<PAGE>

                 EMPLOYMENT AGREEMENT

    THIS AGREEMENT is entered into this 27th day of April,
1998  (the "Effective Date"), by and between Bank Street
Mortgage, Inc. ("BSMI") and Thomas G. Riehl (the "Employee").

    WHEREAS, the Employee has heretofore been employed by BSMI
as Vice President and is experienced in all phases of the
business of BSMI; and

    WHEREAS, the parties desire by this writing to set forth
the continuing employment relationship of BSMI and the Employee.

    NOW, THEREFORE, it is AGREED as follows:

    1.   Employment.  The Employee is employed as the Vice
President of BSMI.  The Employee shall render such
administrative  and management services for BSMI as are
currently rendered and as are customarily performed by persons
situated in a similar executive capacity.  The Employee shall
also promote, by entertainment or otherwise, as and to the
extent permitted by law, the business of BSMI.  The Employee's
other duties shall be such as the Board of Directors of BSMI
(the "Board") may from time to time reasonably direct, including
normal duties as an officer of BSMI.

    2.   Base Compensation.  BSMI agrees to pay the Employee
during the term of this Agreement a salary at the rate of
$60,000 per annum, payable in cash not less frequently than
monthly.  The Board shall review, not less often than annually,
the rate of the Employee's salary, and in its sole discretion
may decide to increase his salary.

    3.   Discretionary Bonuses.  The Employee shall
participate in an equitable manner with all other senior
management employees of BSMI in discretionary bonuses that the
Board may award from time to time to BSMI's senior management
employees.  No other compensation provided for in this Agreement
shall be deemed a substitute for the Employee's right to
participate in such discretionary bonuses.

    4.   (a)   Participation in Retirement, Medical and
Other Plans.  The Employee shall participate in any plan that
BSMI maintains for the benefit of its employees if the plan
relates to (i) pension, profit-sharing, or other retirement
benefits, (ii) medical insurance or the reimbursement of medical
or dependent care expenses, or (iii) other group benefits,
including disability and life insurance plans.  

         (b)   Employee Benefits; Expenses.  The Employee
shall participate in any fringe benefits which are or may become
available to BSMI's senior management employees, including for
example: any stock option or incentive compensation plans, club
memberships, and any other benefits which are commensurate with
the responsibilities and functions to be performed by the
Employee under this Agreement.  The Employee shall be reimbursed
for all reasonable out-of-pocket
                            -1-<PAGE>
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business expenses which he shall incur in connection with his
services under this Agreement upon substantiation of such
expenses in accordance with the policies of BSMI.

    5.   Term.  BSMI hereby employs the Employee, and the
Employee hereby accepts such employment under this Agreement,
for the period commencing on the Effective Date and ending 36
months thereafter (or such earlier date as is determined in
accordance with Section 9).  Additionally, on each annual
anniversary date from the Effective Date, the Employee's term of
employment shall be extended for an additional one-year period
beyond the then effective expiration date provided the Board
determines in a duly adopted resolution that the performance of
the Employee has met the Board's requirements and standards, and
that this Agreement shall be extended.

    6.   Loyalty; Noncompetition.

         (a)   During the period of his employment hereunder
and except for illnesses, reasonable vacation periods, and
reasonable leaves of absence, the Employee shall devote all his
full business time, attention, skill, and efforts to the
faithful performance of his duties hereunder; provided, however,
from time to time, Employee may serve on the boards of directors
of, and hold any other offices or positions in, companies or
organizations, which will not present any conflict of interest
with BSMI or any of its affiliates, or unfavorably affect the
performance of Employee's duties pursuant to this Agreement, or
will not violate any applicable statute or regulation.  "Full
business time" is hereby defined as that amount of time usually
devoted to like companies by similarly situated executive
officers.  During the term of his employment under this
Agreement, the Employee shall not engage in any business or
activity contrary to the business affairs or interests of BSMI,
or be gainfully employed in any other position or job other than
as provided above.

         (b)   Nothing contained in this Paragraph 6 shall
be deemed to prevent or limit the Employee's right to invest in
the capital stock or other securities of any business dissimilar
from that of BSMI, or, solely as a passive or minority investor,
in any business.

    7.   Standards.  The Employee shall perform his duties
under this Agreement in accordance with such reasonable
standards as the Board may establish from time to time.  BSMI
will provide Employee with the working facilities and staff
customary for similar executives and necessary for him to
perform his duties.
 
    8.   Vacation and Sick Leave.  At such reasonable times
as the Board shall in its discretion permit, the Employee shall
be entitled, without loss of pay, to absent himself voluntarily
from the performance of his employment under this Agreement, all
such voluntary absences to count as vacation time; provided
that:

         (a)   The Employee shall be entitled to an annual
vacation in accordance with the policies that the Board
periodically establishes for senior management employees of
BSMI.
                              -2-<PAGE>
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         (b)   The Employee shall not receive any additional
compensation from BSMI on account of his failure to take a
vacation, and the Employee shall not accumulate unused vacation
from one fiscal year to the next, except in either case to the
extent authorized by the Board.

         (c)   In addition to the aforesaid paid vacations,
the Employee shall be entitled without loss of pay, to absent
himself voluntarily from the performance of his employment with
BSMI for such additional periods of time and for such valid and
legitimate reasons as the Board may in its discretion determine. 
Further, the Board may grant to the Employee a leave or leaves
of absence, with or without pay, at such time or times and upon
such terms and conditions as such Board in its discretion may
determine.

         (d)   In addition, the Employee shall be entitled
to an annual sick leave benefit as established by the Board.

    9.   Termination and Termination Pay.  Subject to
Section 11 hereof, the Employee's employment hereunder may be
terminated under the following circumstances:

         (a)   Death.  The Employee's employment under this
Agreement shall terminate upon his death during the term of this
Agreement, in which event the Employee's estate shall be
entitled to receive the compensation due the Employee through
the last day of the calendar month in which his death occurred.

         (b)   Disability.  BSMI may terminate the
Employee's employment after having established the Employee's
Disability.  For purposes of this Agreement, "Disability" means
a physical or mental infirmity which impairs the Employee's
ability to substantially perform his duties under this Agreement
and which results in the Employee becoming eligible for long-
term disability benefits under BSMI's long-term disability plan
(or, if BSMI has no such plan in effect, which impairs the
Employee's ability to substantially perform his duties under
this Agreement for a period of one hundred eighty (180)
consecutive days).  The Employee shall be entitled to the
compensation and benefits provided for under this Agreement for
(i) any period during the term of this Agreement and prior to
the establishment of the Employee's Disability during which the
Employee is unable to work due to the physical or mental
infirmity, or (ii) any period of Disability which is prior to
the Executive's termination of employment pursuant to this
Section 9(b).

         (c)   Just Cause.  The Board may, by written notice
to the Employee, immediately terminate his employment at any
time, for Just Cause.  The Employee shall have no right to
receive compensation or other benefits for any period after
termination for Just Cause.  Termination for "Just Cause" shall
mean termination because of, in the good faith determination of
the Board, 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 this Agreement. 
Notwithstanding the foregoing, (i) the Employee shall not be
deemed to have been terminated for Just Cause unless there shall
have been delivered to the Employee a copy of a resolution duly
adopted by the affirmative vote of not less than

                             -3-<PAGE>
<PAGE>
a majority of the entire membership of the Board at a meeting of
the Board called and held for the purpose (after reasonable
notice to the Employee and an opportunity for the Employee to be
heard before the Board), finding that in the good faith opinion
of the Board the Employee was guilty of conduct set forth above
in the second sentence of this Subsection (c) and specifying the
particulars thereof in detail.

         (d)   Without Just Cause.  Subject to Section 11
hereof, the Board may, by written notice to the Employee,
immediately terminate his employment at any time for a reason
other than Just Cause, in which event the Employee shall be
entitled to receive the following compensation and benefits: (i)
the salary provided pursuant to Section 2 hereof, up to the date
of termination of the term (including any renewal term) of this
Agreement (the "Expiration Date"), plus said salary for an
additional 12-month period, and (ii) the cost to the Employee of
obtaining all health, life, disability and other benefits which
the Employee would have been eligible to participate in through
the Expiration Date based upon the benefit levels substantially
equal to those that BSMI provided for the Employee at the date
of termination of employment.  Said sum shall be paid, at the
option of the Employee, either (I) in periodic payments over the
remaining term of this Agreement, as if the Employee's
employment had not been terminated, or (II) in one lump sum
within ten (10) days of such termination.

    Notwithstanding the foregoing, but only to the extent
required under federal banking law, the amount payable under
clause (i) hereof shall be reduced to the extent that on the
date of the Employee's termination of employment, the present
value of the benefits payable under clauses (i) and (ii) hereof
exceeds three times his average annual compensation based on his
most recent five taxable years.  In this context, "compensation"
shall have the meaning set forth in Regulatory Bulletin 27a of
the Office of Thrift Supervision. 

         (e)   Termination or Suspension Under Federal Law. 
(1) If the Employee is removed and/or permanently prohibited
from participating in the conduct of BSMI'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) or (g)(1)), all
obligations of BSMI under this Agreement shall terminate, as of
the effective date of the order, but vested rights of the
parties shall not be affected.

         (2)   If Harbor Federal Savings Bank (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; however, this Paragraph shall not affect the vested
rights of the parties.

         (3)   All obligations under this Agreement shall
terminate, except to the extent 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") or the
Resolution Trust Corporation 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

                            -4-<PAGE>
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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.  Such action shall not affect any vested rights of
the parties.

         (4)  If a notice served under Section 8(e)(3) or
(g)(1) of the FDIA (12 U.S.C. 1818(e)(3) or (g)(1)) suspends
and/or temporarily prohibits the Employee from participating in
the conduct of BSMI's affairs, BSMI's obligations under this
Agreement shall be suspended as of the date of such service,
unless stayed by appropriate proceedings.  If the charges in the
notice are dismissed, BSMI may in 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.

         (f)   Voluntary Termination by Employee.  Subject
to Section 11 hereof, the Employee may voluntarily terminate
employment with BSMI during the term of this Agreement, upon at
least 60 days' prior written notice to the Board of Directors,
in which case the Employee shall receive only his compensation,
vested rights and employee benefits up to the date of his
termination.

    10.  No Mitigation.  The Employee shall not be required
to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise and no such
payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any
subsequent employment.

    11.  Change in Control.

         (a)   Notwithstanding any provision herein to the
contrary, the Employee shall be entitled to collect the
severance benefits set forth in this Section in the event that
(1) the Employee's employment under this Agreement is terminated
by BSMI, without the Employee's prior written consent and for a
reason other than Just Cause, in connection with or within
twelve (12) months after any change in control of the Bank or
Harbor Federal Bancorp, Inc. (the "Company"), or (2) the
Employee voluntarily terminates employment for any reason within
the 30-day period beginning on the date of a change in control.
The Employee shall be paid an amount equal to the difference
between (i) the product of 2.99 times his "base amount" as
defined in Section 280G(b)(3) of the Internal Revenue Code of
1986, as amended (the "Code") and regulations promulgated
thereunder, and (ii) the sum of any other parachute payments (as
defined under Section 280G(b)(2) of the Code) that the Employee
receives on account of the change in control. 

    Any severance benefits that are payable under this
Agreement after the closing date of a change in control of the
Bank or the Company shall be paid in the manner selected by the
Employee in a duly executed election (the "Election Form"), in
the form attached hereto as Exhibit "A"; provided that such an
election will be honored and given effect only if it is properly
made and delivered to BSMI more than 90 days before said closing
date.  Present value determinations and interest accruals on
present value sums that are paid in installments over a fixed
period of years shall be calculated at a rate equal to 120% of
the applicable federal rate, compounded semiannually, as
determined under Section 1274(d) of the Code, and the
regulations thereunder. The Employee may

                              -5-<PAGE>
<PAGE>
specify on the Election Form the manner of payment to his
beneficiary,  and may at any time or from time to time change
the identity or manner of payment to his beneficiary.

      The term "change in control" shall mean (1) the
ownership, holding or power to vote more than 25% of the Bank's
or Company's voting stock, (2) the control of the election of a
majority of the Bank's or Company's directors, (3) the exercise
of a controlling influence over the management or policies of
the Bank or the Company by any person or by persons acting as a
"group" (within the meaning of Section 13(d) of the Securities
Exchange Act of 1934) (except in the case of (1), (2) and (3)
hereof, ownership or control of the Bank by the Company itself
shall not constitute a "Change in Control"), or (4) during any
period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of
the Company or the Bank (the "Company Board") (the "Continuing
Directors") cease for any reason to constitute at least two-
thirds thereof, provided that any individual whose election or
nomination for election as a member of the Company Board was
approved by a vote of at least two-thirds of the Continuing
Directors then in office shall be considered a Continuing
Director.  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.

         (b)   Notwithstanding any other provision of this
Agreement to the contrary, the Employee may voluntarily
terminate his employment under this Agreement within twelve (12)
months following a change in control of the Bank or the Company,
and the Employee shall thereupon be entitled to receive the
payment described in Section 11(a) of this Agreement, upon the
occurrence of any of the following events, or within ninety (90)
days thereafter, which have not been consented to in advance by
the Employee in writing: (i) the requirement that the Employee
move his personal residence, or perform his principal executive
functions, more than thirty-five (35) miles from his primary
office as of the date of the change in control; (ii) a material
reduction in the Employee's base compensation as in effect on
the date of the change in control or as the same may be
increased from time to time; (iii) the failure by BSMI to
continue to provide the Employee with compensation and benefits
provided for under this Agreement, as the same may be increased
from time to time, or with benefits substantially similar to
those provided to him under any of the employee benefit plans in
which the Employee now or hereafter becomes a participant, or
the taking of any action by BSMI which would directly or
indirectly reduce any of such benefits or deprive the Employee
of any material fringe benefit enjoyed by him at the time of the
change in control; (iv) the assignment to the Employee of duties
and responsibilities materially different from those normally
associated with his position as referenced at Section 1; (v) a
failure to elect or reelect the Employee to the Board of
Directors of BSMI, if the Employee is serving on the Board on
the date of the change in control; or (vi) a material diminution
or reduction in the Employee's responsibilities or authority
(including reporting responsibilities) in connection with his
employment with BSMI.

         (c)   Any payments made to the Employee pursuant to
this Agreement, or otherwise are subject to and conditioned upon
their compliance with 12 U.S.C. Section 1828(k) and any
regulations promulgated thereunder.

                             -6-<PAGE>
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         (d)   Funding of Grantor Trust.  Not later than
three business days after a change in control, BSMI shall (a)
deposit, in the Harbor Federal Savings Bank Grantor Trust (the
"Trust"), an amount that BSMI reasonably projects to be
sufficient to fund the payment of all severance benefits that
are or may become payable, pursuant to this Section, after the
closing date of the change in control of the Bank or the
Company, and (b) provide the trustee of the Trust with a written
direction both to hold said amount and any investment return
thereon in a segregated account for the benefit of the Employee,
and to follow the procedures set forth in the next paragraph as
to the payment of such amounts from the Trust.  The provisions
of this Section 11(d) shall be null and void only if the
Executive provides a written release of all claims under this
Agreement.

    During the 24-consecutive month period after a change in
control of the Bank or the Company, the Employee may provide the
trustee of the Trust with a written notice directing the trustee
to pay to Employee an amount designated in the notice as being
payable pursuant to this Agreement.  Within three business days
after receiving said notice, the trustee of the Trust shall pay
such amount to the Employee, and coincidentally shall provide
BSMI or its successor with notice of such payment.  Upon the
earlier of the Trust's final payment of all amounts due under
the preceding paragraph or the date 24 months after the change
in control of the Bank or the Company, the trustee of the Trust
shall pay to BSMI the entire balance remaining in the segregated
account maintained for the benefit of the Employee.  The
Employee shall thereafter have no further interest in the Trust.

         (e)   In the event that any dispute arises between
the Employee and BSMI as to the terms or interpretation of this
Agreement, including this Section 11, whether instituted by
formal legal proceedings or otherwise, including any action that
the Employee takes to enforce the terms of this Section 11 or to
defend against any action taken by BSMI, the Employee shall be
reimbursed for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or
actions, provided that the Employee shall obtain a final
judgement by a court of competent jurisdiction in favor of the
Employee.  Such reimbursement shall be paid within ten (10) days
of Employee's furnishing to BSMI written evidence, which may be
in the form, among other things, of a cancelled check or
receipt, of any costs or expenses incurred by the Employee.  

    12.  Successors and Assigns.

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

         (b)   Since BSMI is contracting for the unique and
personal skills of the Employee, the Employee shall be precluded
from assigning or delegating his rights or duties hereunder
without first obtaining the written consent of BSMI.

    13.  Amendments.  No amendments or additions to this
Agreement shall be binding unless made in writing and signed by
all of the parties, except as herein otherwise specifically
provided.
                            -7-<PAGE>
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    14.  Applicable Law.  Except to the extent preempted by
Federal law, the laws of the State of Maryland shall govern this
Agreement in all respects, whether as to its validity, construc-
tion, capacity, performance or otherwise.

    15.  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.

    16.  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 as of the day and year first hereinabove written.


                              BANK STREET MORTGAGE, INC.
Witnessed by:

/s/ Joyce Lancaster           By /s/ Robert A. Williams 
--------------------             -----------------------
Secretary                        Its President


                              EMPLOYEE
Witnessed by:

/s/ Lawrence W. Williams      /s/ Thomas G. Riehl
------------------------      -----------------------
                              Thomas G. Riehl


<PAGE>
<PAGE>
             HARBOR FEDERAL BANCORP, INC.

              __________________________

                  Guaranty Agreement
             __________________________



    THIS AGREEMENT is entered into this 27th day of
April, 1998 (the "Effective Date"), by and between Harbor
Federal Bancorp, Inc. (the "Company") and Thomas G. Riehl (the
"Employee").

    WHEREAS, the Employee has heretofore been employed by Bank
Street Mortgage, Inc. ("BSMI") as its Vice President, and has
entered into an agreement (the "Employment Agreement") dated 
April 27, 1998, with BSMI; and

    WHEREAS, the Board of Directors (the "Board") of the
Company has determined that it is in the best interests of the
Company to enter into this Agreement with the Employee in order
to assure continuity of management of BSMI and to reinforce and
encourage the long-term retention of the Employee; and 

    WHEREAS, the parties desire by this writing to set forth
the Company's commitment to guarantee BSMI's obligations under
its Employment Agreement with the Employee.

    NOW, THEREFORE, it is AGREED as follows:

    1.    Consideration from Company: Joint and Several
Liability.  The Company hereby agrees that to the extent
permitted by law, it shall be jointly and severally liable with
BSMI for the payment of all amounts due under the Employment
Agreement, provided that the paragraphs of the Employment
Agreement that appear under the heading "Termination or
Suspension under Federal Law" shall be inapplicable to this
Agreement.  The Board may in its discretion at any time during
the term of this Agreement agree to pay the Employee with a base
salary for the remaining term of this Agreement.  If the Board
agrees to pay such salary, the Board shall thereafter review,
not less often than annually, the rate of the Employee's salary,
and in its sole discretion may decide to increase his salary.
    
    2.    Indemnification.  The Company agrees that its
Bylaws shall continue to provide for indemnification of
directors, officers, employees and agents of the Company,
including the Employee, during the full term of this Agreement,
and to at all times provide adequate insurance for such
purposes.

<PAGE>
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    3.    Successors and Assigns.

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

          (b)  Attachment.  Except as required by law, no
right to receive payments under this Agreement shall be subject
to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation or to exclusion,
attachment, levy or similar process or assignment by operation
of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.

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

    5.    Applicable Law.  Except to the extent preempted by
Federal law, the laws of the State of Maryland shall govern this
Agreement in all respects, whether as to its validity, construc-
tion, capacity, performance or otherwise.

    6.    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.

    7.    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 year first hereinabove written.


                              HARBOR FEDERAL BANCORP, INC.
Witnessed by:                           

/s/ Joyce Lancaster           By /s/ Robert A. Williams 
--------------------             -----------------------
Secretary                        Its President


                              EMPLOYEE
Witnessed by:

/s/ Lawrence W. Williams      /s/ Thomas G. Riehl
------------------------      -----------------------
                              Thomas G. Riehl

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