FARNSWORTH BANCORP, INC.

                             2002 STOCK OPTION PLAN


     1. Purpose of the Plan. The Plan shall be known as the Farnsworth  Bancorp,
Inc. (the  "Company")  2002 Stock Option Plan (the  "Plan").  The purpose of the
Plan is to attract and retain  qualified  personnel for positions of substantial
responsibility  and to provide  additional  incentive  to  officers,  directors,
employees and other persons providing services to the Company, or any present or
future  parent or  subsidiary  of the  Company  to  promote  the  success of the
business.

     2. Definitions. The following words and phrases when used in this Plan with
an initial capital letter, unless the context clearly indicates otherwise, shall
have the meaning as set forth below. Wherever appropriate, the masculine pronoun
shall include the feminine pronoun and the singular shall include the plural.

     "Award" means the grant by the Committee of a Stock Option,  as provided in
the Plan.

     "Bank"  shall mean  Peoples  Savings  Bank,  or any  successor  corporation
thereto.

     "Board" shall mean the Board of Directors of the Company,  or any successor
or parent corporation thereto.

     "Change in Control" shall mean: (i) the sale of all, or a material portion,
of the assets of the Company; (ii) the merger or recapitalization of the Company
whereby the Company is not the  surviving  entity;  (iii) a change in control of
the  Company,  as  otherwise  defined  or  determined  by the  Office  of Thrift
Supervision or regulations promulgated by it; or (iv) the acquisition,  directly
or indirectly,  of the beneficial  ownership (within the meaning of that term as
it is used in Section 13(d) of the Securities Exchange Act of 1934 and the rules
and regulations  promulgated thereunder) of twenty-five percent (25%) or more of
the outstanding voting securities of the Company by any person, trust, entity or
group. This limitation shall not apply to the purchase of shares by underwriters
in connection with a public offering of Company stock, or the purchase of shares
of up to 25% of any  class  of  securities  of the  Company  by a  tax-qualified
employee stock benefit plan which is exempt from the approval requirements,  set
forth under 12 C.F.R. ss.574.3(c)(1)(vi) as now in effect or as may hereafter be
amended.   The  term  "person"   refers  to  an  individual  or  a  corporation,
partnership,   trust,   association,   joint  venture,  pool,  syndicate,   sole
proprietorship,  unincorporated  organization  or any other  form of entity  not
specifically  listed  herein.  . "Code" shall mean the Internal  Revenue Code of
1986, as amended, and regulations promulgated thereunder.

     "Committee" shall mean the Board or the Stock Option Committee appointed by
the Board in accordance with Section 5(a) of the Plan.

     "Common Stock" shall mean common stock of the Company,  or any successor or
parent corporation thereto.

     "Company" shall mean the Farnsworth  Bancorp,  Inc., the parent corporation
of the Bank, or any successor or Parent thereof.

     "Continuous  Employment" or "Continuous  Status as an Employee"  shall mean
the absence of any interruption or termination of employment with the Company or
any present or future Parent or

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Subsidiary of the Company. Employment shall not be considered interrupted in the
case of sick leave, military leave or any other leave of absence approved by the
Company or in the case of transfers between payroll locations, of the Company or
between the Company, its Parent, its Subsidiaries or a successor.

     "Director"  shall  mean a  member  of the  Board  of  the  Company,  or any
successor or parent corporation thereto.

     "Director  Emeritus"  shall mean a person  serving as a director  emeritus,
advisory  director,  consulting  director  or other  similar  position as may be
appointed  by the Board of  Directors  of the Bank or the  Company  from time to
time.

     "Disability"  means any  physical or mental  impairment  which  renders the
Participant  incapable of continuing in the employment or service of the Bank or
the Parent in his then current capacity as determined by the Committee.

     "Effective Date" shall mean August 17, 2002.

     "Employee"  shall mean any person employed by the Company or any present or
future Parent or Subsidiary of the Company.

     "Fair Market Value" shall mean: (i) if the Common Stock is traded otherwise
than on a national  securities  exchange,  then the Fair Market  Value per Share
shall be equal to the mean  between  the last bid and ask  price of such  Common
Stock on such date or, if there is no bid and ask  price on said  date,  then on
the immediately prior business day on which there was a bid and ask price. If no
such  bid and ask  price is  available,  then the  Fair  Market  Value  shall be
determined by the Committee in good faith; or (ii) if the Common Stock is listed
on a national securities exchange, then the Fair Market Value per Share shall be
not less than the average of the highest and lowest selling price of such Common
Stock on such  exchange  on such  date,  or if there were no sales on said date,
then the Fair Market  Value shall be not less than the mean between the last bid
and ask price on such date.

     "Option" or "Stock Option" shall mean an option to purchase  Shares granted
pursuant to Section 8 hereof, providing the holder of such Option with the right
to purchase  Common  Stock.  The  Committee is  authorized to grant Options that
comply  with the  requirements  of Section 422 of the Code as  "incentive  stock
options" and Options that do not satisfy such requirements. Any award of Options
by the Committee that satisfy the  requirements  to be an incentive stock option
shall  nevertheless be deemed an option that does not satisfy such  requirements
in the event that the stockholders of the Company do not vote to ratify the Plan
within the time period specified at Section 422 of the Code.

     "Optioned  Stock" shall mean stock subject to an Option granted pursuant to
the Plan.

     "Optionee"  shall mean any person who receives an Option or Award  pursuant
to the Plan.

     "Parent"  shall mean any  present or future  corporation  which  would be a
"parent  corporation"  of the Bank or the Company as defined in Sections  424(e)
and (g) of the Code.

     "Participant" means any Director, Director Emeritus, officer or employee of
the  Company  or any Parent or  Subsidiary  of the  Company or any other  person
providing a service to the Company who is selected by the  Committee  to receive
an Award, or who by the express terms of the Plan is granted an Award.

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     "Plan" shall mean the Farnsworth Bancorp, Inc. 2002 Stock Option Plan.

     "Share" shall mean one share of the Common Stock.

     "Subsidiary" shall mean any present or future corporation which constitutes
a "subsidiary corporation" as defined in Sections 424(f) and (g) of the Code.

     3.  Shares  Subject  to the  Plan.  Except  as  otherwise  required  by the
provisions of Section 11 hereof,  the aggregate number of Shares with respect to
which Awards may be made  pursuant to the Plan shall not exceed  21,652  Shares.
Such Shares may either be from authorized but unissued  shares,  treasury shares
or shares  purchased in the market for Plan purposes.  If an Award shall expire,
become unexercisable,  or be forfeited for any reason prior to its exercise, new
Awards may be granted  under the Plan with respect to the number of Shares as to
which such expiration has occurred.

     4. Six Month Holding Period.

     Subject  to vesting  requirements,  if  applicable,  except in the event of
death or  Disability  of the Optionee or a Change in Control of the  Company,  a
minimum of six months must elapse between the date of the grant of an Option and
the date of the sale of the Common Stock  received  through the exercise of such
Option.

     5. Administration of the Plan.

     (a)  Composition of the Committee.  The Plan shall be  administered  by the
Board of Directors of the Company or a Committee which shall consist of not less
than two  Directors  of the  Company  appointed  by the Board and serving at the
pleasure of the Board. All persons  designated as members of the Committee shall
meet the  requirements of a "Non-Employee  Director"  within the meaning of Rule
16b-3 under the Securities  Exchange Act of 1934, as amended, as found at 17 CFR
ss.240.16b-3.

     (b) Powers of the Committee.  The Committee is authorized  (but only to the
extent not  contrary to the  express  provisions  of the Plan or to  resolutions
adopted by the Board) to interpret  the Plan,  to  prescribe,  amend and rescind
rules and regulations relating to the Plan, to determine the form and content of
Awards to be issued under the Plan and to make other determinations necessary or
advisable for the  administration  of the Plan,  and shall have and may exercise
such other power and  authority as may be delegated to it by the Board from time
to time. A majority of the entire  Committee  shall  constitute a quorum and the
action of a majority of the members  present at any meeting at which a quorum is
present  shall be  deemed  the  action  of the  Committee.  In no event  may the
Committee revoke outstanding Awards without the consent of the Participant.

     The President of the Company and such other officers as shall be designated
by the Committee are hereby authorized to execute written agreements  evidencing
Awards  on  behalf  of the  Company  and to cause  them to be  delivered  to the
Participants.  Such agreements  shall set forth the Option  exercise price,  the
number of shares of Common Stock subject to such Option,  the expiration date of
such Options, and such other terms and restrictions  applicable to such Award as
are determined in accordance with the Plan or the actions of the Committee.

     (c) Effect of  Committee's  Decision.  All  decisions,  determinations  and
interpretations  of the Committee  shall be final and  conclusive on all persons
affected thereby.


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     6. Eligibility for Awards and Limitations.

     (a)  The  Committee  shall  from  time  to time  determine  the  Directors,
Employees  and other  persons who shall be granted  Awards  under the Plan,  the
number  of Awards  to be  granted  to each  such  persons,  and other  terms and
conditions of such Awards in accordance with the Plan. In selecting Participants
and in  determining  the number of Shares of Common  Stock to be granted to each
such  Participant,  the  Committee  may  consider  the  nature  of the prior and
anticipated  future  services  rendered  by each  such  Participant,  each  such
Participant's  current and potential  contribution to the Company and such other
factors  as  the  Committee  may,  in  its  sole   discretion,   deem  relevant.
Participants  who have been  granted an Award may,  if  otherwise  eligible,  be
granted additional Awards.

     (b) In no event shall  Shares  subject to Options  granted to  non-employee
Directors  in the  aggregate  under this Plan  exceed  more than  12,000  Shares
authorized  for delivery  under this Plan.  In no event shall Shares  subject to
Options granted to any  Participant  exceed more than 25% of the total number of
Shares authorized for delivery under the Plan.

     7. Term of the Plan.  The Plan shall  continue  in effect for a term of ten
(10) years from the Effective Date, unless sooner terminated pursuant to Section
15 hereof.  No Option shall be granted  under the Plan after ten (10) years from
the Effective Date.

     8.  Terms and  Conditions  of Stock  Options.  Each  Stock  Option  granted
pursuant to the Plan shall be  evidenced  by an  instrument  in such form as the
Committee shall from time to time approve. Each Stock Option granted pursuant to
the Plan shall comply with and be subject to the following terms and conditions.

     (a) Options  Granted to Directors.  Subject to the  limitations  of Section
6(b),  Stock Options to purchase the following  number of shares of Common Stock
will be granted to each  Director  who is not an  Employee  as of the  Effective
Date, at an exercise price equal to the Fair Market Value of the Common Stock on
the  Effective  Date.  Such Options  shall be first  exercisable  at the rate of
one-third on September 5, 2002 and one-third annually  thereafter.  Such Options
shall continue to be exercisable for a period of ten years following the date of
grant without regard to the continued services of such Director as a Director or
Director  Emeritus.  In the event of the Optionee's  death,  such Options may be
exercised by the personal  representative  of his estate or person or persons to
whom his rights  under such  Option  shall have passed by will or by the laws of
descent and  distribution.  Options may be granted to newly appointed or elected
non-employee Directors within the sole discretion of the Committee. The exercise
price per Share of such Options  granted shall be equal to the Fair Market Value
of the Common  Stock at the time such  Options  are  granted.  Unless  otherwise
inapplicable, or inconsistent with the provisions of this paragraph, the Options
to be granted to Directors hereunder shall be subject to all other provisions of
this Plan.

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                Director                            Number of Options
                --------                            -----------------
                George G. Aaronson, Jr.                   1,650
                Joseph H. Kelly                           2,291
                G. Edward Koenig, Jr.                     1,148
                Edgar N. Peppler                          2,583
                Charles E. Adams                          2,180
                William H. Wainwright, Jr.                2,800


     (b) Option  Price.  The  exercise  price per Share of Common Stock for each
Stock  Option  granted  pursuant  to the  Plan  shall  be at such  price  as the
Committee  may determine in its sole  discretion,  but in no event less than the
Fair Market Value of such Common Stock on the date of grant as determined by the
Committee in good faith.

     (c) Payment. Full payment for each Share of Common Stock purchased upon the
exercise of any Stock Option granted under the Plan shall be made at the time of
exercise of each such Stock  Option and shall be paid in cash (in United  States
Dollars),  Common Stock or a combination of cash and Common Stock.  Common Stock
utilized in full or partial  payment of the exercise  price must have been owned
by the party  exercising  such Option for not less than six months  prior to the
date of exercise of such  Option,  and such Common  Stock shall be valued at the
Fair Market  Value at the date of  exercise.  The Company  shall  accept full or
partial payment in Common Stock only to the extent  permitted by applicable law.
No Shares of Common Stock shall be issued  until full payment has been  received
by the Company and no Optionee  shall have any of the rights of a stockholder of
the Company until the Shares of Common Stock are issued to the Optionee.

     (d) Term. The term of  exercisability of each Stock Option granted pursuant
to the Plan  shall be not more than ten (10) years from the date each such Stock
Option is granted.

     (e) Exercise Generally. The Committee may impose additional conditions upon
the right of any  Participant  to exercise  any Stock Option  granted  hereunder
which is not  inconsistent  with the  terms of the  Plan.  Except  as  otherwise
provided by the terms of the Plan or by action of the  Committee  at the time of
the grant of the Options,  the Options will be first  exercisable at the rate of
one-third  of  such  Award  as of the  date  of  grant  and  one-third  annually
thereafter.

     (f) Cashless Exercise.  Subject to vesting requirements,  if applicable, an
Optionee  who has held a Stock  Option for at least six months may engage in the
"cashless exercise" of the Option.  Upon a cashless exercise,  an Optionee gives
the Company  written notice of the exercise of the Option together with an order
to a registered  broker-dealer or equivalent third party, to sell part or all of
the Optioned  Stock and to deliver  enough of the proceeds to the Company to pay
the Option exercise price and any applicable  withholding taxes. If the Optionee
does  not  sell  the  Optioned  Stock  through  a  registered  broker-dealer  or
equivalent  third party, the Optionee can give the Company written notice of the
exercise

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of the Option and the third party  purchaser of the Optioned Stock shall pay the
Option exercise price plus any applicable withholding taxes to the Company.

     (g) Transferability. Any Stock Option granted pursuant to the Plan shall be
exercised  during an  Optionee's  lifetime  only by the  Optionee to whom it was
granted and shall not be assignable or transferable otherwise than by will or by
the laws of descent and distribution.

     9. Effect of Termination of Employment, Disability or Death on Stock
        Options.

     The terms and  conditions  of Stock  Options  relating to the effect of the
termination of an Optionee's  employment or service,  or the Disability or death
of an Optionee shall be such terms and conditions as the Committee shall, in its
sole  discretion,  determine  at the  time of  termination  of  service,  unless
specifically  provided for by the terms of the Agreement at the time of grant of
the award.

     10.  Withholding  Tax. The Company  shall have the right to deduct from all
amounts paid in cash with respect to the cashless  exercise of Options any taxes
required  by law to be  withheld  with  respect to such cash  payments.  Where a
Participant  or other  person is  entitled  to receive  Shares  pursuant  to the
exercise  of an  Option,  the  Company  shall  have  the  right to  require  the
Participant  or such  other  person to pay the  Company  the amount of any taxes
which the Company is required to withhold  with respect to such  Shares,  or, in
lieu  thereof,  to retain,  or to sell without  notice,  a number of such Shares
sufficient to cover the amount required to be withheld.

     11. Recapitalization, Merger, Consolidation, Change in Control and Other
         Transactions.

     (a) Adjustment.  Subject to any required action by the  stockholders of the
Company,  within the sole discretion of the Committee,  the aggregate  number of
Shares of Common Stock for which Options may be granted hereunder, the number of
Shares of Common  Stock  covered by each  outstanding  Option,  and the exercise
price  per  Share  of  Common   Stock  of  each  such   Option,   shall  all  be
proportionately  adjusted  for any  increase or decrease in the number of issued
and  outstanding  Shares  of  Common  Stock  resulting  from  a  subdivision  or
consolidation   of  Shares   (whether   by  reason  of  merger,   consolidation,
recapitalization,   reclassification,   split-up,   combination  of  shares,  or
otherwise) or the payment of a stock  dividend (but only on the Common Stock) or
any other  increase or  decrease  in the number of such  Shares of Common  Stock
effected  without the receipt or payment of  consideration by the Company (other
than Shares held by dissenting stockholders).

     (b) Change in Control.  All  outstanding  Awards shall  become  immediately
exercisable in the event of a Change in Control of the Company.  In the event of
such a Change in Control, the Committee and the Board of Directors will take one
or more of the  following  actions to be effective as of the date of such Change
in Control:

               (i) provide that such  Options  shall be assumed,  or  equivalent
options  shall  be  substituted,  ("Substitute  Options")  by the  acquiring  or
succeeding  corporation (or an affiliate  thereof),  provided that: (A) any such
Substitute  Options  exchanged  for  Incentive  Stock  Options  shall  meet  the
requirements of Section 424(a) of the Code, and (B) the shares of stock issuable
upon  the  exercise  of such  Substitute  Options  shall  constitute  securities
registered in accordance  with the  Securities  Act of 1933, as amended,  ("1933
Act") or such  securities  shall be exempt from such  registration in accordance
with  Sections  3(a)(2) or 3(a)(5) of the 1933 Act,  (collectively,  "Registered
Securities"),  or in  the  alternative,  if the  securities  issuable  upon  the
exercise of such Substitute Options shall not constitute Registered


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Securities,  then the Optionee will receive upon the exercise of the  Substitute
Options a cash  payment  for each  Option  surrendered  equal to the  difference
between (1) the Fair Market Value of the  consideration  to be received for each
share of Common Stock in the Change in Control  transaction  times the number of
shares  of  Common  Stock  subject  to  such  surrendered  Options,  and (2) the
aggregate exercise price of all such surrendered Options, or

               (ii) in the event of a  transaction  under the terms of which the
holders  of the Common  Stock of the  Company  will  receive  upon  consummation
thereof a cash  payment  (the  "Merger  Price")  for each share of Common  Stock
exchanged in the Change in Control transaction, to make or to provide for a cash
payment to the Optionees  equal to the  difference  between (A) the Merger Price
times the number of shares of Common Stock  subject to such Options held by each
Optionee (to the extent then  exercisable  at prices not in excess of the Merger
Price) and (B) the aggregate  exercise price of all such surrendered  Options in
exchange for such surrendered Options.

     (c) Extraordinary  Corporate Action.  Notwithstanding any provisions of the
Plan to the contrary,  subject to any required action by the stockholders of the
Company,  in the  event of any  Change  in  Control,  recapitalization,  merger,
consolidation,  exchange  of Shares,  spin-off,  reorganization,  tender  offer,
partial or  complete  liquidation  or other  extraordinary  corporate  action or
event,  the Committee,  in its sole discretion,  shall have the power,  prior or
subsequent to such action or event to:

               (i)  appropriately  adjust the  number of Shares of Common  Stock
subject to each Option, the Option exercise price per Share of Common Stock, and
the  consideration  to be given or received by the Company  upon the exercise of
any outstanding Option;

               (ii) cancel any or all previously granted Options,  provided that
appropriate  consideration  is paid to the  Optionee  in  connection  therewith;
and/or

               (iii) make such other  adjustments in connection with the Plan as
the Committee, in its sole discretion, deems necessary,  desirable,  appropriate
or advisable.

     (d)  Acceleration.  The  Committee  shall at all  times  have the  power to
accelerate the exercise date of Options previously granted under the Plan.

     Except as expressly provided in Sections 11(a) and 11(b), no Optionee shall
have any rights by reason of the  occurrence  of any of the events  described in
this Section 11.

     12. Time of Granting Options. The date of grant of an Option under the Plan
shall,  for  all  purposes,  be the  date  on  which  the  Committee  makes  the
determination of granting such Option. Notice of the grant of an Option shall be
given to each  individual  to whom an Option is so granted  within a  reasonable
time after the date of such grant in a form determined by the Committee.

     13.  Modification of Options.  At any time and from time to time, the Board
may authorize  the Committee to direct the execution of an instrument  providing
for the modification of any outstanding  Option,  provided no such modification,
extension  or renewal  shall  confer on the  holder of said  Option any right or
benefit  which  could not be  conferred  on the  Optionee  by the grant of a new
Option at such time, or shall not materially  decrease the  Optionee's  benefits
under the Option  without  the  consent of the holder of the  Option,  except as
otherwise permitted under Section 14 hereof.



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<PAGE>


     14. Amendment and Termination of the Plan.

     (a) Action by the Board.  The Board may alter,  suspend or discontinue  the
Plan, except that no action of the Board may increase (other than as provided in
Section 11 hereof) the maximum  number of Shares  permitted to be optioned under
the Plan,  materially  increase the benefits accruing to Participants  under the
Plan or materially  modify the requirements for eligibility for participation in
the Plan  unless  such  action of the Board  shall be  subject  to  approval  or
ratification by the stockholders of the Company.

     (b) Change in Applicable Law. Notwithstanding any other provision contained
in the  Plan,  in the  event of a change  in any  federal  or state  law,  rule,
regulation  or  policy  which  would  make  the  exercise  of all or part of any
previously  granted Option  unlawful or subject the Company to any penalty,  the
Committee may restrict any such exercise  without the consent of the Optionee or
other holder thereof in order to comply with any such law, rule or regulation or
to avoid any such penalty.

     15.  Conditions  Upon Issuance of Shares;  Limitations on Option  Exercise;
Cancellation of Option Rights.

     (a) Shares shall not be issued with respect to any Option granted under the
Plan unless the  issuance  and  delivery of such  Shares  shall  comply with all
relevant  provisions of  applicable  law,  including,  without  limitation,  the
Securities  Act of 1933,  as  amended,  the  rules and  regulations  promulgated
thereunder,  any applicable  state  securities laws and the  requirements of any
stock exchange upon which the Shares may then be listed.

     (b) The  inability of the Company to obtain any  necessary  authorizations,
approvals  or letters of  non-objection  from any  regulatory  body or authority
deemed by the Company's  counsel to be necessary to the lawful issuance and sale
of any Shares issuable hereunder shall relieve the Company of any liability with
respect to the non-issuance or sale of such Shares.

     (c) As a condition  to the  exercise of an Option,  the Company may require
the person exercising the Option to make such  representations and warranties as
may  be  necessary  to  assure  the   availability  of  an  exemption  from  the
registration requirements of federal or state securities law.

     (d) Notwithstanding  anything herein to the contrary,  upon the termination
of employment or service of an Optionee by the Company or its  Subsidiaries  for
"cause" as  defined  at 12 C.F.R.  563.39(b)(1)  as  determined  by the Board of
Directors, all Options held by such Participant shall cease to be exercisable as
of the date of such termination of employment or service.

     (e) Upon the  exercise  of an  Option  by an  Optionee  (or the  Optionee's
personal  representative),  the Committee,  in its sole and absolute discretion,
may make a cash  payment to the  Optionee,  in whole or in part,  in lieu of the
delivery  of shares of Common  Stock.  Such cash  payment  to be paid in lieu of
delivery  of Common  Stock  shall be equal to the  difference  between  the Fair
Market  Value of the  Common  Stock on the date of the Option  exercise  and the
exercise  price per share of the Option.  Such cash payment shall be in exchange
for the cancellation of such Option.  Such cash payment shall not be made in the
event that such  transaction  would  result in  liability to the Optionee or the
Company under Section 16(b) of the Securities  Exchange Act of 1934, as amended,
and regulations promulgated thereunder.


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<PAGE>


     16.  Reservation  of Shares.  During the term of the Plan, the Company will
reserve  and keep  available  a number  of  Shares  sufficient  to  satisfy  the
requirements of the Plan.

     17.  Unsecured  Obligation.  No  Participant  under the Plan shall have any
interest  in any fund or special  asset of the  Company by reason of the Plan or
the grant of any  Option  under the Plan.  No trust  fund  shall be  created  in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.

     18. No Employment Rights. No Director,  Employee or other person shall have
a right to be selected as a Participant under the Plan. Neither the Plan nor any
action taken by the Committee in  administration  of the Plan shall be construed
as giving any  person any rights of  employment  or  retention  as an  Employee,
Director  or in  any  other  capacity  with  the  Company,  the  Bank  or  other
Subsidiaries.

     19.  Governing  Law.  The  Plan  shall  be  governed  by and  construed  in
accordance  with the laws of the State of New Jersey,  except to the extent that
federal law shall be deemed to apply.



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