<PAGE>

                            FALLBROOK NATIONAL BANK

                  DIRECTOR'S INDEXED FEE CONTINUATION PROGRAM

I.    DEFINITIONS

      A.    EFFECTIVE DATE:

            The Effective Date of the Fallbrook National Bank Director's Indexed
            Fee Continuation Program (the Plan) shall be September 24, 1996.

      B.    PLAN YEAR:

            Any reference to "the Plan Year" shall mean a calendar year from
            January 1 to December 31. In the year of implementation, the term
            "the Plan Year" shall mean the period from the effective date to
            December 31 of the year of the Effective Date.

      C.    RETIREMENT DATE:

            Retirement Date shall mean retirement from service with the Bank
            which becomes effective on the first day of the calendar month
            following the month in which the Director reaches age sixty-five
            (65) or such later date as the Director may actually retire.

      D.    TERMINATION OF SERVICE:

            Termination of Service shall mean voluntary resignation by the
            Director from service on the Board or failure of re-election to the
            Board, prior to the Retirement Date.

      E.    PRE-RETIREMENT ACCOUNT:

            A Pre-Retirement Account shall be established as a liability reserve
            account on the books of the Bank for the benefit of each director in
            the Plan. Prior to termination of service or a director's
            retirement, such liability reserve account shall be increased or
            decreased each Plan Year (including the Plan Year in which the
            Directors ceases to serve on the Board) by an amount equal to the
            annual earnings or loss for that Plan

<PAGE>

            Year determined by the Index [described in subparagraph I (G)
            hereinafter], less the Cost of Funds Expense for that Plan Year
            [described in subparagraph I (H) hereinafter], divided by the number
            of directors in the Plan [as defined in subparagraph I (I)
            hereinafter] during that Plan Year.

      F.    INDEX RETIREMENT BENEFIT:

            The Index Retirement Benefit for each director in the Plan shall be
            equal to the annual earnings or loss determined by the Index
            [subparagraph I (G)] less the Cost of Funds Expense [subparagraph I
            (H)], divided by the number of directors in the Plan [subparagraph I
            (I)], for each Plan Year in which the Index Retirement Benefit is
            due.

      G.    INDEX:

            The Index for any Plan Year shall be the aggregate annual after-tax
            income from the life insurance contracts described in the attached
            Exhibit "A" on the lives of the participating directors [described
            in subparagraph I (I)], as defined by FASB Technical Bulletin 85-4.
            This Index shall be applied as if such insurance contracts were
            purchased on the effective date of the Plan.

            If such contracts of life insurance are actually purchased by the
            Bank then the actual policies as of the dates they were actually
            purchased shall be used in calculations under this Agreement. If
            such contracts of life insurance are not purchased or are
            subsequently surrendered or lapsed, then the Bank shall receive
            annual policy illustrations from the above named insurance
            company(ies) on the increase in value from such policy(ies) as if
            they had actually been in force which will be used to calculate the
            amount of the Index.

            In either case, references to the life insurance contract are merely
            for purposes of calculating a benefit. The Bank has no obligation to
            purchase such life insurance and, if purchased, the Director and his
            beneficiaries shall have no ownership interest in such policy and
            shall always have no greater interest in the benefits under this
            Agreement than that of an unsecured creditor of Bank.

      H.    COST OF FUNDS EXPENSE:

            The Cost of Funds Expense for any Plan Year shall be calculated by
            taking the sum of the amount of premiums set forth in the Indexed
            policies described above (Exhibit "A") plus the amount of any
            after-tax benefits paid to any director pursuant to the Plan
            (Paragraph II hereinafter) plus the


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            amount of all previous years after-tax Costs of Funds Expense, and
            multiplying that sum by the average after-tax cost of funds of the
            Bank's One Year Treasury Instrument as filed with the Federal
            Reserve or other primary Federal Regulator.

      I.    NUMBER OF PARTICIPATING DIRECTORS:

            The Number of Participating Directors for any Plan Year shall be the
            number of directors (including those in retirement status)
            participating in the Plan as of December 31 of the previous year.
            Participating directors are those directors listed on the attached
            Exhibit B less any of those directors who have died. The policy of a
            director who is no longer a participating director shall not be
            considered when computing the Index [subparagraph I (G)] in any Plan
            Year.

      J.    CHANGE OF CONTROL:

            Change of Control shall be deemed to be the cumulative transfer of
            more than fifty percent (50%) of the voting stock of the Bank
            holding company from the Effective Date of this Agreement. For the
            purposes of this Agreement, transfers on account of deaths or gifts,
            transfers between family members or transfers to a qualified
            retirement plan maintained by the Bank shall not be considered in
            determining whether there has been a change in control.

      K.    NORMAL RETIREMENT AGE:

            Normal Retirement Age shall mean the date on which the Director
            attains age sixty-five (65).

II.   INDEX BENEFITS

      A.    RETIREMENT BENEFITS:

            Subject to subparagraph II (C) hereinafter, a director who remains
            on the Board of the Bank until his Retirement Date defined in
            subparagraph I (C), shall be entitled to receive the balance in his
            Pre-Retirement Account in ten (10) equal annual installments
            commencing thirty days following the Director's Normal Retirement
            Date. In addition to these payments, commencing with the Plan Year
            in which the Director attains his Retirement Date, the Index
            Retirement Benefit (as defined in subparagraph I (F) above] for each
            Plan Year shall be paid to the Director until his death.


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<PAGE>

      B.    DEATH:

            Should the Director die prior to having received the Pre-Retirement
            Account, the unpaid balance of the Pre-Retirement Account shall be
            paid to the beneficiary selected by the Director and filed with the
            Bank. In the absence of or a failure to designate a beneficiary, the
            unpaid balance shall be paid in a lump sum to the personal
            representative of the Director's estate.

      C.    TERMINATION OF SERVICE:

            Should a Director suffer a Termination of Service [subparagraph I
            (D)], he shall be entitled to receive the vested percent from the
            table below based on the Directors total years of service on the
            Board, times the balance in the Pre-Retirement Account paid over ten
            (10) years in equal installments commencing at the Director's Normal
            Retirement Age [subparagraph I (K)]. In addition to these payments,
            commencing in the Plan Year the Director reaches his Normal
            Retirement age [subparagraph I (K)], the vested percent from the
            table below based on the Directors total years of service on the
            Board, times the Index Retirement Benefit for each year shall be
            paid to the Director until his death.

<TABLE>
                  Total Number of
                  Full Years of Service
                  on the Board                    Vested Percent
                  ------------                    --------------

                 <S>                              <C>
                   less than 6                      00%
                      6                             20%
                      7                             40%
                      8                             60%
                      9                             80%
                    10 or more                     100%
</TABLE>
            In addition, the Director shall receive one hundred percent (100%)
            of his Deferred Compensation Account (as defined in Paragraph III)
            immediately after a Termination of Service.

      D.    DISCHARGE FOR CAUSE:

            Should the Director be discharged for cause at any time prior to his
            Retirement Date, all Index Benefits under this Agreement
            [subparagraphs II (A), (B) or (C)] shall be forfeited. The term
            "for cause" shall mean gross negligence or gross neglect or the
            commission of a felony or gross-


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            misdemeanor involving moral turpitude, fraud, dishonesty or willful
            violation of any law that results in any adverse effect on the bank.
            If a dispute arises as to discharge "for cause", such dispute shall
            be resolved by arbitration as set forth in this Agreement. However,
            deferral benefits under Paragraph III shall continue to be due and
            payable under the terms of this Agreement. Notwithstanding the
            above, the bank may in it's sole discretion pay the Directors
            Deferred Compensation Account to the Director in a lump sum upon
            his discharge for cause. In such case this Agreement shall
            terminate.

      E.    DEATH BENEFIT:

            Except as set forth above, there is no death benefit provided under
            this Agreement.

      F.    MINIMUM BENEFITS:

            The minimum amount of the benefits described in Paragraph II,
            hereof, shall be eight thousand dollars ($8,000) in each of the
            first three year following the Director's retirement.

III.  DEFERRAL BENEFITS

      Any director wishing to defer any portion or all of his director fees may
      elect to defer up to one hundred percent (100%) each year. However, the
      aggregate fees deferred under this agreement may not exceed one hundred
      thousand ($100,000) dollars. This limit applies to deferred fees only and
      shall not include any interest credited on those deferred fees. The Bank
      shall establish a Deferred Compensation Account in the name of the
      Director, and credit that account with the deferrals. The Bank shall also
      credit interest to the Deferred Compensation Account balance monthly. The
      interest rate credited shall be the Bank's average portfolio yield for the
      prior month, less two hundred (200) basis points.

      The Director will make his election to defer by filing with the Bank a
      written statement setting forth the amount and timing of the deferrals.
      This statement must be filed prior to having earned the deferred income.

      Upon the Director's Retirement Date or Termination of Service from the
      Board [subparagraph I (C) and (D) herein above], the balance of the
      Director's Deferred Compensation Account shall be payable to the Director
      in equal annual


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      installments of principle and interest at the rate of eight percent (8%)
      per annum. Director may elect to have such payments made according to any
      of the following options: lump sum, three years, five years, or ten years.
      The Director shall make such payment election no later that one year prior
      to Retirement Date. In the absence of an election, the benefit shall be
      payable in three equal annual installments.

      Should the Director die while there is a balance in his Deferred
      Compensation Account, such balance shall be paid pursuant to subparagraph
      II (C) herein above.

IV.   RESTRICTIONS UPON FUNDING

      The Bank shall have no obligation to set aside, earmark or entrust any
      fund or money with which to pay its obligations under this Agreement. The
      directors, their beneficiaries or any successor in interest shall be and
      remain simply a general creditor of the Bank in the same manner as any
      other creditor having a general claim for matured and unpaid compensation.

      The Bank reserves the absolute right at its sole discretion to either fund
      the obligations undertaken by this Agreement or to refrain from funding
      the same and to determine the extent, nature and method of such funding.
      Should the Bank elect to fund this Agreement, in whole or in part,
      through the purchase of life insurance, mutual funds, disability policies
      or annuities, the Bank reserves the absolute right, in its sole
      discretion, to terminate such funding at any time, in whole or in part. At
      no time shall any director be deemed to have any lien nor right, title or
      interest in or to any specific funding investment or to any assets of the
      Bank.

      If the Bank elects to invest in a life insurance, disability or annuity
      policy upon the life of the Director, then the Director shall assist the
      Bank by freely submitting to a physical exam and supplying such additional
      information necessary to obtain such insurance or annuities.

V.   CHANGE OF CONTROL

      Upon a Change of Control [as defined in subparagraph I (J) herein], if the
      Director is subsequently terminated then he shall receive the benefits
      promised in this Agreement upon attaining Normal Retirement Age, as if he
      had been continuously


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      serving the Bank until his Normal Retirement Age. The Director will also
      remain eligible for all promised death benefits in this Agreement. In
      addition, no sale, merger or consolidation of the Bank shall take place
      unless the new or surviving entity expressly acknowledges the obligations
      under this Agreement and agrees to abide by its terms.



This Director's Indexed Retirement Program adopted this 24th day of September,
1996.



                                             FALLBROOK NATIONAL BANK

                                             /s/ E. Steve LeFevre
                                             -------------------------
                                             Chairman of the Board


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<PAGE>

<TABLE>
<CAPTION>
                                   EXHIBIT A


<S>                                      <C>
1.   Assumed Insured:                    Merril J. Crow
     Insurance Company:                  First Penn-Pacific Life Insurance Company
     Policy Form:                        Flexible Premium Adjustable Life
     Policy Name:                        Premier
     Insured's Age:                      76
     Riders:                             None
     Ratings:                            According to the health of the insured
     Option:                             One
     Face Amount:                        $260,000.00
     Premiums Paid:                      $225,000.00
     Number of Premium Payments:         One
     Assumed Purchase Date:              July 27, 1996

2.   Assumed Insured:                    Roy B. Hiscock
     Insurance Company:                  First Penn-Pacific Life Insurance Company
     Policy Form:                        Flexible Premium Adjustable Life
     Policy Name:                        Premier
     Insured's Age:                      75
     Riders:                             None
     Ratings:                            According to the health of the insured
     Option:                             One
     Face Amount:                        $290,000.00
     Premiums Paid:                      $228,013.86
     Number of Premium Payments:         One
     Assumed Purchase Date:              November 5, 1996

3.   Assumed Insured:                    E. Steve LeFevre
     Insurance Company:                  Alexander Hamilton Life Insurance
     Policy Form:                        Flexible Premium Adjustable Life
     Policy Name:                        Executive Security Plan III
     Insured's Age:                      63
     Riders:                             None
     Ratings:                            According to the health of the insured
     Option:                             A
     Face Amount:                        $180,000.00
     Premiums Paid:                      $84,580.00
     Number of Premium Payments:         One
     Assumed Purchase Date:              October 29, 1996
</TABLE>


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<PAGE>
<TABLE>
<CAPTION>
                             EXHIBIT A (CONTINUED)


<S>                                      <C>
4.   Assumed Insured:                    E. Steve LeFevre
     Insurance Company:                  Alexander Hamilton Life Insurance
     Policy Form:                        Flexible Premium Adjustable Life
     Policy Name:                        Executive Security Plan III
     Insured's Age:                      62
     Riders:                             None
     Ratings:                            According to the health of the insured
     Option:                             A
     Face Amount:                        $200,000.00
     Premiums Paid:                      $115,420.10
     Number of Premium Payments:         One
     Assumed Purchase Date:              June 28, 1995

5.   Assumed Insured:                    Gordon T. Tucker
     Insurance Company:                  Alexander Hamilton Life Insurance
     Policy Form:                        Flexible Premium Adjustable Life
     Policy Name:                        Executive Security Plan III
     Insured's Age:                      57
     Riders:                             None
     Ratings:                            According to the health of the insured
     Option:                             One
     Face Amount:                        $495,000.00
     Premiums Paid:                      $200,000.00
     Number of Premium Payments:         One
     Assumed Purchase Date:              September 20, 1996
</TABLE>


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<PAGE>

<TABLE>
<CAPTION>
                                   EXHIBIT B


<S>                                  <C>
Director Name:                       Merril J. Crow
Address:                             2448 Gird Road, Fallbrook, California 92028
Date of Birth:                       July 28, 1919
Social Security Number:              ###-##-####

Director Name:                       Roy B. Hiscock
Address:                             Box 1629, Fallbrook, California 92088
Date of Birth:                       November 18, 1920
Social Security Number:              ###-##-####

Director Name:                       E. Steve LeFevre
Address:                             1479 Los Amigos, Fallbrook, California 92028
Date of Birth:                       April 22, 1933
Social Security Number:              ###-##-####

Director Name:                       Gordon T. Tucker
Address:                             2561 Havencrest Drive, Fallbrook, California 92028
Date of Birth:                       February 4, 1939
Social Security Number:              ###-##-####
</TABLE>

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