2007 SENIOR OFFICER INCENTIVE PLAN - A

 

I.
Trigger Point: After-Tax Return on Beginning Equity1 must be greater than the
Peer Group 50 Percentile Return on Equity.

Pre-tax Earnings are adjusted as follows:

 
(A)
Tax-exempt income is grossed up to a fully taxable equivalent.

 
(B)
Incentive/Expense accrual is added back to pre-tax earnings.

 
(C)
Trust Preferred Interest is added back to pre-tax earnings.

 
(D)
Loan Loss Recoveries are added back relative to prior year adjustment.

 
(E)
Extra-ordinary income and expense not directly associated with operating the
Bank, is excluded from pre-tax earnings.

1Comprehensive Income (Loss) & Goodwill is adjusted out of Beginning Equity.
Trust Preferred Securities are treated as Equity.

 
I.
Pool Formula

 
1.
Trigger Point must be achieved (50th percentile for after tax earnings).

 
2.
Pool is funded using peer group data derived from BancIntelligence.com
(Calculations assume a 35% tax rate and excludes Mutual’s & Sub S’s):

 
(A)
5% of Pacific Financial’s pretax earnings that place The Company up to the 50
percentile for Pre-tax Return on Equity (rounded up to the next ¼%) for banks
between $500 and $1,000 million.

 
(B)
10% of the pretax earnings above the 50 percentile and less than the Pre-tax
Return on Beginning Equity (rounded up to the next ¼%) that places The Company
among the top 10% of banks between $500 and $1,000 million.

 

 
(C)
15% of the amount of pretax earnings that places the Company above the 90
percentile for Return on Equity (rounded up to the next ¼%) for banks between
$500 and $1,000 million.

 
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II.
Pool Distribution

 
(A)
The pool is divided among officers based on position, responsibility and
performance. In the event an officer’s compensation along with financial perks,
such as a car provided or a car allowance exceeds the salary range maximum, that
portion in excess of the maximum will be considered prepaid incentive and
subtracted from the incentive paid to the officer.

 
(B)
Each year certain positions will have specific objectives that can increase or
decrease the officer’s incentive compensation based on achievement of their
objectives.

 
(C)
Anyone with less than satisfactory performance during the year which includes
probation for performance will not participate.

 
(D)
Employees who terminate employment prior to Incentive Pool payout are ineligible
to participate.

 
(E)
New employees are eligible to participate, however, after 90 days of employment.
Participation is pro-rated beginning the 91st day of employment.

 
(F)
Retiring employees participate pro-rata based on their last day of employment.

 
(G)
Should The Bank achieve an after tax return on equity of equal to or greater
than 25%, Officers will be awarded a “Special Achievement Award”. The “Special
Achievement Award” will be in the form of a Hawaiian travel voucher covering
air, hotel accommodations, and a rental car, however, not to exceed $2500 in
total value. Normal vacation time will be used to facilitate use of the travel
voucher.

 
(H)
The Board of Directors reserves the right to alter, change, or eliminate the
continuation of the Officer Incentive Plan at any time and at the Board of
Director’s sole discretion.

 
 
 
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