First Federal Bank, A Federal Savings Bank


                     MANAGEMENT INCENTIVE AWARD PLAN


                             1998 PLAN YEAR



                      Effective Date: July 1, 1997



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Management Incentive Award Plan                                      July 1,1997


                                SECTION I

                       RESTRICTIONS ON INFORMATION

The contents of this Plan shall be disseminated  only to the eligible  employees
of the "Bank,,  who are  Participants  as named on Exhibit  "A,, and others on a
"need to know" basis.

The President may elect a more limited distribution.


                               SECTION II

                           PURPOSE OF THE PLAN

The purpose of the Plan is to provide  those  employees  of the Bank,  primarily
responsible  for the  development  and  execution of  strategies,  management of
personnel and programs,  innovation,  and earning of profits, with an incentive,
beyond their  salaries,  to strive for the long term  production  of higher than
average  return on equity for the Bank.  In general it is the  philosophy of the
Board of  Directors  that base  salaries  on these  employees  be held below the
prevailing  base salaries on Bank peers but,  based on results,  the sum of base
and incentive can approach or even exceed the highest peer's total compensation.
This allows a substantial  part of  compensation to be tied to personal and Bank
performance and provides motivation by --

          1. requiring the production of an acceptable level of after-tax profit
     for the shareholders before employee participation;

          2.  requiring the  establishment  of individual  year-end  performance
     reviews which  compliment  those of the Chairman and President and serve to
     demonstrate the achievement of strategic and personal performance which may
     or may not reflect in short-term profit; and

          3. providing guidance in an equitable method of allocating  individual
     awards based on performance, contribution and achievement.

Careful  thought has gone into the  development  of this Plan. It is believed to
provide an effective motivational tool for management participants in a safe and
sound  environment  to  produce  better  than  average  return on equity for the
shareholders.



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Management Incentive Award Plan                                     July 1, 1997

                               SECTION III

                       ADMINISTRATION OF THE PLAN

The Plan will be  administered  by the  Personnel  and Pension  Committee of the
Board of  Directors  with the  assistance  of the  Chairman of the Board and the
President.

The  Committee  shall have the right to  interpret  the Plan and to approve  for
recommendation to the Board of Directors the list of Participants (Exhibit "A").

The Board of Directors may amend, modify or terminate the Plan at any time prior
to the distribution of the incentive  payment as set forth in Section VIII. Said
amendment,  modification,  or termination  may be  retroactive,  and no employee
shall have any vested rights pursuant to this Plan.

The Plan is not and does not become a part of any  present or future  employment
contract.   No  earned  or  anticipated   incentive  payment  may  be  attached,
transferred,  pledged or assigned. Upon clear evidence of such action, the Board
of Directors may, without notification,  elect to withhold the payment of all or
any part of any individual's payment.

Incentive  awards shall be treated as an expense in the Fiscal Year in which the
awards are earned and not the Fiscal Year in which paid. Proper  withholding for
taxes shall be applied to all awards under this Plan.

First Federal Bank, A F.S.B.  shall not merge into or  consolidate  with another
entity or sell all or  substantially  all of its assets to another entity unless
such other entity becomes obligated to perform the terms and conditions relating
to awards already earned but not yet paid.


                               SECTION IV

                         PARTICIPANT ELIGIBILITY

A  Participant  must be a management  employee as provided for in Exhibit "A" of
this  Plan and  remain  in the  employ  of the Bank  through  June 30,  1998 for
consideration.  Except, if a Participant dies,  becomes disabled,  retires or is
granted,  in writing,  a Leave of Absence under 1ST BANCORP's  Personnel Policy,
the Chairman of the Board or President may, at their  discretion,  recommend for
the Committee's review and the Board of Directors  ultimate approval,  a partial
award based on Participant's performance, contribution and achievement of goals.

Other  management   employees,   such  as  those  employed  in  branch  mortgage
origination  offices and First Financial  Insurance  Agency,  Inc. are incentive
compensated on another basis more directly  identifiable  with their  operations
and are not included in this Plan.

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Management Incentive Award Plan                                     July 1, 1997


                                SECTION V

                            GENERAL PREMISES

This Plan is based on four fundamental factors:

          1. After tax but before  incentive  year-end profit as adjusted by the
     Board of Directors  for any  extraordinary  factors or those which could be
     perceived as resulting from risk taking to achieve short-term profits.

          2. Equity.

          3. Maximizing the potential  contribution of each Participant based on
     resources and direction afforded the individual.

          4. The appraisal of each Participant's  individual job performance and
     contribution towards the Bank's long-term goals.


                               SECTION VI

                         EVALUATING PERFORMANCE

The Board of Directors desires that the organization's  management function as a
team and strive to achieve results  together.  Toward this end, while none of us
are prescient, we require that personal objectives or areas of work emphasis for
the year be identified that are expected to contribute to the whole.

By July 30,  1998,  each if the  participants  listed in Exhibit  "A",  with the
exception of the Board Chairman,  President and Executive Vice President,  shall
prepare and submit a chronological  listing,  with some narrative explanation to
define scope and/or  benefit to the bank,  of their  accomplishments  during the
preceding FY, to the President.  The President  shall review the  submissions of
accomplishments  and as he deems  appropriate  consult with both the individuals
and  supervisors.  The  President  with the Board  Chairman and  Executive  Vice
President,   shall  rank  order  the  submissions  and  provide  copies  of  the
participants'  submission,  plus their rank order to the Chairman of the Pension
and Personnel Committee, for their information no later than August 15th.


                                      - 3 -
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Management Incentive Award Plan                                     July 1, 1997

By August 15th,  the Board  Chairman,  President and Executive  Vice  President,
shall  prepare  and  submit  a  chronological   listing,   with  some  narrative
explanation to define scope and/or benefit to the bank, of their accomplishments
during the preceding FY, to the Chairman of the Pension and Personnel  Committee
if so  requested.  The  Pension  and  Personnel  Committee  shall meet and after
reviewing the  accomplishments  of the Board  Chairman,  President and Executive
Vice President, allocate their performance bonuses

At the August monthly Board of Directors Meeting the Chairman of the Pension and
Personnel  Committee will submit his  recommendations  for the allocation of the
annual bonus pool. The Pension and Personnel Committee will advise the President
of the  balance of funds  available  for  allocation  among the  remaining  plan
participants no later than August 30th. Following discussion and approval of the
recommendations  the  distribution of the annual bonuses will be affected to all
participants in a Special September Payroll on or before September 15th.



                               SECTION VII

                  DETERMINATION OF INCENTIVE AWARD FUND

The Board of  Directors  anticipates  each year to  contain  challenges  for the
management team.  Wanting to continue to emphasize a results based  compensation
component  while  first  rewarding  shareholders,  it seems  prudent to base the
Management Incentive Award Fund on the Bank's Return on Equity.

As of June 30, 1998, the Management  Incentive  Award Fund will be determined as
follows:

          1. The Board of Directors has  determined  1ST BANCORP's  equity as of
     the end of the FY1997, to be $22,332,876.  A base Net Income of $781,650 is
     required for the Management Incentive Award Plan.

          2. If 1ST  BANCORPS's  Net Income  exceeds  $781,650,  then 20% of the
     excess  shall be deemed  eligible  for and the basis for  establishing  the
     Management  Incentive  Award  Fund  subject  to  review  by  the  Board  of
     Directors.

          3. The Management  Incentive Award Fund is to be reviewed by the Board
     of Directors  and, at their sole  discretion,  adjusted  for  extraordinary
     effects  during the Fiscal Year and/or for any  transactions  that resulted
     from excessive risk-taking to achieve short- term results. It is understood
     that there is normally a risk-reward relationship.  The Board of Directors'
     judgment will be employed in the  assessment of the limit of  "acceptable,,
     risk-taking.


                                      - 4 -

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Management Incentive Award Plan                                     July 1, 1997


                              SECTION VIII

                              DISTRIBUTION

The Personnel and Pension  Committee,  none of whom are Participants,  will look
first at the sum of the year's earnings of all  Participants  and the difference
between that and the annual total compensation of the most recent peer survey(s)
of positions  most like ours.  That compared to the Management  Incentive  Award
Fund  generated  in Section  VII will  guide in the  overall  allocation  of the
individual awards.

The Chairman of the Board,  President and Executive  Vice  President & CFO shall
report to the  Personnel  and  Pension  Committee  on  accomplishments  of their
individual  objectives  as set forth  under  Section  VI.  That,  along with the
Personnel and Pension  Committee's ongoing assessment through Board of Directors
and Personnel and Pension  Committee  meetings,  Audit  Reports,  10Q's and K's,
Examination Reports, and any other factors they deem pertinent,  will become the
basis for their evaluation and the Chairman of the Board and the President.  The
Chairman of the Board and the President  will be invited to  participate  in the
evaluation of the Executive Vice President & CFO.

The  Personnel  and Pension  Committee,  with the  Chairman of the Board and the
President,  will  recommend to the entire  Board of  Directors,  the  individual
incentive awards to the Chairman of the Board,  President and the Executive Vice
President & CFO.

The President,  with and through his management organization,  will evaluate the
remaining   other   Participants'   performance   based  on  their  synopsis  of
achievements  during the Fiscal  Year and any other  factors  deemed  pertinent.
Objective  achievement will be a significant  factor,  though we appreciate that
evaluation is not an exact science.  Other factors that may be considered  would
be  creativity  and  innovation  brought  to  the  job,  community  involvement,
professional   development,   teamwork,   attendance,   size  of   staff,   cost
consciousness,   budgetary   responsibility,   revenue  generation,   additional
responsibility  assumed during the Fiscal Year not otherwise  addressed all as a
part of a total job performance evaluation.

Based  on the  above  individual  evaluations  and  knowing  the  amount  of the
Management  Incentive  Award Fund remaining to be allocated,  the President will
prepare a listing showing the names of all Plan  Participants  and the incentive
award recommended for each by him. Appropriate explanation and/or interpretation
should accompany any unusual situation(s).

Final distribution/allocation approval of the Management Incentive Award Fund is
reserved for the Board of Directors.  Payout of the Management  Incentive  Award
Fund, if generated, will be effected by September 15, 1997.

                                      - 5 -



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Management Incentive Award Plan                                     July 1, 1997


                               SECTION IX

                               CONCLUSION

It is the  intention of the First  Federal  Bank,  A F.S.B.  to  administer  the
Management  Incentive Award Plan so the maximum benefits  commensurate with safe
and sound business  practices will result for all Plan  Participants and thereby
generously favor the shareholders. All restrictions,  provisions for changes and
relief are included to provide  maximum  protection for the  administrators  and
stockholders,  and to provide  for the  continuation  of this Plan or some other
plan to accomplish the purposes set forth in Section II.

The  Board of  Directors  will  review  the Plan  annually,  in the light of the
then-current  conditions and Plan operation.  If there are changes called for to
better meet the purpose,  appropriate  revisions  will be adopted.  Every effort
will be made to announce those changes to Participants before the Plan Year, but
no later than the end of the first quarter.

The Bank reaffirms its commitment to the principles of management  participation
in  setting  of  goals,  and  in  incentive   compensation   after   shareholder
satisfaction  in recognition  of  achievement.  The Bank firmly  believes that a
strong incentive program will produce results for the shareholders.























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Management Incentive Award Plan                                     July 1, 1997





                               EXHIBIT "A"

          MANAGEMENT INCENTIVE AWARD PLAN PARTICIPANTS -- 97/98


                C. James MCCORMICK, Chairman of the Board
                   Frank D. BARACANI, President & CEO
          M. Lynn STENFTENAGEL, Executive Vice President & CFO
                Carroll C. HAMNER, Senior Vice President
                Gerald R. BELANGER, Senior Vice President
           Bradley M. RUST, Senior Vice President & Controller
                     Laura E. BOGARD, Vice President
                     Cheryl A. OTTEN, Vice President
                     Paula J. PESCH, Vice President
                 Jay A. BAKER, Assistant Vice President
              Doris J. BLACKBURN, Assistant Vice President
               Doralynn ELLIOTT, Assistant Vice President
                 Kelly J. GAY, Assistant Vice President
                Ruth E. HUNTER, Assistant Vice President
               Randall W. PRATT, Assistant Vice President
               Carol A. WITSHORK, Assistant Vice President


IN ADDITION TO THE ABOVE LISTED OFFICERS OF FIRST FEDERAL BANK, A F.S.B.,  AS OF
JULY 1, 1997,  INDIVIDUALS  SUBSEQUENTLY  APPOINTED/PROMOTED  AS OFFICERS IN THE
GRADE OF  ASSISTANT  VICE  PRESIDENT  OR ABOVE IN THE COURSE OF THE FISCAL  YEAR
1998, SHALL BE DEEMED ELIGIBLE TO PARTICIPATE IN THE MANAGEMENT  INCENTIVE AWARD
PROGRAM,  SUBJECT TO THE  RECOMMENDATION  OF THE PRESIDENT,  AND APPROVAL OF THE
BOARD  OF  DIRECTORS,  SUCH  PARTICIPATION  MAY  BE ON A  PRO  RATA  BASIS  AS A
PERCENTAGE  OF THE FISCAL  YEAR THAT THEY SERVE IN AN  OFFICER  CAPACITY.  IT IS
NOTED THAT CURRENT AND FUTURE OFFICERS ASSIGNED TO MORTGAGE  ORIGINATION OFFICES
ARE EXCLUDED FROM THE PLAN AND THAT  ELIGIBILITY  IS CONTINGENT  UPON BEING IN A
QUALIFIED ACTIVE OFFICER STATUS AT THE END OF THE PLAN YEAR.