<PAGE>

                                    EXHIBIT 10.3



                                   MID-STATE BANK
                                 PROFIT SHARING AND
                            SALARY DEFERRAL 401(K) PLAN
                                          
                              SUMMARY PLAN DESCRIPTION
                                          
                                          
                                          
<PAGE>
<TABLE>
<S>                                                                  <C>
                                       IX

STATEMENT OF ERISA RIGHTS

1.  Explanation of Your ERISA Rights . . . . . . . . . . . . . . . . 22


                                      X
                                          
                      AMENDMENT AND TERMINATION OF YOUR PLAN
                                          
1.   Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

2.   Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 23


                                       XI

GENERAL INFORMATION ABOUT YOUR PLAN

1.   General Plan Information. . . . . . . . . . . . . . . . . . . . 24

2.   Employer Information. . . . . . . . . . . . . . . . . . . . . . 24

3.   Plan Administrator Information. . . . . . . . . . . . . . . . . 25

4.   Plan Trustee Information. . . . . . . . . . . . . . . . . . . . 25

5.   Service of Legal Process. . . . . . . . . . . . . . . . . . . . 25

</TABLE>

                                      2
<PAGE>

                                   MID-STATE BANK
                                 PROFIT SHARING AND
                            SALARY DEFERRAL 401(K) PLAN
                                          
                              SUMMARY PLAN DESCRIPTION
                                          
                                         I
                                          
                             INTRODUCTION TO YOUR PLAN
                                          


     Mid-State Bank has amended your Profit Sharing Plan as of January 1, 1995. 
Mid-State Bank continues to recognize the efforts you have made to its success. 
This amended Profit Sharing Plan is for the exclusive benefit of eligible
employees and their beneficiaries.

     Your Plan is a "salary reduction plan."  It is also called a "401(K) Plan."
Under this type of plan, you may choose to reduce your compensation and have
these amounts contributed to this Plan on your behalf.

     The purpose of this Plan is to reward eligible employees for long and loyal
service by providing them with retirement benefits.

     Between now and your retirement, your Employer intends to make
contributions for you and other eligible employees.  When you retire, you will
be eligible to receive the value of the amounts which have accumulated in your
account.

     Your Employer has the right to submit this Plan to the Internal Revenue
Service for approval.  The Internal Revenue Service for approval.  The Internal
Revenue Service will issue a "determination letter" to your Employer approving
this Plan as a "qualified" retirement plan, if this Plan meets specific legal
requirements.

     Other participating Employers have adopted the provisions of this Plan. 
(See the Section in this Summary entitled "Employer Information.")

     This Summary Plan Description is a brief description of your Plan and your
rights, obligations, and benefits under that Plan.  Some of the statements made
in this Summary Plan Description are dependent upon this Plan being "qualified"
under the provisions of the Internal Revenue Code.  This Summary Plan
Description is not meant to interpret, extend, or change the provisions of your
Plan in any way.  The provisions of your Plan may only be determined accurately
by reading the actual Plan document.

     A copy of your Plan is on file at your Employer's office and may be read by
you, your beneficiaries, or your legal representatives at any reasonable time. 
If you have any questions regarding either your Plan or this Summary Plan
Description and the actual provisions of the Plan, the Plan will govern.

                                    3
<PAGE>
                                    II

                        PARTICIPATION IN YOUR PLAN

     Before you become a member or a "participant" in the Plan, there are
certain eligibility and participation rules which you must meet.  These rules
are explained in this section.

1.   ELIGIBILITY REQUIREMENTS

     You will be eligible to participate in the Plan if you have completed six
(6) months of service.

     You will have completed six (6) months of service if you are in the employ
of your Employer six (6) months after your employment commencement date.

2.   PARTICIPATION REQUIREMENTS

     Once you have satisfied your Plan's eligibility requirements, your next
step will be to actually become a member or a "participant" in the Plan.  You
will become a participant on a specified day of the Plan Year.  This day is
called the Effective Date of Participation.

     You will become a participant on the earlier of the January 1st, April 1st,
July 1st or October 1st coinciding with or next following the date you satisfy
your Plan's eligibility requirements.

3.   EXCLUDED EMPLOYEES

     There are certain employees of Mid-State Bank who will not be eligible to
participate in your Plan.  Those employees are:

          (a)  employees whose employment is governed by a collective bargaining
agreement under which retirement benefits were the subject of good faith
bargaining, unless such agreement expressly provides for participation in this
Plan.

                                         III

                              CONTRIBUTIONS TO YOUR PLAN

1.   EMPLOYER CONTRIBUTIONS TO THE PLAN

     Each year, your Employer will contribute to your Plan the following
     amounts:
     
          (a)  The total amount of the salary reduction you elected to defer. 
(See the Section in this Article entitled "Participant Salary Reduction
Election.")

                                    4
<PAGE>

          (b)  A discretionary matching contribution equal to a percentage of
the amount of the salary reduction you elected to defer, which percentage will
be determined each year by the Employer.

     In applying this matching percentage, however, only salary reductions up to
6% of your compensation will be considered.

     You must be actively employed on the last day of the Plan Year in order to
share in the matching contribution for the year.

          (c)  On behalf of each non-highly compensation participant, a special
discretionary contribution equal to a percentage of your compensation, which
percentage will be determined each year by the Employer.

     You must be actively employed on the last day of the Plan Year to share in
this special contribution for the year.

          (d)  A discretionary amount in addition to the special contribution,
which amount will be determined each year by your Employer.

     You must be actively employed on the last day of the Plan Year in order to
share in the contribution.

     In determining your eligibility to share in contributions for the year,
there are special rules which apply if your employment terminates due to your
Retirement (Normal or Late), Total and Permanent Disability or death.

     In such cases, you will be eligible to share in the contributions made by
your Employer in accordance with the following:

     If the reason your employment terminated is due to your retirement (Normal
or Late), total and permanent disability or death, then you will be eligible to
share in the contribution for the year without regard to whether you satisfied
the requirements explained above.

2.   PARTICIPANT SALARY REDUCTION ELECTION

     As a participant, you may elect to defer up to 10% of your compensation
each year instead of receiving that amount in cash.  However, your total
deferrals in any taxable year may not exceed a dollar limit which is set by law.
The limit for 1995 is $9,240.  This limit will be increased in future years for
cost of living changes.

     The amount you elect to defer will be deducted from your pay in accordance
with a procedure established by your Employer and Administrator.  The procedure
will require that you enter into a written salary reduction agreement after you
satisfy the Plan's eligibility requirements.  You will be permitted to modify
your election during the Plan Year.  You are also permitted to revoke your
election any time during the Plan Year.

                                    5
<PAGE>

     The amount you elect to defer, and any earnings on that amount, will not be
subject to income tax until it is actually distributed to you.  This money will,
however, be subject to Social Security taxes at all times.

     You should also be aware that the annual dollar limit is an aggregate limit
which applies to all deferrals you may make under this plan or other cash or
deferred arrangements (including tax-sheltered 403(b) annuity contracts,
simplified employee pensions or other 401(k) plans in which you may be
participating).  Generally, if your total deferrals under all cash or deferred
arrangements for a calendar year exceed the annual dollar limit, the excess must
be included in your income for the year.  For this reason, it is desirable to
request in writing that these excess deferrals be returned to you.  If you fail
to request such a return, you may be taxed a second time when the excess
deferral is ultimately distributed from the Plan.

     You must decide which plan or arrangement you would like to have return the
excess.  If you decide that the excess should be distributed from this Plan, you
should communicate this in writing to the Administrator no later than the March
1st following the close of the calendar year in which such excess deferrals were
made.  If the entire dollar limit is exceeded in this Plan or any other plan
maintained by the Employer, you will be deemed to have notified the
Administrator of the excess.  The Administrator will then return the excess
deferral and any earnings to you by April 15th.

     In the event you receive a hardship distribution from your deferrals to any
other plan maintained by your Employer, you will not be allowed to make
additional salary reductions for a period of twelve (12) months after you
receive the distribution.  Furthermore, the dollar limitation set by law with
respect to your taxable year following the year in which you received the
distribution, will be reduced by your salary reductions, if any, for the taxable
year of the distribution.

     You will always be 100% vested in the amount you deferred.  This means that
you will always be entitled to all of the deferred amount.  This money will,
however, be affected by any investment gains or losses.  If the Trustee invested
this money and there was a gain, the balance in your account would increase.  Of
course, if there was a loss, the balance in your account would decrease.  Your
interest in this account cannot be forfeited for any reason.

     Distributions from your deferred account are not permitted EXCEPT in the
event of:

          (a)  death;
          (b)  disability; or
          (c)  termination of employment.

     In addition, if you are a highly compensated employee (generally owners,
officers or individuals receiving wages in excess of certain amounts established
by law), a distribution from your deferred account of certain excess
contributions may be required to comply with the law.  The Administrator will
notify you when a distribution is required.

                                    6
<PAGE>

3.   YOUR SHARE OF EMPLOYER CONTRIBUTIONS

     Your Employer will allocate the amount you elect to defer to an account
maintained by the Trustee on your behalf.

     If you are eligible, your Employer will also allocate the matching
contribution and the special contribution made to the Plan on your behalf.  (See
the Section in this Article entitled "Employer Contributions to the Plan.")

                                    7
<PAGE>

                          SUMMARY OF MATERIAL MODIFICATION
                                          
                         MID-STATE BANK PROFIT SHARING AND
                            SALARY DEFERRAL 401(k) PLAN
                                          
        Mid-State Bank EIN:                           95-2135438
        1026 Grand Avenue                             Plan Number: 001
        Arroyo Grande, CA 93421-0580



The following changes have been made to the Mid-State Bank Profit Sharing and
Salary Deferral 401(k) Plan Summary Plan Description:

ARTICLE III, SECTION 2, FIRST PARAGRAPH, FIRST SENTENCE HAS BEEN CHANGED

          From:  "As a Participant, you may elect to defer up to 10% of your
          compensation each year instead of receiving that amount in cash."

          To:  "As a Participant, you may elect to defer up to 15% of your
          compensation each year instead of receiving that amount in cash."
          




       THIS SUMMARY OF MATERIAL MODIFICATION IS EFFECTIVE AS OF JULY 1, 1998.

                                    8
<PAGE>

     Your Employer's discretionary contribution will be "allocated" or 
divided among participants eligible to share in the contribution for the Plan 
Year. Your share of the contribution will depend upon how much compensation 
you received during the year and the compensation received by other eligible 
participants.
                                          
     Your share of your Employer's discretionary contribution is determined 
by the following fraction:
                                          
                                          
                                 
            Employer's                                 Your Compensation
    Discretionary Contribution           X          -----------------------
                                                      Total Compensation of
                                                    All Participants Eligible 
                                                            to Share

     For example:  Suppose the Employer's Discretionary Contribution for the
Plan Year is $20,000.  Employee A's compensation for the Plan Year is $25,000. 
The total compensation of all participants eligible to share, including Employee
A, is $250,000.  Employee A's share will be:

                                      $25,000

                           $20,000 X __________ or $2,000

                                      $250,000

     In addition to the Employer's contributions made to your account, your
account will be credited daily with a share of the investment earnings or losses
of the trust fund.

     You should also be aware that the law imposes certain limits on how much
money may be allocated to your account for a year.  These limits are extremely
complex but generally no more than the lesser of $30,000 or 25% of your
compensation may be allocated to you (excluding earnings or losses) in any year.
The Administrator will inform you if these limits have affected you.

4.   COMPENSATION

     For the purposes of your Plan, compensation has a special meaning. 
Compensation is defined as your total compensation during a Plan Year that is
subject to income tax and is reflected on your W-2 Form, but

          -- including your salary reduction contributions to any plan or
arrangement maintained by your Employer.

     Your compensation will be recognized for benefit purposes from your date of
entry into the Plan.

                                    9
<PAGE>

     For Plan Years beginning in 1994, the Plan, by law, cannot recognize
compensation in excess of $150,000.  This amount will be adjusted in future
years for cost of living increases.  It will also be applied to certain highly
compensated employees and their family members as if they were a single
participant.  If you or a member of your family may be affected by this rule,
ask your Administrator for further details.  For any short Plan Year, the
adjusted $150,000 limit will be prorated based upon the number of full months in
the short Plan Year.

5.   FORFEITURES

     Forfeitures are created when participants terminate employment before
becoming entitled to their full benefits under the Plan.  Your account may grow
from the forfeitures of other participants.  Forfeitures will be "allocated" or
divided among participants eligible to share for a Plan Year.  However, a
portion of forfeited amounts will be used to reduce your Employer's
contributions to the Plan.

6.   YOUR VOLUNTARY CONTRIBUTIONS TO THE PLAN

     Previously under the Plan, you were permitted to make after-tax voluntary
contributions to the Plan.  However, the Plan has been amended, and you are no
longer permitted to make such contributions to your Plan.  Your previously
established account will still be maintained under the Plan.

     You will always be "100% vested" in your voluntary contributions.  This
means that you will always be entitled to all of your voluntary contributions. 
Your voluntary contributions will, however, be affected by any investment gains
or losses.  If the Trustee invested this money and there was a gain, the balance
in your account would increase.  Of course, if there were a loss from an
investment, the balance in your account would decrease.

     Your voluntary contributions may be invested by the Trustee in segregated,
interest-bearing accounts or as part of the general trust fund.

     You may withdraw the balance of your voluntary contributions and any gains
from your voluntary contribution account.  You will only be taxed on investment
income and gains when you withdraw them from your account.

     When you retire or otherwise become eligible for Plan benefits, the value
of your voluntary contribution account will be used to provide additional
benefits for you or your beneficiaries.

7.   YOUR QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS ("QVECS")

     Prior to the enactment of the Tax Reform Act of 1986, you were permitted to
make qualified voluntary employee contributions (or "QVECs") to your Plan. 
These contributions were made on a tax-deductible basis.  However, for taxable
years beginning after December 31, 1986, these QVEC contributions are no longer
permitted.  Your Plan will continue to maintain a QVEC account in your name
representing contributions attributable to tax years before January 1, 1987. 
QVECs held by your Plan will be subject to the rules outlined in this section.

                                    10
<PAGE>

     Your "QVEC" contributions may be invested by the Trustee in segregated,
interest bearing accounts or as part of the general trust fund.
   
     You will always be 100% vested in your "QVEC" account.  This means that you
will always be entitled to all of your "QVEC" contributions.  Qualified
voluntary employee contributions will, however, be affected by any investment
gains or losses.  If the Trustee invested this money and there was a gain, the
balance in your account would increase.  Of course, if there were a loss from an
investment, the balance in your account would decrease.
   
     Upon written request to the Administrator, you may make withdrawals of your
qualified voluntary employee contributions and any gains from your "QVEC"
account.  If you make any withdrawals before you reach age 59 1/2, you will be
charged a penalty tax of 10% on the amount withdrawn in addition to the income
tax you would ordinarily pay.  There would be no penalty tax, however, if you
made this withdrawal because of your disability, as that term is defined under
your Plan.
   
     When you retire or otherwise become eligible for Plan benefits, the 
value of your "QVEC" account will be used to provide additional benefits for 
you or your beneficiaries.
   
8.   TRANSFERS FROM QUALIFIED PLANS (ROLLOVERS)

     At the discretion of the Administrator, you may be permitted to deposit 
into your Plan Distributions you have received from other plans.  Such a 
deposit is called a "rollover" and may result in tax savings to you.  You 
should consult qualified counsel to determine if a rollover is in your best 
interest.

     Your rollover will be placed in a separate account called a "participant's
rollover account."  The Administrator may establish rules for investment.

     You will always be 100% vested in your "rollover account."  This means that
you will always be entitled to all of your rollover contributions.  Rollover
contributions will be affected by any investment gains or losses.  If the
Trustee invested this money and there was a gain, the balance in your account
would increase.  Of course, if there were a loss from an investment, the balance
in your account would decrease.

9.   DIRECTED INVESTMENTS

   The Administrator may establish rules for investment of your account balance.
If the Administrator approves, you may direct the Trustee as to the investment
of your account balance.

                                    11
<PAGE>

                                         IV
                                          
                              BENEFITS UNDER YOUR PLAN

1.   DISTRIBUTION OF BENEFITS UPON NORMAL RETIREMENT

     Your Normal Retirement Date is the Birthdate coinciding with your Normal
Retirement Age.

     You will attain your Normal Retirement Age when you reach your 65th
birthday.

     At your Normal Retirement Age, you will be entitled to 100% of your account
balance.  Payment of your benefits will, at your election, begin as soon as
practicable following your actual retirement but not prior to your Normal
Retirement Date.

2.   DISTRIBUTION OF BENEFITS UPON LATE RETIREMENT

     You may remain employed past your Plan's Normal Retirement Date and retire
instead on your Late Retirement Date.  Your Late Retirement Date is the
Anniversary Date coinciding with or next following the date you choose to
retire, after first having reached your Normal Retirement Date.  On your Late
Retirement Date, you will be entitled to 100% of your Account.  Actual benefit
payments will begin as soon as practicable following your Late Retirement Date.

3.   DISTRIBUTION OF BENEFITS UPON DEATH

     Your beneficiary will be entitled to 100% of your account balance upon your
death.

     If you are married at the time of your death, your spouse will be the
beneficiary of the death benefit, unless you otherwise elect in writing on a
form to be furnished to you by the Administrator.  IF YOU WISH TO DESIGNATE A
BENEFICIARY OTHER THAN YOUR SPOUSE, HOWEVER, YOUR SPOUSE MUST IRREVOCABLY
CONSENT TO WAIVE ANY RIGHT TO THE DEATH BENEFIT.  YOUR SPOUSE'S CONSENT MUST BE
IN WRITING, BE WITNESSED BY A NOTARY OR A PLAN REPRESENTATIVE AND ACKNOWLEDGE
THE SPECIFIC NONSPOUSE BENEFICIARY.

     If, however,

          (a)  your spouse has validly waived any right to the death benefit in
the manner outlined  above,
   
          (b)  your spouse cannot be located; or
   
          (c)  you are not married at the time of your death,

then your death benefit will be paid to the beneficiary of your own choosing in
installments or as a single lump sum, as you or your beneficiary may elect.  You
may designate the beneficiary on 

                                    12
<PAGE>

a form to be supplied to you by the Administrator.  If you change your 
designation, your spouse must again consent to the change.

     Regardless of the method of distribution selected, your entire death
benefit must generally be paid to your beneficiaries within five years after
your death (the "5-year rule").  However, if your designated beneficiary is a
person (instead of your estate or most trusts), then you or your beneficiary may
elect to have minimum distributions begin within one year of your death and it
may be paid over the designated beneficiary's life expectancy (the "1-year
rule").  If your spouse is the beneficiary, then under the "1-year rule", the
start of payments may be delayed until the year in which you would have attained
age 70 1/2.  The election to have death benefits distributed under the "1-year
rule" instead of the "5-year rule' must be made no later than the time at which
minimum distributions must commence under the "1-year rule" (or, in the case of
a surviving spouse, the "5-year rule," if earlier).

     Since your spouse has certain rights in the death benefit, you should
immediately report any change in your marital status to the Administrator.

4.   DISTRIBUTION OF BENEFITS UPON DISABILITY

     Under your Plan, disability is defined as a physical or mental condition
resulting from bodily injury, disease, or mental disorder which renders you
incapable of continuing any gainful occupation with your Employer.  This
condition must constitute total disability under the federal Social Security
Acts.

     If you become disabled while a participant, you will be entitled to 100% of
your account balance.  Payment of your disability benefits will be made to you
as if you had retired.  (See the Section in this Article entitled "Benefit
Payment Options.")

5.   DISTRIBUTION OF BENEFITS UPON TERMINATION OF EMPLOYMENT

     Your Plan is designed to encourage you to stay with your Employer until
retirement.  Payment of your account balance under your Plan is only available
upon your death, disability or retirement.

     If your employment terminates for reasons other than those listed above,
you will be entitled to receive only your "vested percentage" of your account
balance and the remainder of your account will be forfeited.  Only contributions
made by your Employer are subject to forfeiture.  (See the Section in this
Article entitled "Vesting in Your Plan.")

     If you so elect, the Administrator will direct the Trustee to distribute
your vested benefit to you before the date it would normally be distributed
(upon your death, disability or retirement).  If your vested benefit under the
plan at the time of any prior distribution exceeded $3, 500 or currently exceeds
$3, 500, you must give written consent before the distribution may be made. 
Amounts of $3,500 or less will be distributed without the need for consent.

                                    13
<PAGE>

6.   VESTING IN YOUR PLAN

     Your "vested percentage" in your account is determined under the 
following schedule and is based on vesting Years of Service.  You will 
always, however, be 100% vested upon your Normal Retirement Age.  (See the 
Section in this Article entitled "Distribution of Benefits Upon Normal 
Retirement.")

                         VESTING SCHEDULE
<TABLE>
<CAPTION>
              Years of Service          Percentage
<S>                              <C>
               Less than 3                  0%
                    3                      20%
                    4                      40%
                    5                      60%
                    6                      80%
                    7                     100%
</TABLE>

     Regardless of this vesting schedule, you are always 100% vested in your
salary reduction amounts contributed to the Plan.

     Additionally, you are 100% vested in your Employer's special contributions
made to the Plan.  However, matching contributions attributable to salary
reduction amounts which are returned to you for any reason will be forfeited.

     Your vested percentage will not be less than your vested percentage under
the Plan before this amendment and restatement.

     Your vested benefit will normally be distributed to you or your beneficiary
upon your death, disability or retirement.  If you terminate employment before
any of these events, however, your unpaid vested benefit may be segregated in a
special account.

7.   BENEFIT PAYMENT OPTIONS

     The Administrator, in accordance with your election, will direct the 
Trustee to pay your benefits to you under one or more of the following 
options:

         (a) a single lump-sum payment in cash;
          
         (b) equal installments over a period of not more than your assumed life
     expectancy (or your assumed life expectancy (or your and your beneficiary's
     assumed life expectancies) determined at the time of distribution.

     GENERALLY, WHENEVER A DISTRIBUTION IS TO BE MADE TO YOU ON OR AS OF AN
ANNIVERSARY DATE, IT MAY BE MADE ON SUCH DATE OR AS SOON 

                                    14
<PAGE>

THEREAFTER AS IS PRACTICABLE.  HOWEVER, UNLESS YOU ELECT IN WRITING TO DEFER 
THE RECEIPT OF BENEFITS, NO DISTRIBUTION MAY BEGIN LATER THAN THE 60TH DAY 
AFTER THE CLOSE OF THE PLAN YEAR IN WHICH THE LATEST OF THE FOLLOWING EVENTS 
OCCURS:

         (a) the date on which you reach the age of 65 or your Normal Retirement
             Age;
          
         (b) the 10th anniversary of the year in which you became a participant 
             in the Plan;

         (c) the date you terminated employment with your Employer.

         Regardless of whether you elect to delay the receipt of benefits,
         there are other rules which generally require minimum payments to
         begin no later than the April 1st following the year in which you
         reach age 70 1/2.  You should see the Administrator if you feel you
         may be affected by this rule.

8.   PRE-RETIREMENT DISTRIBUTION OF BENEFITS

     You are entitled to receive pre-retirement distributions from your 
Voluntary Contribution and Rollover Accounts.  However, any distributions 
will reduce the value of the benefits you will receive at normal retirement.  
These distributions are made at your election.

     Also, the law restricts any pre-retirement distribution from certain
accounts which are maintained for you under the Plan.  These accounts are
generally the ones set up to receive your salary reduction contributions and
other Employer contributions which are used to satisfy special rules for 401(K)
plans.  Ask your Administrator if you need more details.

9.   TREATMENT OF DISTRIBUTIONS FROM YOUR PLAN

     Whenever you receive a distribution from your Plan, it will normally be
subject to income taxes.  You may, however, reduce, or defer entirely, the tax
due on your distribution through use of one of the following methods:

         (a) The rollover of all or a portion of the distribution to an 
     Individual Retirement (IRA) or another qualified employer plan.  This 
     will result in no tax being due until you begin withdrawing funds from 
     the IRA or other qualified employer plan.  The rollover of the 
     distribution, however, MUST be made within strict time frames (normally, 
     within 60 days after you receive your distribution).  Under certain 
     circumstances all or a portion of a distribution may not qualify for 
     this rollover treatment.  In addition, most distributions will be 
     subject to mandatory federal income tax withholding at a rate of 20%. 
     This will reduce the amount you actually receive.  For this reason, if 
     you wish to rollover all or a portion of your distribution amount, the 
     direct transfer option described in paragraph (b) below would be the 
     better choice.

         (b) You may request for most distributions that a direct transfer of 
     all or a portion of your distribution amount be made to either an 
     Individual Retirement Account (IRA) or 

                                    15
<PAGE>

     another qualified employer plan willing to accept the transfer.  A 
     direct transfer will result in no tax being due until you withdraw funds 
     from the IRA or other qualified employer plan.  Like the rollover, under 
     certain circumstances all or a portion of the amount to be distributed 
     may not qualify for this direct transfer.  If you elect to actually 
     receive the distribution rather than request a direct transfer, then in 
     most cases 20% of the distribution amount will be withheld for federal 
     income tax purposes.
     
         (c) The election of favorable income tax treatment under "10-year 
     forward averaging," "5-year forward averaging" or, if you qualify, 
     "capital gains" method of taxation.

     WHENEVER YOU RECEIVE A DISTRIBUTION, THE ADMINISTRATOR WILL DELIVER TO 
YOU A MORE DETAILED EXPLANATION OF THESE OPTIONS.  HOWEVER THE RULES WHICH 
DETERMINE WHETHER YOU QUALIFY FOR FAVORABLE TAX TREATMENT ARE VERY COMPLEX.  
YOU SHOULD CONSULT WITH QUALIFIED TAX COUNSEL BEFORE MAKING A CHOICE.

10.  DOMESTIC RELATIONS ORDER

     As a general rule, your interest in your account, including your "vested 
interest," may not be alienated.  This means that your interest may not be 
sold, used as collateral for a loan, given away or otherwise transferred.  In 
addition, your creditors may not attach, garnish or otherwise interfere with 
your account.

     There is an exception, however, to this general rule.  The Administrator
may be required by law to recognize obligations you incur as a result of court
ordered child support or alimony payments.  The Administrator must honor a
"qualified domestic relations order."  A "qualified domestic relations order" is
defined as a decree or order issued by a court that obligates you to pay child
support or alimony, or otherwise allocates a portion of your assets in the Plan
to your spouse, former spouse, child or other dependent.  If a qualified
domestic relations order is received by the Administrator, all or a portion of
your benefits may be used to satisfy the obligation.  The Administrator will
determine the validity of any domestic relations order received.

11.  PENSION BENEFIT GUARANTY CORPORATION

     Benefits provided by your Plan are NOT insured by the Pension Benefit
Guaranty Corporation (PBGC) under the Title IV of the Employee Retirement Income
Security Act of 1974 because the insurance provisions under ERISA are not
applicable to your Plan.

                                    16
<PAGE>

                                         V
                                          
                               YEAR OF SERVICE RULES

1.   YEAR OF SERVICE AND HOUR OF SERVICE

     You will have completed a Year of Service for vesting purposes if you are
credited with 12 consecutive Months of Service during a Plan Year, even if you
were not employed on the first or last day of the Plan Year.

     An "Hour" of Service" has a special meaning for Plan purposes.  You will be
credited with an Hour of Service for:


         (a) each hour for which you are directly or indirectly compensated by 
     your Employer for the performance of duties during the Plan Year;

         (b) each hour for which you are directly or indirectly compensated by 
     your Employer for reasons other than performance of duties (such as 
     vacation, holidays, sickness, disability, lay-off, military duty, jury 
     duty or leave of absence during the Plan Year); and

         (c) each hour for back pay awarded or agreed to by your Employer

         You will not be credited for the same Hours of Service both under (a)
or (b), as the case may be and under (c).

2.   1-YEAR BREAK IN SERVICE

     A 1-Year Break in Service shall occur on the first day of the month 
following a period of 12 consecutive months during which you are not credited 
with an Hour of Service. (See the Article and Section in this Summary 
entitled "BENEFITS UNDER YOUR PLAN: Vesting in Your Plan.")

     A 1-Year Break in Service does NOT occur, however, in the computation
period in which you enter or leave the Plan for reasons of:

         (a) an authorized leave of absence;

         (b) certain maternity or paternity absences.

     The Administrator will be required to credit you with Hours of Service 
for a maternity or paternity absence.  These are absences taken on account of 
pregnancy, birth, or adoption of your child.  These Hours of Service shall be 
credited solely to avoid your incurring a 1-Year Break in Service.  The 
Administrator may require you to furnish proof that your absence qualifies as 
a maternity or paternity absence.

                                    17
<PAGE>

                                         VI
                                          
                           YOUR PLAN'S "TOP HEAVY RULES"
   
1.   EXPLANATION OF "TOP HEAVY RULES"

     A 401(K) Profit Sharing Plan that primarily benefits "key employees" is 
called a "top heavy plan."  Key employees are certain owners or officers of 
your Employer.  A Plan is a "top heavy plan" when more than 60% of the 
contributions or benefits have been allocated to the key employees.

     Each year, the Administrator is responsible for determining whether your
plan is a "top heavy plan."

     If your Plan becomes top heavy in any Plan Year, then non-key employees
will be entitled to certain "top heavy minimum benefits," and other special
rules will apply.  Among these top heavy rules are the following:

         (a) Your Employer may be required to make a contribution equal to 35 
     of your compensation to your account;
   
         (b) Instead of the vesting schedule outlined in the Article and Section
in this Summary entitled "BENEFITS UNDER YOUR PLAN":  Vesting in Your Plan," 
your nonforfeitable right to benefits or contributions derived from Employer
contributions will be determined according to the following schedule:

                         VESTING SCHEDULE
<TABLE>
<CAPTION>
              Years of Service          Percentage
<S>                              <C>
               Less than 2                  0%
                    2                      20%
                    3                      40%
                    4                      60%
                    5                      80%
                    6                     100%
</TABLE>

         (c) If you are a participant in more than one Plan, you may not be
entitled to minimum benefits under both Plans.

                                    18
<PAGE>

                                        VII
                                          
                                       LOANS

     You may apply to the Administrator for a loan from the Plan.  Your
application must be in writing on forms which the Administrator will provide to
you.  The Administrator may also request that you provide additional
information, such as financial statements, tax returns and credit reports. 
After considering your application, the Administrator may, in its discretion,
determine that you qualify for the loan.  The Administrator will inform the
Trustee that you qualify.  The Trustee may then review the Administrator's
determination and make a loan to you if it is a prudent investment for the Plan.

LOAN REQUIREMENTS

     There are various rules and requirements that apply for any loan.  These 
rules are outlined in this section.  In addition, your Employer has 
established a written loan program which explains these requirements in more 
detail.  You can request a copy of the loan program from the Administrator.  
Generally, the rules for loans include the following:

          (a) Loans must be made available to all participants and their
          beneficiaries on a uniform and non-discriminatory basis.
          
          (b) All loans must be adequately secured.  You may use up to one-half
          (1/2) of your vested account balance under the Plan as security for
          the loan.  If more security is required, your principal residence may
          be used, if permitted by State law.  The Plan may also require that
          repayments on the loan obligation be by payroll deduction.
          
          (c) All loans must bear a reasonable rate of interest.  The interest 
          rate must be one a bank or other professional lender would charge for
          making a loan in a similar circumstance.
          
          (d) All loans must have a definite repayment period which provides for
          payments to be made not less frequently than quarterly, and for the
          loan to be amortized on a level basis over a reasonable period time,
          not to exceed five (5) years.  However, if you use the loan to acquire
          your principal residence, you may repay the loan over a reasonable
          period of time that may be longer than five (5) years.
   
          (e) All loans will be considered a directed investment from your 
          account under the Plan.  All payments of principal and interest by 
          you on a loan shall be credited to your account.
          
          (f) The amount of the Plan may loan to you is limited by rules under 
          the Internal Revenue Code.  All loans, when added to the outstanding
          balance of all other loans from the Plan, will be limited to the
          lesser of:

                                    19
<PAGE>

          (1) $50,000 reduced by the excess, if any, of your highest outstanding
          balance of loans from the Plan during the one-year period prior to the
          date of the loan over your current outstanding balance of loans; or

          (2) 1/2 of your vested account balance.
        
          The $50,000 limit stated in (1) above will not be reduced for loans 
          made on or before DECEMBER 31, 1986.
        
          Also, no loan will be made if two prior loans are currently 
          outstanding.
        
          (g) If you fail to make payments when they are due under the loan, you
          will be considered to be "in default."  The trustee would then have
          authority to take all reasonable actions to collect the balance owing
          on the loan.  This could include filing a lawsuit or foreclosing on
          the security for the loan.  Under certain circumstances, a loan that
          is in default may be considered a distribution from the Plan, and
          could result in taxable income to you.  In any event, your failure to
          repay a loan will reduce the benefit you would otherwise be entitled
          to from the Plan.
          
                                        VIII
                                          
                      CLAIMS BY PARTICIPANTS AND BENEFICIARIES
   
     Benefits will be paid to participants and their beneficiaries without 
the necessity of formal claims.  You or your beneficiaries, however, may make 
a request for any Plan benefits to which you may be entitled.  Any such 
request must be made in writing, and it should be made to the Administrator.  
(See the Article in this Summary entitled "GENERAL INFORMATION ABOUT YOUR 
PLAN.")
   
     Your request for Plan benefits shall be considered a claim for Plan 
benefits, and it will be subject to a full and fair review.  If your claim is 
wholly or partially denied, the Administrator will furnish you with a written 
notice of this denial.  This written notice must be provided to you within a 
reasonable period of time (generally 90 days) after the receipt of your claim 
by the Administrator.  The written notice must contain the following 
information:

          (a) the specific reason or reasons for the denial;
   
          (b) specific reference to those Plan provisions on which the denial is
     based;

          (c) a description of any additional information or material necessary 
     to correct your claim and an explanation of why such material or 
     information is necessary; and
     
          (d) appropriate information as to the steps to be taken if you or your
     beneficiary wishes to submit your claim for review.

                                    20
<PAGE>

     If notice of the denial of a claim is not furnished to you in accordance 
with the above within a reasonable period of time, your claim will be deemed 
denied. You will then be permitted to proceed to the review stage described 
in the following paragraphs.
   
     If your claim has been denied, and you wish to submit your claim for 
review, you must follow the Claims Review Procedure.

1.   THE CLAIMS REVIEW PROCEDURE

          (a) Upon the denial of your claim for benefits, you may file your 
     claim for review, in writing, with the Administrator.
   
          (b) YOU MUST FILE THE CLAIM FOR REVIEW NO LATER THAN 60 DAYS AFTER 
     YOU HAVE RECEIVED WRITTEN NOTIFICATION OF THE DENIAL OF YOUR CLAIM FOR 
     BENEFITS, OR IF NO WRITTEN DENIAL OF YOUR CLAIM WAS PROVIDED, NO LATER 
     THAN 60 DAYS AFTER THE DEEMED DENIAL OF YOUR CLAIM.

          (c) You may review all pertinent document relating to the denial of 
     your claim and submit any issues and comments, in writing, to the 
     Administrator.
   
          (d) Your claim for review must be given a full and fair review.  If 
     your claim is denied, the Administrator must provide you with written 
     notice of this denial within 60 days after the Administrator's receipt of 
     your written claim for review. There may be times when this 60 day period 
     may be extended.  This extension may only be made, however, where there 
     are special circumstances which are communicated to you in writing within 
     the 60 day period.  If there is an extension, a decision shall be made as 
     soon as possible, but not later than 120 days after receipt by the 
     Administrator of your claim for review.
   
          (e) The Administrator's decision on your claim for review will be 
     communicated to you in writing and will include specific references to the
     pertinent Plan provisions on which the decision was based.
   
          (f) If the Administrator's decision on review is not furnished to you
     within the time limitations described above, your claim will be deemed 
     denied on review.
   
          (g) If benefits are provided or administered by an insurance company, 
     insurance service, or other similar organization which is subject to 
     regulation under the insurance laws, the claims procedure relating to these
     benefits may provide for review. If so, that company, service, or 
     organization will be the entity to which claims are addressed.  If you have
     any questions regarding the proper person or entity to address claims, you 
     should ask the Administrator.

                                    21
<PAGE>

                                         IX
                                          
                                STATEMENT OF RIGHTS
   
1.   EXPLANATION OF YOUR ERISA RIGHTS
   
          As a participant in this Plan you are entitle to certain rights and
     protections under the Employee Retirement Income Security Act of 1974, 
     also called ERISA.  ERISA provides that all Plan participants are entitled
     to:
   
          (a)  examine, without charge, all Plan documents, including:
               
          (1)  insurance contracts;
               
          (2)  collective bargaining agreements, and

          (3)  copies of all documents filed by the Plan with the U.S.
          Department of Labor, such as detailed annual reports and Plan 
          descriptions.

This examination may take place at the Administrator's Office and at other
specified employment locations of the Employer.  (See the Article in this
Summary entitled "GENERAL INFORMATION ABOUT YOUR PLAN");

          (b)  obtain copies of all Plan documents and other Plan information
          upon written request to the Plan Administrator.  The Administrator 
          may make a reasonable charge for the copies;
   
          (c)  receive a summary of the Plan's annual financial report.  The
          Administrator is required by law to furnish each participant with a 
          copy of this summary annual report;
   
          (d)  obtain a statement telling you whether you have a right to
          receive a retirement benefit at Normal Retirement Age and, if so, 
          what your benefits would be at Normal Retirement Age if you stop 
          working under the Plan now.  If you do not have a right to a 
          retirement benefit, the statement will tell you how many years you 
          have to work to get a right to a retirement benefit.  THIS STATEMENT 
          MUST BE REQUESTED IN WRITING AND IS NOT REQUIRED TO BE GIVEN MORE 
          THAN ONCE A YEAR.  The Plan must provide the statement free of charge.
   
     In addition to creating rights for Plan participants, ERISA imposes duties
upon the people who are responsible for the operation of the Plan.  The people
who operate your Plan, called "fiduciaries" of the Plan, have a duty to do so
prudently and in the interest of you and other Plan participants and
beneficiaries.  No one, including your employer or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a pension benefit or exercising your rights under ERISA.

                                    22
<PAGE>

     If your claim for a retirement benefit is denied in whole or in part, you
must receive a written explanation of the reason for the denial.  you have the
right to have the Administrator review and reconsider your claim.  (See the
Article in this Summary entitled "CLAIMS BY PARTICIPANTS AND BENEFICIARIES.")
   
     Under ERISA, there are steps you can take to enforce the above rights.  For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file suit in a federal court.  In such a case, the court may
require the Administrator to provide the materials and pay you up to $100.00 a
day until you receive the materials, unless the materials were not sent because
of reasons beyond the control of the Administrator.
   
     If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or federal court.
   
     If the Plan's fiduciaries misuse the Plan's money, or if you are
discriminated against for asserting your rights, you may seek assistance from
the U.S. Department of Labor, or you may file suit in a federal court.  The
court will decide who should pay court costs and legal fees.  If you are
successful, the court may order the person you have sued to pay these costs and
fees.  If you lose, the court may order you to pay these costs and fees if, for
example, it finds your claim is frivolous.
   
     If you have any questions about this statement, or about your rights under
ERISA, you should contact the nearest Area Office of the U.S. Labor-Management
Services Administration, Department of Labor.

                                         X
                                          
                       AMENDMENT AND TERMINATION OF YOUR LOAN

1.   AMENDMENT

     Your Employer has the right to amend your Plan at any time.  Any such 
amendment shall be adopted by formal action of the Employer's board of 
directors and executed by an officer authorized to act on behalf of the 
Employer.  In no event, however, will any amendment:

          (a)  authorize or permit any part of the Plan assets to be used for 
     purposes other than the exclusive benefit of participants or their 
     beneficiaries; or

          (b)  cause any reduction in the amount credited to your account.

2.   TERMINATION

     Your Employer has the right terminate the Plan at any time.  Upon 
termination, all amounts credited to your accounts will become 100% vested.  
A complete discontinuance of contributions by your Employer will constitute a 
termination.

                                    23
<PAGE>

                                         XI
                                          
                        GENERAL INFORMATION ABOUT YOUR PLAN

     There is certain general information which you may need to know about your
Plan.  This information has been summarized for you in this section.

1.   GENERAL PLAN INFORMATION

     Mid-State Bank Profit Sharing and Salary Deferral 401(K) Plan is the name
of your Plan.
     
     California Bankers Association Profit Sharing and Salary Deferral 401(K)
Plan was the original Plan name.

     Your Employer has assigned Plan Number 001 to your Plan.

     The amended and restated provisions of your plan become effective on 
January 1, 1995

     Your Plan's records are maintained on a twelve-month period of time.  This
is known as the Plan Year.  The Plan Year begins on January 1st and ends on
December 31st.

     Certain valuations and distributions are made on the Anniversary Date of
your Plan.  This date is December 31.

     The contributions made to your Plan will be held and invested by the
Trustee of your Plan.

     Your Plan will be governed by the laws of the State of California.

2.   EMPLOYER INFORMATION

     Your Employer's name, address and identification number are:
     
     Mid-State Bank 
     1026 Grand Avenue
     Arroyo Grande, California  93421-0580
     (95-2135438)
     
     Your Plan allows other employers to adopt its provisions.  You or your 
beneficiaries may examine or obtain a complete list of employers, if any, who 
have adopted your Plan by making a written request to the Administrator.

     Another Employer who has adopted the provisions of the Plan is:

     Mid-Coast Land Company
     1026 Grand Avenue
     Arroyo Grande, California  03421-0580

                                    24
<PAGE>

3.   PLAN ADMINISTRATOR INFORMATION

     The name, address and business telephone number of your Plan's
Administrator are:

     Mid-State Bank
     1026 Grand Avenue
     Arroyo Grande, California  93421-0580
     (805) 473-7700

     Your Plan's Administrator keeps the records for the Plan and is responsible
for the administration of the Plan.  The Administrator has discretionary
authority to construe the terms of the Plan and make determinations on questions
which may affect your eligibility for benefits.  Your Plan's Administrator will
also answer any questions you may have about your Plan.

4.   PLAN TRUSTEE INFORMATION

     The name of your Plan's Trustee is:
     
     Franklin Templeton Trust Company
     
     The principal place of business of your Plan's Trustee is:
     
     777 Mariners Island Blvd.
     San Mateo, California  94403-7777
     
     
     Your Plan's Trustee has been designated to hold and invest Plan assets 
for the benefit of you and other Plan participants.  The trust fund 
established by the Plan's Trustee will be the funding medium used for the 
accumulation of assets from which benefits will be distributed.

5.   SERVICE OF LEGAL PROCESS

     The name and address of your Plan's agent for service of legal process are:

     Mid-State Bank
     1026 Grand Avenue
     Arroyo Grande, California  93421-0580

     Service of legal process may also be made upon the Trustee or 
Administrator.


                                    25