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                                                                   Exhibit 10.12

                                    AGREEMENT


      AGREEMENT, dated this 9th day of December 1997, between Commonwealth Bank
(the "Bank"), a federally chartered savings bank, and Peter A. Kehoe (the
"Executive").


                                   WITNESSETH

      WHEREAS, the Executive is presently President, ComNet Mortgage Services
Division of the Bank (the "Employer");

      WHEREAS, the Employer desires to be ensured of the Executive's continued
active participation in the business of the Employer, and the Bank desires to
have this new Agreement supersede its current agreement with the Executive dated
January 1, 1997; and

      WHEREAS, in order to induce the Executive to remain in the employ of the
Employer and in consideration of the Executive's agreeing to remain in the
employ of the Employer, the parties desire to specify the terms of such
employment, including the severance benefits which shall be due the Executive by
the Bank in the event that his employment with the Bank is terminated under
specified circumstances;

      NOW THEREFORE, in consideration of the mutual agreements herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

      1.  DEFINITIONS. The following words and terms shall have the meanings set
forth below for the purposes of this Agreement:

      (a) AVERAGE ANNUAL COMPENSATION. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the average
level of compensation paid to the Executive by the Employer or any subsidiary
thereof during the most recent five taxable years preceding the Date of
Termination, including Base Salary (as defined in Section 1(b) hereof) and
bonuses paid to the Executive but excluding amounts relating to the vesting of
Management Recognition Plan shares.

      (b) BASE SALARY. "Base Salary" shall mean the Executive's annual salary
exclusive of any pension or other retirement plan, profit sharing, stock option,
employee stock ownership, or other plans, benefits and privileges given to
employees and executives of the Employer.

      (c) CAUSE. Termination by the Bank of the Executive's employment for
"Cause" shall mean termination because of personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar
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offenses) or final cease-and-desist order or material breach of any provision of
this Agreement.

      (d) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of the
Corporation" shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), or any successor thereto, whether or not Commonwealth Bancorp, Inc. (the
"Corporation") is registered under the Exchange Act; provided that, without
limitation, such a change in control shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Corporation
representing 25% or more of the combined voting power of the Corporation's then
outstanding securities; or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Corporation cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.

      (e) CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.

      (f) DATE OF TERMINATION. "Date of Termination" shall mean the date the
Executive's employment is terminated for any reason, as specified in the Notice
of Termination.

      (g) DISABILITY. Termination by the Bank of the Executive's employment
based on "Disability" shall mean termination because of any physical or mental
impairment which qualifies the Executive for disability benefits under the
applicable long-term disability plan maintained by the Employer or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.

      (h) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive within one
year following a Change in Control of the Corporation based on:

                  (i)   Without the Executive's express written consent, the
                        failure to elect or to re-elect or to appoint or to
                        re-appoint the Executive to the office of President,
                        ComNet Mortgage Services Division of the Employer or a
                        material adverse change made by the Employer in the
                        Executive's functions, duties or responsibilities as
                        President, ComNet Mortgage Services Division of the
                        Employer as they existed immediately prior to a Change
                        in Control of the Corporation;
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                  (ii)  Without the Executive's express written consent, a
                        reduction by the Employer in the Executive's Base Salary
                        as the same may be increased from time to time or,
                        except to the extent permitted by Section 3(b) hereof, a
                        reduction in the package of fringe benefits provided to
                        the Executive, taken as a whole;

                  (iii) The principal executive office of the Employer is
                        relocated more than 25 miles from the current principal
                        executive office or, without the Executive's express
                        written consent, the Employer requires the Executive to
                        be based anywhere other than an area in which the
                        Employer's principal executive office is located, except
                        for required travel on business of the Employer to an
                        extent substantially consistent with the Executive's
                        present business travel obligations;

                  (iv)  Any purported termination of the Executive's employment
                        for Cause, Disability or Retirement which is not
                        effected pursuant to a Notice of Termination satisfying
                        the requirements of paragraph (j) below; or

                  (v)   The failure by the Bank to obtain the assumption of and
                        agreement to perform this Agreement by any successor as
                        contemplated in Section 9 hereof.

      (i) IRS. IRS shall mean the Internal Revenue Service.

      (j) NOTICE OF TERMINATION. Any purported termination of the Executive's
employment by the Bank for any reason, including without limitation for Cause,
Disability or Retirement, or by the Executive for any reason, including without
limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated,
(iii) specifies a Date of Termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of the Bank's termination of the Executive's employment for Cause,
which shall be effective immediately; and (iv) is given in the manner specified
in Section 10 hereof.

      (k) RETIREMENT. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employer's retirement policies, including early
retirement, generally applicable to their salaried employees.

      (l) GENDER NEUTRAL PRONOUN USAGE. The use of the masculine pronoun shall
be deemed to include the feminine pronoun throughout this Agreement.
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      2.  TERM OF EMPLOYMENT.

      (a) The Bank hereby employs the Executive as President, ComNet Mortgage
Services Division and the Executive hereby accepts said employment and agrees to
render such services to the Bank on the terms and conditions set forth in this
Agreement. The term of employment under this Agreement shall be for three years,
commencing on the date of this Agreement and, upon approval of the Board of
Directors of the Bank, shall extend for an additional year on each annual
anniversary of the date of this Agreement such that at any time the remaining
term of this Agreement shall be from two to three years. Prior to the first
annual anniversary of the date of this Agreement and each annual anniversary
thereafter, the Board of Directors of the Bank shall consider and review (taking
into account all relevant factors, including the Executive's performance
hereunder) an extension of the term of this Agreement, and the term shall
continue to extend each year if the Board of Directors approves such extension
unless the Executive gives written notice to the Employer of the Executive's
election not to extend the term, with such written notice to be given not less
than thirty (30) days prior to any such anniversary date. If the Board of
Directors elects not to extend the term, it shall give written notice of such
decision to the Executive not less than thirty (30) days prior to any such
anniversary date. If any party gives timely notice that the term will not be
extended as of any annual anniversary date, then this Agreement shall terminate
at the conclusion of its remaining term. References herein to the term of this
Agreement shall refer both to the initial term and successive terms.

      (b) During the term of this Agreement, the Executive shall perform such
executive services for the Bank as may be consistent with his titles and from
time to time assigned to him by the Bank's Board of Directors.

      3.  COMPENSATION AND BENEFITS.

      (a) The Employer shall compensate and pay the Executive for his services
during the term of this Agreement at a minimum Base Salary of $154,440 per year,
which may be increased from time to time in such amounts as may be determined by
the Board of Directors of the Employer and may not be decreased without the
Executive's express written consent. In addition to his Base Salary, the
Executive shall be entitled to receive during the term of this Agreement such
bonus payments as may be determined by the Board of Directors of the Employer.

      (b) During the term of this Agreement, the Executive shall be entitled to
participate in and receive the benefits of any pension or other retirement
benefit plan, profit sharing, stock option, employee stock ownership, or other
plans, benefits and privileges given to employees and executives of the
Employer, to the extent commensurate with his then duties and responsibilities,
as fixed by the Board of Directors of the Employer. The Bank shall not make any
changes in such plans, benefits or privileges which would adversely affect the
Executive's rights or benefits thereunder, unless such change occurs pursuant to
a program applicable to all executive officers of the Bank and does not result
in a
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proportionately greater adverse change in the rights of or benefits to the
Executive as compared with any other executive officer of the Bank. Nothing paid
to the Executive under any plan or arrangement presently in effect or made
available in the future shall be deemed to be in lieu of the salary payable to
the Executive pursuant to Section 3(a) hereof.

      (c) During the term of this Agreement, the Executive shall be entitled to
paid annual vacation in accordance with the policies as established from time to
time by the Board of Directors of the Employer, which shall in no event be less
than four weeks per annum. The Executive shall not be entitled to receive any
additional compensation from the Employer for failure to take a vacation, nor
shall the Executive be able to accumulate unused vacation time from one year to
the next, except to the extent authorized by the Board of Directors of the
Employer.

      (d) During the term of this Agreement, in keeping with past practices, the
Employer shall continue to provide the Executive with the use of an
Employer-owned automobile appropriate to his positions with the Employer and to
pay all costs associated with such automobile, including registration,
licensing, insurance and costs of operation.

      (e) In the event the Executive's employment is terminated by the Bank for
any reason other than Cause, the Employer shall provide continued group
insurance (other than disability insurance unless the Executive was disabled and
was receiving disability insurance benefits prior to the Date of Termination),
life insurance, and health and accident insurance substantially identical to the
coverage maintained by the Employer for the Executive immediately prior to his
termination. Such coverage shall cease upon the expiration of the remaining term
of this Agreement.

      4.  EXPENSES. The Employer shall reimburse the Executive or otherwise
provide for or pay for all reasonable expenses incurred by the Executive in
furtherance of or in connection with the business of the Employer, including,
but not by way of limitation, automobile expenses described in Section 3(d)
hereof, traveling expenses, and all reasonable entertainment expenses (whether
incurred at the Executive's residence, while traveling or otherwise), subject to
such reasonable documentation and other limitations as may be established by the
Board of Directors of the Employer. If such expenses are paid in the first
instance by the Executive, the Employer shall reimburse the Executive therefor.

      5.  TERMINATION.

      (a) The Bank shall have the right, at any time upon prior Notice of
Termination, to terminate the Executive's employment hereunder for any reason,
including without limitation termination for Cause, Disability or Retirement,
and the Executive shall have the right, upon prior Notice of Termination, to
terminate his employment hereunder for any reason. The Executive's employment
and his status as an officer shall terminate (i) immediately upon being given a
Notice of Termination for Cause, or (ii) on the Date of Termination for any
other reason.
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      (b) In the event that (i) the Executive's employment is terminated by the
Bank for Cause or (ii) the Executive terminates his employment hereunder other
than for Disability, Retirement, death or Good Reason, the Executive shall have
no right pursuant to this Agreement to compensation or other benefits for any
period after the applicable Date of Termination.

      (c) In the event that the Executive's employment is terminated as a result
of Disability, Retirement or the Executive's death during the term of this
Agreement, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination, except as provided for in Section 3(e) hereof.

      (d) In the event that (i) the Executive's employment is terminated by the
Bank for other than Cause, Disability, Retirement or the Executive's death or
(ii) such employment is terminated by the Executive (a) due to a material breach
of this Agreement by the Bank, which breach has not been cured within fifteen
(15) days after a written notice of non-compliance has been given by the
Executive to the Employer, or (b) for Good Reason, then the Bank shall, subject
to the provisions of Section 6 hereof, if applicable

            (A) pay to the Executive, within thirty (30) days following the Date
      of Termination, a lump cash severance amount equal to three (3) times the
      Executive's Average Annual Compensation, and

            (B) maintain and provide for a period ending at the earlier of (i)
      the expiration of twenty-four (24) months from the Executive's Date of
      Termination or (ii) the date of the Executive's full-time employment by
      another employer (provided that the Executive is entitled under the terms
      of such employment to benefits substantially similar to those described in
      this subparagraph (B)), on a tax-adjusted basis at no cost to the
      Executive, the Executive's continued participation in all group insurance
      (other than disability insurance unless the Executive was disabled and was
      receiving disability insurance benefits prior to the Date of Termination),
      life insurance, health and accident insurance and other employee benefit
      plans, programs and arrangements offered by the Bank in which the
      Executive was entitled to participate immediately prior to the Date of
      Termination (other than stock option, employee stock ownership and
      restricted stock plans).

      6.  LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES. If the payments
and benefits pursuant to Section 5 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Bank, would constitute a "parachute payment" under Section 280G of the Code, the
payments and benefits payable by the Bank pursuant to Section 5 hereof shall be
reduced, in the manner determined by the Executive, by the amount, if any, which
is the minimum necessary to result in no portion of the payments and benefits
payable by the Bank under Section 5 being non-deductible to the Bank pursuant to
Section 280G of the Code and subject to the excise tax imposed under
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Section 4999 of the Code. The parties hereto agree that the payments and
benefits payable pursuant to this Agreement by the Bank to the Executive upon
termination shall be limited to a maximum of three times the Executive's "base
amount" (as defined in Section 280G(b)(3) of the Code) in accordance with OTS
Regulatory Bulletin 27a. The determination of any reduction in the payments and
benefits to be made pursuant to Section 5 shall be based upon the opinion of
independent tax counsel selected by the Bank's independent public accountants
and paid by the Bank. Such counsel shall be reasonably acceptable to the Bank
and the Executive; shall promptly prepare the foregoing opinion, but in no event
later than thirty (30) days from the Date of Termination; and may use such
actuaries as such counsel deems necessary or advisable for the purpose. Nothing
contained herein shall result in a reduction of any payments or benefits to
which the Executive may be entitled upon termination of employment under any
circumstances other than as specified in this Section 6, or a reduction in the
payments and benefits specified in Section 5 below zero.

      7.  MITIGATION; EXCLUSIVITY OF BENEFITS.

      (a) The Executive, unless his employment is terminated for Disability,
Retirement, death, a Change in Control of the Corporation or pursuant to Section
5(d)(ii) hereof, shall be required to mitigate the amount of any payments and
benefits hereunder by seeking other employment or otherwise. In the event that
the Executive obtains other employment during the period that the Executive is
receiving payments pursuant to Section 5(d)(i) hereof, the cash amounts to be
paid to the Executive pursuant thereto shall be reduced by any compensation
received by the Executive as a result of employment by another employer after
the Date of Termination, unless the termination was in connection with a Change
in Control of the Corporation.

      (b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employer pursuant to employee benefit plans
of the Employer or otherwise.

      8.  WITHHOLDING. All payments required to be made by the Bank hereunder to
the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Bank may reasonably
determine should be withheld pursuant to any applicable law or regulation.

      9.  ASSIGNABILITY. The Bank may assign this Agreement and its rights and
obligations hereunder in whole, but not in part, to any corporation, bank or
other entity with or into which the Bank may hereafter merge or consolidate or
to which the Bank may transfer all or substantially all of its assets, if in any
such case said corporation, bank or other entity shall by operation of law or
expressly in writing assume all obligations of the Bank hereunder as fully as if
it had been originally made a party hereto, but may not otherwise assign this
Agreement or its rights and obligations hereunder. The Executive may not assign
or transfer this Agreement or any rights or obligations hereunder.
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      10.  NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:

         To the Bank:       Secretary
                            Commonwealth Bank
                            2 West Lafayette Street
                            Norristown, Pennsylvania  19401-4758

         To the Executive:  Peter A. Kehoe
                            2 Country Lane
                            Malvern, Pennsylvania 19355


      11. CONFIDENTIALITY. The Executive acknowledges that by virtue of his
employment hereunder, he will maintain an intimate knowledge of the activities
and affairs of the Employer, including confidential matters. As a result, the
Executive agrees to maintain the confidentiality of all confidential information
relating to the Employer during the term of employment hereunder and any period
that the Executive may be receiving payments pursuant to this Agreement,
provided that nothing in this Section 11 shall be deemed to prevent the
Executive from either (a) being employed by any other corporation, firm or
entity upon termination of the Executive's employment by the Employer as long as
the Executive does not violate the foregoing prescription, or (b) responding to
inquiries from regulatory authorities.

      12. ARBITRATION. The Executive and the Employer agree to submit to final
and binding arbitration pursuant to the rules of the American Arbitration
Association, any and all claims arising from the termination, for any reason, of
the Executive's employment by the Employer including, but not limited to:

      (a) any and all claims for wages and benefits (including without
limitation salary, stock, commissions, royalties, license fees, health and
welfare benefits, severance pay, vacation pay, and bonuses);

      (b) any and all claims for wrongful discharge and breach of contract
(whether express or implied), and implied covenants of good faith and fair
dealing;

      (c) any and all claims for alleged employment discrimination on the basis
of age, race, color, religion, sex, national origin, veteran status, disability
and/or handicap, in violation of any federal, state or local statute, ordinance,
judicial precedent or executive order, including but not limited to claims for
discrimination under the following statutes: Title VII of the Civil Rights Act
of 1964, 42 U.S.C. Section 2000 et. seq., the Civil Rights Act of 1866, 42
U.S.C. Section 1981, the Age Discrimination in Employment Act, as amended, 29
U.S.C.
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                                        9

Section 621 et. seq., the Older Workers Benefit Protection Act, the
Rehabilitation Act of 1972, as amended, 29 U.S.C. Section 701 et. seq., the
Americans with Disabilities Act, 42 U.S.C. Section 12101 et. seq., and the
Pennsylvania Human Relations Act, 43 P.S. Section 951 et. seq.;

      (d) any and all claims under any federal or state statute relating to
employee benefits or pensions;

      (e) any and all claims in tort (including but not limited to any claims
for misrepresentation, defamation, interference with contract or prospective
economic advantage, intentional infliction of emotional distress and
negligence); and

      (f) any and all claims for attorney's fees and costs.

      13.  AMENDMENT; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Bank to sign on its
behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

      14.  GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.

      15.  NATURE OF OBLIGATIONS. Nothing contained herein shall create or
require the Bank to create a trust of any kind to fund any benefits which may be
payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Bank hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Bank.

      16.  HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

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

      18.  COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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                                       10

      19.  REGULATORY ACTIONS. The following provisions shall be applicable to
the parties to the extent that they are required to be included in employment
agreements between a savings bank and its employees pursuant to Section
563.39(b) of the Regulations Applicable to all Savings Associations, 12 C.F.R.
Section 563.39(b), or any successor thereto, and shall be controlling in the
event of a conflict with any other provision of this Agreement, including
without limitation Section 5 hereof.

      (a) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Bank's affairs pursuant to
notice served under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit
Insurance Act ("FDIA")(12 U.S.C. Sections 1818(e)(3) and 1818(g)(1)), the
Bank's obligations under this Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Bank may, in its discretion: (i) pay the Executive all or
part of the compensation withheld while its obligations under this Agreement
were suspended, and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.

      (b) If the Executive is removed from office and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. Sections 1818(e)(4)
and (g)(1)), all obligations of the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights of the Executive and the
Bank as of the date of termination shall not be affected.

      (c) If the Bank is in default, as defined in Section 3(x)(1) of the FDIA
(12 U.S.C. Section 1813(x)(1)), all obligations under this Agreement shall
terminate as of the date of default, but vested rights of the Executive and the
Bank as of the date of termination shall not be affected.

      (d) All obligations under this Agreement shall be terminated pursuant to
12 C.F.R. Section 563.39(b)(5) (except to the extent that it is determined that
continuation of the Agreement for the continued operation of the Bank is
necessary): (i) by the Director of the OTS, or his/her designee, at the time the
Federal Deposit Insurance Corporation ("FDIC") enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of the FDIA (12 U.S.C. Section 1823(c)); or (ii) by the Director
of the OTS, or his/her designee, at the time the Director or his/her designee
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director of the OTS to be in an
unsafe or unsound condition, but vested rights of the Executive and the Employer
as of the date of termination shall not be affected.

      20.  REGULATORY PROHIBITION. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C. Section 1828(k)) and any regulations
promulgated thereunder.
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      21. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Bank and the Executive with respect to the matters agreed to herein.
All prior agreements between the Bank and the Executive with respect to the
matters agreed to herein, including without limitation the Agreement between the
Employer and the Executive dated January 1, 1997, are hereby superseded and
shall have no force or effect.

      IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.

Attest:                                   COMMONWEALTH BANK



                                          By:
________________________________________     ___________________________________
Patrick J. Ward, President and Secretary     __________________, Director and
                                              Member of the Compensation and
                                              Benefits Committee of the Board
                                              of Directors


Witness:                                  EXECUTIVE



                                          By:
________________________________________     ___________________________________
Patrick J. Ward                              Peter A. Kehoe