SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT

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:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a 6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant toss.240.14a-11(c) orss.240.14a-12

Reserve Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)

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

Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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January 28, 2003

Dear Fellow Stockholder:

On behalf of the Board of Directors and management of Reserve Bancorp,
Inc. (the "Company"), we cordially invite you to attend our first Annual Meeting
of Stockholders (the "Meeting") to be held at the offices of Mt. Troy Bank, 2000
Mt. Troy Road, Pittsburgh, Pennsylvania, on April 8, 2003, at 11:00 a.m. The
attached Notice of Annual Meeting of Stockholders and Proxy Statement describe
the formal business to be transacted at the Meeting.

The Board of Directors of the Company has determined that the matters
to be considered at the Meeting, described in the accompanying Notice of Annual
Meeting and Proxy Statement, are in the best interest of the Company and its
stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID RETURN
ENVELOPE AS QUICKLY AS POSSIBLE. This will not prevent you from voting in person
at the Meeting, but will assure that your vote is counted if you are unable to
attend the Meeting. Your vote is very important.

Sincerely,

/s/Richard A. Sinewe

Richard A. Sinewe
President

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RESERVE BANCORP, INC.
2000 MT. TROY ROAD
PITTSBURGH, PENNSYLVANIA 15212
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON April 8, 2003
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of Reserve Bancorp, Inc. (the "Company") will be held at the offices of Mt. Troy
Bank, 2000 Mt. Troy Road, Pittsburgh, Pennsylvania, on Tuesday, April 8, 2003,
at 11:00 a.m. The Meeting is for the purpose of considering and acting upon the
following matters:

1. The election of two directors of Reserve Bancorp, Inc.;

2. The ratification of the Reserve Bancorp, Inc. 2003 Stock Option Plan;

3. The ratification of the Mt. Troy Bank 2003 Restricted Stock Plan; and

4. The ratification of the appointment of Stokes & Hinds, LLC as the
Company's independent auditor for the fiscal year ending September 30,
2003.

The transaction of such other business as may properly come before the
Meeting or any adjournments thereof may also be acted upon. The Board of
Directors is not aware of any other business to come before the Meeting.

Action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Pursuant to the
Company's Bylaws, the Board of Directors has fixed the close of business on
January 17, 2003, as the record date for determination of the stockholders
entitled to vote at the Meeting and any adjournments thereof.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY
REVOKE YOUR PROXY BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN
REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. IF YOU ARE PRESENT AT
THE MEETING YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT
BEFORE THE MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT
REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR
RECORD HOLDER TO VOTE IN PERSON AT THE MEETING.

BY ORDER OF THE BOARD OF DIRECTORS

/s/Robert B. Shust

Robert B. Shust
Secretary

Pittsburgh, Pennsylvania
January 28, 2003

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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
RESERVE BANCORP, INC.
2000 MT. TROY ROAD
PITTSBURGH, PENNSYLVANIA 15212
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ANNUAL MEETING OF STOCKHOLDERS
April 8, 2003
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Reserve Bancorp, Inc. (the "Company") to
be used at the Annual Meeting of Stockholders of the Company which will be held
at the offices of Mt. Troy Bank, 2000 Mt. Troy Road, Pittsburgh, Pennsylvania,
on April 8, 2003, at 11:00 a.m. (the "Meeting"). The accompanying Notice of
Annual Meeting of Stockholders and this Proxy Statement are being first mailed
to stockholders on or about January 28, 2003. The Company is the parent company
of Mt. Troy Bank (the "Bank"). The Company was formed as a corporation chartered
under the laws of Pennsylvania at the direction of the Bank to acquire all of
the outstanding stock of the Bank issued in connection with the completion of
the Bank's mutual-to-stock conversion on April 5, 2002.

At the Meeting, stockholders will consider and vote upon (i) the
election of two directors of the Company, (ii) the ratification of the Reserve
Bancorp, Inc. 2003 Stock Option Plan (the "Option Plan"), (iii) the ratification
of the Mt. Troy Bank 2003 Restricted Stock Plan (the "RSP" or the "Restricted
Stock Plan") and (iv) the ratification of the appointment of Stokes & Hinds, LLC
as the Company's independent auditor for the fiscal year ending September 30,
2003.

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 proxyholder the 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.

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VOTING AND REVOCABILITY OF PROXIES
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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 will be voted as
specified thereon. If no specification is made, signed proxies will be voted
"FOR" the nominees for director as set forth herein, "FOR" the ratification of
the Option Plan, "FOR" the ratification of the Restricted Stock Plan, and "FOR"
the ratification of Stokes & Hinds, LLC as the Company's independent auditor for
the fiscal year ending September 30, 2003. The proxy confers discretionary
authority on the persons named thereon 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 with respect to matters incident to the conduct of the
Meeting.

-1-

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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
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Officers, directors and employees of the Company have an interest in a
matter being presented for shareholder ratification. Upon shareholder
ratification of the Option Plan and the Restricted Stock Plan, officers,
directors and employees of the Company may be granted stock options or
restricted stock under the Option Plan and the Restricted Stock Plan. The
ratification of the Option Plan and the Restricted Stock Plan are being
presented as Proposal II and Proposal III, respectively.

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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on January 17, 2003
(the "Record Date"), are entitled to one vote for each share of Common Stock
then held. As of the Record Date, the Company had 757,500 shares of Common Stock
issued and outstanding.

The articles of incorporation of the Company ("Articles of
Incorporation") provide that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to the definition in the Articles of Incorporation and includes shares
beneficially owned by such person or any of his or her affiliates (as such terms
are defined in the Articles of Incorporation), or which such person or any of
his or her affiliates has the right to acquire upon the exercise of conversion
rights or options and shares as to which such person or any of his or her
affiliates or associates have or share investment or voting power, but neither
any employee stock ownership or similar plan of the Company or any subsidiary,
nor any trustee with respect thereto or any affiliate of such trustee (solely by
reason of such capacity of such trustee), shall be deemed, for purposes of the
Articles of Incorporation, to beneficially own any Common Stock held under any
such plan.

The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. With respect to any matter, broker non-votes (i.e., shares for which a
broker indicates on the proxy that it does not have discretionary authority as
to such shares to vote on such matter) will be considered present for purposes
of determining whether a quorum is present. 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 (Proposal I), the proxy provided by the
Board of Directors allows a stockholder to vote for the election of the nominees
proposed by the Board of Directors, or to withhold authority to vote for the
nominees being proposed. Under the Company's bylaws, directors are elected by a
plurality of votes cast, without regard to either (i) broker non-votes or (ii)
proxies as to which authority to vote for the nominees being proposed is
withheld.

With respect to Proposal II, Ratification of the Option Plan, and
Proposal III, Ratification of the Restricted Stock Plan, such matters shall be
determined by an affirmative vote of a majority of total votes cast on the
matter. Proxies marked "ABSTAIN" will have the same impact as a vote "AGAINST"
such matters. Broker non-votes will have no impact on the outcome of the vote on
such matters.

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Concerning all other matters that may properly come before the Meeting,
including the ratification of the independent auditors (Proposal IV), by
checking the appropriate box, a shareholder 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 such matters shall be determined by a majority of
votes cast affirmatively or negatively without regard to (i) broker non-votes or
(ii) proxies marked "ABSTAIN" as to that matter.

Security Ownership of Certain Beneficial Owners

Persons and groups owning in excess of 5% of the outstanding shares of
Common Stock are required to file reports regarding such ownership pursuant to
the Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the Record Date, persons or groups who own more than 5%
of the Common Stock and the ownership of all executive officers and Directors of
the Company as a group. Other than as noted below, management knows of no person
or group that owns more than 5% of the outstanding shares of Common Stock at the
Record Date.

Percent of Shares
Amount and Nature of of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
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Mt. Troy Bank Employee Stock Ownership Plan Trust
(the "ESOP") 59,000(1) 7.8%
2000 Mt. Troy Road
Pittsburgh, Pennsylvania 15212

All directors and executive officers of the
Company as a group (6 persons) 107,373(2) 14.2%

_____________________________________
(1) These shares are held in a suspense account and are allocated among
participants annually on the basis of compensation as the ESOP debt is
repaid. As of the Record Date, 5,900 shares have been allocated to ESOP
participants and 53,100 shares remain unallocated.
(2) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership. Includes 59,000
shares held by the ESOP. The Board of Directors appointed Directors Shust
and Slais to serve as the ESOP Trustees and as members of the ESOP Plan
Committee. The ESOP Plan Committee directs the vote of all unallocated
shares and shares allocated to participants if timely voting directions are
not received for such shares.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of the Common Stock, to file reports of ownership and changes in
ownership of the Common Stock with the Securities and Exchange Commission and to
provide copies of those reports to the Company. The Company is not aware of any
beneficial owner, as defined under Section 16(a), of more than ten percent of
its Common Stock. To the best of the Company's knowledge, all Section 16(a)
filing requirements applicable to its officers and directors were complied with
during the 2002 fiscal year.

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PROPOSAL I - ELECTION OF DIRECTORS
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The Articles of Incorporation require that the Board of Directors be
divided into four classes, as nearly equal in number as possible, each class to
serve for a four-year period, with approximately one-

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fourth of the directors elected each year. The Board of Directors currently
consists of five members. Two directors will be elected at the Meeting, both to
serve for a four term and until their successors have been elected and
qualified.

Robert B. Shust and Timothy Schneider have been nominated by the Board
of Directors to serve as directors. Both nominees are currently members of the
Board of Directors. It is intended that proxies solicited by the Board of
Directors will, unless otherwise specified, be voted for the election of the
named nominees. If either of the nominees is unable to serve, the shares
represented by all valid proxies will be voted for the election of such
substitutes as the Board of Directors may recommend or the size of the Board may
be reduced to eliminate the vacancy. At this time, the Board of Directors knows
of no reason why either of the nominees might be unavailable to serve.

The following table sets forth the names, ages, terms of, length of
board service and the number and percentage of shares of Common Stock
beneficially owned by both nominees and for each other director of the Company
who will continue to serve as a director after the Meeting.

Shares of
Age at Year First Current Common Stock Percent
September 30, Elected or Term to Beneficially of
Name 2002 Appointed(1) Expire Owned(2) Class
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Board Nominees for Term to Expire in 2006
Robert B. Shust 64 1992 2002(3) 13,000 1.7%
Timothy Schneider 42 2002 2002 500 *

Directors Continuing in Office
David P. Butler 64 1975 2005 14,230 1.9%
Louis J. Slais 82 1976 2003(3) 500 *
Richard A. Sinewe 62 1996 2004 15,000 2.0%

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* Less than 1%.
(1) Refers to the year the individual first became a director of the Bank. All
directors of the Bank in December 2001 became directors of the Company at
that time.
(2) Beneficial ownership as of the Record Date. Includes shares of Common Stock
held directly as well as by spouses or minor children, in trust, and other
indirect ownership.
(3) Excludes 59,000 shares of Common Stock held under the ESOP over which such
individual, as an ESOP Trustee, exercises voting power.

Biographical Information

Directors and Executive Officers of the Company. Set forth below is the
business experience for the past five years of each of the directors, nominees
and executive officers of the Company.

David P. Butler has been a director since 1975 and has served as
Chairman since 1994. He was a senior engineer with Westinghouse Electric Corp.
until his retirement in 1997.

Louis J. Slais has been a director since 1976 and serves as Vice
Chairman. He is retired. Prior to his retirement, Mr. Slais was the president of
the Pittsburgh Brewing Company.

-4-

Richard A. Sinewe has been President of the Bank since 1994 and
President of the Company since its inception. He has served as a director since
1996. Mr. Sinewe has been employed by the Bank since 1989.

Robert B. Shust has been a director since 1992 and serves as Secretary
and Vice Chairman. He is an attorney with the law firm of Tener, Van Kirk, Wolf
& Moore in Pittsburgh, Pennsylvania.

Timothy Schneider has been a director since 2002. He is a certified
public accountant and a partner with the accounting firm of Henry Rossi & Co.

Robert B. Kastan has been the Treasurer/Controller of the Bank since
1997 and has held the same office for the Company since its inception. He has
been employed by the Bank since 1995.

Meetings and Committees of the Board of Directors

The Board of Directors conducts its business through meetings of the
board and through activities of its committees. During the year ended September
30, 2002, the Board of Directors of the Bank held twenty-two regular meetings
and two special meetings, and the Board of Directors of the Company held three
meetings. No director attended fewer than 75% of the total meetings of the Board
of Directors and the committees on which he served during the year ended
September 30, 2002.

Nominating Committee. The entire Board of Directors serves as a
Nominating Committee to select persons to be nominated to serve as directors of
the Company and met one time in such capacity during the year ended September
30, 2002. The Nominating Committee is not required to consider nominees
recommended by stockholders of the Company.

Personnel Committee. The Personnel Committee is responsible for
performing the function of a compensation committee. The Personnel Committee of
the Bank's Board of Directors consists of Directors Butler, Shust and Slais. The
Personnel Committee met one time during the year ended September 30, 2002.

Audit Committee. The Audit Committee consists of Directors Schneider
and Butler. All members of the Audit Committee are independent under the rules
of the Nasdaq stock market. The Audit Committee was formed during the year ended
September 30, 2002. The Board of Directors as a whole has adopted a written
charter for the Audit Committee, and a copy of the charter is attached as
Appendix A to this proxy statement. The Audit Committee generally meets
quarterly and meets with the Company's independent auditor to review the results
of the annual audit and other related matters. The Audit Committee met one time
during the year ended September 30, 2002.

Report of the Audit Committee. For the fiscal year ended September 30,
2002, the Audit Committee: (i) reviewed and discussed the Company's audited
financial statements with management, (ii) discussed with the Company's
independent auditor, Stokes & Hinds, LLC, all matters required to be discussed
under Statement on Auditing Standards No. 61, and (iii) received from Stokes &
Hinds, LLC disclosures regarding Stokes & Hinds, LLC's independence as required
by Independence Standards Board Standard No. 1 and discussed with Stokes &
Hinds, LLC its independence. Based on the foregoing review and discussions, the
Audit Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended September 30, 2002.

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Audit Committee:
Timothy Schneider
David P. Butler

Audit Fees. For the year ended September 30, 2002, the Company paid
$31,293 for professional services rendered by Stokes & Hinds, LLC in connection
with the audit of the annual financial statements and review of the quarterly
financial statements.

Financial Information Systems Design and Implementation Fees. There
were no fees billed by Stokes & Hinds, LLC for professional services rendered
for information technology services relating to financial information systems
design and implementation for the fiscal year ended September 30, 2002.

All Other Fees. Fees paid by the Company to Stokes & Hinds, LLC for
services rendered to the Company, other than the services described above under
"Audit Fees," for the fiscal year ended September 30, 2002 included $3,600 for
tax preparation services and $32,041 for services in connection with the
Company's stock offering completed in April 2002.

The Audit Committee has determined that the provision of non-audit
services is compatible with maintaining the principal accountant's independence.

Certain Relationships and Related Transactions

No directors, officers or their immediate family members were engaged
in transactions with the Bank or any subsidiary involving more than $60,000
(other than through a loan) during the two years ended September 30, 2002.
Furthermore, the Bank had no "interlocking" relationships in which (1) any
officer is a member of the board of directors of another entity with an officer
who is a member of the Bank's Board of Directors, or where (2) any officer is a
member of the compensation committee of another entity, one of whose officers is
a member of the Bank's Board of Directors.

The Bank, like many financial institutions, has followed the policy of
offering residential mortgage loans for the financing of personal residences and
consumer loans to its officers, directors and employees. Loans are made in the
ordinary course of business and are also made on substantially the same terms
and conditions, other than a 1% discount on the interest rate paid while the
person remains an employee, as those of comparable transactions prevailing at
the time with other persons, and do not include more than the normal risk of
collectibility or present other unfavorable features. As of September 30, 2002,
the aggregate principal balance of loans outstanding to all directors and
officers was approximately $320,000.

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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Compensation of Directors

Board Fees. During the year ended September 30, 2002, each director was
paid a monthly fee of $800. The Chairman and Secretary receive additional yearly
fees of $1,000 and $800, respectively. Directors do not receive compensation for
attending committee meetings. The total fees paid to the directors for the year
ended September 30, 2002 were approximately $46,300, not including director
bonus payments of $11,000 in the aggregate. Directors who also serve as
employees of the Bank do not receive compensation as board members.

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Director Retirement Program ("DRP"). The Bank has a DRP which provides
retirement benefits to the Bank's directors based upon the number of years of
service to the Board and after they attain the age of 65. Upon retirement, a
director would receive a monthly payment for a period of time or until death. In
the event there is a change in control, all directors would be entitled to
receive benefits as though retirement occurred on the day prior to the change of
control date.

Stock Awards. Each non-employee director will be awarded options to
purchase shares of Common Stock upon stockholder ratification of the Option
Plan, at an exercise price equal to the fair market value of the Common Stock on
the date of stockholder ratification. In addition, each non-employee director
will be awarded shares of restricted stock upon stockholder ratification of the
Restricted Stock Plan. Ratification of these plans is being presented in this
Proxy Statement as Proposal II and Proposal III.

Executive Compensation

The Company has no full time employees and relies on the employees of
the Bank for the limited services required by the Company. All compensation paid
to officers of the Company is paid by the Bank. The following table sets forth
the cash and non-cash compensation awarded to or earned by the President of the
Bank and the Company.

Annual Compensation
-----------------------------------
Name and Fiscal Other Annual All Other
Principal Position Year Salary Bonus Compensation(1) Compensation(2)
- ------------------ ---- ------ ----- --------------- ---------------

Richard A. Sinewe, President 2002 $85,000 $3,600 $1,800 $24,219
2001 80,000 3,300 1,800 6,677
2000 75,744 3,300 1,800 6,244

__________________
(1) Consists of payment in lieu of health care benefit.
(2) For 2002, includes the Bank's contribution under 401(k) Plan of $2,567 and
1,685 shares of Common Stock allocated under the ESOP with a market value
based on the last reported sales price as of September 30, 2002 of $12.85
per share.

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PROPOSAL II - RATIFICATION OF THE OPTION PLAN
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General

The Company's Board of Directors has adopted the Option Plan. The
Option Plan is subject to ratification by the Company's stockholders. Pursuant
to the Option Plan, up to 75,750 shares of Common Stock (equal to 10% of total
shares of Common Stock currently outstanding), are to be reserved under the
Company's authorized but unissued shares for issuance by the Company upon
exercise of stock options to be granted to officers, directors, employees, and
other persons from time to time. The purpose of the Option Plan is to attract
and retain qualified personnel for positions of substantial responsibility and
to provide additional incentive to certain officers, directors, employees and
other persons to promote the success of the business of the Company and the
Bank. The Option Plan, which shall become effective upon the date of stockholder
ratification (the "Plan Effective Date"), provides for a term of ten years,
after which time no awards may be made. The following summary of the material
features of the Option Plan

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is qualified in its entirety by reference to the complete provisions of the
Option Plan which is attached hereto as Appendix B.

The Option Plan will be administered by the Board of Directors or a
committee of not less than two non-employee directors appointed by the Company's
Board of Directors and serving at the pleasure of the Board (the "Option
Committee"). Members of the Option Committee shall be deemed "Non- Employee
Directors" within the meaning of Rule 16b-3 pursuant to the 1934 Act. The Option
Committee may select the directors, directors emeritus, officers and employees
to whom options are to be granted and the number of options to be granted based
upon several factors including prior and anticipated future job duties and
responsibilities, job performance, the Company's financial performance and a
comparison of awards given by other institutions that have converted from mutual
to stock form. A majority of the members of the Option Committee shall
constitute a quorum and the action of a majority of the members present at any
meeting at which a quorum is present shall be deemed the action of the Option
Committee.

Officers, directors, employees and other persons who are designated by
the Option Committee will be eligible to receive, at no cost to them, options
under the Option Plan (the "Optionees"). Each option granted pursuant to the
Option Plan shall be evidenced by an instrument in such form as the Option
Committee shall from time to time approve. Option shares may be paid for in
cash, shares of Common Stock, or a combination of both. The Company will receive
no monetary consideration for the granting of stock options under the Option
Plan. Further, the Company will receive no consideration other than the option
exercise price per share for Common Stock issued to Optionees upon the exercise
of those options.

Shares issuable under the Option Plan may be from authorized but
unissued shares, treasury shares or shares purchased in the open market. An
option which expires, becomes unexercisable, or is forfeited for any reason
prior to its exercise will again be available for issuance under the Option
Plan. No option or any right or interest therein is assignable or transferable
except by will or the laws of descent and distribution. The Option Plan shall
continue in effect for a term of ten years from the Plan Effective Date.

Stock Options

The Option Committee may grant options. The terms and conditions of
options relating to the effect of a Optionee's termination of employment or
service, disability, or death shall be such terms as the Option Committee, in
its sole discretion, shall determine at the time of termination of service,
disability or death, unless specifically determined at the time of grant of such
options.

The exercise price for the purchase of Common Stock subject to an
option may not be less than one hundred percent (100%) of the Fair Market Value
of the Common Stock covered by the option on the date of grant of such option.
For purposes of determining the Fair Market Value of the Common Stock, if the
Common Stock is traded otherwise than on a national securities exchange at the
time of the granting of an option, then the exercise price per share of the
option shall be not less than the mean between the last bid and ask price on the
date the option is granted or, if there is no bid and ask price on said date,
then on the immediately prior business day on which there was a bid and ask
price. If no such bid and ask price is available, then the exercise price per
share shall be determined in good faith by the Option Committee. If the Common
Stock is listed on a national securities exchange at the time of the granting of
the option, then the exercise price per share of the option shall be not less
than the average of the highest and lowest selling price of the Common Stock on
such exchange on the date such option is granted or, if there were

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no sales on said date, then the exercise price shall be not less than the mean
between the last bid and ask price on such date. The Option Committee may impose
additional conditions upon the right of a Optionee to exercise any option
granted hereunder which are not inconsistent with the terms of the Option Plan.

No shares of Common Stock shall be issued upon the exercise of an
option until full payment has been received by the Company, and no Optionee
shall have any of the rights of a stockholder of the Company until shares of
Common Stock are issued to such Optionee. Upon the exercise of an option by a
Optionee (or the Optionee's personal representative), the Option Committee, in
its sole and absolute discretion, may make a cash payment to the Optionee, in
whole or in part, in lieu of the delivery of shares of Common Stock. Such cash
payment to be paid in lieu of delivery of Common Stock shall be equal to the
difference between the Fair Market Value of the Common Stock on the date of the
option exercise and the exercise price per share of the option. Such cash
payment shall be in exchange for the cancellation of such option. Such cash
payment shall not be made in the event that such transaction would result in
liability to the Optionee and the Company under Section 16(b) of the 1934 Act or
any related regulations promulgated thereunder.

The Option Plan provides that the Board of Directors of the Company may
authorize the Option Committee to direct the execution of an instrument
providing for the modification, extension or renewal of any outstanding option,
provided that no such modification, extension or renewal shall confer on the
Optionee any right or benefit which could not be conferred on the Optionee by
the grant of a new option at such time, and shall not materially decrease the
Optionee's benefits under the option without the Optionee's consent, except as
otherwise provided under the Option Plan.

Awards Under the Option Plan

The Board or the Option Committee shall from time to time determine the
officers, directors, employees and other persons who shall be granted options
under the Option Plan and the number of options to be granted to any individual.
In selecting Optionees and in determining the number of options to be granted,
the Board or the Option Committee may consider the nature of the services
rendered by each such individual, each individual's current and potential
contribution to the Company and such other factors as may be deemed relevant.
The Optionees may, if otherwise eligible, be granted additional options. In no
event shall options be granted under the Option Plan to any individual exceeding
25% of the total number of available shares of Common Stock under the Option
Plan. In no event shall options be granted under the Option Plan to non-employee
directors in the aggregate exceeding 40% of the total number of available shares
of Common Stock under the Option Plan.

Pursuant to the terms of the Option Plan, options to purchase 7,575
shares of Common Stock will be granted to each non-employee director of the
Company, as of the Plan Effective Date, at an exercise price equal to the Fair
Market Value of the Common Stock on such date of grant. Options may be granted
to newly appointed or elected non-employee directors within the sole discretion
of the Option Committee, and the exercise price shall be equal to the Fair
Market Value of such Common Stock on the date of grant.
Such options granted to non-employee directors will remain exercisable for up
to ten years from the date of grant. Upon the death or disability of a director
or director emeritus, such options shall be deemed immediately 100% exercisable
for their remaining term. All outstanding options become immediately exercisable
in the event of a Change in Control (as defined in the Option Plan) of the
Company.

-9-

The table below presents information related to stock option awards
anticipated to be awarded upon stockholder ratification of the Option Plan.

NEW PLAN BENEFIT
OPTION PLAN
-----------
Number of Options
Name and Position Dollar Value(1) to be Granted
- ----------------- --------------- -------------

David P. Butler, Chairman........................ N/A 7,575(2)
Robert B. Shust, Vice Chairman and Secretary..... N/A 7,575(2)
Louis J. Slais, Vice Chairman.................... N/A 7,575(2)
Timothy Schneider, Director...................... N/A 7,575(2)
Richard A. Sinewe, President and Director........ N/A 7,575(3)
Robert B. Kastan, Treasurer/Controller........... N/A 7,575(3)
Executive Group (2 persons)...................... N/A 15,150(3)
Non-Executive Director Group (4 persons)......... N/A 30,300(2)
Non-Executive Officer Employee Group............. N/A --(3)

- ------------
(1) The exercise price of such options shall be equal to the fair market value
of the Common Stock on the date of stockholder ratification of the Option
Plan. Accordingly, the dollar value of the options was not determinable at
the time of mailing this proxy statement. On January 17, 2003, the last
reported sales price of the Common Stock was $13.30 per share.
(2) Options awarded to directors are first exercisable at a rate of 331/3% on
the date of stockholder ratification of the Option Plan, and 331/3%
annually thereafter, during such period of service as a director or
director emeritus, and shall remain exercisable for ten years without
regard to continued service as a director or director emeritus. Upon
disability or death of the participant, or a Change in Control of the
Company, such awards shall be 100% exercisable.
(3) Options awarded to employees will be exercisable as follows: Options
awarded at the time of stockholder ratification of the Option Plan are
first exercisable at the rate of 331/3% immediately and 331/3% annually
thereafter during periods of continued service as an employee, director or
director emeritus. Such awards shall be 100% exercisable in the event of
death or disability of the Participant, or upon a Change in Control of the
Company. Options awarded to employees shall continue to be exercisable
during continued service as an employee, director or director emeritus.

Effect of Mergers, Change of Control and Other Adjustments

Subject to any required action by the stockholders of the Company,
within the sole discretion of the Option Committee, the aggregate number of
shares of Common Stock for which options may be granted hereunder or the number
of shares of Common Stock represented by each outstanding option will be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any other increase
or decrease in the number of shares of Common Stock effected without the receipt
or payment of consideration by the Company. Subject to any required action by
the stockholders of the Company, in the event of any Change in Control,
recapitalization, merger, consolidation, exchange of shares, spin-off,
reorganization, tender offer, partial or complete liquidation or other
extraordinary corporate action or event, the Option Committee, in its sole
discretion, shall have the power, prior to or subsequent to such action or
events, to (i) appropriately adjust the number of shares of Common Stock subject
to options, the exercise price per share of such option, and the consideration
to be given or received by the Company upon the exercise of any outstanding
options; (ii) cancel any or all previously granted options, provided that
appropriate consideration is paid to the Optionee in connection therewith;
and/or (iii) make such other adjustments in connection with the Option Plan as
the Option Committee, in its sole discretion, deems necessary, desirable,
appropriate or advisable.

-10-

The Option Committee will at all times have the power to accelerate the
exercise date of all options granted under the Option Plan. In the case of a
Change in Control of the Company as determined by the Option Committee, all
outstanding options shall become immediately exercisable. A Change in Control is
defined to include (i) the sale of all, or a material portion, of the assets of
the Company; (ii) the merger or recapitalization of the Company whereby the
Company is not the surviving entity; (iii) a change in control of the Company as
otherwise defined or determined by the OTS or its regulations; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of Section 13(d) of the 1934 Act and rules and regulations promulgated
thereunder) of 25% or more of the outstanding voting securities of the Company
by any person, trust, entity, or group. This limitation shall not apply to the
purchase of shares by underwriters in connection with a public offering of
Company stock or the purchase of shares of up to 25% of any class of securities
of the Company by a tax-qualified employee stock benefit plan which is exempt
from the approval requirements set forth under 12 C.F.R. ss.574.3(c)(1)(vi).

In the event of a Change in Control, the Option Committee and the Board
of Directors will take one or more of the following actions to be effective as
of the date of such Change in Control: (i) provide that such options shall be
assumed, or equivalent options shall be substituted, ("Substitute Options") by
the acquiring or succeeding Company (or an affiliate thereof), provided that:
the shares of stock issuable upon the exercise of such Substitute Options shall
constitute securities registered in accordance with the Securities Act of 1933,
as amended ("1933 Act") or such securities shall be exempt from such
registration in accordance with Sections 3(a)(2) or 3(a)(5) of the 1933 Act
(collectively, "Registered Securities"), or in the alternative, if the
securities issuable upon the exercise of such Substitute Options shall not
constitute Registered Securities, then the Optionee will receive upon
consummation of the Change in Control a cash payment for each option surrendered
equal to the difference between (1) the Fair Market Value of the consideration
to be received for each share of Common Stock in the Change in Control times the
number of shares of Common Stock subject to such surrendered options, and (2)
the aggregate exercise price of all such surrendered options, or (ii) in the
event of a transaction under the terms of which the holders of the Common Stock
of the Company will receive upon consummation thereof a cash payment (the
"Merger Price") for each share of Common Stock exchanged in the Change in
Control transaction, to make or to provide for a cash payment to the Optionees
equal to the difference between (A) the Merger Price times the number of shares
of Common Stock subject to such options held by each Optionee (to the extent
then exercisable at prices not in excess of the Merger Price) and (B) the
aggregate exercise price of all such surrendered options in exchange for such
surrendered options.

The power of the Option Committee to accelerate the exercise of options
and the immediate exercisability of options in the case of a Change in Control
of the Company could have an anti-takeover effect by making it more costly for a
potential acquiror to obtain control of the Company due to the higher number of
shares outstanding following such exercise of options. The power of the Option
Committee to make adjustments in connection with the Option Plan, including
adjusting the number of shares subject to options and canceling options, prior
to or after the occurrence of an extraordinary corporate action, allows the
Option Committee to adapt the Option Plan to operate in changed circumstances,
to adjust the Option Plan to fit a smaller or larger institution, and to permit
the issuance of options to new management following such extraordinary corporate
action. However, this power of the Option Committee also has an anti-takeover
effect, by allowing the Option Committee to adjust the Option Plan in a manner
to allow the present management of the Company to exercise more options and hold
more shares of the Common Stock, and to possibly decrease the number of options
available to new management of the Company.

Although the Option Plan may have an anti-takeover effect, the
Company's Board of Directors did not adopt the Option Plan specifically for
anti-takeover purposes. The Option Plan could render it more

-11-

difficult to obtain support for stockholder proposals opposed by the Company's
Board and management in that recipients of options could choose to exercise such
options and thereby increase the number of shares for which they hold voting
power. Also, the exercise of such options could make it easier for the Board and
management to block the approval of certain transactions. In addition, the
exercise of such options could increase the cost of an acquisition by a
potential acquiror.

Amendment and Termination of the Option Plan

The Board of Directors may alter, suspend or discontinue the Option
Plan, except that no action of the Board shall increase the maximum number of
shares of Common Stock issuable under the Option Plan, materially increase the
benefits accruing to Optionees under the Option Plan or materially modify the
requirements for eligibility for participation in the Option Plan unless such
action of the Board shall be subject to approval or ratification by the
stockholders of the Company.

Possible Dilutive Effects of the Option Plan

The Common Stock to be issued upon the exercise of options awarded
under the Option Plan may either be authorized but unissued shares of Common
Stock or shares purchased in the open market. Because the stockholders of the
Company do not have preemptive rights, to the extent that the Company funds the
Option Plan, in whole or in part, with authorized but unissued shares, the
interests of current stockholders may be diluted. If upon the exercise of all of
the options, the Company delivers newly issued shares of Common Stock (i.e.,
75,750 shares of Common Stock), then the dilutive effect to current stockholders
would be approximately 9.1%. The Company can avoid dilution resulting from
awards under the Option Plan by delivering shares repurchased in the open market
upon the exercise of options.

Federal Income Tax Consequences

Under present federal tax laws, awards under the Option Plan will have
the following consequences:

1. The grant of an option will not by itself result in the recognition of
taxable income to an Optionee nor entitle the Company to a tax deduction at
the time of such grant.

2. The exercise of an option which is an "Incentive Stock Option" within the
meaning of Section 422 of the Code generally will not, by itself, result in
the recognition of taxable income to an Optionee nor entitle the Company to
a deduction at the time of such exercise. However, the difference between
the option exercise price and the Fair Market Value of the Common Stock on
the date of option exercise is an item of tax preference which may, in
certain situations, trigger the alternative minimum tax for an Optionee. An
Optionee will recognize capital gain or loss upon resale of the shares of
Common Stock received pursuant to the exercise of Incentive Stock Options,
provided that such shares are held for at least one year after transfer of
the shares or two years after the grant of the option, whichever is later.
Generally, if the shares are not held for that period, the Optionee will
recognize ordinary income upon disposition in an amount equal to the
difference between the option exercise price and the Fair Market Value of
the Common Stock on the date of exercise, or, if less, the sales proceeds
of the shares acquired pursuant to the option.

3. The exercise of a Non-Incentive Stock Option will result in the recognition
of ordinary income by the Optionee on the date of exercise in an amount
equal to the difference between the exercise price and the Fair Market
Value of the Common Stock acquired pursuant to the option.

4. The Company will be allowed a tax deduction for federal tax purposes equal
to the amount of

-12-

ordinary income recognized by an Optionee at the time the optionee recognizes
such ordinary income.

Accounting Treatment

The Company expects to use the "intrinsic value based method" as
prescribed by APB Opinion 25. Accordingly, neither the grant nor the exercise of
an option under the Option Plan currently requires any charge against earnings
under generally accepted accounting principles. Common Stock issuable pursuant
to outstanding options which are exercisable under the Option Plan will be
considered outstanding for purposes of calculating earnings per share on a
diluted basis.

Stockholder Ratification

Stockholder ratification of the Option Plan is being sought to enable
Optionees to qualify for certain exempt transactions related to the short-swing
profit recapture provisions of Section 16(b) of the 1934 Act and to meet the
requirements for the tax-deductibility of certain compensation items under
Section 162(m) of the Code. An affirmative vote of the holders of a majority of
the total votes cast at the Meeting in person or by proxy is required to
constitute stockholder ratification of this Proposal II.

The Board of Directors recommends a vote "FOR" the ratification of the Option
Plan.

- --------------------------------------------------------------------------------
PROPOSAL III - RATIFICATION OF THE RESTRICTED STOCK PLAN
- --------------------------------------------------------------------------------

General

The Board of Directors of the Company and the Bank have adopted the
Restricted Stock Plan (the "RSP") as a method of providing directors, officers,
and employees of the Bank with a proprietary interest in the Company in a manner
designed to encourage such persons to remain in the employment or service of the
Bank. The Bank will contribute sufficient funds to the RSP to purchase up to
30,300 shares of Common Stock, representing up to 4% of the aggregate number of
shares presently outstanding. Alternatively, the RSP may purchase authorized but
unissued shares of Common Stock or treasury shares from the Company. All of the
Common Stock to be purchased by the RSP will be purchased at the Fair Market
Value of such stock on the date of purchase. Awards under the RSP will be made
in recognition of expected future services to the Bank by its directors,
officers and employees responsible for implementation of the policies adopted by
the Bank's Board of Directors and as a means of providing a further retention
incentive. The following is a summary of the material features of the RSP which
is qualified in its entirety by reference to the complete provisions of the RSP
which is attached hereto as Appendix C.

Awards Under the RSP

Benefits under the RSP ("RSP Share Awards") may be granted at the sole
discretion of a committee comprised of not less than two directors who are not
employees of the Bank or the Company (the "RSP Committee") appointed by the
Bank's Board of Directors. The RSP is managed by trustees (the "RSP

-13-

Trustees") who are non-employee directors of the Bank or the Company and who
have the responsibility to invest all funds contributed by the Bank to the trust
created for the RSP (the "RSP Trust"). The RSP Committee shall determine the
terms and conditions of the RSP Share Awards. A recipient of such restricted
stock will not be entitled to voting rights associated with such shares prior to
the applicable date such shares are earned. Dividends paid on RSP Share Awards
that are not yet earned shall be paid to the holder of an award as compensation
within 30 days of the applicable dividend payment date. Any shares held by the
RSP Trust which are not yet earned shall be voted by the RSP Trustees, as
directed by the RSP Committee. If a recipient of such restricted stock
terminates employment or service for reasons other than death, disability or a
Change in Control (as such term is defined in the RSP) of the Company or the
Bank, the recipient forfeits all rights to the awards under restriction. If the
recipient's termination of employment or service is caused by death, disability
or a Change in Control of the Company or the Bank all restrictions expire and
all shares allocated shall become unrestricted. The RSP Share Awards shall be
immediately non-forfeitable in the event of the death, disability or a Change in
Control of the Company or the Bank, of such recipient and distributed as soon as
practicable thereafter. The Board of Directors can terminate the RSP at any
time, and if it does so, any shares not allocated will revert to the Bank. The
RSP Share Awards under the RSP will be determined by the RSP Committee. In no
event shall any individual receive RSP Share Awards in excess of 25% of the
aggregate Common Stock authorized under the RSP ("RSP Share Reserve").

The aggregate number of RSP Shares available for issuance pursuant to
the RSP Share Awards and the number of shares to which any RSP Share 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 the RSP, resulting from any split, subdivision or
consolidation of the Common Stock or other capital adjustment, change or
exchange of Common Stock, or other increase or decrease in the number or kind of
shares effected without receipt or payment of consideration by the Company.

The following table presents information related to the anticipated
award of Common Stock under the RSP as authorized pursuant to the terms of the
RSP or the anticipated actions of the RSP Committee.

NEW PLAN BENEFITS
RESTRICTED STOCK PLAN
---------------------
Dollar Number of Shares
Name and Position Value(1) to be Granted(2)
- ----------------- -------- ----------------
David P. Butler, Chairman.......................... $40,299 3,030
Robert B. Shust, Vice Chairman and Secretary....... $40,299 3,030
Louis J. Slais, Vice Chairman...................... $40,299 3,030
Timothy Schneider, Director........................ $40,299 3,030
Richard A. Sinewe, President and Director.......... $40,299 3,030
Robert B. Kastan, Treasurer/Controller............. $40,299 3,030
Executive Group (2 persons)........................ $80,598 6,060
Non-Executive Director Group (4 persons)........... $161,196 12,120
Non-Executive Officer Employee Group............... N/A --

- -------------
(1) These values are based on the last reported sale price for the Common Stock
as reported on the OTC Bulletin Board on January 17, 2003, which was $13.30
per share. The exact dollar value of the Common Stock granted will equal
the market price of the Common Stock on the date of vesting of such awards.
Accordingly, the exact dollar value is not presently determinable.
(2) All Plan Share Awards presented herein shall be earned at the rate of 25%
as of the date of such award on the date of stockholder ratification of the
RSP and 25% annually thereafter. All awards shall become immediately 100%
vested upon

-14-

death or disability of the Participant, or upon termination of service z
following a change in control (as defined in the RSP). Plan Share Awards
shall continue to vest during periods of service as an employee, director,
or director emeritus.

Amendment and Termination of the RSP

The Board may amend or terminate the RSP at any time. However, no
action of the Board may increase the maximum number of RSP Shares permitted to
be awarded under the RSP, except for adjustments in the Common Stock of the
Company, materially increase the benefits accruing to participants under the RSP
or materially modify the requirements for eligibility for participation in the
RSP unless such action of the Board shall be subject to ratification by the
stockholders of the Company.

Possible Dilutive Effects of the RSP

It is the Company's present intention to fund the RSP through
open-market purchases of Common Stock, which will cause no dilutive effect. The
RSP provides, however, that Common Stock to be awarded may be acquired by the
RSP through open-market purchases or from authorized but unissued shares of
Common Stock from the Company. In that stockholders do not have preemptive
rights, to the extent that the Company utilizes authorized but unissued shares
to fund RSP Share Awards, the interests of current stockholders may be diluted.
If all RSP Share Awards are funded with newly issued shares, the dilutive effect
to existing stockholders would be approximately 3.8%.

Federal Income Tax Consequences

Common Stock awarded under the RSP is generally taxable to the
recipient at the time that such awards become earned and non-forfeitable, based
upon the Fair Market Value of such stock at the time of such vesting.
Alternatively, a recipient may make an election pursuant to Section 83(b) of the
Code within 30 days of the date of the transfer of such RSP Share Award to elect
to include in gross income for the current taxable year the Fair Market Value of
such award. Such election must be filed with the Internal Revenue Service within
30 days of the date of the transfer of the stock award. The Bank will be allowed
a tax deduction for federal tax purposes as a compensation expense equal to the
amount of ordinary income recognized by a recipient of RSP Share Awards at the
time the recipient recognizes taxable ordinary income. A recipient of a RSP
Share Award may elect to have a portion of such award withheld by the RSP Trust
in order to meet any necessary tax withholding obligations.

Accounting Treatment

For accounting purposes, the Bank will recognize compensation expense
in the amount of the Fair Market Value of the Common Stock subject to RSP Share
Awards at the grant date pro rata over the period of years during which the RSP
Share Awards are earned.

Stockholder Ratification

The RSP and awards made thereunder will not be effective until receipt
of stockholder ratification of Proposal III. Stockholder ratification of the RSP
is being sought to enable recipients of RSP Share Awards to qualify for certain
exemptive treatment from the short-swing profit recapture provisions of Section
16(b) of the 1934 Act. The affirmative vote of holders of a majority of the
total votes cast at the Meeting in person or by proxy is required to constitute
stockholder ratification of this Proposal III.

-15-

The Board of Directors recommends a vote "FOR" the ratification of the
Restricted Stock Plan.

- --------------------------------------------------------------------------------
PROPOSAL IV - RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------

The Board of Directors of the Company has appointed Stokes & Hinds, LLC
as the Company's independent auditor for the fiscal year ending September 30,
2003, subject to ratification by the Company's stockholders. A representative of
Stokes & Hinds, LLC is expected to be present at the Meeting, will have the
opportunity to make a statement if he so desires, and is expected to be
available to respond to appropriate questions.

Ratification of the appointment of the auditors requires the
affirmative vote of a majority of the votes cast, in person or by proxy, by the
stockholders of the Company at the Meeting. The Board of Directors recommends
that stockholders vote "FOR" the ratification of the appointment of Stokes &
Hinds, LLC as the Company's auditors for the 2003 fiscal year.

- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------

In order to be considered for inclusion in the Company's proxy
materials for the annual meeting of stockholders for the fiscal year ending
September 30, 2003, all stockholder proposals must be received at the Company's
executive office at 2000 Mt. Troy Road, Pittsburgh, Pennsylvania 15212 within a
reasonable amount of time prior to the Company printing and mailing its proxy
materials for such meeting. Stockholder proposals must meet other applicable
criteria as set forth in the Company's bylaws in order to be considered for
inclusion in the Company's proxy materials.

Under the Company's bylaws, stockholder proposals that are not included
in the Company's proxy statement for the fiscal year ending September 30, 2003,
will only be considered at the annual meeting to be held in 2004 if the
stockholder submits notice of the proposal to the Company at the above address
within a reasonable amount of time prior to the Company printing and mailing its
proxy materials for such meeting. Stockholder proposals must meet other
applicable criteria as set forth in the Company's bylaws in order to be
considered at the 2004 annual meeting.

- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------

The Board of Directors is not aware of any other matters to come before
the Meeting. However, if any other matters should properly come before the
Meeting or any adjournments, it is intended that proxies in the accompanying
form will be voted in respect thereof in accordance with the judgment of the
persons named in the accompanying proxy.

-16-

- --------------------------------------------------------------------------------
FORM 10-KSB
- --------------------------------------------------------------------------------

A copy of the Company's annual report on Form 10-KSB for the fiscal
year ended September 30, 2002 will be furnished without charge to stockholders
as of the Record Date upon written request to the Secretary, Reserve Bancorp,
Inc., 2000 Mt. Troy Road, Pittsburgh, Pennsylvania 15212.

BY ORDER OF THE BOARD OF DIRECTORS

/s/Robert B. Shust

Robert B. Shust
Secretary

-17-

APPENDIX A

RESERVE BANCORP, INC.
AUDIT COMMITTEE CHARTER

1. Members. The Board of Directors of Reserve Bancorp, Inc. (the
"Company") shall appoint an Audit Committee of at least two members, consisting
entirely of "independent" directors of the Board, and shall designate one member
as chairperson. For purposes hereof, "independent" shall mean a director who
meets the National Association of Securities Dealers, Inc. ("NASD") definition
of "independence."

Each member of the Company's Audit Committee must be financially
literate, and one member of the Audit Committee shall have accounting or related
financial management expertise, both as provided in the BBX/NASD rules.

2. Purposes, Duties, and Responsibilities. The Audit Committee shall
represent the Board of Directors in discharging its responsibilities relating to
the accounting, reporting, and financial practices of the Company and its
subsidiaries, and shall have general responsibility for surveillance of internal
controls and accounting and audit activities of the Company and its
subsidiaries. The Audit Committee does not itself prepare financial statements
or perform audits, and its members are not auditors or certifiers of the
Company's financial statements. Specifically, the responsibilities of the Audit
Committee shall include:

(i) Recommend to the Board of Directors, and evaluate, the firm
of independent certified public accountants to be appointed as
auditors of the Company, which firm shall be ultimately
accountable to the Board of Directors through the Audit
Committee.

(ii) Review and discuss with the outside auditors their audit
procedures, including the scope, fees and timing of the audit,
and the results of the annual audit examination and any
accompanying management letters, and any reports of the outside
auditors with respect to interim periods.

(iii)Review and discuss the written statement from the outside
auditor of the Company concerning any relationships between the
auditor and the Company or any other relationships that may
adversely affect the independence of the auditor and, based on
such review, assess the independence of the outside auditor.

(iv) Review and discuss with management and the outside auditors
the financial statements of the Company, including an analysis of
the auditors' judgment as to the quality of the Company's
accounting principles.

(v) Recommend to the Board of Directors whether, based on the
review and discussions described in paragraphs (ii) through (iv)
above, the financial statements should be included in the Annual
Report on Form 10-KSB.

(vi) Review and discuss with management and the outside auditors:
(a) any material financial or non-financial arrangements of the
Company which do not appear on the financial statements of the
Company; and (b) any transactions or courses of dealing with
parties related to the Company which transactions are significant
in size or involve terms

A-1

or other aspects that differ from those that would likely be
negotiated with independent parties, and which arrangements or
transactions are relevant to an understanding of the Company's
financial statements.

(vii) Review and discuss with management and the outside auditors
the adequacy of the Company's internal controls.

(viii) Review and discuss with management and the outside
auditors the accounting policies which may be viewed as critical,
and review and discuss any significant changes in the accounting
policies of the Company and accounting and financial reporting
proposals that may have a significant impact on the Company's
financial reports.

(ix) Establish policies and procedures for the engagement of the
outside auditor to provide non-audit services, and consider
whether the outside auditor's performance of information
technology and other non-audit services is compatible with the
auditor's independence.

(x) Review material pending legal proceedings involving the
Company and other contingent liabilities.

(xi) Establish procedures to receive and respond to employee and
others' complaints and concerns regarding the Company's
accounting or auditing matters.

(xii) Review the appropriateness of the Audit Committee Charter
on an annual basis.

3. Meetings. The Audit Committee shall meet as often as may be deemed
necessary or appropriate in its judgment, generally four times each year, either
in person or telephonically. The Audit Committee shall meet in executive session
with the outside auditors at least annually. The Audit Committee may create
subcommittees who shall report to the Audit Committee. The Audit Committee shall
report to the full Board of Directors with respect to its meetings. The majority
of the members of the Audit Committee shall constitute a quorum.

4. Outside Advisors. The Audit Committee shall have the authority to
retain such outside counsel, experts, and other advisors as it determines
appropriate to assist in the full performance of its functions.

5. Investigations. The Audit Committee shall have the authority to
conduct or authorize investigations into any matters within its scope of
responsibilities and shall have the authority to retain outside advisors to
assist it in the conduct of any investigation.

Adopted on November 26, 2002

A-2

APPENDIX B

RESERVE BANCORP, INC.
2003 STOCK OPTION PLAN

1. Purpose of the Plan. The Plan shall be known as the Reserve Bancorp,
Inc. ("Company") 2003 Stock Option Plan (the "Plan"). The purpose of the Plan is
to attract and retain qualified personnel for positions of substantial
responsibility and to provide additional incentive to officers, directors,
employees and other persons providing services to the Company, or any present or
future parent or subsidiary of the Company 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 (the "Code") and Non-Incentive Stock Options, options that do
not so qualify. 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. The following words and phrases when used in this Plan
with an initial capital letter, unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun and the singular shall include the
plural.

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

"Bank" shall mean Mt. Troy Bank, or any successor corporation
thereto.

"Board" shall mean the Board of Directors of the Company, or
any successor or parent corporation thereto.

"Change in Control" shall mean: (i) the sale of all, or a
material portion, of the assets of the Company; (ii) the merger or
recapitalization of the Company whereby the Company is not the surviving entity;
(iii) a change in control of the Company, as otherwise defined or determined by
the Office of Thrift Supervision or regulations promulgated by it; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the Securities Exchange
Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five
percent (25%) or more of the outstanding voting securities of the Company by any
person, trust, entity or group. This limitation shall not apply to the purchase
of shares by underwriters in connection with a public offering of Company stock,
or the purchase of shares of up to 25% of any class of securities of the Company
by a tax-qualified employee stock benefit plan which is exempt from the approval
requirements, set forth under 12 C.F.R. ss.574.3(c)(1)(vi) as now in effect or
as may hereafter be amended. The term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.

"Code" shall mean the Internal Revenue Code of 1986, as
amended, and regulations promulgated thereunder.

B-1

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

"Common Stock" shall mean common stock of the Company, or any
successor or parent corporation thereto.

"Company" shall mean the Reserve Bancorp, Inc., the parent
corporation of the Bank, or any successor or Parent thereof.

"Continuous Employment" or "Continuous Status as an Employee"
shall mean the absence of any interruption or termination of employment with the
Company or any present or future Parent or Subsidiary of the Company. Employment
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Company or in the case of transfers
between payroll locations, of the Company or between the Company, its Parent,
its Subsidiaries or a successor.

"Director" shall mean a member of the Board of the Company, or
any successor or parent corporation thereto.

"Director Emeritus" shall mean a person serving as a director
emeritus, advisory director, consulting director or other similar position as
may be appointed by the Board of Directors of the Bank or the Company from time
to time.

"Disability" means (a) with respect to Incentive Stock
Options, the "permanent and total disability" of the Employee as such term is
defined at Section 22(e)(3) of the Code; and (b) with respect to Non-Incentive
Stock Options, any physical or mental impairment which renders the Participant
incapable of continuing in the employment or service of the Bank or the Parent
in his then current capacity as determined by the Committee.

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

"Employee" shall mean any person employed by the Company or
any present or future Parent or Subsidiary of the Company.

"Fair Market Value" shall mean: (i) if the Common Stock is
traded otherwise than on a national securities exchange, then the Fair Market
Value per Share shall be equal to the mean between the last bid and ask price of
such Common Stock on such date or, if there is no bid and ask price on said
date, then on the immediately prior business day on which there was a bid and
ask price. If no such bid and ask price is available, then the Fair Market Value
shall be determined by the Committee in good faith; or (ii) if the Common Stock
is listed on a national securities exchange, then the Fair Market Value per
Share shall be not less than the average of the highest and lowest selling price
of such Common Stock on such exchange on such date, or if there were no sales on
said date, then the Fair Market Value shall be not less than the mean between
the last bid and ask price on such date.

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

B-2

"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.

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

"Optioned Stock" shall mean stock subject to an Option granted
pursuant to the Plan.

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

"Parent" shall mean any present or future corporation which
would be a "parent corporation" of the Bank or the Company as defined in
Sections 424(e) and (g) of the Code.

"Participant" means any Director, officer or employee of the
Company or any Parent or Subsidiary of the Company or any other person providing
a service to the Company who is selected by the Committee to receive an Award,
or who by the express terms of the Plan is granted an Award.

"Plan" shall mean the Reserve Bancorp, Inc. 2003 Stock Option
Plan.

"Share" shall mean one share of the Common Stock.

"Subsidiary" shall mean any present or future corporation
which constitutes a "subsidiary corporation" as defined in Sections 424(f) and
(g) of the Code.

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 75,750 Shares.
Such Shares may either be from authorized but unissued shares, treasury shares
or shares purchased in the market for Plan purposes. If an Award shall expire,
become unexercisable, or be forfeited for any reason prior to its exercise, new
Awards may be granted under the Plan with respect to the number of Shares as to
which such expiration has occurred.

4. Six Month Holding Period.

Subject to vesting requirements, if applicable, except in the
event of death or disability of the Optionee, a minimum of six months must
elapse between the date of the grant of an Option and the date of the sale of
the Common Stock received through the exercise of such Option.

5. Administration of the Plan.

(a) Composition of the Committee. The Plan shall be
administered by the Board of Directors of the Company or a Committee which shall
consist of not less than two Directors of the Company appointed by the Board and
serving at the pleasure of the Board. All persons designated as members of the
Committee shall meet the requirements of a "Non-Employee Director" within the
meaning

B-3

of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, as found at
17 CFR ss.240.16b-3.

(b) Powers of the Committee. The Committee is authorized (but
only to the extent not contrary to the express provisions of the Plan or to
resolutions adopted by the Board) to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the form and
content of Awards to be issued under the Plan and to make other determinations
necessary or advisable for the administration of the Plan, and shall have and
may exercise such other power and authority as may be delegated to it by the
Board from time to time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at any meeting at
which a quorum is present shall be deemed the action of the Committee. In no
event may the Committee revoke outstanding Awards without the consent of the
Participant.

The President of the Company and such other officers
as shall be designated by the Committee are hereby authorized to execute written
agreements evidencing Awards on behalf of the Company and to cause them to be
delivered to the Participants. Such agreements shall set forth the Option
exercise price, the number of shares of Common Stock subject to such Option, the
expiration date of such Options, and such other terms and restrictions
applicable to such Award as are determined in accordance with the Plan or the
actions of the Committee.

(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Committee shall be final and
conclusive on all persons affected thereby.

6. Eligibility for Awards and Limitations.

(a) The Committee shall from time to time determine the
officers, Directors, employees and other persons who shall be granted Awards
under the Plan, the number of Awards to be granted to each such persons, and
whether Awards granted to each such Participant under the Plan shall be
Incentive and/or Non-Incentive Stock Options. In selecting Participants and in
determining the number of Shares of Common Stock to be granted to each such
Participant, the Committee may consider the nature of the prior and anticipated
future services rendered by each such Participant, each such Participant's
current and potential contribution to the Company and such other factors as the
Committee may, in its sole discretion, deem relevant. Participants who have been
granted an Award may, if otherwise eligible, be granted additional Awards.

(b) The aggregate Fair Market Value (determined as of the date
the Option 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 all Incentive Stock Option plans, as defined in Section 422 of the
Code, of the Company or any present or future Parent or Subsidiary of the
Company) shall not exceed $100,000. Notwithstanding the prior provisions of this
Section 6, the Committee may grant Options in excess of the foregoing
limitations, provided said Options shall be clearly and specifically designated
as not being Incentive Stock Options.

(c) In no event shall Shares subject to Options granted to
non-employee Directors in the aggregate under this Plan exceed more than 40% of
the total number of Shares authorized for delivery under this Plan pursuant to
Section 3 herein or more than 10% to any individual non-employee Director. In no
event shall Shares subject to Options granted to any Employee exceed more than
25% of the total number of Shares authorized for delivery under the Plan.

B-4

7. Term of the Plan. The Plan shall continue in effect for a term of
ten (10) years from the Effective Date, unless sooner terminated pursuant to
Section 18 hereof. No Option shall be granted under the Plan after ten (10)
years from the Effective Date.

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 an instrument in
such form as the Committee shall from time to time approve. Each 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 by the Committee under the Plan may be exercised shall not,
as to any particular Incentive Stock Option, be less than the Fair Market Value
of the Common Stock on the date that such Incentive Stock Option is granted.

(ii) In the case of an Employee who owns Common
Stock representing more than ten percent (10%) of the outstanding Common Stock
at the time the Incentive Stock Option is granted, the Incentive Stock Option
exercise price shall not be less than one hundred and ten percent (110%) of the
Fair Market Value of the Common Stock on the date that 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), Common Stock or a combination
of cash and Common Stock. Common Stock utilized in full or partial payment of
the exercise price must have been owned by the party exercising such Option for
not less than six months prior to the date of exercise of such Option, and such
Common Stock shall be valued at the Fair Market Value at the date of exercise.
The Company 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 has been received by the Company, and no Optionee shall have
any of the rights of a stockholder of the Company until Shares of Common Stock
are issued to the Optionee.

(c) Term of Incentive Stock Option. The term of exercisability
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 stock representing more than
ten percent (10%) of the Common Stock outstanding at the time the Incentive
Stock Option is granted, the term of exercisability of the Incentive Stock
Option shall not exceed five (5) years.

(d) Exercise Generally. Except as otherwise provided in
Section 10 hereof, no Incentive Stock Option may be exercised unless the
Optionee shall have been in the employ of the Company at all times during the
period beginning with the date of grant of any such Incentive Stock Option and
ending on the date three (3) months prior to the date of exercise of any such
Incentive Stock Option. The Committee 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. Except as otherwise provided by the
terms of the Plan or

B-5

by action of the Committee at the time of the grant of the Options, the Options
will be first exercisable as of the date of grant of such Options.

(e) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held an Incentive Stock Option for at least six
months may engage in the "cashless exercise" of the Option. Upon a cashless
exercise, an Optionee gives the Company written notice of the exercise of the
Option together with an order to a registered broker-dealer or equivalent third
party, to sell part or all of the Optioned Stock and to deliver enough of the
proceeds to the Company to pay the Option exercise price and any applicable
withholding taxes. If the Optionee does not sell the Optioned Stock through a
registered broker-dealer or equivalent third party, the Optionee can give the
Company written notice of the exercise of the Option and the third party
purchaser of the Optioned Stock shall pay the Option exercise price plus any
applicable withholding taxes to the Company.

(f) Transferability. An 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.

9. Terms and Conditions of Non-Incentive Stock Options. Each
Non-Incentive Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee shall from time to time approve. Each
Non-Incentive Stock Option granted pursuant to the Plan shall comply with and be
subject to the following terms and conditions.

(a) Options Granted to Directors. Subject to the limitations
of Section 6(c), Non- Incentive Stock Options to purchase 7,575 shares of Common
Stock will be granted to each Director who is not an Employee as of the
Effective Date, at an exercise price equal to the Fair Market Value of the
Common Stock on such date of grant. The Options will be first exercisable at the
rate on one-third as of the Effective Date, and one-third annually thereafter.
Such Options shall continue to be exercisable for a period of ten years
following the date of grant without regard to the continued services of such
Director as a Director or Director Emeritus. In the event of the Optionee's
death, such Options may be exercised by the personal representative of his
estate or person or persons to whom his rights under such Option shall have
passed by will or by the laws of descent and distribution. Options may be
granted to newly appointed or elected non-employee Directors within the sole
discretion of the Committee. The exercise price per Share of such Options
granted shall be equal to the Fair Market Value of the Common Stock at the time
such Options are granted. Unless otherwise inapplicable, or inconsistent with
the provisions of this paragraph, the Options to be granted to Directors
hereunder shall be subject to all other provisions of this Plan.

(b) Option Price. The exercise price per Share of Common Stock
for each Non-Incentive Stock Option granted pursuant to the Plan shall be at
such price as the Committee may determine in its sole discretion, but in no
event less than the Fair Market Value of such Common Stock on the date of grant
as determined by the Committee in good faith.

(c) 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), Common Stock or a
combination of cash and Common Stock. Common Stock utilized in full or partial
payment of the exercise price must have been owned by the party exercising such
Option for not less than six months

B-6

prior to the date of exercise of such Option, and such Common Stock shall be
valued at the Fair Market Value at the date of exercise. The Company 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 has
been received by the Company and no Optionee shall have any of the rights of a
stockholder of the Company until the Shares of Common Stock are issued to the
Optionee.

(d) Term. The term of exercisability 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.

(e) Exercise Generally. The Committee may impose additional
conditions upon the right of any Participant to exercise any Non-Incentive Stock
Option granted hereunder which is not inconsistent with the terms of the Plan.
Except as otherwise provided by the terms of the Plan or by action of the
Committee at the time of the grant of the Options, the Options will be first
exercisable as of the date of grant of such Options.

(f) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held a Non-Incentive Stock Option for at least
six months may engage in the "cashless exercise" of the Option. Upon a cashless
exercise, an Optionee gives the Company written notice of the exercise of the
Option together with an order to a registered broker-dealer or equivalent third
party, to sell part or all of the Optioned Stock and to deliver enough of the
proceeds to the Company to pay the Option exercise price and any applicable
withholding taxes. If the Optionee does not sell the Optioned Stock through a
registered broker-dealer or equivalent third party, the Optionee can give the
Company written notice of the exercise of the Option and the third party
purchaser of the Optioned Stock shall pay the Option exercise price plus any
applicable withholding taxes to the Company.

(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.

10. Effect of Termination of Employment, Disability or Death on
Incentive Stock Options.

(a) Termination of Employment. In the event that any
Optionee's employment with the Company shall terminate 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 (A) the earlier of (i)
or (ii): (i) the respective expiration dates of any such Incentive Stock
Options, or (ii) the expiration of not more than three (3) months after the date
of such termination of employment; or (B) at such later date as is determined by
the Committee at the time of the grant of such Award, 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, and further that such
Award shall thereafter be deemed a Non-Incentive Stock Option. In the event that
a Subsidiary ceases to be a Subsidiary of the Company, the employment of all of
its employees who are not immediately thereafter employees of the Company shall
be deemed to terminate upon the date such Subsidiary so ceases to be a
Subsidiary of the Company.

B-7

(b) Disability. In the event that any Optionee's employment
with the Company shall terminate as the result of the Disability of such
Optionee, such Optionee may exercise any Incentive Stock Options granted to the
Optionee 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.

(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 specified at the time of grant of such Award, if any,
but in either case 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 exercisable at the date of his death if the only unsatisfied
condition precedent to the exercisability of such Incentive Stock Option at the
date of death is the passage of a specified period of time. At the discretion of
the Committee, upon exercise of such Options the Optionee may receive Shares or
cash or a combination thereof. If cash shall be paid in lieu of Shares, such
cash shall be equal to the difference between the Fair Market Value of such
Shares and the exercise price of such Options on the exercise date.

(d) Incentive Stock Options Deemed Exercisable. For purposes
of Sections 10(a), 10(b) and 10(c) above, any Incentive Stock Option held by any
Optionee shall be considered exercisable at the date of termination of
employment if any such Incentive Stock Option would have been exercisable at
such date of termination of employment without regard to the Disability or death
of the Participant.

(e) Termination of Incentive Stock Options. Except as may be
specified by the Committee at the time of grant of an Option, to the extent that
any Incentive Stock Option granted under the Plan to any Optionee whose
employment with the Company 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, Disability or Death on
Non-Incentive Stock Options. The terms and conditions of Non-Incentive Stock
Options relating to the effect of the termination of an Optionee's employment or
service, Disability of an Optionee or his death shall be such terms and
conditions as the Committee shall, in its sole discretion, determine at the time
of termination of service, unless specifically provided for by the terms of the
Agreement at the time of grant of the award.

12. Withholding Tax. The Company shall have the right to deduct from
all amounts paid in cash with respect to the cashless exercise of Options any
taxes required by law to be withheld with respect to such cash payments. Where a
Participant or other person is entitled to receive Shares pursuant to the
exercise of an Option, the Company shall have the right to require the
Participant or such other person to pay the Company the amount of any taxes
which the Company is required to withhold with respect to such Shares, or, in
lieu thereof, to retain, or to sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.

B-8

13. Recapitalization, Merger, Consolidation, Change in Control and
Other Transactions.

(a) Adjustment. Subject to any required action by the
stockholders of the Company, within the sole discretion of the Committee, the
aggregate number of Shares of Common Stock for which Options may be granted
hereunder, the number of Shares of Common Stock covered by each outstanding
Option, and the exercise price per Share of Common Stock of each such Option,
shall all be proportionately adjusted for any increase or decrease in the number
of issued and outstanding Shares of Common Stock resulting from a subdivision or
consolidation of Shares (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or
otherwise) or the payment of a stock dividend (but only on the Common Stock) or
any other increase or decrease in the number of such Shares of Common Stock
effected without the receipt or payment of consideration by the Company (other
than Shares held by dissenting stockholders).

(b) Change in Control. All outstanding Awards shall become
immediately exercisable in the event of a Change in Control of the Company. In
the event of such a Change in Control, the Committee and the Board of Directors
will take one or more of the following actions to be effective as of the date of
such Change in Control:

(i) provide that such Options shall be assumed, or
equivalent options shall be substituted, ("Substitute Options") by the acquiring
or succeeding corporation (or an affiliate thereof), provided that: (A) any such
Substitute Options exchanged for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, and (B) the shares of stock issuable
upon the exercise of such Substitute Options shall constitute securities
registered in accordance with the Securities Act of 1933, as amended, ("1933
Act") or such securities shall be exempt from such registration in accordance
with Sections 3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, "Registered
Securities"), or in the alternative, if the securities issuable upon the
exercise of such Substitute Options shall not constitute Registered Securities,
then the Optionee will receive upon the exercise of the Substitute Options a
cash payment for each Option surrendered equal to the difference between (1) the
Fair Market Value of the consideration to be received for each share of Common
Stock in the Change in Control transaction times the number of shares of Common
Stock subject to such surrendered Options, and (2) the aggregate exercise price
of all such surrendered Options, or

(ii) in the event of a transaction under the terms
of which the holders of the Common Stock of the Company will receive upon
consummation thereof a cash payment (the "Merger Price") for each share of
Common Stock exchanged in the Change in Control transaction, to make or to
provide for a cash payment to the Optionees equal to the difference between (A)
the Merger Price times the number of shares of Common Stock subject to such
Options held by each Optionee (to the extent then exercisable at prices not in
excess of the Merger Price) and (B) the aggregate exercise price of all such
surrendered Options in exchange for such surrendered Options.

(c) Extraordinary Corporate Action. Notwithstanding any
provisions of the Plan to the contrary, subject to any required action by the
stockholders of the Company, in the event of any Change in Control,
recapitalization, merger, consolidation, exchange of Shares, spin-off,
reorganization, tender offer, partial or complete liquidation or other
extraordinary corporate action or event, the Committee, in its sole discretion,
shall have the power, prior or subsequent to such action or event to:

B-9

(i) appropriately adjust the number of Shares of
Common Stock subject to each Option, the Option exercise price per Share of
Common Stock, and the consideration to be given or received by the Company upon
the exercise of any outstanding Option;

(ii) cancel any or all previously granted Options,
provided that appropriate consideration is paid to the Optionee in connection
therewith; and/or

(iii) make such other adjustments in connection with
the Plan as the Committee, in its sole discretion, deems necessary, desirable,
appropriate or advisable; provided, however, that no action shall be taken by
the Committee which would cause Incentive Stock Options granted pursuant to the
Plan to fail to meet the requirements of Section 422 of the Code without the
consent of the Optionee.

(d) Acceleration. The Committee shall at all times have
the power to accelerate the exercise date of Options previously granted under
the Plan.

Except as expressly provided in Sections 13(a) and
13(b), no Optionee shall have any rights by reason of the occurrence of any of
the events described in this Section 13.

14. Time of Granting Options. The date of grant of an Option under the
Plan shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the grant of an Option shall be
given to each individual to whom an Option is so granted within a reasonable
time after the date of such grant in a form determined by the Committee.

15. Effective Date. The Plan shall become effective upon the date of
ratification of the Plan by the stockholders of the Company. The Committee may
make a determination related to Awards prior to the Effective Date with such
Awards 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 Company within twelve (12) months before or after the date
the Plan is approved by the Board.

17. Modification of Options. At any time and from time to time, the
Board may authorize the Committee to direct the execution of an instrument
providing for the modification of any outstanding Option, provided no such
modification, extension or renewal shall confer on the holder of said Option any
right or benefit which could not be conferred on the Optionee by the grant of a
new Option at such time, or shall not materially decrease the Optionee's
benefits under the Option without the consent of the holder of the Option,
except as otherwise permitted under Section 18 hereof.

18. Amendment and Termination of the Plan.

(a) Action by the Board. The Board may alter, suspend or
discontinue the Plan, except that no action of the Board may increase (other
than as provided in Section 13 hereof) the maximum number of Shares permitted to
be optioned under the Plan, materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility for participation in the Plan unless such action of the Board shall
be subject to approval or ratification by the stockholders of the Company.

B-10

(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, regulation or policy which would make the exercise of all or
part of any previously granted Option unlawful or subject the Company to any
penalty, the Committee 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; Limitations on Option Exercise;
Cancellation of Option Rights.

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

(b) The inability of the Company to obtain any necessary
authorizations, approvals or letters of non-objection from any regulatory body
or authority deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares issuable hereunder shall relieve the Company of
any liability with respect to the non-issuance or sale of such Shares.

(c) As a condition to the exercise of an Option, the Company
may require the person exercising the Option 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.

(d) Notwithstanding anything herein to the contrary, upon the
termination of employment or service of an Optionee by the Company or its
Subsidiaries for "cause" as defined at 12 C.F.R. 563.39(b)(1) as determined by
the Board of Directors, all Options held by such Participant shall cease to be
exercisable as of the date of such termination of employment or service.

(e) Upon the exercise of an Option by an Optionee (or the
Optionee's personal representative), the Committee, in its sole and absolute
discretion, may make a cash payment to the Optionee, in whole or in part, in
lieu of the delivery of shares of Common Stock. Such cash payment to be paid in
lieu of delivery of Common Stock shall be equal to the difference between the
Fair Market Value of the Common Stock on the date of the Option exercise and the
exercise price per share of the Option. Such cash payment shall be in exchange
for the cancellation of such Option. Such cash payment shall not be made in the
event that such transaction would result in liability to the Optionee or the
Company under Section 16(b) of the Securities Exchange Act of 1934, as amended,
and regulations promulgated thereunder.

20. Reservation of Shares. During the term of the Plan, the Company
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 Company by reason of the Plan or
the grant of any Option under the Plan. No trust fund shall be created in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.

B-11

22. No Employment Rights. No Director, Employee or other person shall
have a right to be selected as a Participant under the Plan. Neither the Plan
nor any action taken by the Committee in administration of the Plan shall be
construed as giving any person any rights of employment or retention as an
Employee, Director or in any other capacity with the Company, the Bank or other
Subsidiaries.

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.

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APPENDIX C

MT. TROY BANK
2003 Restricted Stock Plan
and Trust Agreement

Article I
---------
ESTABLISHMENT OF THE PLAN AND TRUST

1.01 Mt. Troy Bank ("Bank") hereby establishes the 2003 Restricted
Stock Plan (the "Plan") and Trust (the "Trust") upon the terms and conditions
hereinafter stated in this 2003 Restricted Stock Plan and Trust Agreement (the
"Agreement").

1.02 The Trustee hereby accepts this Trust and agrees 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 reward and to retain personnel of
experience and ability in key positions of responsibility with the Bank and its
subsidiaries, by providing such personnel of the Bank and its subsidiaries with
an equity interest in the parent corporation of the Bank, Reserve Bancorp, Inc.
("Parent"), as compensation for their prior and anticipated future professional
contributions and service to the Bank and its subsidiaries.

Article III
-----------
DEFINITIONS

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

"Bank" means Mt. Troy Bank, and any successor corporation thereto.

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

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

"Cause" means the personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profits, intentional
failure to perform stated duties, willful violation of a material provision of
any law, rule or regulation (other than traffic violations and similar offense),
or a material violation of a final cease-and-desist order or any other action
which results in a substantial financial loss to the Parent, Bank or its
Subsidiaries.

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"Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the Parent or Bank; (ii) the merger or
recapitalization of the Parent or the Bank whereby the Parent or Bank is not the
surviving entity; (iii) a change in control of the Parent or Bank, as otherwise
defined or determined by the Office of Thrift Supervision ("OTS") or regulations
promulgated by it; or (iv) the acquisition, directly or indirectly, of the
beneficial ownership (within the meaning of that term as it is used in Section
13(d) of the 1934 Act and the rules and regulations promulgated thereunder) of
twenty-five percent (25%) or more of the outstanding voting securities of the
Parent or Bank by any person, trust, entity or group. This limitation shall not
apply to the purchase of shares of up to 25% of any class of securities of the
Parent or Bank by a tax-qualified employee stock benefit plan which is exempt
from the approval requirements, set forth under 12 C.F.R. ss.574.3(c)(1)(vi) as
now in effect or as may hereafter be amended. The term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein.

"Committee" means the Board of Directors of the Bank or the Restricted
Stock Plan Committee appointed by the Board of Directors of the Bank pursuant to
Article IV hereof.

"Common Stock" means shares of the common stock of the Parent, or any
successor corporation or parent thereto.

"Director" means a member of the Board of the Bank.

"Director Emeritus" means a person serving as a director emeritus,
advisory director, consulting director, or other similar position as may be
appointed by the Board of Directors of the Bank or the Parent from time to time.

"Disability" means any physical or mental impairment which renders the
Participant incapable of continuing in the employment or service of the Bank or
the Parent in his current capacity as determined by the Committee.

"Employee" means any person who is employed by the Bank or a
Subsidiary.

"Effective Date" shall mean the date of stockholder ratification of the
Plan by the Parent's stockholders.

"Parent" shall mean Reserve Bancorp, Inc., the parent corporation of
the Bank.

"Participant" means an Employee or Director who receives a Plan Share
Award under the Plan.

"Plan Shares" means shares of Common Stock held in the Trust which are
awarded or issuable to a Participant pursuant to the Plan.

"Plan Share Award" or "Award" means a right granted to a Participant
under this Plan to earn or to receive Plan Shares.

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"Plan Share Reserve" means the shares of Common Stock held by the Trust
pursuant to Sections 5.03 and 5.04.

"Subsidiary" means those subsidiaries of the Bank which, with the
consent of the Board, agree to participate in this Plan.

"Trustee" or "Trustee Committee" means that person(s) or entity
nominated by the Committee and approved by the Board pursuant to Sections 4.01
and 4.02 to hold legal title to the Plan assets for the purposes set forth
herein.

Article IV
----------
ADMINISTRATION OF THE PLAN

4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Board of Directors of the Bank or a Committee appointed by
said Board, which shall consist of not less than two non-employee members of the
Board, which shall have all of the powers allocated to it in this and other
sections of the Plan. All persons designated as members of the Committee shall
be "Non-Employee Directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended ("1934 Act"). The interpretation and
construction by the Committee of any provisions of the Plan or of any Plan Share
Award granted hereunder shall be final and binding. The Committee shall act by
vote or written consent of a majority of its members. Subject to the express
provisions and limitations of the Plan, the Committee may adopt such rules,
regulations and procedures as it deems appropriate for the conduct of its
affairs. The Committee shall report its actions and decisions with respect to
the Plan to the Board at appropriate times, but in no event less than one time
per calendar year. The Committee shall recommend to the Board one or more
persons or entity to act as Trustee in accordance with the provision of this
Plan and Trust and the terms of Article VIII hereof.

4.02 Role of the Board. The members of the Committee and the Trustee
shall be appointed or approved by, and will serve at the pleasure of the Board.
The Board may in its discretion from time to time remove members from, or add
members to, the Committee, and may remove, replace or add Trustees. The Board
shall have all of the powers allocated to it in this and other sections of the
Plan, may take any action under or with respect to the Plan which the Committee
is authorized to take, and may reverse or override any action taken or decision
made by the Committee under or with respect to the Plan, provided, however, that
the Board may not revoke any Plan Share Award already made except as provided in
Section 7.01(b) herein.

4.03 Limitation on Liability. No member of the Board, the Committee or
the Trustee shall be liable for any determination made in good faith with
respect to the Plan or any Plan Share Awards granted. If a member of the Board,
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 any reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Parent and
the Bank shall indemnify such member against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in the best interests of the Parent, the Bank and its Subsidiaries and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. Notwithstanding anything herein to the contrary, in no
event shall the Bank take

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any actions with respect to this Section 4.03 which is not in compliance with
the limitations or requirements set forth at 12 CFR 545.121, as may be amended
from time to time.

Article V
---------
CONTRIBUTIONS; PLAN SHARE RESERVE

5.01 Amount and Timing of Contributions. The Board of Directors of the
Bank shall determine the amounts (or the method of computing the amounts) to be
contributed by the Bank to the Trust established under this Plan. Such amounts
shall be paid to the Trustee at the time of contribution. No contributions to
the Trust by Participants shall be permitted except with respect to amounts
necessary to meet tax withholding obligations.

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

5.03 Investment of Trust Assets. Following ratification of the Plan by
stockholders of the Parent and receipt of any other necessary regulatory
approvals, the Trust shall purchase Common Stock of the Parent 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 30,300 shares of Common Stock. The Trustee may purchase
shares of Common Stock in the open market or, in the alternative, may purchase
authorized but unissued shares of the Common Stock or treasury shares from the
Parent 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 Sections 6.02 and 6.05,
or the decision of the Committee to return Plan Shares to the Parent, 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 are not earned
because of forfeiture by the Participant pursuant to Section 7.01 shall be added
to the Plan Share Reserve.

Article VI
----------
ELIGIBILITY; ALLOCATIONS

6.01 Eligibility. Employees are eligible to receive Plan Share Awards
within the sole discretion of the Committee. Directors who are not otherwise
Employees shall receive Plan Share Awards pursuant to Section 6.05.

6.02 Allocations. The Committee will determine which of the Employees
will be granted Plan Share Awards and the number of Shares covered by each
Award, provided, however, that in no event shall any Awards be made which will
violate the Charter or Bylaws of the Bank or its Parent or Subsidiaries or any
applicable federal or state law or regulation. In the event Shares are forfeited
for any reason or additional Shares are purchased by the Trustee, the Committee
may, from time to time, determine which of the Employees will be granted Plan
Share Awards to be awarded from forfeited Shares. In selecting those Employees
to whom Plan Share Awards will be granted and the number of shares covered by
such Awards, the Committee shall consider the prior and anticipated future
position, duties and responsibilities of the Employees, the value of their prior
and anticipated future services to the Bank and its Subsidiaries, and any other
factors the Committee may deem relevant. All actions by the Committee shall be
deemed

C-4

final, except to the extent that such actions are revoked by the Board.
Notwithstanding anything herein to the contrary, in no event shall any
Participant receive Plan Share Awards in excess of 25% of the aggregate Plan
Shares authorized under the Plan.

6.03 Form of Allocation. As promptly as practicable after a
determination is made pursuant to Section 6.02 or Section 6.05 that a Plan Share
Award is to be made, the Committee shall notify the Participant in writing of
the grant of the Award, the number of Plan Shares covered by the Award, and the
terms upon which the Plan Shares subject to the award may be earned. The date on
which the Committee makes its award determination or the date the Committee so
notifies the Participant shall be considered the date of grant of the Plan Share
Awards as determined by the Committee. The Committee shall maintain records as
to all grants of Plan Share Awards under the Plan.

6.04 Allocations Not Required. Notwithstanding anything to the contrary
at Sections 6.01, 6.02 or 6.05, no Employee shall have any right or entitlement
to receive a Plan Share Award hereunder, such Awards being at the sole
discretion of the Committee and the Board, nor shall the Employees as a group
have such a right. The Committee may, with the approval of the Board (or, if so
directed by the Board) return all Common Stock in the Plan Share Reserve to the
Bank at any time, and cease issuing Plan Share Awards.

6.05 Awards to Directors. Notwithstanding anything herein to the
contrary, upon the Effective Date, a Plan Share Award consisting of 3,030 Plan
Shares shall be awarded to each current Director of the Bank that is not
otherwise an Employee. Such Plan Share Award shall be earned and non-forfeitable
at the rate of one-fourth as of the Effective Date and an additional one-fourth
following each of the next three successive years during such periods of service
as a Director or Director Emeritus. Such Plan Share Award shall be immediately
100% earned and non-forfeitable in the event of the death or Disability of such
Director or Director Emeritus. Further, such Plan Share Award shall be
immediately 100% earned and non-forfeitable upon a Change in Control of the Bank
or Parent. Subsequent to the Effective Date, Plan Share Awards may be awarded to
newly elected or appointed Directors of the Bank by the Committee, provided that
total Plan Share Awards granted to non-employee Directors of the Bank shall not
exceed 40% of the total Plan Share Reserve in the aggregate under the Plan or
10% of the total Plan Share Reserve to any individual non-employee Director.

Article VII
-----------
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS

7.01 Earnings Plan Shares; Forfeitures.

(a) General Rules. Unless the Committee shall specifically state to the
contrary at the time a Plan Share Award is granted, Plan Shares subject to an
Award shall be earned and non-forfeitable by a Participant at the rate of
one-fourth of such Award as of the date of granting of such Award, and an
additional one-fourth following each of the next three successive years;
provided that such Participant remains an Employee, Director, or Director
Emeritus during such period.

(b) Revocation for Misconduct. Notwithstanding anything herein to the
contrary, the Board shall, by resolution, immediately revoke, rescind and
terminate any Plan Share Award, or portion thereof, previously awarded under
this Plan, to the extent Plan Shares have not been delivered thereunder to the
Participant, whether or not yet earned, in the case of a Participant who is
discharged from the employ or

C-5

service of the Parent, Bank or a Subsidiary for Cause, or who is discovered
after termination of employment or service to have engaged in conduct that would
have justified termination for Cause. A determination of Cause shall be made by
the Board within its sole discretion.

(c) Exception for Terminations Due to Death or Disability.
Notwithstanding the general rule contained in Section 7.01(a) above, all Plan
Shares subject to a Plan Share Award held by a Participant whose employment or
service with the Parent, Bank or a Subsidiary terminates due to death or
Disability, shall be deemed earned and nonforfeitable as of the Participant's
last date of employment or service with the Parent, Bank or Subsidiary and shall
be distributed as soon as practicable thereafter.

(d) Exception for Termination after a Change in Control.
Notwithstanding the general rule contained in Section 7.01 above, all Plan
Shares subject to a Plan Share Award held by a Participant shall be deemed to be
immediately 100% earned and non-forfeitable in the event of a Change in Control
of the Parent or Bank and shall be distributed as soon as practicable
thereafter.

7.02 Accrual and Payment of Dividends. A holder of a Plan Share Award,
whether or not earned, shall also be entitled to receive an amount equal to any
cash dividends declared and paid with respect to shares of Common Stock
represented by such Plan Share Award between the date the relevant Plan Share
Award was granted to such Participant and the date the Plan Shares are
distributed. Such cash dividend amounts shall be paid out within 30 days of the
applicable dividend payment date.

7.03 Distribution of Plan Shares.

(a) Timing of Distributions: General Rule. Except as provided in
Subsections (d) and (e) below, Plan Shares shall be distributed to the
Participant or his Beneficiary, as the case may be, as soon as practicable after
they have been earned. No fractional shares shall be distributed.
Notwithstanding anything herein to the contrary, at the discretion of the
Committee, Plan Shares may be distributed prior to such Shares being 100%
earned, provided that such Plan Shares shall contain a restrictive legend
detailing the applicable limitations of such shares with respect to transfer and
forfeiture.

(b) Form of Distribution. 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. Payments
representing cash dividends (and earnings thereon) shall be made in cash.
Notwithstanding anything within the Plan to the contrary, upon a Change in
Control whereby substantially all of the Common Stock of the Parent shall be
acquired for cash, all earned Plan Shares associated with Plan Share Awards,
together with any shares representing stock dividends associated with earned
Plan Share Awards, shall be, at the sole discretion of the Committee,
distributed as of the effective date of such Change in Control, or as soon as
administratively feasible thereafter, in the form of cash equal to the
consideration received in exchange for such Common Stock represented by such
Plan Shares.

(c) Withholding. The Trustee may withhold from any payment or
distribution made under this Plan sufficient amounts of cash or shares of Common
Stock necessary to cover any applicable withholding and employment taxes, and if
the amount of such payment or distribution is not sufficient, the Trustee may
require the Participant or Beneficiary to pay to the Trustee the amount required
to be withheld in taxes as a condition of delivering the Plan Shares. The
Trustee shall pay over to the Parent, Bank or Subsidiary which employs or
employed such Participant any such amount withheld from or paid by the
Participant or Beneficiary.

C-6

(d) Timing: Exception for 10% Shareholders. Notwithstanding Subsection
(a) above, no Plan Shares may be distributed prior to the date which is five
years from the effective date of the Conversion to the extent the Participant or
Beneficiary, as the case may be, would after receipt of such Shares own in
excess of ten percent (10%) of the issued and outstanding shares of Common Stock
held by parties other than Parent, unless such action is approved in advance by
a majority vote of disinterested directors of the Board of the Parent. Any Plan
Shares remaining undistributed solely by reason of the operation of this
Subsection (d) shall be distributed to the Participant or his Beneficiary on the
date which is five years from the effective date of the Conversion.

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

7.04 Voting of Plan Shares. After a Plan Share Award has become earned
and non-forfeitable, the Participant shall be entitled to direct the Trustee as
to the voting of the Plan Shares which are associated with the Plan Share Award
and which have not yet been distributed pursuant to Section 7.03, subject to
rules and procedures adopted by the Committee for this purpose. All shares of
Common Stock held by the Trust as to which Participants have not yet earned and
are not entitled to direct, or have not directed, the voting of such Shares,
shall be voted by the Trustee as directed by the Committee.

Article VIII
------------
TRUST

8.01 Trust. The Trustee 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 Committee pursuant to
the Plan.

8.02 Management of Trust. It is the intention of this Plan and Trust
that the Trustee shall have complete authority and discretion with respect to
the management, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust, except those attributable to cash dividends paid
with respect to Plan Shares not held in the Plan Share Reserve, in Common Stock
to the fullest extent practicable, except to the extent that the Trustee
determines that the holding of monies in cash or cash equivalents is necessary
to meet the obligations of the Trust. In performing their duties, the Trustees
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
the 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 is authorized to purchase Common
Stock from the Parent 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 accounts, and certificates of deposit
(including those issued by the Bank), obligations of

C-7

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 be in the
opinion of the Trustee reasonable for the proper operation of the Plan
and Trust.

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

(g) To hire 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 Participant 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.

(i) As may be directed by the Committee or the Board from time to time,
the Trustee shall pay to the Bank earnings of the Trust attributable to
the Plan Share Reserve.

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

8.03 Records and Accounts. The Trustee 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 Committee.

8.04 Earnings. All earnings, gains and losses with respect to Trust
assets shall be allocated in accordance with a reasonable procedure adopted by
the Committee, to bookkeeping accounts for Participants 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 Participants, except to the extent that such cash dividends are
distributed to Participants, 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 this Plan, including those incurred by the Trustee, shall be
paid by the Bank.

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8.06 Indemnification. Subject to the requirements and limitations of
applicable laws and regulations, the Parent and the Bank shall indemnify, defend
and hold the Trustee 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 Adjustments for Capital Changes. The aggregate number of Plan
Shares available for issuance pursuant to the Plan Share Awards and the number
of Shares to which any Plan Share 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 the Plan resulting
from any split, subdivision or consolidation of the Common Stock or other
capital adjustment, change or exchange of the Common Stock, or other increase or
decrease in the number or kind of shares effected without receipt or payment of
consideration by the Parent.

9.02 Amendment and Termination of the Plan. The Board may, by
resolution, at any time, amend or terminate the Plan. The power to amend or
terminate the Plan shall include the power to direct the Trustee to return to
the Parent 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 which have not yet been earned by
the Participants to whom they have been awarded. However, the termination of the
Trust shall not affect a Participant's right to earn Plan Share Awards and to
the distribution of Common Stock relating thereto, including earnings thereon,
in accordance with the terms of this Plan and the grant by the Committee or the
Board. Notwithstanding the foregoing, no action of the Board may increase (other
than as provided in Section 9.01 hereof) the maximum number of Plan Shares
permitted to be awarded under the Plan as specified at Section 5.03, materially
increase the benefits accruing to Participants under the Plan or materially
modify the requirements for eligibility for participation in the Plan unless
such action of the Board shall be subject to ratification by the stockholders of
the Parent.

9.03 Nontransferable. Plan Share Awards and rights to Plan Shares shall
not be transferable by a Participant, and during the lifetime of the
Participant, Plan Shares may only be earned by and paid to the Participant who
was notified in writing of the Award by the Committee pursuant to Section 6.03.
No Participant or Beneficiary shall have any right in or claim to any assets of
the Plan or Trust, nor shall the Parent, Bank, or any Subsidiary be subject to
any claim for benefits hereunder.

9.04 No Employment Rights. Neither the Plan nor any grant of a Plan
Share Award or Plan Shares hereunder nor any action taken by the Trustee, the
Committee or the Board in connection with the Plan shall create any right,
either express or implied, on the part of any Participant to continue in the
employ or service of the Parent, Bank, or a Subsidiary thereof.

9.05 Voting and Dividend Rights. No Participant shall have any voting
or dividend rights of a stockholder with respect to 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 distributed to such Participant.

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9.06 Governing Law. The Plan and Trust shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania, except to the
extent that Federal Law shall be deemed applicable.

9.07 Effective Date. The Plan shall be effective as of the date of
ratification of the Plan by stockholders of the Parent.

9.08 Term of Plan. This Plan shall remain in effect until the earlier
of (i) termination by the Board, (ii) the distribution of all assets of the
Trust, or (iii) 21 years from the Effective Date. Termination of the Plan shall
not effect any Plan Share Awards previously granted, and such Plan Share 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 shall be treated as a grantor trust of the Bank under the provisions of
Section 671 et seq. of the Internal Revenue Code of 1986, as amended, as the
same may be amended from time to time.

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The undersigned hereby appoints the Board of Directors of Reserve
Bancorp, Inc. (the "Company"), or its designee, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of the Company, which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held at the offices
of Mt. Troy Bank, 2000 Mt. Troy Road, Pittsburgh, Pennsylvania, on Tuesday,
April 8, 2003, at 11:00 a.m. and at any and all adjournments thereof, in the
following manner:

FOR WITHHELD
--- --------
1. The election as director of the nominees
listed with terms to expire in 2006
(except as marked to the contrary below): |_| |_|

Robert B. Shust
Timothy Schneider

INSTRUCTIONS: To withhold your vote for either nominee, write the nominee's name
- ------------ on the line provided below.

________________________

FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the
Reserve Bancorp, Inc.
2003 Stock Option Plan. |_| |_| |_|

3. The ratification of the
Mt. Troy Bank
2003 Restricted Stock Plan. |_| |_| |_|

4. The ratification of the appointment
of Stokes & Hinds, LLC as the
Company's independent auditor for the
fiscal year ending September 30, 2003. |_| |_| |_|

The Board of Directors recommends a vote "FOR" all of the above listed
proposals. ---

- --------------------------------------------------------------------------------
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE NOMINEES LISTED AND ALL OF
THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING,
THIS SIGNED PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the stockholder's decision to terminate this Proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently dated Proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this Proxy.

The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders and a
Proxy Statement dated January 28, 2003.

[_] Check Box if You Plan
Dated: to Attend the Annual Meeting.
--------------------------

- --------------------------------------- ----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER

- --------------------------------------- ----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER

Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.

- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------