<PAGE>

                                                                    Exhibit 10.3


                                    AGREEMENT


         AGREEMENT, dated this 15th day of May 1998, between PBOC Holdings, Inc.
(the "Corporation") and People's Bank of California (the "Bank"), a federally
chartered savings bank, and William W. Flader (the "Executive").


                                   WITNESSETH

         WHEREAS, the Executive is presently an officer of the Corporation and
the Bank (together, the "Employers");

         WHEREAS, the Executive entered into an employment agreement with the
Bank dated as of October 21, 1996 (the "Initial Employment Agreement");

         WHEREAS, the Corporation and the Bank have, as of the date set forth
above, established a Trust for the benefit of Executive and funded such Trust
with the amount which the Bank has agreed to pay to Executive under the Initial
Employment Agreement;

         WHEREAS, the Bank and the Executive desire to terminate the Initial
Employment Agreement effective with the date of execution of this Agreement;

         WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers;

         WHEREAS, the Employers desire to enter into a new agreement with the
Executive with respect to his employment by each of the Employers; and

         WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive by the Employers in the event that his
employment with the Employers is terminated under specified circumstances;

         NOW THEREFORE, in consideration of the mutual agreements herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:

         1.  DEFINITIONS.  The following words and terms shall have the 
meanings set forth below for the purposes of this Agreement:

         (a) BASE SALARY.  "Base Salary" shall have the meaning set forth 
in Section 4(a) hereof.

         (b) CAUSE. Termination of the Executive's employment for "Cause" shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any

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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.

         (c) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of the 
Corporation" shall mean the occurrence of any of the following events 
subsequent to the initial public offering of common stock of the Corporation: 
(i) the acquisition of control of the Corporation as defined in 12 C.F.R. 
Section 574.4, unless a presumption of control is successfully rebutted or 
unless the transaction is exempted by 12 C.F.R. Section 574.3(c)(vii), or any 
successor to such sections; (ii) an event that would be required to be 
reported in response to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of 
Regulation 14A pursuant to the Securities Exchange Act of 1934, as amended 
("Exchange Act"), or any successor thereto, whether or not any class of 
securities of the Corporation is registered under the Exchange Act; (iii) any 
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange 
Act), other than a trustee or other fiduciary holding securities under an 
employee benefit plan of the Corporation, is or becomes the "beneficial 
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or 
indirectly, of securities of the Corporation representing 25% or more of the 
combined voting power of the Corporation's then outstanding securities; or 
(iv) during any period of three consecutive years, individuals who at the 
beginning of such period constitute the Board of Directors of the Corporation 
cease for any reason to constitute at least a majority thereof unless the 
election, or the nomination for election by stockholders, of each new 
director was approved by a vote of at least two-thirds of the directors then 
still in office who were directors at the beginning of the period. For 
purposes of this Agreement, no "Change in Control of the Corporation" shall 
be deemed to occur with respect to purchases of additional shares of the 
Corporation's Common Stock by the Trustees of the Estate of Bernice Pauahi 
Bishop or by BIL Securities (Offshore) Limited.

         (d) CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.

         (e) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.

         (f) DISABILITY. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.

         (g) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive within
twenty-four (24) months following a Change in Control of the Corporation based
on:

             (i)      Without the Executive's express written consent, the
                      failure to elect or to re-elect or to appoint or to
                      re-appoint the Executive to the office of Executive

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                      Vice President of the Employers or a material adverse
                      change made by the Employers in the Executive's
                      functions, duties or responsibilities as Executive
                      Vice President of the Employers;

             (ii)     Without the Executive's express written consent, a
                      reduction by either of the Employers in the
                      Executive's Base Salary as the same may be increased
                      from time to time;

             (iii)    The principal executive office of either of the 
                      Employers is relocated outside of the Los Angeles
                      County, California area or, without the Executive's
                      express written consent, either of the Employers
                      require the Executive to be based anywhere other than
                      an area in which the Employers' principal executive
                      office is located, except for required travel on
                      business of the Employers to an extent substantially
                      consistent with the Executive's present business
                      travel obligations;

             (iv)     Any purported termination of the Executive's
                      employment for Disability or Retirement which is not
                      effected pursuant to a Notice of Termination
                      satisfying the requirements of paragraph (j) below;
                      or

             (v)      The failure by the Employers to obtain the assumption
                      of and agreement to perform this Agreement by any
                      successor as contemplated in Section 10 hereof.

         (h) IRS. IRS shall mean the Internal Revenue Service.

         (i) NOTICE OF TERMINATION. Any purported termination of the Executive's
employment by the Employers for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated, (iii)
specifies a Date of Termination, which shall be not less than thirty (30) nor
more than ninety (90) days after such Notice of Termination is given, except in
the case of the Employers' termination of Executive's employment for Cause,
which shall be effective immediately; and (iv) is given in the manner specified
in Section 11 hereof.

         (j) RETIREMENT. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employers' retirement policies, including early
retirement, generally applicable to their salaried employees.



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         2.  TERMINATION OF INITIAL EMPLOYMENT AGREEMENT.

         The Employers and the Executive hereby mutually understand and agree
that the Initial Employment Agreement, all obligations with respect thereto as
well as rights and entitlements inuring thereunder, shall be and with the
execution of this Agreement hereby is terminated, it being agreed that any
provisions regarding notice therein are hereby waived by the parties hereto.
Subsequent to the date hereof, the rights and obligations of the Employers and
the Executive with respect to the Executive's employment shall be as set forth
in this Agreement.

         3.  TERM OF EMPLOYMENT.

         (a) The Employers hereby employ the Executive as Executive Vice
President of the Corporation and the Bank and the Executive hereby accepts said
employment and agrees to render such services to the Corporation and the Bank on
the terms and conditions set forth in this Agreement. The term of employment
under this Agreement shall be for three years, commencing on the date of this
Agreement. The term of this Agreement may be extended for an additional year on
the second annual anniversary of the date of this Agreement, and on each annual
anniversary thereafter, if the Boards of Directors of the Employers so approve
such extension, such that at any time the remaining term of this Agreement shall
be from one to two years. Prior to the second annual anniversary of the date of
this Agreement and each annual anniversary thereafter, the Boards of Directors
of the Employers shall consider and review (after taking into account all
relevant factors, including the Executive's performance hereunder) an extension
of the term of this Agreement, and the term shall continue to extend each year
if the Boards of Directors approve such extension unless the Executive gives
written notice to the Employers of the Executive's election not to extend the
term, with such written notice to be given not less than thirty (30) days prior
to any such anniversary date. If the Boards of Directors of the Employers elect
not to extend the term, they shall give written notice of such decision to the
Executive not less than thirty (30) days prior to any such anniversary date. If
any party gives timely notice that the term will not be extended as of any
annual anniversary date, then this Agreement shall terminate at the conclusion
of its remaining term. References herein to the term of this Agreement shall
refer both to the initial term and successive terms.

         (b) During the term of this Agreement, the Executive shall perform such
executive services for the Employers as may be consistent with his titles and
from time to time assigned to him by the Employers' Boards of Directors.

         4.  COMPENSATION AND BENEFITS.

         (a) The Employers shall compensate and pay the Executive for his
services during the term of this Agreement at a minimum base salary of
$175,000.00 per year ("Base Salary"), which may be increased from time to time
in such amounts as may be determined by the Boards of Directors of the Employers
and may not be decreased without the Executive's express written consent. In
addition to his Base Salary, the Executive shall be entitled to receive during
the term of

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this Agreement such bonus payments as may be determined by the Boards of
Directors of the Employers.

         (b) During the term of this Agreement, the Executive shall be entitled
to participate in and receive the benefits of any pension or other retirement
benefit plan, profit sharing, stock option, employee stock ownership, or other
plans, benefits and privileges given to employees and executives of the
Employers, to the extent commensurate with his then duties and responsibilities,
as fixed by the Boards of Directors of the Employers. Nothing paid to the
Executive under any plan or arrangement presently in effect or made available in
the future shall be deemed to be in lieu of the salary payable to the Executive
pursuant to Section 4(a) hereof.

         (c) During the term of this Agreement, the Executive shall be entitled
to paid annual vacation in accordance with the policies as established from time
to time by the Boards of Directors of the Employers. The Executive shall not be
entitled to receive any additional compensation from the Employers for failure
to take a vacation, nor shall the Executive be able to accumulate unused
vacation time from one year to the next, except to the extent authorized by the
Boards of Directors of the Employers.

         (d) In the event the Executive's employment is terminated due to
Disability or Retirement, the Employers shall provide continued life, medical,
dental and disability coverage substantially identical to the coverage
maintained by the Employers for the Executive immediately prior to his
termination. Such coverage shall cease upon the expiration of the remaining term
of this Agreement.

         (e) The Executive's compensation, benefits and expenses shall be paid
by the Corporation and the Bank in the same proportion as the time and services
actually expended by the Executive on behalf of each respective Employer.

         5. EXPENSES. The Employers shall reimburse the Executive or otherwise
provide for or pay for all reasonable expenses incurred by the Executive in
furtherance of or in connection with the business of the Employers, including,
but not by way of limitation, automobile expenses and other traveling expenses,
subject to such reasonable documentation and other limitations as may be
established by the Boards of Directors of the Employers. If such expenses are
paid in the first instance by the Executive, the Employers shall reimburse the
Executive therefor.

         6.  TERMINATION.

         (a) The Employers shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and the Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.


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         (b) In the event that (i) the Executive's employment is terminated by
the Employers for Cause or (ii) the Executive terminates his employment
hereunder other than for Disability, Retirement, death or Good Reason, the
Executive shall have no right pursuant to this Agreement to compensation or
other benefits for any period after the applicable Date of Termination.

         (c) In the event that the Executive's employment is terminated as a
result of Disability, Retirement or the Executive's death during the term of
this Agreement, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination, except as provided for in Section 4(d) hereof.

         (d) In the event that (i) the Executive's employment is terminated by
the Employers for other than Cause, Disability, Retirement or the Executive's
death or (ii) such employment is terminated by the Executive (a) due to a
material breach of this Agreement by the Employers, which breach has not been
cured within fifteen (15) days after a written notice of non-compliance has been
given by the Executive to the Employers, or (b) for Good Reason, then the
Employers shall, subject to the provisions of Section 7 hereof, if applicable:

                  (A) pay to the Executive, a cash severance amount equal to the
         Executive's Base Salary as in effect immediately prior to the Date of
         Termination, multiplied by the number of years or fraction thereof
         remaining in the term of this Agreement at the Date of Termination up
         to a maximum of two (2) years ("Severance Pay"). Such Severance Pay
         shall be paid in monthly installments beginning with the first business
         day of the month following the Date of Termination and continuing for
         such number of months or fraction thereof representing the remaining
         term of this Agreement up to a maximum of two (2) years. The Boards of
         Directors, at their sole discretion, may elect to pay the Severance Pay
         to Executive on a more accelerated schedule than that set forth in the
         immediately preceding sentence.

                  (B) maintain and provide for a period ending at the earlier of
         (i) the first anniversary of the Date of Termination or (ii) the date
         of the Executive's full-time employment by another employer, at no cost
         to the Executive, the Executive's continued participation in all group
         insurance, life insurance, health and accident, disability and other
         employee benefit plans, programs and arrangements in which the
         Executive was entitled to participate immediately prior to the Date of
         Termination (other than any stock option or other stock compensation
         plans or bonus plans of the Corporation), provided that in the event
         that Executive's participation in any such plan, program or arrangement
         is barred, the Corporation shall arrange to provide Executive with
         benefits substantially similar to those Executive was entitled to
         receive under such plans, programs and arrangements prior to the Date
         of Termination.

         7. LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES. If the payments
and benefits pursuant to Section 6 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employers, would constitute a "parachute payment" under Section 280G of the
Code, the payments and benefits payable by the Employers pursuant to

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Section 6 hereof shall be reduced, in the manner determined by the Executive, by
the amount, if any, which is the minimum necessary to result in no portion of
the payments and benefits payable by the Employers under Section 6 being
non-deductible to the Employers pursuant to Section 280G of the Code and subject
to the excise tax imposed under Section 4999 of the Code. The determination of
any reduction in the payments and benefits to be made pursuant to Section 6
shall be based upon the opinion of independent counsel selected by the
Employers' independent public accountants and paid by the Employers. Such
counsel shall be reasonably acceptable to the Employers and the Executive; shall
promptly prepare the foregoing opinion, but in no event later than thirty (30)
days from the Date of Termination; and may use such actuaries as such counsel
deems necessary or advisable for the purpose. Nothing contained herein shall
result in a reduction of any payments or benefits to which the Executive may be
entitled upon termination of employment under any circumstances other than as
specified in this Section 7, or a reduction in the payments and benefits
specified in Section 6 below zero.

         8.  MITIGATION; EXCLUSIVITY OF BENEFITS.

         (a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise except as provided
in Section 6(d)(B) hereof, nor shall the amount of any such benefits be reduced
by any compensation earned by the Executive as a result of employment by another
employer after the Date of Termination or otherwise.

         (b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.

         9. WITHHOLDING. All payments required to be made by the Employers
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employers may
reasonably determine should be withheld pursuant to any applicable law or
regulation.

         10. ASSIGNABILITY. The Employers may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge or
consolidate or to which the Employers may transfer all or substantially all of
its assets, if in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations of the Employers
hereunder as fully as if it had been originally made a party hereto, but may not
otherwise assign this Agreement or its rights and obligations hereunder. The
Executive may not assign or transfer this Agreement or any rights or obligations
hereunder.

         11. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:

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         The Corporation:            Secretary
                                     PBOC Holdings, Inc.
                                     5900 Wilshire Boulevard
                                     Los Angeles, California  90036

         The Bank:                   Secretary
                                     People's Bank of California
                                     5900 Wilshire Boulevard
                                     Los Angeles, California  90036

         The Executive:              William W. Flader
                                     656 Longfellow Avenue
                                     Hermosa Beach, California 90254


         12. AMENDMENT; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Boards of Directors of the Employers to sign on
its behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

         13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of
California.

         14. NATURE OF OBLIGATIONS. Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employers hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employers.

         15. HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

         16. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.

         17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.


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         18. REGULATORY ACTIONS. The following provisions shall be applicable 
to the parties to the extent that they are required to be included in 
employment agreements between a savings association and its employees 
pursuant to Section 563.39(b) of the Regulations Applicable to All Savings 
Associations, 12 C.F.R. Section 563.39(b), or any successor thereto, and 
shall be controlling in the event of a conflict with any other provision of 
this Agreement, including without limitation Section 6 hereof.

         (a) If the Executive is suspended from office and/or temporarily 
prohibited from participating in the conduct of the Employers' affairs 
pursuant to notice served under Section 8(e)(3) or Section 8(g)(1) of the 
Federal Deposit Insurance Act ("FDIA") (12 U.S.C. Sections 1818(e)(3) and 
1818(g)(1)), the Employers' obligations under this Agreement shall be 
suspended as of the date of service, unless stayed by appropriate 
proceedings. If the charges in the notice are dismissed, the Employers may, 
in their discretion: (i) pay the Executive all or part of the compensation 
withheld while their obligations under this Agreement were suspended, and 
(ii) reinstate (in whole or in part) any of their obligations which were 
suspended.

         (b) If the Executive is removed from office and/or permanently 
prohibited from participating in the conduct of the Employers' affairs by an 
order issued under Sections 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. 
Sections 1818(e)(4) and (g)(1)), all obligations of the Employers under this 
Agreement shall terminate as of the effective date of the order, but vested 
rights of the Executive and the Employers as of the date of termination shall 
not be affected.

         (c) If the Employers are in default, as defined in Section 3(x)(1) 
of the FDIA (12 U.S.C. Section 1813(x)(1)), all obligations under this 
Agreement shall terminate as of the date of default, but vested rights of the 
Executive and the Employers as of the date of termination shall not be 
affected.

         (d) All obligations under this Agreement shall be terminated 
pursuant to 12 C.F.R. Section 563.39(b)(5) (except to the extent that it is 
determined that continuation of the Agreement for the continued operation of 
the Employers is necessary): (i) by the Director of the Office of Thrift 
Supervision ("OTS"), or his/her designee, at the time the Federal Deposit 
Insurance Corporation ("FDIC") enters into an agreement to provide assistance 
to or on behalf of the Employers under the authority contained in Section 
13(c) of the FDIA (12 U.S.C. Section 1823(c)); or (ii) by the Director of the 
OTS, or his/her designee, at the time the Director or his/her designee 
approves a supervisory merger to resolve problems related to operation of the 
Employers or when the Employers are determined by the Director of the OTS to 
be in an unsafe or unsound condition, but vested rights of the Executive and 
the Employers as of the date of termination shall not be affected.

         19. REGULATORY PROHIBITION. Notwithstanding any other provision of 
this Agreement to the contrary, any payments made to the Executive pursuant 
to this Agreement, or otherwise, are subject to and conditioned upon their 
compliance with Section 18(k) of the FDIA (12 U.S.C. Section 1828(k)) and the 
regulations promulgated thereunder, including 12 C.F.R. Part 359. In the 
event of the Executive's termination of employment with the Employers for 
Cause, all employment relationships and managerial duties with the Employers 
shall immediately cease regardless of

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whether the Executive remains in the employ of the Corporation following such
termination. Furthermore, following such termination for Cause, the Executive
will not, directly or indirectly, influence or participate in the affairs or the
operations of the Employers.

         20. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Employers and the Executive with respect to the matters agreed to
herein. All prior agreements between the Employers and the Executive with
respect to the matters agreed to herein are hereby superseded and shall have no
force or effect.

         IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.

                               PBOC HOLDINGS, INC.



                               By:        /S/RUDOLF P. GUENZEL                  
                                      ------------------------------------------
                                      Rudolf P. Guenzel
                                      President and Chief Executive Officer


Attest:                        PEOPLE'S BANK OF CALIFORNIA



  /s/Patricia L.Park           By:         /S/RUDOLF P. GUENZEL                
------------------------              ------------------------------------------
                                      Rudolf P. Guenzel
                                      President and Chief Executive Officer


                               EXECUTIVE



                               By:        /S/WILLIAM W. FLADER                 
                                      ------------------------------------------
                                      William W. Flader






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