<PAGE>   1
                             HALLMARK CAPITAL CORP.

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is effective as of ______________________ the
"Commencement Date") between Hallmark Capital Corp., its successors and assigns,
a Wisconsin corporation, (hereinafter referred to as the "Company"), having its
principal offices located at 5555 North Port Washington Road, Glendale,
Wisconsin 53217, and James D. Smessaert (the "Executive").

                                    RECITALS

     WHEREAS, Executive is a key employee, whose extensive background, knowledge
and experience in the financial services industry has substantially benefited
both West Allis Savings Bank (the "Bank") and the Company and whose continued
employment by the Company in the capacities of President, Chief Executive
Officer and Chairman of the Board ("Corporate Position") will benefit the
Company in the future; and

     WHEREAS, the parties are mutually desirous of entering into this Agreement
setting forth the terms and conditions for the employment relationship between
the Company and Executive; and

     WHEREAS, the Company's Board of Directors has approved and authorized its
entry into this Agreement with Executive.

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below:

     1. Employment. The Company shall employ Executive, and Executive shall
serve the Company, on the terms and conditions set forth in this Agreement.

     2. Term of Employment. The period of Executive's employment under this
Agreement shall coincide with his period of employment by the Bank under the
West Allis Savings Bank Employment Agreement (the "Bank Agreement") entered into
between the Bank and Executive and bearing even date herewith. The term of
employment as in effect from time to time hereunder shall be referred to as the
"Employment Term".

     3. Position and Duties. Executive shall serve the Company in his Corporate
Position as its President and Chief Executive Officer. As such, Executive shall
report directly to the Company's Board of Directors, be nominated as a
management candidate for election to the Board of Directors upon expiration of
each term thereon while this Agreement remains in effect, and be generally
responsible for selection and supervision of the Company's management team and
for the formulation of Company business and personnel policies, and shall render
executive, policy-making and other management services of the type customarily
performed by persons serving in similar capacities at other bank and savings
bank holding companies, together with such other duties and responsibilities as
may be appropriate to



<PAGE>   2
Executive's position and as may be from time to time determined by the Bank's
Board of Directors to be necessary to its operations and in accordance with its
bylaws.

     4. Compensation. As compensation for services provided pursuant to this
Agreement, Executive shall receive from the Company the compensation and
benefits set forth below:

          (i) Base Salary. During the Employment Term, Executive shall receive a
     base salary payable by the Bank ("Base Salary") in such amount as may from
     time to time be approved by the Board of Directors of the Bank; provided,
     however, that the Company and Executive agree that (i) a portion of the
     amount received by Executive from the Bank will be allocable to time and
     effort of the Executive spent on behalf of the Company pursuant to this
     Agreement, and (ii) that the Company may reimburse the Bank in an amount
     jointly determined by the Boards of Directors of the Company and Bank to
     reflect such allocable portion. No increase in Base Salary paid by the Bank
     (or the amount thereof reimbursed by the Company) or other compensation
     granted by the Company or Bank shall in any way limit or reduce any other
     obligation of the Company under this Agreement. Executive's Base Salary and
     other compensation shall be paid in accordance with the Bank's regular
     payroll practices, as then in effect.

          (ii) Bonus Payments. In addition to Base Salary, Executive shall be
     entitled, during the Employment Term, to participate in and receive
     payments from all bonus and other incentive compensation plans (as
     currently in effect, as modified from time to time, or as subsequently
     adopted) of the Company; provided, however, that nothing contained herein
     shall grant Executive the right to continue in any bonus or other incentive
     compensation plan following its discontinuance by the Board (except to the
     extent Executive had earned or otherwise accumulated vested rights therein
     prior to such discontinuance).

          (iii) Other Benefits. During the Employment Term, the Company shall
     provide to Executive all other benefits of employment (or, with Executive's
     consent, equivalent benefits) generally made available to other Executive
     Officers of the Company. In addition, Executive shall participate in any
     stock purchase, stock option or stock appreciation rights, plans, or any
     other stock based program of any type, made available by the Company to its
     Executive Officers.

          Executive shall be entitled to the same vacation, sick time, personal
     days and other perquisites in the same manner and to the same extent as
     such benefits are available under the Bank Agreement; provided that this
     Agreement is intended to allow Executive to utilize the perquisites as
     provided pursuant to the Bank Agreement and not to create additional
     perquisites hereunder.

          Nothing contained herein shall be construed as granting Executive the
     right to continue in any benefit plan or program, or to receive any other
     perquisite of employment provided under this paragraph 4(iii) (except to
     the extent Executive had previously earned or accumulated vested rights
     therein) following termination or discontinuance of such plan, program or
     perquisite by the Board.

                                      -2-


<PAGE>   3


     5. Termination. This Agreement shall terminate upon the effective date of
termination of the Bank Agreement.

     Upon termination of this Agreement simultaneous with termination of the
Bank Agreement, Executive shall be entitled to the receipt of
termination/severance benefits from the Bank as determined under all applicable
provisions of the Bank Agreement ("Severance Benefits"). The Bank shall be
primarily responsible for the payment of Severance Benefits; provided, however,
that the Company may reimburse the Bank for a portion of the cost of Executive's
Severance Benefits in any amount jointly determined by the Boards of Directors
of the Company and Bank to correspond to the allocation of Executive's time and
effort between Bank and Company matters during the 12-month period preceding
termination of the Bank Agreement. Notwithstanding the foregoing, if the
application of Section 6 of the Bank Agreement results in Unpaid Severance as
defined therein, the Company shall be responsible for payment to Executive of
the entire amount of the Unpaid Severance and shall also pay to Executive an
additional amount (the "Reimbursement Payment") such that the net amount
retained by Executive after deduction of (i) any tax imposed by Section 4999 of
the Internal Revenue Code (the "Excise Tax") and any interest charges or
penalties in respect to the imposition of such Excise Tax (but not any federal,
state or local income tax) on the Total Payments (which shall include the
Termination Benefits and the Unpaid Severance, together with any other payments
or benefits paid by the Bank or Company, including but not limited to any amount
or value attributable to the vesting of stock options upon Executive's
termination to which said Excise Tax applies by reason of Section 280G of the
Code), and (ii) any federal, state and local income tax and Excise Tax upon the
payment pursuant to Section 5(i) above, so that the total received by Executive
after deduction of said Excise Taxes shall be equal to the total of the
Severance Benefits actually paid by the Bank plus the Unpaid Severance. For
purposes of determining the amount of Reimbursement Payment, Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Reimbursement Payment is to be
made and state and local income taxes at the highest marginal rate of taxation
in the state and locality of Executive's domicile for income tax purposes on the
date the Reimbursement Payment is made, net of the maximum reduction of federal
income taxes that could be obtained from deduction of such state and local
taxes.

     6. General Provisions.

          (i) Successors; Binding Agreement.

          (A)  The Company will require any successor (whether direct or
               indirect, by purchase, merger, consolidation or otherwise) to all
               or substantially all of the business and/or assets of the Company
               ("successor organization") to expressly assume and agree to
               perform this Agreement in the same manner and to the same extent
               that the Company would have been required to perform if no such
               succession had taken place. If such succession is the result of a
               "change in control" as defined herein, such assumption shall
               specifically preserve to Executive, for the greater of twelve
               (12) months or the then remaining term under the Bank Agreement,
               the same rights and remedies (recognizing them as being available
               and

                                      -3-

<PAGE>   4
               applicable as the result of the "change in control" effectuating
               said succession) provided under this Agreement upon a "change in
               control".

                    As used in this Agreement "Company" shall mean the Company
               as hereinbefore defined and any successor to its business and/or
               assets as aforesaid which executes and delivers the agreement
               provided for in this Section 6 or which otherwise becomes bound
               by the terms and provisions of this Agreement by operation of
               this Agreement or law. Failure of the Company to obtain such
               agreement prior to the effectiveness of any such succession shall
               be a breach of this Agreement and shall entitle Executive as his
               exclusive remedy to compensation from the Company in the same
               amount and on the same terms as he would be entitled to pursuant
               to this Agreement under Section 5. For purposes of implementing
               the foregoing, the date on which any such succession becomes
               effective shall be deemed the Termination Date.

          (B)  No right or interest to or in any payments or benefits under this
               agreement shall be assignable or transferable in any respect by
               the Executive, nor shall any such payment, right or interest be
               subject to seizure, attachment or creditor's process for payment
               of any debts, judgments, or obligations of Executive.

          (C)  This Agreement shall be binding upon and inure to the benefit of
               and be enforceable by Executive and his heirs, beneficiaries and
               personal representatives and the Company and any successor
               organization.

          (ii) Noncompetition Provision. Executive acknowledges that the
     development of personal contacts and relationships is an essential element
     in the financial services industry, that the Company has invested
     considerable time and money in his development of such contacts and
     relationships, that the Company could suffer irreparable harm if he were to
     leave employment and solicit the business of Company customers, and that it
     is reasonable to protect the Company against competitive activities by
     Executive. Executive covenants and agrees, in recognition of the foregoing
     and in consideration of the mutual promises contained herein, that in the
     event of a voluntary termination of employment by Executive pursuant to
     Section 5(iii) of the Bank Agreement, or upon expiration of this Agreement
     as a result of Executive's election (but not as the result of an election
     by the Company) not to continue automatic annual renewals, Executive shall
     not accept employment with any Significant Competitor of the Bank or
     Company for a period of twelve (12) months following such termination. For
     purposes of this Agreement, the term Significant Competitor means any
     financial institution including, but not limited to, any commercial bank,
     savings bank, savings and loan association, credit union, or mortgage
     banking corporation which, at the time of termination of this Agreement, or
     during the period of this covenant not to compete, has a home, branch or
     other office in any county in which the Bank or Company has an office or
     which has, during the twelve (12) months preceding Executive's termination,
     originated, or which during the period of this covenant not to compete
     originates, more than $500,000 in commercial or mortgage loans secured by
     real property in any such county.


                                      -4-
<PAGE>   5

          Executive agrees that the non-competition provisions set forth herein
     are necessary for the protection of the Bank and Company and are reasonably
     limited as to (i) the scope of activities affected, (ii) their duration and
     geographic scope, and (iii) their effect on Executive and the public. In
     the event Executive violates the non-competition provisions set forth
     herein, Bank shall be entitled, in addition to its other legal remedies, to
     enjoin the employment of Executive with any Significant Competitor for the
     period set forth herein. If Executive violates this covenant and the
     Company brings legal action for injunctive or other relief, the Company
     shall not, as a result of the time involved in obtaining such relief, be
     deprived of the benefit of the full period of the restrictive covenant.
     Accordingly, the covenant shall be deemed to have the duration specified
     herein, computed from the date such relief is granted, but reduced by any
     period between commencement of the period and the date of the first
     violation. In addition to such other relief as may be awarded, if the
     Company is the prevailing party it shall be entitled to reimbursement for
     all reasonable costs, including attorneys' fees, incurred in enforcing its
     rights hereunder.

          (iii) Notice. For purposes of this Agreement, notices and all other
     communications provided for in the Agreement shall be in writing and shall
     be deemed to have been duly given when delivered or mailed by the Company,
     United States registered mail, return receipt requested, postage prepaid,
     addressed as follows:

                           If to the Company:
                           Hallmark Capital Corporation
                           5555 North Port Washington Road
                           Glendale, WI 53217

         or if to Executive, at the address set forth below:

                           Mr. James D. Smessaert
                           N19 W28985 Golf Ridge North
                           Pewaukee, WI 53072

     or to such other address as either party may have furnished to the other in
     writing in accordance herewith, except that notice of change of address
     shall be effective only upon receipt.

          (iv) Expenses. If any legal proceeding is necessary to enforce or
     interpret the terms of this Agreement, or to recover damages for breach of
     it, the prevailing party shall be entitled to recover from the other party
     reasonable attorneys' fees and necessary costs and disbursements incurred
     in such litigation, in addition to any other relief to which such
     prevailing party may be entitled.

          Notwithstanding the foregoing, in the event of a legal proceeding to
     enforce or interpret the terms of this Agreement following a change in
     control, or a reexecution of this Agreement pursuant to section 6(i),
     Executive shall be entitled to recover from the Company (A) reasonable
     attorney's fees and necessary costs and disbursements incurred in such
     litigation if Executive is the prevailing party, or (B) reasonable
     attorneys fees and necessary costs and disbursements of up to $7,500
     incurred in such litigation if Executive is not the prevailing party.
     Recovery of attorneys fees and costs as provided herein

                                      -5-
<PAGE>   6

     following a change in control or reexecution shall be in addition to any
     other relief to which Executive may be entitled.

          (v) Withholding. The Company shall be entitled to withhold from
     amounts to be paid to Executive under this Agreement any federal, state, or
     local withholding or other taxes of charges which it is from time to time
     required to withhold. The Company shall be entitled to rely on an opinion
     of counsel if any question as to the amount or requirement of any such
     withholding shall arise.

          (vi) Miscellaneous. No provision of this Agreement may be amended,
     waived or discharged unless such amendment, waiver of discharge is agreed
     to in writing and signed by Executive and such Company officer as may be
     specifically designated by the Board. No waiver by either party hereto at
     any time of any breach by the other party hereto of, or compliance with,
     any condition or provision of this Agreement to be performed by such other
     party shall be deemed a waiver of similar or dissimilar provisions or
     conditions at the same or at any prior or subsequent time. No agreements or
     representations, oral or otherwise, express or implied, with respect to the
     subject matter hereof have been made by either party which are not
     expressly set forth in this Agreement. The validity, interpretation,
     construction and performance of this Agreement shall be governed by the
     laws of the State of Wisconsin.

          (vii) Validity. The invalidity or unenforceability of any provision of
     this Agreement shall not affect the validity or enforceability of any other
     provision of this Agreement, which shall remain in full force and effect.

          (viii) Counterparts. This Agreement may be executed in several
     counterparts, each of which together will constitute one and the same
     instrument.

          (ix) Headings. Headings contained in this Agreement are for reference
     only and shall not affect the meaning or interpretation of any provision of
     this Agreement.

          (x) Effective Date. The effective date of this Agreement shall be the
     date indicated in the first section of this Agreement, notwithstanding the
     actual date of execution by any party.

     IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the date first above written.

Hallmark Capital Corp.                               Executive:

By ___________________________                       _________________________
Title __________________________

Witness

By ____________________________
Title ___________________________


                                      -6-