EMPLOYMENT AGREEMENT


THIS AGREEMENT, is entered into this 16th day of August 2001, ("Effective Date")
by and between  Peoples  Home  Savings  Bank (the "Bank") and Richard E. Canonge
(the "Executive").

                                   WITNESSETH

         WHEREAS,  the Executive has heretofore been employed by the Bank as the
Chief Financial  Officer and is experienced in all phases of the business of the
Bank; and

         WHEREAS,  the Bank desires to be ensured of the  Executive's  continued
active participation in the business of the Bank; and

         WHEREAS,  in order to induce the  Executive  to remain in the employ of
the Bank and in  consideration  of the  Executive's  agreeing  to  remain in the
employ of the Bank,  the  parties  desire to specify the  continuing  employment
relationship between the Bank and the Executive;

         NOW THEREFORE,  in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree as follows:

         1. Employment. The Bank hereby employs the Executive in the capacity of
Chief Financial Officer. The Executive hereby accepts said employment and agrees
to render such  administrative  and  management  services to the Bank and to any
present or  to-be-formed  parent  holding  company  ("Parent")  as are currently
rendered  and as are  customarily  performed  by persons  situated  in a similar
executive  capacity.  The  Executive  shall promote the business of the Bank and
Parent. The Executive'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.  The  Executive's
employment  shall be for no definite  period of time,  and the  Executive 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 President of the Bank.

         2.  Term of  Agreement.  The  term of this  Agreement  shall be for the
period  commencing  on the  Effective  Date and ending  thirty-six  (36)  months
thereafter ("Term").  Additionally,  on, or before, each annual anniversary date
from the Effective  Date, the Term of this Agreement shall be extended for up to
an  additional  period  beyond  the  then  effective   expiration  date  upon  a
determination  and resolution of the Board of Directors that the  performance of
the Executive has met the  requirements and standards of the Board, and that the
Term of such Agreement shall be extended.  References herein to the Term of this
Agreement shall refer both to the initial term and successive terms.



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         3. Compensation, Benefits and Expenses.

               (a) Base Salary.  The Bank shall compensate and pay the Executive
during  the  Term of  this  Agreement  a  minimum  base  salary  at the  rate of
$107,800.00 per annum ("Base Salary"),  payable in cash not less frequently than
monthly;  provided,  that the rate of such salary shall be reviewed by the Board
of Directors not less often than annually,  and the Executive  shall be entitled
to receive increases at such percentages or in such amounts as determined by the
Board of Directors. The base salary may not be decreased without the Executive's
express written consent.

               (b)  Discretionary  Bonus.  The  Executive  shall be  entitled to
participate in an equitable manner with all other senior management employees of
the Bank in  discretionary  bonuses that may be  authorized  and declared by the
Board of Directors to its senior  management  executives  from time to time.  No
other  compensation  provided for in this Agreement shall be deemed a substitute
for the Executive's right to participate in such discretionary  bonuses when and
as declared by the Board.

               (c)  Participation in Benefit and Retirement Plans. The Executive
shall be entitled to  participate in and receive the benefits of any plan of the
Bank which may be or may become  applicable  to senior  management  relating  to
pension or other  retirement  benefit  plans,  profit-sharing,  stock options or
incentive plans, or other plans,  benefits and privileges given to employees and
executives  of the Bank,  to the extent  commensurate  with his then  duties and
responsibilities, as fixed by the Board of Directors of the Bank.

               (d)  Participation in Medical Plans and Insurance  Policies.  The
Executive  shall be entitled to  participate  in and receive the benefits of any
plan or  policy  of the Bank  which may be or may  become  applicable  to senior
management relating to life insurance, short and long term disability,  medical,
dental, eye-care, prescription drugs or medical reimbursement plans.

               (e) Vacations and Sick Leave.  The Executive shall be entitled to
paid annual vacation leave in accordance  with the policies as established  from
time to time by the  Board of  Directors,  which  shall in no event be less than
three weeks per annum.  The  Executive  shall also be entitled to an annual sick
leave benefit as established by the Board for senior management employees of the
Bank. The Executive shall not be entitled to receive any additional compensation
from the Bank for failure to take a vacation or sick leave, nor shall he be able
to accumulate unused vacation or sick leave from one year to the next, except to
the extent authorized by the Board of Directors.

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               (f) Expenses. The Bank 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 Bank,  including,  but
not by way of limitation,  automobile and traveling expenses, and all reasonable
entertainment  expenses,  subject  to such  reasonable  documentation  and other
limitations as may be established by the Board of Directors of the Bank. If such
expenses  are paid in the  first  instance  by the  Executive,  the  Bank  shall
reimburse the Executive therefor.

               (g) Changes in  Benefits.  The Bank shall not make any changes in
such plans, benefits or privileges previously described in Section 3(c), (d) and
(e) 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  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 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  Executive  pursuant  to  Section  3(a)
hereof.

         4. Loyalty; Noncompetition.

               (a) The Executive shall devote his full time and attention to the
performance  of his  employment  under  this  Agreement.  During the term of the
Executive's  employment under this Agreement,  the Executive shall not engage in
any business or activity  contrary to the  business  affairs or interests of the
Bank or Parent.

               (b)  Nothing  contained  in this  Section  4 shall be  deemed  to
prevent or limit the right of Executive to invest in the capital  stock or other
securities  of any  business  dissimilar  from that of the Bank or  Parent,  or,
solely as a passive or minority investor, in any business.

         5. Standards.  During the term of this  Agreement,  the Executive shall
perform his duties in  accordance  with such  reasonable  standards  expected of
executives with comparable  positions in comparable  organizations and as may be
established from time to time by the Board of Directors.

         6.  Termination and Termination  Pay. The Executive's  employment under
this Agreement shall be terminated upon any of the following occurrences:

               (a) The death of the Executive during the term of this Agreement,
in  which  event  the  Executive's  estate  shall be  entitled  to  receive  the
compensation  due the  Executive  through the last day of the calendar  month in
which Executive's death shall have occurred.

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               (b) The Bank may terminate the Executive's employment at any time
with or without Just Cause within its sole discretion.  This Agreement shall not
be deemed  to give  Executive  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 Executive at any time,  but any  termination by the Bank other
than  termination for Just Cause,  shall not prejudice the Executive's  right to
compensation or other benefits under the Agreement.  The Executive shall have no
right to receive compensation or other benefits for any period after termination
for Just Cause. The Bank may within its sole  discretion,  acting in good faith,
terminate  the  Executive  for  Just  Cause  and  shall  notify  such  Executive
accordingly.  Termination for "Just Cause" shall include  termination because of
the Executive'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.

               (c) Except as provided pursuant to Section 9 hereof, in the event
Executive's  employment  under this  Agreement is terminated by the Bank without
Just Cause,  the Bank shall be  obligated to continue to pay the  Executive  the
salary provided  pursuant to Section 3(a) herein,  up to the date of termination
of the remaining  Term of this  Agreement,  but in no event for a period of less
than  nine  months,  and the  cost of  Executive  obtaining  all  health,  life,
disability,  and  other  benefits  which  the  Executive  would be  eligible  to
participate  in through  such date based upon the benefit  levels  substantially
equal  to  those  being  provided  Executive  at  the  date  of  termination  of
employment.  The provisions of this Section 6(c) shall survive the expiration of
this Agreement.

               (d) The voluntary termination by the Executive during the term of
this  Agreement  with the delivery of no less than 60 days written notice to the
Board of  Directors,  other than  pursuant  to Section  9(b),  in which case the
Executive shall be entitled to receive only the compensation, vested rights, and
all employee benefits up to the date of such termination.

         7.  Regulatory  Exclusions.  Notwithstanding  anything  herein  to  the
contrary,  any payments  made to the  Executive  pursuant to the  Agreement,  or
otherwise,  shall  be  subject  to  and  conditioned  upon  compliance  with  12
USCss.1828(k) and any regulations promulgated thereunder.

         8. Disability.  If the Executive shall become disabled or incapacitated
to the extent  that he is unable to perform his duties  hereunder,  by reason of
medically determinable physical or mental impairment,  as determined by a doctor
engaged by the Board of  Directors,  Executive  shall  nevertheless  continue to
receive the compensation and benefits provided under the terms of this Agreement
as follows: 100% of such compensation and benefits for a period of 6 months, but
not exceeding the remaining  term of the  Agreement,  and 65% thereafter for the
remainder  of the term of the  Agreement.  Such  benefits  noted herein shall be
reduced by any benefits  otherwise  provided to the Executive during such period
under the provisions of disability insurance coverage in effect

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for Bank employees.  Thereafter, Executive shall be eligible to receive benefits
provided by the Bank under the  provisions of disability  insurance  coverage in
effect for Bank employees.  Upon returning to active full-time  employment,  the
Executive's full compensation as set forth in this Agreement shall be reinstated
as of the  date of  commencement  of such  activities.  In the  event  that  the
Executive returns to active employment on other than a full-time basis, then his
compensation  (as set forth in Section 3(a) of this Agreement)  shall be reduced
in proportion  to the time spent in said  employment,  or as shall  otherwise be
agreed to by the parties.

         9. Change in Control.

         (a) Notwithstanding any provision herein to the contrary,  in the event
of the involuntary termination of Executive's employment during the term of this
Agreement  following  any Change in Control of the Bank or Parent,  or within 18
months thereafter of such Change in Control,  absent Just Cause, Executive shall
be paid an amount  equal to the  product of 2.999  times the  Executive's  "base
amount" as defined in Section  280G(b)(3) of the Internal  Revenue Code of 1986,
as amended (the "Code") and regulations promulgated  thereunder.  Said sum shall
be paid, at the option of  Executive,  either in one (1) lump sum as of the date
of such  termination of service or in periodic  payments over the next 36 months
or the remaining  term of this  Agreement,  whichever is less, as if Executive's
employment  had not been  terminated,  and such payments shall be in lieu of any
other future payments which the Executive would be otherwise entitled to receive
under Section 6 of this  Agreement.  Additionally,  the Executive and his or her
dependents  shall  remain  eligible  to  participate  in the  medical and dental
insurance  programs  offered by the Bank to its employees  through the remaining
term of the Agreement.  Notwithstanding the forgoing, all sums payable hereunder
shall be reduced in such manner and to such extent so that no such payments made
hereunder when aggregated with all other payments to be made to the Executive by
the  Bank or the  Parent  shall be  deemed  an  "excess  parachute  payment"  in
accordance  with  Section  280G of 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;  or  (iii)  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. A Change in Control shall not be
deemed to occur  whereby  the Bank  undertakes  a  recapitalization  whereby its
parent holding company and/or its mutual holding company is merged into the Bank
and the Bank  thereafter  completes a  recapitalization  and  formation on a new
parent bank holding  company.  The term "person" means an individual  other than
the Executive, or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship,  unincorporated  organization or any other
form of entity not  specifically  listed


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herein. The provisions of this Section 9(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,  Executive may voluntarily terminate his employment during the term of
this Agreement following a Change in Control of the Bank or Parent, or within 18
months following such Change in Control, 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 Executive in writing: (i) if Executive would be required to
move his personal  residence or perform his principal  executive  functions more
than  thirty-five  (35)  miles  from the  Executive's  primary  office as of the
signing of this Agreement;  (ii) if in the organizational structure of the Bank,
Executive  would be  required  to report to a person or  persons  other than the
Board of Directors of the Bank or its  President;  (iii) if the Bank should fail
to maintain Executive's base compensation in effect as of the date of the Change
in Control and the existing employee benefits plans,  including  material fringe
benefit,  stock option and retirement plans; (iv) if Executive would be assigned
duties  and  responsibilities  other  than those  normally  associated  with his
position as referenced at Section 1, herein; (v) if Executive's responsibilities
or authority have in any way been materially  diminished or reduced;  or (vi) if
Executive  would not be reelected  to the Board of  Directors of the Bank.  Upon
such  voluntary  termination  of employment by the Executive in accordance  with
this  subsection,  Executive shall thereupon be entitled to receive the payments
described in Section 9(a) of this Agreement. The provisions of this Section 9(b)
shall  survive the  expiration  of this  Agreement  occurring  after a Change in
Control.

         10. 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.

         11. Successors and Assigns.

               (a) This  Agreement  shall inure to the benefit of and be binding
upon any corporate or other successor of the Bank or Parent 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) Since the Bank is  contracting  for the unique  and  personal
skills of the  Executive,  the Executive  shall be precluded  from  assigning or
delegating his rights or duties  hereunder  without first  obtaining the written
consent of the Bank.

         12. 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


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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.

         13.  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.

         14. 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.

         15. 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.

         16.  Severability.  The  provisions of this  Agreement  shall be deemed
severable  and the  invalidity  or  unenforceability  of any  provision  of this
Agreement  shall  not  affect  the  validity  or  enforceability  of  the  other
provisions of this Agreement, which shall remain in full force and effect.

         17. 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. The provisions of this Section 17 shall
survive the expiration of this Agreement.

         18. Confidential  Information.  The Executive  acknowledges that during
his 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 Executive 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  Executive
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 Executive
confirms that such  information  constitutes the exclusive  property of the Bank
and the Parent.  The  Executive  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.  Executive acknowledges and agrees that
the  existence  of this  Agreement  and its  terms  and  conditions  constitutes
Confidential  Information of the Bank, and the


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Executive 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
Executive  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 Executive taken by the Bank,  including but not
limited to the  termination  of  employment  of the  Executive for breach of the
Agreement and the  provisions of this  Section,  and other  remedies that may be
available in law or in equity.

         19. 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.





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