ELLWOOD CITY, Penn. - Pennfirst Bancorp and ESB Bancorp said they had reached a definitive merger agreement.

The companies said that following the merger, Economy Savings Bank, a Pennsylvania-chartered savings association and wholly owned unit of ESB, will be operated as a wholly owned subsidiary of Pennfirst.

In connection with the merger, the two companies said they entered into an option agreement by which Pennfirst may acquire 185,225 shares, or 19.9 percent, of ESB's common stock subject to certain unspecified restrictions.

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