<PAGE>
 
                                                                   Exhibit 10.11

                         SUPPLEMENTAL INCOME AGREEMENT

AGREEMENT entered into as of the 1st day of October, 1989, between Haywood
Savings and Loan, a domestic Corporation having its principal office in
Waynesville, North Carolina, (hereinafter referred to as the Company) and Larry
R. Ammons (hereinafter referred to as the Employee).

WITNESSETH:

WHEREAS, the Employee has been an Employee of the Company since 10/15/72, and,
                                                                --------

WHEREAS the value of the Employee is such that assurance of his continued
service is essential to the future growth and profits of the Company; and,

WHEREAS, the Company desires to retain the service of the Employee, and realizes
that if the Employee were to terminate his employment it would suffer a
substantial financial loss;

NOW THEREFORE, in consideration of the premises contained herein, the parties
hereto mutually agree as follows:

     1.   Remuneration:  During the period of the Employee's employment with the
          ------------                                                          
          Company, the Company will pay the Employee for services to be
          rendered:

               A.  Cash amounts at rates and times mutually agreed upon; and,

               B.  Additional amounts, payment of which will be deferred
               pursuant to the terms hereinafter set forth.

     2.   Retirement Benefit:  Upon the attainment of the first day of the month
          ------------------                                                    
          following the Employee's 65th birthday, the Company will commence to
          pay the Employee $1,273.16 monthly for a continuous period of fifteen
          years.  Such initial monthly income shall be increased 5% for each
          additional full year of service of the employee, beginning after the
          first year from the date of this agreement, except that there will be
          no increases in benefits after the attainment of age 65.  In the event
          the employee should die after becoming entitled to receive said
          monthly installments but before any or all of said installments have
          been paid, the Company will pay or will continue to pay said
          installments to such beneficiaries as the Employee has directed by
          filing with the Company a notice in writing.  In the event of the
          death of the last named beneficiary before all the unpaid payments
          have been made, the balance of any amount which remains unpaid at said
          death shall be commuted on the basis of eight percent per annum
          compounded interest and shall be paid in a single sum to the executor
          or administrator of the estate of the last named beneficiary to die.
          In the absence of such beneficiary designation, any amount remaining
          unpaid at the Employee's death shall be commuted on the basis of eight
          percent per annum


<PAGE>
 
          
          compound interest and shall be paid in a single sum to the executor or
          administrator of the Employee's estate.

     3.   Death Benefit:  Should the Employee die prior to the attainment of the
          -------------                                                         
          first day of the month following his birthday, the Company (beginning
          at a date to be determined by the Company but within six months from
          the date of such death) will commence to pay $1,273.16 monthly for a
          continuous period of fifteen years to such beneficiary or
          beneficiaries as the Employee has directed by filing with the Company
          a notice in writing.  Such initial monthly income shall be increased
          5% for each additional full year of service of the employee beginning
          after the first year from the date of this agreement, except that
          there will be no increases in benefits after the attainment of age 65.
          Irrespective of the above, however, if the Employee dies as a result
          of suicide within two years of the execution of this agreement, no
          death benefit shall be payable.  In the event of the death of the last
          named beneficiary before any amount which remains unpaid at said death
          shall be commuted on the basis of eight percent per annum compound
          interest and shall be paid in a single sum to the executor or
          administrator of the estate of the last named beneficiary to die.  In
          the absence of any such beneficiary designation, any amount remaining
          unpaid at the Employee's death shall be commuted on the basis of eight
          percent per annum compound interest and shall be paid in a single sum
          to the executor or administrator of the Employee's estate.

     4.   Termination of Employment:
          ------------------------- 

          If the Employee terminates his Employment for reasons other than death
          or the attainment of his 65th birthday, he or his beneficiary, as
          applicable, shall be entitled upon the attainment of his 65th
          birthday, or his prior death, to the retirement benefits stated in
          Section 2 of this Agreement multiplied by a fraction the numerator of
          which is the number of full years of employment of the employee to his
          termination date and the denominator of which is the number of full
          years of employment of the employee to his age 65.

     5.   Forfeiture Provisions:
          --------------------- 

          A.  During the period the retirement benefit is payable to the
          Employee under Section 2 of this Agreement, the Employee shall not
          engage in business activities in Haywood County, North Carolina, which
          are in competition with the Company without first obtaining the
          written consent of the Company.

          B.  During the period the retirement payment is payable to the
          Employee under Section 2 of the Agreement, the Employee shall be
          available to render consulting services to the Company upon request by
          an officer of the Company, but such requests shall not be made more
          frequently than once each month.  The Employee shall not be considered
          to have breached this condition if he is unable to consult because of
          his mental or physical disability.
<PAGE>
 
          C.  Payment of the retirement benefit under this Agreement may be
          terminated by the Company, if the Employee fails to comply with either
          of the conditions set forth in paragraph (A) and (B) of this
          Section 5.

     6.   General Provisions:
          ------------------ 

          A.  Except as otherwise provided by this Agreement, it is agreed that
          neither the Employee, nor his beneficiary shall have any right to
          commute, sell, assign, transfer or otherwise convey the right to
          receive any payments hereunder, which payments and the right thereto
          are expressly declared to be nonassignable and nontransferable.

          B.  The benefits payable under this Agreement shall be independent of,
          and in addition to, any other employment agreements that may exist
          from time to time between the parties hereto, concerning any other
          compensation payable by the Company to the Employee whether as salary,
          bonus, or otherwise.  This Agreement shall not be deemed to constitute
          a contract of employment between the parties hereto, nor shall any
          provision hereof restrict the right of the Company to discharge the
          Employee or restrict the right of the Employee to terminate his
          employment.

          C.  The rights of the Employee under this Agreement and of any
          beneficiary of the Employee shall be solely those of an unsecured
          creditor of the Company.  Any asset acquired by the Company in
          connection with the liabilities assumed by it hereunder, shall not be
          deemed to be held under any trust for the benefit of the Employee or
          his beneficiaries or to be considered security for the performances of
          the obligations of the Company but shall be, and remain, a general,
          unpledged, unrestricted asset of the Company.

          D.  The Company hereby reserves the right to accelerate the payments
          specified in Section 2, 3 and 4 above without the consent of the
          employee, his estate, beneficiaries, or any other person claiming
          through or under him.

          E.  The Company agrees that it will not merge or consolidate with any
          other Company or organization, or permit its business activities to be
          taken over by any other organization unless and until the succeeding
          or continuing Company or other organization shall expressly assume the
          rights and obligations of the Company herein set forth.  The Company
          further agrees that it will not cease its business activities or
          terminate its existence, other than as heretofore set forth in this
          Section, without having made adequate provision for the fulfilling of
          its obligations hereunder.

          F.  This agreement shall be binding upon and inure to the benefit of
          the parties, their respective legal representatives, and any
          "Successor" of the Company, which shall be deemed substituted for the
          Company under the terms of this Agreement.  As used in this Agreement
          the term "Successor" shall include any person, firm, Corporation or
          other business entity which at anytime, whether by merger purchase or
          otherwise, acquires all or substantially all of the Corporation's
          assets or business.



<PAGE>
 
          G.  This Agreement may be revoked or amended in whole or in part by a
          writing signed by both of the parties hereto.

          H.  This Agreement shall be subject to and construed under the laws of
          the State of North Carolina.

IN WITNESS THEREOF, the Said Company has caused this Agreement to be signed in
its Corporate name by its duly authorized officer, and impressed with its
corporate seal, attested by its secretary, and the said Employee has hereunto
set his hand and seal, all on the day and year first above written.


                                    By: /s/ Robert H. Francis
                                        ________________________________

ATTEST:                                 /s/ Larry R. Ammons
                                        ________________________________
                                                  The Employee



/s/ Johnnie Sue Caldwell
________________________


WITNESS: /s/ Johnnie Sue Caldwell
         ________________________



<PAGE>
 
                          BENEFICIARY DESIGNATION FORM

As Beneficiary to receive any death benefits payable on my behalf from Haywood
Savings and Loan, I designate the following:

        NAME              DATE OF BIRTH     ADDRESS         RELATIONSHIP
        ----              -------------     -------         ------------

PRIMARY:
------- 
                                          501 Blink Bonny
Cristina C. Ammons          8/10/42       Waynesville, N.C.      wife
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________

CONTINGENT, If Any
----------        

All children share and share alike
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________

(Note:  If more than one primary beneficiary is named, the benefit will be paid
in equal shares to those living.  Should the contingent beneficiaries be
eligible to receive the benefits, such benefits will be paid in equal shares to
such living contingent beneficiaries.  If none of the designated beneficiaries
are living at such time as the death benefit is payable, such benefit will be
paid to the Executor or the Administrator of your Estate.)

Name of Spouse if not given above: ________________________________________


/s/ Johnnie Sue Caldwell                      /s/ Larry R. Ammons
________________________                      ___________________
Witness                                       Signature of Employee


                                              1-26-90
                                              ___________________
                                              Date


Note:  The original should be retained by the Company and one copy by the
       Employee.




<PAGE>
 
                             ERISA CLAIMS PROCEDURE


CLAIMS PROCEDURE.  In accord with the Employee Retirement Income Security Act
of 1974, the following claims procedure is hereby adopted by the Company as the
claims procedure for this unfunded nonqualified deferred compensation plan; and,
for the purpose of implementing such claims procedure (but not for any other
purpose) Haywood Savings and Loan is hereby designated as the named fiduciary
and plan administrator of this plan:

      a.  Filing of a Claim for Benefits.  A participant or beneficiary of the
          plan shall make a claim for the benefits provided by delivering a
          written request to the plan administrator.

      b.  Notification to Claimant of Decision.  If a claim is wholly or
          partially denied, notice of the decision, meeting the requirements of
          paragraph c following shall be furnished to the claimant within a
          reasonable period of time after receipt of the claim by the plan
          administrator.

      c.  Content of Notice.  The plan administrator shall provide to every
          claimant who is denied a claim for benefits written notice setting
          forth in a manner calculated to be understood by the claimant, the
          following:

                (1) The specific reason or reasons for the denial;

                (2) Specific reference to pertinent plan provision on which the
                    denial is  based.

                (3) A description of any additional material or information
                    necessary for the claimant to perfect the claim and an
                    explanation of why any such material or information is
                    necessary; and,

                (4) An explanation of the plan's claim review procedure, as set
                    forth in paragraphs d and e following.

      d.  Review Procedure.  The purpose of the review procedure, set forth in
          this paragraph and in paragraph e following, is to provide a procedure
          by which a claimant under the plan may have a reasonable opportunity
          to appeal a denial of a claim to the named fiduciary for a full and
          fair review.  To accomplish that purpose, the claimant or his duly
          authorized representative:

                a.  May request a review upon written application to the plan
                    administrator;
                b.  May review pertinent plan documents; and
                c.  May submit issues and comments in writing.

          A claimant (or his duly authorized representative) shall request a
          review by filing a written application for review with the plan
          administrator at any time within sixty (60) days after receipt by the
          claimant of written notice of the denial of his claim.

      e.  Decision on Review.  The decision on review of a denied claim shall be
          made in the following manner:

                a.  The decision on review shall be made by the plan
                    administrator, who may in his discretion hold a hearing on
                    the denied claim.  The plan administrator shall make his
                    decision promptly, and not later than sixty (60) days after
                    receipt of the request for review, unless special
                    circumstances (such as the need to hold a hearing) require
                    an
<PAGE>
 
                    extension of time for processing, in which case a decision
                    shall be rendered as soon as possible, but not later than
                    one hundred twenty (120) days after receipt of the request
                    for review.

                b.  The decision on review shall be in writing and shall include
                    specific reasons for the decisions, written in a manner
                    calculated to be understood by the claimant, and specific
                    references to the pertinent plan provisions on which the
                    decision is based.




<PAGE>
 
                   AMENDMENT TO SUPPLEMENTAL INCOME AGREEMENT

AMENDMENT entered into as of the    7th    day of October, 1994 between Haywood
                                 ---------       --------                      
Savings Bank, SSB (formerly Haywood Savings and Loan Association), a domestic
Corporation having its principal office in Waynesville, North Carolina
(hereinafter referred to as the Company) and Larry Ammons (hereinafter referred
to as the Employee).

WITNESSETH:

WHEREAS the Employee entered into a Supplemental Income Agreement as of the
1/st/ day of October 1989 between Haywood Savings and Loan Association of
Waynesville, North Carolina and Larry Ammons; and

WHEREAS Sections 2 of said agreement set forth certain monthly benefits to be
paid upon the attainment of the Employee's 65/th/ Birthday and Section 3 of said
agreement set forth certain monthly benefits to be paid (beginning at a date to
be determined by the Company but within six months from the employee's death)
should the Employee die prior to the attainment of the first day of the month
following his 65/th/ birthday; and

WHEREAS the amount of the monthly benefit stated was incorrect in that it
erroneously reflected the maximum benefit that would be provided if the Employee
continued his employment to age 65 and received the yearly 5% benefit increases
when it should have reflected the initial monthly benefit before any increases
due to future years of employment; and

WHEREAS Section 5.G of said agreement provide that said agreement may be amended
in whole or in part by a writing signed by both of the parties thereto; and

WHEREAS, it is in the desire of both parties to the agreement to correct this
unintentional error by deleting the incorrect benefit amount of $1,273.16
monthly stipulated in Sections 2 and 3 and replacing it with the correct benefit
amount of $457.00 monthly;

BE IT THEREFORE RESOLVED that the Supplemental Income Agreement be and is hereby
amended by deleting the incorrect benefit amount of $1,273.16 monthly stipulated
in Sections 2 and 3 and replacing it with the correct benefit amount of $457.00
monthly.

All other provisions of the agreement shall remain in full force and effect.

ATTEST:                            Haywood Savings Bank, SSB
                         (formerly Haywood Savings and Loan Association)


/s/ Johnnie Sue Caldwell          By: /s/ G. D. Stovall, Jr.
________________________              ______________________
                                      Chairman        (Seal)

WITNESS:
/s/ Michael E. Stamey               /s/ Larry R. Ammons
________________________              ______________________
                                      Employee        (Seal)



<PAGE>
 
                        HAYWOOD SAVINGS BANK, INC., SSB
                         SUPPLEMENTAL INCOME AGREEMENT
                        _______________________________

                                1998 Amendment
                        _______________________________

     WHEREAS, Haywood Savings Bank, Inc., SSB (the "Bank") entered into a
Supplemental Income Agreement (the "SIA") dated October 1, 1989, with Larry
Ammons (the "Employee"); and

     WHEREAS, the Bank's Board of Directors and the Employee have determined
that it is in their respective best interests to amend the SIA in the manner set
forth herein.

     NOW, THEREFORE, the SIA shall be amended as follows, pursuant to Section 6.
G thereof:

     1.   Section 6 of  the SIA shall be amended by adding the following new
paragraph I at the end thereof:

          I.  Notwithstanding the provisions of paragraphs 2, 3, and 4 hereof,
          any benefits that are or become payable after the closing date of a
          Change in Control (as defined in the Bank's Retirement Plan for Non-
          Employee Directors) shall be paid in the manner selected by the
          Employee in a duly executed election in the form attached hereto as
          Exhibit "A"; provided that such an election will be honored and given
          effect only if it is properly made and delivered to the Bank more than
          90 days before said closing date.  Present value determinations, as
          well as interest accruals on present value sums that are paid in
          installments over a fixed period of years, shall be calculated at a
          rate equal to 120% of the applicable federal rate, compounded
          semiannually, as determined under Section 1274(d) of the Internal
          Revenue Code of 1986, as amended, and the regulations thereunder.

               The Employee may specify, on the election form attached as
          Exhibit "A", the manner of payment to his beneficiary,  and may at any
          time or from time to time change the identity or manner of payment to
          his beneficiary.

     2.   Nothing contained herein shall be held to alter, vary, or affect any
of the terms, provisions, or conditions of the SIA other than stated above.




<PAGE>
 
Supplement Income Agreement
1998 Amendment
Page 2

 
     WHEREFORE, the undersigned hereby approve this 1998 Amendment to the SIA.
Date of Execution: 21 April, 1998
                   --------      

ATTEST:                              HAYWOOD SAVINGS BANK, INC., SSB



/s/ Paul W. Trantham                 By /s/ William P. Burgin
____________________________         _______________________________________
                                     Its Chairman of the Board


WITNESS:                             EMPLOYEE



/s/ Larry R. Ammons                  /s/ Larry R. Ammons
____________________________         _______________________________________