SEVERANCE AGREEMENT

     Agreement  made this 1st day of  January,  2001,  by and  between  Nazareth
National Bank and Trust Company, a banking association  organized under the laws
of  the  United  States   ("Bank")  and  Robert  M.   McGovern,   an  individual
("Employee").

                                   BACKGROUND

     Effective  January 1, 2001 and subject to the terms of this Agreement,  the
Bank  will  continue  to employ  Employee  in the  position  of  Executive  Vice
President and Senior Trust  Officer,  and to perform such other duties as may be
assigned to him by the President of the Bank.  Employee agrees to serve the Bank
in this capacity on a full-time basis, faithfully, diligently and to the best of
his ability.  Employee  further agrees to fully  cooperate with the officers and
employees  of the  Bank to the best of his  ability,  and not to  engage  in any
outside for profit  business  deemed to be in conflict  with general  commercial
banking,  employment or commercial activity without the prior written consent of
the President of the Bank. The Bank and Employee wish to provide for the payment
of certain  compensation  and other  benefits to Employee upon the occurrence of
certain events, all as more fully set forth below.

     In consideration of the mutual covenants and agreements  herein  contained,
and intending to be legally bound hereby, the parties agree as follows:

     1. Term.  This Agreement shall begin on January 1, 2001 and shall terminate
at the earliest of the following dates (the "Term"):  (a) the date Employee dies
or becomes  permanently  disabled (i.e.,  upon his failure to render services of
the  character  which he had  previously  rendered  to the Bank,  because of his
physical  or  mental  illness  or other  incapacity  beyond  his  control  for a
continuous period of six months or for shorter periods aggregating six months in

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in any  twelve  month  period);  (b)  the  date  of  termination  of  Employee's
employment  with the Bank  for  cause  (as  hereinafter  defined);  (c) the date
specified by mutual agreement of the Bank and Employee; (d) subject to Section 2
hereof,  the date of termination by Employee of Employee's  employment  with the
Bank by  resignation  or otherwise;  or (e) December 31, 2001. If this Agreement
expires on December 31, 2001  pursuant to (e) of the  foregoing  sentence  ("the
Initial Term"),  it shall renew  automatically for successive terms of up to one
year  beginning  on January 1 of the  applicable  succeeding  year  ("Successive
Term(s)"), provided neither of the parties has given written notice to the other
party of his or its intention not to renew at least two months prior to December
31, 2001 or December 31 of the  applicable  succeeding  year.  In the event that
this  Agreement is renewed  pursuant to the  foregoing  sentence,  the Agreement
shall terminate on the earliest of the following dates: (i) a date listed in the
(a) through (d) of the first sentence of this paragraph; (ii) December 31 of the
applicable succeeding year. If Employee's employment with the Bank is terminated
during the  Initial  Term or any  Successive  Term  (other  than as set forth in
Section  2  hereof),  Employee  shall  have no  rights or  benefits  under  this
Agreement except to receive payment of base salary through the effective date of
his termination. For purposes of this Agreement, the term "cause" shall mean (i)
conviction of Employee for any felony,  fraud or embezzlement or (ii) Employee's
failure or refusal to comply with the written policies or written  directives of
the  Bank's  Board of  Directors  or  Employee  being  guilty of  misconduct  in
connection  with the performance of his duties for the Bank,  provided  Employee
fails to  cure such  non-compliance or  misconduct within twenty (20) days after

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receiving  written  notice from the Bank's  Board of Directors  specifying  such
non-compliance or misconduct.

     2.  Termination.  If during the Initial Term or any Successive Term hereof,
the Employee's  employment  with the Bank is terminated as set forth below,  the
Bank will pay to Employee  the amount set forth in Section 3 hereof and Employee
shall be entitled to the benefits set forth in Section 4 hereof:

          (a) the Bank  terminates  Employee's  employment with the Bank without
     cause; or

          (b) Employee  terminates  his  employment  with the Bank:  (i) for any
     reason at any time within  eighteen  months  after a "change in control" of
     the Bank (as defined  hereinafter),  or (ii) due to the fact that,  without
     Employee's  consent  and whether or not a change of control of the Bank has
     occurred,  the nature and scope of  Employee's  duties and authority or his
     responsibilities  with the Bank or the  surviving or  acquiring  person are
     materially  reduced  to a level  below  that  which he  enjoys  on the date
     hereof,  his then  current  base annual  salary is reduced to a level below
     that which he enjoys on the date hereof or at any time hereafter (whichever
     may be  greater),  Employee's  position  or  title  with  the  Bank  or the
     surviving  or  acquiring  person is  materially  reduced  from his  current
     position or title with the Bank, or, without Employee's consent, Employee's
     principal  place  of  employment  with the Bank is  changed  to a  location
     greater  than fifty miles from his current  principal  place of  employment
     with the Bank,  provided,  however,  that for any  termination  by Employee
     under this clause (ii) the Employee shall have first given the Bank written
     notice of his intention to terminate his employment pursuant to this clause
     (ii), specifying the

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     reason(s) for such termination,  and provided further,  that the Bank shall
     not have cured or remedied the reason(s)  specified in such notice prior to
     the expiration of twenty (20) days after receipt of such written notice.

          (c) For  purposes of this  Agreement,  a "change in control"  shall be
     deemed to have occurred upon the happening of any of the following events:

               (1) A change  within a twelve  month  period in a majority of the
          members of the Board of Directors of the Bank or its holding  company,
          First Colonial Group, Inc. (the "Holding Company");

               (2) A change  within a twelve month period in the holders of more
          than 50% of the  outstanding  voting  stock of the Bank or its Holding
          Company; or

               (3) Any other event deemed to constitute a "change in control" by
          the  Board of  Directors  of the  Bank.

     3.  Termination  Payments to  Employee.  Commencing  not later than 30 days
after the date Employee's employment with the Bank is terminated pursuant to any
event  enumerated in subsection  (a) or subsection  (b) of Section 2 hereof (the
"Termination Date") and subject to Employee's  compliance with Section 8 hereof,
the Bank shall pay  compensation to Employee for a one year period following the
Termination  Date (the "Severance  Period") at a per annum rate equal to 100% of
Employee's  "base annual salary" on the  Termination  Date. For purposes of this
Agreement,  the term  "base  annual  salary"  shall mean the  Employee's  annual
compensation rate on the Termination Date exclusive of cash bonuses and payments
under the Bank's  bonus  plan(s),  if any. The Bank agrees that it will make the
payments due under this Section 3 on the first day of each month  following  the

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Termination  Date in an amount equal to 1/12 of 100% of  Employee's  base annual
salary  on the  Termination  Date.  If  Employee's  employment  with the Bank is
terminated  pursuant to any event enumerated in subsection (a) or subsection (b)
of Section 2 hereof, Employee shall have a duty to seek substantially equivalent
employment.  The  payments  required  by this  Section 3 shall be  reduced  on a
dollar-for-dollar  basis by any income or earnings received by Employee from any
other  employer or by any income or  earnings  obtained  from any other  working
activity in which  Employee may engage  during the  Severance  Period.  Employee
shall notify the Bank  promptly of his receipt of any income or earnings  during
the Severance Period.

     4. Other Benefits.  In addition to the  compensation set forth in Section 3
hereof,  Employee  shall be entitled to the following  benefits from the Bank in
the event that Employee's employment with the Bank is terminated pursuant to any
event enumerated in subsection (a) or subsection (b) of Section 2 hereof:

          (a)  for  the  Severance  Period,  reimbursement  for  all  reasonable
     expenses  incurred  by  Employee  in  connection  with the  search  for new
     employment,  including,  without limitation, those of a placement agency or
     service, and reimbursement for all reasonable  relocation expenses incurred
     by Employee in connection with securing new employment;  provided, however,
     in no event shall the Bank be obligated to reimburse  Employee in excess of
     1/3 of his  base  annual  salary  on the  Termination  Date  for the sum of
     Employee's search and relocation expenses hereunder.

          (b)  for  the  Severance   Period,   Employee  shall  be  entitled  to
     participate  in the following  group  programs of the Bank if such programs
     are in effect  at the Termination  Date (or,  if such  participation is not

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     permitted by the terms of the group programs, through substantially
     equivalent benefits), with the Bank paying for the Employee's continued
     participation in such group programs at the same annual rate at which the
     Bank was paying on the Termination Date: all medical, hospitalization, life
     and disability group insurance benefits which existed at the Termination
     date, except that should other subsequent employment be obtained by
     Employee during the Severance Period, continuation of any medical,
     hospitalization, life and disability group insurance benefits will be
     offset by coverages provided through the Employee's subsequent employer.

     5. Withholding.  The Bank may withhold from any benefits payable under this
Agreement all federal,  state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.

     6. Source of Payment.  All payments  provided under this Agreement shall be
paid by the Bank from such funds as the President  shall  direct.  No special or
separate  fund shall be required to be  established  and Employee  shall have no
right,  title or interest  whatsoever in or to any investment which the Bank may
make to aid the Bank in meeting its obligations hereunder.  Nothing contained in
this Agreement, and no action taken pursuant to its provisions,  shall create or
be construed to create a trust of any kind or a fiduciary  relationship  between
the Bank and Employee or any other person.

     7. (a)  Nonassignability. Neither this  Agreement nor any right or interest
hereunder shall be assignable by Employee or his legal  representatives  without
the Bank's prior written consent.

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       (b) Attachment. Except as required by law, the right to receive  payments
under this Agreement shall not be subject of  anticipation,  sale,  encumbrance,
charge, levy, or similar process or assignment by operation of law.

     8. Confidentiality and Non-Competition. All payments to Employee under this
Agreement shall be subject to Employee's  compliance with the provisions of this
Section 8. If Employee  fails to comply with such  provisions,  his right to any
future payments under this Agreement shall terminate and the Bank's  obligations
under this  Agreement  to make such  payments and provide  such  benefits  shall
cease.

          (a) Employee covenants and agrees that he will not, during the term of
     his  employment and at any time  thereafter,  except with the express prior
     written consent of the Bank or pursuant to the lawful order of any judicial
     or administrative agency of government,  directly or indirectly,  disclose,
     communicate or divulge to any person, or use for the benefit of any person,
     any knowledge or information  with respect to the conduct or details of the
     Bank's business which he, acting reasonably,  believes or should believe to
     be of a  confidential  nature and the  disclosure of which not to be in the
     Bank's interest.

          (b) Employee covenants and agrees that he will not, during the term of
     his  employment  and for a period of one year  thereafter,  except with the
     express prior written consent of the Bank, directly or indirectly,  whether
     as  employee,  employer,  owner,  partner,  consultant,   agent,  director,
     officer,  shareholder  or in any other  capacity,  engage in or assist  any
     person to engage in any act or action which he, acting reasonably, believes
     or should  believe  would be harmful or  inimical to the  interests  of the
     Bank.

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          (c) Employee covenants and agrees that he will not, during the term of
     his  employment  and for a period of one year  thereafter,  except with the
     express prior written consent of the Bank, in any capacity (including,  but
     not limited to, owner, partner,  shareholder,  consultant, agent, employee,
     employer, officer, director or otherwise),  directly or indirectly, for his
     own account or for the benefit of any person,  engage or  participate in or
     otherwise be connected  with any  commercial  bank which has its  principal
     office in either  Northampton,  Lehigh or Monroe Counties,  Pennsylvania or
     Warren  County,  New Jersey  except that the  foregoing  shall not prohibit
     Employee from owning as a shareholder less than 1% of the outstanding stock
     of an issuer whose stock is publicly traded.

          (d) The  parties  agree  that any  breach  by  Employee  of any of the
     covenants  or  agreements  contained  in  this  Section  8 will  result  in
     irreparable injury to the Bank for which money damages could not adequately
     compensate  the Bank and  therefore,  in the event of any such breach,  the
     Bank shall be entitled (in addition to any other rights and remedies  which
     it may  have  at law or in  equity)  to have an  injunction  issued  by any
     competent court enjoining and restraining  Employee and/or any other person
     involved therein from continuing such breach. The existence of any claim or
     cause of  action  which  Employee  may have  against  the Bank or any other
     person  (other  than a claim for the Bank's  breach of this  Agreement  for
     failure to make payments  hereunder)  shall not constitute a defense or bar
     to the enforcement of such covenants.

          (e) If any portion of the  covenants or  agreements  contained in this
     Section  8, or the  application  thereof,  is  construed  to be  invalid or
     unenforceable,  the other portions of such  covenant(s) or  agreement(s) or
     the application thereof shall not be affected and shall be given full force

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     and effect without regard to the invalid or  unenforceable  portions to the
     fullest extent possible.  If any covenant or agreement in this Section 8 is
     held unenforceable  because of the area covered,  the duration thereof,  or
     the scope thereof,  then the court making such determination shall have the
     power to reduce the area and/or  duration  and/or limit the scope  thereof,
     and the  covenant or  agreement  shall then be  enforceable  in its reduced
     form.

          (f) For purposes of this Section 8, the term "the Bank" shall  include
     the Bank, any successor to the Bank under Section 9 hereof, and all present
     and future direct and indirect subsidiaries and affiliates of the Bank.

     9. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon any corporate or other  successor of the Bank which may acquire,
directly or indirectly, by merger, consolidation, purchase, or otherwise, all or
substantially  all of the assets of the Bank, and shall  otherwise  inure to the
benefit of and be binding upon the parties  hereto and their  respective  heirs,
executors,  administrators,  successors  and assigns.  Nothing in the  Agreement
shall  preclude  the  Bank  from  consolidating  or  merging  into  or  with  or
transferring all or substantially  all of its assets to another person.  In that
event,  such other person shall assume this Agreement and all obligations of the
Bank hereunder.  Upon such a  consolidation,  merger,  or transfer of assets and
assumption, the term "the Bank" as used herein, shall mean such other person and
this Agreement shall continue in full force and effect.

     10.  Waivers  Not to be  Continued.  Any waiver by a party of any breach of
this Agreement by another party shall not be construed as a continuing waiver or
as a consent to any subsequent breach by the other party.

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     11.  Notices.  All  notices,  requests,  demands  and other  communications
hereunder  shall be in  writing  and shall be deemed to have been duly  given if
delivered  by hand or mailed,  certified  or  registered  mail,  return  receipt
requested,  with postage  prepaid,  to the following  addresses or to such other
address as either party may designate by like notice:

                       If to Employee, to:
                       Mr. Robert M. McGovern
                       351 Valley Park South
                       Bethlehem, PA  18018

                       If to the Bank, to:

                       Nazareth National Bank and Trust Company
                       76 South Main Street
                       Nazareth, Pennsylvania 18064

                       Attn:  Board of Directors

and to such other or  additional  person or persons as either  party  shall have
designated to the other party in writing by like notice.

     12. Applicable Law;  Jurisdiction.  This Agreement shall be governed by and
construed  and  enforced  in  accordance  with  the  substantive   laws  of  the
Commonwealth  of  Pennsylvania  with respect to contracts  executed in and to be
wholly   performed   therein.   Bank  and  Employee  consent  to  the  exclusive
jurisdiction of the Court of Common Pleas,  Northampton County,  Commonwealth of
Pennsylvania  and the United States  District Court for the Eastern  District of
Pennsylvania in any and all actions arising hereunder and irrevocably consent to
service of process as set forth in Section 11 hereof.

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     13. General Provisions.

     (a) This Agreement  constitutes  the entire  agreement  between the parties
with respect to the subject matter hereof, and supersedes and replaces all prior
agreements  between the parties.  No amendment,  waiver or termination of any of
the  provisions  hereof shall be  effective  unless in writing and signed by the
party against whom it is sought to be enforced. Any written amendment, waiver or
termination  hereof executed by the Bank and Employee shall be binding upon them
and upon all other persons, without the necessity of securing the consent of any
other person and no person shall be deemed to be a third party beneficiary under
this Agreement.

          (b) This  Agreement  shall not limit or infringe upon the right of the
     Bank to terminate  the  employment  of Employee at any time for any reason,
     nor upon the right of Employee to terminate his employment with the Bank.

          (c) The  term  "person"  as used in  this  Agreement  means a  natural
     person, joint venture,  corporation,  sole  proprietorship,  trust, estate,
     partnership, cooperative, association, non-profit organization or any other
     legally cognizable entity.

          (d) This Agreement may be executed in one or more  counterparts,  each
     of which shall be deemed an original, but all of which taken together shall
     constitute one and the same Agreement.

          (e) No  failure  on the part of any party  hereto to  exercise  and no
     delay in exercising any right, power or remedy hereunder preclude any other
     or further exercise  thereof or the exercise of any other rights,  power or
     remedy.

          (f) The headings of the sections of this  Agreement have been inserted
     for  convenience  of reference  only and shall in no way restrict or modify
     any of the terms or provisions hereof.

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          (g) Nothing contained herein shall be construed to require the Bank to
     violate applicable law,  including,  but not limited to, applicable banking
     laws and regulations,  and all obligations of the Bank under this Agreement
     shall be deemed to be qualified accordingly.



ATTEST:                             NAZARETH NATIONAL BANK AND
                                         TRUST COMPANY




By: _________________________       By:____________________________
                                       S. Eric Beattie, President


Witness:


_____________________________         _________________________(SEAL)
                                       Robert M. McGovern