<PAGE>

                                 EXHIBIT 10.5

                         CHANGE IN CONTROL AGREEMENT

                              November 12, 1997


Dear T. E. Reese:

          Mid-State Bank, a California corporation (the "Company"), considers 
the establishment and maintenance of a sound and vital management to be 
essential to protecting and enhancing the best interests of the Company and 
its shareholders. In this connection, the Company recognizes that, as is the 
case with many publicly held corporations, the possibility of a change in 
control may arise and that such possibility, and the uncertainty and 
questions which it may raise among management, may result in the departure or 
distraction of management personnel to the detriment of the Company and its 
shareholders.  Accordingly, the Board of Directors of the Company (the 
"Board") has determined that appropriate steps should be taken to reinforce 
and encourage the continued attention and dedication of members of the 
Company's management to their assigned duties without distraction in 
circumstances arising from the possibility of a change in control of the 
Company.  In particular, the Board believes it important, should the Company 
or its shareholders receive a proposal for transfer of control of the 
Company, that you be able to assess and advise the Board whether such 
proposal would be in the best interests of the Company and its shareholders 
and to take such other action regarding such proposal as the Board might 
determine to be appropriate, without being influenced by the uncertainties of 
your own situation.

          In order to induce you to remain in the employ of the Company, this 
letter agreement, which has been approved by the Board, sets forth the 
severance benefits which the Company agrees will be provided to you in the 
event your employment with the Company is terminated subsequent to a "change 
in control" of the Company under the circumstances described below.

          1.    AGREEMENT TO PROVIDE SERVICES; RIGHT TO TERMINATE.

          (i)   Except as otherwise provided in paragraph (ii) below, the 
Company or you may terminate your employment at any time, subject to the 
Company's providing the benefits hereinafter specified in accordance with the 
terms hereof.

          (ii)  In the event a tender offer or exchange offer is made by a 
Person (as hereinafter defined) for more than 25% of the combined voting 
power of the Company's outstanding securities ordinarily having the right to 
vote at elections of directors ("Voting Securities"), including shares of the 
Common Stock, no par value, of the Company (the "Company Shares"), you agree 
that you will not leave the employ of the Company (other than as a result of 
Disability or upon Retirement, as such terms are hereinafter defined) and 
will render the services 


<PAGE>

contemplated in the recitals to this Agreement until such tender offer or 
exchange offer has been abandoned or terminated or a change in control of the 
Company, as defined in Section 3 hereof, has occurred.  For purposes of this 
Agreement, the term "Person" shall mean and include any individual, 
corporation, partnership, group, association or other "person", as such term 
is used in Section 14(d) of the Securities Exchange Act of 1934 (the 
"Exchange Act"), other than the Company, a wholly owned subsidiary of the 
Company or any employee benefit plan(s) sponsored by the Company or a 
subsidiary of the Company.

          2.    TERM OF AGREEMENT.  This Agreement shall commence on the date 
hereof and shall continue in effect until December 31, 1999; provided, 
however, that commencing on January 1, 2000, and each January 1 thereafter, 
the term of this Agreement shall automatically be extended for one additional 
year unless at least 90 days prior to such January 1st date, the Company or 
you shall have given notice that this Agreement shall not be extended; and 
provided, further, that this Agreement shall continue in effect for a period 
of twenty-four (24) months beyond the term provided herein if a change in 
control of the Company, as defined in Section 3 hereof, shall have occurred 
during such term. Notwithstanding anything in this Section 2 to the contrary, 
this Agreement shall terminate if you or the Company terminate your 
employment prior to a change in control of the Company.

          3.    CHANGE IN CONTROL.  Change in Control means a change, after 
January 1, 1999, in Control of the Bank of a nature that would be required to 
be the subject of prior approval by the Federal Reserve Board pursuant to the 
Bank Holding Company Act of 1956, as amended as of the date hereof, the 
Federal Deposit Insurance Corporation ("FDIC") under the Change in Bank 
Control Act, pursuant to the California Financial Code as in effect on this 
date; provided that, without limitation, and without consideration of 
regulatory exemptions from prior approval, such a Change in Control will be 
deemed to have occurred if and when any of the following occur:  (i) there is 
a transfer, voluntarily or by hostile takeover or proxy contest, operation of 
law, or otherwise, of Control of the Bank, (ii) the individuals who were 
members of the Board of Directors of the Bank immediately prior to a meeting 
of the shareholders of the Bank which meeting involves a contest for the 
election of directors, do not constitute a majority of the Board of Directors 
of the Bank following such meeting or election, (iii) an acquisition, 
directly or indirectly, of more than 25% of the outstanding shares of any 
class of voting securities of the Bank by any Person, (iv) a merger, 
consolidation or sale of all or substantially all of the assets of the Bank, 
or (v) there is a change, during any period of two consecutive years of a 
majority of the Board of Directors of the Bank as constituted as of the 
beginning of such period, unless the election of each director who is not a 
director at the beginning of such period was approved by a vote of at least 
two-thirds of the directors then in office who were directors at the 
beginning of such period.

          4.    TERMINATION FOLLOWING CHANGE IN CONTROL.  If any of the 
events described in Section 3 hereof constituting a change in control of the 
Company shall have occurred, you shall be entitled to the benefits provided 
in Section 5 hereof upon the termination of your employment with the Company 
within twenty-four (24) months after such event, unless such termination is 
(a) because of your death or Retirement, (b) by the Company for Cause or 
Disability or (c) by you other than for Good Reason (as all such capitalized 
terms are hereinafter defined).


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          (i)   DISABILITY.  Termination by the Company of your employment 
based on "Disability" shall mean termination because of your absence from 
your duties with the Company on a full time basis for one hundred eighty 
(180) consecutive days as a result of your incapacity due to physical or 
mental illness, unless within thirty (30) days after Notice of Termination 
(as hereinafter defined) is given to you following such absence you shall 
have returned to the full time performance of your duties.

          (ii)  RETIREMENT.  Termination by you of your employment based on
"Retirement" shall mean the voluntary termination of active employment with the
Company or a subsidiary on or about 65 years of age or at such later age as such
employee desires to discontinue his active employment with the Company or a
subsidiary.

          (iii) CAUSE.  Termination by the Company of your employment for 
"Cause" shall mean termination upon (a) the willful and continued failure by 
you to perform substantially your duties with the Company (other than any 
such failure resulting from your incapacity due to physical or mental 
illness) after a demand for substantial performance is delivered to you by 
the Chairman of the Board or the Vice Chairman of the Board or the President 
of the Company which specifically identifies the manner in which such 
executive believes that you have not substantially performed your duties, or 
(b) the willful engaging by you in illegal conduct which is materially and 
demonstrably injurious to the Company.  For purposes of this paragraph (iii), 
no act, or failure to act, on your part shall be considered "willful" unless 
done, or omitted to be done, by you in bad faith and without reasonable 
belief that your action or omission was in, or not opposed to, the best 
interests of the Company.  Any act, or failure to act, based upon authority 
given pursuant to a resolution duly adopted by the Board or based upon the 
advice of counsel for the Company shall be conclusively presumed to be done, 
or omitted to be done, by you in good faith and in the best interests of the 
Company.  It is also expressly understood that your attention to matters not 
directly related to the business of the Company shall not provide a basis for 
termination for Cause so long as the Board has approved your engagement in 
such activities.  Notwithstanding the foregoing, you shall not be deemed to 
have been terminated for Cause unless and until there shall have been 
delivered to you a copy of a resolution duly adopted by the affirmative vote 
of not less than three quarters of the entire membership of the Board at a 
meeting of the Board called and held for the purpose (after reasonable notice 
to you and an opportunity for you, together with your counsel, to be heard 
before the Board), finding that in the good faith opinion of the Board you 
were guilty of the conduct set forth above in (a) or (b) of this paragraph 
(iii) and specifying the particulars thereof in detail.

          (iv)  GOOD REASON.  Termination by you of your employment for "Good 
Reason" shall mean termination based on:

          (A)   an adverse change in your status or position(s) as an executive
     officer of the Company as in effect immediately prior to the change in
     control, including, without limitation, any adverse change in your status
     or position as a result of a material diminution in your duties or
     responsibilities (other than, if applicable, any such change directly
     attributable to the fact that the Company is no longer publicly owned) or
     the 


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<PAGE>

     assignment to you of any duties or responsibilities which, in your
     reasonable judgment, are inconsistent with such status or position(s), or
     any removal of you from or any failure to reappoint or reelect you to such
     position(s) (except in connection with the termination of your employment
     for Cause, Disability or Retirement or as a result of your death or by you
     other than for Good Reason);
     
          (B)   a reduction by the Company in your base salary as in effect
     immediately prior to the change in control;
     
          (C)   the failure by the Company to continue in effect any Plan (as
     hereinafter defined) in which you are participating at the time of the
     change in control of the Company (or Plans providing you with at least
     substantially similar benefits) other than as a result of the normal
     expiration of any such Plan in accordance with its terms as in effect at
     the time of the change in control, or the taking of any action, or the
     failure to act, by the Company which would adversely affect your continued
     participation in any of such Plans on at least as favorable a basis to you
     as is the case on the date of the change in control or which would
     materially reduce your benefits in the future under any of such Plans or
     deprive you of any material benefit under any Plan enjoyed by you at the
     time of the change in control.
     
          (D)   the failure by the Company to provide and credit you with the
     number of paid vacation days to which you are then entitled in accordance
     with the Company's normal vacation policy as in effect immediately prior to
     the change in control;
     
          (E)   the Company's requiring you to be based at an office that is
     greater than 25 miles from where your office is located immediately prior
     to the change in control except for required travel on the Company's
     business to an extent substantially consistent with the business travel
     obligations which you undertook on behalf of the Company prior to the
     change in control;
     
          (F)   the failure by the Company to obtain from any Successor (as
     hereinafter defined) the assent to this Agreement contemplated by Section 6
     hereof; or 
     
          (G)   any purported termination by the Company of your employment 
     which is not effected pursuant to a Notice of Termination satisfying the
     requirements of paragraph (v) below (and, if applicable, paragraph (iii)
     above); and for purposes of this Agreement, no such purported termination
     shall be effective.
     
For purposes of this Agreement, "Plan" shall mean any compensation plan such as
an incentive, stock option or restricted stock plan or any employee benefit plan
such as a thrift, pension, profit sharing, medical, disability, accident, life
insurance plan or a relocation plan or policy or any other plan, program or
policy of the Company intended to benefit employees.

          (v)   NOTICE OF TERMINATION.  Any purported termination by the 
Company or by you following a change in control shall be communicated by 
written Notice of Termination to the 


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other party hereto.  For purposes of this Agreement, a "Notice of Termination" 
shall mean a notice which shall indicate the specific termination provision in 
this Agreement relied upon.

          (vi)  DATE OF TERMINATION.  "Date of Termination" following a 
change in control shall mean (a) if your employment is to be terminated for 
Disability, thirty (30) days after Notice of Termination is given (provided 
that you shall not have returned to the performance of your duties on a 
full-time basis during such thirty (30) day period), (b) if your employment 
is to be terminated by the Company for Cause or by you pursuant to Sections 
4(iv) (F) and 6 hereof or for any other Good Reason, the date specified in 
the Notice of Termination, or (c) if your employment is to be terminated by 
the Company for any reason other than Cause, the date specified in the Notice 
of Termination, which in no event shall be a date earlier than ninety (90) 
days after the date on which a Notice of Termination is given, unless an 
earlier date has been expressly agreed to by you in writing either in advance 
of, or after, receiving such Notice of Termination. In the case of 
termination by the Company of your employment for Cause, if you have not 
previously expressly agreed in writing to the termination, then within thirty 
(30) days after receipt by you of the Notice of Termination with respect 
thereto, you may notify the Company that a dispute exists concerning the 
termination, in which event the Date of Termination shall be the date set 
either by mutual written agreement of the parties or by the arbitrators in a 
proceeding as provided in Section 13 hereof.  During the pendency of any such 
dispute, the Company will continue to pay you your full compensation in 
effect just prior to the time the Notice of Termination is given and until 
the dispute is resolved in accordance with Section 13.

          5.    COMPENSATION UPON TERMINATION OR DURING DISABILITY; OTHER 
AGREEMENTS.

          (i)   During any period following a change in control of the 
Company that you fail to perform your duties as a result of incapacity due to 
physical or mental illness, you shall continue to receive your salary at the 
rate then in effect and any benefits or awards under any Plans shall continue 
to accrue during such period, to the extent not inconsistent with such Plans, 
until your employment is terminated pursuant to and in accordance with 
paragraphs 4(i) and 4(vi) hereof.  Thereafter, your benefits shall be 
determined in accordance with the Plans then in effect.

          (ii)  If your employment shall be terminated for Cause following a 
change in control of the Company, the Company shall pay you your salary 
through the Date of Termination is given plus any benefits or awards 
(including both the cash and stock components) which pursuant to the terms of 
any Plan have been earned or become payable, but which have not yet been paid 
to you.  Thereupon the Company shall have no further obligations to you under 
this Agreement.

          (iii) Subject to Section 8 hereof, if, within twenty-four (24) months
after a change in control of the Company, as defined in Section 3 above, shall
have occurred, your employment by the Company shall be terminated (a) by the
Company other than for Cause, Disability or Retirement or (b) by you for Good
Reason, then the Company shall pay to you, no later than the fifth day following
the Date of Termination, without regard to any contrary provisions of any Plan,
the following:


                                      -5-

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          (A)  your salary through the Date of Termination at the rate in effect
     just prior to the time a Notice of Termination is given plus any benefits
     or awards (including both the cash and stock components) which pursuant to
     the terms of any Plans have been earned or become payable, but which have
     not yet been paid to you (including amounts which previously had been
     deferred at your request); and
     
          (B)  as severance pay and in lieu of any further salary for periods
     subsequent to the Date of Termination, an amount in cash equal to one and
     one-half (1-1/2) times your annual salary and bonus, such salary to be at
     the rate of salary in effect immediately prior to the Date of Termination
     (or, if greater, immediately prior to the change in control of the Company)
     and such bonus to be equal to the total bonus paid to you during the
     twelve-month period immediately preceding the Date of Termination (or, if
     greater, during the twelve-month period immediately preceding the change in
     control of the Company); provided, however, that in no event shall such
     amount exceed 2.99 times your "annualized includible compensation for the
     base period" (as defined in Section 280G(d) (1) of the Internal Revenue
     Code of 1986 (the "Code").
     
          (iv) If, within twenty-four (24) months after a change in control 
of the Company, as defined in Section 3 above, shall have occurred, your 
employment by the Company shall be terminated (a) by the Company other than 
for Cause, Disability or Retirement or (b) by you for Good Reason, then the 
Company shall maintain in full force and effect, for the continued benefit of 
you and your dependents for a period terminating on the earliest of (a) three 
years after the Date of Termination, (b) the commencement date of equivalent 
benefits from a new employer or (c) your normal retirement date under the 
terms of any retirement plan, all insured and self-insured employee welfare 
benefit Plans in which you were entitled to participate immediately prior to 
the Date of Termination, provided that your continued participation is 
possible under the general terms and provisions of such Plans (and any 
applicable funding media) and you continue to pay an amount equal to your 
regular contribution under such plans for such participation.  If, at the end 
of three years after the Termination Date, you have not reached your normal 
retirement date and you have not previously received or are not then 
receiving equivalent benefits from a new employer, the Company shall arrange, 
at its sole cost and expense, to enable you to convert your and your 
dependents' coverage under such Plans to individual policies or programs upon 
the same terms as employees of the Company may apply for such conversions.  
In the event that your participation in any such Plan is barred, the Company, 
at its sole cost and expense, shall arrange to have issued for the benefit of 
you and your dependents individual policies of insurance providing benefits 
substantially similar (on an after-tax basis) to those which you otherwise 
would have been entitled to receive under such Plans pursuant to this 
paragraph (iv) or, if such insurance is not available at a reasonable cost to 
the Company, the Company shall otherwise provide you and your dependents with 
equivalent benefits (on an after-tax basis).  You shall not be required to 
pay any premiums or other charges in an amount greater than that which you 
would have paid in order to participate in such Plans.

          (v)  Except as specifically provided in paragraph (iv) above, the 
amount of any payment provided for in this Section 5 shall not be reduced, 
offset or subject to recovery by the 


                                      -6-

<PAGE>

Company by reason of any compensation earned by you as the result of 
employment by another employer after the Date of Termination, or otherwise.

          6.    SUCCESSORS; BINDING AGREEMENT.

          (i)   The Company will seek, by written request at least five (5) 
business days prior to the time a Person becomes a Successor (as hereinafter 
defined), to have such Person by agreement in form and substance satisfactory 
to you, assent to the fulfillment of the Company's obligations under this 
Agreement.  Failure of such Person to furnish such assent by the later of (A) 
three (3) business days prior to the time such Person becomes a Successor or 
(B) two (2) business days after such Person receives a written request to so 
assent shall constitute Good Reason for termination by you of your employment 
if a change in control of the Company occurs or has occurred.  For purposes 
of this Agreement, "Successor" shall mean any Person that succeeds to, or has 
the practical ability to control (either immediately or with the passage of 
time), the Company's business directly, by merger or consolidation, or 
indirectly, by purchase of the Company's Voting Securities or otherwise.

          (ii)  This Agreement shall inure to the benefit of and be 
enforceable by your personal or legal representatives, executors, 
administrators, successors, heirs, distributees, devisees and legatees.  If 
you should die while any amount would still be payable to you hereunder if 
you had continued to live, all such amounts, unless otherwise provided 
herein, shall be paid in accordance with the terms of this Agreement to your 
devisee, legatee or other designee or, if there be no such designee, to your 
estate.

          (iii) For purposes of this Agreement, the "Company" shall include any
corporation or other entity which is the surviving or continuing entity in
respect of any merger, consolidation or form of business combination in which
the Company ceases to exist.

          7.    FEES AND EXPENSES; MITIGATION.

          (i)   The Company shall pay all reasonable legal fees and related 
expenses incurred by you in connection with the Agreement following a change 
in control of the Company, including, without limitation, (a) all such fees 
and expenses, if any, incurred in contesting or disputing any termination of 
your employment or incurred by you in seeking advice with respect to the 
matters set forth in Section 8 hereof or (b) your seeking to obtain or 
enforce any right or benefit provided by this Agreement; provided, however, 
you shall be required to repay any such amounts to the Company to the extent 
that a court issues a final and non-appealable order setting forth the 
determination that the position taken by you was frivolous or advanced by you 
in bad faith.

          (ii)  You shall not be required to mitigate the amount of any 
payment the Company becomes obligated to make to you in connection with this 
Agreement, by seeking other employment or otherwise.



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          8.    TAXES.

          (i)   All payments to be made to you under this Agreement will be 
subject to required withholding of federal, state and local income and 
employment taxes.

          (ii)  Notwithstanding anything in the foregoing to the contrary, if 
any of the payments provided for in this Agreement, together with any other 
payments which you have the right to receive from the Company or any 
corporation which is a member of an "affiliated group" (as defined in Section 
1504(a) of the Code without regard to Section 1504(b) of the Code) of which 
the Company is a member, would constitute a "parachute payment" (as defined 
in Section 280G(b) (2) of the Code), the payments pursuant to this Agreement 
shall be reduced (reducing first the payments under Section 5(iii) (B)) to 
the largest amount as will result in no portion of such payments being 
subject to the excise tax imposed by Section 4999 of the Code; provided, 
however, that the determination as to whether any reduction in the payments 
under this Agreement pursuant to this proviso is necessary shall be made by 
you in good faith, and such determination shall be conclusive and binding on 
the Company with respect to its treatment of the payment for tax reporting 
purposes.

          9.    SURVIVAL.  The respective obligations of, and benefits 
afforded to, the Company and you as provided in Sections 5, 6(ii), 7, 8, 13 
and 14 of this Agreement shall survive termination of this Agreement.

          10.   NOTICE.  For the purpose of this Agreement, notices and all 
other communications provided for in the Agreement shall be in writing and 
shall be deemed to have been duly given when delivered or mailed by United 
States registered mail, return receipt requested, postage prepaid and 
addressed, in the case of the Company, to the address set forth on the first 
page of this Agreement or, in the case of the undersigned employee, to the 
address set forth below his signature, provided that all notices to the 
Company shall be directed to the attention of the Chairman of the Board or 
President of the Company, with a copy to the Secretary of the Company, or to 
such other address as either party may have furnished to the other in writing 
in accordance herewith, except that notice of change of address shall be 
effective only upon receipt.

          11.   MISCELLANEOUS.  No provision of this Agreement may be 
modified, waived or discharged unless such modification, waiver or discharge 
is agreed to in a writing signed by you and approved by the Board of 
Directors of the Company.  No waiver by either party hereto at any time of 
any breach by the other party hereto of, or of compliance with, any condition 
or provision of this Agreement to be performed by such other party shall be 
deemed a waiver of similar or dissimilar provisions or conditions at the same 
or at any prior or subsequent time.  No agreements or representations, oral 
or otherwise, express or implied, with respect to the subject matter hereof 
have been made by either party which are not expressly set forth in this 
Agreement.  The validity, interpretation, construction and performance of 
this Agreement shall be governed by the laws of the State of California.


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<PAGE>

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

          13.   ARBITRATION.  Any dispute or controversy arising under or in 
connection with this Agreement shall be settled exclusively by arbitration in 
San Luis Obispo County, California, by three (3) arbitrators in accordance 
with the rules of the American Arbitration Association then in effect.  
Judgment may be entered on the arbitrators' award in any court having 
jurisdiction; provided, however, that you shall be entitled to seek specific 
performance of your right to be paid until the Date of Termination during the 
pendency of any dispute or controversy arising under or in connection with 
this Agreement.  The Company shall bear all costs and expenses arising in 
connection with any arbitration proceeding pursuant to this Section 13.

          14.   EMPLOYEE'S COMMITMENT.  You agree that subsequent to your 
period of employment with the Company, you will not at any time communicate 
or disclose to any unauthorized person, without the written consent of the 
Company, any proprietary processes of the Company or any subsidiary or other 
confidential information concerning their business, affairs, products, 
suppliers or customers which, if disclosed, would have a material adverse 
effect upon the business or operations of the Company and its subsidiaries, 
taken as a whole; it being understood, however, that the obligations of this 
Section 14 shall not apply to the extent that the aforesaid matters (a) are 
disclosed in circumstances where you are legally required to do so or (b) 
become generally known to and available for use by the public otherwise than 
by your wrongful act or omission.

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

          If this letter correctly sets forth our agreement on the subject 
matter hereof, kindly sign and return to the Company the enclosed copy of 
this letter which will then constitute our agreement on this subject.


                                   Sincerely,

                                   Mid-State Bank

                                   By: /s/ Carrol R. Pruett           
                                       ----------------------------------
                                       Carrol R. Pruett, President
               

Agreed to this 12th day
of November, 1997.

/s/ T. E. Reese          
----------------------------------


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