<PAGE>

                              EMPLOYMENT AGREEMENT

      This Agreement is made and is effective as of January 1, 1998, by and
between Fallbrook National Bank ("Bank") and Gary M. Youmans ("Executive").

      WHEREAS, Executive is currently employed by the Bank in the capacity as
Executive Vice President and Chief Operating Officer, and Executive's
background, expertise and efforts have contributed to the success and financial
strength of the Bank; and

      WHEREAS, the Bank wishes to assure itself of the continued opportunity to
benefit from Executive's services for the period provided in this Agreement, and
Executive wishes to serve in the employ of the Bank on a full-time basis solely
in accordance with the terms hereof for such purposes; and

      WHEREAS, the Board of Directors of the Bank ("Board") has determined that
the best interests of the Bank would be served by Executive's continued
employment with the Bank under the terms of this Agreement;

      NOW, THEREFORE, in order to effect the foregoing, the parties hereto wish
to enter into an employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

      I. DEFINITIONS.

         (a) "AGREEMENT" means this employment agreement and any amendments
hereto complying with Section 14(a) hereof.

         (b) "BOARD" means the Board of Directors of the Bank unless the context
otherwise requires.

         (c) "CAUSE" means:

                  (i)   Executive's personal dishonesty, incompetence or willful
         misconduct;

                  (ii)  Executive's breach of fiduciary duty involving personal
         profit


                                       1
<PAGE>

                  (iii) Executive's intentional failure to perform Executive's
         duties for the Bank after a written demand for performance is given to
         Executive by the Board which demand specifically identifies the manner
         in which the Board believes that Executive has not performed his
         duties;

                  (iv)  Executive's willful violation of any law, rule,
         regulation or final cease and desist order (other than traffic
         violations or similar minor offenses) to the extent detrimental to the
         Bank's business or reputation; or

                  (v)   Executive's material breach of any provision of this
         Agreement.

         (d) "CHANGE IN CONTROL" means a change of control of the Bank of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Securities Exchange Act, whether
or not the Bank is then subject to such reporting requirement; provided,
however, that without limitation, a Change in Control shall be deemed to have
occurred if:

                  (i)   there is a transfer, voluntarily or by hostile takeover,
         by proxy contest (or similar action), operation of law, or otherwise,
         of Control of the Bank;

                  (ii)  any Person is or becomes the "beneficial owner" (as
         defined in Rules l3d-3 and 13d-5 under the Securities Exchange Act or
         any successor provisions thereof), directly or indirectly, of
         securities of the Bank representing 20% or more of the combined voting
         power of the Bank's then outstanding securities;

                  (iii) the individuals who were members of the Board
         immediately prior to a meeting of the shareholders of the Bank, which
         meeting involves a contest for the election of directors, do not
         constitute a majority of the Board following such meeting or election;

                  (iv)  a merger, consolidation or sale of all or substantially
         all of the assets of the Bank; or

                  (v)   there is a change, during any period of two consecutive
         years, of a majority of the Board as constituted as of the beginning of
         such period, unless the election of each director who is not a director
         at the beginning of such period was approved by a vote of at least
         two-thirds of the directors then in office who were directors at the
         beginning of such period.

         (e) "CODE" shall mean the Internal Revenue Code of 1986, as amended.


                                       2
<PAGE>

         (f) "CONTROL" means the possession, direct or indirect, by any Person
or "group" (as defined in Section 13(d) of the Securities Exchange Act) of the
power to direct or cause the direction of the management policies of the Bank,
whether through ownership of voting securities, by contract or otherwise, and in
any case means the ability to determine the election of a majority of the
directors of the Bank.

         (g) "DISABILITY" means physical or mental illness resulting in
Executive's absence on a full-time basis from Executive's duties with the Bank
for 180 calendar days, subject to the procedure described in Section 7(a).

         (h) "EXPIRATION" means the termination of this Agreement (including
Executive's employment hereunder) and of any further obligations of the parties
(except as specified in this Agreement) upon completion of the Term.

         (i) "Person" means an individual, a group acting in concert, a
corporation, a partnership, an association, a joint stock company, a trust, any
unincorporated organization, a government or political subdivision thereof, or
any other entity whatsoever.

         (j) "RESIGN FOR GOOD REASON" OR "RESIGNATION FOR GOOD REASON" has the
meaning found in Section 7(e)

         (k) "TERM" means the initial term of this Agreement and any extensions
hereof, as provided in Section 4, whether prior to or following a Change in
Control.

         (l) "TERMINATION" OR "TERMINATE(D)" means the termination of
Executive's employment hereunder for any of the following reasons unless the
context indicates otherwise:

                  (i)   Retirement by Executive;

                  (ii)  Death of Executive;

                  (iii) Disability;

                  (iv)  Expiration;

                  (v)   Resignation for Good Reason;

                  (vi)  Resignation other than Resignation for Good Reason;

                  (vii) Termination Without Cause; and


                                       3
<PAGE>

                  (viii) Termination for Cause.

         (m) "TERMINATION WITHOUT CAUSE" OR "TERMINATE(d) WITHOUT CAUSE" means
the cessation of Executive's employment hereunder for any reason except:

                  (i)    A resignation by Executive;

                  (ii)   Termination for Cause;

                  (iii)  Retirement;

                  (iv)   Disability;

                  (v)    Death; or

                  (vi)   Expiration.

      2. EMPLOYMENT. The Bank hereby agrees to continue to employ the Executive,
and the Executive hereby agrees to continue to serve the Bank, for the period
stated in Section 4 hereof and upon the terms and conditions set forth herein.

      3. POSITION AND RESPONSIBILITIES. The Executive shall serve as Executive
Vice President and Chief Operating Officer of the Bank and, subject to the
provisions of Section 5 below, shall have such responsibilities, duties and
authority as are generally associated with such positions and as may from time
to time be assigned to the Executive by the Board that are consistent with such
responsibilities, duties and authority. During the Term of this Agreement, the
Executive shall devote all his time, attention, skill and efforts during normal
business hours to the business and affairs of the Bank.

      4. TERM OF AGREEMENT. Subject to the terms and provisions of this
Agreement, this Agreement and the period of Executive's employment shall be
deemed to have commenced as of January 1, 1998, and shall continue for an
initial term of three (3) calendar years thereafter and any extensions
thereafter. The initial term shall automatically be extended for an additional
one (1) fall calendar year without further action by the parties on January 1,
1999, and on each succeeding January 1 thereafter, such that as of each such
January 1, this Agreement shall have a remaining term of three (3) calendar
years. Each party may stop an automatic calendar year extension, however, by
serving written notice ("Notice of Non-Renewal") upon the other within 90
calendar days prior to January 1, 2001 or within 90 calendar days prior to
January 1 of any succeeding year, as the case may be, of such party's intention
that this Agreement shall expire at the end of such Tenn. In the event the Bank
retains Executive as an employee following the expiration of the Term, such
employment, absent a written agreement to the contrary, will be on an at-will
basis with such compensation and


                                       4
<PAGE>

upon such terms as the parties may then agree, subject to termination at any
time with or without cause, and without liability. If the Bank does not retain
Executive as an employee after the Expiration of the Term, Executive's
employment shall cease without further liability of the parties to each other.
Executive's employment shall also terminate, and the Term of this Agreement will
expire, upon Executive's resignation (unless resignation is for Good Reason
after a Change in Control), retirement, death or Disability, or upon Executive's
Termination for Cause.

      5. DUTIES.

         (a) The Bank and Executive hereby agree that, subject to the provisions
of this Agreement, the Bank shall employ Executive, and Executive shall serve
the Bank as an executive officer for the Term of this Agreement. The specific
executive position(s) in which Executive will serve will be designated from time
to time by the Board.

         (b) During the Term hereof, Executive shall devote substantially all of
his or her business time, attention, skill and efforts to the faithful
performance of the business of the Bank to the fullest extent necessary to
properly discharge his or her duties and responsibilities hereunder. Executive's
position and duties with the Bank shall be as identified from time to time by
the Board of Directors of the Bank. Further, with the approval of the Board,
from time to time, Executive may serve, or continue to serve, on the boards of
directors of, and hold any other offices or positions in, companies or
charitable, political or civic organizations, which, in such Board's judgment,
will not present any material conflict of interest with the Bank and will not
unfavorably affect the performance of Executive's duties pursuant to this
Agreement.

      6. SALARY, BONUS PAYMENTS AND RELATED MATTERS.

         (a) SALARY. During the period of the Executive's employment hereunder,
the Bank shall pay to the Executive a base salary of One Hundred Thousand
Dollars ($100,000.00) per year, payable at regular intervals in accordance with
the Bank's normal payroll practices now or hereafter in effect. Executive's
salary shall be reviewed at least annually by the Board or a committee
designated by the Board and shall be adjusted based upon Executive's job
performance and the Bank's financial condition and performance; provided,
however, that in no event shall Executive's monthly salary be lower than the
initial amount set forth above unless, in the good faith judgment of the Board,
the financial condition of the Bank requires a general decrease in the salaries
of executive officers of the Bank. The first such salary review shall be
undertaken no later than January 1, 1998 and completed no later than June 30,
1998. Notwithstanding the foregoing, if there is a Change in Control,
Executive's salary shall not be less than Executive's annual salary for the year
immediately preceding the Change in Control.

         (b) INCENTIVE/BONUS PAYMENTS. During the period of the Executive's
employment hereunder, the Executive may receive such discretionary bonuses as
may be granted to him from time


                                       5
<PAGE>

to time by the Board. In addition, Executive shall be eligible to receive such
bonuses, if any, as shall be awarded Executive pursuant to Executive's Employee
Incentive Plan, attached.

         (c) EXPENSES. During the period of the Executive's employment
hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable and customary expenses incurred by the Executive in performing
services hereunder in accordance with the general policies and procedures
established by the Bank.

         (d) EMPLOYEE BENEFITS AND PERKS. During the period of the Executive's
employment hereunder, the Executive shall be entitled to participate in all
employee benefits plans or arrangements of the Bank on the same basis as other
employees of the Bank including, without limitation, plans or arrangements
providing medical insurance, dental insurance, life insurance, disability
insurance, sick leave, vacation or retirement. Executive shall also be entitled
to (i) the continuation of an automobile allowance in the amount of $750.00 per
month, (ii) use of the Bank provided credit card(s), car telephone(s), pager(s)
and such other perks (if such is (are) being so provided) upon the terms and
conditions previously in effect.

      7. TERMINATION.

         (a) RESIGNATION, RETIREMENT, DEATH OR DISABILITY. Executive's
employment hereunder shall cease at any time by Executive's resignation (other
than a resignation for Good Reason as provided in Section 7(e)), or by
Executive's retirement, death or Disability. Disability shall be deemed to have
occurred only after the following procedure has been satisfied: If within 30
days after a written notice of proposed Termination for Disability is given to
Executive by the Bank, Executive has not returned to the full-time performance
of his duties, the Bank may end Executive's employment by giving written notice
of Termination for Disability. Such notice may be given by the Bank following
Executive's absence from Executive's duties by reason of physical or mental
disability for one hundred and fifty (150) consecutive calendar days.

         (b) TERMINATION FOR CAUSE. Executive's employment shall cease upon a
good faith finding of Cause by the Board; provided, however, that Executive
shall be given written notice of the Board's finding of conduct by Executive
amounting to Cause for such termination. Said notice shall be accompanied by a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of a quorum of the Board at a duly-noticed meeting of the Board,
finding that in the good faith opinion of the Board, Executive was guilty of
conduct amounting to Cause and specifying the particulars thereof; provided,
however, that after a Change in Control, such resolution may be adopted only by
the affirmative vote of not less than a majority of a committee composed of at
least three (3) disinterested outside directors of the Bank. In the absence of
at least three (3) disinterested outside directors, a determination of Cause
shall be submitted to and made by an arbitrator(s) pursuant to Section 13
hereof.


                                       6
<PAGE>

         (c) TERMINATION WITHOUT CAUSE. Executive's employment may be terminated
Without Cause upon 30 days' notice for any reason, subject to the payment of all
amounts required by Section 8 hereof.

         (d) EXPIRATION. Executive's employment shall cease, or shall continue
on an at-will basis as provided in Section 4 hereof, upon the expiration of the
Term of this Agreement as provided in Section 4 hereof.

         (e) RESIGNATION FOR GOOD REASON. Following a Change in Control during
the Term hereof, Executive may, under the following circumstances, regard
Executive's employment as being constructively terminated by the Bank (and in
such case Executive's employment shall terminate) and may, therefore, Resign for
Good Reason within 90 days of Executive's discovery of the occurrence of one or
more of the following events, any of which shall constitute "Good Reason" for
such Resignation for Good Reason:

                  (i)    Without Executive's express written consent, the
         assignment to Executive of any duties materially inconsistent with
         Executive's position, duties, responsibilities and status with the Bank
         immediately prior to the Change in Control, or any subsequent removal
         of Executive from or any failure to re-elect him to any such position;

                  (ii)   Without Executive's express written consent, the
         termination and/or material reduction in Executive's facilities
         (including office space and general location) and staff reporting and
         available to Executive immediately prior to the Change in Control;

                  (iii)  A material reduction (ten percent or greater) by the
         Bank of Executive's base salary or of any bonus compensation applicable
         to him as in effect immediately prior to the Change in Control;

                  (iv)   A failure by the Bank to maintain any of the employee
         benefits and perks to which Executive was entitled immediately prior to
         the Change in Control at a level substantially equal to or greater than
         the value of those employee benefits and perks in effect immediately
         prior to the Change in Control; or the taking of any action by the Bank
         which would materially affect Executive's participation in or reduce
         Executive's benefits under any such benefits' or perks' plans, programs
         or policies, or deprive Executive of any material fringe benefits
         enjoyed by him immediately prior to the Change in Control;

                  (v)    The Bank requiring Executive to be based anywhere other
         than in the county in which the Bank's principal business location is
         currently situated, except


                                       7
<PAGE>

         for required travel on the Bank's behalf to an extent substantially
         consistent with Executive's present business travel obligations;

                  (vi)   Any purported Termination of Executive's employment by
         the Bank other than those effected in good faith pursuant to Sections
         7(a) and 7(b);

                  (vii)  The failure of the Bank to obtain the assumption of
         this Agreement by any successor; or

                  (viii) Receipt by Executive of a Notice of Non-Renewal.

         (f) SUPERVISORY SUSPENSION. If the Executive is suspended and/or
temporarily prohibited from participating in the conduct of the Bank's affairs
by a notice served under Sections 8(e) or (g) of the Federal Deposit Insurance
Act or similar statute, rule or regulation, the Bank's obligations under this
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the Bank
shall, (i) pay the Executive all or part of the compensation withheld while its
obligations under this Agreement were suspended and (ii) reinstate (in whole or
in part) any of its obligations which were suspended.

         (g) REGULATORY REMOVAL. If the Executive is removed and/or permanently
prohibited from participating in the conduct of the Bank's affairs by an order
issued under Sections 8(e) or (g) of the Federal Deposit Insurance Act or
similar statute, rule or regulation, all obligations of the Bank under this
Agreement shall terminate as of the effective date of the order.

      8. PAYMENTS TO EXECUTIVE UPON TERMINATION.

         (a) DEATH, DISABILITY OR RETIREMENT. In the event of Termination of
this Agreement due to Executive's death, Disability or retirement, Executive or
Executive's spouse and/or estate shall be entitled to all benefits generally
available to Bank employees, or their spouses and/or estates, as of the date of
such death, Disability or retirement, without reduction.

         (b) RESIGNATION WITHOUT GOOD REASON OR EXPIRATION. In the event of
Executive's resignation (other than a Resignation for Good Reason), or upon
Expiration, the Bank shall have no further obligations to Executive under this
Agreement or otherwise, except as may be expressly required by law.

         (c) TERMINATION FOR CAUSE. In the event Executive is Terminated for
Cause, the Bank shall have no further obligations to Executive under this
Agreement or otherwise, except as may be expressly required by law.

         (d) TERMINATION WITHOUT CAUSE PRIOR TO A CHANGE IN CONTROL. Upon the
occurrence


                                       8
<PAGE>

of a Termination Without Cause prior to a Change in Control, as damages for
breach of this Agreement, the Bank shall continue to provide Executive his base
salary then in effect, upon such terms and at such times as described herein,
for a period of nine (9) months following such Termination.

         (e) TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON, AFTER A
CHANGE IN CONTROL. If in the twenty-four (24) month period following a Change in
Control, Executive (i) Resigns for Good Reason or (ii) is otherwise Terminated
Without Cause, the Bank shall pay to Executive a lump sum payment equal to
eighteen (18) months base salary then in effect. Such lump sum shall be paid not
later than the tenth (10th) day following the date of Termination Without Cause
or a Resignation for Good Reason.

         (f) SOURCE OF PAYMENTS. All payments provided in Section 8 shall be
paid in cash from the general funds of the Bank, and no special or separate fund
need be established and no other segregation of assets need be made to assure
payment.

         (g) CONSISTENT RETURNS. The Bank and Executive agree that the payments
being made under this Agreement represent reasonable compensation for services
and that neither the Bank nor Executive will file any returns or reports which
take a contrary position.

         (h) REDUCTION OF PAYMENT. Notwithstanding anything in the foregoing to
the contrary, if the payments made to Executive following a Termination Without
Cause or Resignation For Good Reason or any of the other payments provided for
in this Agreement, together with any other payments which Executive has the
right to receive from the Bank would constitute a "parachute payment" (as
defined in Section 280G of the Code), the payments pursuant to this Agreement
shall be reduced to the largest amount as will result in no portion of such
payments being subject to the excise tax imposed by Section 4999 of the Code;
provided, however, that the determination as to whether any reduction in the
payments under this Agreement pursuant to this proviso is necessary shall be
made in good faith by the Bank's independent auditors or if such firm is no
longer providing tax services to Bank to such other tax advisor as shall be
mutually acceptable to Bank and Executive, and such determination shall be
conclusive and binding on the Bank and Executive with respect to the treatment
of the payment for tax reporting purposes.

         (i) SOLE REMEDY. The receipt of the amounts described in this Section
8, and attorneys' fees as set forth in Section 13, if any, shall constitute
Executive's sole remedy for breach of this Agreement against the Bank and its
officers, directors, employees and agents.

      9. UNAUTHORIZED DISCLOSURE. During the period of his employment hereunder
and for a period of two years following the cessation of such employment
(irrespective of the reason therefor), Executive shall not, except as required
by any court, supervisory authority or administrative agency,


                                       9
<PAGE>

without the written consent of the Board or a person authorized thereby,
disclose to any person, other than an employee of the Bank or a person to whom
disclosure is reasonably necessary or appropriate in connection with the
performance by the Executive of his duties as an employee of the Bank, any
confidential information obtained by him while in the employ of the Bank;
provided, however, that confidential information shall not include any
information known generally to the public (other than as a result of an
unauthorized disclosure by the Executive).

      10. AGREEMENT NOT TO COMPETE. To the extent permitted by law, unless
otherwise approved in writing by the Bank, and except for a Termination Without
Cause Prior to a Change in Control, for a period of one (1) year from the date
of his cessation of employment by the Bank, Executive shall not directly or
indirectly enter into or in any manner take part in any business, profession or
endeavor which shall be competitive with the business of the Bank in any city
where the Bank has a full service branch office as an employee, officer, agent,
independent contractor, 10% or more owner of an entity, director or other
business representative; in addition, Executive agrees that for the one (1) year
period described herein, Executive shall not solicit any customer with whom the
Bank has done business during the preceding five years.

      11. WAIVERS NOT TO BE CONTINUED. Any waiver by a party of any breach of
this Agreement by the other party shall not be construed as a continuing waiver
or as a consent to any subsequent breach by the other party.

      12. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested, with postage prepaid, to the following addresses or to such other
address as either party may designate by like notice.

         A.   If to the Bank, to:

              Fallbrook National Bank
              130 West Fallbrook Street
              Fallbrook, California 92028
              Attn: Chairman of the Board

         B.   If to Executive, to:

              Gary M. Youmans
              c/o Fallbrook National Bank
              130 West Fallbrook Street
              Fallbrook, California 92028


                                       10
<PAGE>

and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.

      13. ARBITRATION. Any dispute or controversy arising or in connection with
this Agreement shall, upon written request of one party to the other, be
submitted to and settled exclusively by arbitration in the State of California
and be governed by the California Arbitration Act as set forth in the California
Code of Civil Procedure. Notwithstanding the pendency of any such dispute or
controversy, the Bank shall continue to pay Executive's full compensation in
effect when the notice giving rise to the dispute was given and continue
Executive as a participant in all compensation, employee benefits and executive
benefits in which Executive was participating when the notice giving rise to the
dispute was given, until the dispute is finally resolved, except that no such
continuation of compensation or benefits shall apply if Executive is terminated
for Cause under Section 7(b) hereof. Judgment may be entered on the arbitrator's
award in any court of competent jurisdiction. The cost of such arbitration,
including reasonable attorney's fees, shall be borne by the losing party or in
such proportions as the arbitrator(s) shall decide. Arbitration shall be the
exclusive remedy of Executive and the Company and the award of the arbitrator(s)
shall be final and binding upon the parties. All reasonable costs, including
reasonable attorney's fees, incurred in enforcing an arbitration award in court,
or of seeking a court order to compel arbitration, shall be borne by the losing
party in such proceedings.

      14. GENERAL PROVISIONS.

         (a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
by the parties with respect to the subject matter hereof, and supersedes and
replaces all prior agreements among or between the parties, unless otherwise
provided herein. No amendment, waiver or termination of any of the provisions
hereof shall be effective unless in writing and signed by the party against whom
it is sought to be enforced. Any written amendment, waiver, or termination
hereof executed by the Bank and Executive shall be binding upon them and upon
all other Persons, without the necessity of securing the consent of any other
Person, and no Person shall be deemed to be a third-party beneficiary under this
Agreement.

         (b) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.

         (c) NO WAIVER. Except as otherwise expressly set forth herein, no
failure on the part of any party hereto to exercise and no delay in exercising
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.


                                       11
<PAGE>

         (d) HEADINGS. The headings of the Sections of this Agreement have been
inserted for convenience of reference only and shall in no way restrict or
modify any of the terms or provisions hereof.

         (e) SEVERABILITY. If for any reason any provision of this Agreement is
held invalid or unenforceable, such invalidity or unenforceability shall not
affect the validity or enforceability of any other provision of this Agreement.
If any provision of this Agreement shall be held invalid or unenforceable in
part, such invalidity or unenforceability shall in no way effect the rest of
such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect.

         (f) GOVERNING LAW. This Agreement shall be governed and construed and
the legal relationships of the parties determined in accordance with the laws
the United States and to the extent not inconsistent therewith the laws of the
State of California applicable to contracts executed and to be performed solely
in the State of California.

         (g) ASSUMPTION. The Bank shall require any successor in interest
(whether direct or indirect or as a result of purchase, merger, consolidation,
Change in Control or otherwise) to all or substantially all of the business
and/or assets of the Bank to expressly assume and agree to perform the
obligations under this Agreement in the same manner and to the same extent that
the Bank would be required to perform it if no such succession had taken place.

         (h) ADVICE OF COUNSEL. Executive acknowledges that he has been
encouraged to consult with legal counsel of his choosing concerning the terms of
this Agreement prior to executing this Agreement. Any failure by Executive to
consult with competent counsel prior to executing this Agreement shall not be a
basis for rescinding or otherwise avoiding the binding effect of this Agreement.
The parties acknowledge that they are entering into this Agreement freely and
voluntarily, with full understanding of the terms of this Agreement.
Interpretation of the terms and provisions of this Agreement shall not be
construed for or against either party on the basis of the identity of the party
who drafted the terms or provisions in question.


                                       12
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.

ATTEST:                                 FALLBROOK NATIONAL BANK

/s/ Peter M. Estrada                    By: /s/ Thomas E. Swanson
-------------------------                  -----------------------------
                                        Its:
                                            ----------------------------
                                        print name:
                                                   ---------------------


                                        THE EXECUTIVE

/s/ L. Bruce Mills, Jr.                 /s/ Gary M. Youmans
-------------------------               --------------------------------
Witness                                 Gary M. Youmans




                                       13
<PAGE>

                   EXECUTIVE INCENTIVE COMPENSATION AGREEMENT

Fallbrook National Bank (FNB) and Gary Youmans, as Executive Vice President,
Chief Operating Officer, enter into this Executive Incentive Compensation
Agreement for Gary Youmans, to be effective JANUARY 1, 1998. The Executive
Incentive Compensation Plan is designed to provide financial incentive to Gary
and is not intended as a contract of employment. This document is intended as an
outline of the incentive plan that has been agreed upon by both parties. Any
representations or promises made and not reflected in this plan or in Gary's
employment agreement, effective January 1, 1998, are void. All sections of this
plan are subject to modification but can only be altered in writing by the
President of Fallbrook National Bank.

INCENTIVE COMPENSATION PLAN

A.       CONDITIONS

         Gary will be entitled to receive incentive compensation, payable
         ANNUALLY, according to the following incentive plan:

         I. SBA SALES INCENTIVE:

            YOU WILL BE ELIGIBLE TO RECEIVE 30BP ON TOTAL SBA ASSET SALES
            GAINS LESS SALES INCENTIVES PAID.

            EXAMPLE:   TOTAL ANNUAL ASSET SALES GAINS =          $ 2,300,000
                       (+) OTHER INCOME & FEES                   $    33,200
                       (-) ANNUAL SALES INCENTIVES PAID =       ($   207,000)
                                                               -------------
                       ANNUAL TOTAL =                            $ 2,126,200
                       $2,093,000 X 30 BP (.03) =                $    63,786

         II. MORTGAGE LOANS INCENTIVES:

             YOU WILL BE ELIGIBLE TO RECEIVE 30BP ON TOTAL MORTGAGE INCOME &
             FEES LESS SALES INCENTIVE PAID.

             EXAMPLE:  TOTAL ANNUAL INCOME & FEES =          $888,000
                       (-) SALES INCENTIVES PAID =          ($285,000)
                                                             --------
                       ANNUAL TOTAL =                        $603,000
                       $603,000 X 30 BP (.03) =              $ 18,090

                  TOTAL ANNUAL INCENTIVE = $63,786 + $18,090 = $ 81,876

PARTICIPATION IN THE ABOVE INCENTIVE EXEMPTS GARY FROM THE BANK'S SENIOR
MANAGEMENT BONUS PROGRAM.

Notwithstanding any of the above, no Bonuses shall vest until the date the Bonus
is paid.

Any and all compensation paid to Gary is subject to normal payroll deductions
and are payable through normal payroll cycles. To be eligible for any bonus
compensation, you must be employed by the Bank at the time the bonus is to be
paid. Any bonus awarded will be paid in full and no prorated portion of any
bonus will be awarded. The goal associated with each bonus must be achieved and
approved by the PRESIDENT prior to any bonus award.

Notwithstanding any timeframes specified above, nothing in this Executive
Incentive Compensation Agreement modifies the rights of either Gary or FNB to
terminate employment at any time, for any reason.

<PAGE>

This constitutes our entire agreement as to the matters addressed in this
Executive Incentive Compensation Agreement. It fully supersedes any other
promises, representations or understandings, and it cannot be modified except in
writing signed as below. In the event that any provision of this plan or any
part hereof is found invalid, the remainder of this plan will be binding upon
the parties and will be construed as if the invalid provision or part thereof
had been deleted from this plan.

/s/ Gary Youmans                             9-8-98
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Gary Youmans                                  Date


/s/ Thomas Swanson                           9-9-98
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Thomas Swanson, President                     Date