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                                                                  EXHIBIT 10.7


                                 AMENDMENT NO. 3
                                       TO
                     EXECUTIVE SALARY CONTINUATION AGREEMENT


This Amendment No. 3 to the Executive Salary Continuation Agreement ("Amended
Agreement") is made and entered into as of this 26th day of May, 1999 by and
between The Bank of Hemet, a California banking corporation (the "Employer") and
James B. Jaqua, an individual residing in the State of California (hereinafter
referred to as "Executive").

                            RECITALS AND UNDERTAKINGS

A.      WHEREAS, the Executive is an employee of the Employer and is serving as
        its President and Chief Executive Officer;

B.      WHEREAS, the Executive's experience and knowledge of the affairs of the
        Employer and the banking industry are extensive and valuable;

C.      WHEREAS, the Employer has provided Executive with certain salary
        continuation benefits as set forth in the Salary Continuation Agreement
        ("Agreement") between Employer and Executive dated March 22, 1995; as
        amended on July 16, 1998 and July 29, 1998; and

D.      WHEREAS, Employer and Executive desire to adopt a specific payment
        amount for the proposed acquisition of Employer by Pacific Community
        Banking Group.

NOW, THEREFORE, the parties hereto agree to amend the Agreement as follows:

1.      Section 5.2 is amended and shall read in the entirety as follows:

        5.2    TERMINATION IN A SALE OF BUSINESS. In the event there is a Sale
               of Business, the Executive shall be entitled to be paid in a lump
               sum the present value (using the annual discount rate equal to
               the annual interest rate of a ten year treasury bond) of the
               Annual Benefit for a period of fifteen (15) years with the
               Applicable Percentage being 100% to be paid on the first day of
               each month, beginning with the month following the month in which
               the Executive for any reason terminates employment with Employer
               or a successor of Employer after a Sale of Business.

               The annual interest rate of a ten year treasury bond will be the
               yield on the 10 Year Treasury Note as shown in the "Morning
               Economic Notes" provided daily to Employer by Paine Webber on the
               date of the Sale of Business. In the event this source is no
               longer available on the date of the Sale of Business, then the
               source of the rate will be selected by mutual agreement of the
               Employer and Executive.

               The payment of the lump sum will be made to the Executive by the
               Employer via wire transfer to the Executive's choice of bank
               account as

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               soon as practicable after the earlier of a) the Sale of Business
               (assuming the Executive's termination date has been contractually
               or officially established by the Employer), or b) the effective
               date of the Executive's termination by Employer or a successor of
               Employer after a Sale of Business.

               Notwithstanding the calculation provided for in the foregoing
               paragraphs of this Section 5.2, in the event the Bank is acquired
               by Pacific Community Banking Group the amount of the lump sum
               payment required by this Section 5.2 shall be $484,000.

2.      Except as amended hereby, the provisions of the Agreement remain in full
        force and effect and the enforceability thereof is not affected by this
        Amended Agreement.

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

                                    THE BANK OF HEMET


By: /s/ John J. McDonough, Chairman
    -------------------------------

                                    JAMES B. JAQUA


By: /s/ James B. Jaqua, President and Chief Executive Officer
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