contributed by the Bank to the Trust.  Such amounts shall be
paid to the Plan Trustee at the time of contribution.  No
contributions by Eligible Persons shall be permitted.

     5.02  Initial Investment.  Any amounts held by the Trust
prior to the purchase of Common Stock shall be invested by the
Plan Trustee in such interest-bearing account or accounts at the
Bank as the Plan Trustee shall determine to be appropriate.  

     5.03  Investment of Trust Assets; Conversion; Creation of
Plan Share Reserve.  Except as otherwise permitted under this
Agreement, the Plan Trustee shall invest all of the Trust's
assets exclusively in Common Stock.  The Common Stock initially
acquired by the Trust, together with any shares thereafter
acquired by the Trust, shall constitute the "Plan Share Reserve." 
Any cash earnings received with respect to Common Stock held in
the Trust subject to the Plan Share Awards shall be distributed
to the Individual Recipient.

     5.04  Effect of Allocations, Returns and Forfeitures Upon
Plan Share Reserves.  Upon the allocation of Plan Share Awards
under Section 6.02, the Plan Share Reserve shall be reduced by
the number of Plan Shares subject to the Plan Share Awards so
allocated.  Any Plan Shares subject to a Plan Share Award which
may no longer be earned because of a forfeiture by the Recipient
pursuant to Section 7.01(b) shall be added to the Plan Share
Reserve.

                           ARTICLE VI

                    ELIGIBILITY; ALLOCATIONS

     6.01  Allocations.  The Compensation Committee will
determine which Eligible Persons will be granted Plan Share
Awards and the number of Plan Shares covered by each Plan Share
Award, provided, however, that the number of Plan Shares covered
by such Plan Share Awards may not exceed the number of Plan
Shares in the Plan Share Reserve immediately prior to the grant
of such Plan Share Awards, and provided, further, that in no
event shall any Plan Share Award be made which will violate the
Bank's Articles of Incorporation or Bylaws or any applicable law. 
In the event Plan Shares are forfeited for any reason, the
Compensation Committee may, from time to time, determine which
Eligible Persons will be granted Plan Share Awards from forfeited
Plan Shares.

          In selecting those Eligible Persons to whom Plan Share
Awards will be granted and the number of Plan Shares covered by
such Plan Share Awards, the Compensation Committee shall consider 
<PAGE MRP-6> the position and responsibilities of the Eligible
Persons, the value of their services to the Bank and/or its
subsidiaries and any other fact the Compensation Committee may
deem relevant.

     6.02  Form of Allocation.  Promptly after making a Plan
Share Award, the Compensation Committee shall notify the
Recipient in writing of the grant of the Plan Share Award, the
number of Plan Shares covered by the Plan Share Award, and the
terms upon which the Plan Shares subject to the Plan Share Award
may be earned.  The date on which the Compensation Committee so
notifies the Recipient shall be considered the date of grant of
the Plan Share Awards.  The Compensation Committee shall maintain
records as to all grants of Plan Share Awards under the Plan.

     6.03  Allocations Not Required.  Notwithstanding anything to
the contrary in Sections 6.01 and 6.02, no Eligible Person shall
have any right or entitlement to receive a Plan Share Award
hereunder, the grant of Plan Share Awards being at the total
discretion of the Compensation Committee.

                           ARTICLE VII

     EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS

     7.01  Earning Plan Shares; Forfeitures.

          (a)  General Rules.  Unless the Compensation Committee
shall specifically state otherwise at the time a Plan Share Award
is granted, Plan Shares subject to a Plan Share Award shall be
earned by a Recipient at the rate of twenty percent (20%) of the
aggregate number of Plan Shares covered by the Plan Share Award
at the end of each full twelve month period following the date of
the grant.  Except as set forth in Section 7.01(b) below.  The
termination of a Recipient's employment with the Bank shall
constitute revocation of the unearned Plan Share Award.  

          (b)  Revocation for Misconduct.  Notwithstanding
anything hereinafter to the contrary, the Compensation Committee
of the Board may, by resolution, immediately revoke, rescind and
terminate any Plan Share Award, or portion thereof, previously
awarded under this Plan, to the extent Plan Shares have not been
delivered thereunder to the Recipient, whether or not yet earned,
in the case of a Recipient who is discharged from the employ of
the Bank or a subsidiary for Cause, or who is discovered after
termination of employment to have engaged in conduct that would
have justified termination for Cause, and in the case of a member
of the Board, who is removed from the Board for Cause.  

     7.02  Payment of Dividends.  Cash dividends on Plan Shares
shall be allocated and distributed to a Recipient when declared
and paid by the Bank with respect to all shares.
  <PAGE MRP-7>
     7.03  Distribution of Plan Shares.

          (a)  Timing of Distributions.  Plan Shares shall be
distributed to the Recipient or his Beneficiary, as the case may
be, as soon as practicable after they have been earned.

          (b)  Form of Distribution.  All Plan Shares, together
with any shares representing stock dividends, shall be
distributed in the form of Common Stock.  One share of Common
Stock shall be given for each Plan Share earned and payable.   

          (c)  Withholding.  The Plan Trustee may withhold from
any payment or distribution made under this Plan sufficient
amounts of cash or shares of Common Stock to cover any applicable
withholding and employment taxes, and if the amount of such
payment is insufficient, the Plan Trustee may require the
Recipient or Beneficiary to pay to the Plan Trustee the amount
required to be withheld as a condition of delivering the Plan
Shares.  The Plan Trustee shall pay over to the Bank or a
Subsidiary which employs or employed such Recipient any such
amount withheld from or paid by the Recipient or Beneficiary.

     7.04  Voting of Plan Shares.  After a Plan Share Award has
been granted, the Recipient shall be entitled to direct the
Trustee as to the voting of the Plan Shares which are covered by
the Plan Share Award and which have not yet been earned and
distributed to him pursuant to Section 7.03, subject to rules and
procedures adopted by the Compensation Committee of the Board for
this purpose.  All shares of Common Stock held by the Trust as to
which Recipients are not entitled to direct, or have not
directed, the voting, shall be voted by the Plan Trustee in the
same proportion as Plan Shares which have been awarded and voted.

                          ARTICLE VIII

                              TRUST

     8.01  Trust.  The Plan Trustee shall receive, hold,
administer, invest and make distributions and disbursements from
the Trust in accordance with the provisions of this Agreement and
the applicable directions, rules, regulations, procedures and
policies established by the Compensation Committee pursuant to
this Agreement.

     8.02  Management of Trust.  It is the intent of this
Agreement that, subject to the provisions of this Agreement, the
Plan Trustee shall have complete authority and discretion with
respect to the management, control and investment of the Trust,
and that the Plan Trustee shall invest all assets of the Trust in
Common Stock to the fullest extent practicable, and except to the
extent that the Plan Trustee determines that the holding of
monies in cash or cash equivalents is necessary to meet the
obligations of the Trust.  In performing its duties, the Plan
Trustee shall have the power to do all things and execute such 
<PAGE MRP-8> instruments as may be deemed necessary or proper,
including the following powers:  

          (a)  To invest up to one hundred percent (100%) of all
Trust assets in Common Stock without regard to any law now or
hereafter in force limiting investments by trustees or other
fiduciaries.  The investment authorized herein constitutes the
only investment of the Trust, and in making such investment, the
Plan Trustee is authorized to purchase Common Stock from the Bank
or from any other source, and such Common Stock so purchased may
be outstanding, newly issued, or treasury shares.

          (b)  To invest any Trust assets not otherwise invested
in accordance with (a) above in such deposit accounts,
certificates of deposit (including those issued by the Bank),
obligations of the United States government or its agencies or
such other investments as shall be considered the equivalent of
cash, or to invest in mutual funds which invest in such
securities.

          (c)  To sell, exchange or otherwise dispose of any
property at any time held or acquired by the Trust.

          (d)  To cause stocks, bonds or other securities to be
registered in the name of a nominee, without the addition of
words indicating that such security is an asset of the Trust (but
accurate records shall be maintained showing that such security
is an asset of the Trust).

          (e)  To hold cash without interest in such amounts as
may be in the opinion of the Trustee reasonable for the proper
operation of the Plan and Trust.

          (f)  To employ brokers, agents, consultants and
accountants.

          (g)  To hire counsel to render advice with respect to
the Plan Trustee's rights, duties and obligations hereunder, and
such other legal services or representation as the Plan Trustee
may deem desirable.

          (h)  To hold funds and securities representing the
amounts to be distributed to a Recipient or his Beneficiary as a
consequence of a dispute as to the disposition thereof, whether
in a segregated account or held in common with other assets of
the Trust.

          Notwithstanding anything herein contained to the
contrary, the Plan Trustee shall not be required to make any
inventory, appraisal or settlement or report to any court, or to
secure any order of court for the exercise of any power herein
contained, or give bond.

     8.03  Records and Accounts.  The Trustee shall maintain
accurate and detailed records and accounts of all transactions of 
<PAGE MRP-9> the Trust, which shall be available at all
reasonable times for inspection by any legally entitled person or
entity to the extent required by applicable law, or any other
person determined by the Board.

     8.04  Earnings.  All earnings, gains and losses with respect
to Trust assets shall be allocated in accordance with a
reasonable procedure adopted by the Compensation Committee of the
Board.

     8.05  Expenses.  All costs and expenses incurred in the
operation and administration of this Plan shall be borne by the
Bank.  

                           ARTICLE IX

                          MISCELLANEOUS

     9.01  Adjustments for Capital Changes.  The aggregate number
of Plan Shares available for issuance pursuant to Plan Share
Awards and the number of Plan Shares to which any Plan Share
Award relates shall be proportionately adjusted for any increase
or decrease in the total number of outstanding shares of Common
Stock issued subsequent to the Effective Date resulting from any
split, subdivision or consolidation of shares or other capital
adjustment, or other increase or decrease in such Common Stock
effected without receipt or payment of consideration, by the
Bank.

     9.02  Amendment and Termination of Plan.  The Board may, by
resolution, at any time amend or terminate the Agreement.  Upon
termination, the Bank may direct the Plan Trustee to return to
the Bank Common Stock held in the Plan Share Reserve and any
other unallocated assets of the Trust.  Termination or amendment
of the Trust shall not affect a Recipient's right to earn Plan
Shares pursuant to previously granted Plan Share Awards or to the
distribution of Common Stock relating thereto, including earnings
thereon.  Termination of the Plan shall not become effective as
to previously awarded Plan Share Awards that remain outstanding
on the proposed termination date unless the Board elects to
distribute all unearned Plan Shares subject to such Plan Share
Awards immediately upon such termination.

     9.03  Nontransferable.  Plan Share Awards and rights to Plan
Shares shall not be transferable by a Recipient or Beneficiary,
and during the lifetime of the Recipient, Plan Shares may only be
earned by and paid to the Recipient who was notified in writing
of the Plan Share Award by the Compensation Committee of the
Board pursuant to Section 6.03.

     9.04  Employment Rights.  Neither the Plan nor any grant of
a Plan Share Award or Plan Shares hereunder nor any action taken
by the Plan Trustee or the Compensation Committee of the Board in
connection with the Plan shall create any right on the part of 
<PAGE MRP-10> any Eligible Person to continue in the employ of
the Bank or to continue to sit on the Board thereof.

     9.05  Voting and Dividend Rights.  No Recipient shall have
any voting or dividend rights or other rights of a shareholder in
respect of any Plan Shares covered by a Plan Share Award, except
as expressly provided in Sections 7.02 and 7.04 above, prior to
the time said Plan Shares are actually distributed to him. 

     9.06  Governing Law.  This Agreement shall be governed by,
and construed in accordance with, the laws of the Commonwealth of
Pennsylvania without regard to its conflicts of law rules. 

     9.07  Effective Date.  The date of its execution by the Bank
and the Plan Trustee.

     9.08  Term of Plan.  This Plan shall remain in effect until
the earlier of (1) 21 years from the Effective Date,
(2) termination by the Board, or (3) the distribution of all
assets of the Trust.  Termination or amendment of the Plan shall
not affect any Plan Share Awards previously granted, and such
Plan Share Awards shall remain valid and in effect until they
have been earned and paid, or by their terms expire or are
forfeited.       

     IN WITNESS WHEREOF, the Bank has caused this Agreement to be
executed by its duly authorized officers and the corporate seal
to be affixed and duly attested, as of the ____ day of _________,
1996.

                              PENNSYLVANIA SAVINGS BANK

                              By:________________________________

                              Attest:____________________________



     IN WITNESS WHEREOF, the undersigned, JAMES W. EASTWOOD,
P. CHARLES DeRITA and ROSANNE PAUCIELLO, as members of the
Pennsylvania Savings Bank Compensation Committee, hereby execute
this Agreement, as Plan Trustee undertaking to perform the
obligations and duties of the Plan Trustee hereunder and
consenting to the foregoing Management Recognition Plan and Trust
Agreement.

                    Signed:   ___________________________________
                              James W. Eastwood

                              ___________________________________
                              P. Charles DeRita

                              ___________________________________
                              Rosanne Pauciello  <PAGE MRP-11>