PRUDENTIAL SAVINGS ASSOCIATION

                           DEFERRED COMPENSATION PLAN



                           EFFECTIVE: JANUARY 1, 1986



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                           DEFERRED COMPENSATION PLAN



Prudential has implemented a voluntary deferred compensation plan which will

allow directors and certain executive employees to defer part of their income at

their election. The purpose of the program is to allow directors and select

executive employees who find themselves in the higher tax brackets to defer

income until a future date when their tax burden may not be as great. This

program will be administered by a Deferred Compensation Committee approved by

the Board of Directors.



Advantage and Disadvantages to Employees and Directors



For an employee or director the deferred compensation plan offers the following

advantages:



      1.    It defers income and thus tax on such income until the Participant

            is in a potentially lower tax bracket.



      2.    It allows the amount deferred to increase through appreciation on a

            tax deferred basis.



An employee or director who defers income, however, is treated as a general

creditor of his employer and his deferred compensation is co-mingled with other

assets of Prudential. Payment by Prudential of deferred compensation is not

guaranteed by the FSLIC as are savings accounts. This general creditor status is

viewed as a significant disadvantage of deferred compensation plan.



Consideration for an Employee or Director Contemplating a Deferred Compensation

Arrangement



      1.    Employee should be in a strong financial position with current

            income substantially in excess of current expense.



      2.    Employee's current income tax bracket must be high with the

            prospects of staying high only to retirement. At retirement the

            employee's tax bracket should potentially decrease if the deferred

            compensation approach is to be entirely effective.



      3.    The savings produced by having payments taxed at a lower bracket at

            payout should exceed the after-tax income that could have been

            earned by the employee if he had received the compensation, paid tax

            on it and invested it.



      4.    The employer should be in sound financial condition with the

            likelihood of remaining so throughout both the accumulation period

            and the payout period.



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Description of the Agreement



1.    Eligibility - employees eligible for participation in this program are

directors and select executive employees as determined by the Board of

Directors.



2.    Deferral Amount - an employee may defer an amount of his compensation if

he does so no later than the December 31st preceding the year in which the

compensation is earned.



Example: An employee is currently earning $40,000 per year or $3,333. per month.

         He would like to defer $500. a month and receive taxable income of

         $2,833. per month beginning on January 1, 1987. To do so he must

         make his election to defer $500. no later than December 31, 1986.



Investment of Deferred Income



Prudential may keep the deferred amounts in cash or invested in mutual funds,

stocks, bonds, securities or any other asset (including life insurance) as

selected by the Deferred Compensation Committee. If the deferred amounts are

kept in cash, interest will be credited at a rate equal to one (1%) percent less

than the earnings on Prudential's mortgage portfolio as determined on March

31st, June 30th, September 30th and December 31st of each year.



The employee assumes all investment risks. There is no guarantee of interest and

principal.



Payment of Deferred Compensation Balance



Payment from the Deferred Compensation Agreement will generally be in a lump sum

or in six or twelve annual installments as the employee or directors elect.

Payments will begin no later than 30 days following the termination of

employment or the attaining of seventy (70) years of age as the employee or

director. During the payout period the funds still are subject to investment

risk. Other payout arrangements may be made at the Committee's discretion.

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