<PAGE>


                                   AGREEMENT


    This AGREEMENT is entered into this 12th day of March, 1997, by and 
between BANK OF SANTA MARIA, a California corporation (hereinafter referred 
to as the "Bank"), BSM BANCORP, a California corporation (hereinafter 
referred to as the "Company") and SUSAN FORGNONE (hereinafter referred to as 
the "Executive").

                                   RECITALS

    WHEREAS, Executive has been an Executive Officer of the Bank since 1994 
and an Executive Officer of the Company since 1996;

    WHEREAS, the Bank desires to continue to avail itself of the skill, 
knowledge and experience of Executive in order to ensure the successful 
operation of the Bank and the Company without distraction should the Bank 
and/or the Company be sold, be merged out of existence, or otherwise be 
acquired by another financial institution, individuals or others, and 
Executive is terminated, or Executive's employment with the Bank and/or the 
Company is adversely affected; and 

    WHEREAS, to induce Executive to remain in the employ of the Bank and the 
Company, and to continue as an Executive Officer of the Bank and the Company, 
the Bank and the Company are willing to provide benefits to Executive in the 
event his or her employment is terminated or adversely affected after such a 
change of control;

    NOW, THEREFORE, in consideration of the mutual covenants and conditions 
hereinafter set forth, the parties hereto covenant and agree as follows:


                                      0
<PAGE>

A.  TERM OF AGREEMENT.

    This Agreement shall terminate upon the first to occur of (i) the 
termination of Executive's employment with Bank and/or the Company for cause, 
disability or voluntarily by Executive, and shall have occurred between the 
date of this Agreement and March 12, 2002 (the "Term of this Agreement"), or 
(ii) the termination of, or adverse effect on, Executive's employment with 
Bank and/or the Company within twelve (12) months following a change of 
control of the Company and/or the Bank, when the benefits provided for in 
Paragraph E have been conferred and paid, or (iii) March 12, 2002.

B.  EFFECT ON EMPLOYMENT

    This Agreement is not intended to alter or otherwise change the current 
employment relationship between Executive and the Bank and/or the Company 
except as described in the following Paragraphs, and Executive further 
acknowledges his employment at-will status with the Bank and the Company as 
described under the Bank's Personnel Policy.

C.  CHANGE OF CONTROL

    No benefits shall be payable hereunder unless there shall have been a 
Change of Control of the Bank and/or the Company and Executive's employment 
with the Bank shall thereafter have been terminated in the manner set forth 
in Paragraph D below, or Executive terminates employment for any of the 
reasons set forth in paragraph D.3. below following such change of control.  
For purposes of this Agreement, a "Change of Control" of the Bank and/or the 
Company shall mean:  (i) a merger with any Person (as defined below), where 
the Bank and/or the Company is not the surviving corporation; (ii) a 
consolidation with any Person, where the Bank and/or the Company is not the 
surviving corporation; (iii) a transfer to any Person of all or substantially 
all of the assets of the Bank and/or the Company; or (iv) an acquisition by 
any Person of beneficial ownership of an aggregate of more than 25% of the 
issued and outstanding shares of common stock of the Bank and/or the Company, 
whether or not such Person or Persons are current shareholders of the Bank 
and/or the Company at the time of such acquisition, coupled with or followed 
by the election as directors of the Bank and/or the Company of persons who 
were not directors at the time of such acquisition if such 


                                      1
<PAGE>

persons shall become a majority of the Board of Directors of the Bank and/or 
the Company.  As used in this Agreement, the term "Person" shall include any 
financial institution, corporation, individual, partnership or association, 
and any group formed for the purpose of acquiring, holding or disposing of 
the common stock of the Bank and/or the Company, and the term "beneficial 
ownership" shall have the same meaning as under Rule 13d-3 of the Securities 
and Exchange Commission promulgated under the Securities Exchange Act of 
1934, as amended.

D.  TERMINATION FOLLOWING CHANGE OF CONTROL

    If (i) a Change of Control shall have occurred, and if Executive's 
employment with the Bank and/or the Company is terminated within twelve (12) 
months after such Change of Control, or Executive terminates employment with 
the Bank and/or the Company pursuant to Paragraph D.3. below, and unless such 
termination is (a) because of his death, (b) for Cause or Disability (both as 
defined below) or (c) by Executive other than for Good Reason (as defined 
below), he shall be entitled to the benefits provided in Paragraph E.2. 
below. 

   1.    DISABILITY.  If, as a result of Executive's incapacity due to 
physical or mental illness, he shall have been absent from or unable to 
perform his duties with the Bank and/or the Company for a period of three 
consecutive months, and if within 30 days after written notice of termination 
is given (which notice may not be given prior to the expiration of the 
three-month period) he shall not have recommenced the full-time performance 
of his duties, the Bank and/or the Company may terminate his employment for 
"Disability."

    2.   CAUSE.  Termination of Executive's employment for "Cause" shall mean 
termination by the Bank and/or the Company for cause as defined in its 
Personnel Policy or by a regulatory authority for any reason within its 
purview.

    3.   GOOD REASON.  Termination by Executive of his employment for "Good 
Reason" shall mean termination by him after any of the following events 
occurs without his express written consent:

         (i)   a reduction in Executive's annual salary or benefits;


                                      2
<PAGE>

         (ii)  an adverse change in Executive's duties whereby he is 
performing duties of a higher level employee than the duties being performed 
by Executive at the time of the Change of Control;

         (iii) Executive is required to work more than fifty (50) miles from 
the Bank's Santa Maria Way office;

         (iv)  Executive is transferred to a department or division and is 
required to perform duties that Executive is not familiar or knowledgeable.

    4.   NOTICE OF TERMINATION.  Any purported termination by the Bank and/or 
the Company, or by Executive, for Good Reason shall be communicated by 
written "Notice of Termination" to the other party hereto.  A Notice of 
Termination shall mean a notice which indicates the specific termination 
provision in this Agreement relied upon and sets forth in reasonable detail 
the facts and circumstances claimed to  provide a basis for termination of 
Executive's employment under the provision so indicated.

    5.   DATE OF TERMINATION.  The "Date of Termination" shall mean (i) if 
Executive's employment is terminated by death, the date of death, (ii) if 
Executive's employment is terminated for Disability, 30 days after Notice of 
Termination is given (provided that Executive shall not have recommenced the 
full-time performance of his duties during such 30-day period), (iii) if 
Executive's employment is terminated pursuant to subparagraph 2 or 3 above, 
the date specified in the Notice of Termination, which shall be not less than 
30 days after the date such Notice of Termination is given, and (iv) if 
Executive voluntarily terminates employment pursuant to Paragraph D.6., the 
date specified in the Notice of Termination, which shall be not less than 60 
days after the Notice of Termination is given.

    6.   VOLUNTARY OR INVOLUNTARY TERMINATION.  If Executive should 
voluntarily or involuntarily terminate employment with the Bank and/or the 
Company prior to March 12, 2002, Executive shall not (i) solicit or employ 
any of the Bank's employees, or employees formerly employed by the Bank or 
the Company for a one hundred eighty (180) day period prior to Executive's 
voluntary termination, nor (ii) remove, transfer or otherwise take any loan 
or other file at the Bank or the Company during the time from the Notice of 
Termination to the effective date of the voluntary termination.  

E.  BENEFITS UPON TERMINATION


                                      3
<PAGE>

    1.   REGULAR COMPENSATION.  If Executive's employment shall be terminated 
by the Bank and/or the Company for Disability or for Cause, or because of his 
death, or by a regulatory authority or by Executive other than for Good 
Reason, within twelve (12) months after a Change of Control, or by the 
Executive for Good Reason, the Bank and/or the Company shall pay him the full 
accrued base salary and accrued incentive bonus through the Date of 
Termination, less withholding required by law, at the rate in effect at the 
time Notice of Termination is given or death occurs and the Bank and/or the 
Company shall have no further obligation to him under this Agreement.

    2.   SEVERANCE BENEFITS.  If Executive's employment shall be terminated 
by the Bank and/or the Company other than for Disability, Cause or his death, 
or by Executive for Good Reason within twelve (12) months of a Change of 
Control, Executive shall be entitled to receive an amount equal to 
Executive's base salary paid by the Bank and/or the Company to Executive for 
the previous eighteen (18) months.  Such amount shall be payable to Executive 
in eighteen (18) equal monthly installments commencing the first of the month 
following the Date of Termination or in a lump sum, as determined in the sole 
discretion of Executive, less withholding as required by law.   In addition, 
the Bank and/or the Company shall continue payment of all of Executive's 
benefits in effect on the date of Executive's termination including health 
and other medical benefits for a period of eighteen (18) months from the Date 
of Termination.  Payment of the foregoing amounts shall discharge the Bank 
and the Company from any further obligation and liability to Executive under 
this Agreement.

         Notwithstanding the foregoing, in the event that any payment or 
benefit received or to be received by Executive in connection with the 
termination of employment pursuant to the terms of this Agreement would not 
be deductible (in whole or in part) by the Bank and/or the Company as a 
result of Section 280G of the Internal Revenue Code of 1986, as amended (the 
"Code"), the amount of the payment shall be reduced until no portion is not 
deductible as a result of Section 280G of the Code.

F.  GENERAL PROVISIONS

    1.   RETURN OF DOCUMENTS.  Executive expressly agrees that all manuals, 
documents, files, reports, studies, instruments or other materials used 
and/or developed by Executive related to banking or of a banking nature 
during the term of his 


                                      4
<PAGE>

employment are solely the property of the Bank and/or the Company, and that 
Executive has no right, title or interest therein.  Upon termination of 
Executive's employment, Executive shall promptly deliver possession of all of 
said property to the Bank and/or the Company in good condition.

    2.   NOTICES.  Any notice, request, demand or other communication 
required or permitted hereunder shall be in writing and shall be deemed to be 
properly given when personally served or forty-eight hours after deposit in 
the United States mail, postage prepaid, in each case addressed to the Bank 
and/or the Company as its head office location or to Executive at his last 
residence address on the Bank or the Company's records.  Either party may 
change its address by written notice in accordance with this subparagraph.

    3.   BINDING EFFECT; SUCCESSORS.  Except to the extent otherwise provided 
herein, this Agreement shall inure to the benefit of and be binding upon the 
parties hereto and their respective executors, administrators, successors and 
assigns.  The Bank and/or the Company will require any successor to all or 
substantially all of its assets (other than by way of merger) to expressly 
assume and agree to perform this Agreement in the same manner and to the same 
extent that the Bank and/or the Company would be required to perform it if no 
such succession had taken place.  Failure of the Bank and/or the Company to 
obtain such assumption and agreement prior to the effectiveness of any such 
succession shall entitle Executive to the benefits from the Bank and/or the 
Company in the same amount and on the same terms as he would be entitled to 
hereunder if he terminated his employment for Good Reason, except that for 
purposes of implementing the foregoing, the date on which any such succession 
becomes effective shall be deemed the Date of Termination.  

    4.   APPLICABLE LAW.  Except to the extent governed by the laws of the 
United States, this Agreement is to be governed by and construed under the 
laws of the State of California.

    5.   CAPTIONS AND PARAGRAPH HEADINGS.  Captions and paragraph headings 
used herein are for convenience only and are not part of this Agreement and 
shall not be used in construing it.


                                      5
<PAGE>

    6.   SEVERABILITY.  Should any provision of this Agreement for any reason 
be declared invalid, void or unenforceable by a court of competent 
jurisdiction, the validly and binding effect of any remaining portion shall 
not be affected, and the remaining portions of this Agreement shall remain in 
full force and effect as if this Agreement had been executed with said 
provision eliminated.

    7.   ENTIRE AGREEMENT.  This Agreement contains the entire agreement of 
the parties relating to termination of employment after a Change of Control 
as provided herein.  It supersedes any and all other agreements, either oral 
or in writing, between the parties hereto with respect to such subject 
matter, and does not otherwise modify, alter or change the employment 
relationship of Executive with the Bank and/or the Company.  Each party to 
this Agreement acknowledges that no representations, inducements, promises or 
agreements, oral or otherwise, have been made by any party, or anyone acting 
on behalf of any party, which are not embodied herein, and that no other 
agreement, statement or promise not contained in this Agreement concerning 
its subject matter shall be valid or binding.

    8.   MODIFICATION; WAIVER.  No provision of this Agreement may be 
modified, waived or discharged unless such modification, waiver or discharge 
is agreed to in writing and signed by Executive and such officer of the Bank 
and/or the Company as may be specifically designated or authorized by the 
Board of Directors or by the Chief Executive Officer.  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.

    9.   ARBITRATION.  In the event that any dispute shall arise between the 
parties concerning the provisions of this Agreement or the performance of any 
part of their obligations hereunder, or in the event of an alleged breach of 
this Agreement by either of the parties hereto, and the parties are unable to 
mutually adjust and settle same, such dispute or disputes shall be submitted 
to binding arbitration pursuant to the applicable rules of the American 
Arbitration Association, and the decision and determination of the 
arbitrators shall be final and conclusive.


                                      6
<PAGE>

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

                                       BANK OF SANTA MARIA

    By:
       ----------------------------------------
                                            A.J. Diani, Chairman of the Board


    By:
       ----------------------------------------
                                            William L. Snelling, Secretary


                                       BSM BANCORP

    By:
       ----------------------------------------
                                            A.J. Diani, Chairman of the Board


    By:
       ----------------------------------------
                                            William L. Snelling, Secretary


                                       EXECUTIVE


    -------------------------------------------
                                       Susan Forgnone


                                      7


<PAGE>

                                  AGREEMENT


    This AGREEMENT is entered into this 12th day of March, 1997, by and 
between BANK OF SANTA MARIA, a California corporation (hereinafter referred 
to as the "Bank"), BSM BANCORP, a California corporation (hereinafter 
referred to as the "Company") and F. DEAN FLETCHER (hereinafter referred to 
as the "Executive").

                                   RECITALS

    WHEREAS, Executive has been an Executive Officer of the Bank since 1991 
and an Executive Officer of the Company since 1996;

    WHEREAS, the Bank desires to continue to avail itself of the skill, 
knowledge and experience of Executive in order to ensure the successful 
operation of the Bank and the Company without distraction should the Bank 
and/or the Company be sold, be merged out of existence, or otherwise be 
acquired by another financial institution, individuals or others, and 
Executive is terminated, or Executive's employment with the Bank and/or the 
Company is adversely affected; and 

    WHEREAS, to induce Executive to remain in the employ of the Bank and the 
Company, and to continue as an Executive Officer of the Bank and the Company, 
the Bank and the Company are willing to provide benefits to Executive in the 
event his or her employment is terminated or adversely affected after such a 
change of control;

    NOW, THEREFORE, in consideration of the mutual covenants and conditions 
hereinafter set forth, the parties hereto covenant and agree as follows:


                                      0
<PAGE>

A.  TERM OF AGREEMENT.

    This Agreement shall terminate upon the first to occur of (i) the 
termination of Executive's employment with Bank and/or the Company for cause, 
disability or voluntarily by Executive, and shall have occurred between the 
date of this Agreement and March 12, 2002 (the "Term of this Agreement"), or 
(ii) the termination of, or adverse effect on, Executive's employment with 
Bank and/or the Company within twelve (12) months following a change of 
control of the Company and/or the Bank, when the benefits provided for in 
Paragraph E have been conferred and paid, or (iii) March 12, 2002.

B.  EFFECT ON EMPLOYMENT

    This Agreement is not intended to alter or otherwise change the current 
employment relationship between Executive and the Bank and/or the Company 
except as described in the following Paragraphs, and Executive further 
acknowledges his employment at-will status with the Bank and the Company as 
described under the Bank's Personnel Policy.

C.  CHANGE OF CONTROL

    No benefits shall be payable hereunder unless there shall have been a 
Change of Control of the Bank and/or the Company and Executive's employment 
with the Bank shall thereafter have been terminated in the manner set forth 
in Paragraph D below, or Executive terminates employment for any of the 
reasons set forth in paragraph D.3. below following such change of control.  
For purposes of this Agreement, a "Change of Control" of the Bank and/or the 
Company shall mean:  (i) a merger with any Person (as defined below), where 
the Bank and/or the Company is not the surviving corporation; (ii) a 
consolidation with any Person, where the Bank and/or the Company is not the 
surviving corporation; (iii) a transfer to any Person of all or substantially 
all of the assets of the Bank and/or the Company; or (iv) an acquisition by 
any Person of beneficial ownership of an aggregate of more than 25% of the 
issued and outstanding shares of common stock of the Bank and/or the Company, 
whether or not such Person or Persons are current shareholders of the Bank 
and/or the Company at the time of such acquisition, coupled with or followed 
by the election as directors of the Bank and/or the Company of persons who 
were not directors at the time of such acquisition if such 


                                      1
<PAGE>

persons shall become a majority of the Board of Directors of the Bank and/or 
the Company.  As used in this Agreement, the term "Person" shall include any 
financial institution, corporation, individual, partnership or association, 
and any group formed for the purpose of acquiring, holding or disposing of 
the common stock of the Bank and/or the Company, and the term "beneficial 
ownership" shall have the same meaning as under Rule 13d-3 of the Securities 
and Exchange Commission promulgated under the Securities Exchange Act of 
1934, as amended.

D.  TERMINATION FOLLOWING CHANGE OF CONTROL

    If (i) a Change of Control shall have occurred, and if Executive's 
employment with the Bank and/or the Company is terminated within twelve (12) 
months after such Change of Control, or Executive terminates employment with 
the Bank and/or the Company pursuant to Paragraph D.3. below, and unless such 
termination is (a) because of his death, (b) for Cause or Disability (both as 
defined below) or (c) by Executive other than for Good Reason (as defined 
below), he shall be entitled to the benefits provided in Paragraph E.2. 
below. 

    1.   DISABILITY.  If, as a result of Executive's incapacity due to 
physical or mental illness, he shall have been absent from or unable to 
perform his duties with the Bank and/or the Company for a period of three 
consecutive months, and if within 30 days after written notice of termination 
is given (which notice may not be given prior to the expiration of the 
three-month period) he shall not have recommenced the full-time performance 
of his duties, the Bank and/or the Company may terminate his employment for 
"Disability."

    2.   CAUSE.  Termination of Executive's employment for "Cause" shall mean 
termination by the Bank and/or the Company for cause as defined in its 
Personnel Policy or by a regulatory authority for any reason within its 
purview.

    3.   GOOD REASON.  Termination by Executive of his employment for "Good 
Reason" shall mean termination by him after any of the following events 
occurs without his express written consent:

         (i)   a reduction in Executive's annual salary or benefits;


                                      2
<PAGE>

         (ii)  an adverse change in Executive's duties whereby he is 
performing duties of a higher level employee than the duties being performed 
by Executive at the time of the Change of Control;

         (iii) Executive is required to work more than fifty (50) miles from 
the Bank's Santa Maria Way office;

         (iv)  Executive is transferred to a department or division and is 
required to perform duties that Executive is not familiar or knowledgeable.

    4.   NOTICE OF TERMINATION.  Any purported termination by the Bank and/or 
the Company, or by Executive, for Good Reason shall be communicated by 
written "Notice of Termination" to the other party hereto.  A Notice of 
Termination shall mean a notice which indicates the specific termination 
provision in this Agreement relied upon and sets forth in reasonable detail 
the facts and circumstances claimed to  provide a basis for termination of 
Executive's employment under the provision so indicated.

    5.   DATE OF TERMINATION.  The "Date of Termination" shall mean (i) if 
Executive's employment is terminated by death, the date of death, (ii) if 
Executive's employment is terminated for Disability, 30 days after Notice of 
Termination is given (provided that Executive shall not have recommenced the 
full-time performance of his duties during such 30-day period), (iii) if 
Executive's employment is terminated pursuant to subparagraph 2 or 3 above, 
the date specified in the Notice of Termination, which shall be not less than 
30 days after the date such Notice of Termination is given, and (iv) if 
Executive voluntarily terminates employment pursuant to Paragraph D.6., the 
date specified in the Notice of Termination, which shall be not less than 60 
days after the Notice of Termination is given.

    6.   VOLUNTARY OR INVOLUNTARY TERMINATION.  If Executive should 
voluntarily or involuntarily terminate employment with the Bank and/or the 
Company prior to March 12, 2002, Executive shall not (i) solicit or employ 
any of the Bank's employees, or employees formerly employed by the Bank or 
the Company for a one hundred eighty (180) day period prior to Executive's 
voluntary termination, nor (ii) remove, transfer or otherwise take any loan 
or other file at the Bank or the Company during the time from the Notice of 
Termination to the effective date of the voluntary termination.  

E.  BENEFITS UPON TERMINATION


                                      3
<PAGE>

    1.   REGULAR COMPENSATION.  If Executive's employment shall be terminated 
by the Bank and/or the Company for Disability or for Cause, or because of his 
death, or by a regulatory authority or by Executive other than for Good 
Reason, within twelve (12) months after a Change of Control, or by the 
Executive for Good Reason, the Bank and/or the Company shall pay him the full 
accrued base salary and accrued incentive bonus through the Date of 
Termination, less withholding required by law, at the rate in effect at the 
time Notice of Termination is given or death occurs and the Bank and/or the 
Company shall have no further obligation to him under this Agreement.

    2.   SEVERANCE BENEFITS.  If Executive's employment shall be terminated 
by the Bank and/or the Company other than for Disability, Cause or his death, 
or by Executive for Good Reason within twelve (12) months of a Change of 
Control, Executive shall be entitled to receive an amount equal to 
Executive's base salary paid by the Bank and/or the Company to Executive for 
the previous eighteen (18) months.  Such amount shall be payable to Executive 
in eighteen (18) equal monthly installments commencing the first of the month 
following the Date of Termination or in a lump sum, as determined in the sole 
discretion of Executive, less withholding as required by law.   In addition, 
the Bank and/or the Company shall continue payment of all of Executive's 
benefits in effect on the date of Executive's termination including health 
and other medical benefits for a period of eighteen (18) months from the Date 
of Termination.  Payment of the foregoing amounts shall discharge the Bank 
and the Company from any further obligation and liability to Executive under 
this Agreement.

         Notwithstanding the foregoing, in the event that any payment or 
benefit received or to be received by Executive in connection with the 
termination of employment pursuant to the terms of this Agreement would not 
be deductible (in whole or in part) by the Bank and/or the Company as a 
result of Section 280G of the Internal Revenue Code of 1986, as amended (the 
"Code"), the amount of the payment shall be reduced until no portion is not 
deductible as a result of Section 280G of the Code.

F.  GENERAL PROVISIONS

    1.   RETURN OF DOCUMENTS.  Executive expressly agrees that all manuals, 
documents, files, reports, studies, instruments or other materials used 
and/or developed by Executive related to banking or of a banking nature 
during the term of his 


                                      4
<PAGE>

employment are solely the property of the Bank and/or the Company, and that 
Executive has no right, title or interest therein.  Upon termination of 
Executive's employment, Executive shall promptly deliver possession of all of 
said property to the Bank and/or the Company in good condition.

    2.   NOTICES.  Any notice, request, demand or other communication 
required or permitted hereunder shall be in writing and shall be deemed to be 
properly given when personally served or forty-eight hours after deposit in 
the United States mail, postage prepaid, in each case addressed to the Bank 
and/or the Company as its head office location or to Executive at his last 
residence address on the Bank or the Company's records.  Either party may 
change its address by written notice in accordance with this subparagraph.

    3.   BINDING EFFECT; SUCCESSORS.  Except to the extent otherwise provided 
herein, this Agreement shall inure to the benefit of and be binding upon the 
parties hereto and their respective executors, administrators, successors and 
assigns.  The Bank and/or the Company will require any successor to all or 
substantially all of its assets (other than by way of merger) to expressly 
assume and agree to perform this Agreement in the same manner and to the same 
extent that the Bank and/or the Company would be required to perform it if no 
such succession had taken place.  Failure of the Bank and/or the Company to 
obtain such assumption and agreement prior to the effectiveness of any such 
succession shall entitle Executive to the benefits from the Bank and/or the 
Company in the same amount and on the same terms as he would be entitled to 
hereunder if he terminated his employment for Good Reason, except that for 
purposes of implementing the foregoing, the date on which any such succession 
becomes effective shall be deemed the Date of Termination.  

    4.   APPLICABLE LAW.  Except to the extent governed by the laws of the 
United States, this Agreement is to be governed by and construed under the 
laws of the State of California.

    5.   CAPTIONS AND PARAGRAPH HEADINGS.  Captions and paragraph headings 
used herein are for convenience only and are not part of this Agreement and 
shall not be used in construing it.


                                      5
<PAGE>

    6.   SEVERABILITY.  Should any provision of this Agreement for any reason 
be declared invalid, void or unenforceable by a court of competent 
jurisdiction, the validly and binding effect of any remaining portion shall 
not be affected, and the remaining portions of this Agreement shall remain in 
full force and effect as if this Agreement had been executed with said 
provision eliminated.

    7.   ENTIRE AGREEMENT.  This Agreement contains the entire agreement of 
the parties relating to termination of employment after a Change of Control 
as provided herein.  It supersedes any and all other agreements, either oral 
or in writing, between the parties hereto with respect to such subject 
matter, and does not otherwise modify, alter or change the employment 
relationship of Executive with the Bank and/or the Company.  Each party to 
this Agreement acknowledges that no representations, inducements, promises or 
agreements, oral or otherwise, have been made by any party, or anyone acting 
on behalf of any party, which are not embodied herein, and that no other 
agreement, statement or promise not contained in this Agreement concerning 
its subject matter shall be valid or binding.

    8.   MODIFICATION; WAIVER.  No provision of this Agreement may be 
modified, waived or discharged unless such modification, waiver or discharge 
is agreed to in writing and signed by Executive and such officer of the Bank 
and/or the Company as may be specifically designated or authorized by the 
Board of Directors or by the Chief Executive Officer.  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.

    9.   ARBITRATION.  In the event that any dispute shall arise between the 
parties concerning the provisions of this Agreement or the performance of any 
part of their obligations hereunder, or in the event of an alleged breach of 
this Agreement by either of the parties hereto, and the parties are unable to 
mutually adjust and settle same, such dispute or disputes shall be submitted 
to binding arbitration pursuant to the applicable rules of the American 
Arbitration Association, and the decision and determination of the 
arbitrators shall be final and conclusive.


                                      6
<PAGE>

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

                                            BANK OF SANTA MARIA



                                       By:
                                          ------------------------------------
                                            A.J. Diani, Chairman of the Board



                                       By:
                                          ------------------------------------
                                             William L. Snelling, Secretary


                                            BSM BANCORP



                                       By:
                                          ------------------------------------
                                            A.J. Diani, Chairman of the Board



                                       By:
                                          ------------------------------------
                                             William L. Snelling, Secretary


                                            EXECUTIVE



                                       ---------------------------------------
                                            F. Dean Fletcher


                                      7
<PAGE>


                                  AGREEMENT


    This AGREEMENT is entered into this 12th day of March, 1997, by and 
between BANK OF SANTA MARIA, a California corporation (hereinafter referred 
to as the "Bank"), BSM BANCORP, a California corporation (hereinafter 
referred to as the "Company") and JAMES D. GLINES (hereinafter referred to as 
the "Executive").

                                  RECITALS

    WHEREAS, Executive has been an Executive Officer of the Bank since 1992 
and an Executive Officer of the Company since 1996;

    WHEREAS, the Bank desires to continue to avail itself of the skill, 
knowledge and experience of Executive in order to ensure the successful 
operation of the Bank and the Company without distraction should the Bank 
and/or the Company be sold, be merged out of existence, or otherwise be 
acquired by another financial institution, individuals or others, and 
Executive is terminated, or Executive's employment with the Bank and/or the 
Company is adversely affected; and 

    WHEREAS, to induce Executive to remain in the employ of the Bank and the 
Company, and to continue as an Executive Officer of the Bank and the Company, 
the Bank and the Company are willing to provide benefits to Executive in the 
event his or her employment is terminated or adversely affected after such a 
change of control;

    NOW, THEREFORE, in consideration of the mutual covenants and conditions 
hereinafter set forth, the parties hereto covenant and agree as follows:


                                      0
<PAGE>

A.  TERM OF AGREEMENT.

    This Agreement shall terminate upon the first to occur of (i) the 
termination of Executive's employment with Bank and/or the Company for cause, 
disability or voluntarily by Executive, and shall have occurred between the 
date of this Agreement and March 12, 2002 (the "Term of this Agreement"), or 
(ii) the termination of, or adverse effect on, Executive's employment with 
Bank and/or the Company within twelve (12) months following a change of 
control of the Company and/or the Bank, when the benefits provided for in 
Paragraph E have been conferred and paid, or (iii) March 12, 2002.

B.  EFFECT ON EMPLOYMENT

    This Agreement is not intended to alter or otherwise change the current 
employment relationship between Executive and the Bank and/or the Company 
except as described in the following Paragraphs, and Executive further 
acknowledges his employment at-will status with the Bank and the Company as 
described under the Bank's Personnel Policy.

C.  CHANGE OF CONTROL

    No benefits shall be payable hereunder unless there shall have been a 
Change of Control of the Bank and/or the Company and Executive's employment 
with the Bank shall thereafter have been terminated in the manner set forth 
in Paragraph D below, or Executive terminates employment for any of the 
reasons set forth in paragraph D.3. below following such change of control.  
For purposes of this Agreement, a "Change of Control" of the Bank and/or the 
Company shall mean:  (i) a merger with any Person (as defined below), where 
the Bank and/or the Company is not the surviving corporation; (ii) a 
consolidation with any Person, where the Bank and/or the Company is not the 
surviving corporation; (iii) a transfer to any Person of all or substantially 
all of the assets of the Bank and/or the Company; or (iv) an acquisition by 
any Person of beneficial ownership of an aggregate of more than 25% of the 
issued and outstanding shares of common stock of the Bank and/or the Company, 
whether or not such Person or Persons are current shareholders of the Bank 
and/or the Company at the time of such acquisition, coupled with or followed 
by the election as directors of the Bank and/or the Company of persons who 
were not directors at the time of such acquisition if such 


                                      1
<PAGE>

persons shall become a majority of the Board of Directors of the Bank and/or 
the Company.  As used in this Agreement, the term "Person" shall include any 
financial institution, corporation, individual, partnership or association, 
and any group formed for the purpose of acquiring, holding or disposing of 
the common stock of the Bank and/or the Company, and the term "beneficial 
ownership" shall have the same meaning as under Rule 13d-3 of the Securities 
and Exchange Commission promulgated under the Securities Exchange Act of 
1934, as amended.

D.  TERMINATION FOLLOWING CHANGE OF CONTROL

    If (i) a Change of Control shall have occurred, and if Executive's 
employment with the Bank and/or the Company is terminated within twelve (12) 
months after such Change of Control, or Executive terminates employment with 
the Bank and/or the Company pursuant to Paragraph D.3. below, and unless such 
termination is (a) because of his death, (b) for Cause or Disability (both as 
defined below) or (c) by Executive other than for Good Reason (as defined 
below), he shall be entitled to the benefits provided in Paragraph E.2. 
below.

    1.   DISABILITY.  If, as a result of Executive's incapacity due to 
physical or mental illness, he shall have been absent from or unable to 
perform his duties with the Bank and/or the Company for a period of three 
consecutive months, and if within 30 days after written notice of termination 
is given (which notice may not be given prior to the expiration of the 
three-month period) he shall not have recommenced the full-time performance 
of his duties, the Bank and/or the Company may terminate his employment for 
"Disability."

    2.   CAUSE.  Termination of Executive's employment for "Cause" shall mean 
termination by the Bank and/or the Company for cause as defined in its 
Personnel Policy or by a regulatory authority for any reason within its 
purview.

    3.   GOOD REASON.  Termination by Executive of his employment for "Good 
Reason" shall mean termination by him after any of the following events 
occurs without his express written consent:

         (i)   a reduction in Executive's annual salary or benefits;


                                      2
<PAGE>

         (ii)  an adverse change in Executive's duties whereby he is 
performing duties of a higher level employee than the duties being performed 
by Executive at the time of the Change of Control;

         (iii) Executive is required to work more than fifty (50) miles from 
the Bank's Santa Maria Way office;

         (iv)  Executive is transferred to a department or division and is 
required to perform duties that Executive is not familiar or knowledgeable.

    4.  NOTICE OF TERMINATION.  Any purported termination by the Bank and/or 
the Company, or by Executive, for Good Reason shall be communicated by 
written "Notice of Termination" to the other party hereto.  A Notice of 
Termination shall mean a notice which indicates the specific termination 
provision in this Agreement relied upon and sets forth in reasonable detail 
the facts and circumstances claimed to  provide a basis for termination of 
Executive's employment under the provision so indicated.

    5.   DATE OF TERMINATION.  The "Date of Termination" shall mean (i) if 
Executive's employment is terminated by death, the date of death, (ii) if 
Executive's employment is terminated for Disability, 30 days after Notice of 
Termination is given (provided that Executive shall not have recommenced the 
full-time performance of his duties during such 30-day period), (iii) if 
Executive's employment is terminated pursuant to subparagraph 2 or 3 above, 
the date specified in the Notice of Termination, which shall be not less than 
30 days after the date such Notice of Termination is given, and (iv) if 
Executive voluntarily terminates employment pursuant to Paragraph D.6., the 
date specified in the Notice of Termination, which shall be not less than 60 
days after the Notice of Termination is given.

    6.   VOLUNTARY OR INVOLUNTARY TERMINATION.  If Executive should 
voluntarily or involuntarily terminate employment with the Bank and/or the 
Company prior to March 12, 2002, Executive shall not (i) solicit or employ 
any of the Bank's employees, or employees formerly employed by the Bank or 
the Company for a one hundred eighty (180) day period prior to Executive's 
voluntary termination, nor (ii) remove, transfer or otherwise take any loan 
or other file at the Bank or the Company during the time from the Notice of 
Termination to the effective date of the voluntary termination.  

E.  BENEFITS UPON TERMINATION


                                      3
<PAGE>

    1.   REGULAR COMPENSATION.  If Executive's employment shall be terminated 
by the Bank and/or the Company for Disability or for Cause, or because of his 
death, or by a regulatory authority or by Executive other than for Good 
Reason, within twelve (12) months after a Change of Control, or by the 
Executive for Good Reason, the Bank and/or the Company shall pay him the full 
accrued base salary and accrued incentive bonus through the Date of 
Termination, less withholding required by law, at the rate in effect at the 
time Notice of Termination is given or death occurs and the Bank and/or the 
Company shall have no further obligation to him under this Agreement.

    2.   SEVERANCE BENEFITS.  If Executive's employment shall be terminated 
by the Bank and/or the Company other than for Disability, Cause or his death, 
or by Executive for Good Reason within twelve (12) months of a Change of 
Control, Executive shall be entitled to receive an amount equal to 
Executive's base salary paid by the Bank and/or the Company to Executive for 
the previous eighteen (18) months.  Such amount shall be payable to Executive 
in eighteen (18) equal monthly installments commencing the first of the month 
following the Date of Termination or in a lump sum, as determined in the sole 
discretion of Executive, less withholding as required by law.   In addition, 
the Bank and/or the Company shall continue payment of all of Executive's 
benefits in effect on the date of Executive's termination including health 
and other medical benefits for a period of eighteen (18) months from the Date 
of Termination.  Payment of the foregoing amounts shall discharge the Bank 
and the Company from any further obligation and liability to Executive under 
this Agreement.

         Notwithstanding the foregoing, in the event that any payment or 
benefit received or to be received by Executive in connection with the 
termination of employment pursuant to the terms of this Agreement would not 
be deductible (in whole or in part) by the Bank and/or the Company as a 
result of Section 280G of the Internal Revenue Code of 1986, as amended (the 
"Code"), the amount of the payment shall be reduced until no portion is not 
deductible as a result of Section 280G of the Code.

F.  GENERAL PROVISIONS

    1.   RETURN OF DOCUMENTS.  Executive expressly agrees that all manuals, 
documents, files, reports, studies, instruments or other materials used 
and/or developed by Executive related to banking or of a banking nature 
during the term of his 


                                      4
<PAGE>

employment are solely the property of the Bank and/or the Company, and that 
Executive has no right, title or interest therein.  Upon termination of 
Executive's employment, Executive shall promptly deliver possession of all of 
said property to the Bank and/or the Company in good condition.

    2.   NOTICES.  Any notice, request, demand or other communication 
required or permitted hereunder shall be in writing and shall be deemed to be 
properly given when personally served or forty-eight hours after deposit in 
the United States mail, postage prepaid, in each case addressed to the Bank 
and/or the Company as its head office location or to Executive at his last 
residence address on the Bank or the Company's records.  Either party may 
change its address by written notice in accordance with this subparagraph.

    3.   BINDING EFFECT; SUCCESSORS.  Except to the extent otherwise provided 
herein, this Agreement shall inure to the benefit of and be binding upon the 
parties hereto and their respective executors, administrators, successors and 
assigns.  The Bank and/or the Company will require any successor to all or 
substantially all of its assets (other than by way of merger) to expressly 
assume and agree to perform this Agreement in the same manner and to the same 
extent that the Bank and/or the Company would be required to perform it if no 
such succession had taken place.  Failure of the Bank and/or the Company to 
obtain such assumption and agreement prior to the effectiveness of any such 
succession shall entitle Executive to the benefits from the Bank and/or the 
Company in the same amount and on the same terms as he would be entitled to 
hereunder if he terminated his employment for Good Reason, except that for 
purposes of implementing the foregoing, the date on which any such succession 
becomes effective shall be deemed the Date of Termination.  

    4.   APPLICABLE LAW.  Except to the extent governed by the laws of the 
United States, this Agreement is to be governed by and construed under the 
laws of the State of California.

    5.   CAPTIONS AND PARAGRAPH HEADINGS.  Captions and paragraph headings 
used herein are for convenience only and are not part of this Agreement and 
shall not be used in construing it.


                                      5
<PAGE>

    6.   SEVERABILITY.  Should any provision of this Agreement for any reason 
be declared invalid, void or unenforceable by a court of competent 
jurisdiction, the validly and binding effect of any remaining portion shall 
not be affected, and the remaining portions of this Agreement shall remain in 
full force and effect as if this Agreement had been executed with said 
provision eliminated.

    7.   ENTIRE AGREEMENT.  This Agreement contains the entire agreement of 
the parties relating to termination of employment after a Change of Control 
as provided herein.  It supersedes any and all other agreements, either oral 
or in writing, between the parties hereto with respect to such subject 
matter, and does not otherwise modify, alter or change the employment 
relationship of Executive with the Bank and/or the Company.  Each party to 
this Agreement acknowledges that no representations, inducements, promises or 
agreements, oral or otherwise, have been made by any party, or anyone acting 
on behalf of any party, which are not embodied herein, and that no other 
agreement, statement or promise not contained in this Agreement concerning 
its subject matter shall be valid or binding.

    8.   MODIFICATION; WAIVER.  No provision of this Agreement may be 
modified, waived or discharged unless such modification, waiver or discharge 
is agreed to in writing and signed by Executive and such officer of the Bank 
and/or the Company as may be specifically designated or authorized by the 
Board of Directors or by the Chief Executive Officer.  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.

    9.   ARBITRATION.  In the event that any dispute shall arise between the 
parties concerning the provisions of this Agreement or the performance of any 
part of their obligations hereunder, or in the event of an alleged breach of 
this Agreement by either of the parties hereto, and the parties are unable to 
mutually adjust and settle same, such dispute or disputes shall be submitted 
to binding arbitration pursuant to the applicable rules of the American 
Arbitration Association, and the decision and determination of the 
arbitrators shall be final and conclusive.


                                      6
<PAGE>

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

                                       BANK OF SANTA MARIA

    By:
       ----------------------------------------
                                            A.J. Diani, Chairman of the Board


    By:
       ----------------------------------------
                                            William L. Snelling, Secretary


                                       BSM BANCORP



    By:
       ----------------------------------------
                                            A.J. Diani, Chairman of the Board


    By:
       ----------------------------------------
                                            William L. Snelling, Secretary


                                       EXECUTIVE


    -------------------------------------------
                                       James D. Glines


                                      7

<PAGE>

                                   AGREEMENT


    This AGREEMENT is entered into this 12th day of March, 1997, by and 
between BANK OF SANTA MARIA, a California corporation (hereinafter referred 
to as the "Bank"), BSM BANCORP, a California corporation (hereinafter 
referred to as the "Company") and WILLIAM A. HARES (hereinafter referred to 
as the "Executive").

                                   RECITALS

    WHEREAS, Executive has been an Executive Officer of the Bank since 1978 
and an Executive Officer of the Company since 1996;

    WHEREAS, the Bank desires to continue to avail itself of the skill, 
knowledge and experience of Executive in order to ensure the successful 
operation of the Bank and the Company without distraction should the Bank 
and/or the Company be sold, be merged out of existence, or otherwise be 
acquired by another financial institution, individuals or others, and 
Executive is terminated, or Executive's employment with the Bank and/or the 
Company is adversely affected; and 

    WHEREAS, to induce Executive to remain in the employ of the Bank and the 
Company, and to continue as an Executive Officer of the Bank and the Company, 
the Bank and the Company are willing to provide benefits to Executive in the 
event his or her employment is terminated or adversely affected after such a 
change of control;

    NOW, THEREFORE, in consideration of the mutual covenants and conditions 
hereinafter set forth, the parties hereto covenant and agree as follows:


                                      0
<PAGE>

A.  TERM OF AGREEMENT.

    This Agreement shall terminate upon the first to occur of (i) the 
termination of Executive's employment with Bank and/or the Company for cause, 
disability or voluntarily by Executive, and shall have occurred between the 
date of this Agreement and March 12, 2002 (the "Term of this Agreement"), or 
(ii) the termination of, or adverse effect on, Executive's employment with 
Bank and/or the Company within twelve (12) months following a change of 
control of the Company and/or the Bank, when the benefits provided for in 
Paragraph E have been conferred and paid, or (iii) March 12, 2002.

B.  EFFECT ON EMPLOYMENT

    This Agreement is not intended to alter or otherwise change the current 
employment relationship between Executive and the Bank and/or the Company 
except as described in the following Paragraphs, and Executive further 
acknowledges his employment at-will status with the Bank and the Company as 
described under the Bank's Personnel Policy.

C.  CHANGE OF CONTROL

    No benefits shall be payable hereunder unless there shall have been a 
Change of Control of the Bank and/or the Company and Executive's employment 
with the Bank shall thereafter have been terminated in the manner set forth 
in Paragraph D below, or Executive terminates employment for any of the 
reasons set forth in paragraph D.3. below following such change of control.  
For purposes of this Agreement, a "Change of Control" of the Bank and/or the 
Company shall mean:  (i) a merger with any Person (as defined below), where 
the Bank and/or the Company is not the surviving corporation; (ii) a 
consolidation with any Person, where the Bank and/or the Company is not the 
surviving corporation; (iii) a transfer to any Person of all or substantially 
all of the assets of the Bank and/or the Company; or (iv) an acquisition by 
any Person of beneficial ownership of an aggregate of more than 25% of the 
issued and outstanding shares of common stock of the Bank and/or the Company, 
whether or not such Person or Persons are current shareholders of the Bank 
and/or the Company at the time of such acquisition, coupled with or followed 
by the election as directors of the Bank and/or the Company of persons who 
were not directors at the time of such acquisition if such 


                                      1
<PAGE>

persons shall become a majority of the Board of Directors of the Bank and/or 
the Company.  As used in this Agreement, the term "Person" shall include any 
financial institution, corporation, individual, partnership or association, 
and any group formed for the purpose of acquiring, holding or disposing of 
the common stock of the Bank and/or the Company, and the term "beneficial 
ownership" shall have the same meaning as under Rule 13d-3 of the Securities 
and Exchange Commission promulgated under the Securities Exchange Act of 
1934, as amended.

D.  TERMINATION FOLLOWING CHANGE OF CONTROL

    If (i) a Change of Control shall have occurred, and if Executive's 
employment with the Bank and/or the Company is terminated within twenty-four 
(24) months after such Change of Control, or Executive terminates employment 
with the Bank and/or the Company pursuant to Paragraph D.3. below, and unless 
such termination is (a) because of his death, (b) for Cause or Disability 
(both as defined below) or (c) by Executive other than for Good Reason (as 
defined below), he shall be entitled to the benefits provided in Paragraph 
E.2. below. 


    1.   DISABILITY.  If, as a result of Executive's incapacity due to 
physical or mental illness, he shall have been absent from or unable to 
perform his duties with the Bank and/or the Company for a period of three 
consecutive months, and if within 30 days after written notice of termination 
is given (which notice may not be given prior to the expiration of the 
three-month period) he shall not have recommenced the full-time performance 
of his duties, the Bank and/or the Company may terminate his employment for 
"Disability."

    2.   CAUSE.  Termination of Executive's employment for "Cause" shall mean 
termination by the Bank and/or the Company for cause as defined in its 
Personnel Policy or by a regulatory authority for any reason within its 
purview.

    3.   GOOD REASON.  Termination by Executive of his employment for "Good 
Reason" shall mean termination by him after any of the following events 
occurs without his express written consent:

         (i)   a reduction in Executive's annual salary or benefits;


                                      2
<PAGE>

         (ii)  an adverse change in Executive's duties whereby he is 
performing duties of a higher level employee than the duties being performed 
by Executive at the time of the Change of Control;

         (iii) Executive is required to work more than fifty (50) miles from 
the Bank's Santa Maria Way office;

         (iv)  Executive is transferred to a department or division and is 
required to perform duties that Executive is not familiar or knowledgeable.

    4.   NOTICE OF TERMINATION.  Any purported termination by the Bank and/or 
the Company, or by Executive, for Good Reason shall be communicated by 
written "Notice of Termination" to the other party hereto.  A Notice of 
Termination shall mean a notice which indicates the specific termination 
provision in this Agreement relied upon and sets forth in reasonable detail 
the facts and circumstances claimed to  provide a basis for termination of 
Executive's employment under the provision so indicated.

    5.   DATE OF TERMINATION.  The "Date of Termination" shall mean (i) if 
Executive's employment is terminated by death, the date of death, (ii) if 
Executive's employment is terminated for Disability, 30 days after Notice of 
Termination is given (provided that Executive shall not have recommenced the 
full-time performance of his duties during such 30-day period), (iii) if 
Executive's employment is terminated pursuant to subparagraph 2 or 3 above, 
the date specified in the Notice of Termination, which shall be not less than 
30 days after the date such Notice of Termination is given, and (iv) if 
Executive voluntarily terminates employment pursuant to Paragraph D.6., the 
date specified in the Notice of Termination, which shall be not less than 60 
days after the Notice of Termination is given.

    6.   VOLUNTARY OR INVOLUNTARY TERMINATION.  If Executive should 
voluntarily or involuntarily terminate employment with the Bank and/or the 
Company prior to March 12, 2002, Executive shall not (i) solicit or employ 
any of the Bank's employees, or employees formerly employed by the Bank or 
the Company for a one hundred eighty (180) day period prior to Executive's 
voluntary termination, nor (ii) remove, transfer or otherwise take any loan 
or other file at the Bank or the Company during the time from the Notice of 
Termination to the effective date of the voluntary termination.  

E.  BENEFITS UPON TERMINATION


                                      3
<PAGE>

    1.   REGULAR COMPENSATION.  If Executive's employment shall be terminated 
by the Bank and/or the Company for Disability or for Cause, or because of his 
death, or by a regulatory authority or by Executive other than for Good 
Reason, within twenty-four (24) months after a Change of Control, or by the 
Executive for Good Reason, the Bank and/or the Company shall pay him the full 
accrued base salary and accrued incentive bonus through the Date of 
Termination, less withholding required by law, at the rate in effect at the 
time Notice of Termination is given or death occurs and the Bank and/or the 
Company shall have no further obligation to him under this Agreement. 
    2.   SEVERANCE BENEFITS.  If Executive's employment shall be terminated 
by the Bank and/or the Company other than for Disability, Cause or his death, 
or by Executive for Good Reason within twenty-four (24) months of a Change of 
Control, Executive shall be entitled to receive an amount equal to 
Executive's base salary paid by the Bank and/or the Company to Executive for 
the previous twenty-four (24) months.  Such amount shall be payable to 
Executive in twenty-four (24) equal monthly installments commencing the first 
of the month following the Date of Termination or in a lump sum, as 
determined in the sole discretion of Executive, less withholding as required 
by law.   In addition, the Bank and/or the Company shall continue payment of 
all of Executive's benefits in effect on the date of Executive's termination 
including health and other medical benefits for a period of twenty-four (24) 
months from the Date of Termination.  Payment of the foregoing amounts shall 
discharge the Bank and the Company from any further obligation and liability 
to Executive under this Agreement.

         Notwithstanding the foregoing, in the event that any payment or 
benefit received or to be received by Executive in connection with the 
termination of employment pursuant to the terms of this Agreement would not 
be deductible (in whole or in part) by the Bank and/or the Company as a 
result of Section 280G of the Internal Revenue Code of 1986, as amended (the 
"Code"), the amount of the payment shall be reduced until no portion is not 
deductible as a result of Section 280G of the Code.

F.  GENERAL PROVISIONS

    1.   RETURN OF DOCUMENTS.  Executive expressly agrees that all manuals, 
documents, files, reports, studies, instruments or other materials used 
and/or developed by Executive related to banking or of a banking nature 
during the term of his employment are solely the property of the Bank and/or 
the Company, and that 


                                      4
<PAGE>

Executive has no right, title or interest therein.  Upon termination of 
Executive's employment, Executive shall promptly deliver possession of all of 
said property to the Bank and/or the Company in good condition.

    2.   NOTICES.  Any notice, request, demand or other communication 
required or permitted hereunder shall be in writing and shall be deemed to be 
properly given when personally served or forty-eight hours after deposit in 
the United States mail, postage prepaid, in each case addressed to the Bank 
and/or the Company as its head office location or to Executive at his last 
residence address on the Bank or the Company's records.  Either party may 
change its address by written notice in accordance with this subparagraph.

    3.   BINDING EFFECT; SUCCESSORS.  Except to the extent otherwise provided 
herein, this Agreement shall inure to the benefit of and be binding upon the 
parties hereto and their respective executors, administrators, successors and 
assigns.  The Bank and/or the Company will require any successor to all or 
substantially all of its assets (other than by way of merger) to expressly 
assume and agree to perform this Agreement in the same manner and to the same 
extent that the Bank and/or the Company would be required to perform it if no 
such succession had taken place.  Failure of the Bank and/or the Company to 
obtain such assumption and agreement prior to the effectiveness of any such 
succession shall entitle Executive to the benefits from the Bank and/or the 
Company in the same amount and on the same terms as he would be entitled to 
hereunder if he terminated his employment for Good Reason, except that for 
purposes of implementing the foregoing, the date on which any such succession 
becomes effective shall be deemed the Date of Termination.  

    4.   APPLICABLE LAW.  Except to the extent governed by the laws of the 
United States, this Agreement is to be governed by and construed under the 
laws of the State of California.

    5.   CAPTIONS AND PARAGRAPH HEADINGS.  Captions and paragraph headings 
used herein are for convenience only and are not part of this Agreement and 
shall not be used in construing it.

    6.   SEVERABILITY.  Should any provision of this Agreement for any reason 
be declared invalid, void or unenforceable by a court of competent 
jurisdiction, the validly 


                                      5
<PAGE>

and binding effect of any remaining portion shall not be affected, and the 
remaining portions of this Agreement shall remain in full force and effect as 
if this Agreement had been executed with said provision eliminated.

    7.   ENTIRE AGREEMENT.  This Agreement contains the entire agreement of 
the parties relating to termination of employment after a Change of Control 
as provided herein.  It supersedes any and all other agreements, either oral 
or in writing, between the parties hereto with respect to such subject 
matter, and does not otherwise modify, alter or change the employment 
relationship of Executive with the Bank and/or the Company.  Each party to 
this Agreement acknowledges that no representations, inducements, promises or 
agreements, oral or otherwise, have been made by any party, or anyone acting 
on behalf of any party, which are not embodied herein, and that no other 
agreement, statement or promise not contained in this Agreement concerning 
its subject matter shall be valid or binding.

    8.   MODIFICATION; WAIVER.  No provision of this Agreement may be 
modified, waived or discharged unless such modification, waiver or discharge 
is agreed to in writing and signed by Executive and such officer of the Bank 
and/or the Company as may be specifically designated or authorized by the 
Board of Directors or by the Chief Executive Officer.  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.

    9.   ARBITRATION.  In the event that any dispute shall arise between the 
parties concerning the provisions of this Agreement or the performance of any 
part of their obligations hereunder, or in the event of an alleged breach of 
this Agreement by either of the parties hereto, and the parties are unable to 
mutually adjust and settle same, such dispute or disputes shall be submitted 
to binding arbitration pursuant to the applicable rules of the American 
Arbitration Association, and the decision and determination of the 
arbitrators shall be final and conclusive.


                                      6
<PAGE>

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

                                       BANK OF SANTA MARIA

    By:
       ----------------------------------------
                                            A.J. Diani, Chairman of the Board


    By:
       ----------------------------------------
                                            William L. Snelling, Secretary


                                       BSM BANCORP



                                   By:
                                      ----------------------------------------
                                            A.J. Diani, Chairman of the Board


    By:
       ----------------------------------------
                                            William L. Snelling, Secretary


                                       EXECUTIVE


    -------------------------------------------
                                       William A. Hares


                                      7
<PAGE>

                                  AGREEMENT


    This AGREEMENT is entered into this 12th day of March, 1997, by and 
between BANK OF SANTA MARIA, a California corporation (hereinafter referred 
to as the "Bank"), BSM BANCORP, a California corporation (hereinafter 
referred to as the "Company") and CAROL BRADFIELD (hereinafter referred to as 
the "Executive").

                                   RECITALS

    WHEREAS, Executive has been an Executive Officer of the Bank since 1996 
and an Executive Officer of the Company since 1996;

    WHEREAS, the Bank desires to continue to avail itself of the skill, 
knowledge and experience of Executive in order to ensure the successful 
operation of the Bank and the Company without distraction should the Bank 
and/or the Company be sold, be merged out of existence, or otherwise be 
acquired by another financial institution, individuals or others, and 
Executive is terminated, or Executive's employment with the Bank and/or the 
Company is adversely affected; and 

    WHEREAS, to induce Executive to remain in the employ of the Bank and the 
Company, and to continue as an Executive Officer of the Bank and the Company, 
the Bank and the Company are willing to provide benefits to Executive in the 
event his or her employment is terminated or adversely affected after such a 
change of control;

    NOW, THEREFORE, in consideration of the mutual covenants and conditions 
hereinafter set forth, the parties hereto covenant and agree as follows:


                                      0
<PAGE>

A.  TERM OF AGREEMENT.

    This Agreement shall terminate upon the first to occur of (i) the 
termination of Executive's employment with Bank and/or the Company for cause, 
disability or voluntarily by Executive, and shall have occurred between the 
date of this Agreement and March 12, 2002 (the "Term of this Agreement"), or 
(ii) the termination of, or adverse effect on, Executive's employment with 
Bank and/or the Company within twelve (12) months following a change of 
control of the Company and/or the Bank, when the benefits provided for in 
Paragraph E have been conferred and paid, or (iii) March 12, 2002.

B.  EFFECT ON EMPLOYMENT

    This Agreement is not intended to alter or otherwise change the current 
employment relationship between Executive and the Bank and/or the Company 
except as described in the following Paragraphs, and Executive further 
acknowledges his employment at-will status with the Bank and the Company as 
described under the Bank's Personnel Policy.

C.  CHANGE OF CONTROL

    No benefits shall be payable hereunder unless there shall have been a 
Change of Control of the Bank and/or the Company and Executive's employment 
with the Bank shall thereafter have been terminated in the manner set forth 
in Paragraph D below, or Executive terminates employment for any of the 
reasons set forth in paragraph D.3. below following such change of control.  
For purposes of this Agreement, a "Change of Control" of the Bank and/or the 
Company shall mean:  (i) a merger with any Person (as defined below), where 
the Bank and/or the Company is not the surviving corporation; (ii) a 
consolidation with any Person, where the Bank and/or the Company is not the 
surviving corporation; (iii) a transfer to any Person of all or substantially 
all of the assets of the Bank and/or the Company; or (iv) an acquisition by 
any Person of beneficial ownership of an aggregate of more than 25% of the 
issued and outstanding shares of common stock of the Bank and/or the Company, 
whether or not such Person or Persons are current shareholders of the Bank 
and/or the Company at the time of such acquisition, coupled with or followed 
by the election as directors of the Bank and/or the Company of persons who 
were not directors at the time of such acquisition if such 


                                      1
<PAGE>

persons shall become a majority of the Board of Directors of the Bank and/or 
the Company.  As used in this Agreement, the term "Person" shall include any 
financial institution, corporation, individual, partnership or association, 
and any group formed for the purpose of acquiring, holding or disposing of 
the common stock of the Bank and/or the Company, and the term "beneficial 
ownership" shall have the same meaning as under Rule 13d-3 of the Securities 
and Exchange Commission promulgated under the Securities Exchange Act of 
1934, as amended.

D.  TERMINATION FOLLOWING CHANGE OF CONTROL

    If (i) a Change of Control shall have occurred, and if Executive's 
employment with the Bank and/or the Company is terminated within twelve (12) 
months after such Change of Control, or Executive terminates employment with 
the Bank and/or the Company pursuant to Paragraph D.3. below, and unless such 
termination is (a) because of his death, (b) for Cause or Disability (both as 
defined below) or (c) by Executive other than for Good Reason (as defined 
below), he shall be entitled to the benefits provided in Paragraph E.2. 
below. 

    1.   DISABILITY.  If, as a result of Executive's incapacity due to 
physical or mental illness, he shall have been absent from or unable to 
perform his duties with the Bank and/or the Company for a period of three 
consecutive months, and if within 30 days after written notice of termination 
is given (which notice may not be given prior to the expiration of the 
three-month period) he shall not have recommenced the full-time performance 
of his duties, the Bank and/or the Company may terminate his employment for 
"Disability."

    2.   CAUSE.  Termination of Executive's employment for "Cause" shall mean 
termination by the Bank and/or the Company for cause as defined in its 
Personnel Policy or by a regulatory authority for any reason within its 
purview.

    3.   GOOD REASON.  Termination by Executive of his employment for "Good 
Reason" shall mean termination by him after any of the following events 
occurs without his express written consent:

         (i)   a reduction in Executive's annual salary or benefits;


                                      2
<PAGE>

         (ii)  an adverse change in Executive's duties whereby he is 
performing duties of a higher level employee than the duties being performed 
by Executive at the time of the Change of Control;

         (iii) Executive is required to work more than fifty (50) miles from 
the Bank's Santa Maria Way office;

         (iv)  Executive is transferred to a department or division and is 
required to perform duties that Executive is not familiar or knowledgeable.


    4.   NOTICE OF TERMINATION.  Any purported termination by the Bank and/or 
the Company, or by Executive, for Good Reason shall be communicated by 
written "Notice of Termination" to the other party hereto.  A Notice of 
Termination shall mean a notice which indicates the specific termination 
provision in this Agreement relied upon and sets forth in reasonable detail 
the facts and circumstances claimed to  provide a basis for termination of 
Executive's employment under the provision so indicated.

    5.   DATE OF TERMINATION.  The "Date of Termination" shall mean (i) if 
Executive's employment is terminated by death, the date of death, (ii) if 
Executive's employment is terminated for Disability, 30 days after Notice of 
Termination is given (provided that Executive shall not have recommenced the 
full-time performance of his duties during such 30-day period), (iii) if 
Executive's employment is terminated pursuant to subparagraph 2 or 3 above, 
the date specified in the Notice of Termination, which shall be not less than 
30 days after the date such Notice of Termination is given, and (iv) if 
Executive voluntarily terminates employment pursuant to Paragraph D.6., the 
date specified in the Notice of Termination, which shall be not less than 60 
days after the Notice of Termination is given.

    6.   VOLUNTARY OR INVOLUNTARY TERMINATION.  If Executive should 
voluntarily or involuntarily terminate employment with the Bank and/or the 
Company prior to March 12, 2002, Executive shall not (i) solicit or employ 
any of the Bank's employees, or employees formerly employed by the Bank or 
the Company for a one hundred eighty (180) day period prior to Executive's 
voluntary termination, nor (ii) remove, transfer or otherwise take any loan 
or other file at the Bank or the Company during the time from the Notice of 
Termination to the effective date of the voluntary termination.  

E.  BENEFITS UPON TERMINATION


                                      3
<PAGE>

    1.   REGULAR COMPENSATION.  If Executive's employment shall be terminated 
by the Bank and/or the Company for Disability or for Cause, or because of his 
death, or by a regulatory authority or by Executive other than for Good 
Reason, within twelve (12) months after a Change of Control, or by the 
Executive for Good Reason, the Bank and/or the Company shall pay him the full 
accrued base salary and accrued incentive bonus through the Date of 
Termination, less withholding required by law, at the rate in effect at the 
time Notice of Termination is given or death occurs and the Bank and/or the 
Company shall have no further obligation to him under this Agreement.

    2.   SEVERANCE BENEFITS.  If Executive's employment shall be terminated 
by the Bank and/or the Company other than for Disability, Cause or his death, 
or by Executive for Good Reason within twelve (12) months of a Change of 
Control, Executive shall be entitled to receive an amount equal to 
Executive's base salary paid by the Bank and/or the Company to Executive for 
the previous eighteen (18) months.  Such amount shall be payable to Executive 
in eighteen (18) equal monthly installments commencing the first of the month 
following the Date of Termination or in a lump sum, as determined in the sole 
discretion of Executive, less withholding as required by law.   In addition, 
the Bank and/or the Company shall continue payment of all of Executive's 
benefits in effect on the date of Executive's termination including health 
and other medical benefits for a period of eighteen (18) months from the Date 
of Termination.  Payment of the foregoing amounts shall discharge the Bank 
and the Company from any further obligation and liability to Executive under 
this Agreement.

         Notwithstanding the foregoing, in the event that any payment or 
benefit received or to be received by Executive in connection with the 
termination of employment pursuant to the terms of this Agreement would not 
be deductible (in whole or in part) by the Bank and/or the Company as a 
result of Section 280G of the Internal Revenue Code of 1986, as amended (the 
"Code"), the amount of the payment shall be reduced until no portion is not 
deductible as a result of Section 280G of the Code.

F.  GENERAL PROVISIONS

    1.   RETURN OF DOCUMENTS.  Executive expressly agrees that all manuals, 
documents, files, reports, studies, instruments or other materials used 
and/or developed by Executive related to banking or of a banking nature 
during the term of his 


                                      4
<PAGE>

employment are solely the property of the Bank and/or the Company, and that 
Executive has no right, title or interest therein.  Upon termination of 
Executive's employment, Executive shall promptly deliver possession of all of 
said property to the Bank and/or the Company in good condition.

    2.   NOTICES.  Any notice, request, demand or other communication 
required or permitted hereunder shall be in writing and shall be deemed to be 
properly given when personally served or forty-eight hours after deposit in 
the United States mail, postage prepaid, in each case addressed to the Bank 
and/or the Company as its head office location or to Executive at his last 
residence address on the Bank or the Company's records.  Either party may 
change its address by written notice in accordance with this subparagraph.

    3.   BINDING EFFECT; SUCCESSORS.  Except to the extent otherwise provided 
herein, this Agreement shall inure to the benefit of and be binding upon the 
parties hereto and their respective executors, administrators, successors and 
assigns.  The Bank and/or the Company will require any successor to all or 
substantially all of its assets (other than by way of merger) to expressly 
assume and agree to perform this Agreement in the same manner and to the same 
extent that the Bank and/or the Company would be required to perform it if no 
such succession had taken place.  Failure of the Bank and/or the Company to 
obtain such assumption and agreement prior to the effectiveness of any such 
succession shall entitle Executive to the benefits from the Bank and/or the 
Company in the same amount and on the same terms as he would be entitled to 
hereunder if he terminated his employment for Good Reason, except that for 
purposes of implementing the foregoing, the date on which any such succession 
becomes effective shall be deemed the Date of Termination.  


    4.   APPLICABLE LAW.  Except to the extent governed by the laws of the 
United States, this Agreement is to be governed by and construed under the 
laws of the State of California.

    5.   CAPTIONS AND PARAGRAPH HEADINGS.  Captions and paragraph headings 
used herein are for convenience only and are not part of this Agreement and 
shall not be used in construing it.


                                      5
<PAGE>

    6.   SEVERABILITY.  Should any provision of this Agreement for any reason 
be declared invalid, void or unenforceable by a court of competent 
jurisdiction, the validly and binding effect of any remaining portion shall 
not be affected, and the remaining portions of this Agreement shall remain in 
full force and effect as if this Agreement had been executed with said 
provision eliminated.

    7.   ENTIRE AGREEMENT.  This Agreement contains the entire agreement of 
the parties relating to termination of employment after a Change of Control 
as provided herein.  It supersedes any and all other agreements, either oral 
or in writing, between the parties hereto with respect to such subject 
matter, and does not otherwise modify, alter or change the employment 
relationship of Executive with the Bank and/or the Company.  Each party to 
this Agreement acknowledges that no representations, inducements, promises or 
agreements, oral or otherwise, have been made by any party, or anyone acting 
on behalf of any party, which are not embodied herein, and that no other 
agreement, statement or promise not contained in this Agreement concerning 
its subject matter shall be valid or binding.

    8.   MODIFICATION; WAIVER.  No provision of this Agreement may be 
modified, waived or discharged unless such modification, waiver or discharge 
is agreed to in writing and signed by Executive and such officer of the Bank 
and/or the Company as may be specifically designated or authorized by the 
Board of Directors or by the Chief Executive Officer.  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.

    9.   ARBITRATION.  In the event that any dispute shall arise between the 
parties concerning the provisions of this Agreement or the performance of any 
part of their obligations hereunder, or in the event of an alleged breach of 
this Agreement by either of the parties hereto, and the parties are unable to 
mutually adjust and settle same, such dispute or disputes shall be submitted 
to binding arbitration pursuant to the applicable rules of the American 
Arbitration Association, and the decision and determination of the 
arbitrators shall be final and conclusive.


                                      6
<PAGE>

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

                                            BANK OF SANTA MARIA


                                       By:
                                          ------------------------------------
                                            A.J. Diani, Chairman of the Board

                                       By:
                                          ------------------------------------
                                            William L. Snelling, Secretary


                                            BSM BANCORP



                                       By:
                                          ------------------------------------
                                            A.J. Diani, Chairman of the Board



                                       By:
                                          ------------------------------------
                                            William L. Snelling, Secretary


                                            EXECUTIVE


                                       ---------------------------------------
                                            Carol Bradfield


                                      7