Document:

<PAGE>   1
EXHIBIT 10 (b)

                        PENNROCK FINANCIAL SERVICES CORP.

                      EXECUTIVE INCENTIVE COMPENSATION PLAN

1.      The plan is adopted pursuant to the Omnibus Stock Plan and is designed
        to calculate a bonus when the net income over average equity investment
        in PennRock Financial Services Corp. (the "Company") (expressed as a
        percentage) exceeds the same measurement for the Company's peer group.
        Both the Company's and peer group's data will be taken from the Bank
        Holding Company Performance Report published by the Federal Reserve. In
        addition, any calculated bonus can be increased (and at maximum,
        doubled) depending on the amount of earnings growth the Company has. The
        growth factor is described in paragraph 3. Both measurements, the return
        on average equity in the Company and growth, are expressed as a two year
        simple average.

2.      The plan uses a tier approach where, as the degree of increase in the
        Company's performance over that of the peer group increases, the amount
        of the bonus increases. For example, if the Company's performance
        exceeds the peer group's performance by 2.5 percentage points the bonus
        is 4% of the executive's base pay. If the Company's performance exceeds
        the peer group's performance by 8 percentage points or more, the bonus
        is 15% of the executive's base pay.

3.      The plan contains a growth factor which considers the growth in
        after-tax earnings of the current year over the prior year. The growth
        percentage of both the current and prior year are averaged and this
        two-year average determines the additional bonus amount. The larger the
        two-year average, the more the bonus increases. However, this is not the
        primary focus of the Incentive Compensation Plan and if there is no
        growth in the current year alone (without regard to the two year
        average), incentive compensation can still be earned based on the
        Company's performance relative to the peer group. See Schedule II for
        the actual growth factors.

4.      The annual incentive compensation amount is determined by using
        Schedules I and II which are presented on a separate page. The operation
        of the Incentive Compensation Plan is illustrated on two separate pages.
        One page uses actual data from 1992 and 1993 and the second page uses
        estimated data from 1994 compared to actual data for 1993.

5.      The President, all Senior Vice Presidents, and all Vice Presidents of
        Blue Ball National Bank (the "Bank") will be eligible for an award of
        incentive compensation, based on their respective base salaries for the
        year, excluding any bonuses or other compensation awards. For example,
        base salaries for 1994 will be used to determine any 1994 incentive
        compensation (which will be calculated and paid in 1995).

6.      Each year, incentive compensation will be determined utilizing year-end
        figures for the Company and for peer group operations. All performance
        figures for the Company and for the peer group shall be adjusted to
        reflect asset values prior to the "mark-to-market" of assets as required
        by FASB 115.

7.      For any year in which the published Bank Holding Company

<PAGE>   2

        Performance Report does not provide sufficient information to calculate
        the "Net Income Over Average Equity Investment In Bank" exclusive of the
        FASB 115 adjustments for both the bank holding company and peer group,
        the Board of Directors may calculate the incentive compensation amount
        using a return on equity measurement (or similar measurement) for the
        bank holding company if data is available from the Performance Report to
        make this calculation exclusive of the FASB 115 adjustment for both the
        bank holding company and peer group.

8.      Incentive compensation will be paid within thirty (30) days after the
        date on which year-end performance figures for the Company and for the
        peer group are made available to the Board.

9.      Seventy (70%) percent of incentive compensation shall be paid by the
        Bank in cash, subject to ordinary payroll deductions, including
        withholding taxes applicable for the entire incentive compensation
        award. Thirty (30%) percent of incentive compensation shall be payable
        in the form of an award of whole shares of common capital stock of the
        Company, the number of shares representing such award to be calculated
        based on the fair market value per share of such stock determined under
        Section 8 of the Company's Omnibus Stock Plan as of the day before the
        day which the Board formally confirms the amount of incentive
        compensation determined on the basis of the year-end figures referred to
        in paragraph 6. However, no fractional shares shall be issued under the
        plan; in lieu of the issuance of fractional shares, each participant
        shall receive cash in an amount equal to the fair market value of any
        fractional share to which he would otherwise be entitled, based upon the
        fair market value per share determined as provided in this paragraph.

                        PENNROCK FINANCIAL SERVICES CORP.

                      EXECUTIVE INCENTIVE COMPENSATION PLAN

SCHEDULE I - BASE PAY PERCENTAGE:

Description

        Bank's two-year simple average percentage of net income to average
        equity investment in bank compared to same measurement for peer group
        (data obtained from annual performance report prepared by the Federal
        Reserve and using current year and immediate prior year to calculate the
        two-year average.)

        1.      If the Bank's current year percentage of net income to average
                equity investment in bank is less than the peer group's current
                year percentage then use 0.0% as base pay percentage and DO NOT
                USE THE FOLLOWING TABLE.

<TABLE>
<CAPTION>
          Bank's Performance             Base Pay
          Compared to Peer Group        Percentage
<S>                                           <C>
          Less than or equal to               0.0
          Exceeds by  0.01 to 0.99            0.0
          Exceeds by 1.00 to 1.99             3.0
          Exceeds by 2.00 to 2.99             4.0
</TABLE>

<PAGE>   3

<TABLE>
<S>                                        <C>
          Exceeds by 3.00 to 3.99             5.0
          Exceeds by 4.00 to 4.99             7.0
          Exceeds by 5.00 to 5.99             9.0
          Exceeds by 6.00 to 6.99            11.0
          Exceeds by 7.00 to 7.99            13.0
          Exceeds by 8.00 or greater         15.0
</TABLE>

SCHEDULE II - GROWTH FACTOR:

Description

        Simple average of current year and prior year percentage increase in
        total after-tax net earnings.

        1.      If prior year increase in after-tax earnings is less than 0.0%,
                use 0.0% as the prior year percentage to calculate the two-year
                simple average.

        2.      If the current year after-tax earnings are less than the prior
                year after tax earnings use 1.0 as the growth factor and DO NOT
                USE THE FOLLOWING TABLE.

<TABLE>
<CAPTION>
          Percentage Increase
          in Annual Earnings                 Growth
          Two Year Average                   Factor
<S>                                          <C>
          0.0% thru 2.99                     1.0
          3.0% thru 4.99                     1.1
          5.0% thru 6.99                     1.2
          7.0% thru 8.99                     1.3
          9.0% thru 10.99                    1.4
          11.0% thru 12.99                   1.5
          13.0% thru 14.99                   1.6
          15.0% thru 16.99                   1.7
          17.0% thru 18.49                   1.8
          18.5% thru 19.99                   1.9
          20.0% and greater                  2.0
</TABLE>

                ILLUSTRATION OF PENNROCK FINANCIAL SERVICES CORP.
                      EXECUTIVE INCENTIVE COMPENSATION PLAN

EMPLOYEE NAME: CEO       /VP
EMPLOYEE BASE PAY:  200,000   80,000

<TABLE>
<CAPTION>
ASSUMED DATA:                      CURRENT   PRIOR     TWO YEAR
                                   YEAR      YEAR      AVERAGE
                                   (Estimated)
<S>                                <C>       <C>
Year                               1994      1993
                                     %         %

Percentage of net income to average
equity investment in Bank:
</TABLE>

<PAGE>   4

<TABLE>
<S>                                <C>       <C>       <C>
  Bank Holding Company             14.29     17.71     16.00

  Peer Group                       12.00     13.64     12.82

  Excess                                                3.18

Growth in Earnings Over Prior
Year                               None      14.54       N/A
</TABLE>

INCENTIVE COMPENSATION AMOUNT:
(CALCULATION)
<TABLE>
<CAPTION>
                                        CEO                 VP
<S>                                 <C>                  <C>
Base Pay % from Schedule I               5.0                 5.0

  Multiplied times Growth Factor
  from Schedule II                      x1.0                x1.0

  Equals, Incentive Compensation
  Rate                                   5.0                 5.0

  Base Pay (current year)           $200,000             $80,000

Incentive Compensation Amount       $ 10,000             $ 4,000
</TABLE>

                ILLUSTRATION OF PENNROCK FINANCIAL SERVICES CORP.
                      EXECUTIVE INCENTIVE COMPENSATION PLAN

EMPLOYEE NAME: CEO       /VP
EMPLOYEE BASE PAY:  200,000   80,000

<TABLE>
<CAPTION>
ASSUMED DATA:                      CURRENT   PRIOR     TWO YEAR
                                   YEAR      YEAR      AVERAGE
<S>                                <C>       <C>       <C>
Year                               1993      1992
                                     %         %

Percentage of net income to average
equity investment in Bank:

  Bank Holding Company             17.71     18.56     18.14

  Peer Group                       13.64     11.98     12.81

  Excess                                                5.33

Growth in Earnings Over Prior
Year                               14.54     21.98     18.26
</TABLE>

INCENTIVE COMPENSATION AMOUNT:
(CALCULATION)
<TABLE>
<CAPTION>
                                        CEO                 VP
<S>                                     <C>                 <C>
Base Pay % from Schedule I               9.0                 9.0

  Multiplied times Growth Factor
  from Schedule II                      x1.8                x1.8
</TABLE>

<PAGE>   5

<TABLE>
<S>                                 <C>                  <C>
  Equals, Incentive Compensation
  Rate                                  16.2%               16.2%

  Base Pay (current year)           $200,000             $80,000

Incentive Compensation Amount       $ 32,400             $12,960
</TABLE>

                        PENNROCK FINANCIAL SERVICES CORP.
                    INCENTIVE COMPENSATION CALCULATION - 1994

                (USING: BANK HOLDING COMPANY PERFORMANCE REPORT)

<TABLE>
<CAPTION>
                              1994      1993     2-Yr.Avg.
                                %         %         %
<S>                           <C>       <C>       <C>
Return On Equity (ROE)
(From calculation below)
  Bank                        13.72     15.70     14.71
  Peer Group                  12.27     12.34     12.31
  Excess                                           2.40

Growth in Earnings Over Prior Year
                              None      14.54       N/A

  Base Pay % - Schedule I                           4.0
  x Growth Factor -  Schedule II                  x 1.0
  = Incentive Compensation Rate                     4.0%
  x Base Pay (1994)
                                                  -----

  = Incentive Compensation Amount
                                                  -----
</TABLE>

<TABLE>
<CAPTION>
                                   Bank             Peer Group
                              1994      1993      1994      1993
                                %         %         %         %
<S>                           <C>       <C>       <C>       <C>
R.O.E. Calculation:

A.   ROA                       1.32      1.55      1.08      1.03
B.   Tier One Leveraged Cap    9.62      9.87      8.80      8.35
C.   ROE = A divided by B     13.72     15.70     12.27     12.34
</TABLE><PAGE>   1
EXHIBIT 10 (c)

               MELVIN PANKUCH DEFERRED COMPENSATION PLAN AGREEMENT

        THIS AGREEMENT, made and entered into this 12th day of June, 1995, by
and between BLUE BALL NATIONAL BANK, a national banking association with
principal offices and place of business at 1060 Main Street, Post Office Box
580, Blue Ball, Pennsylvania, 17506 (hereinafter referred to as the "Bank"), and
MELVIN PANKUCH, an adult individual residing at 58 Heister Avenue, New Holland,
Pennsylvania (hereinafter referred to as "Pankuch"),

                                   WITNESSETH:

        WHEREAS, Pankuch is employed by the Bank; and

        WHEREAS, the Bank recognizes the valuable services heretofore performed
for it by Pankuch and wishes to encourage his continued employment; and

        WHEREAS, Pankuch wishes to defer a certain portion of compensation
payable to him; and

        WHEREAS, the parties hereto wish to provide the terms and conditions
upon which the Bank shall pay such deferred compensation to Pankuch or his
designated beneficiary; and

        WHEREAS, the parties intend that this Agreement be considered an
unfunded arrangement, maintained primarily to provide deferred compensation
benefits for Pankuch, a member of select group of management or highly
compensated employees of the Bank, for purposes of Employee Retirement Income
Act of 1974, as amended;

        NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the parties hereto agree as follows:

        1.      DEFINITION OF TERMS. Certain words and phrases are defined when
first used in this Agreement. In addition, the following words and phrases when
used herein, unless the context clearly requires otherwise, shall have the
following respective meanings:

                (a)     Accrued Benefit. The sum of all Deferred Amounts
        credited to Pankuch's Retirement Account and due and owing to Pankuch or
        his beneficiaries pursuant to this Agreement, together with Additions
        thereto calculated as set forth in paragraph 3 hereof, minus any
        distributions hereunder.

                (b)     Affiliate. Any corporation, partnership, joint venture,
        association, or similar organization or entity, the employees of which
        would be treated as employed by the Bank under Section 414(b) and 414(c)
        of the Code.

                (c)     Agreement. This Agreement, together with any and all
        amendments or supplements thereto.

                (d)     Code. The Internal Revenue Code of 1986, 26 U.S.C. 101
        et seq., as amended or as it may be amended from time to time.

                (e)     Compensation. Total salary and commissions of

<PAGE>   2

        Pankuch paid or accrued by the Bank, exclusive of Accrued Benefits,
        stock options, stock appreciation rights, and any employer contributions
        or payments to any other trust, fund, agreement or plan providing
        retirement, pension, profit sharing, health, welfare, death, insurance
        or similar benefits.

                (f)     Deferred Amount. A portion of the Compensation otherwise
        payable to Pankuch, receipt of which Pankuch has elected to defer under
        the provisions of paragraphs 2 and 4 hereof.

                (g)     Effective Date. The date of the execution of this
        Agreement.

                (h)     Election of Deferral. A written notice filed by Pankuch
        with the Payroll Department of the Bank in substantially the form
        attached hereto as Exhibit "A," specifying the amount of Compensation to
        be deferred.

                (i)     Fiscal Year. The taxable year of the Bank.

                (j)     Normal Retirement Date. The date Pankuch attains
        sixty-five (65) years of age.

                (k)     Notice of Discontinuance. A written notice filed by
        Pankuch with the Payroll Department of the Bank in substantially the
        form attached hereto as Exhibit "B," requesting discontinuance of the
        deferral of Pankuch's Compensation.

                (l)     Retirement Account. Book entries maintained by the Bank
        reflecting Deferred Amounts and Additions thereon; provided, however,
        that the existence of such book entries and the Retirement Account shall
        not create and shall not be deemed to create a trust of any kind, or a
        fiduciary relationship between the Bank and Pankuch, his designated
        beneficiary, or other beneficiaries under this Agreement.

        2.      DEFERRED COMPENSATION. Commencing on the Effective Date, and
continuing through the date on which Pankuch's employment terminates because of
his death, normal retirement, disability, or any other cause, Pankuch and the
Bank agree that Pankuch shall be entitled to elect to defer into his Retirement
Account up to the following maximum amounts of the Compensation that Pankuch
would otherwise be entitled to receive from the Bank in each of the following
Fiscal Year of the Bank:

<TABLE>
<CAPTION>
                                     Amount Deferred
<S>                                     <C>
             1995                       $10,000.00
             1996                       $11,000.00
             1997                       $12,100.00
             1998                       $13,310.00
             1999                       $14,641.00
             2000                       $16,105.00
             2001                       $17,716.00
             2002                       $19,487.00
             2003                       $21,436.00
             2004                       $23,579.00
</TABLE>

<PAGE>   3

The contemplated Annual Deferral Sum shall be deferred in substantially equal
bi-weekly amounts during each Fiscal Year or portion thereof during which this
Agreement is in effect.  The amount of Compensation actually deferred in any
Fiscal Year, taking into account discontinuance of deferral pursuant to a Notice
of Discontinuance, termination of Pankuch's employment, the death of Pankuch, or
otherwise is hereinafter referred to as the "Annual Deferred Amount."  The
portions of Pankuch's Annual Deferred Amount deferred bi-weekly shall be
credited to Pankuch's Retirement Account bi-weekly, as Deferrals are accrued.

        3.      ADDITIONS TO DEFERRED AMOUNTS. The Bank hereby agrees that it
will credit Deferred Amounts in Pankuch's Retirement Account with additions
thereon ("Additions") from and after the dates Deferred Amounts are credited to
the Retirement Account, subject to the limitations herein set forth. Additions
to Deferred Amounts, calculated at the rate of eight percent (8%) per annum,
compounded annually at the end of each Fiscal Year, shall accrue commencing on
the date the Retirement Account first has a positive balance and shall continue
until the first of the following events to occur:

                (a)     The date that Death Benefits as described in
        paragraph 7(b) hereof, Retirement Benefits, or Disability Benefits,
        whichever applies, end hereunder; or

                (b)     The date on which Death Benefits as described in
        paragraph 7(a) hereof commence; or

                (c)     The date on which a Termination Benefit or an
        Acquisition Termination Benefit, as herein defined, is paid.

        4.      ELECTION TO DEFER COMPENSATION. Pankuch may elect an Annual
Deferral Sum hereunder by filing an Election of Deferral. The initial Election
of Deferral must be filed within thirty (30) days of the Effective Date of this
Agreement. Such initial Election of Deferral, if any, shall be effective
commencing with the first day of the first month after it is filed. Thereafter,
an Election of Deferral must be filed at least thirty (30) days prior to the
beginning of the Fiscal Year to which it pertains and shall be effective on the
first day of the Fiscal Year following the filing thereof.

        5.      TERMINATION OF ELECTION. Pankuch's initial Election of Deferral
shall continue in effect, pursuant to the terms of the Election of Deferral,
unless and until Pankuch files with the Bank a Notice of Discontinuance or a
subsequent Election of Deferral specifying a different amount of deferral. Each
Election of Deferral filed subsequent to the initial Election of Deferral shall
similarly continue in effect until Pankuch files a Notice of Discontinuance or a
new Election of Deferral. Any new Election of Deferral, to be effective, must be
filed at least thirty (30) days prior to the beginning of the Fiscal Year in
which deferral is sought. A Notice of Discontinuance shall be effective if filed
at least twenty (20) days prior to any January 1st, April 1st, July 1st or
October 1st. Such Notice of Discontinuance shall be effective commencing with
the January 1st, April 1st, July 1st or October 1st following its filing,
whichever applies, and shall apply only with respect to Pankuch's Compensation
and bonuses attributable to services not yet performed.

        6.      RETIREMENT BENEFITS.

                (a)     Retirement Benefit. The Bank agrees that, from

<PAGE>   4

        and after the retirement of Pankuch from the service of the Bank upon
        reaching his Normal Retirement Date, the Bank shall thereafter pay as a
        retirement benefit (herein referred to as the "Retirement Benefit") to
        Pankuch Pankuch's entire Accrued Benefit, payable in equal annual
        installments, due on the 31st day of January of each year commencing on
        the first such date following the Normal Retirement Date, for a period
        of fifteen (15) years. The amount of each annual installment shall be an
        amount which, if paid annually over the remainder of the fifteen (15)
        year payment term, would result in payment of the entire Accrued
        Benefit, together with interest accrued at the rate of eight (8%)
        percent per annum, in equal annual installments.

                (b)     Election of Benefits Upon Normal Retirement Date.
        Pankuch shall have the option, upon attaining his Normal Retirement
        Date, to elect to receive his Retirement Benefit, notwithstanding his
        continued employment with the Bank after he has attained his Normal
        Retirement Date. Pankuch's election to receive his Retirement Benefit
        notwithstanding his continued employment must be made in writing at
        least ninety (90) days prior to his Normal Retirement Date. The
        Retirement Benefit payable upon election pursuant to this paragraph 6.b
        shall be the amount that would have been payable had Pankuch retired
        from service with the Bank as of his Normal Retirement Date. Any such
        election shall be irrevocable and shall result in the termination of
        Pankuch's right to any further deferrals hereunder.

        7.      DEATH BENEFITS.

                (a)     Death Benefit Prior to Commencement of Retirement or
        Disability Benefits. In the event of Pankuch's death while in the
        employment of Bank and prior to commencement of Retirement Benefits or
        Disability Benefits, Bank shall pay to Pankuch's designated beneficiary,
        in accordance with the last such designation received by the Bank from
        Pankuch prior to his death, a benefit in fifteen (15) annual
        installments, each in the amount of Forty-Four Thousand Five Hundred
        Sixty and 00/100 ($44,560.00). If no such designation has been received
        by Bank from Pankuch prior to his death, or if said payments are
        otherwise to be made as provided herein, said payments shall be made to
        Pankuch's then-living spouse, so long as she shall live, and thereafter
        to such person or persons, including her estate, as she may appoint
        under her Will, making specific reference hereto; if Pankuch is not
        survived by a spouse, or if said spouse shall be then deceased, having
        failed to so appoint, then said payments shall be made to the
        then-living children of Pankuch, if any, in equal shares, for their
        joint and survivor lives; and if none, or after their respective joint
        and survivor lives, any balance thereof in one lump sum to the estate of
        Pankuch. Payments shall be due on January 31 of each year, commencing on
        the first such date occurring after the death of Pankuch. To the extent
        that the Accrued Benefit in Pankuch's Retirement Account exceeds the
        total of payments required under this section, such excess sums shall be
        forfeited.

                (b)     Death Benefit After Commencement of Benefits. In the
        event of Pankuch's death after the commencement of Normal Retirement
        Benefits, but prior to the completion of all such payments due and owing
        hereunder, the Bank shall continue to make such payments, in equal
        annual installments, over the remainder of the period specified in

<PAGE>   5

        paragraph 6 hereof that would have been applicable to Pankuch had he
        survived. Such continuing payments shall be made to Pankuch's designated
        beneficiary, in accordance with the last such designation received by
        the Bank from Pankuch prior to his death. If no such designation has
        been received by the Bank from Pankuch prior to his death or if said
        payments are otherwise to be made as provided herein, said payments
        shall be made to Pankuch's then living spouse, so long as she shall live
        and thereafter to such person or persons, including her estate, as she
        may appoint under her Will, making specific reference hereto; if Pankuch
        is not survived by a spouse or if she shall fail to so appoint, then
        said payments shall be made to the then living children of Pankuch, if
        any, in equal shares, for their joint and survivor lives; and if none,
        or after their respective joint and survivor lives, any balance thereof
        in one lump sum to the estate of Pankuch. Such continuing payments shall
        be payable on January 31 of each year, commencing on the first such date
        occurring after the death of Pankuch.

        8.      DISABILITY BENEFIT. In the event that Pankuch is determined to
be Disabled, as defined in the Blue Ball National Bank Long Term Disability Plan
(which definition is incorporated herein and made a part hereof), then the date
of such determination shall, for purposes of this Agreement, be deemed to be
Pankuch's Normal Retirement Date, and all benefits otherwise payable to Pankuch
following the Normal Retirement Date shall be payable to Pankuch as a Disability
Benefit.

        9.      TERMINATION BENEFIT. In the event of Pankuch's termination of
employment with the Bank before his Normal Retirement Date for any reason, other
than his death or Disability (as herein defined) or the occurrence of any
Acquisition Termination (as herein defined), the Bank shall pay to Pankuch, as
compensation for services rendered prior to such termination, a single sum equal
to the total Deferred Amounts hereunder, exclusive of Additions thereto (herein
referred to as the "Termination Benefit"). In the event of the payment of a
Termination Benefit, any and all Additions credited to Pankuch's Retirement
Account shall be forfeited to the Bank. The Termination Benefit shall be payable
on the first day of the first month following the termination of Pankuch's
employment with the Bank.

        10.     ACQUISITION TERMINATION BENEFIT. In the event that Bank or
PennRock Financial Services Corp., of which Bank is a wholly-owned subsidiary,
should at any time prior to Pankuch's Normal Retirement Date be acquired by any
other entity, and in the event that Pankuch's employment with Bank or its
successor is subsequently terminated involuntarily prior to Pankuch's Normal
Retirement Date, then such termination shall be deemed an Acquisition
Termination hereunder. In such event, Bank or its successor shall pay to
Pankuch, as compensation for services rendered prior to such termination, a
single sum equal to the total Deferred Amounts hereunder, together with all
Additions thereto (the "Acquisition Termination Benefit"). The Acquisition
Termination Benefit shall be payable on the first day of the first month
following the termination of Pankuch's employment with the Bank or its
successor.

        11.     HARDSHIP BENEFIT. In the event Pankuch suffers a financial
hardship (as hereinafter defined), the Bank may, if it deems advisable in its
sole and absolute discretion, distribute to or utilize on behalf of Pankuch as a
hardship benefit (the "Hardship Benefit") any portion of Pankuch's Retirement
Account

<PAGE>   6

up to, but not in excess of, the Termination Benefit to which Pankuch would have
been entitled as of the date a Hardship Benefit is distributed or utilized. Any
Hardship Benefit shall be distributed or utilized at such times as the Bank
shall determine, and the Accrued Benefit in Pankuch's Benefit Account shall be
reduced by the amount so distributed and/or utilized. Financial Hardship shall
mean dire financial need of Pankuch caused by temporary or permanent disability
or incapacity, medical or educational expenses, the purchase or maintenance of a
residence, or a material reduction in family income.

        12.     OFFSET FOR OBLIGATIONS TO BANK. If, at such time as Pankuch
becomes entitled to benefit payments hereunder, Pankuch has any debt, obligation
or other liability representing an amount owing to the Bank or an Affiliate of
the Bank, and if such debt, obligation, or other liability is due and owing at
the time benefit payments are payable hereunder, the Bank may offset the amount
owing it or an Affiliate against the amount of benefits otherwise distributable
hereunder.

        13.     BENEFICIARY DESIGNATION. Pankuch shall have the right, at any
time, to submit in substantially the form attached hereto as Exhibit "C," a
written designation of primary and secondary beneficiaries to whom payment under
this Agreement shall be made in the event of his death prior to complete
distribution of the benefits due and payable under the Agreement. Each
beneficiary designation shall become effective only when receipt thereof is
acknowledged in writing by the Bank.

        14.     NO TRUST CREATED. Nothing created in this Agreement, and no
action taken pursuant to its provisions by either party hereto shall create, or
be construed to create, a trust of any kind, or a fiduciary relationship between
the Bank and Pankuch, his designated beneficiary, other beneficiaries of Pankuch
or any other person.

        15.     BENEFITS PAYABLE ONLY FROM GENERAL CORPORATE ASSETS; UNSECURED
GENERAL CREDITOR STATUS OF PANKUCH.

                (a)     The payments to Pankuch or his designated beneficiary or
        any other beneficiary hereunder shall be made from assets which shall
        continue, for all purposes, to be a part of the general, unrestricted
        assets of the Bank; no person shall have any interest in any such assets
        by virtue of the provisions of this Agreement. The Bank's obligation
        hereunder shall be an unfunded and unsecured promise to pay money in the
        future. To the extent that any person acquires a right to receive
        payments from the Bank under the provisions hereof, such right shall be
        no greater than the right of any unsecured creditor of the Bank, no such
        person shall have nor require any legal or equitable right, interest or
        claim in or to any property or assets of the Bank.

                (b)     This promise of future payment by Bank to Pankuch shall
        be unfunded and unsecured and shall not be construed as a transfer of
        any present right to receive payment. Pankuch shall derive no present
        economic benefit from this Agreement. In the event that, in its
        discretion, the Bank purchases an insurance policy or policies insuring
        the life of Pankuch (or any other property), to allow the Bank to
        recover the cost of providing benefits, in whole or in part, hereunder,
        neither Pankuch, his designated beneficiary nor any other beneficiary
        shall have any rights whatsoever therein or in the proceeds therefrom.
        The Bank shall be the

<PAGE>   7

        sole owner and beneficiary of any such insurance policy and shall
        possess and may exercise all incidents of ownership therein. No such
        policy, policies or other property shall be held in any trust for
        Pankuch or any other person nor as collateral security for any
        obligation of the Bank hereunder.

        16.     NO CONTRACT OF EMPLOYMENT. Nothing contained herein shall be
construed to be a contract of employment for any term of years, nor as
conferring upon Pankuch the right to continue to be employed by the Bank in his
present capacity, or in any capacity. It is expressly understood by the parties
hereto that this Agreement relates to the payment of deferred compensation for
Pankuch's services, payable after termination of his employment with the Bank,
and is not intended to be an employment contract.

        17.     BENEFITS NOT TRANSFERABLE. Neither Pankuch, his designated
beneficiary, nor any other beneficiary under this Agreement shall have any power
or right to transfer, assign, anticipate, hypothecate or otherwise encumber any
part or all of the amounts payable hereunder. No such amounts shall be subject
to seizure by any creditor of any such beneficiary, by a proceeding at law or in
equity, nor shall such amounts be transferable by operation of law in the event
of bankruptcy, insolvency or death of Pankuch, his designated beneficiary, or
any other beneficiary hereunder. Any such attempted assignment or transfer shall
be void.

        18.     DETERMINATION OF BENEFITS.

                (a)     Claim.

                A person who believes that he is being denied a benefit to which
        he is entitled under the Plan (hereinafter referred to as a "Claimant")
        may file a written request for such benefit with the Bank, setting forth
        his claim. The request must be addressed to any Senior Vice President of
        the Bank at its then principal place of business.

                (b)     Claim Decision.

                Upon receipt of a claim, the Bank shall advise the Claimant that
        a reply will be forthcoming within ninety (90) days and shall, in fact,
        deliver such reply within such period. The Bank may, however, extend the
        reply period for an additional ninety (90) days for reasonable cause.

                If the claim is denied in whole or in part, the Bank shall adopt
        a written opinion, using language calculated to be understood by the
        Claimant, setting forth:

                        (i)     The specific reason or reasons for such denial;

                        (ii)    The specific reference to pertinent provisions
        of this Agreement on which such denial is based;

                        (iii)   A description of any additional material or
        information necessary for the Claimant to perfect his claim and an
        explanation why such material or such information is necessary;

                        (iv)    Appropriate information as to the steps to be
        taken if the Claimant wishes to submit the claim for review; and

<PAGE>   8

                        (v)     The time limits for requesting a review under
        subsection c. and for review under subsection d. hereof.

                (c)     Request for Review.

                Within sixty (60) days after the receipt by the Claimant of the
        written opinion described above, the Claimant may request in writing
        that the Secretary of the Bank review the determination of the Bank.
        Such request must be addressed to the Secretary of the Bank, at its then
        principal place of business. The Claimant or his duly authorized
        representative may, but need not, review the pertinent documents and
        submit issues and comments in writing for consideration by the Bank. If
        the Claimant does not request a review of the Bank's determination by
        the Secretary of the Bank within such sixty (60) day period, he shall be
        barred and estopped from challenging the Bank's determination.

                (d)     Review of Decision.

                Within sixty (60) days after the Secretary's receipt of a
        request for review, he will review the Bank's determination. After
        considering all materials presented by the Claimant, the Secretary will
        render a written opinion, written in a manner calculated to be
        understood by the Claimant, setting forth the specific reasons for the
        decision and containing specific references to the pertinent provisions
        of this Agreement on which the decision is based. If special
        circumstances require that the sixty (60) day time period be extended,
        the Secretary will so notify the Claimant and will render the decision
        as soon as possible, but no later than one hundred twenty (120) days
        after receipt of the request for review.

        19.     AMENDMENT. This Agreement may not be amended, altered or
modified, except by a written instrument signed by the parties hereto, or their
respective successors, and may not be otherwise terminated except as provided
herein.

        20.     INUREMENT. This Agreement shall be binding upon and inure to the
benefit of the Bank and its successors and assigns, and Pankuch, his successors,
heirs, executors, administrators and beneficiaries.

        21.     NOTICE. Any notice, consent or demand required or permitted to
be given under the provisions of this Agreement shall be in writing, and shall
be signed by the party giving or making the same. If such notice, consent or
demand is mailed to a party hereto, it shall be sent by United States certified
mail, postage prepaid, addressed to such party's last known address as shown on
the records of the Bank. The date of such mailing shall be deemed the date of
notice, consent or demand. Either party may change the address to which notice
is to be sent by giving notice of the change of address in the manner aforesaid.

        22.     GOVERNING LAW.  This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of the
United States of America and of the Commonwealth of Pennsylvania.

        IN WHEREOF, the parties have executed this Agreement, in duplicate, as
of the day and year first above written.

<PAGE>   9

ATTEST:                       BLUE BALL NATIONAL BANK

                              By:
---------------------------      ------------------------------
ROBERT K. WEAVER, Secretary        JOSEPH SPADA, SR.,
                                   Vice President

                                                          (SEAL)
                              ----------------------------
                              MELVIN PANKUCH Exhibit A
ELECTION OF DEFERRAL

TO:     BLUE BALL NATIONAL BANK
        Attention: Payroll Department

        I hereby elect to defer a portion of my annual compensation under the
following Schedule:

<TABLE>
<CAPTION>
                                   Amount Deferred
<S>                                   <C>
                   1995               $10,000.00
                   1996               $11,000.00
                   1997               $12,100.00
                   1998               $13,310.00
                   1999               $14,641.00
                   2000               $16,105.00
                   2001               $17,716.00
                   2002               $19,487.00
                   2003               $21,436.00
                   2004               $23,579.00
</TABLE>

I further authorize Blue Ball National Bank to credit all amounts
so deferred to the Retirement Account established pursuant to
that certain Melvin Pankuch Deferred Compensation Plan Agreement,
by and between the undersigned and Blue Ball National Bank, dated
the _____ day of _____________, 1995.

        I understand that this authorization shall remain in effect until
revoked or amended. I understand that I may revoke deferral upon at least 20
days' prior written notice, effective on any January 1st, April 1st, July 1st or
October 1st. I further understand that I may file an amended Election of
Deferral at least 30 days prior to the beginning of a Fiscal Year of the Bank,
effective on the first day of such Fiscal Year.

Date:
        -----------------          ------------------------------
                                   Melvin Pankuch Exhibit B

NOTICE OF DISCONTINUANCE

TO:     BLUE BALL NATIONAL BANK
        Attention: Payroll Department

        I hereby give notice of my election to discontinue deferral of my
Compensation under that certain Melvin Pankuch Deferred Compensation Plan
Agreement, by and between Blue Ball National Bank and the undersigned, dated the
_____ day of ______________, 1995. This notice is submitted at least twenty (20)
days prior to January 1st, April 1st, July 1st, or October 1st, and shall be

<PAGE>   10

effective as of such date, as specified below.

<TABLE>
<S>                                  <C>
Discontinue deferral as of           [ ]  January 1st, 19__
(mark one)                           [ ]  April 1st, 19__
                                     [ ]  July 1st, 19__
                                     [ ]  October 1st, 19__
</TABLE>

                                     ----------------------------
                                     Melvin Pankuch

                                     Dated:
                                           ----------------------
                                     Exhibit C

DESIGNATION OF BENEFICIARY
UNDER THE
MELVIN PANKUCH
DEFERRED COMPENSATION PLAN AGREEMENT

I.      Employee:       Melvin Pankuch

II.     The above-named Employee's Revocable Beneficiary under the Melvin
        Pankuch Deferred Compensation Plan Agreement is set forth below (CHECK
        BOX TO LEFT OF APPLICABLE NUMBERED SUBPARAGRAPH AND FILL IN THE
        BLANK(S); CHECK AND COMPLETE ONLY ONE NUMBERED SUBPARAGRAPH):

[x]     1.      Employee's spouse, Ruth A. Pankuch, if living at the Employee's
                death; if not, such of the children of the marriage of the
                Employee and said spouse as shall be then living, equally, or
                the issue of any deceased child per stirpes.

[ ]     2.      Employee's spouse, _______________________, if living at the
                Employee's death, if not, such of the Employee's children as
                shall be then living, equally.

[ ]     3.      Such of the following children of the Employee as shall be
                living at the Employee's death, equally:
                _________________________, __________________________,
                _____________________________________________________.

[ ]             If this box is checked, and if paragraph 1, 2 or 3 is checked,
                then the living children of any deceased child designated shall
                take the share, divided equally, which such child would have
                taken, if living.

[ ]     4.      Employee's ______________________, if living at the Employee's
                death, if not, Employee's ________________, if then living, if
                not, Employee's ________________, if then living. (Insert
                relationship to Employee and name).

[ ]     5.      Such of the following as shall be living at the Employee's
                death, equally: Employee's ____________________________. (Insert
                relationship to Employee and name).

[ ]     6.      Employee's _________________________, if living at the
                Employee's death

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