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Agreement and General Release

AGREEMENT AND GENERAL RELEASE

This AGREEMENT AND GENERAL RELEASE (this Agreement) is made as of August 30, 2006 and entered into by and among PSB BANCORP, INC., a Pennsylvania corporation (PSB), FIRST PENN BANK, a Pennsylvania-chartered bank and a wholly-owned subsidiary of PSB (First Penn and, together with PSB, Employer), and VINCENT J. FUMO (Executive).

WHEREAS, PSB desires to enter into that certain Agreement and Plan of Merger (the Merger Agreement) dated as of August 30, 2006 with Conestoga Bancorp, Inc., a Pennsylvania corporation (Conestoga), Conestoga Bank, a Pennsylvania bank and a wholly-owned subsidiary of Conestoga, and FP Acquisition Corp., a Pennsylvania corporation and a wholly-owned subsidiary of Conestoga (Merger Sub), pursuant to which Merger Sub will merge with and into PSB with PSB being the surviving corporation (the Merger);

WHEREAS, Executive and Employer are parties to that certain Agreement dated as of April 1, 2003 and Executive and PSB are parties to that certain Supplemental Executive Retirement Plan Agreement dated as of July 1, 2004, as amended, (collectively, the Existing Employment Arrangements);

WHEREAS, Conestoga requires, as an essential condition and inducement to its execution and delivery to PSB of the Merger Agreement, that Executive execute and deliver to PSB and First Penn this Agreement; and

WHEREAS, Executive and Employer expressly acknowledge that Conestoga, Merger Sub and their respective subsidiaries and affiliates are intended third-party beneficiaries of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, Employer and Executive agree as follows:

1. Resignation. Executive hereby resigns from his position as a member of the Board of Directors of PSB and from all positions that he holds or has ever held with Employer or any of its subsidiaries or with any other entity with respect to which Employer has requested Executive to perform services, in each case, effective as of the Effective Time (as defined in the Merger Agreement). Upon the effectiveness of such resignation, Employers employment of Executive shall conclude permanently and irrevocably.

2. Amendment and Restatement of Agreements Subject to Code Section 409A. As of the Effective Time or, if earlier, the latest date permitted for amendment of plans to conform to the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the Code), the Existing Employment Arrangements are hereby amended and restated in their entirety and all terms thereof are superseded by the terms set forth herein effective as of January 1, 2005. In accordance with the preceding sentence and pursuant to Proposed Treasury Regulation 1.409A-3(h)(2)(viii)(B), this Agreement amends the Existing Employment

Arrangements to permit termination of the arrangements and acceleration of the time and form of payment within 30 days preceding or the 12 months following a change of control (as defined in Proposed Treasury Regulations 1.409A-2(g)(4)(i)).

3. Termination of Agreements and Plans. As of the Effective Time, except for this Agreement or as otherwise expressly provided in this Agreement: (a) all agreements between Executive, on the one hand, and Employer or one of its subsidiaries or affiliates, on the other hand, shall be terminated and of no further force or effect, and Employer and its subsidiaries and affiliates shall have no continuing obligation to make any payment or to provide any benefit to Executive under any such agreement; and (b) Executives right to participate or receive any payments or other benefits under any employee benefit plan or program maintained by Employer or one of its subsidiaries or affiliates shall immediately cease or be cancelled, and Employer and its subsidiaries and affiliates shall have no continuing obligation to make any payment or to provide any benefit to Executive under any such plan or program. Notwithstanding the foregoing, Executive shall remain obligated to repay any amounts borrowed from Employer or its subsidiaries and otherwise comply with all of his obligations arising under any note, mortgage or other agreement relating to the same, and PSB shall remain obligated to honor the terms of any option to purchase PSB common shares previously awarded to Executive and any restricted PSB common shares previously awarded to Executive. Furthermore, nothing in this Section 3 or elsewhere in this Agreement shall be construed to preclude Executive from receiving any benefit to which he is entitled under an employee pension benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (ERISA) that is qualified under Code Section 401(a). Executive acknowledges that, to the extent the plan sponsor intended to amend any such employee pension benefit plans to freeze benefit accruals and eligibility thereunder, such plans have been properly amended, and subsequently administered (to the extent necessary to effect any such amendment), in compliance with applicable law and such amendments have remained in effect at all times thereafter. As part of Executives release of claims in Section 14 of this Agreement, Executive releases and agrees not to bring any claims against either the Released Parties (as defined therein) or any fiduciary with respect to such plans alleging that any such plan was not so amended (and/or subsequently administered) in compliance with applicable law or that such amendments failed to remain in effect at any time thereafter. Nothing in this Section 3 or elsewhere in this Agreement shall be construed to limit Executives rights under ERISA Section 602 and Code Section 4980B(f).

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