DEFERRED COMPENSATION AGREEMENT

                          PACIFIC STATE BANK PRESIDENT


     THIS AGREEMENT,  made and entered into this 16th day of. December,  1995 by
and between  PACIFIC  STATE BANK,  an Oregon  banking  corporation,  hereinafter
called "Bank", and R.T. Green, hereinafter called "C.E.O.";

                                   WITNESSETH:

     WHEREAS,  C.E.O.  has  been  continuously  employed  by Bank  as its  Chief
Executive Officer, since 5-1-95; and

     WHEREAS,  the Board of Directors of Bank  believe that  C.E.O.'s  continued
services to Bank in that capacity will be extremely valuable to Bank; and

     WHEREAS, it is Bank's desire to provide C.E.O. with incentive for exemplary
performance,  and,  therefore,  to provide  C.E.O.  compensation  in addition to
existing  compensation  arrangements  including future adjustments  thereto as a
post  retirement  income (or  preretirement  death  benefits  to his  designated
beneficiary)  over and above what will be available to him under Bank's  general
employee profit sharing plan;

     NOW, THEREFORE, Bank and C.E.O. mutually agree as follows:

     1. DEFERRED  COMPENSATION  ACCOUNT,  Bank shall  establish a general ledger
account  referred to as Performance  Deferred  Compensation  Account #2, for the
purpose of reflecting the deferred compensation credits to which C.E.O. shall be
entitled under the terms of this agreement.

     (a) Credits to cc un . At the conclusion of each calendar  year,  including
1996 and  thereafter,  in which C.E.O.  shall have remained in Bank's employ for
such year when Bank's after tax profit and loss  statement has been  calculated,
there shall be credited to this account the sum of the amounts  determined under
(i), (ii) and (iii) as follows:

(i)      For each $1.00 of after tax profit above $700,000  (hereafter  referred
         to as  the  profit  base)  as  adjusted  for  extraordinary  items  and
         voluntarily  deferred  compensation  as  provided  for in  (vi) of this
         paragraph  credit $.125 to the account up to a maximum of $20,000.  The
         profit base may from time to time be adjusted  for  economic  and other
         such items as the Bank and C.E.O. may find appropriate.

(ii)     For each year in which the Bank's  Return on Assets  (ROA) falls in the
         upper  25% of its peer  group  the Bank  shall  credit  to the  account
         $2500,00.  For each year in which  the  Bank's  Return on Equity  (ROE)
         falls in the upper 25% of its peer group the Bank  shall  credit to the
         account $2500,00.

     Peer group  standing  for purposes of this  paragraph  shall be measured by
reference to Oregon and Washington banks that are included in the $50 million to
$100 million - asset range as reported by Sheshunoff in their  calendar year end
reports. Normally such reports are issued

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                         DEFERRED COMPENSATION AGREEMENT



in February of each year.

(iii)             The Bank in conjunction with the C.E.O will annually establish
                  certain  short-term  and  long-term  goals.  Such  goals  when
                  established  shall be  summarized  in writing and  attached to
                  this  agreement as Exhibit A for the current  year.  The Board
                  will  assess  the  progress  towards  such goals  during  each
                  calendar year and credit to the account an amount from $-0- to
                  $25,000. The determination of this amount shall be entirely at
                  the  Board's  discretion  and not  arrived at by  mathematical
                  computation.

(iv)     Such credit  shall be deemed to have been made upon  computation  as of
         December 31 of the computation year.

(v)      The  balance of such  account as of  December  31 of each year shall be
         augmented  at the close of each year by an amount  equal to the  Bank's
         passbook   savings  account   interest  rate   prevailing   during  the
         terminating year applied to such balance.

(vi)     Within the scope of C.E.O.'s personal  financial  planning,  C.E.O. may
         find it of benefit to defer some  portion of his regular  compensation.
         In addition to any amount  -credited to the account under (i), (ii) and
         (iii),  C.E.0.  shall be  entitled  to  defer up to 20% of his  regular
         pretax  salary  and bonus  amounts  granted  under  other  compensation
         arrangements.

     2.  BENEFITS,  The  benefits  to be paid as  deferred  compensation  are as
follows:

     (a) Retirement,  If C.E.O.'s  employment is terminated on or after his 65th
birthday,  the  Bank  shall  pay  to  him  in  ten  substantially  equal  annual
installments  the amount of the deferred  compensation  account as of that date.
Thereafter,  the total amount payable to C.E.O. shall be appropriately increased
to reflect the appreciation of the deferred  compensation account as provided in
paragraph  l(a) (v) above.  Each annual  installment  shall  include said annual
appreciation  on the  remaining  balance  during  the  preceding  year until the
account shall have been paid out in full.  If C.E.O.  should die on or after his
65th  birthday and before the ten annual  payments ar made,  the unpaid  balance
shall  continue  to be paid in  installments  for the  unexpired  portion of the
ten-year  period to his  designated  beneficiary in the same manner as set forth
above.

     (b) Termination of Employment. If C.E.O.'s employment is terminated for any
reason other than death and disability but before C.E.O.  shall have reached the
age of 65, then the amount in the deferred compensation account shall freeze. In
the event no payments shall be made until the C.E.O.  shall have reached the age
of 65, at which time payments as provided in paragraph 2(a) above shall be made.
After such  termination  if prior to  reaching  age 65 C.E.O.  should die, or if
prior to reaching age 65 C.E.O. should become disabled,  then payments from such
adjusted  balance shall be made in the same manner and to the same extent as set
forth in paragraph 2(c) below.

     (C) Disability or Death,  If C.E.O.'s  employment is terminated  because of
disability  or death before he has reached the age of 65, and while he is in the
Board's employ, the Board

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                         DEFERRED COMPENSATION AGREEMENT



shall make ten  substantially  equal annual payments to him (in the event of his
disability)  or his  designated  beneficiary  (in the event of his death) in the
same manner and to the same extent as provided in paragraph 2(a) above.


     (d) Death, Lump-Sum n If both C.E.O. and his designated  beneficiary should
die before the Bank makes a total of ten annual payments,  the remaining balance
of the deferred  compensation  account shall be determined as of the date of the
designated  beneficiary's death and shall be paid as promptly as possible in one
lump  sum  to  the  designated  beneficiary's  estate  or as  specified  in  the
beneficiary's Last Will and Testament, as the case may be.

     (e) Designated  Beneficiary.  The beneficiary referred to in this paragraph
may be  designated  or  changed  by C.E.O.  (without  the  consent  of any prior
beneficiary) on a form provided by the Bank and delivered to the Bank before his
death. If no such beneficiary  shall have been  designated,  or if no designated
beneficiary  shall  survive  C.E.O.,  the  installment  payments  payable  under
paragraph 2(c) above, shall be payable to C.E.O.'s estate.

     (f)  Disability  Determination,  C.E.O.  shall  be  deemed  to have  become
disabled for the  purposes of paragraph  2(c) above if the Board of Directors of
Bank shall find on the basis of medical evidence  satisfactory to it that C.E.O.
is so  totally  mentally  or  physically  disabled  as to be unable to engage in
further  employment  by Bank  as  C.E.O.  and  that  such  disability  shall  be
determined by competent  medical personnel as likely be permanent and continuous
during  the  remainder  of  his  life  or of  such  duration  as to  necessitate
replacement of the C.E.O.

     (g) Payment  Commencement.  The  installment  payments to be made to C.E.O.
under  paragraph  2(a) and 2(c) shall  commence on the first day of the calendar
year  following  the date of  termination  of his  employment.  The  installment
payments to be made to C.E.O.  under  paragraph 2(b) shall commence on the first
day of the month  following the date on which C.E.O.  shall have reached the age
of 65. The installment  payments to be made to the designated  beneficiary under
the provisions o this paragraph 2 shall commence on a date to be selected by the
Board of Directors of Bank but within six months from C.E.O.'s date of death.

     3. NO  TRUST  Nothing  contained  in this  agreement  and no  action  taken
pursuant to the  provisions  of this  agreement  shall create or be construed to
create a trust of any Idnd, or a fiduciary relationship between Bank and C.E.O.,
his designated beneficiary or any other person.

     4. NO ASSIGNMENT, The right of C.E.O. or any other person to the payment of
deferred   compensation  or  other  benefits  under  this  payment  of  deferred
compensation  or other  benefits  under this  agreement  shall not be  assigned,
transferred, pledged, or encumbered except by Will or by the laws of descent and
distribution.

     5.  INCAPACITY OF BENEFICIARY- If the Board of Directors of Bank shall find
that any person to whom any payment is payable under this agreement is unable to
care for his affairs  because of illness or accident or is a minor,  any payment
due (unless a prior  claim  therefore  shall have been made by a duly  appointed
guardian, committee, or other legal

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                         DEFERRED COMPENSATION AGREEMENT



representative)  may be paid to the  spouse,  a child,  'parent,  or  brother or
sister,  or to any  person  deemed  by the  Board of  Directors  of Bank to have
incurred  expense for such person  otherwise  entitle to payment,  in accordance
with the  applicable  provisions  of paragraph  2. Any such  payment  shall be a
complete discharge of Bank's liabilities under this agreement.


     6. BOARD'S POWERS AND  LIABILITIES TIE The Board of Directors of Bank shall
have full power and authority to interpret and administer this  agreement.  Such
Board's  interpretations and construction of any provision or action taken under
this agreement, including any valuation of the deferred compensation account, or
the amount or  recipient  of the  payment  due under it,  shall be  binding  and
conclusive  on all  persons for all  purposes.  No member of such Board shall be
liable to any person for  any,action  taken or  omitted in  connection  with the
interpretation and  administration of this agreement unless  attributable to the
member's willful misconduct or lack of good faith.

     7. BINDING  EFFECT,  This agreement  shall be binding upon and inure to the
benefit of the Bank,  its  successors  and  assigns  and  C.E.O.  and his heirs,
executors, administrator, and legal representatives.

     8. GOVERNING LAW, This agreement  shall be construed in accordance with and
governed by the law of the State of Oregon.

     9.  COMPLIANCE  AND LAW AND  REGULATIONS,  The  parties  intend  that  this
agreement   comply  with  the  provisions  of  the  Internal  Revenue  Code  and
Regulations in effect at the time of its execution.  If at a later date the laws
of the United  States or the State of Oregon are  construed  in such a way as to
make this  agreement  null and void,  it shall be given  effect in a manner that
shall best carry out the parties' purposes and intentions.


     10.  SEVERABILITY,  If the  Internal  Revenue  Service  shall  at any  time
interpret this  agreement to be ineffective  with regard to deferral of C.E.O.'s
income, and that interpretation becomes final and unappealable,  then only those
amounts in the account  which would be treated as taxable  income by the Service
at the time of such  final  interpretation,  shall be paid over to  C.E.O..  The
remaining balance in the account at the time of the final  interpretation  shall
be distributed to C.E.O. according to paragraph 2.

     11.  ENTIRE  AGREEMENT,  This  agreement  supersedes  all other  agreements
previously made between the parties relating to its subject matter. There are no
other understandings or agreements.

     12. NOTICE,  Any notice to be delivered under this agreement shall be given
in writing and  delivered,  personally or by certified  mail,  postage  prepaid,
addressed to Bank or C.E.O. at their last known addresses.

     13.  NON-WAIVER,  No delay or failure by either party to exercise any right
under

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                         DEFERRED COMPENSATION AGREEMENT


this  agreement,  and no  partial  or  single  exercise  of  that  right,  shall
constitute a waiver of that or any other right.

     14. HEADINGS, Headings in this agreement are for convenience only and shall
not be used to interpret or construe its provisions.

     15.  MODIFICATION  OR  CANCELLATION.  This  agreement  may be  modified  or
canceled at any time by action of the Board of Directors.

     16.   COUNTERPARTS,   This  agreement  may  be  executed  in  two  or  more
counterparts,  each of  which  shall  be  deemed  an  original  but all of which
together shall constitute one and the same instrument.

     IN  WITNESS  WHEREOF,  The  Board  of  Directors  of Bank has  caused  this
agreement to be executed by its duly authorized officers,  and C.E.O.  hereunder
has set his hand and seal as of the date first above written.

                                                PACIFIC STATE BANK

                                                        By
                                            Thomas S. Tymchuk, Chairman


ATTEST:


David Morgan, Secretary


                                                      "BANK"


                                              R. T. Green, President

                                                     "C.E.O."




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