<PAGE>
 
                                                               Exhibit (10)(iii)

                         RETIREMENT PAYMENT AGREEMENT

       AGREEMENT entered into as of 1st day of October 1985 between Home Savings
and Loan Association a domestic Corporation having its principal office in
Albemarle. North Carolina (hereinafter referred to as the Association) and Carl
M. Hill of Albemarle. North Carolina (hereinafter referred to as the Director).

                                  WITNESSETH:

       WHEREAS, the Director is rendering valuable service and it is the desire
of the Association to have the benefit of his continued loyalty and service and
also to assist him in providing for the contingencies of retirement and death;
and,

       WHEREAS, the Director hereby agrees to waive fees paid to him as a
Director in the amount of $200 per month for five years from the date of the
execution of this agreement;

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

       1.  Retirement Benefit:  Should the Director still be in the Directorship
           ------------------                                                   
of the Association upon attainment of his 65th birthday, the Association will
commence to pay him $803 per month for a continuous period of 120 months. In the
event that the Director should die after becoming entitled to receive said
monthly installments but before any or all of said installments have been paid,
the Association will pay or will continue to pay said installments to such
beneficiary or beneficiaries as the Director has directed by filing with the
Association 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 computed on the basis of 6
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 Director's death shall be commuted on the basis of 6 percent per annum
compound interest and shall be paid in a single sum to the executor or
administrator of the Director's estate.

       2.  Death Benefit:  Should the Director die while in the Directorship of
           -------------                                                       
the Association and prior to the attainment of his 65th birthday, the
Association (beginning at a date to be determined by the Association but within
six months from the date of such death) will commence to pay $803 per month for
a continuous period of 120 months to such beneficiary or beneficiaries as the
Director has directed by filing with the Association a notice in writing.
Irrespective of the above, however, if the Director dies as a result of suicide
within two years of the execution of this agreement, the death benefit shall not
exceed an amount equal to his waived Directors' fees plus interest at the rate
of 7 1/2 percent per annum compounded annually. 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 6 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
<PAGE>
 
unpaid at the Director's death shall be commuted on the basis of 6 percent per
annum compound interest and shall be paid in a single sum to the executor or
administrator of the Director's estate.

        3.  Termination of Directorship:
            --------------------------- 

            A.  If the Director terminates his Directorship, for reasons other
            than death or the attainment of his 65th birthday, prior to two
            years from the execution date of this Agreement, the Director's
            benefits shall be limited to his waived Director fees plus interest
            at the rate of 7 1/2 percent per annum compounded annually and shall
            be paid in a single sum as soon as practical following the
            termination of his Directorship.

            B.  If the Director terminates his Directorship, for reasons other
            than death or the attainment of his 65th birthday, at the end of two
            or more years from the execution date of this Agreement, he or his
            beneficiary, as applicable, shall be entitled upon the attainment of
            his 65th birthday, or his prior death, to a percentage of the
            retirement benefits stated in Section 1 of this Agreement as
            determined by the following table:

<TABLE>
<CAPTION>
 
    FULL NUMBER OF YEARS SERVED        PERCENTAGE OF RETIREMENT
     AS DIRECTOR FROM DATE OF         BENEFITS STATED IN SECTION
    EXECUTION OF THIS AGREEMENT      1 OF THIS AGREEMENT TO WHICH
UNTIL TERMINATION OF DIRECTORSHIP      THE DIRECTOR IS ENTITLED
---------------------------------      ------------------------
<S>                                  <C>
                 2                               40%

                 3                               60%

                 4                               80%

                 5                              100%
 
</TABLE>

       4.   Forfeiture Provisions:

            A.   During the period the retirement benefit is payable to the
            Director under Section 1 of this Agreement, the Director shall not
            engage in business activities which are in competition with the
            Association without first obtaining the written consent of the
            Association.

            B.   During the period the retirement payment is payable to the
            Director under Section 1 of the Agreement, the Director shall be
            available to render consulting services to the Association upon
            request by an officer of the Association, but such requests shall
            not be made more frequently than once each month. The Director 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 Association, if the Director fails to comply with
            either of the conditions set forth in paragraph (A) and (B) of this
            Section 4.

       5.   General Provisions:
            ------------------ 

            A.   Except as otherwise provided by this Agreement, it is agreed
            that neither the Director, 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 Association to the Director
            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
            Association to discharge the Director or restrict the right of the
            Director to terminate his Directorship.

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

            D.   The Association hereby reserves the right to accelerate the
            payments specified in Sections 1, 2 and 3 above without the consent
            of the Director, his estate, beneficiaries, or any other person
            claiming through or under him.

            E.   The Association agrees that it will not merge or consolidate
            with any other Association or organization, or permit its business
            activities to be taken over by any other organization unless and
            until the succeeding or continuing Association or other organization
            shall expressly assume the rights and obligations of the Association
            herein set forth. The Association 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 may be revoked or amended in whole or in part by
            a writing signed by both of the parties hereto.
<PAGE>
 
            G.  This Agreement shall be subject to and construed under the laws
            of the State of North Carolina.

       IN WITNESS THEREOF, the said Association 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 Director has
 hereunto set his hand and seal, all on the day and year first above written.

 ATTEST:                                   HOME SAVINGS AND LOAN
                                                ASSOCIATION
                                        
                                        
   /s/ Sheila S. Barbee                    By: /s/ Carl M. Hill         (Seal)
-------------------------------               --------------------------
                                                        President
                                        
 WITNESS: /s/ Bobby Doby, Jr.                  /s/ Carl M. Hill         (Seal)
          ---------------------               --------------------------
                                                       (The Director)
                                        
<PAGE>
 
                          BENEFICIARY DESIGNATION FORM

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

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


PRIMARY:
------- 

          Peggy B. Hill    12/10/27   P.O. Box 489, Albemarle, N.C.      Wife 
--------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------


CONTINGENT, If Any:

--------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

(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/ Bobby Doby, Jr.                           /s/ Carl M. Hill
-------------------------------               ----------------------------------
Witness                                       Signature of Director


                                              October 1, 1985
                                              ----------------------------------
                                              Date

Note: The original should be retained by the Association, one copy by the
Director, and one copy forwarded to Smith/Broadhurst, Inc.
<PAGE>
 
                         RETIREMENT PAYMENT AGREEMENT

     AGREEMENT entered into as of 1st day of October 1985 between Home Savings
and Loan Association a domestic Corporation having its principal office in
Albemarle. North Carolina (hereinafter referred to as the Association) and
Robert R. Swanner, Albemarle, North Carolina (hereinafter referred to as the
Director).

                                  WITNESSETH:

     WHEREAS, the Director is rendering valuable service and it is the desire of
the Association to have the benefit of his continued loyalty and service and
also to assist him in providing for the contingencies of retirement and death;
and,

     WHEREAS, the Director hereby agrees to waive fees paid to him as a Director
in the amount of $100 per month for five years from the date of the execution of
this agreement;

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

     1.  Retirement Benefit:  Should the Director still be in the Directorship
         ------------------                                                   
of the Association upon attainment of his 65th birthday, the Association will
commence to pay him $1,912 per month for a continuous period of 120 months. In
the event that the Director should die after becoming entitled to receive said
monthly installments but before any or all of said installments have been paid,
the Association will pay or will continue to pay said installments to such
beneficiary or beneficiaries as the Director has directed by filing with the
Association 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 computed on the basis of 6
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 Director's death shall be commuted on the basis of 6 percent per annum
compound interest and shall be paid in a single sum to the executor or
administrator of the Director's estate.

     2.  Death Benefit:  Should the Director die while in the Directorship of
         -------------                                                       
the Association and prior to the attainment of his 65th birthday, the
Association (beginning at a date to be determined by the Association but within
six months from the date of such death) will commence to pay $1,912 per month
for a continuous period of 120 months to such beneficiary or beneficiaries as
the Director has directed by filing with the Association a notice in writing.
Irrespective of the above, however, if the Director dies as a result of suicide
within two years of the execution of this agreement, the death benefit shall not
exceed an amount equal to his waived Directors' fees plus interest at the rate
of 7 1/2 percent per annum compounded annually. 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 6 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
<PAGE>
 
unpaid at the Director's death shall be commuted on the basis of 6 percent per
annum compound interest and shall be paid in a single sum to the executor or
administrator of the Director's estate.

     3.  Termination of Directorship:
         --------------------------- 

     A.  If the Director terminates his Directorship, for reasons other than
         death or the attainment of his 65th birthday, prior to two years from
         the execution date of this Agreement, the Director's benefits shall be
         limited to his waived Director fees plus interest at the rate of 7 1/2
         percent per annum compounded annually and shall be paid in a single sum
         as soon as practical following the termination of his Directorship.

     B.  If the Director terminates his Directorship, for reasons other than
         death or the attainment of his 65th birthday, at the end of two or more
         years from the execution date of this Agreement, he or his beneficiary,
         as applicable, shall be entitled upon the attainment of his 65th
         birthday, or his prior death, to a percentage of the retirement
         benefits stated in Section 1 of this Agreement as determined by the
         following table:
<TABLE>
<CAPTION>
 
    FULL NUMBER OF YEARS SERVED        PERCENTAGE OF RETIREMENT
     AS DIRECTOR FROM DATE OF         BENEFITS STATED IN SECTION
    EXECUTION OF THIS AGREEMENT      1 OF THIS AGREEMENT TO WHICH
 UNTIL TERMINATION OF DIRECTORSHIP     THE DIRECTOR IS ENTITLED
-----------------------------------  -----------------------------
<S>                                  <C>
                 2                                             40%
                 3                                             60%
                 4                                             80%
                 5                                            100%
 
</TABLE>

     4.  Forfeiture Provisions:

         A.   During the period the retirement benefit is payable to the
              Director under Section 1 of this Agreement, the Director shall not
              engage in business activities which are in competition with the
              Association without first obtaining the written consent of the
              Association.

         B.   During the period the retirement payment is payable to the
              Director under Section 1 of the Agreement, the Director shall be
              available to render consulting services to the Association upon
              request by an officer of the Association, but such requests shall
              not be made more frequently than once each month. The Director
              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 Association, if the Director fails to comply
              with either of the conditions set forth in paragraph (A) and (B)
              of this Section 4.

     5.  General Provisions:
         ------------------ 

         A.   Except as otherwise provided by this Agreement, it is agreed that
              neither the Director, 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 Association to the Director 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
              Association to discharge the Director or restrict the right of the
              Director to terminate his Directorship.

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

         D.   The Association hereby reserves the right to accelerate the
              payments specified in Sections 1, 2 and 3 above without the
              consent of the Director, his estate, beneficiaries, or any other
              person claiming through or under him.

         E.   The Association agrees that it will not merge or consolidate with
              any other Association or organization, or permit its business
              activities to be taken over by any other organization unless and
              until the succeeding or continuing Association or other
              organization shall expressly assume the rights and obligations of
              the Association herein set forth. The Association 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 may be revoked or amended in whole or in part by a
              writing signed by both of the parties hereto.
<PAGE>
 
         G.  This Agreement shall be subject to and construed under the laws of
             the State of North Carolina.

     IN WITNESS THEREOF, the said Association 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 Director has
hereunto set his hand and seal, all on the day and year first above written.

ATTEST:                                HOME SAVINGS AND LOAN
                                       ASSOCIATION


/s/ Sheila S. Barbee                   By: /s/ Carl M. Hill
________________________________           -------------------------------(Seal)
                                                       President

WITNESS: /s/ Bobby Doby, Jr.               /s/ Robert R. Swanner
--------------------------------           -------------------------------(Seal)
                                                       (The Director)
<PAGE>
 
                         BENEFICIARY DESIGNATION FORM

     As Beneficiary to receive any death benefits payable on my behalf from Home
Savings

and Loan Association, Albemarle, NC, I designate the following:

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

PRIMARY:
------- 

    Beth M. Swanner     10/13/49    1415 Northridge Drive, Albemarle, NC   Wife
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------


CONTINGENT, If Any:

 Mary Leslie Swanner   3/14/71   1415 Northridge Drive, Albemarle, NC   Daughter
--------------------------------------------------------------------------------
 Ashley Leigh Swanner  7/19/76   1415 Northridge  Drive, Albemarle, NC  Daughter
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

(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/ Bobby Doby, Jr.                        /s/ Robert R. Swanner
---------------------------------          -------------------------------------
Witness                                    Signature of Employee


                                           October 1, 1985
                                           -------------------------------------
                                           Date



Note: The original should be retained by the Association, one copy by the
Director, and one copy forwarded to Smith/Broadhurst, Inc.
<PAGE>
 
                          RETIREMENT PAYMENT AGREEMENT

     AGREEMENT entered into as of 1st day of October 1985 between Home Savings
and Loan Association a domestic Corporation having its principal office in
Albemarle. North Carolina (hereinafter referred to as the Association) and Joel
A. Huneycutt, Albemarle, North Carolina (hereinafter referred to as the
Director).

                                  WITNESSETH:

     WHEREAS, the Director is rendering valuable service and it is the desire of
the Association to have the benefit of his continued loyalty and service and
also to assist him in providing for the contingencies of retirement and death;
and,

     WHEREAS, the Director hereby agrees to waive fees paid to him as a Director
in the amount of $200 per month for five years from the date of the execution of
this agreement;

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

     1.  Retirement Benefit:  Should the Director still be in the Directorship
         ------------------                                                   
of the Association upon attainment of his 65th birthday, the Association will
commence to pay him $2,204 per month for a continuous period of 120 months. In
the event that the Director should die after becoming entitled to receive said
monthly installments but before any or all of said installments have been paid,
the Association will pay or will continue to pay said installments to such
beneficiary or beneficiaries as the Director has directed by filing with the
Association 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 computed on the basis of 6
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 Director's death shall be commuted on the basis of 6 percent per annum
compound interest and shall be paid in a single sum to the executor or
administrator of the Director's estate.

     2.  Death Benefit:  Should the Director die while in the Directorship of
         -------------                                                       
the Association and prior to the attainment of his 65th birthday, the
Association (beginning at a date to be determined by the Association but within
six months from the date of such death) will commence to pay $2,204 per month
for a continuous period of 120 months to such beneficiary or beneficiaries as
the Director has directed by filing with the Association a notice in writing.
Irrespective of the above, however, if the Director dies as a result of suicide
within two years of the execution of this agreement, the death benefit shall not
exceed an amount equal to his waived Directors' fees plus interest at the rate
of 7  1/2 percent per annum compounded annually. 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 6 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
<PAGE>
 
unpaid at the Director's death shall be commuted on the basis of 6 percent per
annum compound interest and shall be paid in a single sum to the executor or
administrator of the Director's estate.

     3.  Termination of Directorship:
         --------------------------- 

         A.  If the Director terminates his Directorship, for reasons other than
         death or the attainment of his 65th birthday, prior to two years from
         the execution date of this Agreement, the Director's benefits shall be
         limited to his waived Director fees plus interest at the rate of 7 1/2
         percent per annum compounded annually and shall be paid in a single sum
         as soon as practical following the termination of his Directorship.

         B.  If the Director terminates his Directorship, for reasons other than
         death or the attainment of his 65th birthday, at the end of two or more
         years from the execution date of this Agreement, he or his beneficiary,
         as applicable, shall be entitled upon the attainment of his 65th
         birthday, or his prior death, to a percentage of the retirement
         benefits stated in Section 1 of this Agreement as determined by the
         following table: 
<TABLE>
<CAPTION>
 
    FULL NUMBER OF YEARS SERVED        PERCENTAGE OF RETIREMENT
     AS DIRECTOR FROM DATE OF         BENEFITS STATED IN SECTION
   EXECUTION OF THIS AGREEMENT       1 OF THIS AGREEMENT TO WHICH
UNTIL TERMINATION OF DIRECTORSHIP      THE DIRECTOR IS ENTITLED
-----------------------------------  -----------------------------
<S>                                  <C>
                 2                                             40%

                 3                                             60%

                 4                                             80%

                 5                                            100%
 
</TABLE>

     4.  Forfeiture Provisions:

         A.  During the period the retirement benefit is payable to the
         Director under Section 1 of this Agreement, the Director shall not
         engage in business activities which are in competition with the
         Association without first obtaining the written consent of the
         Association.

         B.  During the period the retirement payment is payable to the
         Director under Section 1 of the Agreement, the Director shall be
         available to render consulting services to the Association upon request
         by an officer of the Association, but such requests shall not be made
         more frequently than once each month. The Director 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 Association, if the Director fails to comply with
         either of the conditions set forth in paragraph (A) and (B) of this
         Section 4.

     5.  General Provisions:
         ------------------ 

         A.  Except as otherwise provided by this Agreement, it is agreed
         that neither the Director, 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 Association to the Director 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 Association to
         discharge the Director or restrict the right of the Director to
         terminate his Directorship.

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

         D.  The Association hereby reserves the right to accelerate the
         payments specified in Sections 1, 2 and 3 above without the consent of
         the Director, his estate, beneficiaries, or any other person claiming
         through or under him.

         E.  The Association agrees that it will not merge or consolidate
         with any other Association or organization, or permit its business
         activities to be taken over by any other organization unless and until
         the succeeding or continuing Association or other organization shall
         expressly assume the rights and obligations of the Association herein
         set forth. The Association 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 may be revoked or amended in whole or in part by
         a writing signed by both of the parties hereto.
<PAGE>
 
         G.  This Agreement shall be subject to and construed under the laws
of the State of North Carolina.

      IN WITNESS THEREOF, the said Association 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 Director has
hereunto set his hand and seal, all on the day and year first above written.

ATTEST:                             HOME SAVINGS AND LOAN
                                    ASSOCIATION


/s/ Sheila S. Barbee                By: /s/ Carl M. Hill                 (Seal)
-----------------------------          ----------------------------------
                                                    President

WITNESS: /s/ Bobby Doby, Jr.        /s/ Joel A. Huneycutt                (Seal)
        ----------------------      -------------------------------------
                                                    (The Director)
<PAGE>
 
                          BENEFICIARY DESIGNATION FORM

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

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

 PRIMARY:
 ------- 

      Brenda W. Huneycutt  07/20/42      P. O. Box 92, Locust, NC   Wife
 -----------------------------------------------------------------------------

 -----------------------------------------------------------------------------

 -----------------------------------------------------------------------------


 CONTINGENT, If Any:


 -----------------------------------------------------------------------------

 -----------------------------------------------------------------------------

 -----------------------------------------------------------------------------


 (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/ Bobby Doby, Jr.                      /s/ Joel A. Huneycutt
------------------------                 --------------------------------------
Witness                                  Signature of Employee


                                         October 1, 1985
                                         ---------------------------------------
                                         Date



Note: The original should be retained by the Association, one copy by the
Director, and one copy forwarded to Smith/Broadhurst, Inc.
<PAGE>
 
                          RETIREMENT PAYMENT AGREEMENT

     AGREEMENT entered into as of 1st day of October 1985 between Home Savings
and Loan Association a domestic Corporation having its principal office in
Albemarle. North Carolina (hereinafter referred to as the Association) and
Caldwell A. Holbrook, Jr., Albemarle, North Carolina (hereinafter referred to as
the Director).

                                  WITNESSETH:

     WHEREAS, the Director is rendering valuable service and it is the desire of
the Association to have the benefit of his continued loyalty and service and
also to assist him in providing for the contingencies of retirement and death;
and,

     WHEREAS, the Director hereby agrees to waive fees paid to him as a Director
in the amount of $200 per month for five years from the date of the execution of
this agreement;

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

     1.  Retirement Benefit:  Should the Director still be in the Directorship
         ------------------                                                   
of the Association upon attainment of his 65th birthday, the Association will
commence to pay him $3,528 per month for a continuous period of 120 months. In
the event that the Director should die after becoming entitled to receive said
monthly installments but before any or all of said installments have been paid,
the Association will pay or will continue to pay said installments to such
beneficiary or beneficiaries as the Director has directed by filing with the
Association 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 computed on the basis of 6
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 Director's death shall be commuted on the basis of 6 percent per annum
compound interest and shall be paid in a single sum to the executor or
administrator of the Director's estate.

     2.  Death Benefit:  Should the Director die while in the Directorship of
         -------------                                                       
the Association and prior to the attainment of his 65th birthday, the
Association (beginning at a date to be determined by the Association but within
six months from the date of such death) will commence to pay $3,000 per month
for a continuous period of 120 months to such beneficiary or beneficiaries as
the Director has directed by filing with the Association a notice in writing.
Irrespective of the above, however, if the Director dies as a result of suicide
within two years of the execution of this agreement, the death benefit shall not
exceed an amount equal to his waived Directors' fees plus interest at the rate
of 7  1/2 percent per annum compounded annually. 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 6 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
<PAGE>
 
unpaid at the Director's death shall be commuted on the basis of 6 percent per
annum compound interest and shall be paid in a single sum to the executor or
administrator of the Director's estate.

     3.  Termination of Directorship:
         --------------------------- 

         A.  If the Director terminates his Directorship, for reasons other than
         death or the attainment of his 65th birthday, prior to two years from
         the execution date of this Agreement, the Director's benefits shall be
         limited to his waived Director fees plus interest at the rate of 7 1/2
         percent per annum compounded annually and shall be paid in a single sum
         as soon as practical following the termination of his Directorship.

         B.  If the Director terminates his Directorship, for reasons other than
         death or the attainment of his 65th birthday, at the end of two or more
         years from the execution date of this Agreement, he or his beneficiary,
         as applicable, shall be entitled upon the attainment of his 65th
         birthday, or his prior death, to a percentage of the retirement
         benefits stated in Section 1 of this Agreement as determined by the
         following table:
<TABLE>
<CAPTION>
 
        FULL NUMBER OF YEARS SERVED        PERCENTAGE OF RETIREMENT  
         AS DIRECTOR FROM DATE OF         BENEFITS STATED IN SECTION 
        EXECUTION OF THIS AGREEMENT      1 OF THIS AGREEMENT TO WHICH
    UNTIL TERMINATION OF DIRECTORSHIP      THE DIRECTOR IS ENTITLED  
    -----------------------------------  -----------------------------
    <S>                                  <C>                         
                     2                                40%            
                                                                     
                     3                                60%            
                                                                     
                     4                                80%            
                                                                     
                     5                               100%             

 
</TABLE>

     4.  Forfeiture Provisions:

         A.   During the period the retirement benefit is payable to the
         Director under Section 1 of this Agreement, the Director shall not
         engage in business activities which are in competition with the
         Association without first obtaining the written consent of the
         Association.

         B.   During the period the retirement payment is payable to the
         Director under Section 1 of the Agreement, the Director shall be
         available to render consulting services to the Association upon request
         by an officer of the Association, but such requests shall not be made
         more frequently than once each month. The Director 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 Association, if the Director fails to comply with
           either of the conditions set forth in paragraph (A) and (B) of this
           Section 4.

      5.   General Provisions:
           ------------------ 

           A.   Except as otherwise provided by this Agreement, it is agreed
           that neither the Director, 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 Association to the Director 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 Association to
           discharge the Director or restrict the right of the Director to
           terminate his Directorship.

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

           D.   The Association hereby reserves the right to accelerate the
           payments specified in Sections 1, 2 and 3 above without the consent
           of the Director, his estate, beneficiaries, or any other person
           claiming through or under him.

           E.   The Association agrees that it will not merge or consolidate
           with any other Association or organization, or permit its business
           activities to be taken over by any other organization unless and
           until the succeeding or continuing Association or other organization
           shall expressly assume the rights and obligations of the Association
           herein set forth. The Association 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 may be revoked or amended in whole or in part by
           a writing signed by both of the parties hereto.
<PAGE>
 
           G.  This Agreement shall be subject to and construed under the laws
           of the State of North Carolina.

      IN WITNESS THEREOF, the said Association 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 Director has
 hereunto set his hand and seal, all on the day and year first above written.

 ATTEST:                             HOME SAVINGS AND LOAN
                                     ASSOCIATION


   /s/ Sheila S. Barbee              By: /s/ Carl M.  Hill                (Seal)
  ------------------------------         ---------------------------------
                                               President

 WITNESS: /s/ Bobby Doby, Jr.        /s/ Caldwell A. Holbrook,  Jr.       (Seal)
          ----------------------     -------------------------------------
                                               (The Director)
          
<PAGE>
 
                          BENEFICIARY DESIGNATION FORM

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

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


 PRIMARY:
 ------- 

    Pamela T. Holbrook     09/14/49   Rt. #5, Box 778, Albemarle, NC     Wife 
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 CONTINGENT, If Any:

    Jennifer Anne Holbrook  03/9/79   Rt. #5, Box 778, Albemarle, NC   Daughter 
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 (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/ Bobby Doby, Jr.                  /s/ Caldwell A.  Holbrook, Jr. 
 -----------------------------        -----------------------------------------
 Witness                              Signature of Employee


                                       October 1, 1985
                                      -----------------------------------------
                                      Date



 Note: The original should be retained by the Association, one copy by the
 Director, and one copy forwarded to Smith/Broadhurst, Inc.