<PAGE>   1
                                                                   EXHIBIT 10.11

                           LOCAL FINANCIAL CORPORATION
                             1998 STOCK OPTION PLAN


         1.       PURPOSE

                  The purpose of this Local Financial Corporation 1998 Stock
Option Plan (the "Plan") is to provide a method whereby those key employees and
non-employee directors of Local Financial Corporation and its affiliates
(collectively, the "Company"), who are primarily responsible for the management
and growth of the Company's business and who are presently making and are
expected to make substantial contributions to the Company's future management
and growth, may be offered incentives in addition to those presently available,
and may be stimulated by increased personal involvement in the fortunes and
success of the Company to continue in its service, thereby advancing the
interests of the Company and its shareholders. The word "affiliate," as used in
the Plan, means any corporation in any unbroken chain of corporations beginning
or ending with the Company, if at the time of the granting of an option, each
corporation other than the last in that chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in the chain.

         2.       ADMINISTRATION

                  The following provisions shall govern the administration of
the Plan:

                           (a) BOARD OR COMMITTEE ADMINISTRATION. The Plan shall
         be administered by the Board of Directors which may delegate its
         administrative powers and authority under the Plan, in whole or in
         part, to one or more duly appointed committees of the Board (including
         a committee described in Subsection 2(b) below). The Board of Directors
         may from time to time remove members from or add members to the
         committee. Vacancies on the committee, however caused, shall be filled
         by the Board of Directors. The Board of Directors may designate a
         Chairman and Vice-Chairman of the committee from among the committee
         members. Acts of the committee (i) approved at a meeting, held at a
         time and place and in accordance with rules adopted by the committee,
         at which a quorum of the committee is present and acting, or (ii)
         otherwise reduced to and approved in writing by all members of the
         committee, shall be the valid acts of the committee.

                           (b) SPECIAL RULE FOR OFFICERS AND DIRECTORS. The
         grant of options to employees who are officers or directors of the
         Company and to non-employee directors of the Company may be made by and
         all discretion with respect to the material terms of the options may be
         exercised by either (i) the Board of Directors, or (ii) a duly
         appointed committee of the Board composed solely of two or more
         non-employee directors having full authority to act in the matter. The
         term "non-employee directors" shall have the meaning set forth in Rule
         16b-3 as promulgated by the Securities and Exchange Commission ("SEC")
         under section 16(b) of the Securities Exchange Act of 1934, as amended
         (the "Exchange Act"), as that rule may be amended from time to time,
         and as interpreted by the SEC ("Rule 16b-3").



<PAGE>   2


                           (c) DESIGNATION. The Board of Directors and any
         committee(s) referred to in Subsection 2(a) or 2(b) is referred to
         hereinafter as the "Committee," except where otherwise expressly
         provided or where the context requires otherwise.

                           (d) COMMITTEE POWERS. The Committee shall effect the
         grant of options under the Plan by execution of instruments in writing
         in a form approved by the Committee. Subject to the express terms and
         conditions of the Plan, the Committee shall have full power to construe
         the Plan and the terms of any option granted under the Plan, to
         prescribe, amend and rescind rules and regulations relating to the Plan
         or options granted under the Plan and to make all other determinations
         necessary or advisable for the Plan's administration, including,
         without limitation, the power to:

                                    (i) determine which persons meet the
                  requirements of Section 3 hereof for selection as participants
                  in the Plan;

                                    (ii) determine to whom of the eligible
                  persons, if any, options shall be granted under the Plan;

                                    (iii) establish the terms and conditions
                  required or permitted to be included in every option agreement
                  or any amendments thereto, including whether options to be
                  granted thereunder shall be "incentive stock options," as
                  defined in section 422 of the Internal Revenue Code of 1986,
                  as amended (the "Code"), or non-qualified stock options not
                  described in sections 422(b) or 423(a) of the Code;

                                    (iv) specify the number of shares to be
                  covered by each option;

                                    (v) determine the fair market value of
                  shares of the Company's common stock for any purpose under the
                  Plan;

                                    (vi) take appropriate action to amend any
                  option hereunder, provided that no such action may be taken
                  without the written consent of the affected optionee;

                                    (vii) cancel outstanding options and issue
                  replacement options therefor with the consent of the affected
                  optionee; and

                                    (viii) make all other determinations deemed
                  necessary or advisable for administering the Plan.

The Committee's determination on the foregoing matters shall be conclusive.

         3.       ELIGIBILITY

                  The persons who shall be eligible to receive the discretionary
grant of options under the Plan shall be those key employees, officers and
directors of the Company (including directors of the Company who are not also
employees of the Company) selected for participation by the Committee ("Eligible



                                       2

<PAGE>   3

Persons"). Notwithstanding any other provision of the Plan, no Eligible Person
shall be granted options to purchase more than an aggregate of eight hundred
eleven thousand six hundred forty (811,640) shares of the Company's common stock
under the Plan, as adjusted pursuant to Section 9.

         4.       THE SHARES

                  The shares of stock subject to options authorized to be
granted under the Plan shall consist of one million four hundred twenty thousand
three hundred seventy (1,420,370) shares of the Company's $0.01 par value common
stock (the "Shares"), or the number and kind of shares of stock or other
securities which shall be substituted for the Shares or to which the Shares
shall be adjusted as provided in Section 9 hereof. Upon the expiration or
termination for any reason of an outstanding option under the Plan which has not
been exercised in full, all unissued Shares thereunder shall again become
available for the grant of options under the Plan. Shares which are (i)
delivered by an optionee in payment of the exercise price of an option, or (ii)
delivered by an optionee, or withheld by the Company from the Shares otherwise
due upon exercise of an option, in satisfaction of applicable withholding taxes,
shall again become available for the grant of options under the Plan.

         5.       INCENTIVE STOCK OPTION AGREEMENT TERMS AND CONDITIONS

                  Options granted to employees (but not to non-employee
directors) under the terms and conditions of this Section 5 are intended to be
incentive stock options (ISOs) under section 422 of the Code. Each incentive
stock option granted under the Plan shall be authorized by action of the
Committee and shall be evidenced by a written agreement in such form as the
Committee shall from time to time approve, which agreement shall comply with and
be subject to the following terms and conditions:

                           (a) EXERCISE PRICE. The exercise price of each
         incentive stock option shall be equal to or greater than one hundred
         percent (100%) of the fair market value of a Share of the Company on
         the date the option is granted; provided, however, that the exercise
         price of an incentive stock option granted to an individual who owns
         stock possessing more than ten percent (10%) of the total combined
         voting power of all classes of stock of the Company, as determined
         under the stock ownership rules specified in Subsection 5(c), shall be
         equal to or greater than one hundred ten percent (110%) of the fair
         market value of a Share on the date the option is granted.

                           (b) DURATION OF OPTIONS. No incentive stock option
         shall be exercisable after the expiration of ten (10) years from the
         date on which that option is granted; provided, however, that no
         incentive stock option granted to an individual who owns stock
         possessing more than ten percent (10%) of the total combined voting
         power of all classes of stock of the Company, as determined under the
         stock ownership rules specified in Subsection 5(c), shall be
         exercisable after the expiration of five (5) years from the date on
         which that option is granted.

                           (c) DETERMINATION OF STOCK OWNERSHIP. For purposes of
         determining in Subsections 5(a) and 5(b) whether an employee owns stock
         possessing more than ten percent 


                                       3

<PAGE>   4

         (10%) of the total combined voting power of all classes of stock of the
         Company, an employee shall be considered as owning the stock owned,
         directly or indirectly, by or for his or her brothers and sisters
         (whether by the whole or half blood), spouse, ancestors, and lineal
         descendants. Stock owned, directly or indirectly, by or for a
         corporation, partnership, estate, or trust shall be considered as being
         owned proportionately by or for its shareholders, partners, or
         beneficiaries. Stock with respect to which the employee holds an option
         shall not be counted for purposes of this determination.

                           (d) RIGHT TO EXERCISE. Each incentive stock option
         shall become exercisable and vest according to the terms and conditions
         established by the Committee and reflected in the written agreement
         evidencing the option. Each incentive stock option shall be subject to
         termination before its date exercised or its date of expiration as
         provided in Subsection 5(e).

                           (e) TERMINATIONS OF OPTIONS. If an optionee ceases to
         be an employee of the Company, his or her rights to exercise an
         incentive stock option then held shall be only as follows:

                  DEATH: If an optionee dies while he or she is employed by the
Company, the optionee's estate shall have the right for a period of twelve (12)
months after the date of death to exercise the option to the extent the optionee
was entitled to exercise the option on that date, provided the date of exercise
is in no event after the expiration of the term of the option. To the extent the
option is not exercised within this period, the option will terminate. An
optionee's "estate" shall mean the optionee's legal representative or any person
who acquires the right to exercise an option by reason of the optionee's death.

                  DISABILITY: If an optionee's employment with the Company ends
because the optionee becomes disabled, the optionee or his or her qualified
representative (in the event of the optionee's mental disability) shall have the
right for a period of twelve (12) months after the date on which the optionee's
employment ends to exercise the option to the extent the optionee was entitled
to exercise the option on that date, provided the date of exercise is in no
event after the expiration of the term of the option. To the extent the option
is not exercised within this period, the option will terminate.

                  RESIGNATION: If an optionee voluntarily resigns from the
Company, the optionee shall have the right for a period of three (3) months
after the date of resignation to exercise the option to the extent the optionee
was entitled to exercise the option on that date, provided the date of exercise
is in no event after the expiration of the term of the option. To the extent the
option is not exercised within this period, the option will terminate.

                  TERMINATION FOR REASONS OTHER THAN CAUSE: If an optionee's
employment is terminated by the Company for reasons other than "Cause," the
optionee shall have the right for a period of three (3) months after the date of
termination to exercise the option to the extent the optionee was entitled to
exercise the option on that date, provided the date of exercise is in no event
after the expiration of the term of the option. To the extent the option is not
exercised within this period, the option will terminate. For the purpose of this
clause, "Cause" shall mean that: 


                                       4


<PAGE>   5

the optionee is determined solely by the Committee to have committed an act of
embezzlement, fraud, dishonesty, or breach of fiduciary duty to the Company, or
to have deliberately disregarded the rules of the Company which resulted in
loss, damage, or injury to the Company, or because the optionee has made any
unauthorized disclosure of any of the secrets or confidential information of the
Company, has induced any client or customer of the Company to break any contract
with the Company, has induced any principal for whom the Company acts as agent
to terminate the agency relationship, or has engaged in any conduct that
constitutes unfair competition with the Company. If an optionee's employment is
terminated by the Company for "Cause," as that term is defined above, then, and
in that event, all rights of the optionee in an incentive stock option granted
to optionee hereunder, to the extent that it has not been previously exercised,
shall terminate on the date the optionee's employment is so terminated for
"Cause."

                  OTHER REASONS: If an optionee's employment with the Company
ends for any reason not mentioned above in this Subsection 5(e), all rights of
the optionee in an incentive stock option, to the extent that it has not been
exercised, shall terminate on the date the optionee's employment ends.

                           (f) NOTICE OF SALE. If an optionee sells or otherwise
         disposes of any Shares acquired upon exercise of an incentive stock
         option, the optionee shall give the Company notice of the sale or
         disposition within five (5) days thereafter.

                           (g) LIMIT ON EXERCISE OF INCENTIVE STOCK OPTIONS. To
         the extent that the aggregate fair market value (determined as of the
         time the option is granted) of the Stock with respect to which
         incentive stock options are exercisable for the first time by any
         individual during any calendar year (under all plans of the Company and
         its parent and subsidiary corporations) exceeds One Hundred Thousand
         Dollars ($100,000), the options shall be treated as options that are
         not incentive stock options.

         6.       NON-QUALIFIED STOCK OPTION AGREEMENT TERMS AND CONDITIONS

                  The options granted under the terms and conditions of this
Section 6 are Non-qualified stock options and are not intended to qualify as
either a qualified stock option or an incentive stock option as those terms are
defined by applicable provisions of the Code. Each Non-qualified stock option
granted under the Plan shall be authorized by action of the Committee and shall
be evidenced by a written agreement in such form as the Committee shall from
time to time approve, which agreement shall comply with and be subject to the
following terms and conditions:

                           (a) EXERCISE PRICE. The exercise price of each
         Non-qualified stock option shall be determined by the Committee at the
         time of grant.

                           (b) DURATION OF OPTIONS. Each Non-qualified stock
         option shall be for a term determined by the Committee; provided,
         however, that the term of any option may not exceed ten (10) years.



                                       5

<PAGE>   6

                           (c) RIGHT TO EXERCISE. Each Non-qualified stock
         option shall become exercisable and vest according to the terms and
         conditions established by the Committee and reflected in the written
         agreement evidencing the option. As an additional condition to the
         exercise of the Non-qualified stock options, the Plan must be approved
         by the Company's shareholders prior to exercise. Each Non-qualified
         stock option shall be subject to termination before its date of
         expiration as provided in Subsection 6(d).

                           (d) TERMINATIONS OF OPTIONS. Unless otherwise
         specified by the Committee in an option agreement, if an optionee
         ceases to be an employee of the Company, his or her rights to exercise
         a Non-qualified stock option then held shall be only as follows:

                  DEATH: If an optionee dies while he or she is employed by the
Company, the optionee's estate shall have the original term of the option (or
such longer period as the Committee may determine at the date of grant or during
the term of the option) after the date of death to exercise the option to the
extent the optionee was entitled to exercise the option on that date, provided
the date of exercise is in no event after the expiration of the term of the
option. To the extent the option is not exercised within this period, the option
will terminate. An optionee's "estate" shall mean the optionee's legal
representative or any person who acquires the right to exercise an option by
reason of the optionee's death.

                  DISABILITY: If an optionee's employment with the Company ends
because the optionee becomes disabled, the optionee or his or her qualified
representative (in the event of the optionee's mental disability) shall have the
original term of the option (or such longer period as the Committee may
determine at the date of grant or during the term of the option) after the date
on which the optionee's employment ends to exercise the option to the extent the
optionee was entitled to exercise the option on that date, provided the date of
exercise is in no event after the expiration of the term of the option. To the
extent the option is not exercised within this period, the option will
terminate.

                  RESIGNATION: If an optionee voluntarily resigns from the
Company, the optionee shall have the right for a period of twelve (12) months
(or such longer period as the Committee may determine at the date of grant or
during the term of the option) after the date of resignation to exercise the
option to the extent the optionee was entitled to exercise the option on that
date, provided the date of exercise is in no event after the expiration of the
term of the option. To the extent the option is not exercised within this
period, the option will terminate.

                  TERMINATION FOR REASONS OTHER THAN CAUSE: If an optionee's
employment is terminated by the Company for reasons other than "Cause," the
optionee shall have the right for a period of twelve (12) months (or such longer
period as the Committee may determine at the date of grant or during the term of
the option) after the date of termination to exercise the option to the extent
the optionee was entitled to exercise the option on that date, provided the date
of exercise is in no event after the expiration of the term of the option. To
the extent the option is not exercised within this period, the option will
terminate. For the purpose of this clause, "Cause" shall mean that: the optionee
is determined solely by the Committee to have committed an act of embezzlement,
fraud, dishonesty, or breach of fiduciary duty to the Company, or to have
deliberately disregarded the rules of the Company which resulted in loss,
damage, or injury to the Company, or 



                                       6

<PAGE>   7

because the optionee has made any unauthorized disclosure of any of the secrets
or confidential information of the Company, has induced any client or customer
of the Company to break any contract with the Company, has induced any principal
for whom the Company acts as agent to terminate the agency relationship, or has
engaged in any conduct that constitutes unfair competition with the Company. If
an optionee's employment is terminated by the Company for "Cause," as that term
is defined above, then, and in that event, all rights of the optionee in a
non-qualified stock option, to the extent that it has not been exercised, shall
terminate on the date the optionee's employment is so terminated for "Cause."

                  OTHER REASONS: If an optionee's employment with the Company
ends for any reason not mentioned above in this Subsection 6(d), all rights of
the optionee in a Non-qualified stock option, to the extent that it has not been
exercised, shall terminate on the date the optionee's employment ends (or such
longer period as the Committee may determine at the date of grant or during the
term of the said option).

                           (e) GROSS-UP BONUS. In conjunction with the granting
         of Non-qualified stock options, the Committee, in its sole discretion,
         may provide for a Gross-Up Bonus upon exercise, cancellation or cash
         out of such stock options to gross up the optionee for applicable
         taxes. The terms and conditions of the Gross-Up Bonus shall be set
         forth in the written agreement.

         7.       GRANTS TO NON-EMPLOYEE DIRECTORS

                  All options granted to non-employee directors shall be subject
to the following terms and conditions:

                           (a) LIMITS. The aggregate amount of Shares (as
         adjusted pursuant to Section 9) subject to options granted to all
         non-employee directors as a group shall not exceed 5% of the Shares
         plus Shares underlying expired or terminated options that are added
         back to the number of Shares available under the Plan pursuant to
         Section 4.

                           (b) NON-QUALIFIED OPTIONS. All stock options granted
         to non-employee directors pursuant to the Plan shall be Non-qualified
         stock options.

                           (c) EXERCISE PRICE. The exercise price of each option
         granted to a non-employee director shall be determined by the Committee
         at the time of grant.

                           (d) DURATION OF OPTIONS. Each option granted to a
         non-employee director shall be for a term determined by the Committee;
         provided, however, that the term of any option may not exceed ten (10)
         years.

                           (e) RIGHT TO EXERCISE. Each option granted to a
         non-employee director shall become exercisable and vest according to
         the terms and conditions established by the Committee and reflected in
         the written agreement evidencing the option. Each option granted to a
         non-employee director shall be subject to termination before its date
         of expiration as provided in Subsection 7(f).



                                       7

<PAGE>   8

                           (f) TERMINATIONS OF OPTIONS. If a non-employee
         director ceases to be a director of the Company, his or her rights to
         exercise an option then held shall be only as follows:

                  DEATH: If a non-employee director dies while he or she is
serving on the Board of the Company, the director's estate shall have the right
for a period of twelve (12) months (or such longer period as the Committee may
determine at the date of grant or during the term of the option) after the date
of death to exercise the option to the extent the director was entitled to
exercise the option on that date, provided the date of exercise is in no event
after the expiration of the term of the option. To the extent the option is not
exercised within this period, the option will terminate. A director's "estate"
shall mean the director's legal representative or any person who acquires the
right to exercise an option by reason of the director's death.

                  DISABILITY: If a non-employee director's Board membership ends
because the director becomes disabled, the director or his or her qualified
representative (in the event of the director's mental disability) shall have the
right for a period of twelve (12) months (or such longer period as the Committee
may determine at the date of grant or during the term of the option) after the
date on which the director's Board membership ends to exercise the option to the
extent the director was entitled to exercise the option on that date, provided
the date of exercise is in no event after the expiration of the term of the
option. To the extent the option is not exercised within this period, the option
will terminate.

                  RESIGNATION: If a non-employee director voluntarily resigns
from the Company's Board, the director shall have the right for a period of
twelve (12) months (or such longer period as the Committee may determine at the
date of grant or during the term of the option) after the date of resignation to
exercise the option to the extent the director was entitled to exercise the
option on that date, provided the date of exercise is in no event after the
expiration of the term of the option. To the extent the option is not exercised
within this period, the option will terminate.

                  TERMINATION FOR REASONS OTHER THAN CAUSE: If a non-employee
director's Board membership is terminated by the Company for reasons other than
"Cause," the director shall have the right for a period of twelve (12) months
(or such longer period as the Committee may determine at the date of grant or
during the term of the option) after the date of termination to exercise the
option to the extent the director was entitled to exercise the option on that
date, provided the date of exercise is in no event after the expiration of the
term of the option. To the extent the option is not exercised within this
period, the option will terminate. For the purpose of this clause, "Cause" shall
mean that: the director is determined by the Committee to have committed an act
of embezzlement, fraud, dishonesty, or breach of fiduciary duty to the Company,
or to have deliberately disregarded the rules of the Company which resulted in
loss, damage, or injury to the Company, or because the director has made any
unauthorized disclosure of any of the secrets or confidential information of the
Company, has induced any client or customer of the Company to break any contract
with the Company, has induced any principal for whom the Company acts as agent
to terminate the agency relationship, or has engaged in any conduct that
constitutes unfair competition with the Company.



                                       8

<PAGE>   9

                  OTHER REASONS: If a non-employee director's Board membership
ends for any reason not mentioned above in this Subsection 7(f), all rights of
the director in an option, to the extent that it has not been exercised, shall
terminate on the date the director's Board membership ends.

         8.       ADDITIONAL TERMS AND CONDITIONS OF ALL OPTIONS

                  The following terms and conditions shall apply to all options
granted pursuant to the Plan:

                           (a) EXERCISE OF OPTIONS. To the extent the right to
         purchase Shares has vested under an optionee's stock option agreement,
         options may be exercised from time to time by delivering payment
         therefor in cash, certified check, official bank check, or the
         equivalent thereof acceptable to the Company, together with written
         notice to the Company at the address specified in the written agreement
         evidencing the option. The written notice must identify the option or
         part thereof being exercised and specify the number of Shares for which
         payment is being tendered. An optionee may also exercise an option by
         the delivery and surrender of Shares which (i) have been owned by the
         optionee for at least six (6) months or for such other period as the
         Committee may require; and (ii) have an aggregate fair market value on
         the date of surrender equal to the exercise price. In addition, an
         option may be exercised by delivering to the Company (i) an exercise
         notice instructing the Company to deliver the certificates for the
         Shares purchased to a designated brokerage firm; and (ii) a copy of
         irrevocable instructions delivered to the brokerage firm to sell the
         Shares acquired upon exercise of the option and to deliver to the
         Company from the sale proceeds sufficient cash to pay the exercise
         price and applicable withholding taxes arising as a result of the
         exercise.

                  The Company is vested with authority to assist any employee to
whom an option is granted under this Plan (including any director or officer of
the Company or any of its subsidiaries who is also an employee) in the payment
of the purchase price payable on the exercise of that option, by lending the
amount of such purchase price to such employee on such terms and at such rates
of interest and upon such security (or unsecured) as shall have been authorized
by or under authority of the Board.

                  The Company shall deliver to the optionee, without transfer or
issue tax to the optionee (or other person entitled to exercise the option), at
the principal office of the Company, or such other place as shall be mutually
acceptable, a certificate or certificates for the Shares acquired under the
option dated the date the option was validly exercised; provided, however, that
the time of delivery may be postponed by the Company for such period as may be
required for it with reasonable diligence to comply with any requirements of
law.

                           (b) TRANSFERABILITY OF OPTIONS AND SHARES. Each
         option shall be transferable only by will or the laws of descent and
         distribution and shall be exercisable during the optionee's lifetime
         only by the optionee, or in the event of disability, the optionee's
         qualified representative. Notwithstanding the foregoing, the Committee
         may grant non-qualified stock options that are transferable by the
         optionee to such optionee's children and 



                                       9

<PAGE>   10

         immediate family members, whether directly or indirectly or by means of
         a trust or partnership or otherwise. In addition, in order for Shares
         acquired upon exercise of incentive stock options to receive the tax
         treatment afforded such Shares, the Shares may not be disposed of
         within two years from the date of the option grant nor within one year
         after the date of transfer of such Shares to the optionee.

                           (c) WITHHOLDING. The Company shall have the right to
         condition the issuance of Shares upon exercise of an option upon
         payment by the optionee of any applicable taxes required to be withheld
         under federal, state or local tax laws or regulations in connection
         with the exercise. To the extent permitted in an optionee's stock
         option agreement, an optionee may elect to pay such tax by (i)
         requesting the Company to withhold a sufficient number of Shares from
         the total number of Shares issuable upon exercise of the option or (ii)
         delivering a sufficient number of Shares which have been held by the
         optionee for at least six (6) months (or such other period as the
         Committee may require) to the Company. This election is subject to
         approval or disapproval by the Committee. The value of Shares withheld
         or delivered shall be the fair market value of the Shares on the date
         the exercise becomes taxable as determined by the Committee.

                           (d) FAIR MARKET VALUE OF SHARES. For any purposes
         under the Plan, fair market value per Share shall mean, where there is
         a public market for the Shares, the mean of the bid and asked prices
         (or the closing price if listed on a stock exchange or the NASDAQ
         National Market) of the Shares for the date of grant, as reported in
         the Wall Street Journal (or, if not so reported, as otherwise reported
         by the NASDAQ Stock Market or the National Quotation Bureau). If this
         fair market value information is not available for the date of grant,
         then such information for the last preceding date for which it is
         available shall be considered as the fair market value.

                           (e) OTHER TERMS AND CONDITIONS. Options may also
         contain such other provisions, which shall not be inconsistent with any
         of the foregoing terms, as the Committee shall deem appropriate. No
         option, however, nor anything contained in the Plan, shall confer upon
         any optionee any right to continue in the employ or in the status as a
         director of the Company, nor limit in any way the right of the Company
         to terminate an optionee's employment at any time.

         9.       ADJUSTMENT OF, AND CHANGES IN, THE SHARES

                  (a) CHANGES IN CAPITALIZATION. Subject to any required action
         by the shareholders of the Company, the number of Shares covered by
         each outstanding option, and the number of Shares which have been
         authorized for issuance under the Plan but as to which no options have
         yet been granted, as well as the price per Share covered by each
         outstanding option, shall be proportionately adjusted for any increase
         or decrease in the number of issued Shares resulting from a stock
         split, reverse stock split, stock dividend, recapitalization,
         combination or reclassification of the Shares, or any other increase or
         decrease in the number of issued Shares effected without receipt of
         consideration by the Company; provided, however, that conversion of any
         convertible securities of the Company shall not be deemed to have been
         "effected without receipt of consideration." Such adjustment shall be
         made by the Board of 



                                       10

<PAGE>   11

         Directors, whose determination in that respect shall be final, binding,
         and conclusive. Except as expressly provided herein, no issuance by the
         Company of shares of stock of any class, or securities convertible into
         shares of stock of any class, shall affect, and no adjustment by reason
         thereof shall be made with respect to, the number or price of Shares
         subject to an option.

                  (b) DISSOLUTION, LIQUIDATION, SALE, OR MERGER. In the event of
         a proposed dissolution or liquidation of the Company, options
         outstanding under the Plan shall terminate immediately before the
         consummation of such proposed action. The Board will, in such
         circumstances, provide written notice to the optionees of the expected
         dates of termination of outstanding options and consummation of the
         proposed dissolution or liquidation.

                  In the event of a proposed Change of Control of the Company,
         as that term is defined below in this Paragraph 9(b), outstanding
         options may be assumed or equivalent options may be substituted by the
         successor corporation (or a parent or subsidiary of the successor
         corporation), unless the successor corporation does not agree to assume
         the options or to substitute equivalent options. If outstanding options
         are not to be assumed or substituted by equivalent options, all
         outstanding options shall terminate immediately before the consummation
         of the proposed Change of Control (subject to the actual consummation
         of the sale or merger) and the Company shall provide written notice to
         the optionees of the expected dates of termination of the options and
         consummation of the transaction. If the unexercised options are to be
         terminated pursuant to the foregoing sentence, all persons entitled to
         exercise any unexercised options then outstanding shall have the right,
         at such time prior to the consummation of the transaction causing such
         termination as the Company shall designate, to exercise any and all
         previously unexercised options, including those options that would not
         otherwise be currently exercisable. If the transaction is not
         consummated, unexercised options shall continue in accordance with the
         original terms of this Plan.

                  Notwithstanding the foregoing, the Committee may provide in
         the option grant that upon a proposed Change of Control, such option
         shall become fully vested and the difference between the fair market
         value of the underlying shares and the exercise price may be paid to
         the optionee in cancellation of such options, at the discretion of such
         optionee. Additionally, notwithstanding the foregoing, the Committee
         may also provide that upon a proposed Change of Control, that such
         option shall become fully vested and at optionee's election, in
         optionee's sole and absolute discretion, the optionee can choose either
         (i) to elect to receive the cash-out payment for his options in the
         manner provided in the preceding sentence, or (ii) to continue to
         retain his options as to the Shares of the Company's common stock
         pursuant to the terms and conditions of his grant, if the Company
         continues to have Shares of its common stock issued and outstanding
         after the effective date of the Change of Control, or (iii) to require
         the surviving, resulting or acquiring corporation, which has merged,
         consolidated or acquired the Company, to assume and agree to fully
         perform and pay all of Company's obligations to optionee under the
         terms and conditions of optionee's option grant and to substitute for
         the Company's Shares, which were otherwise the subject of such option
         grant, a proportionate amount (based on the fair market value of the
         Shares in relation to the fair market value of the shares of common
         stock of the surviving, resulting or acquiring 



                                       11

<PAGE>   12

         corporation on the effective date of the Change of Control) of the
         shares of the surviving, resulting or acquiring corporation with such
         option to be at the same exercise price and otherwise on the same terms
         and conditions contained in the optionee's then existing option grant.
         Company shall take all necessary steps to assure that any surviving,
         resulting or acquiring corporation, as an express condition to, or
         requirement of, its merger, consolidation or acquisition of Company,
         expressly agree to assume and fully perform and pay all of the
         obligations of Company under any non-qualified stock option grant
         containing any of the immediately foregoing clauses (i) - (ii).

                  For all purposes under this Plan, the term "Change of Control"
         shall mean the occurrence of one of the following events to the Company
         or to the Bank, as that term is defined below:

                           (x) the consummation of any agreement of merger,
                  statutory share exchange or consolidation pursuant to which
                  either the Company, or its wholly-owned subsidiary bank, Local
                  Federal Bank, F.S.B., a federally chartered stock savings bank
                  with its principal offices in Oklahoma City, Oklahoma, or any
                  successor entity thereto, or assign (the "Bank"), is merged or
                  consolidated into, or all of the outstanding shares of the
                  Company's or the Bank's common stock are acquired by, another
                  corporation, partnership, limited liability company or limited
                  liability partnership, or any other business entity; or

                           (y) another corporation or such other business entity
                  is merged or consolidated into the Company or the Bank in
                  circumstances under which the outstanding shares of the
                  Company's or the Bank's common stock are converted into or
                  exchanged for cash or securities of another such corporation
                  or entity which was not a wholly-owned subsidiary of the
                  Company or the Bank at all times within one year prior to the
                  said merger or consolidation; or

                           (z) (1) the consummation of a sale of fifty percent
                  (50%) or more of the issued and outstanding common stock of
                  the Bank by the Company; or (2) fifty percent (50%) or more of
                  the issued and outstanding common stock of the Company is
                  acquired by ten or fewer persons (including corporations or
                  any other form of business entity) acting in concert; or (3)
                  the consummation of the sale of all or substantially all of
                  the assets of the Bank by the Company or of the Company by the
                  Bank.

                           (c) NOTICE OF ADJUSTMENTS, FRACTIONAL SHARES. To the
         extent the foregoing adjustments relate to stock or securities of the
         Company, such adjustments shall be made by the Committee, whose
         determination in that respect shall be final, binding, and conclusive.
         No right to purchase fractional shares shall result from any adjustment
         in options pursuant to this Section 9. In case of any such adjustment,
         the shares subject to the option shall be rounded down to the nearest
         whole share. Notice of any adjustment shall be given by the Company to
         each holder of an option which was in fact so adjusted and the
         adjustment (whether or not notice is given) shall be effective and
         binding for all purposes of the Plan.



                                       12

<PAGE>   13

         No adjustment shall be made for dividends or other rights for which the
         record date is prior to the date of such issuance, except as provided
         in this Section 9.

                  Any issue by the Company of shares of stock of any class, or
         securities convertible into shares of any class, shall not affect the
         number or price of Shares subject to the option, and no adjustment by
         reason thereof shall be made. The grant of an option pursuant to the
         Plan shall not affect in any way the right or power of the Company to
         make adjustments, reclassifications, reorganizations or changes of its
         capital or business structure or to merge or to consolidate or to
         dissolve, liquidate or sell, or transfer all or any part of its
         business or assets.

         10.      AMENDMENT AND TERMINATION OF THE PLAN

                  The Board shall have complete power and authority to terminate
or amend the Plan; provided, however, that the Board shall not, without the
approval of the shareholders of the Company, amend the Plan in a manner that
requires shareholder approval for continued compliance with section 422 of the
Code, any successor rules, or other regulatory authority. Except as provided in
Section 9, no termination, modification or amendment of the Plan may, without
the consent of optionees to whom options were previously granted under the Plan,
adversely effect the rights of those optionees. Any consent required by the
preceding sentence may be obtained in any manner deemed appropriate by the
Committee.

                  The Plan, unless sooner terminated, shall terminate on
September 23, 2008, ten (10) years from the date the Plan was originally adopted
by the Board. An option may not be granted under the Plan after the Plan is
terminated.

         11.      EFFECTIVENESS OF THE PLAN

                  The Plan will become effective upon being adopted by the
Company's Board of Directors.

         12.      INFORMATION TO OPTIONEES

                  The Company shall provide to each optionee during the period
for which he or she has one or more outstanding options, copies of all annual
reports and all other information which is provided to shareholders of the
Company. The Company shall not be required to provide such information to key
employees whose duties in connection with the Company assure their access to
equivalent information.

         13.      PRIVILEGES OF STOCK OWNERSHIP AND SECURITIES LAW COMPLIANCE

                  No optionee shall be entitled to the privileges of stock
ownership as to any Shares not actually issued and delivered to the optionee.
The exercise of any option under the Plan shall be conditioned upon the
registration of the Shares with the SEC and qualification of the options and
underlying Shares under the Delaware securities laws, unless in the opinion of
counsel to the 



                                       13

<PAGE>   14

Company registration or qualification is not necessary. The Company shall
diligently endeavor to comply with all applicable securities laws before any
options are granted under the Plan and before any Shares are issued pursuant to
the exercise of such options.

         14.      STOCK APPRECIATION RIGHTS

                  If a stock option agreement so provides, an option granted
under this Plan (herein sometimes referred to as the "Corresponding Option") may
include the right (a "Stock Appreciation Right") to receive an amount equal to
some or all of the excess of the fair market value (determined in a manner
specified in the instrument evidencing the Corresponding Option) of the shares
subject to unexercised portions of the Corresponding Option over the aggregate
exercise price for such shares under the Corresponding Option as of the date the
Stock Appreciation Right is exercised. The amount payable upon exercise of a
Stock Appreciation Right may be paid in cash or in shares of the class then
subject to the Corresponding Option (valued on the basis of their fair market
value, determined as specified with respect to the measurement of the amount
payable as aforesaid), or in a combination of cash and such shares so valued. No
Stock Appreciation Right may be exercised in whole or in part (a) other than in
connection with the contemporaneous surrender without exercise of such
Corresponding Option, or the portion thereof that corresponds to the portion of
the Stock Appreciation Right being exercised, or (b) except to the extent that
the Corresponding Option or such portion thereof is exercisable on the date of
exercise of the Stock Appreciation Right by the person exercising the Stock
Appreciation Right, or (c) unless the class of stock then subject to the
Corresponding Option is then publicly traded stock.

         15.      INDEMNIFICATION

                  To the extent permitted by applicable law in effect from time
to time, no member of the Board or the Committee shall be liable for any action
or omission of any other member of the Board or Committee nor for any act or
omission on the member's own part, excepting only the member's own willful
misconduct or gross negligence. The Company shall pay expenses incurred by, and
satisfy a judgment or fine rendered or levied against, a present or former
director or member of the Committee in any action against such person (whether
or not the Company is joined as a party defendant) to impose liability or a
penalty on such person for an act alleged to have been committed by such person
while a director or member of the Committee arising with respect to the Plan or
administration thereof or out of membership on the Committee or by the Company,
or all or any combination of the preceding; provided the director or Committee
member was acting in good faith, within what such director or Committee member
reasonably believed to have been within the scope of his or her employment or
authority and for a purpose which he or she reasonably believed to be in the
best interests of the Company or its shareholders. Payments authorized hereunder
include amounts paid and expenses incurred in settling any such action or
threatened action. This section does not apply to any action instituted or
maintained in the right of the Company by a shareholder or holder of a voting
trust certificate representing shares of the Company. The provisions of this
section shall apply to the estate, executor, administrator, heirs, legatees or
devisees of a director or Committee member, and the term "person" as used in
this section shall include the estate, executor, administrator, heirs, legatees
or devisees of such person.


Date Plan Approved by the Board:  September 23, 1998

Date Plan Approved by Shareholders:  _____________





                                       14