PRESTIGE BANCORP INC, DEF 14A, 1997-03-28

PRESTIGE BANCORP INC
DEF 14A, 1997-03-28
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant / X /

Filed by a Party other than the Registrant / /

Check the appropriate box:

<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted
/ X / Definitive Proxy Statement by Rule 14a-6(e)(2))

/ / Definitive Additional Materials

/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

PRESTIGE BANK, F.S.B.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/ X / No Fee Required

/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

/ / $500 per each party to the controversy pursuant to the Exchange Act
Rule 14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

<PAGE> 2

PRESTIGE BANCORP, INC.
710 OLD CLAIRTON ROAD
PLEASANT HILLS, PENNSYLVANIA 15236
(412) 655-1190

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 1997

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Prestige Bancorp, Inc. (the "Company") will be held at The Bradley
House, located at 5239 Brownsville Road, Baldwin Borough, Pennsylvania on
Wednesday, April 23, 1997 at 10:30 A.M., Eastern Time, in the Elite Room on the
first level, for the following purposes, all of which are more completely set
forth in the accompanying Proxy Statement:

I. The election of two directors of the Company.

II. To consider and approve the adoption of the Company's Stock Option
Plan;

III. To consider and approve the adoption of the Company's Recognition and
Retention Plan and Trust;

IV. The ratification of the appointment of Arthur Andersen LLP as
independent auditors of the Company and Prestige Bank, A Federal
Savings Bank.

V. If necessary, to adjourn the Meeting to solicit additional proxies
with respect to approval of the Company's Stock Option Plan and
Recognition and Retention Plan and Trust; and

VI. To transact such other business as may properly come before the
Meeting or any adjournment thereof. Management is not aware of any
other such business.

Stockholders of record at the close of business on March 20, 1997, are
stockholders entitled to vote at the Meeting and any adjournment thereof.

You are requested to complete and sign the enclosed Proxy Card which is
solicited by the Board of Directors and to return it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.

By Order of the Board of Directors

/s/ PATRICIA A. WHITE
Patricia A. White
Secretary

YOU CAN HELP THE COMPANY AVOID THE NECESSITY AND EXPENSE OF SENDING
FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY.
IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE, AND RETURN THE
ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING.
THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3

PRESTIGE BANCORP, INC.
710 Old Clairton Road, Pittsburgh, PA 15236-4300 - 412-655-1190
(Fax) 412-655-1772

March 31, 1997

Dear Stockholders:

It is my pleasure to invite you to attend the first Annual Meeting of
Stockholders of Prestige Bancorp, Inc. (the "Company"). The meeting will be held
as The Bradley House, located at 5239 Brownsville Road, Baldwin Borough,
Pennsylvania on Wednesday, April 23, 1997 at 10:30 A.M., Eastern Time. The
Notice of Annual Meeting and Proxy Statement accompanying this letter describe
the business to be transacted at the Meeting.

At the meeting, officers and directors of the Company will report on the
activities of the Company. We will then take action on the matters described in
the proxy statement. The meeting will conclude with a question and answer
period.

It is very important that your shares be voted at the meeting regardless of the
number you own or whether you are able to attend the meeting in person. We urge
you to mark, sign, and date your proxy card today and return it in the envelope
provided, even if you plan to attend the meeting. This will not prevent you from
voting in person, but will ensure that your vote is counted if you are unable to
attend.

On behalf of the Board of Directors and all of the employees of the Company and
the Bank, I thank you for your continued interest and support, and I look
forward to seeing you at the meeting.

Sincerely,

/s/ ROBERT S. ZYLA
Robert S. Zyla
President
<PAGE> 4

PRESTIGE BANCORP, INC.
710 OLD CLAIRTON ROAD
PLEASANT HILLS, PENNSYLVANIA 15236

---------------------------------------------------

PROXY STATEMENT

---------------------------------------------------

ANNUAL MEETING OF STOCKHOLDERS

APRIL 23, 1997

GENERAL

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Prestige Bancorp, Inc. to be used at the
Annual Meeting of Stockholders of Prestige Bancorp, Inc. (the "Company") which
will be held at The Bradley House, 5239 Brownsville Road, Baldwin Borough,
Pennsylvania 15236 on April 23, 1997, 10:30 A.M. local time. The accompanying
Notice of Meeting, the form of Proxy and this Proxy Statement are being first
mailed to stockholders on or about April 4, 1997. A copy of the form of Proxy is
attached to this Proxy Statement as Exhibit C. The address of the principal
executive offices of the Company is set forth above.

At the Meeting, stockholders will consider and vote upon (i) the election
of two directors; (ii) the approval of the Prestige Bancorp, Inc. 1997 Stock
Option Plan (the "Stock Option Plan"); (iii) the approval of the Prestige
Bancorp, Inc. Recognition and Retention Plan and Trust ("Recognition Plan");
(iv) the ratification of the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31, 1997; and (iv) a
proposal to adjourn the Meeting to solicit additional proxies, if needed. The
Board of Directors knows of no additional matters that will be presented for
consideration at the Meeting. Execution of a proxy, however, confers on the
designated proxy holder discretionary authority to vote the shares represented
by such proxy in accordance with their best judgment on such other business, if
any, that may properly come before the Meeting or any adjournment thereof.

VOTING AND REVOCABILITY OF PROXIES

Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular proposal at the
Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors of the Company will
be voted in accordance with the directions given therein. WHERE NO INSTRUCTIONS
ARE INDICATED, PROXIES WILL BE VOTED FOR THE NOMINEES FOR DIRECTORS SET FORTH
BELOW AND "FOR" THE OTHER LISTED PROPOSALS. The proxy confers discretionary
authority on the persons named therein to vote with respect to the election of
any person as a director where the nominee is unable to serve, or for good cause
will not serve, and matters incident to the conduct of the Meeting.
<PAGE> 5

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

Employees, officers and directors of the Company have an interest in
certain matters being presented for stockholder approval. Employees, officers
and directors of the Company would be granted stock options and restricted stock
awards pursuant to the Stock Option Plan and the Recognition Plan. The approval
of the Stock Option Plan and the Recognition Plan are being presented as
Proposals II and III, respectively.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

Stockholders of record as of the close of business on March 20, 1997
("Voting Record Date"), are entitled to one vote for each share of Common Stock
of the Company then held. As of March 20, 1997, the Company had 963,023 shares
of common stock of the Company ("Common Stock") issued and outstanding.

As provided in the Articles of Incorporation of the Company, for a period
of five years from the effective date of the Articles of Incorporation, no
person is permitted to beneficially own in excess of 10% of the outstanding
shares of the Common Stock (the "Limit"), and any shares of the Common Stock
acquired in violation of this Limit are not entitled to vote. A person or entity
is deemed to beneficially own shares owned by an affiliate of, as well as
persons acting in concert with, such person or entity.

The presence in person or by proxy of at least a majority of the
outstanding shares of the Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. In the event there are not sufficient votes for a quorum or to ratify
any proposals at the time of the Meeting, the Meeting may be adjourned in order
to permit the further solicitation of proxies.

As to the election of directors, the proxy card being provided by the Board
of Directors enables a stockholder to vote for the election of the nominees
proposed by the Board of Directors, or to withhold authority to vote for one or
more of the nominees being proposed. [Under the Company's Bylaws, directors are
elected by a plurality of votes cast, without respect to proxies as to which
authority to vote for one or more of the nominees being proposed is withheld.]

As to matters being proposed for stockholder action as set forth in
Proposals II and III the proxy card being provided by the Board of Directors
enables a stockholder to check the appropriate box on the proxy card to (i) vote
"FOR" the item, (ii) vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on such
item. An affirmative vote of the holders of a majority of the Common Stock
entitled to vote at the Meeting, is required to constitute stockholder approval.
Shares as to which the "ABSTAIN" box has been selected on the proxy card will be
counted as votes cast and will have the effect of a vote against the matter for
which the "ABSTAIN" box has been selected. Broker Non-Votes will also have the
effect of a vote against the matter.

As to the ratification of independent auditors as set forth in Proposal IV
and all other matters that may properly come before the Meeting, including a
vote to adjourn the meeting to solicit additional proxies, if needed, as set
forth in Proposal V, by checking the appropriate box, a stockholder may: (i)
vote "FOR" the item, (ii) vote "AGAINST" the item, or (iii) "ABSTAIN" with
respect to the item. Unless otherwise required by law, all other matters shall
be determined by a majority of votes cast affirmatively or negatively without
regard to (a) Broker Non-Votes, or (b) proxies marked "ABSTAIN" as to that
matter. An affirmative vote of the holders of a majority of Common Stock present
at the Meeting, in person or by proxy, and entitled to vote, is required to
constitute stockholder approval.

Persons and groups owning in excess of 5% of the Company's Common Stock are
required to file certain reports with the Securities and Exchange Commission
("SEC") regarding such ownership pursuant to the Securities Act of 1934, as
amended (the "1934 Act"). As of March 20, 1997, management knows of no person
who beneficially owns in excess of 5% of the Common Stock of the Company other
than those entities shown on the table immediately below. The following table
sets forth as of March 20, 1997 certain information as to the Common Stock
beneficially owned by the Prestige Bancorp Employee Stock Ownership Plan (the

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"ESOP"), each other 5% or greater stockholder of the Company, and all executive
officers and directors of the Company as a group.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF SHARES OF
BENEFICIAL OWNERSHIP OF COMMON STOCK
NAME AND ADDRESS OF COMMON STOCK AS OF OUTSTANDING AS OF
BENEFICIAL OWNER MARCH 20, 1997 MARCH 20, 1997
------------------- ----------------------- -------------------
<S> <C> <C>
Prestige Bancorp Employee Stock.......... 77,041(1)(2) 8.0%
Ownership Plan
710 Old Clairton Road
Pleasant Hills, PA 15236

First Financial Fund, Inc................ 95,300 9.9
Gateway Center Three
100 Mulberry Street, 9th Floor
Newark, NJ 07102-9077

Wellington Management Company, LLP....... 95,300 9.9
75 State Street
Boston, Massachusetts 02109

John Hancock Regional Bank Fund.......... 70,000(3) 7.3
c/o John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199

All Directors and Executive.............. 68,097(1)(2) 7.1%
Officers as a Group (8 persons)
</TABLE>

- ------------

(1) Includes shares of Common Stock held directly as well as by spouses or minor
children, in trust and other indirect ownership, over which shares the
individuals effectively exercise sole or shared voting and investment power,
unless otherwise indicated. Excludes options to purchase an additional
96,302 shares to be held by executive officers and directors that may only
be granted if stockholders approve the Stock Option Plan. See "Proposal
II--Approval of Stock Option Plan." Excludes 38,521 shares which may be
awarded under the Management Stock Recognition and Retention Plan over which
shares the named individuals will exercise sole or shared voting rights. See
"Proposal III--Approval of Recognition and Retention Plan and Trust."
Excludes 77,041 shares owned by the Prestige Bancorp Employee Stock
Ownership Plan ("ESOP") as to which certain directors act as trustee. See
"Proposal I--Election of Directors--Other Benefits."

(2) Individual ownership of Shares of Common Stock by the directors is set forth
later in this Proxy Statement. See "Proposal I--Election of
Directors--Information with Respect to Nominees for Directors and Continuing
Directors". James M. Hein is not a director but is an executive officer of
the Company and the Savings Bank. As of March 20, 1997 Mr. Hein owned less
than 1% of the Common Stock of the Company.

(3) John Hancock Advisers, Inc., the investment advisor of John Hancock Regional
Bank Fund, has a direct beneficial ownership of 70,000 shares of Common
Stock.

FILING OF BENEFICIAL OWNERSHIP REPORTS

The Common Stock of the Company is registered pursuant to Section 12(g) of
the 1934 Act. The officers and directors of the Company and beneficial owners of
greater than 10% of the Common Stock ("10% beneficial owners") are required to
file reports on Forms 3, 4 and 5 with the SEC disclosing changes in beneficial
ownership of the Common Stock. Based on the Company's review of such ownership
reports, no officer, director or 10% beneficial owner of the Company's failed to
file such ownership reports on a timely basis for the fiscal year ended December
31, 1996.

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<PAGE> 7

PROPOSAL I--ELECTION OF DIRECTORS

GENERAL

The Company's bylaws require that directors be divided into three classes,
as nearly equal in number as possible, each class to serve for a three year
period, with approximately one-third of the directors elected each year. The
Board of Directors currently consists of seven members. Two directors will be
elected at the Meeting, to serve for a three-year term, as noted below, or until
his successor has been elected and qualified.

INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTORS AND CONTINUING DIRECTORS

Robert S. Zyla and Charles P. McCullough have been nominated by the Board
of Directors to serve as directors for a three year term commencing on the date
of the meeting. Messrs. Zyla and McCullough are currently members of the Board
of Directors. In accordance with the Company's Articles of Incorporation, the
Board of Directors will consider nominees for Directors from stockholders and
such nominees, if properly presented to the Company in accordance with the terms
of the Company's Articles of Incorporation will be placed on the ballot at the
annual meeting. With respect to the meeting of the stockholders of the Company
scheduled for April 23, 1997 only, a stockholder of the Company may submit a
nomination for the Board of Directors no later than the close of business on the
tenth day following the day on which this Proxy Statement and Notice of Annual
Meeting is mailed. Any such nomination must conform to the requirements of the
Articles of Incorporation of the Company. However, it is the discretion of the
Board of Directors whether or not to recommend any stockholder nominees. It is
intended that the persons named in the proxies solicited by the Board of
Directors will vote for the election of the named nominees. Each of the nominees
of the Board of Directors has consented to serve as a director if elected. If
the nominees are unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute as the Board of Directors may
recommend or the size of the Board of Directors may be reduced to eliminate the
vacancy. At this time, the Board of Directors knows of no reason why the
nominees might be unavailable to serve. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE ELECTION OF EACH NOMINEE.

The following table sets forth the nominees and the directors continuing in
office, their name, age, the year they become a director of the Company or of
Prestige Savings Bank, A Federal Savings Bank (the "Savings Bank") in the event
such individual served as a director of the Savings Bank prior to the stock
conversion of the Savings Bank on June 27, 1996, the expiration date of their
current term as a director, and the number and percentage of shares of the
Common Stock beneficially owned.

BOARD OF DIRECTORS NOMINEES FOR TERM OF EXPIRE IN 2000

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DIRECTORS CONTINUING IN OFFICE

<TABLE>
<CAPTION>
PERCENT OF
SHARES OF SHARE OF
CURRENT COMMON STOCK COMMON
DIRECTOR TERM TO BENEFICIALLY STOCK
NAME AGE(1) SINCE(2) EXPIRE OWNED(3)(4)(5)(6)(7) OUTSTANDING
---- ------ -------- ------- -------------------- -----------
<S> <C> <C> <C> <C> <C>
Martin W. Dowling....................... 70 1992 1999 5,000 .52
Michael R. Macosko...................... 45 1992 1998 10,340 1.07
Mark R. Schoen.......................... 43 1994 1999 3,100 .32
John A. Stiver.......................... 52 1986 1998 24,480 2.54
Patricia A. White....................... 50 1989 1998 8,072 .84
</TABLE>

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(1) As of February 28, 1997.

(2) Prior to June 27, 1996, Prestige Bank, A Federal Savings Bank (the "Savings
Bank") was a federal chartered mutual savings bank. The Company is a holding
company which was created as part of the conversion of the Savings Bank to a
stock chartered savings bank. As part of the conversion the then directors
of the Savings Bank were selected as directors of the Company.

(3) Includes shares of Common Stock held directly as well as by spouses or minor
children, in trust and other indirect ownership, over which shares the
individuals effectively exercise sole or shared voting and investment power,
unless otherwise indicated.

(4) Beneficial ownership as of the Voting Record Date.

(5) Excludes stock options to purchase shares of Common Stock pursuant to the
Stock Option Plan, the granting of which are subject to stockholder approval
of the plan and are not exercisable within 60 days of the Voting Record
Date. See "Proposal II--Approval of Stock Option Plan."

(6) Excludes shares of Common Stock proposed to be awarded under the Recognition
and Retention Plan and Trust. See "Proposal III--Approval of the Recognition
and Retention Plan and Trust."

(7) Excludes shares of Common Stock held under the ESOP for which such
individual serves as a member of the ESOP Committee or Trustee Committee.
Such individual disclaims beneficial ownership with respect to such shares
held in a fiduciary capacity. The ESOP purchased such shares for the
exclusive benefit of plan employee participants with funds borrowed from the
Savings Bank. These shares are held in a suspense account and will be
allocated among ESOP participants annually on the basis of total gross
compensation as the ESOP debt is repaid. The Board of Directors has
appointed a committee consisting of Messrs. Zyla, Stiver and Hein to serve
as the ESOP administrative committee ("ESOP Committee") and Messrs. Zyla and
Stiver will serve as the ESOP Trustees ("ESOP Trustees"). The ESOP Committee
or the Board of Directors instructs the ESOP Trustees regarding investment
of ESOP plan assets. The ESOP Trustees must vote all shares allocated to
participant accounts under the ESOP as directed by participants. Unallocated
shares and shares for which no timely voting directive is received will be
voted by the ESOP Trustees as directed by the ESOP Committee. As of March
20, 1997, 2568 shares have been allocated under the ESOP to participant
accounts.

DIRECTOR AND EXECUTIVE OFFICER BIOGRAPHICAL INFORMATION

Set forth below is information with respect to the principal occupations
during the last five years for the directors and executive officers of the
Company and the Savings Bank.

MARTIN W. DOWLING is the president and owner of Jefferson Hills Real
Estate, Inc. He is also President of Martin W. Dowling, Inc., a building and
remodeling company, and President of Town Hall Estates, Inc., and Meadow Green
Corp., both companies being in the business of real estate development. Mr.
Dowling also serves as director of Jefferson Hospital and other
healthcare-related organizations.

JAMES M. HEIN is the Chief Financial Officer of the Savings Bank and has
performed as such since January 1996. Prior to that time Mr. Hein acted as the
controller of the Savings Bank. In connection with the

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formation of the Company and the conversion of the Savings Bank, Mr. Hein was
appointed the controller of the Company.

MICHAEL R. MACOSKO is a pharmacist with Thrift Drug, Inc., and has
performed as such since 1995. From 1974 until 1995 he was pharmacist, owner and
President of Woody's Drug Store, Inc.

CHARLES P. MCCULLOUGH is an attorney and a special shareholder with Tucker
Arensberg, P.C., and has performed as such since November of 1995. Prior to his
employment by Tucker Arensberg, P.C., Mr. McCullough was a solo practitioner
attorney at law. During 1991 and 1992 Mr. McCullough acted as Vice President and
general counsel of Navarra Insurance Services, Inc., a property and casualty
insurance agency and continued in the same position with a successor insurance
agency, T. M. Warwick & Co.

MARK R. SCHOEN is an Assistant Vice President of Product Development for
Federated Investors, a mutual fund company, and has performed as such since
1992. From 1990 until 1992 he worked for Mellon Bank, N.A., as an Assistant Vice
President and as a technical manager of automation products from their Backroom
Systems Group.

JOHN A. STIVER is a self employed certified public accountant since 1980.
He is also President and owner of C & J Leasing Co., an equipment leasing
company and of Miller's Mini Storage, Inc. In addition, he is also President of
Chirp, Inc., which supplies equipment to chiropractors.

PATRICIA A. WHITE is the Executive Vice President of the Savings Bank, and
has performed as such since 1989. She is also the Corporate Secretary of the
Savings Bank and has performed as such since 1986. Her main duties include
oversight of the marketing, compliance, security and loan origination areas of
the Savings Bank. In connection with the formation of the Company and the
conversion of the Savings Bank, Ms. White was appointed Treasurer and Secretary
of the Company.

ROBERT S. ZYLA is the President, Chief Executive Officer and Treasurer of
the Savings Bank. Mr. Zyla was appointed President of the Savings Bank in 1989.
Mr. Zyla received the title of Chief Executive Officer and Treasurer of the
Savings Bank in 1995. In connection with the formation of the Company and the
Conversion of the Savings Bank, Mr. Zyla was appointed the President of the
Company.

COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS OF THE COMPANY AND THE SAVINGS
BANK

The Board of Directors of the Company meets on a monthly basis. Special
meetings of the Board of Directors may be called by the President of the
Company, its Chairman of the Board or by a majority of the directors of the
Corporation. During the fiscal year ending December 31, 1996, the Board of
Directors met 10 times. No director of the Company attended fewer than 90% of
the total number of board meetings or committee meetings during this period. The
Board of Directors of the Company has established an executive committee, an
audit committee and a compensation committee.

Executive Committee of the Company. The Executive Committee consists of Ms.
White and Messrs. Zyla, Stiver, Hein and McCullough. The Executive Committee
addresses policy issues of the Company which arise between meetings of the Board
of Directors of the Company. The Executive Committee met one time during 1996.

Audit Committee of the Company. The Audit Committee consists of Messrs.
Stiver (Chairman), Macosko, Schoen and McCullough. The Audit Committee
recommends engagement of the external auditors of the Company and the Savings
Bank and reviews the audit reports of the external auditors. The Audit Committee
met two times during 1996.

Compensation Committee of the Company. The Compensation Committee consists
of Messrs. Stiver, Dowling, Macosko, Schoen and McCullough. The Compensation
Committee sets the level of compensation of the executive officers of the
Company and the Savings Bank (other than compensation in the form of stock
option and stock compensation awards). The Compensation Committee met one time
during 1996.

The primary business of the Company is conducted through its only
subsidiary, Prestige Bank, A Federal Savings Bank (the "Savings Bank"). Each of
the directors of the Company is also a director of the Savings Bank. The Board
of Directors of the Savings Bank meets on a monthly basis and may have
additional special

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<PAGE> 10

meetings upon the request of the President, the Chairman of the Board of
Directors or a majority of the directors of the Savings Bank. During the fiscal
year ended December 31, 1996, the Board of Directors met 13 times. No director
attended fewer than 90% of the total number of board meetings or committee
meetings on which he or she served that were held during this period. The Board
of Directors of the Savings Bank has established the following committees:

Loan Committee of the Savings Bank. The Loan Committee consists of Ms.
White and Messrs. Zyla, Stiver, Dowling and McCullough. The Loan Committee has
the authority to approve loans up to $250,000. The Loan Committee met 24 times
during 1996.

Audit Committee. The Audit Committee consists of Messrs. Stiver (Chairman),
Macosko, Schoen and McCullough. Prior to the conversion of the Savings Bank to a
stock chartered institution, the Audit Committee recommended the engagement of
the Savings Bank's external auditors and reviewed their audit reports. The Audit
Committee met 1 time during 1996. After the conversion the Audit Committee of
the Savings Bank was disbanded and the role of the committee was assumed by the
Audit Committee of the Company.

Investment and the Asset and Liability Committees of the Savings Bank. The
Investment and the Asset and Liability Committees each consists of Messrs. Zyla,
Stiver, and Hein. These Committees meet back to back. The Investment Committee
has the authority to approve investments in securities eligible for purchase by
a savings association up to $5 million and makes recommendations to the full
board of directors with respect to investment policies and investments in excess
of $5 million. The Asset and Liability Committee reviews the interest bearing
liabilities of the Savings Bank against the interest earning assets of the
Savings Bank and operates to manage the interest rate risk of the Savings Bank.
The Investment and the Asset and Liability Committees each met 11 times during
1996.

Asset Classification Committee of the Savings Bank. The Asset
Classification Committee consists of Messrs. Zyla, Stiver and Hein. The Asset
Classification Committee reviews the Savings Bank's loan portfolio to determine
the classification of loans which are past due. The Asset Classification
Committee met 12 times during 1996.

Marketing/Community Reinvestment Act Committee of the Savings Bank. The
Marketing/Community Reinvestment Act Committee consists of Ms. White and Messrs.
Dowling, Schoen and Macosko. The Committee oversees the Savings Bank's marketing
efforts and monitors its compliance with the Community Reinvestment Act. The
committee met 2 times during 1996.

In addition to the committees described above, the Savings Bank also has a
Facilities Committee which consist of members of the Board of Directors of the
Savings Bank and/or other members of senior management and which meets as
required. In connection with the conversion of the Savings Bank from a mutual
chartered savings bank to a stock chartered savings bank (the "Conversion"), the
Board of Directors of the Savings Bank created a Conversion Committee which
committee has since been disbanded.

DIRECTOR'S COMPENSATION

All directors of the Savings Bank are paid a $500 monthly fee. There are no
separate board of directors fees for the monthly meeting of the Company. In
addition, all outside directors received $125 for each committee meeting of the
Company or the Savings Bank attended during 1996. All outside directors will
receive $150 for each committee meeting of the Company or the Savings Bank they
attend during 1997. In addition, the Chairman of the Board of Directors of the
Savings Bank received additional monthly compensation of $2,500 for the fiscal
year ending 1996 for his services as chairman of the Board of Directors. For the
fiscal year ending December 31, 1997, the Chairman of the Board of Directors
will receive a monthly stipend of $8,000. The Chairman of the Board of Directors
will receive no separate fee for attendance at board meetings or committee
meetings for separate board meetings and committee meetings. The aggregate
amount of fees paid to the directors for the year ended December 31, 1996 for
all board and committee meetings of the Company and the Savings Bank was
$91,750.

The Board of Directors of the Company has adopted a stock option plan and a
stock incentive plan for the fiscal years ending December 31, 1997 and
thereafter. Under these plans the non-employee directors will be

7
<PAGE> 11

awarded stock options and stock on a formula basis. See Proposals II and III for
a summary of the material terms of these plans. Each of the plans is attached
hereto as Exhibit A and Exhibit B respectively.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth a summary of certain information concerning
the compensation paid by the Company and Savings Bank for services rendered in
all capacities during the year ended December 31, 1996 to the President of the
Company and the President and Chief Executive Officer of the Savings Bank. No
executive officer of the Company or the Savings Bank received total compensation
during the fiscal year exceeding $100,000.

SUMMARY COMPENSATION TABLE(1)

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------- OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(2) SALARY BONUS COMPENSATION(3) COMPENSATION(4)
--------------------------- ------- ------- ----- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert S. Zyla, President of the....... 1996 $84,000 $0 $0 $6,500
Company and Chief Executive 1995 $79,235 $0 $0 $6,000
Officer of the Savings Bank 1994 $74,750 $0 $0 $6,400
</TABLE>

- ------------

(1) For the year 1996, 1995 and 1994 neither the Company nor the Savings Bank
had in place any stock options, stock incentive, stock appreciation rights
or long-term incentive plans that would fall under the category of long-term
compensation, awards, payout, restrictive stock awards or options/SAR for
separate presentation.

(2) For each of 1996, 1995 and 1994 all compensation of Mr. Zyla was paid by the
Savings Bank.

(3) Does not include amounts attributable to miscellaneous benefits received by
Mr. Zyla. In the opinion of management of the Company the costs to the
Company of providing such benefits to Mr. Zyla during the years ended
December 31, 1996, 1995 and 1994 did not exceed the lesser of $50,000 or 10%
of the total of annual salary and bonus reported for Mr. Zyla.

(4) This amount includes fees of $6,500, $6,000 and $6,400 paid for service as a
member of the board of directors of each of the Company and/or the Savings
Bank for the years ending December 31, 1996, 1995 and 1994 respectively.
This amount includes contributions of $0, $0 and $0 paid by the Company or
the Savings Bank to defined contribution plans of the Company and the
Savings Bank for the account of Mr. Zyla for the years ending December 31,
1996, 1995 and 1994 respectively. This amount includes payments of $10,591,
$17,929 and $17,510 by the Company or the Savings Bank to defined benefit
plans which are based on the services of Mr. Zyla for the years ending
December 31, 1996, 1995 and 1994. This amount included $4,024 for the year
ending December 31, 1996, which is the fair market value of the stock of the
Company as of the date of allocation of such stock from the ESOP share
suspension account to the account maintained by the ESOP for Mr. Zyla.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The compensation of the executive officers of the Company Savings Bank is
set annually by the Compensation Committee of the Company. Salaries of the
executive officers of the Savings Bank cover for services for both the Savings
Bank and the Company. There is no separate salary for service as an officer of
the Company. During the fiscal year ended December 31, 1996, the Compensation
Committee of the Company consisted of Messrs. Stiver, Dowling, Macosko,
McCullough and Schoen. Each of these gentlemen participated in setting executive
compensation for the officers of the Company and the Savings Bank.

As of December 31, 1996, John A. Stiver, a director and the Chairman of the
Board, and C&J Leasing Co. (of which Mr. Stiver is owner) have borrowings from
the Savings Bank with a total aggregate balance of $377,433 at December 31,
1996. The largest aggregate balance during 1996 of Mr. Stiver's loans (and his
affiliates) was $115,000. These loans were made in the ordinary course of
business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with

8
<PAGE> 12

other persons. These extensions do not involve more than the normal risk of
collectability or present other unfavorable features. Mr. Stiver also leases
space from the Savings Bank for his offices at an annual rental of $11,100,
which management believes is comparable to rates chargeable to unrelated third
parties for rentals of similar space. Please see "Director's Compensation" above
for the fees earned by Mr. Stiver as a director and as the Chairman of the
Board.

In addition, Mr. Stiver has prepared the federal and state tax returns and
filings of the Company and the Savings Bank and during 1996 received fees of
$4,950 for this service. Mr. Stiver has also been retained to prepare the
federal and state tax returns and filings of the Company and the Savings Bank
due during 1997 and will receive a fee not to exceed $6,000 for these services.
Management believes this fee for tax preparation services is comparable to rates
charged by unrelated third parties for comparable services.

As of December 31, 1996, the Savings Bank had committed to make an
additional loan to Mr. Stiver in an amount not to exceed $93,300. This loan
commitment was made in the ordinary course of business of the Savings Bank on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons. These
extensions do not involve more than the normal risk of collectability or present
other unfavorable features.

Charles P. McCullough, a director of the Savings Bank, is an attorney and a
special shareholder with the law firm of Tucker Arensberg, P.C., which has been
retained by the Savings Bank and the Company with respect to certain legal
matters on an ongoing basis. The Company and the Savings Bank expect this
relationship to continue.

Dowling, Inc., (which is owned by Martin W. Dowling) had borrowings from
the Savings Bank with a total balance of $20,159 at December 31, 1996. The
largest balance outstanding during 1996 of loans to Dowling, Inc., was $20,159.
At December 31, 1996, the Savings Bank had extended to Dowling, Inc., a total
credit line of $25,000 of which $20,159 was drawn down as reported above. This
credit line was made available in the ordinary course on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons. This extension of credit does
not involve more than the normal risk of collectability or present other
unfavorable features.

REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION

The salaried executive officers of the Company and the Savings Bank consist
of Mr. Robert S. Zyla (President of the Company and Chief Executive Officer,
President and Treasurer of the Savings Bank), Mr. James M. Hein (Controller of
the Company and Chief Financial Officer of the Bank) and Ms. Patricia A. White
(Treasurer and Secretary of the Company and Executive Vice President and
Secretary of the Savings Bank). The salary of Messrs. Zyla and Hein and Ms.
White are set at the Savings Bank level. No separate salary is paid for service
as an officer of the Company.

The Board of Directors of the Savings Bank meets annually to review
compensation paid to senior management. Mr. Zyla and Ms. White abstain from
board discussion of executive compensation. The Board of Directors of the
Savings Bank reviews various published surveys of compensation paid to employees
performing similar duties for depository institutions and their holding
companies, with a particular focus on the level of compensation paid by
comparable institutions in and around the Savings Bank market area, including
institutions with total assets of less than $150 million. Although the Board of
Directors of the Savings Bank does not specifically set compensation levels for
executive officers based on whether particular financial goals have been
achieved by the Savings Bank, the Board of Directors of the Savings Bank does
consider the overall profitability of the Savings Bank when making these
decisions. With respect to each particular employee, his or her particular
contributions to the Savings Bank over the past year are also evaluated.

Mr. Robert S. Zyla, President and Chief Executive Officer of the Savings
Bank, received an increase in his base salary from $79,235, the base salary for
the fiscal year ending December 31, 1995, to $84,000, the base salary for the
fiscal year ending December 31, 1996. For the fiscal year ending December 31,
1997 the Board of Directors of the Savings Bank has set the base salary for Mr.
Zyla at $88,000. The Compensation

9
<PAGE> 13

Committee does not consider corporate performance in its determination but only
compensation by comparable companies adjusted by an evaluation of the officer's
performance.

The base salaries of Ms. White and Mr. Hein have risen from $50,350 and
$42,130 respectively for the fiscal year ending December 31, 1995 to $60,000 and
$50,000 for the fiscal year ending December 31, 1996. The Board of Directors of
the Savings Bank has set the base salary of Ms. White and Mr. Hein at $63,600
and $60,000 for the fiscal year ending December 31, 1997. In addition, Mr. Zyla,
Ms. White and Mr. Hein will be awarded stock options and restricted stock under
the Stock Option Plan and the Recognition Plan upon stockholder approval of such
Plans. See "Proposal II--Approval of Stock Option Plan" and "Proposal
III--Approval of Recognition and Retention Plan and Trust." The Board of
Directors will consider the annual compensation paid to executive officers of
financial institutions in the Commonwealth of Pennsylvania and surrounding
states with assets of less than $150 million and the individual job performance
of such individual in consideration of its specific salary increase decision
with respect to compensation to be paid to the President and Chief Executive
Officer, Executive Vice President and Chief Financial Officer in the future.

Compensation Committee of the Company:

John A. Stiver
Martin W. Dowling
Charles P. McCullough
Michael R. Macosko
Mark R. Schoen

10
<PAGE> 14

PERFORMANCE GRAPH

The following is a graph comparing the Company's cumulative total
shareholder returns with the performance of the NASDAQ Stock Market index (US
Companies), NASDAQ Financial Stocks index and the stock index for thrift
institutions with less than $250 million in assets maintained by SNL Securities
LP, in which group the Company is included. For each of the Company and each
such index the graph begins with June 27, 1996 (the first day of trading of the
Company's Common Stock) and ends on February 14, 1997.

TOTAL RETURN PERFORMANCE
- ----------------------------------------------------------------------------------------------
INDEX
------------------------------------------------------------

Prestige Nasdaq Total Nasdaq Fi- SNL $250M
Period Ending Bancorp, Inc. Return nancial Index Thrift Index

11
<PAGE> 15

The Company did not pay any dividends during the year ended December 31,
1996. The Board of Directors of the Company declared a $.03 per share dividend
for the holders of the Common Stock of record as of March 1, 1997 and payable on
March 21, 1997. There can be no assurance that the Company's stock performance
will continue into the future with the same or similar trend. The Company does
not make or endorse any predictions as to future stock performance.

EMPLOYMENT AGREEMENTS

In connection with the Conversion, the Company and the Savings Bank (the
"Employers") entered into employment agreements with each of Mr. Zyla, Ms. White
and Mr. Hein (individually the "Executive" and collectively the "Executives").
Under the employment agreements, the Employers employed each of the Executives
for a term of two years, in each case in their current respective positions. The
term of each Executive's employment agreement shall be extended annually for an
additional one-year period such that at any time the remaining term of the
agreement will be from one to two years, unless, not less than 30 days prior to
the annual anniversary date, a determination not to extend the agreement is made
by either the Company or the Savings Bank or the Executive, or unless the
Executive's employment with the Employers has been previously terminated.

Each of the employment agreements shall be terminable with or without cause
by the Employers. The Executive shall have no right to compensation or other
benefits pursuant to the employment agreement for any period after voluntary
termination or termination by the Employers for cause, disability, retirement or
death, provided, however, that for the remaining term of the employment
agreement the Executive may be entitled to supplemental disability benefits upon
termination of employment due to disability. In the event that (1) the Executive
terminates his or her employment (a) because of failure of the Employers to
comply with any material provision of the employment agreement, or (b) for "good
reason", as defined in the employment agreement as a result of certain adverse
actions which are taken with respect to the Executive's employment following a
Change in Control of the Company, including without limitation, (i) a change in
the Executive's title or duties by the Employers, (ii) a reduction in the
Executive's base salary or fringe benefits; or (iii) a relocation of the
principal executive office of the Employers outside of the Pittsburgh,
Pennsylvania area, or (2) prior to a Change in Control the employment agreement
is terminated by the Employers without cause, or for other than the disability,
retirement or death of the Executive, the Executive, or in the event of the
Executive's death, his beneficiary or estate, will be entitled to the
continuation of the base salary and certain fringe benefits that the Executive
was receiving at the time of such termination for the remaining term of the
agreement (approximately one to two years). In the event that following a Change
in Control the employment agreement is terminated by the Employers without
cause, or for other than the disability, retirement or death of the Executive,
for purposes of determining the duration of severance pay the remaining term of
the agreement will be extended for a period of one year and the Executive, or in
the event of the Executive's death, his beneficiary or estate, will be entitled
to the continuation of the base salary and certain fringe benefits that the
Executive was receiving at the time of such termination for the remaining
extended term of the agreement (approximately two to three years). Under such
circumstances and based upon current levels of Executive base salary, base
salary and fringe benefits would continue for a period not to exceed three years
and one month, resulting in a maximum base salary continuation benefit to the
three Executives of $728,641 in the aggregate assuming all three Executives were
entitled to base salary continuation benefits, payable over approximately 37
months.

A Change in Control is generally defined in the employment agreement to
include any change in control of the Company required to be reported under the
Federal securities laws, as well as (i) the acquisition, directly or indirectly,
by any person of 25% or more of the combined voting power of the Company's then
outstanding securities or (ii) a change in a majority of the directors of the
Company during any period of two consecutive years without the approval of at
least two-thirds of the persons then still in office who were directors of the
Company at the beginning of such period.

Each employment agreement provides that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment are
deemed to constitute "excess parachute payments" within the meaning of Section
280G of the Code, then such payments and benefits received thereunder shall be
reduced, in the manner determined by the employee, by the amount, if any, which
is the minimum necessary

12
<PAGE> 16

to result in no portion of the payments and benefits being non-deductible by the
Employers for Federal income tax purposes. Excess parachute payments generally
are payments in excess of three times the base amount, which is defined to mean
the recipient's average annual compensation from the employer includable in the
recipient's gross income during the most recent five taxable years ending before
the date on which a change in control of the employer occurred. Recipients of
excess parachute payments are subject to a 20% excise tax on the amount by which
such payments exceed the base amount, in addition to regular income taxes, and
payments in excess of the base amount are not deductible by the employer as
compensation expense for Federal income tax purposes.

BENEFITS

DEFINED BENEFIT PLAN AND TRUST

The Savings Bank has a defined benefit pension plan and trust ("Defined
Benefit Plan") covering substantially all of its employees. After the
Conversion, the Company joined as a participant in this Defined Benefit Plan.
The benefits are based on years of service and employees' compensation.
Employees of the Savings Bank are eligible to participate in the Defined Benefit
Plan after one year of service and attainment of age 21. In general, the Defined
Benefit Plan provides for benefits to a participant payable monthly upon normal
retirement at age 65 (or, if later, the 5th anniversary of the participant's
original date of participation) in an amount equal to 2% of the participant's
average monthly compensation multiplied by the participant's first 20 years of
benefit service, plus 1% of such average monthly compensation multiplied by the
participant's next 10 years of benefit service. Years of benefit service are
limited to 30 years. Average monthly compensation is the average monthly
compensation paid to the participant over the three consecutive plan years of
service which produce the highest average during the 10 years preceding the
participant's retirement, death or termination of employment. Compensation means
the total earnings received by the participant from the Savings Bank and the
Company which are subject to Federal income tax, including salary deferrals made
on behalf of a participant to the Code Section 401(k) Plan maintained by the
Savings Bank and the Company. A participant may elect to retire early (and
receive a reduced monthly benefit) on or after the participant has attained the
age of 60 and has provided 20 continuous years of service. Alternatively, a
participant may elect a late retirement and receive an adjusted benefit. A year
of service is any year in which an employee works a minimum of 1,000 hours.
Under the Defined Benefit Plan, a participant's benefits are fully vested after
five years of service. In addition, a participant's benefits are fully vested
upon the participant attaining the normal retirement age of 65 or provided the
participant is still employed by the Savings Bank and the Company, upon the
participant attaining the early retirement age of 60 and having been employed by
the Savings Bank and the Company for at least 20 consecutive years.

Payment of benefits under the Defined Benefit Plan generally will be made
in the form of a guaranteed annuity payable monthly for as long as the
participant lives. If the participant dies before receiving 120 monthly
payments, the remainder of the 120 payments will be paid to the participant's
designated beneficiary. The automatic form of benefit is a life annuity to an
unmarried participant and a qualified joint and survivor annuity to a married
participant, although alternative forms of benefits are available. The Defined
Benefit Plan also provides a qualified pre-retirement survivor annuity and a
pre-retirement death benefit in the event of death of the participant prior to
retirement.

13
<PAGE> 17

The following table illustrates annual pension benefits for retirement at
age 65 under various levels of compensation and years of service. The figures in
the table assume that the Defined Benefit Plan continues in its present form and
that the participants elect a straight life annuity form of benefit.

<TABLE>
<CAPTION>
THREE YEAR YEARS OF CREDITED SERVICE
ANNUAL ---------------------------------------------------------------------------
AVERAGE 15 YEARS OF 20 YEARS OF 25 YEARS OF 30 YEARS OF 35 YEARS OF
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE
- ------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 20,000 $ 6,000 $ 8,000 $ 9,000 $10,000 $10,000
$ 30,000 $ 9,000 $12,000 $13,500 $15,000 $15,000
$ 40,000 $12,000 $16,000 $18,000 $20,000 $20,000
$ 50,000 $15,000 $20,000 $22,500 $25,000 $25,000
$ 60,000 $18,000 $24,000 $27,000 $30,000 $30,000
$ 70,000 $21,000 $28,000 $31,500 $35,000 $35,000
$ 80,000 $24,000 $32,000 $36,000 $40,000 $40,000
$ 90,000 $27,000 $36,000 $40,500 $45,000 $45,000
$100,000 $30,000 $40,000 $45,000 $50,000 $50,000
$125,000 $37,500 $50,000 $56,250 $62,500 $62,500
</TABLE>

At December 31, 1996, Mr. Zyla, Ms. White and Mr. Hein had 29, 31 and 10
years, respectively, of credited service under the Defined Benefit Plan. The
credited earnings for Mr. Zyla are approximately the same as the salary and
bonus set forth in the summary compensation table. Benefits under the Defined
Benefit Plan are computed on the basis of straight-life annuity with 120
guaranteed payments. The benefits listed in the Pension Plan Table are not
subject to any deduction for Social Security benefits.

For the years ended December 31, 1996, 1995 and 1994 the Defined Benefit
Plan funding payments amounted to $62,121, $97,007 and $96,400, respectively.
For additional information about the Defined Benefit Plan, see Note 12 of the
Notes to the Financial Statements set forth in the 1996 Annual Report to
Stockholders.

401(K) PLAN AND TRUST

Effective January 1, 1994 the Savings Bank adopted a 401(k) profit sharing
plan and trust (the "401(k) Plan") covering substantially all of its employees.
The Company joined the Savings Bank as a participant in this plan during 1996.
The 401(k) Plan has no age or service requirements as a condition of eligibility
to participate in the 401(k) Plan. In general, the 401(k) Plan allows each
participant through a salary reduction arrangement to elect to have his or her
compensation paid by the Savings Bank during the plan year reduced by up to 10%,
subject to certain limitations, and contributed to the 401(k) Plan. Starting in
1997 a participant's compensation may only be reduced by 7% with such reduction
contributed to the 401(k) Plan. A participant's compensation includes his or her
W-2 compensation and other compensation which is not currently includable in the
participant's gross income by reason of Code Sections 125, 401(a)(8),
402(h)1)(B), or 403(b) (the "Compensation"). The Savings Bank may make matching
contributions on behalf of all participants equal to a discretionary percentage,
to be determined by the Savings Bank, of the participant's elective salary
reduction. In addition, the Savings Bank may make a discretionary contribution
which is not limited to its current or accumulated net profit, to be allocated
in the same proportion as each participant's Compensation bears to the total of
such Compensation for all participants. All employer contributions are
discretionary, and not mandatory. Participants are provided with the opportunity
to direct the investment of their account balances in the 401(k) Plan through
one or more investment funds. Contributions made by a participant through a
salary reduction arrangement are credited to a participant's elective account,
are fully vested when made and cannot be forfeited for any reason. Employer
contributions, if any, are credited to an employer contribution account for each
participant. A participant is fully vested in the employer contribution account
after five years of credited service with the Savings Bank or the Company. If
the participant terminates employment for any reason other than normal
retirement at age 65, late retirement, death or total and permanent disability,
any amount in the employer contribution account which is not vested will be
forfeited. There are no provisions for early retirement benefits or
pre-retirement distributions. Withdrawals from a participant's elective account
are not permitted except in the event of normal retirement

14
<PAGE> 18

at age 65, disability, termination of employment or a specified hardship.
Distributions of benefits under the 401(k) Plan will be made in a cash lump sum
payment. For the years ended December 31, 1996, 1995 and 1994 the Savings Bank
made no matching or other discretionary contributions to the 401(k) Plan. The
Company made no contribution to the 401(k) Plan for the year ending December 31,
1996.

EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST

In connection with the Conversion, the Company established an employee
stock ownership plan (the "ESOP") for employees of the Company and the Savings
Bank. Substantially all employees of the Company and the Savings Bank will be
eligible to participate in the ESOP. The ESOP will have no age requirement and a
one hour service requirement as a condition of eligibility to participate. The
Company has submitted to the Internal Revenue Service an application for a
letter of determination as to the tax-qualified status of the ESOP. Although no
assurances can be given, the Company expects that the ESOP will receive a
favorable letter of determination from the Internal Revenue Service.

As part of the Conversion, the ESOP borrowed $770,410 from the Company to
fund the purchase of 8% of the Common Stock issued in connection with the
Conversion. The loan to the ESOP will be repaid principally from the Company's
and the Savings Bank's contributions to the ESOP over a period of 15 years, and
the collateral for the loan will be the Common Stock purchased by the ESOP and
remaining unallocated to participant accounts. The interest rate for the ESOP
loan is a fixed rate of 7%. The Company may, in any plan year, make additional
discretionary contributions for the benefit of plan participants in either cash
or shares of Common Stock, which may be acquired through the purchase of
outstanding shares in the market or from individual stockholders, through the
original issuance of additional shares by the Company or through the sale of
treasury shares by the Company. Such purchases, if made, would be funded through
additional borrowings by the ESOP or additional contributions from the Company.
The timing, amount and manner of future contributions to the ESOP will be
affected by various factors, including prevailing regulatory policies, the
requirements of applicable laws and regulations and market conditions.

Shares purchased by the ESOP with the proceeds of the loan will be held by
the trustees in a suspense account and released on a pro rata basis as debt
service payments are made. Discretionary contributions to the ESOP and shares
released from the suspense account will be allocated among participants on the
basis of compensation for the year of allocation. All participants must be
employed by the Company or the Savings Bank on the last day of the plan year in
order to receive an allocation. Forfeitures will be reallocated among remaining
participating employees and may reduce any amount the Company might otherwise
have contributed to the ESOP. Participants will vest in their right to receive
their account balances within the ESOP at the rate of 20 percent per year,
starting with completion of their third year of credited service, until 100%
vesting is achieved after seven years of credited service. For purposes of
vesting, credit is given for years of service with the Savings Bank prior to the
adoption of the ESOP. A year of credited service will be earned by a participant
for each calendar year in which the participant is credited with not less than
1000 hours of service for the Company or the Savings Bank. Prior to the
completion of three years of credited service, a participant who terminates
employment will not receive any benefit under the ESOP. Participants will become
100% vested in the ESOP upon the attainment of age 65, death, disability or
termination of the ESOP. Benefits may be payable upon retirement, disability or
separation from service. The Company's contributions to the ESOP are not fixed,
so benefits payable under the ESOP cannot be estimated.

The Board of Directors of the Company appointed a committee of Messrs.
Zyla, Stiver and Hein administer the ESOP. Messrs. John A. Stiver and Robert S.
Zyla will serve as trustees of the ESOP. Under the ESOP, the trustees must vote
all allocated shares held in the ESOP in accordance with the instructions of the
participating employees, and allocated shares for which employees do not give
instructions, and unallocated shares, will generally be voted by the ESOP
trustees in the same ratio on any matter as to those shares for which
instructions are given.

STOCK OPTION PLAN

The Board of Directors of the Company has recently adopted the Stock Option
Plan for the benefit of the directors, officers and key employees of the Company
and its subsidiaries. The plan is subject to stockholder

15
<PAGE> 19

approval, and must be submitted to the Office of Thrift Supervision ("OTS") for
approval. Stockholder approval of the Stock Option Plan must be achieved prior
to submission of the Stock Option Plan to the OTS for approval. See "Proposal
II--Approval of Stock Option Plan" for a summary of the material terms of the
Stock Option Plan. The Stock Option Plan is attached as Exhibit A hereto.

RECOGNITION AND RETENTION PLAN AND TRUST

The Board of Directors of the Company has recently adopted a restricted
stock program for the benefit of the directors, officers and key employees of
the Company and its subsidiaries. The plan is subject to stockholder approval,
and must be submitted to OTS for approval. Stockholder approval of the
Recognition Plan must be achieved prior to submission of the Recognition Plan to
the OTS for approval. See "Proposal III--Approval of the Recognition and
Retention Plan" for a summary of the material terms of the Recognition Plan. The
Recognition Plan is attached as Exhibit B hereto.

TRANSACTIONS WITH CERTAIN RELATED PERSONS

Federal law requires that all loans or extensions of credit to executive
officers and directors must be made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. The Savings Bank's
policy provides that all loans made by the Savings Bank to its directors and
officers are made in the ordinary course of business, are made on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons and do not involve more
than the normal risk of collectability or present other unfavorable features.

As of December 31, 1996, John A. Stiver, a director and the Chairman of the
Board of each of the Company and the Savings Bank, and C&J Leasing Co. (of which
Mr. Stiver is owner) have borrowings from the Savings Bank with a total
aggregate balance of $377,433 at December 31, 1996. The largest aggregate
balance during 1996 of Mr. Stiver's loans (and his affiliates) was $115,000.
These loans were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons. These extensions do not
involve more than the normal risk of collectability or present other unfavorable
features. Mr. Stiver also leases space from the Savings Bank for his offices at
an annual rental of $11,100, which management believes is comparable to rates
chargeable to unrelated third parties for rentals of similar space.

In addition, Mr. Stiver has prepared the federal and state tax returns of
the Company and the Savings Bank and during 1996 received a fee of $4,950 for
this service. Mr. Stiver has also been retained to prepare the federal and state
tax returns and filings of the Company and the Savings Bank due during 1997 and
will receive a fee not to exceed $6,000 for these services. Management believes
this fee for tax preparation services is comparable to rates charged by
unrelated third parties for comparable services.

At December 31, 1996, except for Mr. Stiver, no other director or executive
officer, or their affiliates, had aggregate loan balances in excess of $60,000.
Other than Mr. McCullough, no such individual, or his or her affiliate, had
engaged in any transaction during the year ending December 31, 1996, and is not
a party to a present or proposed transaction, with the Company or the Savings
Bank with a value in excess of $60,000. The aggregate amount of loans to
insiders at December 31, 1996 was $419,236, which constitutes 2.7% of the
consolidated equity of the Company and the Savings Bank.

Charles P. McCullough, a director of the Savings Bank, is an attorney with
the law firm of Tucker Arensberg, P.C., which has been retained by the Savings
Bank and the Company with respect to certain legal matters on an ongoing basis.
The Company and the Savings Bank expect this relationship to continue.

16
<PAGE> 20

The Savings Bank retained media services from a company owned by the
brother of one of the Savings Bank's officers. The total costs for such services
in 1996, 1995 and 1994 were $21,590, $24,765 and $26,320, respectively.

PROPOSAL II--ADOPTION OF THE STOCK OPTION PLAN

GENERAL

The Board of Directors of the Company has adopted the Stock Option Plan
which is designed to attract and retain qualified personnel in key positions,
provide officers, key employees and directors with a proprietary interest in the
Company as an incentive to contribute to the success of the Company and reward
key employees for outstanding performance. The Stock Option Plan provides for
the grant of incentive stock options ("incentive stock options") intended to
comply with the requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") and non-incentive or compensatory stock options
("non-incentive stock options"; the incentive stock options and the
non-incentive stock options are referred to herein collectively as "Awards" or
"options"). If stockholder approval is obtained, options to acquire shares of
Common Stock will be awarded from time to time (i) to officers and key employees
(excluding non-employee directors) of, and other persons providing services to,
the Company, the Savings Bank and certain affiliates participating in the Stock
Option Plan (collectively the "Employees"), and (ii) to non-employee directors
of the Company, the Savings Bank and certain affiliates participating in the
Stock Option Plan. In granting such Awards, (i) incentive stock options may only
be granted to Employees, and (ii) non-employee directors are not eligible to
receive discretionary Awards, but may only receive non-incentive stock options
awarded pursuant to a formula system, as hereinafter described.

DESCRIPTION OF THE STOCK OPTION PLAN

The following description of the Stock Option Plan is a summary of its
terms and is qualified in its entirety by reference to the Stock Option Plan, a
copy of which is attached hereto as Exhibit A.

Administration. The Stock Option Plan is administered and interpreted by
the Board of Directors of the Company. The Board of Directors of the Company has
the option to appoint a committee of two or more non-employee directors of the
Company (the "Committee") to make recommendations concerning the level of Awards
and other administrative issues that arise during the operation of the Stock
Option Plan.

In the administration of the Stock Option Plan no member of the Board of
Directors of the Company or the Committee shall be liable for any determination
made, with respect to the Stock Option Plan, in good faith. In the event any
member of the Board of Directors of the Company or the Committee is a party to
or threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil or criminal, administrative or investigative,
by reason of any actions or inactions concerning the Stock Option Plan the
Company will indemnify such individual against all liabilities, expenses and
losses incurred in connection with such action, suit or proceeding so long as
the actions or inactions were undertaken in good faith with the reasonable
belief that such actions or inactions were in the best interest of the Company,
the Savings Bank or certain affiliates participating in the Stock Option Plan,
and in the case of any criminal proceedings, the individual had no reasonable
cause to believe his conduct was unlawful.

Stock Options to Employees. Under the Stock Option Plan, the Board of
Directors of the Company determines which Employees will be granted options,
whether such options will be incentive stock options or non-incentive stock
options, the number of shares subject to each option, the exercise price of such
options, and whether such options may be exercised by delivering other shares of
Common Stock and when such options become exercisable. Each non-incentive stock
option and incentive stock option will be evidenced by a stock option agreement.
No Employee shall have any rights of a stockholder of the Company, including,
without limitation, voting and dividend rights, until shares of Common Stock are
issued to him and he becomes the record owner of such shares.

The per share exercise price of incentive stock options and non-incentive
stock options granted to Employees will be at least equal to the fair market
value of a share of Common Stock on the date the option is

17
<PAGE> 21

granted. All non-incentive options and incentive options granted to Employees
under the Stock Option Plan shall become vested and exercisable at a rate and
subject to such limitations as may be determined by the Board at the time of the
grant, which vesting rate will be no greater than 20% per year beginning one
year from the later of the date the Stock Option Plan is approved by
stockholders of the Company or the date of the grant of the Award. No vesting of
any unvested options will occur after an Employee's employment with the Company,
the Savings Bank or any affiliate participating in the Stock Option Plan is
terminated for any reason other than death or disability; provided, however,
that, unless the Board of Directors of the Company shall specifically state
otherwise at the time an option is granted, all options granted to Employees
shall become vested and exercisable in full on the date on which the Employee
terminates his employment with the Company, the Savings Bank or any affiliate
participating in the Stock Option Plan because of his death or disability. Under
certain circumstances, the Awards may be revoked for misconduct.

Each non-incentive stock option shall be exercisable by the Employee at any
time after it vests until the expiration of the term of the non-incentive stock
option, as determined by the Board of Directors of the Company at the time of
the grant of the Award (which term will not exceed ten (10) years from the date
of grant of the Award). In the event of the cessation of employment, death or
disability of any Employee who is the recipient of a non-incentive stock option,
each vested non-incentive stock option shall be exercisable at any time prior to
the date established by the Board of Directors of the Company at the time of the
grant or if no such date was set at the time of grant, such date as the Board of
Directors of the Company shall establish at the time of termination of
employment, death or disability.

All non-incentive stock options and incentive stock options may be
exercised during the Employee's lifetime only by the Employee to whom it was
granted, and will not be assignable or transferable otherwise than by will or by
the laws of descent and distribution.

Each incentive stock option shall be exercisable by the Employee at any
time after it vests until the earlier of the term of the incentive stock option,
as determined by the Board of Directors of the Company at the time of the grant
of the Award (which term will not exceed ten (10) years from the date of grant
of the Award), or three months after the date on which the Employee's employment
terminates other than due to death or disability. Upon the death or disability
of any Employee who is the recipient of an incentive stock option, such vested
incentive stock option shall be exercisable at any time prior to the earlier of
(i) the respective expiration dates of such option, or (ii) the date which is
one year after the date of the termination of the Employee's employment due to
such death or disability.

In the case of an incentive stock option granted to an Employee who owns
more than 10% of the Common Stock, the exercise price of such stock option shall
be at least equal to 110% of the fair market value of a share of Common Stock on
the date the option is granted and the term of the incentive stock option shall
not exceed five (5) years. The total fair market value (determined at the time
of the grant of the Award) of the shares of Common Stock with respect to which
incentive stock options are exercisable for the first time by each Employee
during any calendar year (under all incentive stock option plans) shall not
exceed $100,000.

Stock Options to Non-Employee Directors. Under the Stock Option Plan,
non-employee directors of the Company, the Savings Bank and certain affiliates
participating in the Stock Option Plan will receive non-incentive stock options
on a formula basis. If this Proposal II is adopted by the stockholders of the
Company on the date of such adoption, each person serving as a non-employee
director of the Company or the Savings Bank immediately after the meeting of
stockholders of the Company at which Proposal II is adopted shall receive
non-incentive stock options for 1,000 shares of Common Stock plus 100 additional
shares of Common Stock for each full year of service as a non-employee director
of the Savings Bank. Each new non-employee director of the Company, the Savings
Bank and each affiliate participating in the Stock Option Plan will receive
non-incentive stock options for 1,000 shares of Common Stock upon election to
the Board of Directors of the Company, the Savings Bank or any affiliate
participating in the Stock Option Plan. Following the annual meeting of the
stockholders, each non-employee director of the Company, the Savings Bank and
the affiliates participating in the Stock Option Plan will receive non-incentive
stock options for 100 shares of Common Stock in consideration for serving as a
director, provided that the director elected at the organizational meeting for
the new board of directors of the Company as the chairperson of the board of
directors of the Company shall be awarded additional non-incentive stock options
for 100 shares of Common Stock. Any person serving

18
<PAGE> 22

in the capacity of a non-employee director for more than one corporation
participating in the Stock Option Plan (i.e. a person serving as a non-employee
director of the Company and the Savings Bank) will be limited to receiving
formula awards under the Stock Option Plan with respect to the one directorship
that provides the formula award offering the greatest number of shares of Common
Stock, and will be prohibited from receiving formula awards with respect to any
other directorship.

24,075 shares of Common Stock will be reserved for purposes of making
non-incentive stock option formula awards to non-employee directors under the
Stock Option Plan (25% of the shares of Common Stock to be acquired by the Stock
Option Plan), and all formula awards are subject to the availability of shares
of Common Stock from such reserves, including forfeitures. Each non-incentive
stock option formula award will be evidenced by a stock option agreement. No
recipient of a non-incentive stock option formula award shall have any rights of
a stockholder of the Company, including, without limitation, voting and dividend
rights, until shares of Common Stock are issued to him and he becomes the record
owner of such shares.

All formula awards of non-incentive stock options to non-employee directors
of the Corporation, the Savings Bank and other affiliates participating in the
Stock Option Plan will be granted under the following terms and conditions: (i)
the per share exercise price of the non-incentive stock options will be the fair
market value of a share of Common Stock on the date the option is granted; (ii)
the non-incentive options shall become vested and exercisable at a rate of 20%
per year beginning one year from the later of the date the Stock Option Plan is
approved by stockholders of the Company or the date of the grant of the Award;
provided, however, that all formula award non-incentive stock options granted to
non-employee directors shall become vested and exercisable in full on the date
on which the non-employee director terminates his service with the Company, the
Savings Bank or any affiliate participating in the Stock Option Plan because of
his death or disability; (iii) the non-incentive stock option, under certain
circumstances, may be revoked for misconduct; (iv) each non-incentive stock
option shall be exercisable by the non-employee director at any time after it
vests until the earlier of (1) ten (10) years after the date of grant or (2) the
third anniversary of the date on which the non-employee director ceases to be a
non-employee director; provided, however, that if the non-employee director dies
while serving as a non-employee director or within three (3) years following the
termination of his service as a non-employee director as a result of disability,
retirement or resignation without having fully exercised his vested formula
award non-incentive stock options the person to whom his rights under such
non-incentive stock options pass by will or by the laws of descent and
distribution shall have the right to exercise such non-incentive stock options
at any time prior to the earlier of (1) one year after the date of such death or
(2) the expiration dates of such non-incentive stock options; and (iv) any
formula award non-incentive stock option may be exercised during the recipient's
lifetime only by the recipient to whom it was granted, and will not be
assignable or transferable otherwise than by will or by the laws of descent and
distribution.

Number of Shares Covered by the Stock Option Plan. A total of 96,302 shares
of Common Stock has been reserved for issuance pursuant to the Stock Option
Plan, which is 10% of the Common Stock issued in connection with the Conversion.
OTS regulations provide that no individual Employee may receive more than 25% of
the shares of the Stock Option Plan and non-employee directors may not receive
more than 5% of the shares of the Stock Option Plan, individually, or 30% in the
aggregate, unless the Regional Director of the OTS permits otherwise. These
shares may be acquired through open market purchases, or may be satisfied
through the use of authorized but unissued Common Stock. In the event that the
total number of shares of the Company outstanding are increased or decreased
resulting from a stock split, subdivision or consolidation of shares or other
capital adjustment, the number of shares to which any Award relates shall be
adjusted proportionately to reflect such increase or decrease in the total
number of shares of the Common Stock outstanding. The Company is obligated to
reserve or have available sufficient shares of Common Stock to satisfy the
Awards outstanding.

Right of Repurchase and Restrictions on Disposition. The Board of Directors
of the Company may include as a term of any incentive stock option or
non-incentive stock option (other than formula awards to non-employee directors)
the right to repurchase all or part of any amount of shares of Common Stock
acquired by an Employee pursuant to the exercise of any options granted under
the Stock Option Plan. The repurchase right will provide for, among other
things, a specified duration, purchase price per share and restrictions on
disposition of the shares by the optionee.

19
<PAGE> 23

Modification of Awards. At the discretion of the Board of Directors of the
Company, Awards (other than formula Awards) may be modified, including a
modification of an Award to renewal, or extend the terms of an option. No
modification is permitted if it confers a benefit on a participant which could
not be conferred on such participant by a new Award. The Board of Directors of
the Company is authorized to cancel an Award and reissue the Award with a lower
exercise price so long as the new exercise price is not below the then current
fair market value of the stock, except for formula awards of non-incentive stock
options.

Amendment and Termination of the Stock Option Plan. The Board of Directors
of the Company by resolution may amend, suspend or terminate the Stock Option
Plan. Such action may be taken with or without the approval of the shareholders
except that no amendment is permitted without shareholder approval if the terms
of such amendment (i) would materially increase (1) the benefits available under
the Stock Option Plan or (2) the number of shares of Common Stock committed to
the Stock Option Plan, or (ii) would materially modify the eligibility
requirements for participation in the Stock Option Plan. Unless sooner
terminated, the Stock Option Plan shall continue in effect for a term of ten
years from the earlier of the date of adoption of the Stock Option Plan by the
Board of Directors of the Company or the date of ratification or other approval
of the Stock Option Plan by the stockholders of the Company. The Board of the
Company may grant Awards prior to the effective date of the Stock Option Plan,
which Awards will become effective upon the stockholder ratification of the
Stock Option Plan. No Awards may be granted after termination of the Stock
Option Plan, however, termination of the Stock Option Plan shall not affect any
previously granted Awards.

Federal Income Tax Consequences. Under current provisions of the Code, the
federal income tax treatment of incentive stock options and non-incentive stock
options is different. As regards incentive stock options, an optionee who meets
certain holding period requirements will not recognize income at the time the
option is granted or at the time the option is exercised, and a federal income
tax deduction generally will not be available to the Company at any time as a
result of such grant or exercise. With respect to non-incentive stock options,
the difference between the fair market value on the date of exercise and the
option exercise price generally will be treated as compensation income upon
exercise, and the Company will be entitled to a deduction in the amount of
income so recognized by the optionee.

The above description of tax consequences under federal law is necessarily
general in nature and does not purport to be complete. Moreover, statutory
provisions are subject to change, as are their interpretations, and their
application may vary in individual circumstances. Finally, the consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.

Accounting Treatment. Neither the grant nor the exercise of an incentive
stock option or a non-qualified stock option under the Stock Option Plan would
require any charge against earnings under generally accepted accounting
principles as specified under APB Opinion No. 25. However, if the Company would
adopt new accounting method under SFAS No. 123, then there would be a charge
against income to be recorded over the vesting period. See page 17 of the Annual
Report for additional discussion. In certain circumstances, shares issuable
pursuant to outstanding options under the Stock Option Plan would be considered
outstanding for purposes of calculating earnings per share.

Stockholder Approval. No Awards will be granted under the Stock Option Plan
unless the Stock Option Plan is approved by stockholders and the OTS.
Stockholder ratification of the Stock Option Plan will satisfy certain OTS,
NASDAQ market listing and tax requirements.

Awards to be Granted. The Board of Directors of the Company adopted the
Stock Option Plan and approved the grant of non-incentive stock options and/or
incentive stock options to officers and employees of the Company and the Savings
Bank and formula award non-incentive stock options to non-employee directors
thereof. The options shall be effective upon stockholder approval of the Stock
Option Plan with a per share

20
<PAGE> 24

exercise price equal to the fair market value of a share of Common Stock on the
date of such approval. The following table sets forth certain information with
respect to such grants.

<TABLE>
<CAPTION>
NUMBER OF SHARES
SUBJECT TO NUMBER OF SHARES
NON-INCENTIVE SUBJECT TO
NAME OF INDIVIDUAL OF STOCK INCENTIVE STOCK
PERSONS IN GROUP TITLE OPTIONS OPTION
-------------------- ----- --------------- ----------------
<S> <C> <C> <C>
Robert S. Zyla.................................... President 12,038 12,038
All executive officers as a group (3 persons)..... -- 26,483 26,483
All non-employee directors as a group (5
persons)........................................ -- 24,075 0
All employees, not including executive officers,
as a group...................................... -- 0 19,260
</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ADOPTION OF
THE STOCK OPTION PLAN.

PROPOSAL III--ADOPTION OF THE
MANAGEMENT RECOGNITION AND RETENTION PLAN AND TRUST

GENERAL

The Board of Directors of the Company has adopted the Recognition Plan, the
objective of which is to retain qualified personnel in key positions, provide
officers, key employees and directors with a proprietary interest in the Company
as an incentive to contribute to its success and reward key employees for
outstanding performance. Officers and key employees of the Company, the Savings
Bank and certain affiliates participating in the Recognition Plan who are
selected by the Board of Directors of the Company, as well as non-employee
directors of the Company, the Savings Bank and certain affiliates participating
in the Recognition Plan will be eligible to receive benefits under the
Recognition Plan. If stockholder approval is obtained, shares will be granted to
officers and key employees and to non-employee directors as described below.

DESCRIPTION OF THE RECOGNITION PLAN

The following description of the Recognition Plan is a summary of its terms
and is qualified in its entirety by reference to the Recognition Plan, a copy of
which is attached hereto as Exhibit B.

Administration. The Recognition Plan is administered and interpreted by the
Board of Directors of the Company. The Board of Directors of the Company has the
option to appoint a committee of two or more non-employee directors of the
Company (the "Committee") to make recommendations concerning the award of Common
Stock under the Recognition Plan and other administrative issues that arise
during the operation of the Recognition Plan. The Board of Directors of the
Company shall from time to time appoint trustees to hold and manage the property
of the trust created pursuant to the Recognition Plan. The Board of Directors of
the Company has initially chosen John A. Stiver and Robert S. Zyla to act as
trustees for the Recognition Plan.

In the administration of the Recognition Plan no member of the Board of
Directors of the Company or the Committee and none of the Trustees shall be
liable for any determination made, with respect to the Recognition Plan, in good
faith. In the event any member of the Board of Directors of the Company or the
Committee or any of the Trustees is a party to or threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil or criminal, administrative or investigative, by reason of any actions or
inactions concerning the Recognition Plan the Company will indemnify such
individual against all liabilities, expenses and losses incurred in connection
with such action, suit or proceeding so long as the actions or inactions were
undertaken in good faith with the reasonable belief that such actions or
inactions were in the best interest of the Company, the Savings Bank or certain
affiliates participating in the Recognition Plan, and in the case of any
criminal proceedings, the individual had no reasonable cause to believe his
conduct was unlawful.

Grants. Under the Recognition Plan, the Board of Directors of the Company
determines when awards of Common Stock will be made to officers and key
employees of the Company, the Savings Bank and certain affiliates participating
in the Recognition Plan, which officers and key employees will be awarded Common

21
<PAGE> 25

Stock and the number of shares subject to each award. Awards under the
Recognition Plan to officers and key employees are at the complete discretion of
the Board of Directors of the Company.

Non-employee directors of the Company, the Savings Bank and certain
affiliates participating in the Recognition Plan will receive awards of Common
Stock on a formula basis. If this Proposal III is adopted by the stockholders of
the Company, on the date of such adoption each non-employee director of the
Company and each non-employee director of the Savings Bank serving as a director
of the Company or the Savings Bank immediately after the meeting of stockholders
of the Company at which Proposal III was adopted shall receive awards in amount
of 1,000 shares of Common Stock plus 100 additional shares of Common Stock for
each full year of service as a non-employee director of the Savings Bank. Each
new non-employee director of the Company, the Savings Bank and each affiliate
participating in the Recognition Plan will receive an award of 1,000 shares of
Common Stock upon election to the Board of Directors of the Company, the Savings
Bank or any affiliate participating in the Recognition Plan. Following the
annual meeting of the stockholders, each non-employee director of the Company,
the Savings Bank and the affiliates participating in the Recognition Plan will
receive an award of Common Stock of 100 shares in consideration for serving as a
director, provided that the director elected at the organizational meeting for
the new board of directors of the Company as the chairperson of the board of
directors of the Company shall be awarded an additional 100 shares of Common
Stock. Any person serving in the capacity of a non-employee director for more
than one corporation participating in the Recognition Plan (i.e. a person
serving as a non-employee director of the Company and the Savings Bank) will be
limited to receiving formula awards under the Recognition Plan with respect the
one directorship that provides the formula award offering the greatest number of
shares, and will be prohibited from receiving awards with respect to any other
directorship. 9,630 shares of Common Stock will be reserved for purposes of
making formula awards under the Recognition Plan (25% of the shares of Common
Stock to be acquired by the Recognition Plan), and all formula awards are
subject to the availability of shares of Common Stock from such reserves,
including forfeitures.

Shares of Common Stock granted pursuant to the Recognition Plan will be in
the form of restricted stock to be earned and unrestricted over a five-year
period at a rate of 20% per year, beginning one year from the later of the date
the Recognition Plan is approved by stockholders of the Company or the date of
the grant of the award. If the employment or service of a recipient is
terminated prior to the fifth anniversary of the date of the grant of the award
for reasons other than death or disability, the recipient will forfeit all
rights to the awarded but unearned shares. All shares subject to an award held
by a recipient whose employment with or service to the Company, the Savings Bank
or any affiliate participating in the Recognition Plan terminates due to death
or disability, as defined in the Recognition Plan, shall be deemed to be earned
and unrestricted as of the recipient's last day of employment with or service to
the Company, the Savings Bank or the affiliate participating in the Recognition
Plan and shall be distributed as soon as practicable thereafter; provided,
however, that awards shall be distributed in accordance with the Recognition
Plan. During the lifetime of the recipient, shares subject to an award may only
be earned by and paid to the recipient, provided that shares subject to an award
and rights to such shares shall be transferable by a recipient only by will or
by the laws of descent and distribution. Under certain circumstances, the Awards
may be revoked for misconduct.

A recipient will be entitled to all voting and other stockholder rights
with respect to shares, regardless of whether such shares have been earned and
distributed under the Recognition Plan. However, until such shares have been
earned and distributed, they may not be sold, pledged or otherwise disposed of
and are required to be held in the Recognition Plan Trust. Under the terms of
the Recognition Plan, all shares which have been awarded, but not yet been
earned and distributed, are required to be voted by the trustees in accordance
with the directions of the recipients, and if no direction is provided by the
recipient the shares will not be voted by the trustees. The trustees will vote
unallocated shares in the same proportion as they receive instructions from
recipients with respect to the allocated shares which have not yet been earned
and distributed. In the event that a tender offer is made, the trustees shall
tender shares held by the trustees which have not been earned and distributed in
the same proportion in which a recipient tenders shares which have been earned
and distributed. Any cash dividends or stock dividends declared in respect of
each share held by the Recognition Plan Trust, whether or not earned and
distributed, will be paid by the Recognition Plan Trust as soon as practicable
after the Recognition Plan Trust's receipt thereof to the recipient on whose
behalf such share is then held by the Recognition Plan Trust.

22
<PAGE> 26

Number of Shares Covered by the Recognition Plan. A total of 38,517 shares
of Common Stock has been reserved for issuance pursuant to the Recognition Plan,
which is 4% of the Common Stock issued in connection with the Conversion. OTS
regulations provide that no individual employee may receive more than 25% of the
shares of the Recognition Plan and non-employee directors may not receive more
than 5% of the shares of the Recognition Plan, individually, or 30% in the
aggregate, unless the Regional Director of the OTS permits otherwise. These
shares may be acquired through open market purchases, or may be satisfied
through the use of authorized but unissued Common Stock. In the event that the
total number of shares of the Company outstanding are increased or decreased
resulting from a stock split, subdivision or consolidation of shares or other
capital adjustment, the number of shares to which any Award relates shall be
adjusted proportionately to reflect such increase or decrease in the total
number of shares of the Common Stock outstanding. The Company is obligated to
reserve or have available sufficient shares of Common Stock to satisfy the
awards outstanding.

Amendment and Termination of the Recognition Plan. The Board of Directors
of the Company by resolution may amend, suspend or terminate the Recognition
Plan. Such action may be taken with or without the approval of the stockholders
except that no amendment is permitted without stockholder approval if the terms
of such amendment (i) would materially increase (1) the benefits available under
the Recognition Plan or (2) the number of shares of Common Stock to be awarded
under the Recognition Plan, or (ii) would materially modify the eligibility
requirements for participation in the Recognition Plan. Unless sooner
terminated, the Recognition Plan shall continue in effect for a period of ten
years from the effective date, which is April 23, 1997, the date the Recognition
Plan was adopted by the stockholders of the Company. Termination of the
Recognition Plan shall not affect any previously granted Awards.

Federal Income Tax Consequences. Pursuant to Section 83 of the Code,
recipients of Recognition Plan awards will recognize ordinary income in an
amount equal to the fair market value of the shares of Common Stock granted to
them at the time that the shares are earned and unrestricted. A recipient of a
Recognition Plan award may also elect, however, to accelerate the recognition of
income with respect to his or her grant, notwithstanding the vesting schedule of
such awards. The Company will be entitled to deduct as a compensation expense
for tax purposes the same amounts recognized as income by recipients of
Recognition Plan awards in the year in which such amounts are included in
income.

Accounting Treatment. For accounting purposes, the Company would recognize
compensation expense as shares of Common Stock granted pursuant to the
Recognition Plan vest based on the market value of the awards. Unlike the
treatment of Recognition Plan awards for tax purposes, however, the compensation
expense recognized for accounting purposes is limited to the fair market value
of the Common Stock at the date of grant to recipients, rather than the fair
market value of the Common Stock at the time that a Recognition Plan grant
becomes non-forfeitable.

Stockholder Approval. No shares will be granted under the Recognition Plan
unless the Recognition Plan is approved by stockholders. Stockholder
ratification of the Recognition Plan will satisfy certain OTS, NASDAQ market
listing and tax requirements.

Shares to be Granted. The Board of Directors of the Company adopted the
Recognition Plan and approved the grant of shares to officers and key employees
of the Company and the Savings Bank and non-

23
<PAGE> 27

employee directors thereof. The awards shall be effective upon stockholder
approval of the Recognition Plan. The following table sets forth certain
information with respect to such grants.

<TABLE>
<CAPTION>
NAME OF INDIVIDUAL OR NUMBER OF NUMBER OF SHARES
PERSONS IN GROUP TITLE AWARDED
--------------------------------------------------------- --------- ----------------
<S> <C> <C>
Robert S. Zyla........................................... President 7,200
All executive officers as a group (3 persons)............ -- 21,184
All non-employee directors as a group (5 persons)........ -- 9,630
All employees, not including executive officers, as a
group.................................................. -- 7,704
</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ADOPTION OF
THE MANAGEMENT RECOGNITION AND RETENTION PLAN AND TRUST.

PROPOSAL IV--RATIFICATION OF APPOINTMENT OF AUDITORS

Arthur Andersen LLP was the independent public accountant for the Company
and the Savings Bank for the 1996 fiscal year. The Board of Directors has
approved the selection of Arthur Andersen LLP as its auditors for the 1997
fiscal year, subject to ratification by the Company's stockholders. A
representative of Arthur Andersen LLP is expected to be present at the Meeting
to respond to stockholders' questions and will have the opportunity to make a
statement if he or she so desires.

Neither the rules or regulations of the Securities and Exchange Commission
nor the rules of NASDAQ for issues traded through NASDAQ require that the
selection of auditors be submitted to stockholders for approval. The selection
of auditors is an issue for stockholder approval for companies traded on the New
York Stock Exchange. Management believes the selection of auditors is of
particular interest to stockholders. Therefore, management desires to present
the ratification of auditors to the stockholders of the Company. In the event
that the Proposal IV is not approved management will begin to interview public
accounting firms for hire as the new independent auditors of the Company.

RATIFICATION OF THE APPOINTMENT OF THE AUDITORS REQUIRES THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE VOTES CAST BY THE STOCKHOLDERS OF THE COMPANY AT THE
MEETING. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S AND
SAVINGS BANK'S AUDITORS FOR THE 1997 FISCAL YEAR.

PROPOSAL V--ADJOURNMENT OF ANNUAL MEETING--IF REQUIRED

For each proxy solicited hereby, the Company requests authority to vote for
an adjournment of the Meeting, if an adjournment is deemed to be necessary. The
Company may seek an adjournment of the Meeting for not more than 30 days in
order to enable the Company to solicit additional votes in favor of the Stock
Option Plan and/or the Recognition and the Company in the event that either
proposal has not received the requisite vote of stockholders at the Meeting and
has not received the negative votes of the holders of a majority of the Common
Stock. If the Company desires to adjourn the Meeting with respect to one or both
of the foregoing proposals, it will request a motion that the meeting be
adjourned for up to 30 days with respect to such proposal (and solely with
respect to such proposal, provided that a quorum is present at the Meeting), and
no vote will be taken on such proposal at the originally scheduled Meeting. Each
proxy solicited hereby, if properly signed and returned to the Company and not
revoked prior to its use, will be voted on any motion for adjournment in
accordance with the instructions contained herein. If no contrary instructions
are given, each proxy received will be voted in favor of any motion to adjourn
the meeting. Unless revoked prior to its use, any proxy solicited for the
Meeting will continue to be valid for a reconvened Meeting previously adjourned,
and will be voted in accordance with instructions contained therein, and if no
contrary instructions are given, for the proposal in question.

BECAUSE THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
PROPOSED STOCK OPTION PLAN AND RECOGNITION PLAN, AS DISCUSSED ABOVE, THE BOARD
OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE POSSIBLE ADJOURNMENT OF
THE MEETING ON SUCH PROPOSALS UNDER THE

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CIRCUMSTANCES DESCRIBED ABOVE. THE HOLDERS OF A MAJORITY OF COMMON STOCK
REPRESENTED IN PERSON OR BY PROXY AT THE MEETING WILL BE REQUIRED TO APPROVE A
MOTION TO ADJOURN THE MEETING ON SUCH PROPOSALS.

FINANCIAL INFORMATION--ANNUAL REPORT

The audited financial statements of the Company for its fiscal year ended
December 31, 1996, prepared in conformity with generally accepted accounting
principles, are included in the Company's 1996 Annual Report to Stockholders
which accompanies this Proxy Statement. These audited financial statements are
incorporated herein by reference. Any stockholder who has not received a copy of
the Company's 1996 Annual Report to Stockholders may obtain a copy by writing to
the Secretary of the Company.

Stockholders may receive without charge a copy of the Company's Annual
Report or the Form 10-K filed with the Securities and Exchange Commission under
the Securities and Exchange Act of 1934, as amended, for the year ended December
31, 1996, by writing to the Secretary of the Company. Upon written request to
the Secretary, the Company will furnish at no cost to any stockholder copies of
the exhibits to the Annual Report or the Form 10-K.

OTHER MATTERS

The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting such proxies.

MISCELLANEOUS

The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation. The
Company has retained ChaseMellon Shareholder Services, 450 West 33rd Street,
15th Floor, New York, New York as proxy solicitation agent to assist in the
solicitation of proxies at a cost not anticipated to exceed $4,500, plus
reimbursement of certain incurred expenses. Chase Mellon Shareholder Services
may conduct solicitations personally, by mail, telephone, telegraph or other
electronic communication.

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STOCKHOLDER PROPOSALS

In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's executive offices at
710 Old Clairton Road, Pleasant Hills, Pennsylvania 15236, no later than
February 22, 1998. Any such proposals shall be subject to the terms of the
Articles of Incorporation of the Company and the requirements of the proxy rules
adopted under the Securities and Exchange Act of 1934, as amended. With respect
to the meeting of the stockholders of the Company scheduled for April 23, 1997
only, a stockholder of the Company may submit a stockholder proposal for
consideration at the annual meeting to be held on April 23, 1997 no later than
the close of business on the tenth day following the day on which this Proxy
Statement and the Notice of Annual Meeting is mailed. Any such stockholder
proposal shall be subject to the terms of the Articles of Incorporation of the
Company and applicable law.

BY ORDER OF THE BOARD OF DIRECTORS
PATRICIA A. WHITE
Patricia A. White
Secretary

Pleasant Hills, Pennsylvania
March 31, 1997

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PRESTIGE BANCORP, INC.

1997 STOCK OPTION PLAN

Prestige Bancorp, Inc. (the "Corporation") hereby establishes the 1997
Stock Option Plan for non-employee directors, officers and key employees of the
Corporation, its wholly owned subsidiary Prestige Bank, Federal Savings Bank
(the "Savings Bank"), the Parent and any Subsidiary upon the terms and
conditions hereinafter stated in this Plan (the "Agreement").

1. PURPOSE OF THE PLAN. The Plan shall be known as the Prestige Bancorp,
Inc. 1997 Stock Option Plan (the "Plan"). The purpose of the Plan is to attract
and retain the best available personnel for positions of substantial
responsibility and to provide additional incentive to officers, directors and
key employees of the Corporation, the Savings Bank, the Parent and any
Subsidiary to promote the success of the business. The Plan is intended to
provide for the grant of "Incentive Stock Options", within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, and Non-Incentive
Stock Options, options that do not so qualify. Each and every one of the
provisions of the Plan relating to Incentive Stock Options shall be interpreted
to conform to the requirements of Section 422 of the Code.

2. DEFINITIONS. As used herein, the following definitions shall apply.

(a) "Award" means the grant by the Board of an Incentive Stock Option or
a Non-Incentive Stock Option or any combination thereof, including a Formula
Award, as provided in the Plan.

(b) "Board" shall mean the Board of Directors of the Corporation, or any
successor or Parent corporation thereto.

(c) "Code" shall mean the Internal Revenue Code of 1986, as the same
shall be amended from time to time. Whenever a reference is made to a particular
section of the Code, such reference shall include any successor provisions
hereafter enacted.

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

(e) "Common Stock" shall mean common stock, par value $1.00 per share,
of the Corporation, or any successor or Parent corporation thereto.

(f) "Corporation" shall mean Prestige Bancorp, Inc., or any successor or
Parent corporation thereof.

(g) "Director" shall mean a member of the Board of the Corporation, or
any successor or Parent corporation thereto.

(h) "Disability" shall mean permanent and total disability as such term
is defined in Section 22(e)(3) of the Code.

(i) "Effective Date" shall mean the date specified in Section 15 hereof.

(j) "Employee" shall mean any person, including an Director, Officer,
employed by the Corporation, the Savings Bank, the Parent or any Subsidiary,
excluding Non-Employee Directors.

(k) "Exchange Act" shall mean the Securities and Exchange Act of 1934,
as amended or replaced.

(l) "Fair Market Value" shall have the meaning ascribed to the term in
Section 8(a)(i) hereof.

(m) "Formula Award" means the grant of an Award or Awards to
Non-Employee Directors pursuant to Section 9(h) hereof.

(n) "Incentive Stock Option" or "ISO" shall mean an option to purchase
Shares granted by the Board pursuant to Section 8 hereof which is subject to the
limitations and restrictions of Section 8 hereof and is intended to qualify
under Section 422 of the Code.

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(o) "Non-Employee Director" shall mean any member of the board of
directors of the Corporation, the Savings Bank, the Parent or any Subsidiary who
is not an Officer, Employee of or otherwise employed by the Corporation, the
Savings Bank, the Parent or any Subsidiary.

(p) "Non-Incentive Stock Option" or "Non-ISO" shall mean an option to
purchase Shares granted pursuant to Section 9 hereof, which option is not
intended to qualify under Section 422 of the Code.

(q) "Officer" shall mean an Employee whose position in the Corporation,
the Savings Bank, the Parent or any Subsidiary is that of a corporate officer as
determined by the board of directors of such corporation.

(r) "Option" shall mean an Incentive or Non-Incentive Stock Option
granted pursuant to this Plan providing the holder of such Option with the right
to purchase Common Stock.

(s) "Optioned Stock" shall mean stock subject to an Option or Award
granted pursuant to the Plan.

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

(u) "Parent" shall mean any present or future corporation which would be
a "parent corporation" as defined in Subsections 424(e) and (g) of the Code,
which, with the consent of the Board, agrees to participate in the Plan.

(v) "Participant" means any Non-Employee Director and any Officer or key
Employee of the Corporation, Savings Bank, the Parent or any Subsidiary or any
other person providing a service to the Corporation, the Savings Bank, the
Parent or any Subsidiary who is selected by the Board to receive an Award, or
who by the express terms of the Plan is granted an Award; provided, however,
that a Non-Employee Director may only receive an Award if such Award is a
Formula Award.

(w) "Plan" shall mean the Prestige Bancorp, Inc. 1997 Stock Option Plan.

(x) "Savings Bank" shall mean Prestige Bank, Federal Savings Bank.

(y) "SEC" shall mean the Securities and Exchange Commission, or any
successor agency or commission.

(z) "Share" shall mean one share of the Common Stock.

(aa) "Subsidiary" and "Subsidiaries" shall mean the Savings Bank and any
other present or future corporation which would be a direct or indirect
"subsidiary corporation" as defined in Subsections 424(f) and (g) of the Code,
which, with the consent of the Board, agree to participate in the Plan.

3. SHARES SUBJECT TO THE PLAN. Except as otherwise required by the
provisions of Section 13 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 96,302,
representing 10% of the Shares issued in the initial stock offering of the
Corporation. 72,227 of such Shares shall be allocated to Awards for Officers and
Employees and 24,075 of such Shares shall be allocated to Formula Awards for
Non-Employee Directors. Such Shares may either be authorized but unissued shares
or treasury shares or shares purchased by the Corporation on the open market or
from private sources.

None of such Shares shall be the subject of more than one Award at any
time, but if an Option as to any Shares is surrendered before exercise, or
expires or terminates for any reason without having been exercised in full, or
for any other reason ceases to be exercisable, the number of Shares covered
thereby shall again become available for grant under the Plan, as if no Awards
had been previously granted with respect to such Shares, in the following
manner: (i) Shares with respect to prior Awards to any NonEmployee Director
receiving a Formula Award under Section 9(h) shall be made available only for
additional Formula Awards to Non-Employee Directors under Section 9(h); and (ii)
Shares with respect to prior Awards to an Officer or Employee under Section 8 or
Section 9 (other than Section 9(h)) shall be made available only for additional
Awards to Officers and Employees under Section 8 or Section 9 (other than
Section 9(h)).

4. VESTING AND EXERCISE.

(a) General Requirements. Incentive Stock Options and NonIncentive Stock
Options shall become vested and exercisable at the rate, to the extent and
subject to such limitations as may be specified by (i) the

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Board with respect to Awards other than Formula Awards or (ii) by the provisions
of Section 9(h) hereof, provided, however, that such Options (other than Options
arising from Formula Awards) shall vest at a rate no greater than twenty (20%)
percent a year beginning no earlier than one year from the Effective Date or one
year from the date of grant, whichever is later. Notwithstanding the foregoing,
no vesting of an Award shall occur on or after an Optionee's employment with the
Corporation, the Savings Bank, the Parent and/or any Subsidiary is terminated
for any reason other than his death or Disability. In determining the number of
shares of Common Stock with respect to which Awards are vested and/or
exercisable, fractional shares will be rounded up to the nearest whole number if
the fraction is 0.5 or higher, and down if it is less. In the case of any Option
exercisable within the first six months following the date the Option is
granted, the shares of Common Stock received upon the exercise of such Option
may not be sold or disposed of by the optionee for the first six months
following the date of grant, provided further, however, that in the case of any
Option granted prior to the date that this Plan is approved by the requisite
vote of the shareholders of the Corporation, the shares of Common Stock received
upon the exercise of such Option may not be sold or disposed of by the Optionee
for the first six months following the date shareholder approval is received.

(b) Accelerated Vesting and Exercise Date Upon Death or Disability.
Unless the Board shall specifically state otherwise at the time an Award (other
than a Formula Award) is granted, all Awards (other than a Formula Award)
granted under this Plan shall become vested and exercisable in full on the date
an Optionee's employment as an Officer or Employee with the Corporation, the
Savings Bank, the Parent and/or any Subsidiary is terminated because of his
death or Disability. All Formula Awards granted under this Plan shall become
vested and exercisable in full on the date a Non-Employee Director ceases to
serve as a Non-Employee Director due to his death or Disability.

5. ADMINISTRATION OF THE PLAN.

(a) Role of the Board; Formation of the Advisory Committee. (i) The Plan
shall be administered and interpreted by the Board. Subject to any express
limitations established by the terms and provisions of this Agreement, the Board
shall have all power and authority to administer and interpret the Plan, and may
adopt such rules, regulations and procedures as it deems appropriate for the
conduct of its affairs in administering and interpreting the Plan. The members
of the Board may appoint one of its members to be chairperson of any meetings
concerning the administration or interpretation of the Plan (which person need
not be the Chairperson of the Board) and any person, whether or not a member of
the Board, to be its secretary or agent. Except as expressly limited by the
terms and provisions of this Agreement and Rule 16b-3 promulgated by the SEC,
the Board shall have plenary authority to administer and interpret the Plan.

(ii) The Board at its option may create a Stock Option Advisory
Committee composed of at least two Non-Employee Directors of the Corporation
(the "Committee"). The Board may from time to time request the Committee to make
recommendations concerning the grant of Awards to employee Directors, Officers
and other key employees and other administrative matters with respect to the
Plan. The Board from time to time may remove members from, or add members to,
the Committee, provided any such Committee shall consist of at least two or more
Non-employee Directors of the Corporation. Subject to any express limitations
established by the Board, the Committee may adopt such rules, regulations and
procedures as it deems appropriate for the conduct of its affairs. The members
of the Committee may appoint one of its members to be chairperson and any
person, whether or not a member, to be its secretary or agent. The Committee
shall report its recommendations to the Board at appropriate times but in no
event less than one time per calendar year. The Committee shall have no
authority to administer or interpret the Plan. The authority of the Committee
shall be strictly limited to providing recommendations concerning Awards to the
Board and to providing the Board with such other recommendations concerning
other aspects of the Plan as requested by the Board from time to time. The Board
shall have the power to reverse or override any recommendation made by the
Committee under or with respect to the Plan.

(b) Powers of the Board. The Board is authorized in its absolute
discretion (but only to the extent not contrary to the express provisions of the
Plan) to interpret the Plan, to prescribe, amend and rescind rules, regulations
and procedures relating to the Plan which may be advisable in its administration
and interpretation, to determine the form and content of discretionary Awards to
be issued under the Plan and to make other determinations necessary or advisable
for the administration and interpretation of the Plan. The authority of

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the Board in its absolute discretion to prescribe, amend or rescind such rules,
regulations and procedures as, in its opinion, may be advisable in the
administration and interpretation of the Plan, includes, without limitation,
rules, regulations and procedures which (i) deal with satisfaction of a
Participant's tax withholding obligation, (ii) include arrangements which
provide for the payment of some or all of such exercise or purchase price by
delivery of previously-owned shares of Common Stock or other property and/or by
withholding some of the shares of Common Stock which are being acquired, (iii)
deal with leaves of absence taken by an Optionee, and (iv) deal with the use of
restricted or nonrestricted Common Stock to satisfy an Award. The Board shall
act by vote or written consent. A majority of the entire Board shall constitute
a quorum and the action of a majority of the members present at any meeting and
entitled to vote on such action at which a quorum is present, or acts adopted in
writing without a meeting by a majority of the members entitled to vote on such
action, shall be deemed the action of the Board. Members of the Board who are
eligible for or who have been granted Awards other than Formula Awards, may not
vote on any matters affecting the administration or interpretation of the Plan
or the grant of Awards (although such members may be counted in determining the
existence of a quorum at any meeting of the Board). Except as provided in
Section 5(d) hereof, in no event may the Board revoke outstanding Awards without
the consent of the Participant. The Board shall maintain records as to all
grants of Awards under the Plan.

Such Officers as shall be designated by the Board, and in the absence of
such delegation the President or Chairman of the Board of the Corporation, are
each hereby authorized to execute instruments evidencing Awards on behalf of the
Corporation and to cause them to be delivered to the Participants.

(c) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board of any provisions of the Plan, any rule, regulation
or procedure adopted by it pursuant thereto, or of any Award shall be final and
conclusive on all persons affected thereby.

(d) Revocation for Misconduct. Notwithstanding anything hereinafter to
the contrary, the Board may by resolution immediately revoke, rescind and
terminate any Award, or portion thereof, to the extent not yet vested,
previously granted or awarded under the Plan to an Optionee who is in the case
of an Employee who is discharged from the employ of, or a Non-Employee Director
who is removed from service as a Non-Employee Director of, the Corporation, the
Savings Bank, the Parent or any Subsidiary for cause, which, for purposes
hereof, shall mean termination of employment or removal from service for
personal dishonesty, incompetence, gross negligence or willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, the conviction of a felony by a court of competent
jurisdiction, willful violation of any law, rule, or regulation (other than
traffic violations or similar offenses), or final cease-and-desist order. Awards
granted to a Non-Employee Director who is removed for cause pursuant to the
Articles of Incorporation or Bylaws of the Corporation, the Savings Bank, the
Parent or any Subsidiary shall terminate as of the effective date of such
removal.

(e) Limitation on Liability. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan, any rule, regulation or procedure adopted by it pursuant thereto or
any Awards granted under it. If a member of the Board or the Committee is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of anything done or not done by him in such capacity
under or with respect to the Plan, the Corporation shall, subject to the
requirements of applicable laws and regulations, indemnify such member against
all liabilities and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in the best interests of the Corporation, the
Savings Bank, the Parent and/or any Subsidiary, as applicable, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.

(f) Compliance with Law and Regulations. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required,
including, without limitation, the Office of Thrift Supervision. The Corporation
shall not be required to issue or deliver any certificates for shares of Common
Stock prior to the completion of any registration or qualification of or
obtaining of consents or approvals with respect to such Shares under any federal
or state law or any rule or regulation of any government body, which the
Corporation shall, in its sole

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discretion, determine to be necessary or advisable. Moreover, no Option may be
exercised if such exercise would be contrary to applicable laws and regulations.

(g) Restrictions on Transfer. The Corporation may place a legend upon
any certificate representing Shares acquired pursuant to an Award granted
hereunder noting that the transfer of such Shares may be restricted by
applicable laws and regulations.

6. ELIGIBILITY.

(a) General. Awards may be granted to Directors, Officers and key
Employees of, and other persons providing services to, the Corporation, the
Savings Bank, the Parent or any Subsidiary, provided, however, that Incentive
Stock Options may be granted only to, Officers and key Employees of, and other
persons providing services to, the Corporation, the Savings Bank, the Parent or
any Subsidiary (excluding Non-Employee Directors), and that Non-Employee
Directors may receive only Non-Incentive Stock Options in the form of Formula
Awards. The Board shall from time to time determine the Officers and key
Employees of, and other persons providing services to, the Corporation, the
Savings Bank, the Parent and each Subsidiary who shall be granted Awards (other
than Formula Awards) under the Plan, the number to be granted to each such
Officer, key Employee and other persons (other than Non-Employee Directors)
under the Plan, whether Awards granted to each such Participant under the Plan
shall be Incentive and/or Non-Incentive Stock Options, the exercise price of
such Options and all other terms and conditions of such Awards, subject to this
Plan. In selecting Participants (other than Non-Employee Directors) and in
determining the number of Shares of Common Stock to be granted to each such
Officer, key Employee or other Participant (other than Non-Employee Directors)
pursuant to each Award granted under the Plan, the Board may consider the nature
of the services rendered by each such person, each such person's current and
potential contribution to the Corporation, the Savings Bank, the Parent and each
Subsidiary and such other factors as the Board may, in its sole discretion, deem
relevant. Officers, key Employees or other persons (other than Non-Employee
Directors) who have been granted an Award may, if otherwise eligible, be granted
additional Awards. Non-Employee Directors shall not be eligible for any
discretionary Awards under the Plan.

(b) Limitations.

(i) Non-Employee Directors. In no event shall Shares subject to
Awards granted to Non-Employee Directors in the aggregate under this Plan
exceed, more than 30%, and individually under this Plan exceed more than 5%, of
the total number of Shares authorized for delivery under this Plan pursuant to
Section 3 herein.

(ii) Others. In no event shall Shares subject to Awards granted to
any Participant other than Non-Employee Directors exceed, individually, more
than 25% of the total number of Shares authorized for delivery under this Plan
pursuant to Section 3 herein.

(c) Formula Awards. Only Non-Employee Directors shall be eligible to
receive Formula Awards. The terms and conditions of the Formula Awards are
primarily set forth in Section 9(h) hereof. When any other Section of this
Agreement is used in connection with Section 9(h) to interpret the application
and operation of any Formula Award, each such other Section of this Agreement
shall be interpreted to give full accord to Section 9(h) and any provisions of
such other Sections of this Agreement which are inconsistent to any provision of
Section 9(h) shall be resolved in favor of, and by giving complete accord and
full deference to, the competing provision set forth in Section 9(h).

7. TERM OF THE PLAN. The Plan shall continue in effect for a term of ten
(10) years from the earlier of the date of adoption of the Plan by the Board or
the Effective Date, unless sooner terminated pursuant to Section 18 hereof. No
Award shall be granted under the Plan after the earlier of ten (10) years from
the date of adoption of the Plan by the Board or the Effective Date. Termination
of the Plan shall not affect any Awards previously granted and such Awards shall
remain valid and in effect until they have been fully exercised or earned, are
surrendered or by their terms expire or are forfeited.

8. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS. Incentive Stock Options
may be granted only to Participants who are Employees. Each Incentive Stock
Option granted pursuant to the Plan shall be evidenced by a Stock Option
Agreement, signed by the Corporation and the Optionee, in such form as the Board
shall

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from time to time approve, which shall set forth the total number of Shares of
Common Stock to which it pertains, the exercise price, and such other terms,
conditions, restrictions and privileges as the Board in each instance shall deem
appropriate, provided they are not inconsistent with the terms, conditions and
provisions of this Plan. Each Optionee shall receive a copy of his executed
Stock Option Agreement. Each and every Incentive Stock Option granted pursuant
to the Plan shall comply with, and be subject to, the following terms and
conditions:

(a) Option Price.

(i) The price per Share at which each Incentive Stock Option granted
under the Plan may be exercised shall not, as to any particular Incentive Stock
Option, be less than one hundred (100%) percent of the fair market value ("Fair
Market Value") of the Common Stock at the time such Incentive Stock Option is
granted except as provided in Section 8(a)(ii) hereof. For such purposes, if the
Common Stock is traded otherwise than on a national securities exchange at the
time of the granting of an Option, then the price per Share of the Optioned
Stock shall be not less than the mean between the bid and asked price on the
date the Incentive Stock Option is granted or, if there is no bid and asked
price on said date, then on the next prior business day on which there was a bid
and asked price. If no such bid and asked price is available, then the price per
Share shall be determined by the Board. If the Common Stock is listed on a
national securities exchange at the time of the granting of an Incentive Stock
Option, then the price per Share shall be not less than the average of the
highest and lowest selling price on such exchange on the date such Incentive
Stock Option is granted or, if there were no sales on said date, then the price
shall be not less than the mean between the bid and asked price on such date.

(ii) In the case of an Employee who owns, directly or indirectly,
Common Stock representing more than ten percent (10%) of the total combined
voting power of all classes of stock issued to stockholders of the Corporation,
the Savings Bank, the Parent or any Subsidiary at the time the Incentive Stock
Option is granted, the Incentive Stock Option price shall not be less than one
hundred and ten percent (110%) of the Fair Market Value of the Common Stock at
the time the Incentive Stock Option is granted.

(b) Payment. Full payment for each Share of Common Stock purchased upon
the exercise of any Incentive Stock Option granted under the Plan shall be made
at the time of exercise of each such Incentive Stock Option and shall be paid in
cash (in United States Dollars), or at the discretion of the Board, Common Stock
or a combination of cash and Common Stock. Common Stock utilized in full or
partial payment of the exercise price shall be valued at its Fair Market Value
at the date of exercise. At the discretion of the Board, the Corporation shall
accept full or partial payment in Common Stock only to the extent permitted by
applicable law. All Shares sold under the Plan shall be fully paid and
nonassessable, and no Shares of Common Stock shall be issued until full payment
therefor has been received by the Corporation. No Optionee shall have any of the
rights of a stockholder of the Corporation, including, without limitation,
voting and dividend rights, until Shares of Common Stock are issued to him and
his name is recorded on the Corporation's stockholder ledger as the holder of
record of such Shares.

(c) Term of Incentive Stock Option. The term of each Incentive Stock
Option granted pursuant to the Plan shall be not more than ten (10) years from
the date each such Incentive Stock Option is granted, provided that in the case
of an Employee who owns, directly or indirectly, stock representing more than
ten percent (10%) of the total combined voting power of all classes of stock
issued to stockholders of the Corporation, the Savings Bank, the Parent or any
Subsidiary outstanding at the time the Incentive Stock Option is granted, the
term of the Incentive Stock Option shall not exceed five (5) years.

(d) Exercise Generally. Except as otherwise provided in Section 10
hereof or in any other provisions of this Plan, each Incentive Stock Option
shall be exercisable at any time on or after it vests until the earlier of (i)
the expiration of the term of the Incentive Stock Option as determined by the
Board at the time of the grant and as set forth in the Stock Option Agreement,
or (ii) three (3) months after the date on which the Optionee ceases to be
employed by the Corporation, the Savings Bank, the Parent and/or any Subsidiary.
The Board may impose additional conditions upon the right of an Optionee to
exercise any Incentive Stock Option granted hereunder which are not inconsistent
with the terms of the Plan or the requirements for qualification as an Incentive
Stock Option under Section 422 of the Code.

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

(f) Notice of Disposition; Withholding; Escrow. An Optionee shall
immediately notify the Corporation in writing of any sale, transfer, assignment
or other disposition (or action constituting a disqualifying disposition within
the meaning of Section 421 of the Code) of any Shares of Common Stock acquired
through exercise of an Incentive Stock Option, within two (2) years after the
grant of such Incentive Stock Option or within one (1) year after the
acquisition of such shares, setting forth the date and manner of disposition,
the number of shares disposed of and the price at which such shares were
disposed of. The Corporation shall be entitled to withhold from any compensation
or other payments then or thereafter due to the Optionee such amounts as may be
necessary to satisfy any withholding requirements of Federal or state law or
regulation and, further, to collect from the Optionee any additional amounts
which may be required for such purpose. The Board may, in its discretion,
require shares of Common Stock acquired by an Optionee upon exercise of an
Incentive Stock Option to be held in an escrow arrangement for the purpose of
enabling compliance with the provisions of this Section 8(f).

(g) Incentive Stock Option Limitation. The aggregate Fair Market Value
(determined as of the date the Award is granted) of the Shares with respect to
which Incentive Stock Options are exercisable for the first time by each
Employee during any calendar year (under this Plan and all Incentive Stock
Option plans, as defined in Section 422 of the Code, of the Corporation, the
Savings Bank, the Parent or any Subsidiary) shall not exceed $100,000. The Board
may grant Awards in excess of the foregoing limitations, provided said Awards
shall be clearly and specifically designated as not being Incentive Stock
Options, as defined in Section 422 of the Code.

9. TERMS AND CONDITIONS OF NON-INCENTIVE STOCK OPTIONS. Subject to the
limitations of Section 6(b), Non-Incentive Stock Options may, at the discretion
of the Board, be granted to Participants who are Employees and shall, as
provided in Section 9(h) hereof, be granted to Non-Employee Directors. Each Non-
Incentive Stock Option granted pursuant to the Plan shall be evidenced by a
Stock Option Agreement, signed by the Corporation and the Optionee, in such form
as the Board shall from time to time approve, which shall set forth the total
number of shares of Common Stock to which it pertains, the exercise price, and
such other terms, conditions, restrictions and privileges as the Board in each
instance shall deem appropriate (other than with respect to Formula Awards the
terms and conditions of which are set forth in Section 9(h) hereof), provided
they are not inconsistent with the terms, conditions and provisions of this
Plan. Each Optionee shall receive a copy of his executed Stock Option Agreement.
Each and every Non-Incentive Stock Option granted to Employees and Non-Employee
Directors pursuant to the Plan shall comply with and be subject to the following
terms and conditions.

(a) Option Price. The price per Share at which each Non-Incentive Stock
Option granted under the Plan may be exercised shall not, as to any particular
Non-Incentive Stock Option, be less than one hundred (100%) percent of the Fair
Market Value of the Common Stock at the time such Non-Incentive Stock Option is
granted.

(b) Payment. Full payment for each Share of Common Stock purchased upon
the exercise of any Non-Incentive Stock Option granted under the Plan shall be
made at the time of exercise of each such Non-Incentive Stock Option and shall
be paid in cash (in United States Dollars), or at the discretion of the Board,
Common Stock or a combination of cash and Common Stock. Common Stock utilized in
full or partial payment of the exercise price shall be valued at its Fair Market
Value at the date of exercise. At the discretion of the Board, the Corporation
shall accept full or partial payment in Common Stock only to the extent
permitted by applicable law. No Shares of Common Stock shall be issued until
full payment therefor has been received by the Corporation. No Optionee shall
have any of the rights of a stockholder of the Corporation including, without
limitation, voting and dividend rights, until the Shares of Common Stock are
issued to him and his name is recorded on the Corporation's stockholder ledger
as the holder of record of such Shares.

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

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(f) Exercise Generally. Except as provided in Section 11 or in other
provisions of this Plan, each Non-Incentive Stock Option, other than Formula
Awards, on or after it vests shall be exercisable at any time in the manner
determined by the Board at the time of the grant and as set forth in the Stock
Option Agreement. The Board may impose any conditions upon the right of a
Participant to exercise any Non-Incentive Stock Option granted hereunder, other
than Formula Awards, which are not inconsistent with the terms of the Plan.

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

(h) Formula Awards to Non-Employee Directors. Notwithstanding anything
contained herein to the contrary, and subject to the limitations set forth in
Section 9(h)(3) and other provisions of this Agreement, Non-Incentive Stock
Options shall be granted to Non-Employee Directors, excluding honorary
Directors, advisory Directors or Directors emeritus, as follows:

(1) Initial Awards

(i) Existing Non-Employee Directors. On the Effective Date
Non-Incentive Stock Options shall be granted to each Non-Employee Director of
the Corporation and each Non-Employee Director of the Savings Bank serving on
the respective boards of directors on the Effective Date. The total amount of
Non-Incentive Stock Options to be awarded to each such Non-Employee Director of
the Corporation and of the Savings Bank on the Effective Date shall consist of
the sum of (x) 1,000 Shares under Non-Incentive Stock Options plus (y) an
additional 100 Shares under Non-Incentive Stock Options for each full year of
service by such Non-Employee Director of the Corporation or the Savings Bank on
the board of directors of the Savings Bank as of the Effective Date (i.e. a
Non-Employee Director of the Corporation or the Savings Bank with five years of
service on the board of directors of the Savings Bank as of the Effective Date
shall be awarded a total of 1,500 Shares under Non-Incentive Stock Options).

(ii) New Non-Employee Directors. On the date on which the
respective boards of directors appoint, or the respective stockholders elect, a
new person to serve as a Non-Employee Director of the Corporation, the Savings
Bank, the Parent or any Subsidiary (excluding any existing Non-Employee Director
referred to in Section 9(h)(1)(i) hereof or any existing Non-Employee Director
that immediately prior to such appointment or election was serving as a
Non-Employee Director of the Corporation, the Savings Bank, the Parent or any
Subsidiary) 1,000 Shares under Non-Incentive Stock Options shall be granted to
each such new Non-Employee Director.

(2) Subsequent Awards. Immediately after the completion of each
annual meeting of the stockholders of the Corporation, the Savings Bank, the
Parent or any Subsidiary, 100 Shares under Non-Incentive Stock Options shall be
awarded to each Non-Employee Director remaining on the respective boards of
directors after such meeting (including the Chairperson of the Board) plus an
additional 100 Shares under Non-Incentive Stock Options shall be awarded to the
Chairperson of the Board on such date, provided, however, that no such
Non-Incentive Stock Options shall be granted to a Non-Employee Director if such
annual meeting of the stockholders occurs within 6 months of the date of the
initial grant of Non-Incentive Stock Options to such Non-Employee Director
pursuant to Section 9(h)(1) hereof.

(3) Non-Employee Director Limitations. Notwithstanding anything
contained herein to the contrary:

(i) No Duplication of Awards. Any person serving in the capacity
of a Non-Employee Director for more than one corporation participating in the
Plan (i.e. a person serving as a Non-Employee Director of the Corporation and of
the Savings Bank) will be limited to receiving Formula Awards under the Plan
with respect to the one directorship that provides the Formula Award offering
the greatest number of Shares under the Non-Incentive Stock Options, and will be
prohibited from receiving Formula Awards with respect to any other directorship;
and

(ii) Availability of Non-Incentive Stock Options. In no event
shall Shares subject to Non-Incentive Stock Options granted to Non-Employee
Directors under this Section 9(h) in the aggregate exceed

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the number of Shares, including forfeitures, allocated to and available for
Formula Awards pursuant to Section 3 hereof. In the event that on the date of
grant of Formula Awards there is an insufficient number of Shares available for
Formula Awards of Non-Incentive Stock Options to satisfy all such Formula Awards
to be granted on such date pursuant to this Section 9(h), the remaining Shares
available for Non-Incentive Stock Option Formula Awards shall be allocated among
the Non-Employee Directors entitled to receive such Formula Awards on such date,
on a pro rata basis, in the following order of priority: Shares shall be
allocated first to satisfy the Non-Incentive Stock Option Formula Award of any
new Non-Employee Directors pursuant to Section 9(h)(1)(ii); and, to the extent
any Shares are remaining, such Shares shall then be allocated to satisfy the
subsequent Non-Incentive Stock Option Award of any Non-Employee Director
pursuant to Section 9(h)(2) hereof.

(4) Terms and Conditions. The Non-Incentive Stock Option Formula
Awards granted to Non-Employee Directors under this Section 9(h) shall be
subject to the following terms and conditions:

(i) Formula Award Option Price. The price per Share at which each
Non-Incentive Stock Option Formula Award granted under the Plan may be exercised
shall be one hundred (100%) percent of the Fair Market Value of the Common Stock
at the time such Non-Incentive Stock Option is granted.

(ii) Formula Award Payment. The payment provisions of Section
9(b) shall apply, provided that only the cash payment option set forth in
Section 9(b) shall be available to the Optionee of a Non-Incentive Stock Option
awarded under a Formula Award.

(iii) Term of Formula Award. Each Option or portion shall be
exercisable at any time on or after it vests until the earlier of (x) ten (10)
years after the date of grant or (y) the third annual anniversary of the date on
which the Non-Employee Director ceases to be a Non-Employee Director. If a
Non-Employee Director dies while serving as a Non-Employee Director or within
three (3) years following the termination of the Optionee's service as a
Non-Employee Director as a result of Disability, retirement or resignation
without having fully exercised his Awards, the person or persons to whom the
Optionee's rights under any such Non-Incentive Stock Options pass by will or by
the laws of descent and distribution (including the Optionee's estate during the
period of administration) shall have the right to exercise such Awards at any
time prior to the earlier of (i) the date which is one (1) year after the date
of such death or (ii) the respective expiration dates of any such Non-Incentive
Stock Options, provided that no Award will be exercisable within six months
after the date it was granted or more than ten years from the date it was
granted.

(iv) Formula Award Vesting and Forfeiture. Non-Incentive Stock
Option Formula Awards granted to Non-Employee Directors shall vest at a rate
equal to twenty percent (20%) a year beginning one year from the later of the
Effective Date or the anniversary date of the date of grant, unless sooner
vested upon death or disability pursuant to the terms of Section 4(b). Formula
Awards shall be earned and non-forfeitable in accordance with the provisions of
this Section 9(h) and 4(b), and shall otherwise be subject to the other
provisions of the Plan which are not inconsistent with the provisions of this
Section 9(h) and Rule 16b-3 of the SEC.

(v) Transferability of Formula Award. Any Non-Incentive Stock
Option Formula Award granted pursuant to the Plan shall be exercised during a
Non-Employee Director's lifetime only by the Non-Employee Director to whom it
was granted and shall not be assignable or transferable otherwise than by will
or by the laws of descent and distribution.

(vi) Other Terms of Plan. Unless otherwise inapplicable, or
inconsistent with the provisions of Section 6(c), this Section 9(h) or Section
26, the Formula Awards to be granted to Non-Employee Directors hereunder shall
be subject to all other provisions of this Plan.

10. EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH ON INCENTIVE
STOCK OPTIONS.

(a) Termination of Employment. In the event that any Optionee ceases to
be employed by the Corporation, the Savings Bank, the Parent and/or any
Subsidiary, for any reason other than Disability or death, all of any such
Optionee's Incentive Stock Options, and all of any such Optionee's rights to
purchase or receive Shares of Common Stock pursuant thereto, shall automatically
terminate on the earlier of (i) the respective expiration dates of any such
Incentive Stock Options or (ii) the expiration of not more than three

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(3) months after the date of such termination of employment, but only if, and to
the extent that, such Incentive Stock Options were vested and the Optionee was
entitled to exercise any such Incentive Stock Options at the date of such
termination of employment. In the event that a Subsidiary ceases to be a
Subsidiary, the employment of all of its employees who are not immediately
thereafter employees of the Corporation, the Savings Bank, the Parent or any
Subsidiary shall be deemed to terminate upon the date such Subsidiary so ceases
to be a Subsidiary.

(b) Disability. In the event that any Optionee ceases to be employed by
the Corporation, the Savings Bank, the Parent and/or any Subsidiary due to
termination of employment as the result of Disability of such Optionee, such
Optionee may exercise any Incentive Stock Options granted to him pursuant to the
Plan at any time prior to the earlier of (i) the respective expiration dates of
any such Incentive Stock Options or (ii) the date which is one (1) year after
the date of such termination of employment, but only if, and to the extent that,
the Optionee was entitled to exercise any such Incentive Stock Options at the
date of such termination of employment. For purposes of this Section 10(b), any
Incentive Stock Option held by an Optionee shall be considered vested and
exercisable upon such date of termination of employment as set forth in Section
4(b) hereof.

(c) Death. In the event of the death of an Optionee, any Incentive Stock
Options granted to such Optionee may be exercised by the person or persons to
whom the Optionee's rights under any such Incentive Stock Options pass by will
or by the laws of descent and distribution (including the Optionee's estate
during the period of administration) at any time prior to the earlier of (i) the
respective expiration dates of any such Incentive Stock Options or (ii) the date
which is one (1) year after the date of death of such Optionee but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of death. For purposes of this Section 10(c), any
Incentive Stock Option held by an Optionee shall be considered vested and
exercisable at the date of his death as set forth in Section 4(b) hereof.

(d) Incentive Stock Options Deemed Exercisable. For purposes of Sections
10(a), 10(b) and 10(c) above, any Incentive Stock Option held by an Optionee
shall be considered exercisable at the date of termination of his employment if
any such Incentive Stock Option would have been vested and exercisable at such
date of termination of employment, after giving effect to the accelerated
vesting provisions of Section 4(b).

(e) Termination of Incentive Stock Options. To the extent that any
Incentive Stock Option granted under the Plan to any Optionee whose employment
with the Corporation terminates shall not have been exercised within the
applicable period set forth in this Section 10, any such Incentive Stock Option,
and all rights to purchase or receive Shares of Common Stock pursuant thereto,
as the case may be, shall terminate on the last day of the applicable period.

11. EFFECT OF TERMINATION OF EMPLOYMENT, TERMINATION OF SERVICES AS A
DIRECTOR, DISABILITY OR DEATH ON NON-INCENTIVE STOCK OPTIONS.

(a) General Rule. Subject to the terms and conditions of Section 4(b)
hereof, the terms and conditions of Non-Incentive Stock Options, other than
Formula Awards, relating to the effect of the termination of an Optionee's
employment, the termination of an Optionee's service as a Director, Disability
of an Optionee or his death shall be such terms and conditions as the Board
shall, in its sole discretion, determine at the time of termination, disability
or death, unless specifically provided for by the terms of this Plan or the
terms of the Stock Option Agreement at the time of grant of the Award.

(b) Non-Incentive Stock Options Deemed Exercisable. For purposes of
Sections 9(h) and 11(a) above, any Non-Incentive Stock Option held by an
Optionee shall be considered exercisable at the date of termination of his
employment or termination of service as a Director if any such Non-Incentive
Stock Option would have been vested and exercisable at such date of termination
of employment or service, after giving effect to the accelerated vesting
provisions of Section 4(b).

(c) Termination of Non-Incentive Stock Options. To the extent that any
Non-Incentive Stock Option which has been granted under the Plan to any Optionee
whose employment or service as a Director terminates has not been exercised
within the applicable period set forth in Section 9(h) and this Section 11 or in
the applicable Stock Option Agreement, any such Non-Incentive Stock Option, and
all rights to purchase

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or receive Shares of Common Stock pursuant thereto, as the case may be, shall
terminate on the last day of the applicable period.

12. RIGHT OF REPURCHASE AND RESTRICTIONS ON DISPOSITION. The Board, in its
sole discretion, may include, as a term of any Incentive Stock Option or
Non-Incentive Stock Option (other than Formula Awards), the right (the
"Repurchase Right"), but not the obligation, to repurchase all or any amount of
the Shares acquired by an Optionee pursuant to the exercise of any such Options.
The intent of the Repurchase Right is to encourage the continued employment of
the Optionee. The Repurchase Right shall provide for, among other things, a
specified duration of the Repurchase Right, a specified price per Share to be
paid upon the exercise of the Repurchase Right and a restriction on the
disposition of the Shares by the Optionee during the period of the Repurchase
Right. The Repurchase Right may permit the Corporation to transfer or assign
such right to another party. The Corporation may exercise the Repurchase Right
only to the extent permitted by applicable law. Notwithstanding the foregoing,
no right of Repurchase Price may be imposed on any Non-Incentive Stock Option
granted under a Formula Award.

13. RECAPITALIZATION, MERGER, CONSOLIDATION AND SIMILAR TRANSACTIONS. The
aggregate number of shares of Common Stock available for issuance under this
Plan, the number of shares to which any Award relates and the exercise price per
share of Common Stock under any Award shall be proportionately adjusted for any
increase or decrease in the total number of outstanding shares of Common Stock
issued subsequent to the Effective Date of this Plan resulting from a split,
subdivision or consolidation of shares or any other capital adjustment, the
payment of a stock dividend, or other increase or decrease in such shares
effected without receipt or payment of consideration by the Corporation. If,
upon a merger, consolidation, reorganization, liquidation, recapitalization or
the like of the Corporation, the shares of the Corporation's Common Stock shall
be exchanged for other securities of the Corporation or of another corporation,
each recipient of an Award shall be entitled, subject to the conditions herein
stated, to purchase or acquire such number of shares of Common Stock or amount
of other securities of the Corporation or such other corporation as were
exchangeable for the number of shares of Common Stock of the Corporation which
such optionees would have been entitled to purchase or acquire except for such
action, and appropriate adjustments shall be made to the per share exercise
price of outstanding Awards.

14. TIME OF GRANTING AWARDS. The date on which the Board makes the
determination to grant an Award to an Employee pursuant to Section 8 or Section
9, other than Section 9(h), shall be considered the date of grant of the Award,
and the date that a Formula Award is awarded pursuant to Section 9(h) shall be
the date of grant of a Formula Award. Except, however, for purposes of
compliance with Section 16 of the Exchange Act, the date of grant of an Award
shall be deemed the later of the date of grant or the date of stockholder
approval of the Plan. Notice of the determination of the grant of an Award shall
be given to each individual to whom an Award is so granted within a reasonable
time after the date of such grant in a form determined by the Board.

15. EFFECTIVE DATE. The Plan shall become effective upon the date of
ratification or other approval of the Plan by the stockholders of the
Corporation. The Board may grant options prior to the Effective Date with such
option grants to be effective upon the date of stockholder ratification of the
Plan.

16. RATIFICATION BY STOCKHOLDERS. The Plan shall be ratified by
stockholders of the Corporation within twelve (12) months before or after the
date the Plan is approved by the Board.

17. MODIFICATION OF AWARDS. At any time and from time to time, the Board
may direct the execution of an instrument providing for the modification,
extension or renewal of any outstanding Award (other than a Formula Award),
provided no such modification, extension or renewal shall confer on the holder
of said Award any right or benefit which could not be conferred on him by the
grant of a new Award (other than a Formula Award) at such time, or shall not
materially decrease the Optionee's benefits under the Award without the consent
of the holder of the Award, except as otherwise permitted under Section 5(d) or
Section 19 hereof. Notwithstanding anything herein to the contrary, the Board
shall have the authority to cancel outstanding Awards (other than a Formula
Award) with the consent of the Optionee and to reissue new Awards (other than a
Formula Award) at a lower exercise price, but in no event less than the then
Fair Market Value per share of Common Stock, in the event that the Fair Market
Value per share of Common

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Stock at any time prior to the date of exercise of outstanding Awards (other
than a Formula Award) falls below the exercise price of such Awards.

18. AMENDMENT AND TERMINATION OF THE PLAN.

(a) Action by the Board. The Board may, by resolution, at any time
amend, suspend or terminate the Plan, subject to any required stockholder
approval or any stockholder approval which the Board may deem to be advisable
for any reason, such as for the purpose of obtaining or retaining any statutory
or regulatory benefits under tax, securities or other laws or satisfying any
applicable stock exchange listing requirements; provided, however, that, except
as provided in Section 5(d) or Section 19 hereof no such action by the Board
shall alter or impair any rights previously granted to Participants under the
Plan without the consent of such affected Participant (or their successors or
permitted assignees); provided further that, except as otherwise provided
herein, the Plan may not be amended without approval of the Corporation's
stockholders if the amendment would materially increase the benefits accruing to
Participants under the Plan, materially increase the number of Shares that may
be awarded under the Plan, or materially modify the requirements as to
eligibility for participation in the Plan. Notwithstanding the foregoing, the
provisions of Section 9(h) hereof may not be amended, suspended or terminated
more often than once during any six (6) month period, other than to comport with
changes in the Code, the Employment Retirement Income Security Act of 1974, as
amended, or the rules and regulations thereunder.

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

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

The inability of the Corporation to obtain from any regulatory body or
authority deemed by the Corporation's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder shall relieve the Corporation of any
liability in respect of the non-issuance or sale of such Shares.

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

20. RESERVATION OF SHARES. During the term of the Plan, the Corporation
will reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.

21. UNSECURED OBLIGATION. No Participant under the Plan shall have any
interest in any fund or special asset of the corporation by reason of the Plan
or the grant of any Incentive or Non-Incentive Stock Option under the Plan. No
trust fund shall be created in connection with the Plan or any grant of any
Incentive or Non-Incentive Stock Option hereunder and there shall be no required
funding of amounts which may become payable to any Participant.

22. TAX WITHHOLDING. The Corporation may withhold from any cash payment
made under this Plan sufficient amounts to cover any applicable withholding and
employment taxes, and if the amount of such cash payment is insufficient, the
Corporation may require the Optionee to pay to the Corporation the amount
required to be withheld as a condition to delivering the Shares acquired
pursuant to an Award. The Corporation also may withhold or collect amounts with
respect to a disqualifying disposition of Shares of Common Stock acquired
pursuant to exercise of an Incentive Stock Option, as provided in Section 8(f).
The Board is authorized to adopt rules, regulations or procedures which provide
for the satisfaction of a Participant's tax withholding obligation by the
retention of Shares of Common Stock to which the Participant

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would otherwise be entitled pursuant to an Award and/or by the Participant's
delivery of previously-owned Shares of Common Stock or other property.

23. GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, except to the
extent that federal law shall be deemed to apply.

24. EMPLOYMENT AND DIRECTORSHIP RIGHTS. Neither the Plan nor the grant of
any Awards hereunder nor any action taken by the Board in connection with the
Plan shall create any right on the part of any Employee of the Corporation, the
Savings Bank, the Parent or any Subsidiary, or any Director, to continue in the
employ of the Corporation, the Savings Bank, the Parent or any Subsidiary, or to
continue as a Director.

25. NON-UNIFORM DETERMINATIONS. The determinations under this Plan
(including without limitation the determinations of the persons to receive
Options, the form, amount and timing of the Options and the terms and provisions
of such Options) need not be uniform and may be made selectively among persons
who receive, or are eligible to receive, Options under the Plan, whether or not
such persons are similarly situated.

26. PLAN COMPLIANCE WITH RULE 16b-3. With respect to persons subject to the
liability and reporting requirements of Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors rules under the Exchange Act. This
Agreement and the Plan are to be interpreted in a manner which is consistent
with the requirements of Rule 16b-3 or its successor rules and the Exchange Act.
In the event of any conflict in the interpretation of this Agreement and the
Plan and Rule 16b-3, as amended, the terms of Rule 16b-3 shall control. To the
extent any provision of this Agreement and the Plan or action by the Committee
or Board fails so to comply with Rule 16b-3, as amended, shall be deemed null
and void, to the extent permitted by law.

27. PRONOUNS. Wherever appropriate, the masculine pronoun shall include the
feminine pronoun, and the singular shall include the plural.

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and the corporate seal to be affixed
and duly attested on this day of , 1997.

ATTEST PRESTIGE BANCORP, INC.

__________________________________ By: _________________________________

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PRESTIGE BANCORP, INC.
MANAGEMENT RECOGNITION AND RETENTION
PLAN AND TRUST AGREEMENT

ARTICLE I

ESTABLISHMENT OF THE PLAN AND TRUST

1.01. Prestige Bancorp, Inc. (the "Corporation") hereby establishes (i) a
Management Recognition and Retention Plan (the "Plan") for non-employee
directors, officers and key employees of the Corporation and its wholly owned
subsidiary Prestige Bank, Federal Savings Bank (the "Savings Bank"), and any
future parent of the Corporation or any Subsidiary, and (ii) a Trust (the
"Trust") upon the terms and conditions hereinafter stated in this Management
Recognition and Retention Plan and Trust Agreement (the "Agreement").

1.02. The Trustees hereby accept this Trust and agree to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions hereinafter stated.

ARTICLE II

PURPOSE OF THE PLAN

2.01. The purpose of the Plan is to improve the profitability of the
Corporation and to retain personnel of experience and ability in key positions
by providing such non-employee directors, officers and key employees of the
Corporation, Savings Bank, any future parent of the Corporation and any
Subsidiary with a proprietary interest in the Corporation as compensation for
their contributions to the Corporation, the Savings Bank, any future parent of
the Corporation and any Subsidiary and as an incentive to make such
contributions in the future.

ARTICLE III

DEFINITIONS

The following words and phrases when used in this Agreement with an initial
capital letter, unless the context clearly indicates otherwise, shall have the
meanings set forth below. Wherever appropriate, the masculine pronouns shall
include the feminine pronouns and the singular shall include the plural.

3.01. "Beneficiary" means the person or persons designated by a Recipient
to receive any benefits payable under the Plan in the event of such Recipient's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Board and may be changed from time to time by similar
written notice to the Board. In the absence of a written designation, the
Beneficiary shall be the Recipient's surviving spouse, if any, or if none, his
estate.

3.02. "Board" means the Board of Directors of the Corporation, or any
successor corporation thereto.

3.03. "Code" means the Internal Revenue Code of 1986, as the same shall be
amended from time to time. Whenever a reference is made to a particular section
of the Code, such reference shall include any successor provisions hereafter
enacted.

3.04. "Committee" means the advisory committee appointed by the Board
pursuant to Section 4.02 hereof.

3.05. "Common Stock" means shares of the common stock, $1.00 par value per
share, of the Corporation.

3.06. "Corporation" means Prestige Bancorp, Inc., and its successors and
assigns.

3.07. "Disability" means any physical or mental impairment which qualifies
a Recipient for disability benefits under the applicable long-term disability
plan maintained by the Corporation, the Savings Bank, any future parent of the
Corporation or any Subsidiary or, if no such plan applies, which would qualify
such Recipient for disability benefits under the Federal Social Security System.

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3.08. "Effective Date" means the date of ratification or adoption and
approval of the Plan and Trust by the stockholders of the Corporation.

3.09. "Employee" means any person who is employed by the Corporation, the
Savings Bank, any future parent of the Corporation or any Subsidiary, including
officers or other employees who may be directors of the Corporation, the Savings
Bank, any future parent of the Corporation or any Subsidiary.

3.10. "Exchange Act" means the Securities Exchange Act of 1934, as amended
or replaced.

3.11. "Formula Award" means the grant of an Award or Awards to Non-Employee
Directors pursuant to Section 6.04 hereof.

3.12. "Non-Employee Director" means any member of the board of directors of
the Corporation, the Savings Bank, any future parent of the Corporation or any
Subsidiary who is not an officer of or otherwise employed by the Corporation,
Savings Bank, any future parent of the Corporation, or any Subsidiary.

3.13. "Offering" means the offering of Common Stock to the public pursuant
to the Plan of Conversion dated February 14, 1996, as amended, of the Savings
Bank.

3.14. "Plan" means this Prestige Bancorp, Inc. Management Recognition and
Retention Plan.

3.15. "Plan Shares" or "Shares" means shares of Common Stock held in the
Trust which may be distributed to a Recipient pursuant to the Plan (each Plan
Share represents one share of Common Stock).

3.16. "Plan Share Award" or "Award" means a right granted under the Plan to
receive a distribution of Plan Shares upon completion of the service
requirements described in Article VII.

3.17. "Plan Share Reserve" means the shares of Common Stock held by the
Trustee(s) pursuant to Sections 5.03 and 5.04 hereof and available for
allocation to Recipients under the Plan.

3.18. "Recipient" means a Non-Employee Director or an Employee who receives
a Plan Share Award under the Plan; provided, however, that a member of the Board
may only receive a Plan Share Award if such Plan Share Award is a Formula Award.

3.19. "Savings Bank" means Prestige Bank, Federal Savings Bank, the
wholly-owned subsidiary of the Corporation, and its successors and assigns.

3.20. "SEC" shall mean the Securities and Exchange Commission, or any
successor agency or commission.

3.21. "Subsidiary" and "Subsidiaries" means the Savings Bank and any other
direct or indirect subsidiary or subsidiaries of the Corporation or the Savings
Bank, or any future parent of the Corporation, which, with the consent of the
Board, agree to participate in the Plan.

3.22. "Trustee(s)" means such individual(s), firm or entity appointed by
the Board pursuant to Sections 4.01 and 4.02 to hold legal title to the Plan for
the purposes set forth herein.

ARTICLE IV

ADMINISTRATION OF THE PLAN

4.01. Role of the Board. (a) The Plan shall be administered and
interpreted by the Board. Subject to any express limitations established by the
terms and provisions of this Agreement, the Board shall have all power and
authority to administer and interpret the Plan, and may adopt such rules,
regulations and procedures as it deems appropriate for the conduct of its
affairs in administering and interpreting the Plan. The interpretation and
construction by the Board of any provisions of the Plan shall be final and
binding. The Board shall act by vote or written consent. A majority of the
entire Board shall constitute a quorum and the action of a majority of the
members present at any meeting and entitled to vote on such action at which a
quorum is present, or acts adopted in writing without a meeting by a majority of
the members entitled to vote on such action, shall be deemed the action of the
Board. The members of the Board may appoint one of its members to be chairperson
of any meetings concerning the administration or interpretation of the Plan
(which

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person need not be the Chairperson of the Board) and any person, whether or not
a member of the Board, to be its secretary or agent. Except as expressly limited
by the terms and provisions of this Agreement and Rule 16b-3 promulgated by the
SEC, the Board shall have plenary authority to administer and interpret the
Plan.

(b) The Trustee or Trustees shall be appointed or approved by, and will
serve at the pleasure of, the Board. The Board in its discretion from time to
time may remove or replace the Trustee(s), or any of them. The Board shall have
all of the powers allocated to it in this and other sections of the Plan,
provided, however, that the Board may not revoke any Plan Share Award, including
any Formula Award, already made or provided for in the Plan, except as provided
in Section 7.01(b) herein. Members of the Board who are eligible for or who have
been granted Plan Share Awards other than Formula Awards, may not vote on any
matters affecting the administration or interpretation of the Plan or the grant
of Plan Shares or Plan Share Awards (although such members may be counted in
determining the existence of a quorum at any meeting of the Board).

4.02. Role of the Committee. The Board at its option may create an
Advisory Committee composed of at least two Non-Employee Directors of the
Corporation (the "Committee"). The Board may from time to time request the
Committee to make recommendations concerning the grant of Awards to employee
directors, officers and other key employees and other administrative matters
with respect to the Plan. The Board from time to time may remove members from,
or add members to, the Committee, provided any such Committee shall consist of
at least two or more Non-employee Directors of the Corporation. Subject to any
express limitations established by the Board, the Committee may adopt such
rules, regulations and procedures as it deems appropriate for the conduct of its
affairs. The members of the Committee may appoint one of its members to be
chairperson and any person, whether or not a member, to be its secretary or
agent. The Committee shall report its recommendations to the Board at
appropriate times but in no event less than one time per calendar year. The
Committee shall have no authority to administer or interpret the Plan. The
authority of the Committee shall be strictly limited to providing
recommendations concerning Awards to the Board and to providing the Board with
such other recommendations concerning other aspects of the Plan as requested by
the Board from time to time. The Board shall have the power to reverse or
override any recommendation made by the Committee under or with respect to the
Plan.

4.03. Limitation on Liability. No member of the Board or the Committee or
the Trustee(s) shall be liable for any determination made in good faith with
respect to the Plan or any Plan Shares or Plan Share Awards granted under it. If
a member of the Board or the Committee or any Trustee is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of anything done or not done by him in such capacity under or with
respect to the Plan, the Corporation shall, subject to the requirements of
applicable laws and regulations, indemnify such member or Trustee against all
liabilities and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in the best interests of the Corporation, the
Savings Bank, any future parent of the Corporation and any Subsidiary and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.

4.04. Compliance with Laws and Regulations. All Plan Share Awards granted
hereunder shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency or
stockholders as may be required.

ARTICLE V

CONTRIBUTIONS

5.01. Amount and Timing of Contributions. The Board shall determine the
amount (or the method of computing the amount) and timing of any contributions
by the Corporation to the Trust established under the Plan. Such amounts may be
paid in cash or in shares of Common Stock and shall be paid to the Trustee(s) at
the designated time of contribution. No contribution by Employees or
Non-Employee Directors shall be permitted.

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5.02 Initial Investment. Any funds held by the Trust prior to investment
in the Common Stock shall be invested by the Trustee(s) in such interest bearing
account or accounts at the Savings Bank as the Trustee(s) shall determine to be
appropriate.

5.03. Investment of Trust Assets; Number of Plan Shares. Following
ratification or approval of the Plan by the stockholders of the Corporation and
receipt of any other necessary regulatory approvals, and subject to Section 8.02
hereof, the Trust shall invest all of the trust's assets primarily in Common
Stock by purchasing Common Stock in an amount equal to up to 100% of the Trust's
assets, after providing for any required withholding as needed for tax purposes,
provided, however, that the Trust shall not purchase more than 38,517 shares of
Common Stock of the Corporation, which amount is 4% of the aggregate shares of
Common Stock issued by the Corporation in the Offering (rounded down to the
nearest whole number). The Trustee(s) shall purchase shares of Common Stock in
the open market or, in the alternative, shall purchase authorized but unissued
shares of the Common Stock from the Corporation sufficient to fund the Plan
Share Reserve.

5.04. Effect of Allocations, Returns and Forfeitures Upon Plan Share
Reserves. Upon the allocation of Plan Share Awards under Article VI, or the
decision of the Board to return Plan Shares to the Corporation, the Plan Share
Reserve shall be reduced by the number of Shares subject to the Awards so
allocated or returned. Any Shares subject to an Award which may not be earned
because of forfeiture by the Recipient pursuant to Section 7.01 shall be added
to the Plan Share Reserve as follows: (i) Shares forfeited by a Non-Employee
Director receiving a Formula Award under Section 6.04 shall be forfeited and
made available only for additional Formula Awards to Non-Employee Directors
under Section 6.04; and (ii) Shares forfeited by an Employee receiving an Award
under Sections 6.01 and 6.02 shall be forfeited and made available only for
additional Awards to Employees under Sections 6.01 and 6.02.

ARTICLE VI

ELIGIBILITY; ALLOCATIONS

6.01. Eligibility and Allocations. Employees of the Corporation, the
Savings Bank, any future parent of the Corporation or any Subsidiary are
eligible to receive Plan Share Awards within the sole discretion of the Board.
Non-Employee Directors shall receive Plan Share Awards in the form of Formula
Awards under Section 6.04 hereof. Non-Employee Directors shall receive only
Formula Awards and the Board will determine which, if any, of the Employees will
be granted discretionary Plan Share Awards and the number of Shares covered by
each Award, provided, however, that in no event shall any Awards be made which
violate the respective Articles of Incorporation, Charter or Bylaws of the
Corporation, the Savings Bank, any future parent of the Corporation or any
Subsidiary, or any applicable Federal or state law or regulation. Awards to each
Employee and each Non-Employee Director shall not exceed 25% and 5% of the
shares of Common Stock available under the Plan, respectively, nor shall
Non-Employee Directors in the aggregate receive more than 30% of the shares of
Common Stock available under the Plan. In the event Shares previously allocated
to an Employee are forfeited for any reason or additional Shares are purchased
by the Trustee(s) for Awards to Employees, the Board may, from time to time,
determine which of the eligible Employees referenced above, if any, will be
granted additional Plan Share Awards to be awarded from such forfeited or
additional Shares. In the event Shares previously awarded to a Non-Employee
Director are forfeited for any reason, such forfeited Shares will be made
available for the Formula Awards. In selecting those Employees to whom Plan
Share Awards may be granted and the number of Shares covered by such Awards, the
Board shall consider the position and responsibilities of the eligible
Employees, the value of their services to the Corporation, the Savings Bank, any
future parent of the Corporation and any Subsidiary, and any other factors the
Board may deem relevant. The Board may but shall not be required to request the
written recommendation of the President or any other officers of the
Corporation, the Savings Bank, any future parent of the Corporation or any
Subsidiary other than with respect to Plan Share Awards to be granted to such
officer.

6.02. Form of Allocations. As promptly as practicable after a
determination is made pursuant to Section 6.01 that a Plan Share Award is to be
issued, and upon earning a Formula Award, the Board shall notify each Recipient
in writing of the Award, the number of Plan Shares covered by the Award, and the
terms upon which the Plan Shares subject to the Award shall be distributed to
the Recipient. Such terms shall be reflected in a written agreement with the
Recipient. The date on which the Board so notifies the Employee

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shall be considered the date of grant of the Plan Share Award for Employee
Awards, and the date a Non-Employee Director is awarded a Formula Award pursuant
to Section 6.04 shall be the date of grant of a Formula Award. The Board shall
maintain records as to all grants of Plan Share Awards under the Plan.

6.03. Allocations Not Required. Notwithstanding anything to the contrary
in Section 6.01 hereof, no Non-Employee Director or Employee individually, or
Non-Employee Directors or Employees as a group, shall have any right of
entitlement to receive a Plan Share Award hereunder, such Awards being at the
total discretion of the Board. The Board may vote to return all Common Stock in
the Plan Share Reserve to the Corporation at any time, and cease issuing Plan
Share Awards.

6.04 Formula Awards to Non-Employee Directors.

(a) Formula Awards. Subject to the limitations set forth in Section
6.04(b) hereof, 9,630 shares of Common Stock of the Corporation purchased by the
Trustee(s) pursuant to Section 5.02 hereof shall be allocated and used
exclusively for purposes of granting Formula Awards to Non-Employee Directors,
as follows:

(1) Initial Awards

(i) Existing Non-Employee Directors. On the Effective Date a Plan
Share Award shall be awarded to each Non-Employee Director of the
Corporation and each Non-Employee Director of the Savings Bank serving
on the respective boards of directors on the Effective Date. The total
amount of Plan Shares to be awarded to each such Non-Employee Director
of the Corporation and of the Savings Bank on the Effective Date shall
consist of the sum of (x) 1,000 Plan Shares plus (y) an additional 100
Plan Shares for each full year of service by such Non-Employee Director
of the Corporation or the Savings Bank on the board of directors of the
Savings Bank as of the Effective Date (i.e. a Non-Employee Director of
the Corporation or the Savings Bank with five years of service on the
board of directors of the Savings Bank as of the Effective Date shall be
awarded a total of 1,500 Plan Shares).

(ii) New Non-Employee Directors. On the date on which the
respective boards of directors appoint, or the respective stockholders
elect, a new person to serve as a Non-Employee Director of the
Corporation, the Savings Bank, any future parent of the Corporation or
any Subsidiary participating in the Plan (excluding any existing
Non-Employee Director referred to in Section 6.04(a)(1)(i) hereof or any
existing Non-Employee Director that immediately prior to such
appointment or election was serving as a Non-Employee Director of the
Corporation, the Savings Bank, any future parent of the Corporation or
any Subsidiary participating in the Plan), a Plan Share Award consisting
of 1,000 Plan Shares shall be awarded to such new Non-Employee Director.

(2) Subsequent Awards. Immediately after the completion of each
annual meeting of the stockholders of the Corporation, the Savings Bank,
any future parent of the Corporation or any Subsidiary participating in the
Plan, a Plan Share Award consisting of 100 Plan Shares shall be awarded to
each Non-Employee Director remaining on the respective board of directors
after such meeting (including the Chairperson of the Board) plus an
additional Plan Share Award consisting of 100 Plan Shares shall be awarded
to the Chairperson of the Board on such date, provided, however, that no
such Plan Share Award(s) shall be granted to a Non-Employee Director if
such annual meeting of the stockholders occurs within 6 months of the date
of the initial grant of a Plan Share Award to such Non-Employee Director
pursuant to Section 6.04(a)(1) hereof.

(b) Non-Employee Director Limitations. Notwithstanding anything contained
herein to the contrary:

(1) Percentage Limitations. In no event shall Shares subject to
Awards granted to Non-Employee Directors under this Section 6.04 in the
aggregate under the Plan exceed more than 30%, and individually under the
Plan exceed more than 5%, of the total number of shares of the Common Stock
of the Corporation purchased by the Trustee(s) pursuant to Section 5.02
hereof;

(2) No Duplication of Awards. Any person serving in the capacity of a
Non-Employee Director for more than one corporation participating in the
Plan (i.e. a person serving as a Non-Employee Director of the Corporation
and of the Savings Bank) will be limited to receiving Formula Awards under
the Plan

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with respect to the one directorship that provides the Formula Award
offering the greatest number of Plan Shares, and will be prohibited from
receiving Formula Awards with respect to any other directorship;

(3) Availability of Plan Shares. In no event shall Shares subject to
Awards granted to Non-Employee Directors under this Section 6.04 in the
aggregate exceed the number of Plan Shares, including forfeitures,
allocated to and available for Formula Awards pursuant to Section 6.04(a)
hereof. In the event that on the date of grant of Formula Awards there is
an insufficient amount of Plan Shares in the Plan Share Reserve available
for Formula Awards to satisfy all Formula Awards to be granted on such date
pursuant to this Section 6.04, the remaining Shares available for Formula
Awards shall be allocated among the Non-Employee Directors entitled to
receive a Formula Award on such date, on a pro-rata basis, in the following
order of priority: Shares shall be allocated first to satisfy the Award of
any new Non-Employee Directors pursuant to Section 6.04(a)(1)(ii); and, to
the extent any Shares are remaining, such Shares shall then be allocated to
satisfy the subsequent Award of any Non-Employee Director pursuant to
Section 6.04(a)(2).

(c) Vesting and Forfeiture. Such Plan Share Awards to Non-Employee
Directors under this Section 6.04 shall be earned and non-forfeitable in
accordance with the provisions of Section 7.01 hereof, and shall otherwise be
subject to the provisions of the Plan.

(d) Interpretation of Formula Awards. Only Non-Employee Directors shall be
eligible to receive Formula Awards. The terms and conditions of the Formula
Awards are primarily set forth in this Section 6.04. When any other Section of
this Agreement is used in connection with this Section 6.04 to interpret the
application and operation of any Formula Award, each such other Section of this
Agreement shall be interpreted to give full accord to this Section 6.04 and any
provisions of such other Sections of this Agreement which are inconsistent to
any provision of this Section 6.04 shall be resolved in favor of, and by giving
complete accord and full deference to, the competing provision set forth in this
Section 6.04.

(e) Other Terms of Plan. Unless otherwise inapplicable, or inconsistent
with the provisions of this Section 6.04 or Section 9.02, the Formula Awards to
be granted to Non-Employee Directors hereunder shall be subject to all other
provisions of this Plan.

ARTICLE VII

EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS

7.01. Earning Plan Shares; Forfeitures.

(a) General Rules. Subject to the terms hereof, twenty percent (20%) of
the aggregate number of Plan Shares covered by each Award under the Plan shall
be earned by the Recipient as of the first anniversary of the Effective Date or
the first anniversary of the date of the grant of the Award, whichever is later
(the "Anniversary Date"); and the balance thereof shall be earned by such
Recipient at the rate of twenty percent (20%) of the aggregate number of Shares
covered by such Award as of each of the next four successive Anniversary Dates.
If the employment or service of a Recipient is terminated prior to the fifth
(5th) Anniversary Date for any reason (except as specifically provided in
subsections (b) and (c) below), the Recipient shall forfeit the right to any
Shares subject to the Award which have not theretofore been earned. No
fractional shares shall be distributed pursuant to the Plan.

(b) Exception for Terminations Due to Death and Disability. Notwithstanding
the general rule contained in Section 7.01(a), all Plan Shares subject to a Plan
Share Award held by a Recipient whose employment as an Employee or service as a
Non-Employee Director terminates due to death or Disability, shall be deemed
earned as of the Recipient's last day of employment or service with the
Corporation, the Savings Bank, any future parent of the Corporation or any
Subsidiary and shall be distributed as soon as practicable thereafter; provided,
however, that no Awards shall be distributed prior to six months from the date
of grant of the Plan Share Award.

(c) Revocation for Misconduct. Notwithstanding anything hereinafter to the
contrary, the Board may by resolution immediately revoke, rescind and terminate
any Plan Share Award, or portion thereof, previously

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awarded under the Plan, to the extent Plan Shares have not been distributed
hereunder to the Recipient, whether or not yet earned, in the case of an officer
or employee who is discharged from the employ of, or a Non-Employee Director who
is removed from service as a Non-Employee Director of, the Corporation, the
Savings Bank, any future parent of the Corporation or any Subsidiary for cause,
which, for purposes hereof, shall mean termination of employment or removal from
service for personal dishonesty, incompetence, gross negligence or willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, the conviction of a felony by a court of
competent jurisdiction, willful violation of any law, rule, or regulation (other
than traffic violations or similar offenses), or final cease-and-desist order.
Awards granted to a Non-Employee Director who is removed for cause pursuant to
the Articles of Incorporation or Bylaws of the Corporation, the Savings Bank,
the Parent or any Subsidiary shall terminate as of the effective date of such
removal.

7.02. Distribution of Dividends. Any cash dividends or stock dividends
declared in respect of each Plan Share held by the Trust will be paid by the
Trust, as soon as practicable after the Trust's receipt thereof, to the
Recipient on whose behalf such Plan Share is then held by the Trust, whether or
not such Plan Share is earned and non-forfeitable.

7.03. Distribution of Plan Shares.

(a) Timing of Distributions; General Rule. Except as provided in
Subsection (e), Plan Shares shall be distributed to the Recipient or his
Beneficiary, as the case may be, as soon as practicable after they have been
earned, provided, however, that no Plan Shares shall be distributed to the
Recipient or Beneficiary pursuant to a Plan Share Award within six months from
the later of the date on which that Plan Share Award was granted to such person
or the Effective Date. No fractional shares shall be distributed.

(b) Form of Distributions. All Plan Shares, together with any Shares
representing stock dividends, shall be distributed in the form of Common Stock.
One share of Common Stock shall be given for each Plan Share earned and
distributable. Payments representing cash dividends shall be made in cash.

(c) Withholding. The Trustee(s) may withhold from any cash payment or
Common Stock distribution made under the Plan sufficient amounts to cover any
applicable withholding and employment taxes, and if the amount of a cash payment
is insufficient, the Trustee(s) may require the Recipient or Beneficiary to pay
to the Trustee(s) the amount required to be withheld as a condition of
delivering the Plan Shares. The Trustee(s) shall pay over to the Corporation,
the Savings Bank, any future parent of the Corporation or any Subsidiary which
employs or employed, or retains or retained, such Recipient any such amount
withheld from or paid by the Recipient or Beneficiary.

(d) Restrictions on Selling of Plan Shares. Plan Share Awards may not be
sold, assigned, pledged or otherwise disposed of prior to the time that they are
earned and distributed pursuant to the terms of the Plan. Following
distribution, the Board may require the Recipient or his Beneficiary, as the
case may be, to agree not to sell or otherwise dispose of his distributed Plan
Shares except in accordance with all then applicable Federal and state
securities laws, and the Board may cause a legend to be placed on the stock
certificate(s) representing the distributed Plan Shares in order to restrict the
transfer of the distributed Plan Shares for such period of time or under such
circumstances as the Board, upon the advice of counsel, may deem appropriate.

(e) Regulatory Exceptions. No Plan Shares shall be distributed, however,
unless and until all of the requirements of all applicable law and regulations
shall have been fully complied with, including the receipt of approval of the
Plan by stockholders of the Corporation by such vote, if any, as may be required
by applicable law and regulations as determined by the Board.

7.04. Voting of Plan Shares. After a Plan Share Award has been made, the
Recipient shall be entitled to direct the Trustee(s) as to the voting of the
Plan Shares which are covered by the Plan Share Award and which have not yet
been earned and distributed to him pursuant to Section 7.03, subject to rules
and procedures adopted by the Board for this purpose. The Trustee(s) shall vote
all Plan Shares which have not yet been earned and distributed pursuant to
Section 7.03 in the same proportion for and against proposals to stockholders as
the Recipient actually votes Plan Shares which have been earned and distributed
pursuant to Section 7.03; provided, however, that the Recipient timely informs
the Trustee(s) in writing how the Recipient has actually voted or will actually
vote Plan Shares which have been earned and distributed to him.

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If the Recipient does not timely provide the Trustee(s) with such information in
writing, Plan Shares which have not yet been earned and distributed pursuant to
Section 7.03 shall not be voted by the Trustee(s). In the event a tender offer
is made for Plan Shares, the Trustee(s) shall tender Plan Shares held by it
which have not yet been earned and distributed in the same proportion in which
the Recipient actually tenders Plan Shares which have been earned and
distributed. The Trustee(s) shall vote or tender Shares held in the Plan Share
Reserve in the same proportion as it receives instructions from Recipients to
vote or tender Plan Shares which have not yet been earned and distributed
pursuant to Section 7.03.

ARTICLE VIII

TRUST

8.01. Trust. The Trustee(s) shall receive, hold, administer, invest and
make distributions and disbursements from the Trust in accordance with the
provisions of the Plan and Trust and the applicable directions, rules,
regulations, procedures and policies established by the Board pursuant to the
Plan.

8.02. Management of Trust. It is the intent of the Plan and Trust that the
Trustee(s) shall have complete authority and discretion with respect to the
arrangement, control and investment of the Trust, and that the Trustee(s) shall
invest all assets of the Trust in Common Stock to the fullest extent
practicable, except (i) to the extent that the Trustee(s) determines that the
holding of monies in cash or cash equivalents is necessary to meet the
obligations of the Trust and (ii) contributions to the Trust prior to the
Offering may be temporarily invested in such interest-bearing account or
accounts as the Trustee(s) shall determine to be appropriate. In performing the
Trustee's duties, the Trustee(s) shall have the power to do all things and
execute such instruments as may be deemed necessary or proper, including the
following powers:

(a) To invest up to one hundred percent (100%) of all Trust assets in
Common Stock without regard to any law now or hereafter in force limiting
investments for trustees or other fiduciaries. The investment authorized
herein may constitute the only investment of the Trust, and in making such
investment, the Trustee(s) is authorized to purchase Common Stock from the
Corporation or from any other source, and such Common Stock so purchased
may be outstanding, newly issued, or treasury shares;

(b) To invest any Trust assets not otherwise invested in accordance
with (a) above, in such deposit account, and certificates of deposit
(including those issued by the Savings Bank), obligations of the United
States Government or its agencies or such other investments as shall be
considered the equivalent of cash;

(d) To cause stocks, bonds or other securities to be registered in the
name of a nominee, without the addition of words indicating that such
security is an asset of the Trust (but accurate records shall be maintained
showing that such security is an asset of the Trust);

(e) To hold cash without interest in such amounts as may in the
opinion of the Trustee(s) be reasonable for the proper operation of the
Plan and Trust;

(f) To employ brokers, agents, custodians, consultants and
accountants;

(g) To hire legal counsel to render advice with respect to their
rights, duties and obligations hereunder, and such other legal services or
representation as they may deem desirable;

(h) To hold funds and securities representing the amounts to be
distributed to a Recipient or his Beneficiary as a consequence of a dispute
as to the disposition thereof, whether in a segregated account or held in
common with other assets of the Trust.

Notwithstanding anything herein contained to the contrary, the Trustee(s)
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of court for the exercise of any power
herein contained, or give bond.

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8.03. Records and Accounts. The Trustee(s) shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Board.

8.04 Earnings. All earnings, gains and losses with respect to the Trust
assets shall be allocated in accordance with a reasonable procedure adopted by
the Board, to bookkeeping accounts for Recipients or to the general account of
the Trust, depending on the nature and allocation of the assets generating such
earnings, gains and losses. In particular, any earnings on cash dividends
received with respect to shares of Common Stock shall be allocated to accounts
for Recipients, except to the extent that such cash dividends are distributed to
Recipients, if such shares are the subject of outstanding Plan Share Awards, or,
otherwise to the Plan Share Reserve.

8.05. Expenses. All costs and expenses incurred in the operation and
administration of the Plan shall be borne by the Corporation.

8.06. Indemnification. Subject to the requirements of applicable laws and
regulations, the Corporation shall indemnify, defend and hold the Trustee(s)
harmless against all claims, expenses and liabilities arising out of or related
to the exercise of the Trustee's powers and the discharge of their duties
hereunder, unless the same shall be due to their gross negligence or willful
misconduct.

ARTICLE IX

MISCELLANEOUS

9.01. Recapitalization, Merger, Consolidation and Similar Transactions.
The aggregate number of shares of Common Stock available for issuance under
this Plan and the number of shares to which any Award relates shall be
proportionately adjusted for any increase or decrease in the total number of
outstanding shares of Common Stock issued subsequent to the Effective Date of
this Plan resulting from a split, subdivision or consolidation of shares or any
other capital adjustment, the payment of a stock dividend, or other increase or
decrease in such shares effected without receipt or payment of consideration by
the Corporation. If, upon a merger, consolidation, reorganization, liquidation,
recapitalization or the like of the Corporation, the shares of the Corporation's
Common Stock shall be exchanged for other securities of the Corporation or of
another corporation, each recipient of an Award shall be entitled, subject to
the conditions herein stated, to purchase or acquire such number of shares of
Common Stock or amount of other securities of the Corporation or such other
corporation as were exchangeable for the number of shares of Common Stock of the
Corporation which such persons would have been entitled to purchase or acquire
except for such action. Awards.

9.02. Amendment and Termination of Plan. The Board may, by resolution, at
any time amend, suspend or terminate the Plan (including amendments which may
result in the merger of the Plan or the Trust with and into other plans or
trusts of the Corporation or successor thereto), subject to any required
stockholder approval or any stockholder approval which the Board may deem to be
advisable for any reason, such as for the purpose of obtaining or retaining any
statutory or regulatory benefits under tax, securities or other laws or
satisfying any applicable stock exchange listing requirements; provided,
however, that, except as provided in Section 7.01(c), no such action by the
Board shall alter or impair any rights previously granted to Recipients under
the Plan without the consent of such affected Recipient (or their successors or
permitted assignees); provided further that, except as otherwise provided
herein, the Plan may not be amended without approval of the Corporation's
stockholders if the amendment would materially increase the benefits accruing to
participants under the Plan, materially increase the number of Plan Shares that
may be awarded under the Plan, or materially modify the requirements as to
eligibility for participation in the Plan. The power to amend or terminate the
Plan shall include the power to direct the Trustee(s) to return to the
Corporation all or any part of the assets of the Trust, including shares of
Common Stock held in the Plan Share Reserve, as well as shares of Common Stock
and other assets subject to Plan Share Awards not yet earned by the Recipients
to whom they are allocated (which shares of Common Stock shall be held by the
Corporation and distributed to the Recipient when earned). Notwithstanding the
foregoing, the provisions of Section 6.04 hereof may not be amended more often
than once during any six (6) month period, other than to comport with changes in
the

B-9
<PAGE> 52

Code, the Employment Retirement Income Security Act of 1974, as amended, or the
rules and regulations thereunder.

9.03. Nontransferable. Plan Share Awards and rights to Plan Shares shall
not be transferable by a Recipient or a Beneficiary. During the lifetime of the
Recipient, Plan Shares may only be earned by and paid to the Recipient who was
notified in writing of the Award pursuant to Section 6.02. Upon the death of the
Recipient, Plan Shares shall be transferred to the Recipient's Beneficiary by
will or by the applicable laws of intestacy, descent and distribution. No
Recipient or Beneficiary shall have any right in or claim to any assets of the
Plan or Trust, nor shall the Corporation, the Savings Bank, any future parent of
the Corporation or any Subsidiary be subject to any claim for benefits
hereunder.

9.04. Employment Rights. Neither the Plan nor any grant of a Plan Share
Award or Plan Shares hereunder nor any action taken by the Trustee(s), the
Committee or the Board in connection with the Plan shall create any right on the
part of any Employee to continue in the employ of the Corporation, the Savings
Bank, any future parent of the Corporation or any Subsidiary, or on the part of
any Non-Employee Director to serve on the board of directors of the Corporation.

9.05. Voting and Dividend Rights. No Recipient shall have any voting or
dividend rights or other rights of a stockholder in respect of any Plan Shares
covered by a Plan Share Award, except as expressly provided in Sections 7.02 and
7.04 above, prior to the time said Plan Shares are actually earned and
distributed to him.

9.06. Governing Law. The Plan and Trust shall be governed by the laws of
the Commonwealth of Pennsylvania.

9.07. Effective Date. The Plan shall be effective as of the Effective
Date, and Awards may be granted hereunder as of or after the Effective Date and
as long as the Plan remains in effect.

9.08. Term of Plan. The Plan shall remain in effect until the earlier of
(1) ten (10) years from the Effective Date, (2) termination by the Board, or (3)
the distribution to Recipients and Beneficiaries of all assets of the Trust.
Termination of the Plan shall not effect any Plan Share Awards previously
granted, and such Awards shall remain valid and in effect until they have been
earned and paid, or by their terms expire or are forfeited.

9.09. Tax Status of Trust. It is intended that the trust established
hereby be treated as a Grantor Trust of the Corporation under the provisions of
Section 671 et seq. of the Code, as the same may be amended from time to time.

9.10 Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to any Award granted under the Plan unless the issuance and delivery of
such Shares shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law and the requirements
of any stock exchange upon which the Shares may then be listed. The inability of
the Corporation to obtain from any regulatory body or authority deemed by the
Corporation's counsel to be necessary to the lawful issuance and sale of any
Shares hereunder shall relieve the Corporation of any liability in respect of
the non-issuance or sale of such Shares. As a condition to the exercise of an
Award, the Corporation may require the person exercising the Award to make such
representations and warranties as may be necessary to assure the availability of
an exemption from the registration requirements of federal or state securities
law.

9.11 Plan Compliance with Rule 16b-3. With respect to persons subject to
the liability and reporting requirements of Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors rules under the Exchange Act. This
Agreement and the Plan are to be interpreted in a manner which is consistent
with the requirements of Rule 16b-3 or its successor rules and the Exchange Act.
In the event of any conflict in the interpretation of this Agreement and the
Plan and Rule 16b-3, as amended, the terms of Rule 16b-3 shall control. To the
extent any provision of this Agreement and the Plan or action by the Committee
or Board fails so to comply with Rule 16b-3, as amended, shall be deemed null
and void, to the extent permitted by law.

B-10
<PAGE> 53

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and the corporate seal to be affixed
and duly attested, and the initial Trustee(s) of the Trust established pursuant
hereto have duly and validly executed this Agreement, all on this day of
, 1997.

ATTEST: PRESTIGE BANCORP, INC.

___________________________________ By: _______________________________

TRUSTEE(S):

------------------------------------
John A. Stiver

------------------------------------
Robert S. Zyla

B-11
<PAGE> 54
<TABLE>
<S> <C>
REVOCABLE PROXY REVOCABLE PROXY

PRESTIGE BANCORP, INC. (THE "COMPANY") ANNUAL MEETING TO KNOW ALL PERSONS BY THESE PRESENTS that the undersigned
BE HELD ON APRIL 23, 1997 AT 10:30 A.M. LOCAL TIME FOR THE shareholder of Prestige Bancorp, Inc. (the "Company"), hereby
SHAREHOLDERS OF THE COMPANY AS OF 03/20/97. appoints Robert S. Zyla and Patricia A. White, or any one of
them, true and lawful attorneys with power of substitution of
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS each, to vote all shares of the Company which the undersigned
OF THE COMPANY. EACH OF THE FOLLOWING PROPOSALS HAS BEEN would be entitled to vote if personally present at the Annual
PUT FORTH BY THE BOARD OF DIRECTORS OF THE COMPANY. Meeting of Shareholders of the Company to be held on April 23,
1997, at The Bradley House, 5239 Brownsville Road, Baldwin
Borough, Pennsylvania, at 10:30 A.M. (local time) and at any
adjournment thereof.

The undersigned hereby revokes any proxy heretofore given with
respect to such shares. Discretionary authority is hereby
DIRECTORS conferred as to all other matters as may properly come before
PROPOSAL RECOMMEND the Annual Meeting.
- -------- ---------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY. The attorneys named will vote the shares
represented by this proxy in accordance with the choices made
on this card. IF NO CHOICE IS INDICATED FOR A PROPOSAL, THIS
PROXY WILL BE VOTED AFFIRMATIVELY ON SUCH PROPOSAL.

FOR ALL Please indicate your proposal
Proposal I - Election of Directors for Terms Expiring 2000. WITHHOLD EXCEPT AS selection by firmly placing an
Nominees Robert S. Zyla and Charles P. McCullough FOR FOR AUTHORITY MARKED "X" in the appropriate box [X]
BELOW with blue or black ink only.
[ ] [ ] [ ]

Withhold authority for: _______________________________________

Proposal II - Adoption of the Stock Option Plan FOR FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Proposal III - Adoption of the Recognition and Retention
Plan and Trust FOR FOR AGAINST ABSTAIN
[ ] [ ] [ ]

Proposal IV - Ratification of Appointment of Auditors FOR FOR AGAINST ABSTAIN
[ ] [ ] [ ]

Proposal V - Adjournment of Annual Meeting - If Required FOR FOR AGAINST ABSTAIN
[ ] [ ] [ ]

[Full Name of Shareholder]

[Address of Shareholder]

PLEASE SIGN AND RETURN PROMPTLY IN THE ENCLOSED ADDRESSED
ENVELOPE. Please sign EXACTLY as your name(s) appears above.
When signing as attorney, executor, administrator, guardian,
trustee, custodian, etc. please give your full title as such.
If a corporation or partnership, please sign the full name by
an authorized officer or partner. If stock is owned jointly,
all parties must sign.

The undersigned acknowledges that (s)he has received a Proxy
Statement and Annual Report of the Company prior to signing
this Proxy.
__/__/__
-------------------------------------------------
Signature Date
Address of Company:
-------------------------------------------------
PRESTIGE BANCORP, INC. Print Name
710 OLD CLAIRTON ROAD __/__/__
PLEASANT HILLS, PA 15236 -------------------------------------------------
Signature Date

-------------------------------------------------
Print Name
</TABLE>