EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT  ("Agreement")  entered into this 15th day of
April 2004 (the "Effective  Date"), by and between RESERVE BANK ("the Bank") and
GERARD R. KUNIC ("the Employee").

         It is AGREED as follows:

         1.  Employment.  Bank hereby  employs the  Employee in the  capacity of
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President  of the  Bank,  and  Employee  hereby  accepts  that  employment.  The
Employee's  employment  shall be for no definite period of time and the Employee
or the Bank  may  terminate  such  employment  relationship  at any time for any
reason or no reason. The  employment-at-will  relationship remains in full force
and  effect  regardless  of any  statements  to the  contrary  made  by  company
personnel or set forth in any documents other than those  explicitly made to the
contrary and signed by the Chairman of the Bank.  The Employee shall render such
administrative  and  management  services  to the  Bank and its  parent  holding
company ("Parent") as are currently rendered and as are customarily performed by
persons situated in a similar  executive  capacity.  The Employee's other duties
shall be such as the Board of Directors  for the Bank (the "Board of  Directors"
or "Board") may from time to time reasonably direct,  including normal duties as
an officer of the Bank and the Parent.  Employee  shall  devote his entire time,
attention  and energies to such  services  and duties,  and shall not during the
term of this Agreement or any extension thereof be engaged in any other business
activity regardless of purpose.

         2.  Term of  Agreement.  The  term of this  Agreement  shall be for the
             ------------------
period commencing on the Effective Date and ending twelve (12) months thereafter
("Term").  Additionally,  on or before  each  annual  anniversary  date from the
Effective  Date,  the Term of this  Agreement  may be extended for an additional
period  beyond  the then  effective  expiration  date upon a  determination  and
resolution of the Board of Directors  that the  performance  of the Employee has
met the  requirements  and  standards  of the  Board,  and that the Term of such
Agreement shall be extended.  This Agreement shall be deemed terminated upon the
Employee's  termination of employment with the Bank,  absent a Change in Control
coincident or prior to such termination of employment,  subject to the severance
provision set forth as the last sentence of Section 4, below.

         3. Termination  of  Employment  in  Connection with or Subsequent to  a
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            Change in Control.
            ------------------

         (a) Notwithstanding any provision herein to the contrary,  in the event
of the involuntary  termination of Employee's  employment  under this Agreement,
absent Just Cause, in connection with, or within  twenty-four (24) months after,
and Change in Control  of the Bank or Parent,  Employee  shall be paid an amount
equal to 2.999 times the 5 year (or the number of years of Employee's employment
with Bank, if less)  average  taxable  compensation  paid to the Employee by the
Bank  (whether  said amounts were  received or deferred by the Employee) and the
costs associated with  maintaining  coverage under the Bank's medical and dental
insurance  reimbursement  plans  similar  to  that  in  effect  on the  date  of
termination of employment for a period of one year thereafter. Said sum shall be
paid in one (1) lump sum not later  than the date of such  termination  and such
payments shall be in lieu of any other future  payments which the Employee would
be  otherwise  entitled  to receive.  Notwithstanding  the  foregoing,  all sums
payable hereunder shall be reduced in such manner

<PAGE>

and to such extent so that no such payments made hereunder when  aggregated with
all other payments to be made to the Employee by the Bank or the Parent shall be
deemed an "excess  parachute  payment" in  accordance  with  Section 280G of the
Internal  Revenue  Code of 1986,  as amended  (the "Code") and be subject to the
excise tax provided at Section 4999(a) of the Code. The term "Change in Control"
shall refer to (i) the sale of all, or a material portion,  of the assets of the
Bank or the  Parent;  (ii) the  merger  or  recapitalization  of the Bank or the
Parent  whereby  the Bank or the  Parent is not the  surviving  entity;  (iii) a
change in control of the Bank or the Parent,  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 Bank or the
Parent  by any  person,  trust,  entity  or group.  The term  "person"  means an
individual  other  than the  Employee,  or a  corporation,  partnership,  trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization  or any other form of entity not  specifically  listed herein.  The
provisions of this Section 3(a) shall survive the  expiration of this  Agreement
occurring after a Change in Control.

         (b)  Notwithstanding  any  other  provision  of this  Agreement  to the
contrary  except as  provided  at  Sections 4 and 5,  Employee  may  voluntarily
terminate  his  employment  under  this  Agreement  within   twenty-four  months
following a Change in Control of the Bank or Parent, and upon the occurrence, or
within 120 days thereafter,  of any of the following events, which have not been
consented  to in advance by the  Employee in writing:  (i) if Employee  would be
required  to move his  personal  residence  or perform his  principal  executive
functions more than thirty-five (35) miles from the Employee's primary office as
of the signing of this Agreement; (ii) if in the organizational structure of the
Bank or  Parent,  Employee  would be  required  to report to a person or persons
other than the Board of the Bank or Parent;  (iii) if the Bank or Parent  should
fail to maintain the Employee's  base  compensation  in effect as of the date of
the Change in Control and existing employee benefits plans,  including  material
fringe  benefit,  stock option and retirement  plans,  except to the extent that
such reduction in benefit programs is part of an overall  adjustment in benefits
for all  employees  of the  Bank  or  Parent  and  does  not  disproportionately
adversely  impact the Employee;  (iv) if Employee  would be assigned  duties and
responsibilities  other than those  normally  associated  with his  position  as
referenced  at Section  1,  herein;  or (v) if  Employee's  responsibilities  or
authority  have in any way been  materially  diminished  or  reduced.  Upon such
voluntary  termination  of employment  by the Employee in  accordance  with this
subsection,  Employee  shall  thereupon  by  entitled  to receive  the  payments
described in Section 3(a) of this Agreement. The provisions of this Section 3(b)
shall  survive the  expiration  of this  Agreement  occurring  after a Change in
Control.

        4. Other Changes in Employment Status:
           ----------------------------------

         Except as provided for at Section 3, herein, the Board of Directors may
terminate  the  Employee's  employment  at any time with or  without  Just Cause
within its sole discretion.  This Agreement shall not be deemed to give Employee
any right to be  retained  in the  employment  or  service  of the  Bank;  or to
interfere with the right of the Bank to terminate the employment of the Employee
at any time. The Employee shall have no right to receive  compensation  or other
benefits for any period after termination with Just Cause. Termination for "Just
Cause" shall include

                                        2

<PAGE>

termination because of the Employee's 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  offenses)  or  final
cease-and-desist  order,  or material  breach of any provision of the Agreement.
Termination  for  "Just  Cause"  shall  also  include  termination  by the  Bank
resulting from false or misleading  statement to the Bank or its Board,  whether
in  writing  or  otherwise,  made  by the  Employee  during  the  course  of his
employment or prior to such employment as part of the employment application and
interview process.  If Employer  terminates  Employee's  employment without Just
Cause at anytime  during the Term of this  Agreement or any  extension  thereof,
Employer will continue base salary payments and any health  insurance it is then
providing  to  Employee  for a period  of three  (3)  months  measured  from the
termination date.

         5. Regulatory Exclusions.
            ---------------------

         (a) If the  Employee  is removed  and/or  permanently  prohibited  from
participating  in the  conduct of the Bank's  affairs by an order  issued  under
Sections  8(e)(4) or 8(g)(1) of the Federal  Deposit  Insurance Act ("FDIA") (12
U.S.C. 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 the vested rights of
the contracting parties shall not be affected.

         (b) If the Bank is in default (as defined in Section  3(x)(1) of FDIA),
all obligations  under this Agreement shall terminate as of the date of default,
but this  paragraph  shall not  affect  any  vested  rights  of the  contracting
parties.

         (c) All obligations under This Agreement shall be terminated, except to
the extent  determined that  continuation of this Agreement is necessary for the
continued  operation  of the Bank:  (i) by the  Director of the Office of Thrift
Supervision  ("Director of OTS"),  or his or her designee,  at the time that 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  FDIA;  or (ii) by the  Director  of the  OTS,  or his or her
designee,  at the time  that the  Director  of the OTS,  or his or 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. Any rights of the parties that have already vested,
however, shall not be affected by such action.

         (d) If the Employee is suspended  and/or  temporarily  prohibited  from
participating  in the  conduct of the Bank's  affairs by a notice  served  under
Section  8(e)(3) or (g)(1) of the FDIA (12 U.S.C.  1818 (e)(3) and (g)(1)),  the
Bank's  obligations  under the  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 within its  discretion (i) pay the Employee all or
part of the compensation  withheld while its contract obligations were suspended
and (ii)  reinstate  (in whole or in part)  any of its  obligations  which  were
suspended.

                                        3

<PAGE>

         (e) Notwithstanding  anything herein to the contrary, any payments made
to the Employee pursuant to the Agreement, or otherwise, shall be subject to and
conditioned  upon  compliance  with 12 USC  ss.  1828  (k)  and any  regulations
promulgated thereunder.

         6. Salary and Benefits.
            -------------------

         (a) Employee's  initial base salary shall be $85,000 per annum, paid in
monthly installments.

         (b) The Bank  will  provide  husband  and wife  with  health  insurance
coverage under its plan to Employee, including dental and eye coverage.

         (c) Employee will be eligible for consideration for a performance bonus
at calendar year- end, though no such bonus is guaranteed.

         (d) Employee is entitled to two (2) weeks'  vacation for calendar  year
2004. Vacation time will be negotiated by the parties with respect to subsequent
years.

         (e) Term Life  Insurance  coverage for Employee will be provided  under
the Bank's plan and its terms.

         (f)  Employee  will be  entitled  to  reimbursement  from  the Bank for
business expenses, including .32/mile for business auto usage, and Employee will
be provided with a cell phone for business use.

         (g) When  eligible,  Employee  will be entitled to  participate  in the
Employee  Stock  Ownership Plan and the Bank's 401(k) plan, and will be eligible
for  consideration  for  Restricted  Stock Plan and Stock  Option Plan  (Parent)
awards.

         7. Successors and Assigns.
            ----------------------

         (a) This  Agreement  shall inure to the benefit of and be binding  upon
any corporate or other  successor of the Bank which shall  acquire,  directly or
indirectly,   by  merger,   consolidation,   purchase  or   otherwise,   all  or
substantially all of the assets or stock of the Bank or Parent.

         (b) The Employee  shall be precluded  from  assigning or delegating his
rights or duties  hereunder  without first  obtaining the written consent of the
Bank.

         8.  Amendments.  No amendments or additions to this Agreement  shall be
binding  upon the  parties  hereto  unless  made in  writing  and signed by both
parties, except as herein otherwise specifically provided.

         9.  Applicable  Law. This  agreement  shall be governed by all respects
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whether as to validity, construction, capacity, performance or otherwise, by the
laws of the Commonwealth of Pennsylvania,  except to the extent that Federal law
shall be deemed to apply.

                                        4

<PAGE>

         10.  Severability.  The  provisions of this  Agreement  shall be deemed
              ------------
severable and the  invalidity  or  unenforceability  of any provision  shall not
affect the validity or enforceability of the other provisions hereof.

         11. Arbitration. Any controversy or claim arising out of or relating to
             -----------
this  Agreement,  or  the  breach  thereof,  shall  be  settled  exclusively  by
arbitration in accordance  with the rules then in effect of the district  office
of the American  Arbitration  Association  ("AAA") nearest to the home office of
the Bank,  and  judgment  upon the award  rendered  may be  entered in any court
having jurisdiction thereof, except to the extent that the parties may otherwise
reach a mutual settlement of such issue.  Further, the settlement of the dispute
to be  approved  by the  Board of the  Bank  may  include  a  provision  for the
reimbursement by the Bank to the Employee for all reasonable costs and expenses,
including reasonable attorneys' fees, arising from such dispute,  proceedings or
actions, or the Board of the Bank or the Parent may authorize such reimbursement
of such  reasonable  costs and expenses by separate action upon a written action
and  determination  of the  Board  following  settlement  of the  dispute.  Such
reimbursement  shall be paid within ten (10) days of Employee  furnishing to the
Bank or Parent  evidence,  which may be in the form,  among other  things,  of a
canceled check or receipt,  of any costs or expenses  incurred by Employee.  The
provisions of this Section 10 shall survive the expiration of this Agreement.

         12. Confidential Information. The Employee acknowledges that during his
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or her  employment  he or  she  will  learn  and  have  access  to  confidential
information  regarding the Bank and the Parent and its customers and  businesses
("Confidential Information").  The Employee agrees and covenants not to disclose
or use for his or her own benefit, or the benefit of any other person or entity,
any  such  Confidential  Information,  unless  or until  the Bank or the  Parent
consents to such disclosure or use or such information  becomes common knowledge
in the industry or is otherwise legally in the public domain. The Employee shall
not knowingly  disclose or reveal to any  unauthorized  person any  Confidential
Information relating to the Bank, the Parent, or any subsidiaries or affiliates,
or to any of the  businesses  operated by them,  and the Employee  confirms that
such information  constitutes the exclusive property of the Bank and the Parent.
The Employee  shall not otherwise  knowingly  act or conduct  himself (a) to the
material  detriment  of  the  Bank  or  the  Parent,  or  its  subsidiaries,  or
affiliates, or (b) in a manner which is inimical or contrary to the interests of
the Bank or the Parent.  Employee  acknowledges and agrees that the existence of
this Agreement and its terms and conditions constitutes Confidential Information
of the Bank,  and the  Employee  agrees not to  disclose  the  Agreement  or its
contents  without the prior  written  consent of the Bank.  Notwithstanding  the
foregoing, the Bank reserves the right in its sole discretion to make disclosure
of this Agreement as it deems  necessary or  appropriate in compliance  with its
regulatory  reporting  requirements.  Notwithstanding  anything  herein  to  the
contrary,  failure by the Employee to comply with the provisions of this Section
may  result  in the  immediate  termination  of the  Agreement  within  the sole
discretion of the Bank,  disciplinary  action  against the Employee taken by the
Bank, including but not limited to the termination of employment of the Employee
for  breach of the  Agreement  and the  provisions  of this  Section,  and other
remedies that may be available in law or in equity.

                                        5

<PAGE>

         13. Entire Agreement. This Agreement together with any understanding or
             ----------------
modifications  thereof as agreed to in writing by the parties,  shall constitute
the entire agreement between the parties hereto.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and first hereinabove written.


                                                 Reserve Bank

         ATTEST:                                 By:/s/ David P. Butler
                                                    -------------------
                                                    Chairman
         /s/ Robert B. Shust
         Secretary


         WITNESS:


         /s/ Carla Handyside                     /s/ Gerard R. Kunic
         -------------------                     -------------------
                                                 GERARD R. KUNIC, Employee