Pennsylvania Savings Bank has reached a one-year truce with a pesky shareholder activist that will allow it to complete its conversion to a stock holding company.

Jerome Davis, the Greenwich, Conn., investor who owns 9.3% of the thrift's stock, has agreed to vote for the pending conversion and to approve all board recommendations for one year after it. Mr. Davis also promised not to buy additional stock in the $122 million-asset thrift.

Mr. Davis did not return calls to his office Tuesday. His New York attorney, David M. Perlmutter, verified the terms of the agreement between Mr. Davis and Pennsylvania Savings but would not comment further on his client's relationship with the thrift. Mr. Davis has a history of buying up to 10% of a thrift's stock when it originally converts, then campaigning for a streamlining of operations, higher dividends, or a sale.

His targets have reacted in various ways. Last year, an Iowa thrift bought back all the stock owned by Mr. Davis and his family at a price 3.2% greater than the then-current market price.

On the other hand, First Ashland Financial Corp. in Kentucky agreed to be acquired by Camco Financial Corp. after Mr. Davis encouraged the board to sell.

In the Pennsylvania Savings instance, Anthony DiSandro, its president, said Mr. Davis had not insisted on the mutual holding company's second- stage conversion to stock ownership. Mr. Davis has been a shareholder of Pennsylvania Savings since shortly after its October 1995 conversion to a mutual holding company.

Mr. DiSandro characterized the latest agreement with Mr. Davis as "simple." He said it was not prompted by a disagreement but wouldn't say why it was needed or what Mr. Davis gets in return.

But should Pennsylvania Savings go through with its conversion, Mr. Davis, like all the thrift's shareholders, is expected to do well, said Laurie Havener Hunsicker, a thrift analyst at Friedman, Billings, Ramsey & Co. "It's a very good time in the market for a second-step transaction," she said.

Mr. DiSandro said the thrift plans to use excess capital from the holding company conversion to acquire other institutions. The conversion is expected to be completed by early next year.

"We're looking at growth and potential for mergers and acquisitions," he said. "We want to bring the bank into the 21st century."

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