<PAGE>

                                                                    EXHIBIT 10.9

                              EMPLOYMENT AGREEMENT

            This Employment Agreement (the "Agreement") is dated for reference
purposes and entered into as of July 1, 2003 (the "Effective Date"), by and
between Bank of Internet USA, a federal savings bank ("Bank'), having a
principal place of business at 12220 El Camino Real, Suite 220, San Diego,
California, and Michael J. Berengolts ("Executive"), whose address is 10621
Queen Avenue, La Mesa, CA 91941. Bank and Executive are sometimes collectively
referred to in this Agreement as the "Parties." As used in this Agreement, the
term "Effective Date" means the date this Employment Agreement becomes
effective.

                                    RECITALS

      A. Bank desires to employ Executive and avail itself of his skill,
knowledge and experience in the management of Bank's business.

      B. The Parties desire to set forth in this Agreement the terms of
Executive's employment by Bank.

            The Parties therefore agree as follows:

      A. TERM OF EMPLOYMENT

            1. Term. Bank employs Executive to perform the duties described in
this Agreement, and Executive accepts such employment, for a term of one year
commencing on the Effective Date and ending on the day preceding the one year
anniversary of the Effective Date, except (i) that the Term of this Agreement
shall be renewed without further notice for a one year period commencing on the
annual anniversary date of the Effective Date (the "Anniversary Date") and on
each subsequent Anniversary Date following any such one year period of
employment, and (ii) this Agreement may be terminated prior to the end of such
Term by Bank or Employee in accordance with and subject to the terms of
Paragraph F. (Termination) of this Agreement, including,

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<PAGE>

but not limited to, Paragraph F.2.(a) providing Executive with a Severance
Payment (as defined therein) upon termination of this Agreement by Bank other
than for cause. When used in this Agreement, "Term" shall refer to the entire
period of employment of Executive by Bank under this Agreement.

      B. DUTIES OF EXECUTIVE

            Subject to the powers and directions of the policies, procedures and
directives of the board of directors, as adopted and modified from time to time,
Executive shall perform the duties and shall have the title of Chief Technology
Officer. During the Term, Executive shall perform exclusively for Bank the
services contemplated in this Agreement to be performed by Executive,
faithfully, diligently and to the best of Executive's ability, consistent with
the highest and best standards of the banking industry and in compliance with
all applicable laws and regulations and the Bank's federal stock charter and
bylaws. Except as permitted by the prior written consent of Bank's board of
directors, Executive shall devote Executive's entire working time, ability and
attention to the business of Bank during the Term.

      C. COMPENSATION

            1. Base Salary. In consideration of Executive's services to be
performed under this Agreement, Bank shall pay or cause to be paid to Executive
a base salary in the following amounts, payable in equal installments in
conformity with Bank's normal payroll periods:

                  a. $115,000 per annum, effective as of July 1, 2003.

                  b. $120,000 per annum, provided that such base salary shall
begin (i) no earlier than July 1, 2004, and (ii) effective as of the first day
of the calendar month immediately following the end of the calendar month at
which the Bank's Total Assets (as reported in accordance with Paragraph G.13,
below) equals or exceeds $399,098,000.

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                  c. $130,000 per annum, provided that such base salary shall
begin (i) no earlier than July 1, 2005, and (ii) effective as of the first day
of the calendar month immediately following the end of the calendar month at
which the Bank's Total Assets (as reported in accordance with Paragraph G.13,
below) equals or exceeds $532,964,000.

            Executive's salary shall be reviewed by the board of directors from
time to time at its discretion and Executive shall receive such additional or
other salary increases, if any, as the board of directors, in its sole
discretion, shall determine.

            2. One-Time Deferred Compensation. Executive is entitled to one-time
deferred compensation in the amount of $25,000 (the "One-Time Deferred
Compensation"), subject to the terms of this Agreement and the Bank of Internet
USA Non-Qualified Deferred Compensation Plan, adopted effective as of July 1,
2003 (the "Deferred Comp Plan". The Executive's deferred compensation account
shall be credited for $25,000 plus 4% on July 1, 2004. The One-Time Deferred
Compensation amount and all earnings in the account shall vest to the Executive
on the following:

<TABLE>
<S>                                         <C>
July 1, 2004..............................   20%
July 1, 2005..............................   40%
July 1, 2006..............................   60%
July 1, 2007..............................   80%
July 1, 2008..............................  100%
</TABLE>

            The bank shall pay 4% only on July 1, 2004. Thereafter, investment
of the Executive's Account shall comply with the investment provision of the
Deferred Comp Plan.

            3. Pre-Tax Net Income Benefit. Executive shall be entitled to a
benefit based on the pre-tax net income of the Bank, as calculated in accordance
with the formula and terms set forth in Exhibit A, the terms of which are
incorporated by this reference as if set forth in full in this paragraph (the
"Pre-Tax Net Income Benefit"). The amount of the Pre-Tax Net Income Benefit, if
any, to which Executive shall be entitled shall be subject to the terms
governing the deferral of such benefit set forth in Exhibit A. Executive shall
be eligible for such other benefits and other incentive compensation, if any,
that may be made available to the Bank's senior executive officers from time to
time by the board of directors in its sole discretion.

                                       3

<PAGE>

            D. EXECUTIVE BENEFITS

            1. Vacation. Executive shall be entitled to vacation as prescribed
in the Bank's Employee Manual maintained on the Bank's Intranet. In the event
this Agreement is terminated pursuant to Paragraph F.2, Bank reserves the right
to require Executive to take any unused vacation time prior to the Date of
Termination (as defined in Paragraph F.2).

            2. Directors and Officers Liability Insurance. Bank shall provide
for Executive, at Bank's expense, coverage under a directors and officers
liability insurance policy in such amounts and on such terms as may be approved
by Bank's board of directors and as may be consistent with such coverage
provided by Bank for its other officers and directors.

            3. Group Insurance Benefits; and Death Benefit. Executive shall
participate in all group insurance plans provided by Bank for all of its senior
executive officers at Bank's expense to the same extent and on the same terms as
Bank's other senior executive officers. Throughout the term of employment, the
Bank shall, at its sole cost, will provide a death benefit on the life of
Executive in an amount equal to three times Executive's then-current annual
salary.

            4. Stock Options. As of Effective Date, BofI Holding, Inc. a
Delaware corporation ("Holding"), the sole shareholder of Bank, had granted to
Executive incentive stock options, as provided in Section 422 of the United
States Internal Revenue Code (ISOs"), pursuant to the Amended and Restated 1999
Stock Option Plan of BOI Holding, Inc. (the "Plan") and as memorialized in three
Incentive Stock Option Agreements, dated April 27, 2000, April 2, 2001, and
January 28, 2002. (collectively, the "Grant"), which such agreements provide
for, among other things, the vesting of such ISOs. Notwithstanding the terms of
the Plan, in the event that the Bank terminates Executive under this Agreement
for any reason other than for cause pursuant to Paragraph F.I or in the event
Executive's death or disability causes the termination of this Agreement, all of

                                       4

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Executive's lSOs issued pursuant to the Grant and any subsequently issued grant
of ISOs under the Plan, including all ISOs held by Executive that are not
otherwise vested at such time, shall become fully vested and Executive may
exercise such vested ISOs, in whole or in part, at any time within the terms of
the option plan. In the event that Executive terminates this Agreement,
Executive shall be entitled to exercise only those lSOs that are vested as of
the Date of Termination (as defined in Paragraph F.2, below), and may be
exercised within a 90 day period in accordance with Paragraph 6.1.7(a) of the
Plan. Neither Bank nor Holding shall enter into any transaction during or after
the Term that would have the effect of canceling any of Executive's ISOs issued
under the Grant.

            5. Retirement, Profit Sharing and Other Plans. Executive shall be
entitled to participate in any retirement plans, profit-sharing plans, salary
deferral and other deferred compensation plans, medical expense reimbursement
plans and other similar plans that Bank may establish with respect to all
employees; provided, however, that nothing herein shall require Bank to
establish or maintain any of such plans.

      E. BUSINESS EXPENSES AND REIMBURSEMENT

            1. Business Expenses. In addition to Bank's payment or reimbursement
of costs of the type described in Paragraph E.2, Bank shall pay or reimburse
Executive for any ordinary and necessary business expenses incurred by Executive
in the performance of his duties and in acting for or on behalf of Bank during
the Term, provided that: (a) each such expenditure is of a nature qualifying it
as a proper deduction on the federal and state income tax returns of Bank as a
business expense and not as deductible compensation to Executive, (b) Executive
furnishes to Bank adequate records and other documentary evidence required by
federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of such expenditures and deductible business
expenses of Bank, and (c) Executive's expense reimbursement reports are
submitted for approval in accordance with Bank's internal policies.

                                       5

<PAGE>

            2. Additional Expenses. Bank shall pay or reimburse Executive for
the costs and expenses set forth below, subject to the following requirements:
(a) Executive shall comply with the Bank's expense payment or reimbursement
guidelines and procedures as the Bank may amend such guidelines and procedures
or may adopt new guidelines and procedures from time to time, and (b) prior to
the Bank becoming liable for any expenses or reimbursement relating to
equipment, publications, education, training or professional organizations
pursuant to subparagraphs (iii) through (vi) below, any such expenses or
reimbursement shall be approved by Bank's board of directors or any committee or
person authorized by the board of directors to grant such approval, in advance
of incurring any such expenses. Subject to such prior approval of incurring
expenses or reimbursement and to compliance with Bank's payment or reimbursement
procedures, Bank's obligation to make any such payment or reimbursement pursuant
to this paragraph shall not be contingent on whether or to what extent a
particular expense may constitute a deductible business expense of Bank or be
excludable from Executive's taxable compensation.

                  (i) Automobile Allowance. Standard business mileage
reimbursement will be provided to Executive.

                  (ii) Parking. Bank shall pay or reimburse Executive for his
reasonable automobile parking expenses during the Term.

                  (iii) Equipment. Bank shall pay or reimburse Executive for
costs incurred by Executive during the Term for a digital cellular telephone
(including the initial purchase price and connection charges as well as all
business-related air charges), and other equipment as needed. Such equipment
shall be the property of the Bank and upon termination of this Agreement for any
reason, all of such equipment shall be returned to Bank, as more particularly
provided in Paragraph G.3.

                  (iv) Publications. Bank shall reimburse Executive for the
costs incurred by Executive during the term for subscriptions to
business-related

                                       6

<PAGE>

periodical publications that Executive reasonably considers useful and relevant
to the discharge of his duties for Bank.

                  (v) Education and Training. Bank shall pay for or reimburse
Executive for costs incurred by Executive during the Term for attending
business-related seminars, training programs, conferences and conventions that
Executive reasonably considers useful and relevant to the discharge of his
duties to Bank.

                  (vi) Professional Organizations. Bank shall pay for or
reimburse Executive for costs incurred by Executive during the Term for
membership fees and dues of professional organizations that Executive reasonably
considers useful and relevant to the discharge of his duties for Bank.

      F. TERMINATION

            1. Termination for Cause. Bank may terminate this Agreement for
cause at any time without advance notice and without further obligation or
liability to Executive, by action of Bank's board of directors:

                  (a) If Executive materially fails to perform his duties in a
satisfactory manner or habitually neglects his duties; provided, however, that
before any termination pursuant to this subparagraph (a) shall become effective,
(i) Bank shall have given Executive written notice setting forth the specific
grounds for termination ("Warning Notice"), (ii) Bank shall have met and
informed Executive of the grounds for termination, of the extent and nature of
his unsatisfactory or negligent performance and of what Executive must do to
correct such deficiencies, and (iii) Executive shall have been afforded a
reasonable opportunity over a period of not less than forty-five (45) days from
the date of the Warning Notice to correct the unsatisfactory or negligent
performance described in the Warning Notice to the satisfaction of the board of
directors, provided, however, that Executive shall be terminated at the end of
such period if

                                       7

<PAGE>

Executive fails to correct his deficient performance in the manner prescribed by
and to the reasonable satisfaction of the board of directors;

                  (b) If Executive is convicted of illegal activity which
materially adversely affects Bank's reputation in the community or which
evidences the lack of Executive's fitness or ability to perform Executive's
duties as determined by the board of directors, in good faith;

                  (c) If Executive commits any act which causes termination of
coverage under Bank's Bankers Blanket Bond as to Executive, as distinguished
from termination of coverage as to Bank as a whole;

                  (d) If Executive dies;

                  (e) If Executive is found to be physically or mentally
incapable of performing Executive's duties for a consecutive period of ninety
(90) days or greater by the board of directors, reasonably and in good faith.
Termination pursuant to this subparagraph (e) shall become effective immediately
on written notice of termination given by Bank to Executive after the expiration
of such 90-day period;

                  (f) If Bank is closed or taken over by any of the bank
regulatory authorities having jurisdiction over Bank's activities; or

                  (g) If any bank regulatory authority should successfully
exercise its cease and desist powers to remove Executive from office.

      The Parties understand and agree that notwithstanding anything to the
contrary contained in this Agreement: (1) this Agreement is subject to the
requirements and terms set forth in the regulations of the Office of Thrift
Supervision ("OTS") contained in 12 C.F.R. Section 563.39; (2) specifically,
without limitation, the required provisions set forth in 12 C.F.R. Section
563.39(b)

                                       8

<PAGE>

are incorporated by reference in this Agreement as if set forth in full; (3) to
the greatest extent possible, this Agreement shall be interpreted so as to be
consistent with said regulation; and (4) in the event of conflict or
inconsistency between the terms of this Agreement and said regulation, the
required provisions of said OTS regulation shall supersede any inconsistent or
conflicting provisions of this Agreement. The termination of this Agreement for
any of the reasons set forth in 12 C.F.R. Section 563.39(b) shall be considered
termination for cause pursuant to this Paragraph F.1.

            2. Termination at Will. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may be terminated by either party at
any time upon thirty (30) days' written notice of termination to the other Party
("Notice of Termination"). As used in this Paragraph F.2, "Date of Termination"
means the thirtieth (30th) day following the date on which Notice of Termination
is given.

                  (a) Termination by Bank. In the event Bank elects to terminate
this Agreement by giving Notice of Termination prior to the expiration of the
Term, Executive shall be entitled to compensation from Bank as follows: (i) Bank
shall pay Executive his normal compensation then in effect through the Date of
Termination; and (ii) Bank shall pay to Executive a severance payment equal to
his then-current base monthly salary, multiplied by twelve (12) (the "Severance
Payment"), which amount shall be paid by the Bank in either of the following two
ways, in the sole discretion of the board of directors: (A) the Bank may pay the
Severance Payment in twelve (12) equal installments during the succeeding twelve
(12) month period beginning on the Date of Termination (the "Severance Period")
in conformity with Bank's normal payroll periods, or (B) the Bank may pay the
Severance Payment in one lump sum, subject to such withholding and other
deductions as may be required by applicable law. In addition, Executive shall be
entitled to the continuation of the group insurance benefits provided under
Paragraph D.3, subject to Executive's reasonable cooperation with Bank, until
the first to occur of: (x) the expiration of the

                                       9

<PAGE>

Severance Period, or (y) Executive's commencement of work for a new employer
that provides group medical insurance benefits to Executive. Executive's
acceptance of new employment or earnings from other sources during the Severance
Period shall not affect Bank's obligation to make the Severance Payment as
provided above. At any time between Bank giving Executive Notice of Termination
and the Date of Termination, Bank, in its sole discretion, may direct Executive
to cease performing services for Bank or to absent himself from Bank's premises
and operations, provided that Bank shall nonetheless compensate Executive as
provided above.


                  (b) Termination by Executive. In the event Executive elects to
terminate this Agreement by giving Notice of Termination prior to the expiration
of the Term, Executive shall be entitled to such compensation as may be due and
payable to him through and including such Date of Termination, but Executive
shall not be entitled to any other compensation except as may be required by law
or by written agreement, including this Agreement and the Deferred Comp Plan.

            3. Effect of Termination. In the event of the termination of this
Agreement prior to the completion of the Term for any of the reasons specified
in Paragraphs F.1 and F.2, Executive shall be entitled to the compensation
earned by Executive prior to the Date of Termination, as provided in this
Agreement, computed pro rata up to and including the Date of Termination, but
Executive shall not be entitled to any further compensation or other benefits
for services rendered after the Date of Termination, except as otherwise set
forth in this Agreement. As used in this Paragraph F.3. "Date of Termination"
includes the effective date of any termination, whether pursuant to Paragraph
F.1 or F.2.

      G. GENERAL PROVISIONS

            1. Solicitation of Customers and Employees. For any period during
which Executive receives any salary from Bank and for a one (1) year

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<PAGE>

period following any termination of Executive from Bank, Executive shall not
solicit any customers or employees of Bank to move their banking or employment
relationships from Bank. Nothing in this Agreement shall preclude Executive from
any mass solicitation to groups and individual follow-up solicitations of
persons or businesses named in any list or data base not specifically related to
or previously defined by the Bank, even though the names of certain Bank
customers may appear in such list or data base.

            2. Indemnification. To the maximum extent permitted by law, Bank
shall pay any and all expenses incurred by Executive in connection with the
defense or settlement of, and shall pay and satisfy any judgments, awards, fines
and penalties rendered, assessed or levied against Executive in, any judicial,
arbitration, mediation or administrative suit, action, hearing, inquiry or
proceeding (whether or not Bank is joined as a party) relating to acts or
omissions of Executive alleged to have occurred while an "agent" of Bank, or by
Bank, or by both, provided however, that Bank shall not be obligated to defend,
indemnify or hold Executive harmless from the consequences of his own negligent
or reckless act or omission or willful misconduct or dishonesty. In addition, to
the maximum extent permitted by law, Bank shall advance to Executive, upon
receipt of the undertaking required by California Corporations Code Section
317(f), any expenses incurred in defending against any such proceeding to which
Executive is a party or has been threatened to be made a party.

            3. Return of Property. Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments, equipment and other materials
and property used and/or developed by Bank or Executive (whether on his personal
time or while performing services for the Bank) during the Term ("Preparatory
Work") are the sole property of Bank, and that Executive has no right, title or
interest in such property. Executive further agrees that, subject to the
execution of this Agreement, all Preparatory Work is the sole property of Bank,
and that Executive has no right, title or interest, legal or beneficial, in such

                                       11

<PAGE>

Preparatory Work or in any benefits that may arise from such Preparatory Work.
Upon termination of this Agreement for any reason, Executive or Executive's
representative shall promptly deliver possession of all of said property to Bank
in original or good, operating condition, normal wear and tear excepted.

            4. Notices. Any notice, request, demand or other communication
required or permitted hereunder shall be considered to be properly given when
personally served in writing, when deposited in the United States mail, postage
prepaid, or when delivered to a generally recognized overnight courier service
(such as, for example, Federal Express or United Parcel Service) addressed to
the Party at such Party's address appearing at the beginning of this Agreement.
Either Party may change its address by written notice in accordance with this
paragraph.

            5. Benefit of Agreement; Assignment. This Agreement shall inure to
the benefit of and be binding upon the Parties and their respective executors,
administrators, successors and assigns. This Agreement is for the personal
services of Executive and may not be assigned by Executive.

            6. Applicable Law. Except to the extent governed by the laws of the
United States, this Agreement is to be governed by and construed under the laws
of the State of California.

            7. Captions and Paragraphs Headings. Captions and paragraph headings
used herein are for convenience only and are not a part of this Agreement and
shall not be used in constructing it.

            8. Invalid Provisions. Should any provision of this Agreement for
any reason be declared invalid, void, or unenforceable by a court of competent
jurisdiction, the validity and binding effect of any remaining portion shall not
be affected, and the remaining portions of this Agreement shall remain in full
force and effect as if this Agreement had been executed with said provision
eliminated.

                                       12

<PAGE>

            9. Entire Agreement. This Agreement contains the entire agreement of
the Parties. It supersedes any and all other agreements or understandings,
whether oral or written, between the Parties with respect to the employment of
Executive by Bank. The terms of this Agreement in Paragraph D.4 applicable to
stock options supersede the terms of the Plan or any agreement between the
Parties to the extent the terms of the Plan and any other agreement are
inconsistent with the terms of Paragraph D.4. Each party to this Agreement
acknowledges that no representations, inducements, promises, or agreements, oral
or otherwise, have been made by any party, or anyone acting on behalf of any
party, that are not embodied in this Agreement, and that no other agreement,
statement, or promise not contained in this Agreement shall be valid or binding.
This Agreement, may be modified or amended only in a written document signed by
the party against whom enforcement is sought. The amendment or other
modification of the Plan or other any other agreement generally applicable to
the grant of stock options or issuance of ISOs by the Holding Company to
employees, including Executive will not supersede the terms of this Agreement
pertaining to ISOs without the express written approval of the Parties contained
in a writing expressly stating its intent to supersede the specific terms of
this Agreement applicable to ISOs. Additionally, terms of this Agreement will
prevail in any conflicts with other agreements.

            10. Attorney's Fees. Each party shall bear his or its own attorneys'
fees and costs incurred in connection with the negotiation, preparation and
delivery of this Agreement. However, if any action is instituted to enforce or
interpret any of the obligations set forth in this Agreement, the prevailing
party(ies) shall be entitled to recover its (their) reasonable attorneys' fees
and costs incurred in connection with the enforcement or interpretive action.

            11. Trade Secrets. To the extent that during the Term Bank develops
any trade secrets, as that term is defined under California law, the Parties
agree that such trade secrets belong to and are the property of the Bank.

                                       13

<PAGE>

Executive agrees that for a period of one (1) year after the termination of this
Agreement. Executive shall not disclose any of Bank's trade secrets, directly or
indirectly, or use them in any way in contravention of the rights of the Bank to
such trade secrets.

            12. Restricted Securities. The ISOs, the underlying common stock
issuable upon the exercise of the ISOs and the shares of Holding's common stock
issuable pursuant thereto shall be issued by Holding without registration under
the Securities Act of 1933, or registration or qualification of such securities
under any state securities or "blue sky" laws in reliance upon certain
exemptions from registration or qualification, as the case may he. Upon
issuance, such securities shall be considered "restricted securities," subject
to certain limitations on transfer or other disposition imposed under applicable
federal and state securities or "blue sky" laws and regulations and such
restrictions shall be set forth in one or more legends appearing on the
certificate or agreement evidencing such securities.

            13. Accounting Principles. Wherever in this Agreement, including any
exhibit hereto, there is a reference to or need to use or rely upon accounting
principles and procedures, such accounting principles and procedures shall be
those used by the Bank in the preparation and filing of its reports of financial
condition and operations in the form of Thrift Financial Reports, as filed with
the Office of Thrift Supervision in the ordinary course ("TFRs"). By way of
example, such items as Total Assets and loan loss reserves shall be computed as
they are computed for purposes of reporting such information in the Bank's TFRs.




                                       14

<PAGE>
The Parties execute this Agreement as of the Effective Date first above written.

EXECUTIVE:                                  BANK OF INTERNET, USA
                                            a federal savings bank

/s/ Michael Berengolts                      By: /s/ Jerry Englert
------------------------------                  --------------------------------
Michael Berengolts                          Name:  Jerry Englert
10621 Queen Avenue                          Title: Chairman of the Board
La Mesa, CA  91941

                                            Attest: /s/ C. Michelle Paulus
                                                    ---------------------------
                                                    Secretary

                          CONSENT OF BOFI HOLDING, INC.

      By execution of this Agreement below, BofI Holding, Inc., a Delaware
corporation, consents to and agrees to perform its obligations under Paragraph
D.4.

BofI Holding, Inc.

By: /s/ Jerry Englert                             Attest: /s/ C. Michelle Paulus
   ---------------------------------                      ----------------------
Jerry Englert, Chairman of the Board
                                                  Name: C. Michelle Paulus
                                                  Title: Secretary

                                       15

<PAGE>

                                    EXHIBIT A

                           PRE-TAX NET INCOME BENEFIT

      The following terms apply to the calculation of the Pre-Tax Net Income
Benefit provided in Paragraph C.2 of the Agreement.

      A. Definitions.

            1. "Adjusted Net Income" refers to Net Income Before Income Taxes
(as defined below) as reported in a TFR (as defined below), reduced by the
amount of Specific Reserves (as defined below), as reported in a TFR, and
increased by the sum of (a) the amount of General Reserves (as defined below),
(b) the amount of any expense accrued by the Bank for the Pre-Tax Net Income
Benefit, and (c) the amount of any non-taxable or tax preferred income "grossed
up" to its pre-tax equivalent or equivalent income without such tax preference
(the "Tax Preferred Income "gross up").

            2. "Average Asset Balance" refers to the average amount of Total
Assets reported by the Bank on a daily for the period covered by a TFR.

            3. "Asset Target" refers to the level of Total Assets reported in
the Bank's TFR at June 30, 2004 and at June 30, 2005. The Asset Target for the
period ended June 30, 2004 is $399,098,000 and is referred to as the "2004 Asset
Target" and the Asset Target for the period ended June 30, 2005 is $532,963,000
and is referred to as the "2005 Asset Target."

            4. "Bonus Calculation Table" refers to the following table showing
the Bonus Percentage (which will be applied as a percentage of Net Income Before
Income Taxes earned by Executive) if the Bank attains certain levels of
profitability (expressed as a percentage attained by dividing Adjusted Net
Income by the Average Asset Balance):

            If the Bank's Return on Assets Before Taxes (as defined below) is

<TABLE>
<CAPTION>
Bonus
Percentage     at least:                 but not greater than:
----------     --------                  --------------------
<S>            <C>                       <C>
0.05             1.200%                          1.399%
0.10             1.400%                          1.799%
0.15             1.800%                          2.199%
0.20             2.200%                          No limit
</TABLE>

            5. "TFR" refers to the Thrift Financial Report of the Bank,
consisting of various financial statements, including balance sheet, statement
of

                                       16

<PAGE>

operations and other statements, prepared by the Bank in the ordinary course and
filed quarterly with the Office of Thrift Supervision.

            6. "General Reserves" refers to the amount recorded by the Bank as
non-interest expense arising from the establishment of a reserve or an allowance
against loan losses generally and not allocable to one or more specific assets,
as set forth in its TFR for the applicable period.

            7. "Net Income Before Income Taxes" refers to the amount reported as
"Income (Loss) Before Income Taxes" in a TFR for the applicable period.

            8. "Deferred Comp Plan" has the meaning set forth in Section C.3 of
the Agreement.

            9. "Pre-Tax Net Income" refers to the "Income (Loss) Before Income
Taxes," as set forth on the Statement of Operations included in a TFR.

            10. "Return on Assets Before Taxes" refers to the percentage derived
from dividing (a) the Adjusted Net Income for such TFR period, by (b) the
Average Asset Balance with respect to such period.

            10. "Specific Reserves" refers to the amount recorded by the Bank as
non-interest expense arising from the establishment of reserves or allowances
against loan losses specifically attributable to actual losses or to prospective
losses from one or more identified assets, as set forth in a TFR.

      B. Calculation of Pre-Tax Net Income Benefit

            1. Executive shall be entitled to a Pre-Tax Net Income Benefit with
respect to the Bank's fiscal years ending June 30, 2004 and June 30, 2005. All
calculations leading to the computation of the Pre-Tax Net Income Benefit for
each of such years shall be based upon the results reported in the Bank's TFRs
for each such 12-month period. No Pre-Tax Net Income Benefit shall be calculated
or payable with respect to any period less than a full 12-month fiscal year.

            2. As promptly as possible after the filing of the TFR for the
Bank's fiscal years ending June 30, 2004 and 2005, as the case may be, but in no
event later than 30 days after such filing, the Bank shall (i) determine the
Executive's eligibility for the Pre-Tax Net Income Benefit, (ii) calculate the
Pre-Tax Net Income Benefit in accordance with this Agreement, and (iii) report
the results of such calculation to Executive and the board of directors of the
Bank. As promptly as possible after reporting such calculation, but in no event
later than 30 days thereafter, Executive and the Bank shall meet to confirm
their agreement on the calculation of the Pre-Tax Net

                                       17

<PAGE>

Income Benefit. On the date that the Executive and the Bank mutually agree on
the calculation of the Pre-Tax Net Income Benefit (the "Determination Date"),
the Executive shall have a right to the Pre-Tax Net Income Benefit as provided
in this Agreement.

            3. As a condition precedent to Executive's eligibility for the
Pre-Tax Net Income Benefit with respect to the 2004 and 2005 fiscal years, the
Bank shall have achieved the 2004 Asset Target for the fiscal year ending June
30, 2004, and the Bank shall have achieved the 2005 Asset Target for the fiscal
year ending June 30, 2005.

            4. Provided that the Bank shall have achieved the applicable Asset
Target and subject to the provisions of Paragraph C.3, below, governing the
payment and crediting, as the case may be, of the Pre-Tax Net Income Benefit,
the Bank shall provide to Executive the Pre-Tax Net Income Benefit in an amount
equal to the product of multiplying: (1) the Bonus Percentage for which the
Executive is eligible for such fiscal year, based on the Bank's Return on Assets
Before Income Taxes, as derived from the Bonus Calculation Table, times (2)
Executive's rate of annual salary payable as of the end of such fiscal year.

            5. The following is an example only of the calculation of the
Pre-Tax Net Income Benefit. Assume: that the Bank has achieved the applicable
Asset Target.

<TABLE>
<S>                                                           <C>
Net Income Before Income Taxes (from TFR)                     $  4,600,000

Adjustments:

Add/Increase:

General Reserves                                              $    300,000
         Accrued Expense for Pre-Tax Net Income Benefit       $     60,000
         Tax Preferred Income "gross up"                      $     70,000
Subtract/Reduce:

         Specific Reserves/Charge-Offs                        $    (20,000)

Adjusted Net Income                                           $  5,010,000
                                                              ============

Average Asset Balance                                         $405,000,000
                                                              ============

Return on Assets Before Taxes:
</TABLE>

                Adjusted Net Income / Average Asset Balance =

                                   $     5,010,000    = 1.237%
                                   -----------------
                                   $   405,000,000

Bonus Percentage based on 1.237% Return on Average Assets = 0.05
(from Bonus Calculation Table)

                                       18

<PAGE>

Calculation of Bonus (assuming at end of fiscal year, Executive's rate of annual
salary is $115,000 per annum):

Bonus Percentage X Executive's Annual Salary  =  Bonus

0.05  X   $115,000   =   $5,750
                         ======

                                       19

<PAGE>

      C. Payment and Crediting of Pre-Tax Net Income Benefit

            1. Within thirty days of the Determination Date, the Bank shall
provide to Executive the Pre-Tax Net Income Benefit in accordance with the terms
of this Agreement and subject to the Deferred Comp Plan.

            2. As of each Determination Date, Executive is entitled to receive
no more than one-half of the Pre-Tax Net Income Benefit in cash (the "Cash
Portion") and at least one-half of the Pre-Tax Net Income Benefit in the form of
a credit to Executive's Account (as such term is defined under the Deferred Comp
Plan)("Executive's Account. In accordance with the requirements of the Deferred
Comp Plan, Executive shall make in a timely manner any and all elections with
respect to the Deferred Comp Plan, including, but not limited to, elections with
respect to the deferral of compensation.

            3. Within 30 days of the Determination Date, the Bank shall pay the
Cash Portion, if any, to Executive in cash, subject to any withholding required
by law.

            4. The Deferred Portion shall be credited to Executive's Account
effective on July 1 of the year closest to the calculation date of the specific
Pre Tax Net Income Benefit. Installments vest annually over 3 years on July 1,
and annually on July 1 thereafter until fully vested as provide in the deferred
compensation plan.

            5. If this Agreement is terminated by Executive pursuant to
Paragraph F.2.(b) or by the Bank for cause (other than due to Executive's death
or disability) pursuant to Paragraph F.1, Executive shall be entitled only to
that part of the Deferred Portion that has been vested prior to the Date of
Termination.

            6. If this Agreement is terminated due to Executive's death or
disability or by the Bank without cause pursuant to Paragraph F.2.(a), then, on
the Date of Termination of this Agreement on such basis, Executive's Account
shall be credited with all remaining portions of any Deferred Portion that have
not previously been fully vested as of such Date of Termination.

            7. In the event of the termination of Executive's employment, the
amount in Executive's Account shall be distributed to Executive in accordance
with the terms of the Deferred Comp Plan.

                                       20