Document:

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                                                                    Exhibit 10.6

                                OPTION AGREEMENT

     OPTION AGREEMENT, dated as of April 4, 1996, by and between Smith Breeden
Associates, Inc. ("Smith Breeden") and Harrington West Financial Group, Inc.
("HWFG"), a Delaware corporation (the "Agreement").

                                   WITNESSETH

     WHEREAS, HWFG and Los Padres Savings Bank, F.S.B. (the "Bank") have entered
into an Agreement and Plan of Reorganization, dated as of September 19, 1995 and
amended as of March 28, 1996, and a related Plan of Merger (collectively, the
"Reorganization Agreement"), pursuant to which HWFG is acquiring the Bank as of
the date hereof (the "Acquisition");

     WHEREAS, in recognition of Smith Breeden's services as financial advisor to
HWFG in connection with the Acquisition and the related capitalization of HWFG,
as described in the Reorganization Agreement, HWFG desires to grant to Smith
Breeden an option to purchase shares of its common stock upon the terms and
subject to the conditions set forth herein; and

     WHEREAS, the parties desire to enter into this Option Agreement.

     NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:

     1. GRANT OF OPTION. Subject to the terms and conditions hereof, HWFG
irrevocably grants to Smith Breeden as of April 4, 1996 the option ("Option") to
purchase at one time or from time to time an aggregate of 50,000 shares of
common stock, par value $.01 per share, of HWFG ("Common Stock") at a price per
share equal to $17.50 (the price per share is referred to below as the "Purchase
Price" and the price when used with respect to a number of shares is referred to
below as the "aggregate Purchase Price" for such shares). As used in this
Agreement, the term "Shares" means the shares of Common Stock subject to the
Option.

     2. EXERCISE OF OPTION. Subject to the terms and conditions hereof, HWFG may
exercise the Option, in whole at any time or in part from time to time, to the
extent not previously exercised, provided that to the extent the Option shall
not have been exercised, it shall terminate and be of no further effect, except
as to notices of exercise given prior thereto, on April 4, 2001 (the
"Termination Date").

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     3.   NOTICE OF EXERCISE; PAYMENT AND DELIVERY OF SHARES.

     (a)  In the event that Smith Breeden desires to exercise the Option, Smith
Breeden shall send a written notice (the date of which being herein referred to
as the "Notice Date") to HWFG specifying the total number of Shares it will
purchase and a place and date for the closing of such purchase, which date
shall be not later than 60 calendar days nor earlier than three business days
from the date such notice is given, unless additional time is needed to give
notification to or to obtain approval from any governmental or regulatory
authority and, if so required, three business days from the date on which the
required notification period has expired or been terminated or such approval
has been obtained and any requisite waiting period with respect thereto shall
have passed.

     (b)  At the closing of any purchase of Shares hereunder, (a) Smith Breeden
shall make payment to HWFG of the aggregate Purchase Price for the Shares to be
purchased by delivery to HWFG of a certified, cashier's or bank check payable
to the order of HWFG in such amount or, if mutually agreed, by wire transfer of
funds in such amount to an account designated in writing by HWFG; and (b) HWFG
shall deliver to Smith Breeden a certificate or certificates representing the
Shares so purchased, registered in the name of Smith Breeden or its designee.

     (c)  Smith Breeden agrees that it shall not purchase any Shares upon
exercise of all or part of the Option without filing and obtaining acceptance,
nonobjection or approval, as the case by be, of the Office of Thrift
Supervision, or successor agency (the "OTS"), of any rebuttal, notice,
application or other filing which may be required to be made by Smith Breeden
with the OTS in connection with such acquisition, taking into consideration any
other persons who at such time are acting in concert, or presumed to be acting
in concert, with Smith Breeden.

     4.   REPRESENTATIONS AND WARRANTIES OF HWFG. HWFG hereby represents and
warrants to Smith Breeden as follows:

     (a)  This Agreement has been duly authorized, executed and delivered by
HWFG and constitutes a valid and binding agreement of HWFG, enforceable against
HWFG in accordance with its terms, except to the extent that the obligations of
HWFG set forth in Section 8(a) and (d) hereof may be unenforceable under
applicable federal and state securities laws.

     (b)  HWFG has taken all necessary corporate and other action (excluding any
required governmental or stockholder approvals) to authorize and reserve and to
permit it to issue, and at all times from the date hereof until such time as the
obligation to deliver Shares upon the exercise of the Option terminates, will
have reserved for issuance, upon any exercise of the Option, the number of
Shares subject to the Option (less the number of Shares previously issued upon
any partial exercise of the Option or as to which the Option may no longer be
exercised). All of the Shares to be issued pursuant to the Option are duly

                                       2
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authorized and, upon issuance and delivery thereof pursuant to this Agreement,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all claims, liens, charges, encumbrances and security interests, and will not
have been issued in violation of, and will not be subject to, any preemptive
rights of any stockholders of HWFG.

     (c)  The execution, delivery and performance by HWFG of this Agreement and
the consummation of the transactions contemplated hereby (excluding any required
governmental approvals) do not contravene, or constitute a default under, (i)
the Certificate of Incorporation or Bylaws of HWFG or (ii) any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
binding upon HWFG or any of its subsidiaries.

     5.   REPRESENTATIONS AND WARRANTIES OF SMITH BREEDEN.  Smith Breeden hereby
represents and warrants to HWFG as follows:

     (a)  This Agreement has been duly authorized, executed and delivered by
Smith Breeden and constitutes a valid and binding agreement of Smith Breeden,
enforceable against Smith Breeden in accordance with its terms, except to the
extent that the obligations of Smith Breeden set forth in Section 8(b) and (d)
hereof may be unenforceable under applicable federal and state securities laws.

     (b)  Smith Breeden hereby acknowledges that (i) the Option has not been,
and the Shares may not be, registered under the Securities Act of 1933, as
amended ("Securities Act"), or any other applicable securities registration
requirements and (ii) the Option and the Shares may not be transferred except in
compliance with applicable registration requirements or an available exemption
therefrom.

     6.   ADJUSTMENT UPON CHANGE IN CAPITALIZATION, ETC.  In the event of any
change in the Common Stock by reason of stock dividends, stock splits, mergers,
consolidations, recapitalizations, combinations, conversions, exchanges of
shares, extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of HWFG which would have the effect of diluting
or changing Smith Breeden's rights hereunder, the number and kind of shares or
securities subject to the Option and the Purchase Price (but not the aggregate
Purchase Price of the Shares) shall be appropriately and equitably adjusted so
that Smith Breeden shall receive upon exercise of the Option the number and
class of shares or other securities or property that Smith Breeden would have
received in respect of the Shares that could have been purchased upon exercise
of the Option if the Option could have been and had been exercised immediately
prior to such event or the record date therefor, as applicable. HWFG shall take
such steps in connection with any consolidation, merger, liquidation or other
such action as may be necessary to ensure that the provisions hereof shall
thereafter apply as nearly as possible to any securities or property thereafter
deliverable upon exercise of the Option.

                                       3

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     7.   REGISTRATION OF THE SHARES.  HWFG shall notify Smith Breeden in
writing not less than ten business days prior to filing a registration statement
under the Securities Act with respect to any Common Stock (other than a filing
on Form S-4 or Form S-8) of HWFG's intention so to file. If Smith Breeden wishes
to have any portion of its Shares purchased hereunder included in such
registration statement, it shall advise HWFG in writing to that effect within
five business days following receipt of such notice from HWFG pursuant to the
preceding sentence, and HWFG will thereupon include the number of shares
indicated by Smith Breeden under such registration statement, provided, however,
that if the managing underwriter determines and advises HWFG and Smith Breeden
in writing that the inclusion in the registration statement of the number of
shares indicated by Smith Breeden would interfere with the successful marketing
of the Common Stock proposed to be registered and sold by HWFG, then the number
of shares indicated by Smith Breeden to be included in the underwriting shall be
reduced or eliminated pro rata among all holders of shares of Common Stock
requesting such registration, and further provided, however, that nothing herein
shall prevent HWFG from, at any time, abandoning or delaying any registration.

     8.   INDEMNIFICATION.

     (a)  In connection with any registration under the provisions of Section 7
hereof, HWFG shall indemnify and hold harmless Smith Breeden and any
underwriter (as defined in the Securities Act) for Smith Breeden and each
person who controls Smith Breeden or such underwriter within the meaning of
the Securities Act, from and against any and all loss, damage, liability, cost
and expense to which Smith Breeden or any such underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as
such losses, damages, liabilities, costs or expenses are caused by or arise
out of or are based upon any untrue statement or alleged untrue statement  of
any material fact contained in such registration statement, any preliminary or
final offering prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading; provided, however, that HWFG will not be liable in any
such case to the extent that any such loss, damage, liability, cost or expense
arises out of or is based upon an untrue statement or omission so made in
conformity with information furnished by Smith Breeden, such underwriter or
such controlling persons in writing specifically for use in the preparation
thereof.

     (b)  Smith Breeden will indemnify and hold harmless HWFG, any underwriter
for HWFG and each person who controls HWFG or such underwriter within the
meaning of the Securities Act, from and against any and all loss, damage,
liability, cost and expense to which HWFG or any such underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
or arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration statement, any
preliminary or

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final offering prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or omission was so made in conformity with information
furnished by Smith Breeden in writing specifically for use in the preparation
thereof.

     (c)  Promptly after receipt by an indemnified party pursuant to the
provisions of Section 8(a) or (b) of notice of the commencement of any action
involving the subject matter of the foregoing indemnity provisions, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party pursuant to the provisions of Section 8(a) or (b), promptly
notify the indemnifying party of the commencement thereof; except to the extent
of any actual prejudice to the indemnifying party, the omission to so notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise hereunder. In case such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interests which would prevent
counsel for the indemnifying party from also representing the indemnified
party, the indemnified party or parties shall have the right to select one
separate counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of Section 8(a) or (b) for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation, unless (i) the indemnified party shall
have employed counsel in accordance with the provisions of the preceding
sentence, (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the notice of the commencement of the
action, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.

     (d)  If recovery is not available under the foregoing indemnification
provisions, for any reason other than as expressly specified therein, the
parties entitled to indemnification by the terms thereof shall be entitled to
contribution to liabilities and expenses, except to the extent that
contribution is not permitted under Section 11(f) of the Securities Act. In
determining the amount of contribution to which the respective parties are
entitled, there shall be considered the parties' relative fault, knowledge and
access to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and/or prevent any statement or omission,
and any other equitable considerations appropriate under the circumstances.

                                       5
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     9.   QUOTATION. If the Common Stock or any other securities to be acquired
upon exercise of the Option are then authorized for quotation or trading or
listing on the Nasdaq National Market or any securities exchange, HWFG, upon the
request of Smith Breeden will promptly file an application, if required, to
authorize for quotation or trading or listing the shares of Common Stock or
other securities to be acquired upon exercise of the Option on the Nasdaq
National Market or such other securities exchange and will use its best efforts
to obtain approval, if required, of such quotation or listing as soon as
practicable.

     10.  FURTHER ASSURANCES. HWFG agrees to execute and deliver such documents
and instruments and take such further actions as may be necessary or appropriate
or as Smith Breeden may reasonably request in order to ensure that Smith Breeden
receives the full benefits of this Agreement (including, without limitation, the
prompt filing of any required notice or application for approval with any
applicable federal or state regulatory agency). Prior to the Termination Date,
HWFG will refrain from taking any action which would have the effect of
preventing or interfering with the delivery by HWFG of the Shares (or other
securities deliverable pursuant to Section 6 hereof) to Smith Breeden upon any
exercise of the Option or from otherwise performing its obligations under this
Agreement.

     11.  REMEDIES. The parties agree that Smith Breeden would be irreparably
damaged if for any reason HWFG failed to issue any of the Shares (or other
securities deliverable pursuant to Section 6 hereof) upon exercise of the Option
or to perform any of its other obligations under this Agreement, and that Smith
Breeden would not have an adequate remedy at law in such event. Accordingly,
Smith Breeden shall be entitled to specific performance and injunctive and other
equitable relief to enforce the performance of this Agreement by HWFG. This
provision is without prejudice to any other rights that Smith Breeden may have
against HWFG for any failure to perform its obligations under this Agreement.

     12.  MISCELLANEOUS.

     (a)  Expenses. Except as otherwise provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.

     (b)  Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered personally, sent by overnight
express or mailed by prepaid registered or certified mail (return receipt
requested) or by cable, telegram, telecopy or telex addressed as follows:

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          (i)  If to Smith Breeden, to:

               Smith Breeden Associates, Inc.
               7300 College Boulevard, Suite 430
               Overland Park, Kansas 66210
               ATTN: Michael J. Giarla

               Copy to:

               Elias, Matz, Tiernan and Herrick L.L.P.
               734 15th Street, N.W.
               Washington, D.C. 20005
               ATTN: Jeffrey D. Haas, Esq.

          (ii) If to HWFG, to:

               Harrington West Financial Group, Inc.
               610 Alamo Pintado Road
               Solvang, California 93463-2247
               ATTN: Craig J. Cerny

               Copy to:

               Manatt Phelps & Phillips
               11355 West Olympic Boulevard
               Los Angeles, California 90064
               ATTN: Andrew Erskine, Esq.

or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.

     (c) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

     If for any reason any court or regulatory agency determines that the
Option will not permit the holder to acquire the full number of Shares, it is
the express intention of HWFG to allow the holder to acquire such lesser number
of shares as may be permissible, without any amendment or modification hereof.

     (d) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflicts of laws thereof.

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     (e)  Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.

     (f)  Headings.  The section headings herein are for convenience only and
shall not affect the construction hereof.

     (g)  Assignment.  Smith Breeden may assign this Agreement to any person or
persons in whole or in part, provided that such assignee shall not purchase any
Shares upon exercise of all or part of the Option without filing and obtaining
acceptance, nonobjection or approval, as the case may be, of the OTS, of any
rebuttal, notice, application or other filing which may be required to be made
by such assignee with the OTS in connection with such acquisition, taking into
consideration any other persons who at such time are acting in concert, or
presumed to be acting in concert, with such assignee. In the case of any sale,
transfer, assignment or disposition in whole or in part of this Option, HWFG
shall do all things necessary to facilitate the same and the person to whom
this Option is sold, transferred assigned or disposed of shall agree in writing
to the terms and conditions hereof. This Agreement shall not be assignable by
HWFG except by operation of law. Subject to the foregoing, this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.

     (h)  Parties in Interest.  This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person (other than an
assignee or transferee of Smith Breeden pursuant to Section 12(g) hereof) any
rights or remedies of any nature whatsoever under or by any reason of this
Agreement.

     13.  ENTIRE AGREEMENT.  This Agreement, including the documents and other
writings referred to herein or delivered pursuant hereto, contains the entire
agreement and understanding of the parties with respect to its subject matter.
There are no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties other than those expressly set forth herein or
therein. This Agreement supersedes all prior agreements and understandings
between the parties, both written and oral, with respect to its subject matter.

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<PAGE>

     IN WITNESS WHEREOF, Smith Breeden and HWFG have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.

                                       SMITH BREEDEN ASSOCIATES, INC.

Attest:

/s/ DEBRA L. DUGAN                     By:  /s/ MICHAEL J. GIARLA
-------------------------------             -------------------------------
Debra L. Dugan                              Michael J. Giarla
Secretary                                   Chief Operating Officer and
                                              Executive Vice President

                                       HARRINGTON WEST FINANCIAL GROUP, INC.

Attest:

/s/ WALLACE P. WOLF                    By:  /s/ CRAIG J. CERNY
-------------------------------             -------------------------------
Wallace P. Wolf                             Craig J. Cerny
Secretary                                   Chairman and Chief Executive Officer

                                       9

<PAGE>

                              ASSIGNMENT OF OPTION

     ASSIGNMENT, dated as of January 19, 2001 by and between Smith Breeden
Associates, Inc. ("Smith Breeden" or "Assignor") and Craig Cerny ("Assignee")
(the "Assignment").

                                   WITNESSETH

     WHEREAS, Smith Breeden entered into an Option Agreement with Harrington
West Financial Group, Inc. ("HWFG") dated April 4, 1996 (the "Option
Agreement") whereby HWFG granted to Smith Breeden an option to purchase 50,000
shares of common stock, par value $.01 per share, of HWFG ("Common Stock") at a
purchase price equal to $17.50 per share ("Option");

     WHEREAS, the Option Agreement provides that Smith Breeden may assign the
Option Agreement and Option to any person in whole or in part;

     WHEREAS, Smith Breeden desires to assign a portion of the Option Agreement
and Option to purchase 1,900 shares of Common Stock to Assignee; and

     WHEREAS, the parties desire to enter into this Assignment.

     NOW, THEREFORE, in consideration of the premises herein contained, for
good and valuable consideration, the parties agree as follows:

     Assignor hereby assigns its rights, title and interest to purchase 1,900
shares of Common Stock under the Option Agreement to Assignee subject to the
terms and conditions of the Option Agreement, a copy of which is attached
hereto.

     Assignee agrees to abide by the terms and conditions of the Option
Agreement and further agrees not to purchase any shares of Common Stock upon
exercise of all or part of the Option without filing and obtaining acceptance,
nonobjection or approval, as the case may be, of the Office of Thrift
Supervision ("OTS"), of any rebuttal, notice, application or other filing which
may be required to be made by Assignee with the OTS in connection with such
acquisition, taking into consideration any other persons who at such time are
acting in concert, or presumed to be acting in concert, with Assignee.

<PAGE>
     IN WITNESS WHEREOF, Smith Breeden and Assignee have caused this Assignment
to be executed as of the day and year first above written.

                                             SMITH BREEDEN ASSOCIATES, INC.

Attest:

/s/ Marianthe S. Mewkill                By: /s/ Michael J. Giarla
-----------------------------               ------------------------------
Marianthe S. Mewkill                    Michael J. Giarla
Secretary                               Chief Operating Officer and Executive
                                        Vice President

                                             ASSIGNEE

                                            Craig J. Cerny
                                            ------------------------------
                                            Craig Cerny<PAGE>

                                                                    EXHIBIT 10.7

                            STOCK PURCHASE AGREEMENT

                This Stock Purchase Agreement (this "Agreement"), dated as of
May 30, 2001, is made by and between HARRINGTON BANK, FSB, a federally chartered
savings association ("Seller") and LOS PADRES BANK, FSB, a federally chartered
savings association ("Buyer").

                                    RECITALS

                WHEREAS, Seller owns 51 shares of capital stock, constituting
51% of the issued and outstanding capital stock, of Harrington Wealth Management
Company, an Indiana corporation (the "Stock", and such company, the
"Subsidiary").

                WHEREAS, Seller and Buyer are parties to a Shareholder Agreement
dated as of February 1, 1999 relating to their respective investments in the
Subsidiary, which, among other things, provides for a right of first refusa1
with respect to the Stock (the "Shareholder Agreement").

                WHEREAS, Buyer desires to purchase the Stock in accordance with
the Shareholder Agreement in consideration for cash in the amount of the
Purchase Price.

                WHEREAS, Seller desires to sell the Stock to Buyer in
consideration for the Purchase Price.

                NOW, THEREFORE, in consideration of the foregoing and the mutual
representations and promises herein contained, the parties agree as follows:

                                    AGREEMENT

                1.      Purchase and Sale of Stock. Upon the terms and subject
to the conditions set forth herein, Seller agrees to sell, convey and transfer
to Buyer, and Buyer hereby agrees to purchase from Seller, the Stock, all
effective at the Closing for the Purchase Price as defined in paragraph 2 below.
As used herein, the term "Closing" shall mean the consummation of the
transactions described herein, which shall take place on a date mutually
agreeable to the parties within ten business days of the satisfaction of the
last to be satisfied of all of the conditions contained in Section 4 of this
Agreement.

                2.      De1ivery of Purchase Price. The Purchase Price for the
Stock shall be an amount in cash equal to the net book value of the Subsidiary
as mutually determined by Seller and Buyer on the last business day of the
calendar month preceding the Closing. The term "net book value" shall mean the
net book value determined in accordance with generally accepted accounting
principles. Buyer agrees to pay the Purchase Price in cash at the Closing.

                3.      Representations and Warranties. Each of Seller and Buyer
represents and warrants to the other on the Closing as follows:

                        a.      Due Organization. It is duly organized and
existing under the laws of the jurisdiction in which it was organized, has the
power and authority to own its property and

<PAGE>

carry on its business as now being conducted, and is qualified to do business in
all jurisdictions in which the nature of the business conducted makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on it.

                        b.      Authority. It has full power and authority to
execute, deliver and perform this Agreement. The execution of this Agreement and
the performance of the services and activities contemplated hereby will not
violate the terms or conditions of any other agreement with respect to which
such party is subject.

                        c.      Corporate Action Taken. All corporate or other
organizational action on its part, or of its directors, stockholders or members
necessary for the authorization, execution, delivery and performance of this
Agreement has been duly taken, and this Agreement is a legal, valid and binding
agreement of it enforceable against it in accordance with its terms, except as
the enforcement thereof may be limited by (1) applicable bankruptcy, insolvency,
reorganization, liquidation, conservatorship, receivership, moratorium, or other
similar laws affecting the enforcement of creditors' rights generally, and (2)
general principles of equity.

                        d.      Authority of Signers. Its officers who are
executing this Agreement are duly and properly in office and fully authorized to
execute this Agreement.

                        e.      Consent and Approval of Others. Except for any
required approval of the Office of Thrift Supervision, no consent or approval of
any third party, no filings or registrations with, and no consent, permission,
authorization, order or license of any governmental authority is necessary in
connection with the execution and delivery by such party of this Agreement, or
any transaction contemplated hereby, except as may have been obtained by such
party.

                        f.      Compliance with Laws. There is no provision of
any charter or by-law of such party and no provision of any indenture or
agreement, written or oral, to which it is a party or under which it is
obligated, nor is there any applicable statute, governmental rule or regulation,
or any judgment, decree or order of any court or agency binding on it, which
would be violated or breached by its execution, delivery and performance of this
Agreement, which violation or breach would have a material adverse effect on
such party.

                        g.      Litigation. It is not subject to any (i)
contingent liabilities or (ii) pending, or to its knowledge threatened,
litigation, administrative proceedings or inquiries which, in the case of either
clause (i) or (ii), could have a material adverse effect on the relationship
contemplated hereby.

                        h.      No Brokers. It has not involved or retained a
broker in connection with the transactions contemplated hereby and no third
party shall be entitled to receive compensation based upon this arrangement.

                4.      Conditions to Closing.

                        a.      Conditions to the Obligations of Se1ler. Unless
waived in writing by Seller, the obligations of Seller to consummate the
transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Closing of the following conditions:

                                        2

<PAGE>

                                (i)     Performance. Each of the acts and
undertakings and covenants of Buyer to be performed at or before the Closing
pursuant to this Agreement shall have been duly performed.

                                (ii)    Representations and Warranties. The
representations and warranties of Buyer contained in Article 3 of this Agreement
shall be true, correct and complete on and as of the Closing with the same
effect as though made on and as of the Closing.

                                (iii)   Seller shall have received the Purchase
Price from Buyer.

                                (iv)    Seller shall have received such other
instruments and documents as counsel for Seller may reasonably require as
necessary or desirable for transferring to Buyer the obligation to pay the
Deposit liabilities and otherwise perform Seller's obligations that are being
transferred to Buyer pursuant to this Agreement, all in form and substance
reasonably satisfactory to counsel for Seller.

                        b.      Conditions to the Obligations of Buyer. Unless
waived in writing by Buyer, the obligations of Buyer to consummate the
transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Closing of the following conditions:

                                (i)     Performance. Each of the acts and
undertakings and covenants of Seller to be performed at or before the Closing
pursuant to this Agreement shall have been duly performed.

                                (ii)    Representations and Warranties. The
representations and warranties of Seller contained in Article 3 of this
Agreement shall be true, correct and complete on and as of the Closing with the
same effect as though made on and as of the Closing.

                                (iii)   No Material Adverse Change. Between the
date of this Agreement and the Closing, no material adverse change shall have
occurred with respect to the Subsidiary, its business operations or financial
condition.

                                (iv)    Stock Certificates. Buyer shall have
received all stock certificates representing the Stock duly endorsed to Buyer.

                                (v)     Termination of Shareholder Agreement.
Seller shall have executed any documentation reasonably required by Buyer to
evidence the termination of the Shareholder Agreement.

                        c.      Condition to the Obligations of Seller and
Buyer.

                                (i)     Regulatory Approvals. All required
licenses, approvals, and consents of any relevant federal, state, or other
regulatory agency (including the Buyer's application for trust powers and
operating subsidiary status for the Subsidiary) shall have been obtained without
any conditions or other requirements reasonably deemed materially burdensome by
either Seller or Buyer, and all necessary conditions of those licenses,
approvals, and consents shall have been fully satisfied, all in form and
substance satisfactory to Buyer.

                                        3

<PAGE>

                                (ii)    Absence of Proceedings and Litigation.
No order shall have been entered and remain in force at the Closing restraining
or prohibiting any of the transactions contemplated by this Agreement in any
legal, administrative or other proceeding, and no action or proceeding shall
have been instituted or threatened on or before the Closing seeking to restrain
or prohibit the transactions contemplated by this Agreement.

                5.      Tax Matters. [intentionally deleted]

                6.      Covenant Regarding Shareholder Agreement. Buyer and
Seller agree to take all actions necessary or advisable to terminate the
Shareholder Agreement on or prior to the Closing.

                7.      Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of California

                8.      Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision hereof.

                9.      Notices. All notices or other communications hereunder
shall be made in writing and shall be delivered either by personal delivery,
United States mail, overnight courier, facsimile or other electronic
transmission, to Seller at 722 East Main Street, Richmond, Indiana 47374, and to
Buyer at 610 Alamo Pintado, Solvang, California 93463.

                10.     Counterparts. This Agreement may be executed in one or
more counterparts and each such counterpart shall constitute an original
instrument.

                11.     Assignment. This Agreement and the rights and
obligations of a party hereunder may be transferred by such party only after
Closing and upon the written consent of the other party.

                12.     Survival. The representations and warranties shall not
survive the Closing, notwithstanding anything contained herein or in the
Shareholders Agreement to the contrary.

                                        4

<PAGE>

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.

                                        HARRINGTON BANK, FSB ("Seller")

                                        By: /s/ CRAIG CERNY
                                           -------------------------------------
                                           Name: Craig Cerny
                                           Title: President

                                        By: /s/ JOHN E. FLEENER
                                           -------------------------------------
                                           Name: John Fleener
                                           Title: Chief Financial Officer

                                        LOS PADRES BANK, FSB ("Buyer")

                                        By: /s/ WILLIAM PHILLIPS, JR
                                           -------------------------------------
                                           Name: William Phillips, Jr
                                           Title: President

                                       5

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