VIRGINIA BEACH FEDERAL FINANCIAL CORPORATION

                     1997 DIRECTORS STOCK COMPENSATION PLAN


      1.  Purpose  of the Plan.  The Plan shall be known as the  Virginia  Beach
Federal Financial Corporation ("Company") 1997 Directors Stock Compensation Plan
(the  "Plan").  The  purpose  of the  Plan is to  retain  and  reward  qualified
personnel for positions of substantial responsibility as members of the Board of
Directors of the Company or any present or future  parent or  subsidiary  of the
Company to promote the success of the business.  The Plan is intended to provide
for the grant of Stock Options that are not "Incentive  Stock  Options,"  within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").

       2.  Definitions.  The following  words and phrases when used in this Plan
with an initial capital letter,  unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever  appropriate,  the masculine
pronoun  shall include the feminine  pronoun and the singular  shall include the
plural.

            (a) "Award" means the grant by the  Committee or in accordance  with
the terms of the Plan of a Stock Option.

            (b) "Board" shall mean the Board of Directors of the Company, or any
successor or parent corporation thereto.

            (c)  "Change  in  Control"  shall  mean:  (i) the sale of all,  or a
material   portion,   of  the  assets  of  the  Company;   (ii)  the  merger  or
recapitalization of the Company whereby the Company is not the surviving entity;
(iii) a change in control of the Company,  as otherwise defined or determined by
the Office of Thrift  Supervision or regulations  promulgated by it; or (iv) the
acquisition,  directly or indirectly,  of the beneficial  ownership  (within the
meaning of that term as it is used in Section 13(d) of the  Securities  Exchange
Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five
percent (25%) or more of the outstanding voting securities of the Company by any
person,  trust, entity or group. This limitation shall not apply to the purchase
of shares by underwriters in connection with a public offering of Company stock,
or the purchase of shares of up to 25% of any class of securities of the Company
by a  tax-qualified  employee stock benefit plan. The term "person" refers to an
individual or a corporation,  partnership,  trust,  association,  joint venture,
pool, syndicate, sole proprietorship,  unincorporated  organization or any other
form of entity not specifically  listed herein. The decision of the Committee as
to whether a Change in Control has occurred shall be conclusive and binding.

            (d) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and regulations promulgated thereunder.

            (e) "Committee"  shall mean the Board or the Stock Option  Committee
appointed by the Board in accordance with Section 5(a) of the Plan.

            (f) "Common  Stock" shall mean the common  stock of the Company,  or
any successor or parent corporation thereto.


                                        1

<PAGE>



            (g)  "Company"  shall  mean the  Virginia  Beach  Federal  Financial
Corporation,  the parent  corporation  of the Savings  Bank, or any successor or
Parent thereof.

            (h) "Director"  shall mean a member of the Board of the Company,  or
any successor or parent corporation thereto.

            (i) "Director  Emeritus"  shall mean a person  serving as a director
emeritus,  advisory director,  consulting director, or other similar position as
may be  appointed  by the Board of  Directors of the Savings Bank or the Company
from time to time.

            (j)  "Disability"  means any  physical  or mental  impairment  which
renders the Participant  incapable of continuing in the employment or service of
the Savings Bank or the Parent in his then current capacity as determined by the
Committee.

            (k) "Effective Date" shall mean December 11, 1997.

            (l) "Employee"  shall mean any person employed by the Company or any
present or future Parent or Subsidiary of the Company. "Non-Employee" shall mean
an  individual  not  employed by the Company or any present or future  Parent or
Subsidiary of the Company.

            (m) "Fair  Market  Value"  shall  mean:  (i) if the Common  Stock is
traded otherwise than on a national  securities  exchange,  then the Fair Market
Value per Share shall be equal to the mean between the last bid and ask price of
such  Common  Stock on such  date or,  if there is no bid and ask  price on said
date,  then on the  immediately  prior business day on which there was a bid and
ask price. If no such bid and ask price is available, then the Fair Market Value
shall be determined by the Committee in good faith;  or (ii) if the Common Stock
is listed on a national  securities  exchange  (including  the  NASDAQ  National
Market System),  then the Fair Market Value per Share shall be not less than the
average of the highest  and lowest  selling  price of such Common  Stock on such
exchange  on such date,  or if there  were no sales on said date,  then the Fair
Market  Value shall be not less than the mean between the last bid and ask price
on such date.

            (n) "Option" or "Stock Option" shall mean an Award granted  pursuant
to this Plan  providing  the holder of such  Option  with the right to  purchase
Common Stock.

            (o) "Optioned  Stock" shall mean stock subject to an Option  granted
pursuant to the Plan.

            (p) "Optionee" shall mean any person who receives an Option or Award
pursuant to the Plan.

            (q)  "Parent"  shall mean any  present or future  corporation  which
would be a "parent  corporation"  as defined in  Sections  424(e) and (g) of the
Code.

            (r) "Participant" means any director of the Company or any Parent or
Subsidiary of the Company or any other person providing a service to the Company
who is  selected  by the  Committee  to receive an Award,  or who by the express
terms of the Plan is granted an Award.


                                        2

<PAGE>



            (s)  "Plan"  shall  mean  the  Virginia   Beach  Federal   Financial
Corporation 1997 Directors Stock Compensation Plan.

            (t) "Savings  Bank" shall mean First Coastal Bank,  Virginia  Beach,
Virginia, or any successor corporation thereto.

            (u) "Share" shall mean one share of the Common Stock.

            (v) "Subsidiary"  shall mean any present or future corporation which
constitutes a "subsidiary  corporation" as defined in Sections 424(f) and (g) of
the Code.

       3.  Shares  Subject  to the Plan.  Except as  otherwise  required  by the
provisions of Section 11 hereof,  the aggregate number of Shares with respect to
which Awards may be made  pursuant to the Plan shall not exceed  25,000  Shares.
Such  Shares  may  either  be from  authorized  but  unissued  shares  or shares
purchased  in the market for Plan  purposes.  If an Award shall  expire,  become
unexercisable,  or be forfeited for any reason prior to its exercise, new Awards
may be granted  under the Plan with  respect to the number of Shares as to which
such expiration has occurred.

      4.    Six Month Holding Period.
            ------------------------

            Except in the event of the death or  disability of the Optionee or a
Change in Control of the  Company,  a minimum of six months must elapse  between
the date of the grant of an Option and the date of the sale of the Common  Stock
received through the exercise of such Option.

       5.   Administration of the Plan.
            --------------------------

            (a) Composition of the Committee.  The Plan shall be administered by
the Board of Directors of the Company or a Committee  which shall consist of not
less than two Directors of the Company appointed by the Board and serving at the
pleasure of the Board. All persons  designated as members of the Committee shall
meet the  requirements of a "Non-Employee  Director"  within the meaning of Rule
16b-3 under the Securities  Exchange Act of 1934, as amended, as found at 17 CFR
ss.240.16b-3.

            (b) Powers of the Committee.  The Committee is authorized  (but only
to the  extent  not  contrary  to the  express  provisions  of  the  Plan  or to
resolutions adopted by the Board) to interpret the Plan, to prescribe, amend and
rescind  rules and  regulations  relating to the Plan, to determine the form and
content of Awards to be issued  under the Plan and to make other  determinations
necessary or advisable for the  administration  of the Plan,  and shall have and
may  exercise  such other power and  authority  as may be delegated to it by the
Board from time to time. A majority of the entire  Committee shall  constitute a
quorum and the action of a majority  of the  members  present at any  meeting at
which a quorum is present  shall be deemed the  action of the  Committee.  In no
event may the Committee  revoke  outstanding  Awards  without the consent of the
Participant.

            The  President  of the Company  and such other  officers as shall be
designated by the Committee are hereby authorized to execute written  agreements
evidencing  Awards on behalf of the Company and to cause them to be delivered to
the Participants. Such agreements shall set forth the Option exercise price, the
number of shares of Common Stock subject to such Option, the expiration date

                                        3

<PAGE>



of such Options, and such other terms and restrictions  applicable to such Award
as are determined in accordance with the Plan or the actions of the Committee.

            (c) Effect of Committee's  Decision.  All decisions,  determinations
and  interpretations  of the  Committee  shall be final  and  conclusive  on all
persons affected thereby.

       6.   Eligibility for Awards and Limitations.
            --------------------------------------

                   (a) The  Committee  shall  from  time to time  determine  the
Participants who shall be granted Awards under the Plan and the number of Awards
to be granted to each such persons. In selecting Participants and in determining
the number of Shares of Common Stock to be granted to each such Participant, the
Committee may consider the nature of the prior and  anticipated  future services
rendered by each such Participant, each such Participant's current and potential
contribution  to the Company and such other factors as the Committee may, in its
sole discretion, deem relevant. Participants who have been granted an Award may,
if otherwise eligible, be granted additional Awards.

                  (b) In no event shall Shares subject to Options granted to any
Participant  exceed more than 12.5% of the total number of Shares authorized for
delivery under the Plan.

       7. Term of the Plan.  The Plan shall continue in effect for a term of ten
(10) years from the Effective  Date,  unless the Plan is terminated by the Board
in accordance with the Plan.

       8. Terms and Conditions of Stock Options. Stock Options may be granted or
awarded only to  Participants.  Each Stock Option  granted  pursuant to the Plan
shall be evidenced by an  instrument  in such form as the  Committee  shall from
time to time  approve.  Each Stock  Option  granted  pursuant  to the Plan shall
comply with, and be subject to, the following terms and conditions:

            (a) Option  Price.  The price per Share at which  each Stock  Option
granted by the  Committee  under the Plan may be exercised  shall not, as to any
particular Stock Option,  be less than the Fair Market Value of the Common Stock
on the date that such Stock Option is granted.

            (b) Payment.  Full payment for each Share of Common Stock  purchased
upon the  exercise of any Stock Option  granted  under the Plan shall be made at
the time of  exercise  of each such  Stock  Option and shall be paid in cash (in
United States Dollars),  Common Stock or a combination of cash and Common Stock.
Common Stock utilized in full or partial  payment of the exercise price shall be
valued at the Fair  Market  Value at the date of  exercise.  The  Company  shall
accept full or partial  payment in Common Stock only to the extent  permitted by
applicable law. No Shares of Common Stock shall be issued until full payment has
been received by the Company,  and no Optionee shall have any of the rights of a
stockholder  of the  Company  until  Shares  of Common  Stock are  issued to the
Optionee.

            (c) Term of Stock Option.  The term of  exercisability of each Stock
Option  granted  pursuant to the Plan shall be not more than ten (10) years from
the date each such Stock Option is granted.

            (d) Exercise Generally. Except as otherwise provided by the terms of
the Plan or by action of the  Committee at the time of the grant of the Options,
the Options  granted will be first  exercisable  as of the date of grant of such
options  and shall  remain  exercisable  during  such  periods  of  service as a
Director or Director Emeritus.

                                        4

<PAGE>




            (e)  Cashless  Exercise.   Subject  to  vesting   requirements,   if
applicable, an Optionee who has held an Stock Option for at least six months may
engage in the "cashless  exercise" of the Option.  Upon a cashless exercise,  an
Optionee  shall give the Company  written  notice of the  exercise of the Option
together with an order to a registered  broker-dealer or equivalent third party,
to sell part or all of the Optioned  Stock and to deliver enough of the proceeds
to the Company to pay the Option  exercise price and any applicable  withholding
taxes.  If the Optionee  does not sell the Optioned  Stock  through a registered
broker-dealer  or  equivalent  third  party,  the  Optionee can give the Company
written  notice of the  exercise of the Option and the third party  purchaser of
the  Optioned  Stock  shall pay the Option  exercise  price plus any  applicable
withholding taxes to the Company.

            (f)  Transferability.  An Stock Option granted  pursuant to the Plan
shall be exercised during an Optionee's lifetime only by the Optionee to whom it
was granted and shall not be assignable or  transferable  otherwise than by will
or by the laws of descent and distribution.

       9.   Awards to Directors.
            -------------------

            As of December 11, 1997,  Stock Options to purchase  3,125 shares of
Common  Stock shall be granted to each  Director  of the Company  that is not on
that date an employee of the Company or the Savings Bank.  Such Options shall be
exercisable  at a price equal to the Fair Market Value of the Common Stock as of
the date of grant of such Options.  Such Options will be first exercisable as of
the Date of Grant. Such Options shall continue to be exercisable for a period of
ten years  following the date of grant without regard to the continued  services
of such Director as an Employee,  Director or Director Emeritus. In the event of
the   Optionee's   death,   such  Options  may  be  exercised  by  the  personal
representative  of his estate or person or persons to whom his rights under such
Option  shall have  passed by will or by the laws of descent  and  distribution.
Unless  otherwise  inapplicable,  or  inconsistent  with the  provisions of this
paragraph,  the Options to be granted to Directors hereunder shall be subject to
all other provisions of this Plan.

      10.  Withholding  Tax. The Company shall have the right to deduct from all
amounts paid in cash with respect to the cashless  exercise of Options under the
Plan  any  taxes  required  by law to be  withheld  with  respect  to such  cash
payments.  Where a  Participant  or other  person is entitled to receive  Shares
pursuant  to the  exercise  of an Option,  the  Company  shall have the right to
require the  Participant  or such other  person to pay the Company the amount of
any taxes which the Company is required to withhold with respect to such Shares,
or, in lieu  thereof,  to retain,  or to sell without  notice,  a number of such
Shares sufficient to cover the amount required to be withheld.

      11. Recapitalization,  Merger, Consolidation,  Change in Control and Other
          ----------------------------------------------------------------------
          Transactions.
          ------------

            (a) Adjustment.  Subject to any required action by the  stockholders
of the Company,  within the sole  discretion  of the  Committee,  the  aggregate
number of Shares of Common Stock for which Options may be granted hereunder, the
number of Shares of Common Stock  covered by each  outstanding  Option,  and the
exercise  price  per Share of Common  Stock of each  such  Option,  shall all be
proportionately  adjusted  for any  increase or decrease in the number of issued
and  outstanding  Shares  of  Common  Stock  resulting  from  a  subdivision  or
consolidation   of  Shares   (whether   by  reason  of  merger,   consolidation,
recapitalization,   reclassification,   split-up,   combination  of  shares,  or
otherwise) or the payment of a stock  dividend (but only on the Common Stock) or
any other  increase or  decrease  in the number of such  Shares of Common  Stock
effected  without the receipt or payment of  consideration by the Company (other
than Shares held by dissenting stockholders).

                                        5

<PAGE>




            (b)  Change  in  Control.   All  outstanding   Awards  shall  become
immediately  exercisable in the event of a Change in Control of the Company,  as
determined  by the  Committee.  In the  event of such a Change in  Control,  the
Committee  and the Board of  Directors  will  take one or more of the  following
actions to be effective as of the date of such Change in Control:

            (i)  provide  that such  Options  shall be  assumed,  or  equivalent
options  shall  be  substituted,  ("Substitute  Options")  by the  acquiring  or
succeeding  corporation (or an affiliate thereof),  provided that: the shares of
stock  issuable upon the exercise of such  Substitute  Options shall  constitute
securities registered in accordance with the Securities Act of 1933, as amended,
("1933  Act") or such  securities  shall be  exempt  from such  registration  in
accordance  with  Sections  3(a)(2) or  3(a)(5) of the 1933 Act,  (collectively,
"Registered Securities"), or in the alternative, if the securities issuable upon
the  exercise  of  such  Substitute  Options  shall  not  constitute  Registered
Securities,  then the Optionee will receive upon  consummation  of the Change in
Control  transaction  a cash  payment for each Option  surrendered  equal to the
difference between (1) the Fair Market Value of the consideration to be received
for each share of Common  Stock in the Change in Control  transaction  times the
number of shares of Common Stock subject to such  surrendered  Options,  and (2)
the aggregate exercise price of all such surrendered Options, or

            (ii) in the  event of a  transaction  under  the  terms of which the
holders  of the Common  Stock of the  Company  will  receive  upon  consummation
thereof a cash  payment  (the  "Merger  Price")  for each share of Common  Stock
exchanged in the Change in Control transaction, to make or to provide for a cash
payment to the Optionees  equal to the  difference  between (A) the Merger Price
times the number of shares of Common Stock  subject to such Options held by each
Optionee (to the extent then  exercisable  at prices not in excess of the Merger
Price) and (B) the aggregate  exercise price of all such surrendered  Options in
exchange for such surrendered Options.

            (c) Extraordinary  Corporate Action.  Notwithstanding any provisions
of the Plan to the contrary,  subject to any required action by the stockholders
of the Company, in the event of any Change in Control, recapitalization, merger,
consolidation,  exchange  of Shares,  spin-off,  reorganization,  tender  offer,
partial or  complete  liquidation  or other  extraordinary  corporate  action or
event,  the Committee,  in its sole discretion,  shall have the power,  prior or
subsequent to such action or event to:

                   (i) appropriately adjust the number of Shares of Common Stock
subject to each Option, the Option exercise price per Share of Common Stock, and
the  consideration  to be given or received by the Company  upon the exercise of
any outstanding Option;

                  (ii) cancel any or all previously  granted  Options,  provided
that appropriate  consideration is paid to the Optionee in connection therewith;
and/or

                   (iii) make such other adjustments in connection with the Plan
as  the  Committee,  in  its  sole  discretion,   deems  necessary,   desirable,
appropriate or advisable.

            (d) Acceleration. The Committee shall at all times have the power to
accelerate the exercise date of Options previously granted under the Plan.

            (e)  Non-recurring  Dividends.  Upon the  payment  of a  special  or
non-recurring  cash  dividend  that has the effect of a return of capital to the
stockholders,   the  Option   exercise   price  per  share   shall  be  adjusted
proportionately and in an equitable manner.

                                        6

<PAGE>




      Except as expressly provided in Sections 11(a), 11(b) and 11(e) hereof, no
Optionee  shall have any rights by reason of the occurrence of any of the events
described in this Section 11.

      12. Time of  Granting  Options.  The date of grant of an Option  under the
Plan shall, for all purposes,  be the date specified in accordance with the Plan
or the date on which the  Committee  makes the  determination  of granting  such
Option.  Notice of the grant of an Option shall be given to each  individual  to
whom an Option is so  granted  within a  reasonable  time after the date of such
grant in a form determined by the Committee.

      13.  Modification of Options. At any time and from time to time, the Board
may authorize  the Committee to direct the execution of an instrument  providing
for the modification of any outstanding  Option,  provided no such modification,
extension  or renewal  shall  confer on the  holder of said  Option any right or
benefit  which  could not be  conferred  on the  Optionee  by the grant of a new
Option at such time, or shall not materially  decrease the  Optionee's  benefits
under the Option  without  the  consent of the holder of the  Option,  except as
otherwise permitted under Section 14 hereof.

      14. Amendment and Termination of the Plan.
          -------------------------------------

            (a) Action by the Board. The Board may alter, suspend or discontinue
the Plan.

            (b) Change in Applicable  Law.  Notwithstanding  any other provision
contained  in the Plan,  in the event of a change in any  federal  or state law,
rule  or  regulation  which  would  make  the  exercise  of all or  part  of any
previously  granted Option  unlawful or subject the Company to any penalty,  the
Committee may restrict any such exercise  without the consent of the Optionee or
other holder thereof in order to comply with any such law, rule or regulation or
to avoid any such penalty.

      15.  Conditions Upon Issuance of Shares;  Limitations on Option  Exercise;
           ---------------------------------------------------------------------
Cancellation of Option Rights.
-----------------------------

      (a) Shares  shall not be issued with respect to any Option  granted  under
the Plan unless the  issuance  and delivery of such Shares shall comply with all
relevant  provisions of  applicable  law,  including,  without  limitation,  the
Securities  Act of 1933,  as  amended,  the  rules and  regulations  promulgated
thereunder,  any applicable  state  securities laws and the  requirements of any
stock exchange upon which the Shares may then be listed.

      (b) The inability of the Company to obtain any  necessary  authorizations,
approvals  or letters of  non-objection  from any  regulatory  body or authority
deemed by the Company's  counsel to be necessary to the lawful issuance and sale
of any Shares issuable hereunder shall relieve the Company of any liability with
respect to the non-issuance or sale of such Shares.

      (c) As a condition to the  exercise of an Option,  the Company may require
the person exercising the Option to make such  representations and warranties as
may  be  necessary  to  assure  the   availability  of  an  exemption  from  the
registration requirements of federal or state securities law.

      (d) Notwithstanding  anything herein to the contrary, upon the termination
of employment or service of an Optionee by the Company or its  Subsidiaries  for
"cause"  within the sole  discretion  of the  Board,  all  Options  held by such
Participant  shall cease to be exercisable as of the date of such termination of
employment or service.

                                        7

<PAGE>



      (e) Upon the  exercise  of an Option  by an  Optionee  (or the  Optionee's
personal  representative),  the Committee,  in its sole and absolute discretion,
may make a cash  payment to the  Optionee,  in whole or in part,  in lieu of the
delivery  of shares of Common  Stock.  Such cash  payment  to be paid in lieu of
delivery  of Common  Stock  shall be equal to the  difference  between  the Fair
Market  Value of the  Common  Stock on the date of the Option  exercise  and the
exercise  price per share of the Option.  Such cash payment shall be in exchange
for the cancellation of such Option.  Such cash payment shall not be made in the
event that such  transaction  would  result in  liability to the Optionee or the
Company under Section 16(b) of the Securities  Exchange Act of 1934, as amended,
and regulations promulgated thereunder.

      16.  Reservation of Shares.  During the term of the Plan, the Company will
reserve  and keep  available  a number  of  Shares  sufficient  to  satisfy  the
requirements of the Plan.

      17.  Unsecured  Obligation.  No Participant  under the Plan shall have any
interest  in any fund or special  asset of the  Company by reason of the Plan or
the grant of any  Option  under the Plan.  No trust  fund  shall be  created  in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.

      18. No Employment Rights. No Director, Employee or other person shall have
a right to be selected as a Participant under the Plan. Neither the Plan nor any
action taken by the Committee in  administration  of the Plan shall be construed
as giving any  person any rights of  employment  or  retention  as an  Employee,
Director or in any other  capacity  with the Company,  the Savings Bank or other
Subsidiaries.

      19.  Governing  Law.  The  Plan  shall be  governed  by and  construed  in
accordance  with the laws of the State of  Virginia,  except to the extent  that
federal law shall be deemed to apply.




                                      8