<PAGE>



                       AMENDED AND RESTATED SEVERANCE AGREEMENT
                      ----------------------------------------

          THIS AGREEMENT, made and entered as of this 21st day of June, 1993,
     as amended and restated as of the 18th day of March, 1996 ("Effective
     Date"), by and between Stockton Savings Bank, f.s.b., a federally
     chartered savings bank, with its principal executive offices at 501 West
     Weber Avenue, Stockton, California 95203 ("Bank") and Robert V. Kavanaugh
     ("Employee");

          WHEREAS, Employee is currently employed by Bank and is considered a
     key employee of Bank;

          WHEREAS, Bank desires to retain the services of Employee;

          WHEREAS, from time to time Bank has made payments and provided
     benefits to employees who have terminated employment with Bank ("Prior
     Severance Arrangements");

          WHEREAS, Bank and Employee desire to set forth the amounts payable
     and benefits to be provided by Bank to Employee in the event of a
     termination of Employee's employment with Bank under the circumstances set
     forth herein after the happening of a Change in Control (as defined
     herein);

          WHEREAS, the parties intend that the provisions of this Agreement
     shall be in lieu of Employee's right to make any claim or demand with
     respect to any severance policy of Bank arising from or alleged to arise
     from the Prior Severance Arrangements; and

          WHEREAS, Bank and Employee intend to amend and restate in its
     entirety the Severance Agreement between them dated as of June 21, 1993;

          NOW, THEREFORE, in consideration of the foregoing and the mutual
     agreements contained herein and intending to be legally bound hereby, the
     parties agree as follows:

          1.    Continued Employment.  In reliance upon the promises of Bank
     hereinafter contained, Employee agrees that, for a period of no less than
     one (1) year commencing on the date set forth above, and subject to
     reasonable absences for illness, holiday, and vacation pursuant to Bank's
     policies and practices in effect on the date hereof, Employee will
     continue his or her employment with Bank and shall devote his or her best
     efforts to such duties as may be assigned to him or her by Bank from time
     to time.

          2.  Prior Severance Arrangements.  Except to the extent set forth
     herein, in the event of the termination of Employee's employment with
     Bank, Employee shall make no claim or demand arising or alleged to arise
     from any severance plan, program, policy or arrangement (including but not
     limited to the Prior Severance Arrangements) that Bank may have had in
     effect, may currently sponsor or may hereafter adopt.  Notwithstanding the
     foregoing, in the event of a termination of Employee's employment with
<PAGE>






     Bank, Employee (and his or her spouse, heirs, estate and/or personal
     representative, as the case may be) shall be entitled to receive any
     benefits payable under any employee benefit plan, program, policy or
     arrangement as such may then be in effect that is not a severance plan,
     program, policy or arrangement.

          3.   Effective Date.  This Agreement shall be effective as of the
     date first above written ("Effective Date") and shall continue and remain
     in full force and effect until the termination of Employee's employment
     with Bank, unless earlier terminated by the parties in writing.  The
     completion of one (1) year of employment with Bank by Employee as set
     forth in Section 1 shall not be a condition precedent to the effectiveness
     of this Agreement or to the payments of amounts or provision of benefits
     hereunder in the event Employee's employment with Bank is terminated under
     the circumstances described in Section 4(b).

          4.   Termination of Employment.

               (a)  Requiring No Payments Under Section 5.  In the event
     Employee's employment with Bank is terminated under any of the following
     circumstances, no payments shall be or become due and owing and Bank shall
     have no other obligations under Section 5 of this Agreement:

                    (i) by either party for any reason prior to a Change in
               Control, except as otherwise provided in Section 4(b)(iii)
               below;

                    (ii) by either party for any reason at any time more than
               the Applicable Number of Months (as hereinafter defined) after a
               Change in Control;

                    (iii) by Bank, contemporaneously with or subsequent to a
               Change in Control, for reason of "Cause" (as hereinafter
               defined) or upon the death or "Disability" (as hereinafter
               defined) of Employee; or

                    (iv) by Employee, contemporaneously with or subsequent to a
               Change in Control, upon his or her retirement or resignation for
               reasons other than "Good Reason" (as hereinafter defined).

               (b)  Requiring Payments Under Section 5.  In the event
     Employee's employment with Bank is terminated under any of the following
     circumstances, Bank shall make the payments and provide the benefits as
     set forth in Section 5:

                    (i) by Bank, contemporaneously with or within the
               Applicable Number of Months after a Change in Control, for any
               reason other than (A) for Cause or (B) upon the death or
               Disability of Employee;




                                        - 2 -
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                    (ii) by Employee, contemporaneously with or within  the
               Applicable Number of Months after a Change in Control, for Good
               Reason; or

                    (iii)  before a Change in Control occurs either (A) by Bank
               other than for Cause or upon the death or Disability of
               Employee, or (B) by Employee for Good Reason, and in either case
               it is reasonably demonstrated that the termination of employment
               (x) was at the request of a Third Party (as hereinafter defined)
               that has taken steps reasonably calculated to effect a Change in
               Control or (y) otherwise arose in connection with or in
               anticipation of a Change in Control.

               (c)  Cause.  For the purposes of this Agreement, the term
     "Cause" shall mean Employee's personal dishonesty, incompetence, willful
     misconduct, breach of fiduciary duty involving personal profit,
     intentional failure to perform stated duties, willful violation of any
     law, rule, or regulation (other than traffic violations or similar
     offenses) or final cease-and-desist order, or material breach of any
     provision of this Agreement.

               (d)  Disability.  For purposes of this Agreement, the term
     "Disability" shall mean the complete inability of Employee to perform his
     or her duties by reason of his or her total and permanent disability, as
     determined by an independent physician selected with the approval of
     Bank's Board of Directors and Employee.

               (e)  Good Reason.  For purposes of this Agreement, the term
     "Good Reason" shall, absent Employee's written consent to the contrary,
     mean: 

                    (i) any material breach by Bank of its obligations
               contained in this Agreement;

                    (ii) the assignment to Employee of any duties inconsistent
               with the status of his or her position with Bank on the day
               immediately preceding the happening of a Change in Control or an
               alteration in the nature or status of Employee's duties and
               responsibilities that renders Employee's position to be of less
               dignity, responsibility or scope from that which existed on the
               day immediately preceding the happening of a Change in Control;
               provided, however, that, in the event Employee terminates his or
               her employment prior to a Change in Control, the assignment or
               alteration shall have occurred reasonably contemporaneously with
               such termination of employment; 

                    (iii) a reduction by Bank in Employee's annual base salary
               as in effect on the day immediately preceding the happening of a
               Change in Control or as the same may be increased from time to
               time, except for proportional across-the-board salary reductions
               similarly affecting all of Bank's employees; provided, however,
               that, in the event Employee terminates his or her employment

                                        - 3 -
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               prior to a Change in Control, the reduction in annual base
               salary shall have occurred reasonably contemporaneously with
               such termination of employment;

                    (iv)  the relocation of Bank's principal executive offices
               to a location other than Stockton, California or Bank's
               requiring Employee to be based anywhere other than Bank's
               principal executive offices except for required travel on Bank's
               business to an extent substantially consistent with Employee's
               present business travel obligations; or 

                    (v) any material reduction by Bank or California Financial
               Holding Company, a Delaware corporation ("CFHC"), of the
               benefits enjoyed by Employee under any of Bank's or CFHC's
               pension, retirement, profit sharing, savings, life insurance,
               medical, health-and-accident, disability or other employee
               benefit plans, programs or arrangements as in effect from time
               to time, the taking of any action by Bank or CFHC that would
               directly or indirectly materially reduce any of such benefits or
               deprive Employee of any material fringe benefits, or the failure
               by Bank to provide Employee with the number of paid vacation
               days to which he or she is entitled on the basis of years of
               service with Bank in accordance with Bank's normal vacation
               policy; provided, however, that this paragraph (v) shall not
               apply to any proportional across-the-board reduction or action
               similarly affecting all employees of Bank or CFHC.

               (f)  Change in Control.  For purposes of this Agreement, a
     "Change in Control" shall mean the occurrence, after the Effective Date,
     of any of the following events, directly or indirectly or in one or more
     series of transactions:

                    (i)  A consolidation or merger of Bank or CFHC
               with any third party (which includes a single person
               or entity or a group of persons or entities acting in
               concert) not wholly owned directly or indirectly by
               Bank or CFHC (a "Third Party"), unless Bank or CFHC is
               the entity surviving such merger or consolidation;

                    (ii)  A transfer of all or substantially all of
               the assets of Bank or CFHC to a Third Party or a
               complete liquidation or dissolution of Bank or CFHC;

                    (iii)  A Third Party, directly or indirectly,
               through one or more subsidiaries or transactions or
               acting in concert with one or more persons or
               entities:

                         (A)  acquires beneficial ownership of more
                    than 20% of any class of voting stock of Bank or
                    CFHC;


                                        - 4 -
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                         (B)  acquires irrevocable proxies
                    representing more than 20% of any class of
                    voting stock of Bank or CFHC;

                         (C) acquires any combination of beneficial
                    ownership of voting stock and irrevocable proxies
                    representing more than 20% of any class of voting
                    stock of Bank or CFHC; 

                         (D)  acquires the ability to control in
                    any manner the election of a majority of the
                    directors of Bank or CFHC; or

                         (E)  acquires the ability to directly
                    or indirectly exercise a controlling
                    influence over the management or policies of
                    Bank or CFHC;

                    (iv)  any election has occurred of persons to the
               Board of Directors of CFHC ("Board") that causes a
               majority of the Board to consist of persons other than
               (A) persons who were members of the Board on the
               Effective Date and/or (B) persons who were nominated
               for election as members of the Board by the Board (or
               a committee of the Board) at a time when the majority
               of the Board (or of such committee) consisted of
               persons who were members of the Board on the Effective
               Date; provided, however, that any persons nominated
               for election by the Board (or a committee of the
               Board), a majority of whom are persons described in
               clauses (A) and/or (B), or are persons who were
               themselves nominated by such Board (or a committee of
               such Board), shall for this purpose be deemed to have
               been nominated by a Board composed of persons
               described in clause (A); or

                    (v)  A determination is made by the Office of
               Thrift Supervision ("OTS"), the Federal Deposit
               Insurance Corporation ("FDIC"), the Securities and
               Exchange Commission ("SEC") or any similar agency
               having regulatory control over Bank or CFHC that a
               change in control, as defined in the banking,
               insurance, or securities laws or regulations then
               applicable to Bank or CFHC, has occurred.

     Notwithstanding any provision contained herein, a Change in Control shall
     not include any of the above described events if they (A) are related to
     or occur in connection with the appointment of a receiver or a conservator
     for Bank or CFHC, provision of assistance under Section 13(c) of the
     Federal Deposit Insurance Act ("FDI Act"), the approval of a supervisory
     merger, a determination that Bank is in default as defined in Section 3(x)
     of the FDI Act, insolvent or in an unsafe or unsound condition to transact

                                        - 5 -
<PAGE>






     business or the suspension, removal and/or temporary or permanent
     prohibition by the OTS, the FDIC, the SEC or another bank regulatory
     agency of Employee from participation in the conduct of Bank's or CFHC's
     business or affairs or (B) are the result of a Third Party inadvertently
     acquiring beneficial ownership or irrevocable proxies or a combination of
     both for 20% or more of any class of Bank's or CFHC's voting stock, and
     the Third Party as promptly as practicable thereafter divests itself of
     beneficial ownership or irrevocable proxies for a sufficient number of
     shares so that the Third Party no longer has beneficial ownership or
     irrevocable proxies or a combination of both for 20% or more of any class
     of Bank's or CFHC's voting stock.

               (g)  Applicable Number of Months.  For purposes of this
     Agreement, the "Applicable Number of Months" shall mean thirty-six (36)
     months.

          5.   Obligations of Bank Upon Termination of Employment.  Upon
     termination of Employee's employment with Bank under the circumstances set
     forth in Section 4(b), Employee shall, notwithstanding such termination,
     be entitled to receive the following payments and provided with the
     following benefits:

               (a)  Base Salary.  Bank shall pay Employee, within ten (10) days
     after the termination of his or her employment, a lump sum payment equal
     to the aggregate of the future base salary payments Employee would have
     received if he or she had continued in Bank's employ until the Applicable
     Number of Months following the date his or her employment is terminated
     (unless a reduction in compensation preceded Employee's resignation or
     retirement for Good Reason, in which case Bank shall pay Employee a lump
     sum payment based on Employee's highest base salary in effect during the
     twelve-month period preceding the termination of employment), discounted
     to present value at a discount rate equal to the per annum rate offered on
     the date employment is terminated (or the next preceding date on which
     that rate is published) on U.S. Treasury bills with maturities of the
     Applicable Number of Months.

               (b)  Bonus.  Bank shall pay Employee, within ten (10) days after
     the termination of his or her employment, a lump sum payment equal to his
     or her projected bonus for the current year, which shall be computed
     assuming that Employee had remained in the employ of Bank until the end of
     the current year and that all performance goals or other performance
     measures have been met at the then current level for the remainder of the
     year.

               (c)  Benefits.  During the Applicable Number of Months following
     the date Employee's employment is terminated, at Bank's expense, Employee
     shall participate in and be covered by all employee benefit plans,
     programs, policies or arrangements of Bank applicable to executive
     employees, whether funded or unfunded; provided, however, that, in the
     event any administrator or any insurance carrier contests Employee's
     participation in or coverage under such plan, program, policy or
     arrangement, then Bank, in respect to insurance arrangements, shall cause,

                                        - 6 -
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     at its own cost or expense, equivalent insurance coverage to be provided
     and, in respect to arrangements other than insurance arrangements, shall
     make cash payments to Employee in an amount equal to the amount that would
     have been contributed by Bank with respect to Employee at the times such
     amounts would have been contributed; and provided further, however, that,
     to the extent Bank has an obligation to provide continuation coverage
     within the meaning of Section 4980(B)(f) of the Internal Revenue Code of
     1986, as amended ("Code"), the period for which benefits are provided
     under this Section 5(c) constitutes a portion of such continuation
     coverage.  

          6.   Limitations; Excise Tax.

               (a)  Section 1828(k).  Notwithstanding anything to the contrary
     in this Agreement, any payments made to Employee pursuant to this
     Agreement, or otherwise, are subject to and conditioned upon their
     compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated
     thereunder.  

               (b)  Excess Parachute Payment.  Notwithstanding anything to the
     contrary in this Agreement, if tax counsel selected by Bank and acceptable
     to Employee determines that any portion of any payment by Bank or CFHC
     under this Agreement or otherwise would constitute an "excess parachute
     payment," then the payments to be made to Employee under this Agreement
     shall be reduced such that the value of the aggregate payments that
     Employee is entitled to receive under this Agreement and any other
     agreement, plan or program of Bank and/or CFHC shall be one dollar ($1)
     less than the maximum amount of payments that Employee may receive without
     becoming subject to the tax imposed by Section 4999 of the Code.

               (c)  Bank Not Responsible for Excise Tax.  If the Internal
     Revenue Service assesses an excise tax against Employee pursuant to
     Sections 280G and 4999 of the Code, Bank shall be under no obligation to
     Employee with respect to the amount of (i) the excise tax or (ii) any
     additional federal income tax due from and payable by Employee as the
     result of his or her receipt of any payment hereunder or otherwise.

          7.   No Duty to Mitigate.  Employee shall not be required to mitigate
     the amount of any payment required hereunder by seeking other employment
     or otherwise, nor shall the amount paid hereunder be reduced or offset by
     any compensation earned or received by Employee as result of employment
     with another employer, self-employment, or any amount received from any
     other plan, program, policy or arrangement; provided, however, that
     benefits provided under Section 5(c) shall be reduced to the extent
     comparable benefits are actually received by Employee from or through
     another employer.







                                        - 7 -
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          8.   Miscellaneous.

               (a)  General Creditor.  All payments required hereunder shall be
     made from Bank's general assets and Employee shall have no rights greater
     than the rights of a general creditor of Bank.

               (b)  Notices.  All notices and other communications required or
     permitted to be given under this Agreement shall be in writing and shall
     be deemed to have been duly given if delivered personally or sent by
     certified mail, return receipt requested, first-class postage prepaid, to
     the parties to this Agreement at the following addresses:

                    (i)  if to Bank at:

                         Stockton Savings Bank, f.s.b.
                         501 West Weber Avenue
                         Stockton, California  95203
                         Attention:  President

                         and

                    (ii) if to Employee at the address set forth
                         at the end of this Agreement

     or to such other address as either party to this Agreement shall have last
     designated by notice to the other party.  All such notices and
     communications shall be deemed to have been received on the earlier of the
     date of receipt or the third business day after the date of mailing
     thereof.

               (c)  Binding Effect; Benefits.  This Agreement shall be binding
     upon and inure to the benefit of the parties to this Agreement and their
     respective successors and assigns.  Nothing in this Agreement, express or
     implied, is intended or shall be construed to give any person, other than
     the parties to this Agreement or their respective successors or assigns,
     any legal or equitable right, remedy or claim under or in respect of any
     agreement or any provision contained herein.

               (d)  Costs of Enforcement.  If Employee retains legal counsel to
     enforce any or all of his or her rights to benefits under Section 5 above
     and he or she substantially prevails in enforcing those rights, Employee
     shall be entitled to recover from Bank Employee's reasonable attorneys'
     fees, costs and expenses in connection with the enforcement of his or her
     rights.

               (e)  Resolution of Differences Over Breaches of Agreement.  In
     the event of any controversy, dispute or claim arising out of, or relating
     to, this Agreement or the breach thereof, Bank and Employee agree that
     such underlying controversy, dispute or claim shall be settled by
     arbitration conducted in accordance with this Section 8(e) and the
     Commercial Arbitration Rules of the American Arbitration Association
     ("AAA").  The matter shall be heard and decided, and award rendered, by a

                                        - 8 -
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     panel of three (3) arbitrators ("Arbitration Panel").  Bank and Employee
     shall each select one (1) arbitrator from the AAA National Panel of
     Commercial Arbitrators ("Commercial Panel") and the AAA shall elect a
     third arbitrator from the Commercial Panel.  The award rendered by the
     Arbitration Panel shall be final and binding as between the parties hereto
     and their heirs, executors, administrators, successors and assigns, and
     judgment on the award may be entered by any court having jurisdiction
     thereof.

               (f)  Waiver.  Either party hereto may by written notice to the
     other (i) extend the time for the performance of any of the obligations or
     other actions of the other under this Agreement; (ii) waive compliance
     with any of the conditions or covenants of the other contained in this
     Agreement; and (iii) waive or modify performance of any of the obligations
     of the other under this Agreement.  Except as provided in the preceding
     sentence, no action taken pursuant to this Agreement, including, without
     limitation, any investigation by or on behalf of any party, shall be
     deemed to constitute a waiver by the party taking such action of
     compliance with any representation, warranty, covenant or agreement
     contained herein.  The waiver by any party hereto of a breach of any
     provision of this Agreement shall not operate or be construed as a waiver
     of any preceding or succeeding breach, and no failure by either party to
     exercise any right or privilege hereunder shall be deemed a waiver of such
     party's rights or privileges hereunder or shall be deemed a waiver of such
     party's rights to exercise that right or privilege at any subsequent time
     or times hereunder.

               (g)  Amendment.  This Agreement may be terminated, amended,
     modified or supplemented only by a written instrument executed by Employee
     and Bank.

               (h)  Assignability.  Neither this Agreement nor any right,
     remedy, obligation or liability arising hereunder or by reason hereof
     shall be assignable by either Bank or Employee without the prior written
     consent of the other party.

               (i)  Governing Law.  This Agreement shall be governed by and
     construed in accordance with the law of the State of California,
     regardless of the law that might be applied under principles of conflict
     of laws, except as that law is superseded by the laws of the United
     States.

               (j)  Section and Other Headings.  The section and other headings
     contained in this Agreement are for reference purposes only and shall not
     affect the meaning or interpretation of this Agreement.

               (k)  Withholding of Taxes.  Bank may withhold from amounts
     required to be paid to Employee hereunder any applicable federal, state,
     local and other taxes with respect thereto; provided, however, that Bank
     shall promptly pay over the amounts so withheld to the appropriate taxing
     bodies and provide to Employee appropriate statements on forms proscribed
     for such purposes on the amounts so withheld.

                                        - 9 -
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               (l)  Severability.  If, for any reason, any provision of this
     Agreement is held invalid, such invalidity shall not affect any other
     provision of this Agreement not held so invalid, and each such other
     provision shall, to the full extent consistent with law, continue in full
     force and effect.  If any provision of this Agreement shall be held
     invalid in part, such invalidity shall in no way affect the rest of such
     provision not held so invalid, and the rest of such provision, together
     with all other provisions of this Agreement, shall to the full extent
     consistent with law continue in full force and effect.  If this Agreement
     is held invalid or cannot be enforced, then to the full extent permitted
     by law any prior agreement between Bank (or any predecessor thereof) and
     Employee shall be deemed reinstated as if this Agreement had not be
     executed.

               (m)  Counterparts.  This Agreement may be executed in any number
     of counterparts, each of which shall be deemed to be an original and all
     of which together shall be deemed to be one and the same instrument.

          IN WITNESS WHEREOF, Bank has caused this Agreement to be executed and
     its seal affixed hereunto by its officers thereunto duly authorized and
     Employee has signed this Agreement, all as of the date first above
     written.

     ATTEST:                            STOCKTON SAVINGS BANK, F.S.B.


     /s/ Kathleen L. Stover             By:/s/ David K. Rea          
     ------------------------------        --------------------------
     Kathleen L. Stover, Assistant           David K. Rea, 
     Secretary                               Chairman of the Board and
                                             Chief Executive Officer

     WITNESS:                           EMPLOYEE:

     /s/ Kathleen L. Stover             /s/ Robert V. Kavanaugh
     ------------------------------     -----------------------------
                                        Name:  Robert V. Kavanaugh   
                                        ------------------------

                                        Address: 6211 Culpepper Place
                                        Stockton, CA  95207
                                        -----------------------------











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