Exhibit 10.18

                              SEVERANCE AGREEMENT

     Agreement  made this 22nd day of September  1997,  by and between  Nazareth
National Bank and Trust Company, a banking association  organized under the laws
of  the  United  States   ("Bank")  and  Tomas  J.   Bamberger,   an  individual
("Employee").

                                   BACKGROUND

     Employee is  currently  employed by the Bank in the  position of  Executive
Vice President and Chief Lending  Officer.  In consideration of Employee's past,
present  and future  services to the Bank,  the Bank  desires 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 continue for a period  beginning on the day
hereof and ending on 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 any twelve month period);  (b)  termination  of Employee's  employment
with the Bank for cause (as hereinafter  defined);  (c) mutual  agreement of the
Bank and Employee;  (d) subject to Section 2 hereof,  termination by Employee of
Employee's employment with the Bank by resignation or otherwise; or (e) December
31, 2000.   In  the  event the Employee's employment with the Bank is terminated

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during the Term other than as set forth in Section 2 hereof,  the Employee shall
have no rights or benefits  under this  Agreement,  but shall be entitled to any
other rights or benefits to which he or she might  otherwise be entitled to. For
purposes  of this  Agreement,  the term  "cause"  shall mean (i)  conviction  of
Employee  for any felony,  fraud or  embezzlement  or (ii)  Employee  failing or
refusing to comply with the written  policies or  directives of the Bank's Board
of Directors or the Employee  being guilty of misconduct in connection  with the
performance  of his  duties  for the Bank and the  Employee  fails to cure  such
non-compliance  or misconduct  within twenty days after receiving written notice
from the Bank's Board of Directors specifying such non-compliance or misconduct.

     2. Termination.  If during the 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) the Employee terminates  Employee's employment with the Bank due to the
fact that 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

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then  current  base annual  salary is  materially  reduced to a level below that
which he enjoys on the date hereof,  the fringe benefits which the Bank provides
Employee on the date hereof are materially reduced, 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 eighty miles from his current  principal  place of employment  with
the Bank,  provided,  however,  that for any  termination by Employee under this
clause (b) the Employee shall have first given Bank ten (10) days written notice
of his intention to  termination  his  employment  pursuant to this clause (ii),
specifying the 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 ten (10) days after receipt of such written notice.

     3.  Termination  Payments to  Employee.  Commencing  not later than 30 days
after the date  Employee's  employment  with the Bank is terminated  pursuant to
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 "Compensation  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 Annual Incentive Bonus Plan. The Bank
agrees that it will make the  payments due under this Section 3 on the first day
of each month following the Termination  Date in an amount equal to 1/12 of 100%
of  Employee's  base annual  salary on the  Termination  Date.  Such payments to
Employee   shall   be  reduced   each   month    by   the  sum of the following:

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     (a) by the  amount of any  pension or annuity  benefits  Employee  receives
under the Bank's Defined  Benefit Pension Plan as the same shall be amended from
time to time, if Employee had retired at age 65  (regardless of when he actually
retired)  and had elected the single life  annuity  benefit  (regardless  of the
benefit he actually elected),  and (b)in the event Employee commences employment
within the Compensation  Period, by the amount of base annual salary to which he
is then entitled by virtue of his new  employment.  The intent of this paragraph
is that the sum of payments made under this Section 3 in any year, when added to
payments  received under the Bank's Defined Benefit Pension Plan and base annual
salary  received by virtue of other  employment,  will not exceed the Employee's
base annual salary on the  Termination  Date. The Employee  covenants and agrees
that upon the  termination  of the  Employee's  employment  with the  Bank,  the
Employee shall use his best efforts to secure new employment.

     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:

     (a) for a period of one year following the Termination Date,  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;  provided,  however,  in no event  shall the Bank be  obligated  to
reimburse  Employee  hereunder in excess of 1/3 of his base annual salary on the
Termination Date.

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     (b) for a period of one year following the Termination Date,  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  hereunder in excess of 1/3 of his base annual
salary on the Termination Date.

     (c) for a period of one year following the Termination Date, Employee shall
be entitled to participate in the following programs of the Bank:

          (i) All medical,  hospitalization and life insurance benefits shall be
     continued  for  the  Compensation  Period  except  that  should  subsequent
     employment be accepted during the Compensation Period,  continuation of any
     medical,  hospitalization  and life  insurance  benefits  will be offset by
     coverages provided through the Employee's subsequent employer.

          (ii) If  permitted  under the terms  thereof,  Employee  will remain a
     participant  under  the  Bank's  Defined  Benefit  Pension  Plan,  however,
     benefits  will be  actuarially  reduced  based  upon  the  number  of years
     remaining  until  Employee's  normal  retirement  date had he  remained  an
     employee of the Bank.

     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 in cash from the general  funds of the Bank.  No special or  separate  fund
shall be required to be  established  by the Bank and the 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

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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.

     (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.

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     (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.

     (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  or
Lehigh  Counties,  Pennsylvania  or Warren  County,  New Jersey  except that the
foregoing shall not prohibit  Employee from owning as a shareholder less than l%
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)

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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.  In the event
of an alleged breach by Employee of any of the covenants or agreements contained
in this  Section  8, the Bank shall  continue  any and all of the  payments  due
Employee under this Agreement until such time as a court shall enter a final and
unappealable order finding such a breach; provided,  however, that the foregoing
shall not preclude a court from ordering Employee to repay such payments made to
him for the  period  after the breach is  determined  to have  occurred  or from
ordering that  payments  hereunder be  permanently  terminated in the event of a
material and willful  breach.

     (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 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 deter  mination  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.

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     (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.

     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:

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              If to Employee, to:

                 Tomas J. Bamberger
                 510 East Station Avenue
                 Coopersburg, Pennsylvania 18036

              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 irrevoc ably consent
to service of process as set forth in Section 11 hereof.

     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

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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.  (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.

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ATTEST:                                     NAZARETH NATIONAL BANK AND
                                                    TRUST COMPANY


By:/s/ Judith S. Files                      By:/s/ S. Eric Beattie
           , Secretary                             S. Eric Beattie, President


Witness:


 /s/ Reid L. Heeren                            /s/ Tomas J. Bamberger   (SEAL)
                                                   Tomas J. Bamberger