Document:

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                                EXHIBIT (10)(xi)

                             DIRECTOR DEFERRAL PLAN

                                    AGREEMENT

        THIS AGREEMENT, made and entered into this ____ day of ______________,
2003, by and between Home Savings Bank of Albemarle, SSB, a Bank organized and
existing under the laws of the State of North Carolina, (hereinafter referred to
as the "Bank"), and R. Ronald Swanner, a Director of the Bank, (hereinafter
referred to as the "Director").

        WHEREAS, the Director has been in the service of the Bank for several
years and has now and for years faithfully served the Bank. It is the consensus
of the Board of Directors of the Bank (hereinafter referred to as the "Board")
that the Director's services have been of exceptional merit, in excess of the
compensation paid and an invaluable contribution to the profits and position of
the Bank in its field of activity. The Board further believes that the
Director's experience, knowledge of corporate affairs, reputation and industry
contacts are of such value and his continued services are so essential to the
Bank's future growth and profits that it would suffer severe financial loss
should the Director terminate the Director's services.

        ACCORDINGLY, the Board has adopted the Bank Director Deferral Plan
(hereinafter referred to as the "Director Plan") and it is the desire of the
Bank and the Director to enter into this Agreement under which the Bank will
agree to make certain payments to the Director upon the Director's retirement or
to the Director's beneficiary(ies) in the event of the Director's death pursuant
to the Director Plan;

         FURTHERMORE, it is the intent of the parties hereto that this Director
Plan be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Director, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended

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("ERISA"). The Director is fully advised of the Bank's financial status and has
had substantial input in the design and operation of this benefit plan; and

        WHEREAS, the Bank and the Director are parties to a Retirement Payment
Agreement dated October of 1985 between Home Savings Bank of Albemarle, SSB and
R. Ronald Swanner that provides for the payment of certain benefits. This
Director Deferral Plan Agreement and the benefits provided hereunder shall
replace and supercede the existing Retirement Payment Agreement and the benefits
provided thereby;

        NOW THEREFORE, in consideration of services the Director has performed
in the past and those to be performed in the future, and based upon the mutual
promises and covenants herein contained, the Bank and the Director agree as
follows:

I.      DEFINITIONS

        A.      Effective Date:

                The Effective Date of the Director Plan shall be February 18,
                2003.

        B.      Plan Year:

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

        C.      Retirement Date:

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

        D.      Termination of Service:

                Termination of Service shall mean voluntary resignation of
                service by the Director or the Bank's discharge of the Director
                without cause, prior to the Retirement Date (Subparagraph I
                [C]).

        E.      Index Retirement Benefit:

                The Index Retirement Benefit for the Director for each plan year
                shall be equal to the excess (if any) of the Index (Subparagraph
                I [F]) for that Plan Year over the Opportunity Cost
                (Subparagraph I [G]) for that Plan Year, divided by a factor
                equal to 1.00 minus the marginal tax rate.

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        F.      Index:

                The Index for any Plan Year shall be the aggregate annual
                after-tax income from the life insurance contract(s) described
                hereinafter as defined by FASB Technical Bulletin 85-4. This
                Index shall be applied as if such insurance contracts were
                purchased on the Effective Date hereof.

                Insurance Company:            Mass Mutual Life Insurance Company
                Policy Form:                  Flexible Premium Adjustable Life
                Policy Name:                  Strategic Life Executive
                Insured's Age and Sex:        55, Male
                Riders:                       None
                Ratings:                      None
                Option:                       Level
                Face Amount:                  $61,101
                Premiums Paid:                $27,900
                Number of Premium Payments:   Single
                Assumed Purchase Date:        February 18, 2003

                Insurance Company:            New York Life Insurance Company
                Policy Form:                  Flexible Premium Adjustable Life
                Policy Name:                  Strategic Life Executive
                Insured's Age and Sex:        55, Male
                Riders:                       None
                Ratings:                      None
                Option:                       Level
                Face Amount:                  $100,000
                Premiums Paid:                $27,000
                Number of Premium Payments:   Single
                Assumed Purchase Date:        February 18, 2003

                If such contracts of life insurance are actually purchased by
                the Bank, then the actual policies as of the dates they were
                purchased shall be used in calculations under this Director
                Plan. If such contracts of life insurance are not purchased or
                are subsequently surrendered or lapsed, then the Bank shall
                receive annual policy illustrations that assume the
                above-described policies were purchased or had not subsequently
                surrendered or lapsed. Said illustrations shall be received from
                the respective insurance companies and will indicate the
                increase in policy values for purposes of calculating the amount
                of the Index.

                In either case, references to the life insurance contract are
                merely for purposes of calculating a benefit. The Bank has no
                obligation to purchase

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                such life insurance and, if purchased, the Director and the
                Director's beneficiary(ies) shall have no ownership interest in
                such policy and shall always have no greater interest in the
                benefits under this Agreement than that of an unsecured general
                creditor of the Bank.

        G.      Opportunity Cost:

                The Opportunity Cost for any Plan Year shall be calculated by
                taking the sum of the amount of premiums for the life insurance
                policies described in the definition of "Index" plus the amount
                of any after-tax benefits paid to the Executive pursuant to the
                Executive Plan (Paragraph II hereinafter) plus the amount of all
                previous years' after-tax Opportunity Cost, and multiplying that
                sum by the greater of either: (i) the average after tax yield of
                a one-year Treasury bill; or (ii) the Bank's annualized after
                tax cost of funds as calculated from the Bank's third quarter
                call report.

        H.      Change of Control:

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

        I.      Normal Retirement Age:

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

        J.      Benefit Accounting:

                The Bank shall account for the benefit provided herein using the
                regulatory accounting principles of the Bank's primary federal
                regulator. The Bank shall establish an accrued liability
                retirement account for the Director into which appropriate
                reserves shall be accrued. On the date of this Agreement, said
                account shall have a balance of One Hundred Forty Five Thousand
                and 00/100ths Dollars ($145,000.00).

II.     BENEFITS

        A.      Retirement Benefits:

                Subject to Subparagraph II (D), hereinafter, should the Director
                continue to serve the Bank until "Normal Retirement Age" defined
                in Subparagraph I (I), the Director shall be entitled to receive
                an annual benefit equal to the amount set forth in Exhibit
                "A-1". Said payments shall be made monthly

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                (1/12th of the annual benefit) and shall commence thirty (30)
                days following the Director's retirement and shall continue
                until the Director attains age seventy-six (76). Upon completion
                of the aforestated payments and commencing subsequent thereto
                and subject to Subparagraph II (A) (i) hereinbelow, the Index
                Retirement Benefit (Subparagraph I [E]) shall be paid to the
                Director until the Director's death at which time said benefit
                shall cease.

                (i)     Index Retirement Benefit Adjustment:

                        The Index Retirement Benefit payment as set forth
                        hereinabove for the first Plan Year subsequent to the
                        Director attaining age seventy-six (76) shall be
                        adjusted according to a number equal to the aggregate of
                        the Index Retirement Benefit (Subparagraph I [E]) for
                        each Plan Year from the Effective Date of this agreement
                        until the Plan Year subsequent to the Director attaining
                        age seventy-six (76) over the aggregate of the benefit
                        payments the Director actually received under the terms
                        of this Director Plan through that date. For example, if
                        the Director retires at age sixty-five (65) and the
                        aggregate annual benefits received by the Director until
                        the Plan Year the Director attains age seventy-six (76)
                        were $900,000.00, and the aggregate Index Retirement
                        Benefits for each Plan Year from the Effective Date of
                        this agreement to the Plan Year the Director's attains
                        age seventy-six (76) were $1,000,000.00 then the
                        Director's Index Retirement Benefit in the first Plan
                        Year said payment is payable to the Director would be
                        increased by $100,000.00. If said number is a deficit,
                        then the Index Retirement Benefit for the Plan Year when
                        the Director attains age seventy-six (76) and each
                        subsequent Plan Year's benefit (if necessary) shall be
                        reduced until the entire deficit has been recovered by
                        the Bank. For each year thereafter, the Index Retirement
                        Benefit payment shall be paid as set forth in
                        Subparagraph I (E). For example, if the Director retires
                        at age sixty-five (65) and the aggregate annual benefits
                        to be received by the Director until the Plan Year the
                        Director attains age seventy-six (76) were
                        $1,000,000.00, and the aggregate Index Retirement
                        Benefits for each Plan year from the Effective Date of
                        this agreement to the Plan Year the Director attains age
                        seventy-six (76) were $900,000.00 and the Director's
                        Index Retirement Benefit was $90,000.00 in the first
                        year, then the Director would not receive any Index
                        Retirement Benefit in the first year, and the second
                        years' Index Retirement benefit would be reduced by
                        $10,000.00.

        B.      Termination of Service:

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                Subject to Subparagraph II (E), should an Executive suffer a
                Termination of Service the Executive shall be entitled to
                receive the annual benefit set forth in Exhibit A-1. Said
                payments shall be made monthly (1/12th of the annual benefit)
                and shall commence thirty (30) days following the Executive's
                Normal Retirement Age (Subparagraph I [J] and shall continue
                until the Executive attains age seventy-six (76). Upon
                completion of the aforestated payments and commencing subsequent
                thereto and subject to Subparagraph II (A) (i) hereinabove the
                Index Retirement Benefit for each Plan Year subsequent to the
                year in which the Executive attains age seventy-six (76), and
                including the remaining portion of the Plan Year in which the
                Executive attains age seventy-six (76), shall be paid to the
                Executive until the Executive's death.

        C.      Death:

                If the Director dies while there is a balance in the Director's
                accrued liability retirement account, then the unpaid balance
                shall be paid in a lump sum to the individual or individuals
                designated in writing by the Director and filed with the Bank.
                In the absence of or a failure to designate a beneficiary, the
                unpaid balance shall be paid in a lump sum to the personal
                representative of the Director's estate. If, upon death, the
                Director shall have received the total balance of the Director's
                accrued liability retirement account, then no further benefit
                shall be due hereunder. In any event, upon the death of the
                Director, the Director's beneficiary shall not be entitled to
                receive any Index Retirement Benefit.

        D.      Discharge for Cause:

                Should the Director be Discharged for Cause at any time, all
                benefits under this Director Plan shall be forfeited. The term
                "for cause" shall mean any of the following that result in an
                adverse effect on the Bank: (i) gross negligence or gross
                neglect; (ii) the commission of a felony or misdemeanor
                involving moral turpitude, fraud, or dishonesty; (iii) the
                willful violation of any law, rule, or regulation (other than a
                traffic violation or similar offense); (iv) an intentional
                failure to perform stated duties; or (v) a breach of fiduciary
                duty involving personal profit. If a dispute arises as to
                discharge "for cause," such dispute shall be resolved by
                arbitration as set forth in this Director Plan.

        D.      Death Benefit:

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

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III.    RESTRICTIONS UPON FUNDING

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

        The Bank reserves the absolute right, at its sole discretion, to either
        fund the obligations undertaken by this Agreement or to refrain from
        funding the same and to determine the exact nature and method of such
        funding. Should the Bank elect to fund this Agreement, in whole or in
        part, through the purchase of life insurance, mutual funds, disability
        policies or annuities, the Bank reserves the absolute right, in its sole
        discretion, to terminate such funding at any time, in whole or in part.
        At no time shall the Director be deemed to have any lien or right, title
        or interest in or to any specific funding investment or to any assets of
        the Bank.

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

IV.     CHANGE OF CONTROL

        Upon a Change of Control (Subparagraph I [H]), if the Director
        subsequently suffers a Termination of Service (Subparagraph I [D]), then
        the Director shall be entitled to receive the amount in the Director's
        Accrued Liability Retirement Account as of the date of Termination of
        Service paid in a lump sum thirty (30) days following said Termination
        of Service. The Director will also remain eligible for all promised
        death benefits in this Director Plan. In addition, no sale, merger, or
        consolidation of the Bank shall take place unless the new or surviving
        entity expressly acknowledges the obligations of this Director Plan and
        agrees to abide by its terms.

V.      MISCELLANEOUS

        A.      Alienability and Assignment Prohibition:

                Neither the Director, his/her surviving spouse nor any other
                beneficiary under this Agreement shall have any power or right
                to transfer, assign, anticipate, hypothecate, mortgage, commute,
                modify or otherwise encumber in advance any of the benefits
                payable hereunder nor shall any of said benefits be subject to
                seizure for the payment of any debts, judgments, alimony or
                separate maintenance owed by the Director or the Director's
                beneficiary(ies), nor be transferable by operation of law in the

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                event of bankruptcy, insolvency or otherwise. In the event the
                Director or any beneficiary attempts assignment, commutation,
                hypothecation, transfer or disposal of the benefits hereunder,
                the Bank's liabilities shall forthwith cease and terminate.

        B.      Binding Obligation of the Bank and any Successor in Interest:

                The Bank shall not merge or consolidate into or with another
                bank or sell substantially all of its assets to another bank,
                firm or person until such bank, firm or person expressly agree,
                in writing, to assume and discharge the duties and obligations
                of the Bank under this Director Plan. This Director Plan shall
                be binding upon the parties hereto, their successors,
                beneficiaries, heirs and personal representatives.

        C.      Amendment or Revocation:

                Subject to Paragraph VII, it is agreed by and between the
                parties hereto that, during the lifetime of the Director, this
                Director Plan may be amended or revoked at any time or times, in
                whole or in part, by the mutual written consent of the Director
                and the Bank.

        D.      Gender:

                Whenever in this Director Plan words are used in the masculine
                or neuter gender, they shall be read and construed as in the
                masculine, feminine or neuter gender, whenever they should so
                apply.

        E.      Effect on Other Bank Benefit Plans:

                Nothing contained in this Director Plan shall affect the right
                of the Director to participate in or be covered by any qualified
                or non-qualified pension, profit-sharing, group, bonus or other
                supplemental compensation or fringe benefit plan constituting a
                part of the Bank's existing or future compensation structure.

        F.      Headings:

                Headings and subheadings in this Director Plan are inserted for
                reference and convenience only and shall not be deemed a part of
                this Director Plan.

        G.      Applicable Law:

                The validity and interpretation of this Agreement shall be
                governed by the laws of the State of North Carolina.

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        H.      12 U.S.C. Section 1828(k):

                Any payments made to the Director pursuant to this Director
                Plan, or otherwise, are subject to and conditioned upon their
                compliance with 12 U.S.C. Section 1828(k) or any regulations
                promulgated thereunder.

        I.      Partial Invalidity:

                If any term, provision, covenant, or condition of this Director
                Plan is determined by an arbitrator or a court, as the case may
                be, to be invalid, void, or unenforceable, such determination
                shall not render any other term, provision, covenant, or
                condition invalid, void, or unenforceable, and the Director Plan
                shall remain in full force and effect notwithstanding such
                partial invalidity.

        J.      Supersede and Entire Agreement:

                This Agreement shall supersede the Retirement Payment Agreement
                dated October of 1985, and shall constitute the entire agreement
                of the parties pertaining to this particular Director Deferral
                Plan Agreement.

VI.     ERISA PROVISION

        A.      Named Fiduciary and Plan Administrator:

                The "Named Fiduciary and Plan Administrator" of this Director
                Plan shall be Home Savings Bank of Albemarle, SSB until its
                resignation or removal by the Board. As Named Fiduciary and Plan
                Administrator, the Bank shall be responsible for the management,
                control and administration of the Director Plan. The Named
                Fiduciary may delegate to others certain aspects of the
                management and operation responsibilities of the Director Plan
                including the employment of advisors and the delegation of
                ministerial duties to qualified individuals.

        B.      Claims Procedure and Arbitration:

                In the event a dispute arises over benefits under this Director
                Plan and benefits are not paid to the Director (or to the
                Director's beneficiary(ies) in the case of the Director's death)
                and such claimants feel they are entitled to receive such
                benefits, then a written claim must be made to the Named
                Fiduciary and Plan Administrator named above within.sixty (60)
                days from the date payments are refused. The Named Fiduciary and
                Plan Administrator shall review the written claim and if the
                claim is denied, in

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                whole or in part, they shall provide in writing within sixty
                (60) days of receipt of such claim the specific reasons for such
                denial, reference to the provisions of this Director Plan upon
                which the denial is based and any additional material or
                information necessary to perfect the claim. Such written notice
                shall further indicate the additional steps to be taken by
                claimants if a further review of the claim denial is desired. A
                claim shall be deemed denied if the Named Fiduciary and Plan
                Administrator fail to take any action within the aforesaid
                sixty-day period.

                If claimants desire a second review they shall notify the Named
                Fiduciary and Plan Administrator in writing within sixty (60)
                days of the first claim denial. Claimants may review this
                Director Plan or any documents relating thereto and submit any
                written issues and comments it may feel appropriate. In their
                sole discretion, the Named Fiduciary and Plan Administrator
                shall then review the second claim and provide a written
                decision within sixty (60) days of receipt of such claim. This
                decision shall likewise state the specific reasons for the
                decision and shall include reference to specific provisions of
                the Plan Agreement upon which the decision is based.

                If claimants continue to dispute the benefit denial based upon
                completed performance of this Director Plan or the meaning and
                effect of the terms and conditions thereof, then claimants may
                submit the dispute to an arbitrator for final arbitration. The
                arbitrator shall be selected by mutual agreement of the Bank and
                the claimants. The arbitrator shall operate under any generally
                recognized set of arbitration rules. The parties hereto agree
                that they and their heirs, personal representatives, successors
                and assigns shall be bound by the decision of such arbitrator
                with respect to any controversy properly submitted to it for
                determination.

                Where a dispute arises as to the Bank's discharge of the
                Director "for cause," such dispute shall likewise be submitted
                to arbitration as above described and the parties hereto agree
                to be bound by the decision thereunder.

VII.    TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE
        LAW, RULES OR REGULATIONS

        The Bank is entering into this Agreement upon the assumption that
        certain existing tax laws, rules and regulations will continue in effect
        in their current form. If any said assumptions should change and said
        change has a detrimental effect on this Director Plan, then the Bank
        reserves the right to terminate or modify this Agreement accordingly.
        Upon a Change of Control (Subparagraph I [J]), this paragraph shall
        become null and void effective immediately upon said Change of Control.

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IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read
this Agreement and executed the original thereof on the first day set forth
hereinabove, and that upon execution, each has received a conforming copy.

                                             HOME SAVINGS BANK OF
                                             ALBEMARLE, SSB

                                             Albemarle, North Carolina

                                             By:
--------------------------------                --------------------------------
Witness                                                     Title

--------------------------------                --------------------------------
Witness                                               R. Ronald Swanner

                                       11

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                      BENEFICIARY DESIGNATION FORM FOR THE
                        DIRECTOR DEFERRAL PLAN AGREEMENT

I.      PRIMARY DESIGNATION
                (You may refer to the beneficiary designation information prior
                to completion.)

        A.      PERSON(S) AS A PRIMARY DESIGNATION:
                (Please indicate the percentage for each beneficiary.)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        B.      ESTATE AS A PRIMARY DESIGNATION:

        My Primary Beneficiary is The Estate of   ______________________________

        ____ as set forth in the last will and testament dated the _____ day of

        _____________, _______ and any codicils thereto.

        C.      TRUST AS A PRIMARY DESIGNATION:

        Name of the Trust:  ____________________________________________________

        Execution Date of the Trust: _____ / _____ / _________

        Name of the Trustee: ___________________________________________________

        Beneficiary(ies) of the Trust (please indicate the percentage for each
        beneficiary):

        ________________________________________________________________________

        ________________________________________________________________________

        Is this an Irrevocable Life Insurance Trust?  ________ Yes   ________ No
        (If yes and this designation is for a Split Dollar agreement, an
        Assignment of Rights form should be completed.)

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II.     SECONDARY (CONTINGENT) DESIGNATION

        A.      PERSON(S) AS A SECONDARY (CONTINGENT) DESIGNATION:
                (Please indicate the percentage for each beneficiary.)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)           (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)           (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)           (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)           (Zip)

        B.      ESTATE AS A SECONDARY (CONTINGENT) DESIGNATION:

        My Secondary Beneficiary is The Estate of   ____________________________

        ______ as set forth in my last will and testament dated the _____ day of

        _____________, _______ and any codicils thereto.

        C.      TRUST AS A SECONDARY (CONTINGENT) DESIGNATION:

        Name of the Trust:  ____________________________________________________

        Execution Date of the Trust: _____ / _____ / _________

        Name of the Trustee: ___________________________________________________

        Beneficiary(ies) of the Trust (please indicate the percentage for each
        beneficiary):

        ________________________________________________________________________

        ________________________________________________________________________

        All sums payable under the Director Deferral Plan Agreement by reason of
        my death shall be paid to the Primary Beneficiary(ies), if he or she
        survives me, and if no Primary Beneficiary(ies) shall survive me, then
        to the Secondary (Contingent) Beneficiary(ies). This beneficiary
        designation is valid until the participant notifies the bank in writing.

        ----------------------------                ----------------------------
        R Ronald Swanner                            Date

                                       13<PAGE>

                                 EXHIBIT 10(xii)

                                 LIFE INSURANCE

                      ENDORSEMENT METHOD SPLIT DOLLAR PLAN

                                    AGREEMENT

Insurer:                                Mass Mutual Life Insurance Company
                                        New York Life Insurance Company

Policy Number:                          __________

Bank:                                   Home Savings Bank of Albemarle, SSB

Insured:                                R. Ronald Swanner

Relationship of Insured to Bank:        Director

Trust:                                  Rabbi Trust for the Executive
                                        Supplemental Retirement Plan Agreement,
                                        Director Supplemental Retirement Plan
                                        Agreement, and the Endorsement Method
                                        Split Dollar Plan Agreement

The respective rights and duties of the Bank and the Insured in the
above-referenced policy shall be pursuant to the terms set forth below:

I.      DEFINITIONS

        Refer to the policy contract for the definition of any terms in this
        Agreement that are not defined herein. If the definition of a term in
        the policy is inconsistent with the definition of a term in this
        Agreement, then the definition of the term as set forth in this
        Agreement shall supersede and replace the definition of the terms as set
        forth in the policy.

II.     POLICY TITLE AND OWNERSHIP

        Title and ownership shall reside in the Trustee for the Rabbi Trust for
        the Executive Supplemental Retirement Plan Agreement, Director
        Suppleemntal Retirement Plan Agreement, and the Endorsement Method Split
        Dollar Plan Agreement for its use and for the use of the Insured all in
        accordance with this

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        Agreement. The Trustee at the direction of the Bank may, to the extent
        of its interest, exercise the right to borrow or withdraw on the policy
        cash values. Where the Trustee at the direction of the Bank and the
        Insured (or assignee, with the consent of the Insured) mutually agree to
        exercise the right to increase the coverage under the subject Split
        Dollar policy, then, in such event, the rights, duties and benefits of
        the parties to such increased coverage shall continue to be subject to
        the terms of this Agreement.

III.    BENEFICIARY DESIGNATION RIGHTS

        The Insured (or assignee) shall have the right and power to designate a
        beneficiary or beneficiaries to receive the Insured's share of the
        proceeds payable upon the death of the Insured, and to elect and change
        a payment option for such beneficiary, subject to any right or interest
        the Trustee at the direction of the Bank or the Trust may have in such
        proceeds, as provided in this Agreement.

IV.     PREMIUM PAYMENT METHOD

        Subject to the Bank's absolute right to surrender or terminate the
        policy at any time and for any reason, the Bank or the Trustee at the
        direction of the Bank shall pay an amount equal to the planned premiums
        and any other premium payments that might become necessary to keep the
        policy in force.

V.      TAXABLE BENEFIT

        Annually the Insured will receive a taxable benefit equal to the assumed
        cost of insurance as required by the Internal Revenue Service. The Bank
        or the Trustee at the direction of the Bank will report to the Insured
        the amount of imputed income each year on Form W-2 or its equivalent.

VI.     DIVISION OF DEATH PROCEEDS

        Subject to Paragraphs VII and IX herein, the division of the death
        proceeds of the policy is as follows:

        A.      Upon the death of the Insured, the Insured's beneficiary(ies),
                designated in accordance with Paragraph III, shall be entitled
                to an amount equal to eighty percent (80%) of the net-at-risk
                insurance portion of the proceeds. The net-at-risk insurance
                portion is the total proceeds less the cash value of the policy.

        B.      The Bank shall be entitled to the remainder of such proceeds.

                                        2

<PAGE>

        C.      The Bank and the Insured (or assignees) shall share in any
                interest due on the death proceeds on a pro rata basis as the
                proceeds due each respectively bears to the total proceeds,
                excluding any such interest.

VII.    DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY

        The Bank or the Trust shall at all times be entitled to an amount equal
        to the policy's cash value, as that term is defined in the policy
        contract, less any policy loans and unpaid interest or cash withdrawals
        previously incurred by the Bank or the Trustee at the direction of the
        Bank and any applicable surrender charges. Such cash value shall be
        determined as of the date of surrender or death as the case may be.

VIII.   RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS

        In the event the policy involves an endowment or annuity element, the
        Bank's or the Trust' right and interest in any endowment proceeds or
        annuity benefits, on expiration of the deferment period, shall be
        determined under the provisions of this Agreement by regarding such
        endowment proceeds or the commuted value of such annuity benefits as the
        policy's cash value. Such endowment proceeds or annuity benefits shall
        be considered to be like death proceeds for the purposes of division
        under this Agreement.

IX.     TERMINATION OF AGREEMENT

        This Agreement shall terminate upon the occurrence of any one of the
        following:

        A.      The Insured shall be discharged from service with the Bank for
                cause. The term "for cause" shall mean any of the following that
                result in an adverse effect on the Bank: (i) gross negligence or
                gross neglect; (ii) the commission of a felony or gross
                misdemeanor involving moral turpitude, fraud, or dishonesty;
                (iii) the willful violation of any law, rule, or regulation
                (other than a traffic violation or similar offense); (iv) an
                intentional failure to perform stated duties; or (v) a breach of
                fiduciary duty involving personal profit; or

        B.      Surrender, lapse, or other termination of the Policy by the
                Bank.

        Upon such termination, the Insured (or assignee) shall have a fifteen
        (15) day option to receive from the Bank or the Trustee at the direction
        of the Bank an absolute assignment of the policy in consideration of a
        cash payment to the Bank or the Trustee at the direction of the Bank,
        whereupon this Agreement shall terminate. Such cash payment referred to
        hereinabove shall be the greater of:

                                        3

<PAGE>

        A.      The Bank's or the Trust's share of the cash value of the policy
                on the date of such assignment, as defined in this Agreement; or

        B.      The amount of the premiums which have been paid by the Bank or
                the Trustee at the direction of the Bank prior to the date of
                such assignment.

        If, within said fifteen (15) day period, the Insured fails to exercise
        said option, fails to procure the entire aforestated cash payment, or
        dies, then the option shall terminate and the Insured (or assignee)
        agrees that all of the Insured's right, interest and claim in the policy
        shall terminate as of the date of the termination of this Agreement.

        The Insured expressly agrees that this Agreement shall constitute
        sufficient written notice to the Insured of the Insured's option to
        receive an absolute assignment of the policy as set forth herein.

        Except as provided above, this Agreement shall terminate upon
        distribution of the death benefit proceeds in accordance with Paragraph
        VI above.

X.      INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS

        The Insured may not, without the written consent of the Bank or the
        Trustee at the direction of the Bank, assign to any individual, trust or
        other organization, any right, title or interest in the subject policy
        nor any rights, options, privileges or duties created under this
        Agreement.

XI.     AGREEMENT BINDING UPON THE PARTIES

        This Agreement shall bind the Insured and the Bank or the Trustee at the
        direction of the Bank, their heirs, successors, personal representatives
        and assigns.

XII.    ERISA PROVISIONS

        The following provisions are part of this Agreement and are intended to
        meet the requirements of the Employee Retirement Income Security Act of
        1974 ("ERISA"):

        A.      Named Fiduciary and Plan Administrator.

                The "Named Fiduciary and Plan Administrator" of this Endorsement
                Method Split Dollar Agreement shall be Home Savings Bank of
                Albemarle, SSB until its resignation or removal by the Board of
                Directors. As Named Fiduciary and Plan Administrator, the Bank
                or the Trustee at the direction of the Bank shall be responsible
                for the management, control, and administration of this Split
                Dollar Plan as established herein. The Named Fiduciary may
                delegate to others certain aspects of the

                                        4

<PAGE>

                management and operation responsibilities of the Plan, including
                the employment of advisors and the delegation of any ministerial
                duties to qualified individuals.

        B.      Funding Policy.

                Subject to the Bank's absolute right to surrender or terminate
                the policy at any time and for any reason, the funding policy
                for this Split Dollar Plan shall be to maintain the subject
                policy in force by paying, when due, all premiums required.

        C.      Basis of Payment of Benefits.

                Direct payment by the Insurer is the basis of payment of
                benefits under this Agreement, with those benefits in turn being
                based on the payment of premiums as provided in this Agreement.

        D.      Claim Procedures.

                Claim forms or claim information as to the subject policy can be
                obtained by contacting Benmark, Inc. (800-544-6079). When the
                Named Fiduciary has a claim which may be covered under the
                provisions described in the insurance policy, it should contact
                the office named above, and they will either complete a claim
                form and forward it to an authorized representative of the
                Insurer or advise the named Fiduciary what further requirements
                are necessary. The Insurer will evaluate and make a decision as
                to payment. If the claim is payable, a benefit check will be
                issued in accordance with the terms of this Agreement.

                In the event that a claim is not eligible under the policy, the
                Insurer will notify the Named Fiduciary of the denial pursuant
                to the requirements under the terms of the policy. If the Named
                Fiduciary is dissatisfied with the denial of the claim and
                wishes to contest such claim denial, they should contact the
                office named above and they will assist in making an inquiry to
                the Insurer. All objections to the Insurer's actions should be
                in writing and submitted to the office named above for
                transmittal to the Insurer.

XIII.   GENDER

        Whenever in this Agreement words are used in the masculine or neuter
        gender, they shall be read and construed as in the masculine, feminine
        or neuter gender, whenever they should so apply.

                                        5

<PAGE>

XIV.    INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT

        The Insurer shall not be deemed a party to this Agreement, but will
        respect the rights of the parties as herein developed upon receiving an
        executed copy of this Agreement. Payment or other performance in
        accordance with the policy provisions shall fully discharge the Insurer
        from any and all liability.

XV.     CHANGE OF CONTROL

        Change of Control shall be deemed to be the cumulative transfer of more
        than fifty percent (50%) of the voting stock of the Bank from the date
        of this Agreement. For the purposes of this Agreement, transfers on
        account of death or gifts, transfers between family members, or
        transfers to a qualified retirement plan maintained by the Bank shall
        not be considered in determining whether there has been a Change of
        Control. Upon a Change of Control, if the Insured's service is
        subsequently terminated, except for cause, then the Insured shall be one
        hundred percent (100%) vested in the benefits promised in this
        Agreement.

XVI.    AMENDMENT OR REVOCATION

        Subject to the Bank's absolute right to surrender or terminate the
        policy at any time and for any reason, it is agreed by and between the
        parties hereto that, during the lifetime of the Insured, this Agreement
        may be amended or revoked at any time or times, in whole or in part, by
        the mutual written consent of the Insured and the Bank.

XVII.   EFFECTIVE DATE

        The Effective Date of this Agreement shall be February 18, 2003.

XVIII.  SEVERABILITY AND INTERPRETATION

        If a provision of this Agreement is held to be invalid or unenforceable,
        the remaining provisions shall nonetheless be enforceable according to
        their terms. Further, in the event that any provision is held to be over
        broad as written, such provision shall be deemed amended to narrow its
        application to the extent necessary to make the provision enforceable
        according to law and enforced as amended.

XIX.    APPLICABLE LAW

        The validity and interpretation of this Agreement shall be governed by
        the laws of the State of North Carolina.

Executed at Albemarle, North Carolina this ________day of ___________, 2003.

                                        6

<PAGE>

                                             HOME SAVINGS BANK OF
                                             ALBEMARLE, SSB
                                             Albemarle, North Carolina

                                             By:
--------------------------------                --------------------------------
Witness                                                     Title

--------------------------------                --------------------------------
Witness                                               R. Ronald Swanner

                                        7

<PAGE>

                          BENEFICIARY DESIGNATION FORM
                      FOR LIFE INSURANCE ENDORSEMENT METHOD
                           SPLIT DOLLAR PLAN AGREEMENT

I.      PRIMARY DESIGNATION
                (You may refer to the beneficiary designation information prior
                to completion.)

        A.      PERSON(S) AS A PRIMARY DESIGNATION:
                (Please indicate the percentage for each beneficiary.)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        B.      ESTATE AS A PRIMARY DESIGNATION:

        My Primary Beneficiary is The Estate of   ______________________________

        _____ as set forth in the last will and testament dated the _____ day of

        _____________, _______ and any codicils thereto.

        C.      TRUST AS A PRIMARY DESIGNATION:

        Name of the Trust:  ____________________________________________________

        Execution Date of the Trust: _____ / _____ / _________

        Name of the Trustee: ___________________________________________________

        Beneficiary(ies) of the Trust (please indicate the percentage for each
        beneficiary):

        ________________________________________________________________________

        ________________________________________________________________________

        Is this an Irrevocable Life Insurance Trust?  ________ Yes   ________ No
        (If yes and this designation is for a Split Dollar agreement, an
        Assignment of Rights form should be completed.)

                                        8

<PAGE>

II.     SECONDARY (CONTINGENT) DESIGNATION

        A.      PERSON(S) AS A SECONDARY (CONTINGENT) DESIGNATION:
                (Please indicate the percentage for each beneficiary.)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        Name______________________   Relationship___________________  / _______%

        Address:_______________________________________________________________
                     (Street)              (City)       (State)          (Zip)

        B.      ESTATE AS A SECONDARY (CONTINGENT) DESIGNATION:

        My Secondary Beneficiary is The Estate of   ____________________________

        ______ as set forth in my last will and testament dated the _____ day of

        _____________, _______ and any codicils thereto.

        C.      TRUST AS A SECONDARY (CONTINGENT) DESIGNATION:

        Name of the Trust:  ____________________________________________________

        Execution Date of the Trust: _____ / _____ / _________

        Name of the Trustee: ___________________________________________________

        Beneficiary(ies) of the Trust (please indicate the percentage for each
        beneficiary):

        ________________________________________________________________________

        ________________________________________________________________________

        All sums payable under the Life Insurance Endorsement Method Split
        Dollar Plan Agreement by reason of my death shall be paid to the Primary
        Beneficiary(ies), if he or she survives me, and if no Primary
        Beneficiary(ies) shall survive me, then to the Secondary (Contingent)
        Beneficiary(ies). This beneficiary designation is valid until the
        participant notifies the bank in writing.

        ----------------------------                ----------------------------
        R Ronald Swanner                            Date

                                        9

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