Document:

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                                                                    Exhibit 10.2

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                     AMENDED AND RESTATED CREDIT AGREEMENT

                          DATED AS OF OCTOBER 30, 1997

                                     AMONG

                     HARRINGTON WEST FINANCIAL GROUP, INC.,

                                  THE LENDERS
                                 PARTY HERETO,

                                      AND

                         HARRIS TRUST AND SAVINGS BANK,
                           INDIVIDUALLY AND AS AGENT

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                               TABLE OF CONTENTS

SECTION                           DESCRIPTION                               PAGE

SECTION 1.       THE CREDITS ...............................................  1
  Section 1.1.     Revolving Credit ........................................  1
  Section 1.2.     Revolving Credit Loans ..................................  2
  Section 1.3.     Manner and Disbursement of Loans ........................  2

SECTION 2.       INTEREST AND CHANGE IN CIRCUMSTANCES ......................  3
  Section 2.1.     Interest Rate Options ...................................  3
  Section 2.2.     Minimum LIBOR Portions ..................................  4
  Section 2.3.     Computation of Interest .................................  4
  Section 2.4.     Manner of Rate Selection ................................  4
  Section 2.5.     Change of Law ...........................................  5
  Section 2.6.     Unavailability of Deposits or Inability to Ascertain
                     Adjusted LIBOR ........................................  5
  Section 2.7.     Taxes and Increased Costs ...............................  5
  Section 2.8.     Funding Indemnity .......................................  6
  Section 2.9.     Lending Branch ..........................................  7
  Section 2.10.    Discretion of Lenders as to Manner of Funding ...........  7

SECTION 3.       FEES, PREPAYMENTS, TERMINATIONS, APPLICATIONS AND
                   EXTENSIONS ..............................................  7

  Section 3.1.     Prepayments .............................................  7
  Section 3.2.     Voluntary Terminations ..................................  8
  Section 3.3.     Place and Application of Payments .......................  8
  Section 3.4.     Notations ...............................................  9
  Section 3.5.     Extension of the Revolving Credit Termination Date ......  9

SECTION 4.       COLLATERAL AND GUARANTY ................................... 10
  Section 4.1.     Collateral .............................................. 10
  Section 4.2.     Guaranty ................................................ 10

SECTION 5.       DEFINITIONS; INTERPRETATION ............................... 10
  Section 5.1.     Definitions ............................................. 10
  Section 5.2.     Interpretation .......................................... 18

SECTION 6.       REPRESENTATIONS AND WARRANTIES ............................ 18
  Section 6.1.     Organization and Qualification .......................... 18
  Section 6.2.     Subsidiaries ............................................ 18
  Section 6.3.     Corporate Authority and Validity of Obligations ......... 18

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     Section 6.4.   Use of Proceeds: Margin Stock......................... 19
     Section 6.5.   Financial Reports..................................... 19
     Section 6.6.   No Material Adverse Change............................ 19
     Section 6.7.   Full Disclosure....................................... 19
     Section 6.8.   Good Title............................................ 20
     Section 6.9.   Litigation and Other Controversies.................... 20
     Section 6.10.  Taxes................................................. 20
     Section 6.11.  Approvals............................................. 20
     Section 6.12.  Affiliate Transactions................................ 20
     Section 6.13.  Investment Company; Public Utility Holding Company.... 20
     Section 6.14.  ERISA................................................. 20
     Section 6.15.  Compliance with Laws.................................. 21
     Section 6.16.  Other Agreements...................................... 21
     Section 6.17.  No Default............................................ 21

SECTION 7.     CONDITIONS PRECEDENT....................................... 21
     Section 7.1.   All Advances.......................................... 21
     Section 7.2.   Initial Advance....................................... 22
     Section 7.3.   Loan by New Lender.................................... 23

SECTION 8.     COVENANTS.................................................. 23
     Section 8.1.   Maintenance of Business............................... 23
     Section 8.2.   Maintenance of Properties............................. 23
     Section 8.3.   Taxes and Assessments................................. 24
     Section 8.4.   Insurance............................................. 24
     Section 8.5.   Financial Reports..................................... 24
     Section 8.6.   Inspection............................................ 26
     Section 8.7.   Non-Performing Assets................................. 26
     Section 8.8.   Regulatory Capital Requirements....................... 27
     Section 8.9.   Loan to Value Ratio................................... 27
     Section 8.10.  Mortgage Derivatives.................................. 27
     Section 8.11.  Indebtedness for Borrowed Money....................... 27
     Section 8.12.  Liens................................................. 28
     Section 8.13.  Mergers and Consolidations............................ 28
     Section 8.14.  Maintenance of Subsidiaries........................... 28
     Section 8.15.  Dividends and Certain Other Restricted Payments....... 28
     Section 8.16.  ERISA................................................. 28
     Section 8.17.  Compliance with Laws.................................. 29
     Section 8.18.  Burdensome Contracts With Affiliates.................. 29
     Section 8.19.  Change in the Nature of Business...................... 29

SECTION 9.     EVENTS OF DEFAULT AND REMEDIES............................. 29
     Section 9.1.   Events of Default..................................... 29
     Section 9.2.   Non-Bankruptcy Defaults............................... 32

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     Section 9.3.   Bankruptcy Defaults...................................... 32

SECTION 10.    THE AGENT..................................................... 32

     Section 10.1.  Appointment and Authorization............................ 32
     Section 10.2.  Rights as a Lender....................................... 32
     Section 10.3.  Standard of Care......................................... 33
     Section 10.4.  Costs and Expenses....................................... 33
     Section 10.5.  Indemnity................................................ 34

SECTION 11.    MISCELLANEOUS................................................. 34

     Section 11.1.  Withholding Taxes........................................ 34
     Section 11.2.  Non-Business Days........................................ 35
     Section 11.3.  No Waiver, Cumulative Remedies........................... 35
     Section 11.4.  Amendments............................................... 35
     Section 11.5.  Costs and Expenses....................................... 36
     Section 11.6.  Documentary Taxes........................................ 36
     Section 11.7.  Survival of Representations.............................. 36
     Section 11.8.  Survival of Indemnities.................................. 37
     Section 11.9.  Participations........................................... 37
     Section 11.10. Assignment Agreements.................................... 37
     Section 11.11. Notices.................................................. 38
     Section 11.12. Headings................................................. 38
     Section 11.13. Severability of Provisions............................... 38
     Section 11.14. Counterparts............................................. 39
     Section 11.15. Entire Understanding..................................... 39
     Section 11.16. Binding Nature, Governing Law, Etc....................... 39
     Section 11.17. Submission to Jurisdiction............................... 39

Exhibit A - Revolving Credit Note
Exhibit B - Compliance Certificate
Exhibit C - Opinion of Counsel
Schedule 6.2 - Subsidiaries
Schedule 6.12 - Affiliate Contracts

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                     AMENDED AND RESTATED CREDIT AGREEMENT

To each of the Lenders party hereto:

Ladies and Gentlemen:

     The undersigned, Harrington West Financial Group, Inc., a Delaware
corporation (the "Company"), refers to that certain Credit Agreement dated as
September 23, 1996, as amended, currently in effect among the Company, Harris
Trust and Savings Bank, as agent, and the lenders party thereto (the "Original
Credit Agreement"). The Company hereby requests that the aggregate commitments
available under the Original Credit Agreement be increased, that First
Commercial Bank, N.A. (the "New Lender") be added as a Lender, that certain
additional amendments be made to the Original Credit Agreement and, for the
sake of clarity and convenience, that the Original Credit Agreement be restated
in its entirety as so amended. This Amended and Restated Credit Agreement
amends and replaces in its entirety the Original Credit Agreement, and all
references made to the Original Credit Agreement in any Loan Document or in any
other instrument or document shall, without more, be deemed to refer to this
Amended and Restated Credit Agreement. Upon the execution of this Amended and
Restated Credit Agreement by each of the parties hereto and the fulfillment of
the conditions precedent contained in Section 6.2 hereof, this Amended and
Restated Credit Agreement shall become effective and shall supersede all
provisions of the Original Credit Agreement.

SECTION 1.     THE CREDITS.

     Section 1.1.   Revolving Credit. Subject to the terms and conditions
hereof, each Lender severally agrees to extend a revolving credit (the
"Revolving Credit") to the Company which may be availed of by the Company from
time to time during the period from and including the date hereof to but not
including the Revolving Credit Termination Date, at which time the commitments
of the Lenders to extend credit under the Revolving Credit shall expire. The
maximum amount of the Revolving Credit which each Lender agrees at any time to
extend to the Company shall be as set forth opposite such Lender's signature
hereto under the heading "Revolving Credit Commitment" for the periods
specified or as otherwise provided in Section 11.10 hereof, as such amount may
be reduced pursuant hereto. The Revolving Credit may be utilized by the Company
in the form of Revolving Credit Loans, all as more fully hereinafter set forth,
provided that the aggregate principal amount of Revolving Credit Loans
outstanding at any one time shall not exceed the Revolving Credit Commitments.
During the period from and including the date hereof to but not including the
Revolving Credit Termination Date, the Company may use the Revolving Credit
Commitments by borrowing, repaying and reborrowing Revolving Credit Loans in
whole or in part, all in accordance with the terms and conditions of this
Agreement. The obligations of the Lenders hereunder are several and not joint,
and no Lender shall under any circumstances be obligated to extend credit under
the Revolving Credit in excess of its Revolving Credit Commitment.

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     Section 1.2.   Revolving Credit Loans.  Subject to the terms and
conditions hereof, the Revolving Credit may be availed of by the Company in the
form of loans (individually a "Revolving Credit Loan" and collectively the
"Revolving Credit Loans"). Each Borrowing of Revolving Credit Loans shall be
made ratably by the Lenders in accordance with their Percentages of the
Revolving Credit Commitments. Each Borrowing of Revolving Credit Loans shall be
in an amount of $100,000 or such greater amount which is an integral multiple
of $100,000; provided, however, that a Borrowing of Revolving Credit Loans
which bears interest with reference to the Adjusted LIBOR shall be in such
greater amount as is required by Section 2 hereof. All Revolving Credit Loans
made by a Lender shall be made against and evidenced by a single Revolving
Credit Note of the Company (individually a "Revolving Credit Note" and
collectively the "Revolving Credit Notes") payable to the order of such Lender
in the amount of its Revolving Credit Commitment, with each Revolving Credit
Note to be in the form (with appropriate insertions) attached hereto as Exhibit
A. Each Revolving Credit Note shall be dated the date of issuance thereof, be
expressed to bear interest as set forth in Section 2 hereof, and be expressed
to mature on the Revolving Credit Termination Date. Without regard to the
principal amount of each Revolving Credit Note stated on its face, the actual
principal amount at any time outstanding and owing by the Company on account
thereof shall be the sum of all advances then or theretofore made thereon less
all payments of principal actually received.

     Section 1.3.   Manner and Disbursement of Loans.  The Company shall give
written or telephonic notice to the Agent (which notice shall be irrevocable
once given) by no later than 11:00 a.m. (Chicago time) on the Business Day the
Company requests that any Borrowing of Loans be made to it under the Revolving
Credit Commitments, and the Agent shall promptly notify each Lender (which
notification, if oral, shall be confirmed in writing) of the Agent's receipt of
each such notice. Each such notice shall specify the date of the Borrowing of
Loans requested (which must be a Business Day), the type of Loan being
requested, and the amount of such Borrowing. Each Borrowing of Loans shall
initially constitute part of the Domestic Rate Portion except to the extent the
Company has otherwise timely elected that such Borrowing, or any part thereof,
constitute part of a LIBOR Portion as provided in Section 2 hereof. The Company
agrees that the Agent may rely upon any written or telephonic notice given by
any person the Agent in good faith believes is an Authorized Representative
without the necessity of independent investigation and, in the event any
telephonic notice conflicts with any written confirmation, such telephonic
notice shall govern if the Agent and the Lenders have acted in reliance
thereon. Not later than 1:00 p.m. (Chicago time) on the date specified for any
Borrowing of Loans to be made hereunder, each Lender shall make the proceeds of
its Loan comprising part of such Borrowing available to the Agent in Chicago,
Illinois in immediately available funds. Subject to the provisions of Section 7
hereof, the proceeds of each Loan shall be made available to the Company at the
principal office of the Agent in Chicago, Illinois, in immediately available
funds, upon receipt by the Agent from each Lender of its Percentage of such
Borrowing. Unless the Agent shall have been notified by a lender prior to 1:00
p.m. (Chicago time) on the date a Borrowing is to be made hereunder that such
Lender does not intend to make the proceeds of its Loan available to the Agent,
the Agent may assume that such Lender has made such proceeds available to the
Agent on such date and the Agent may in reliance upon such assumption make
available to the Company a

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corresponding amount. If such corresponding amount is not in fact made available
to the Agent by such Lender and the Agent has made such amount available to the
Company, the Agent shall be entitled to receive such amount from such Lender
forthwith upon the Agent's demand, together with interest thereon in respect of
each day during the period commencing on the date such amount was made
available to the Company and ending on but excluding the date the Agent
recovers such amount at a rate per annum equal to the effective rate charged to
the Agent for overnight federal funds transactions with member banks of the
federal reserve system for each day as determined by the Agent (or in the case
of a day which is not a Business Day, then for the preceding day). If such
amount is not received from such Lender by the Agent immediately upon demand,
the Company shall, on demand, repay to the Agent the proceeds of such Loan
attributable to such Lender with interest thereon at a rate per annum equal to
the interest rate applicable to the relevant Loan, but without such payment
being considered a payment or prepayment of a LIBOR Portion, so that the
Company will have no liability under Section 2.8 hereof with respect to such
payment.

SECTION 2.     INTEREST AND CHANGE IN CIRCUMSTANCES.

     Section 2.1.   Interest Rate Options.

          (a)  Portions. Subject to the terms and conditions of this Section 2,
portions of the principal indebtedness evidenced by the Notes (all of the
indebtedness evidenced by Notes of the same type bearing interest at the same
Rate for the same period of time being hereinafter referred to as a "Portion")
may, at the option of the Company, bear interest with reference to the Domestic
rate (the "Domestic Rate Portion") or with reference to the Adjusted LIBOR
("LIBOR Portions"). Subject to the terms and conditions of this Section 2, the
Domestic Rate Portion or LIBOR Portions may be converted from time to time from
one basis to the other. All of the indebtedness evidenced by Notes which is not
part of a LIBOR Portion shall constitute a single Domestic Rate Portion. All of
the indebtedness evidenced by Notes which bears interest with reference to a
particular Adjusted LIBOR for a particular Interest Period shall constitute a
single LIBOR Portion. There shall not be more than 3 LIBOR Portions applicable
to Notes outstanding at any one time. Each Lender shall have a ratable interest
in each Portion of the indebtedness evidenced by the Notes based on its
Percentage thereof. Anything contained herein to the contrary notwithstanding,
the obligation of the Lenders to create or effect by conversion any LIBOR
Portion shall be conditioned upon the fact that at the time no Default or Event
of Default shall have occurred and be continuing. The Company hereby promises
to pay interest on each Portion at the rates and times specified in this
Section 2.

          (b)  Domestic Rate Portion. Each Domestic Rate Portion shall bear
interest at the rate per annum determined by adding 1/4 of 1% to the Domestic
Rate as in effect from time to time, provided that if a Domestic Rate Portion or
any part thereof is not paid when due (whether by lapse of time, acceleration or
otherwise) such Portion shall bear interest, whether before or after judgment,
until payment in full thereof at the rate per annum determined by adding 2-1/4%
to the interest rate which would otherwise be applicable thereto from time to
time. Interest on each Domestic Rate Portion shall be payable

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quarterly in arrears on the last day of each March, June, September and
December in each year and at maturity of the Notes, and interest after maturity
(whether by lapse of time, acceleration or otherwise) shall be due and payable
upon demand. Any change in the interest rate on the Domestic Rate Portions
resulting from a change in the Domestic Rate shall be effective on the date of
the relevant change in the Domestic Rate.

          (c) LIBOR Portions. Each LIBOR Portion shall bear interest for each
Interest Period selected therefor at a rate per annum determined by adding 3%
to the Adjusted LIBOR for such Interest Period, provided that if any LIBOR
Portion is not paid when due (whether by lapse of time, acceleration or
otherwise) such Portion shall bear interest, whether before or after judgment,
until payment in full thereof through the end of the Interest Period then
applicable thereto at the rate per annum determined by adding 2% to the
interest rate which would otherwise be applicable thereto, and effective at the
end of such Interest Period such LIBOR Portion shall automatically be converted
into and added to the applicable Domestic Rate Portion and shall thereafter
bear interest at the interest rate applicable to such Domestic Rate Portion
after default. Interest on each LIBOR Portion shall be due and payable
quarterly in arrears on the last day of each March, June, September and
December in each year and at maturity of the Notes (regardless of the duration
of the relevant Interest Period), and interest after maturity (whether by lapse
of time, acceleration or otherwise) shall be due and payable upon demand. The
Company shall notify the Agent on or before 11:00 a.m. (Chicago time) on the
third Business Day preceding the end of an Interest Period applicable to a
LIBOR Portion whether such LIBOR Portion is to continue as a LIBOR Portion, in
which event the Company shall notify the Agent of the new Interest Period
selected therefor, and in the event the Company shall fail to so notify the
Agent, such LIBOR Portion shall automatically be converted into and added to
the applicable Domestic Rate Portion as of and on the last day of such Interest
Period. The Agent shall promptly notify each Lender of each notice received
from the Company pursuant to the foregoing provision.

     Section 2.2. Minimum LIBOR Portions. Each LIBOR Portion shall be in an
amount equal to $500,000 or such greater amount which is an integral multiple
of $100,000.

     Section 2.3. Computation of Interest. All interest on the Notes shall be
computed on the basis of a year of 360 days for the actual number of days
elapsed.

     Section 2.4. Manner of Rate Selection.

          (a) LIBOR Portions. The Company shall notify the Agent by 11:00 a.m.
(Chicago time) at least three Business Days prior to the date upon which the
Company requests that any LIBOR Portion be created or that any part of the
Domestic Rate Portion be converted into a LIBOR Portion (each such notice to
specify in each instance the amount thereof and the Interest Period selected
therefor), and the Agent shall promptly notify each Lender of each notice
received from the Company pursuant to the foregoing provision. If any request
is made to convert a LIBOR Portion into a Domestic Rate Portion, such
conversion shall only be made so as to become effective as of the last day of
the Interest Period applicable thereto.

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          (b) All requests for the creation, continuance and conversion of
Portions under this Agreement shall be irrevocable. Such requests may be
written or oral and the Agent is hereby authorized to honor telephonic requests
for creations, continuances and conversions received by it from any person the
Agent in good faith believes to be an Authorized Representative without the
necessity of independent investigation.

     Section 2.5. Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time any Lender shall determine that any
change in applicable laws, treaties or regulations or in the interpretation
thereof makes it unlawful for such Lender to create or continue to maintain any
LIBOR Portion, it shall promptly so notify the Agent (which shall in turn
promptly notify the Company and the other Lenders) and the obligation of such
Lender to create, continue or maintain any such LIBOR Portion under this
Agreement shall terminate until it is no longer unlawful for such Lender to
create, continue or maintain such LIBOR Portion. The Company, on demand, shall,
if the continued maintenance of any such LIBOR Portion is unlawful, thereupon
prepay the outstanding principal amount of the affected LIBOR Portion, together
with all interest accrued thereon and all other amounts payable to affected
Lender with respect thereto under this Agreement; provided, however, that the
Company may elect to convert the principal amount of the affected LIBOR Portion
into another type of Portion available hereunder, subject to the terms and
conditions of this Agreement.

     Section 2.6. Unavailability of Deposits or Inability to Ascertain Adjusted
LIBOR. Notwithstanding any other provision of this Agreement or any Note, if
prior to the commencement of any Interest Period, the Required Lenders shall
determine that deposits in the amount of any LIBOR Portion scheduled to be
outstanding during such Interest Period are not readily available to such
Lenders in the relevant market or, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining
Adjusted LIBOR, then such Lenders shall promptly give notice thereof to the
Agent (which shall in turn promptly notify the Company and the other Lenders)
and the obligations of the Lenders to create, continue or effect by conversion
any such LIBOR Portion in such amount and for such Interest Period shall
terminate until deposits in such amount and for the Interest Period selected by
the Company shall again be readily available in the relevant market and
adequate and reasonable means exist for ascertaining Adjusted LIBOR.

     Section 2.7. Taxes and Increased Costs. With respect to any LIBOR Portion,
if any Lender shall determine that any change in any applicable law treaty,
regulation or guideline (including, without limitation, Regulation D of the
Board of Governors of the Federal Reserve System) or any new law, treaty,
regulation or guideline, or any interpretation of any of the foregoing by any
governmental authority charged with the administration thereof or any central
bank or other fiscal, monetary or other authority having jurisdiction over such
Lender or its lending branch or the LIBOR Portions contemplated by this
Agreement (whether or not having the force of law), shall:

               (i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in or for
the account of, or

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loans by, or any other acquisition of funds or disbursements by, such Lender
which is not in any instance already accounted for in computing the interest
rate applicable to such LIBOR Portion:

          (ii) subject such Lender, any LIBOR Portion or a Note to the extent it
     evidences any LIBOR Portion to any tax (including, without limitation, any
     United States interest equalization tax or similar tax however named
     applicable to the acquisition or holding of debt obligations and any
     interest or penalties with respect thereto), duty, charge, stamp tax, fee,
     deduction or withholding in respect of this Agreement, any LIBOR Portion or
     a Note to the extent it evidences any LIBOR Portion, except such taxes as
     may be measured by the overall net income or gross receipts of such Lender
     or its lending branches and imposed by the jurisdiction, or any political
     subdivision or taxing authority thereof, in which such Lender's principal
     executive office or its lending branch is located;

         (iii) change the basis of taxation of payments of principal and
     interest due from the Company to such Lender hereunder or under a Note to
     the extent it evidences any LIBOR Portion (other than by a change in
     taxation of the overall net income or gross receipts of such Lender or its
     lending branches); or

          (iv) impose on such Lender any penalty with respect to the foregoing
     or any other condition regarding this Agreement, any LIBOR Portion, or a
     Note to the extent it evidences any LIBOR Portion;

and such Lender shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to such
Lender of creating or maintaining any LIBOR Portion hereunder or to reduce the
amount of principal or interest received or receivable by such Lender (without
benefit of, or credit for, any prorations, exemption, credits or other offsets
available under any such laws, treaties, regulations, guidelines or
interpretations thereof), then the Company shall pay on demand to the Agent for
the account of such Lender from time to time as specified by such Lender such
additional amounts as such Lender shall in good faith reasonably determine are
sufficient to compensate and indemnify it for such increased cost or reduced
amount. If a Lender makes such a claim for compensation, it shall provide to the
Company (with a copy to the Agent) a certificate setting forth the computation
of the increased cost or reduced amount as a result of any event mentioned
herein in reasonable detail and such certificate shall be conclusive if
reasonably determined in good faith.

     Section 2.8. Funding Indemnity. (a) In the event any Lender shall incur any
loss, cost or expense (including, without limitation, any loss (including loss
of profit), cost or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired or contracted to be acquired
by such Lender to fund or maintain its part of any LIBOR Portion or the
relending or reinvesting of such deposits or other funds or amounts paid or
prepaid to such Lender) as a result of:

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          (i) any payment of a LIBOR Portion on a date other than the last day
     of the then applicable Interest Period for any reason, whether before or
     after default, and whether or not such payment is required by any
     provisions of this Agreement; or

         (ii) any failure by the Company to create, borrow, continue or effect
     by conversion a LIBOR Portion on the date specified in a notice given
     pursuant to this Agreement;

then, upon the demand of such Lender, the Company shall pay to the Lender such
amount as will reimburse such Lender for such loss, cost or expense.

     (b) If a Lender requests such reimbursement under this Section 2.8, it
shall provide to the Company (with a copy to the Agent) a certificate setting
forth the computation of the loss, cost or expense giving rise to the request
for reimbursement in reasonable detail and such certificate shall be conclusive
if reasonably determined.

     Section 2.9. Lending Branch. Each Lender may, at its option, elect to make,
fund or maintain its pro rata share of the Loans hereunder at the branches or
offices specified on the signature pages hereof or on any Assignment Agreement
executed and delivered pursuant to Section 11.10 hereof or at such of its
branches or offices as such Lender may from time to time elect.

     Section 2.10. Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Notes in any manner it sees fit, it being understood, however, that for purposes
of this Agreement all determinations hereunder with respect to LIBOR Portions
(including, without limitation, determinations under Sections 2.6, 2.7 and 2.8
hereof) shall be made as if each Lender had actually funded and maintained each
LIBOR Portion during each Interest Period applicable thereto through the
purchase of deposits in the relevant market in the amount of its Percentage of
such LIBOR Portion, having a maturity corresponding to such Interest Period, and
bearing an interest rate equal to the LIBOR for such Interest Period.

SECTION 3. FEES, PREPAYMENTS, TERMINATIONS, APPLICATIONS AND EXTENSIONS.

     Section 3.1. Prepayment. (a) Voluntary. The Company shall have the
privilege of prepaying the Revolving Credit Loans in whole or in part (but if in
part, then (i) if such Loans constitute part of the Domestic Rate Portion, in an
amount not less than $100,000, (ii) if such Loans constitute part of a LIBOR
Portion, in an amount not less than $500,000 and (iii) in each case, in an
amount such that the minimum amount required for a Borrowing of Revolving Credit
Loans, for a LIBOR Portion of the relevant Loans, pursuant to Sections 1.2 and
2.2 hereof remains outstanding) at any time upon 1 Business Day prior notice to
the Agent (such notice if received subsequent to 11:00 a.m. (Chicago time) on a
given day to be treated as though received at the opening of business on the
next Business Day), which shall promptly so notify the Lenders, by paying to the
Agent for the account of the Lenders the principal amount to be prepaid and (i)
if such a prepayment prepays the

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Revolving Credit Notes in full and is accompanied by the termination in whole
of the Revolving Credit Commitments, accrued interest thereon to the date of
prepayment, and (ii) any amounts due to the Lenders under Section 2.8 hereof.

     (b) Mandatory.  In the event that the aggregate principal amount of the
Notes should at any time and for any reason (whether as a result of reductions
in the Revolving Credit Commitments or otherwise) exceed the aggregate amount
of the Revolving Credit Commitments as then in effect, the Company shall
immediately and without notice or demand pay over the amount of the excess to
the Agent as and for a mandatory prepayment of the Notes, together with any
amounts due to the Lenders under Section 2.8 hereof.

     Section 3.2.  Voluntary Terminations.  The Company shall have the right at
any time and from time to time, upon 1 Business Day prior written notice to the
Agent (which shall promptly so notify the Lenders, which notification, if oral,
shall be confirmed in writing), to ratably terminate without premium or penalty
and in whole or in part (but if in part, then in an aggregate amount not less
than $1,000,000 or such greater amount which is an integral multiple of
$1,000,000) the Revolving Credit Commitments, provided that the Revolving
Credit Commitments may not be reduced to an amount less than the aggregate
principal amount of the Revolving Credit Loans then outstanding. Any
termination of the Revolving Credit Commitments pursuant to this Section may
not be reinstated.

     Section 3.3.  Place and Application of Payments.  All payments of
principal, interest, fees and all other Obligations payable hereunder and under
the other Loan Documents shall be made to the Agent at its office at 111 West
Monroe Street, Chicago, Illinois (or at such other place as the Agent may
specify) on the date any such payment is due and payable. Payments received by
the Agent after 12:00 noon (Chicago time) shall be deemed received as of the
opening of business on the next Business Day. All such payments shall be made in
lawful money of the United States of America, in immediately available funds at
the place of payment, without set-off or counterclaim and without reduction for,
and free from, any and all present or future taxes, levies, imposts, duties,
fees, charges, deductions, withholdings, restrictions and conditions of any
nature imposed by any government or any political subdivision or taxing
authority thereof (but excluding any taxes imposed on or measured by the net
income of any Lender). Except as herein provided, all payments shall be received
by the Agent for the ratable account of the Lenders and shall be promptly
distributed by the Agent ratably to the Lenders. Unless the Company otherwise
directs, principal payments of the Notes shall be first applied to the Domestic
Rate Portion until payment in full thereof, with any balance applied to the
relevant LIBOR Portions in the order in which their Interest Periods expire.

     Anything contained herein to the contrary notwithstanding, all payments
and collections received in respect of the Obligations and all proceeds of the
Collateral received, in each instance, by the Agent or any of the Lenders after
the occurrence and during the continuation of an Event of Default shall be
remitted to the Agent and distributed as follows:

          (a)  first, to the payment of any outstanding costs and expenses
     incurred by the Agent in monitoring, verifying, protecting, preserving or
     enforcing the Liens on

                                      -8-
<PAGE>
     the Collateral or by the Agent in protecting, preserving or enforcing
     rights under the Loan Documents, and in any event all costs and expenses of
     a character which the Company has agreed to pay to the Agent under Section
     11.5 hereof (such funds to be retained by the Agent for its own account
     unless the Agent has previously been reimbursed for such costs and expenses
     by the Lenders, in which event such amounts shall be remitted to the
     Lenders to reimburse them for payments theretofore made to the Agent):

          (b) second, to the payment of any outstanding interest or other fees
     due under the Notes and the other Loan Documents, in each case other than
     for principal, ratably as among the Agent and the Lenders in accord with
     the amount of such interest and other fees or amounts owing each:

          (c) third, to the payment of the principal of the Notes ratably among
     the Lenders in accordance with the then respective aggregate unpaid
     principal balances of their Loans:

          (d) fourth, to the Agent and the Lenders ratably in accordance with
     the amounts of any other indebtedness, obligations or liabilities of the
     Company owing to each of them and secured by the Loan Documents unless and
     until all such indebtedness, obligations and liabilities have been fully
     paid and satisfied; and

          (e) fifth, to the Company or whoever else may be lawfully entitled
     thereto.

     Section 3.4.    Notations. Each Loan made against a Note, the status of all
amounts evidenced by a Note as constituting part of the Domestic Rate Portion or
a LIBOR Portion, and, in the case of any LIBOR Portion, the rates of interest
and Interest Periods applicable to such Portions shall be recorded by the
relevant Lender on its books and records or, at its option in any instance,
endorsed on a schedule to its Note and the unpaid principal balance and status,
rates and Interest Periods so recorded or endorsed by such Lender shall be prima
facie evidence in any court or other proceeding brought to enforce such Note of
the principal amount remaining unpaid thereon, the status of the Loan or Loans
evidenced thereby and the interest rates and Interest Periods applicable
thereto; provided that the failure of a Lender to record any of the foregoing
shall not limit or otherwise affect the obligation of the Company to repay the
principal amount of each Note together with accrued interest thereon. Prior to
any negotiation of a Note, a Lender shall record on a schedule thereto the
status of all amounts evidenced thereby as constituting part of the Domestic
Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion, the rates
of interest and the Interest Periods applicable thereto.

     Section 3.5.    Extension of the Revolving Credit Termination Date. No
sooner than 120 days and no later than 60 days prior to the first anniversary
date hereof, the Company may request in a written notice to the Agent that the
scheduled Revolving Credit Termination Date then in effect be extended for one
(1) year. The Agent will promptly inform the Lenders in writing of such request
and each Lender shall notify the Agent in writing within 30 days of receipt of
such notice whether it agrees to such extension. In the

                                      -9-
<PAGE>
event that any Lender shall fail to so notify the Agent whether it agrees to
such extension, such Lender shall be deemed to have refused to grant the
requested extension. Upon receipt by the Agent of the consent of all the
Lenders, the Company and the Lenders shall enter into such documents as the
Agent may deem necessary or appropriate to reflect such extension and to assure
that all extensions of credit hereunder as so extended are secured by the
Collateral Documents and covered by the Guaranty.

SECTION 4.     COLLATERAL AND GUARANTY.

     Section 4.1.   Collateral. The payment and performance of the Obligations
shall at all times be secured by all of the issued and outstanding capital stock
(except for directors' qualifying shares as required by law) of each Banking
Subsidiary pursuant to that certain Pledge and Security Agreement dated as of
September 23, 1996, from the Company to the Agent for the benefit of the
Lenders, as the same may be amended, modified or restated from time to time (the
"Pledge and Security Agreement"; and the Pledge and Security Agreement, and all
other instruments and documents as shall from time to time secure any
Obligations, being hereinafter referred to as the "Collateral Documents"). The
Company agrees that it shall comply with all terms and conditions of each of the
Collateral Documents and that it shall, at any time and from time to time as
requested by the Agent or Required Lenders, execute and deliver such further
documents and do such acts as the Agent or Required Lenders may deem necessary
or desirable to provide for or protect or perfect the Lien of the Agent and the
Lenders in the Collateral.

     Section 4.2.   Guaranty. The payment and performance of the Obligations
shall at all times be guarantied by Douglas T. Breeden (the "Guarantor")
pursuant to that certain Guaranty Agreement dated as of September 23, 1996, from
the Guarantor to the Agent for the benefit of the Lenders, as the same may be
amended, modified or restated from time to time (the "Guaranty").

SECTION 5.     DEFINITIONS; INTERPRETATION.

     Section 5.1.   Definitions. The following terms when used herein shall have
the following meanings:

          "Adjusted LIBOR" means a rate per annum determined by the Agent in
accordance with the following formula:

                          Adjusted LIBOR =         LIBOR
                                          -----------------------
                                          100%-Reserve Percentage

"Reserve Percentage" means, for the purpose of computing Adjusted LIBOR, the
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental or other special reserves) imposed by the
Board of Governors of the Federal Reserve System (or any successor) under
Regulation D on Eurocurrency liabilities (as such term is defined in Regulation
D) for the applicable Interest Period as of the first day of such Interest
Period, but subject to any amendments to such reserve requirement by such Board

                                      -10-

<PAGE>
or its successor, and taking into account any transitional adjustments thereto
becoming effective during such Interest Period. For purposes of this definition,
LIBOR Portions shall be deemed to be Eurocurrency liabilities as defined in
Regulation D without benefit of or credit for prorations, exemptions or offsets
under Regulation D. "LIBOR" means, for each Interest Period, (a) the LIBOR Index
Rate for such Interest Period, if such rate is available, and (b) if the LIBOR
Index Rate cannot be determined, the arithmetic average of the rates of interest
per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) at which
deposits in U.S. Dollars in immediately available funds are offered to the Agent
at 11:00 a.m. (London, England time) 2 Business Days before the beginning of
such Interest Period by 3 or more major banks in the interbank eurodollar market
selected by the Agent for a period equal to such Interest Period and in an
amount equal or comparable to the applicable LIBOR Portion scheduled to be
outstanding from the Agent during such Interest Period. "LIBOR Index Rate"
means, for any Interest Period, the rate per annum (rounded upwards, if
necessary, to the next higher one hundred-thousandth of a percentage point) for
deposits in U.S. Dollars for a period equal to such Interest Period which
appears on the Telerate Page 3750 as of 11:00 a.m. (London, England time) on the
date 2 Business Days before the commencement of such Interest Period. "Telerate
Page 3750" means the display designated as "Page 3750" on the Telerate Service
(or such other page as may replace Page 3750 on that service or such other
service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Banker's Association
Interest Settlement Rates for U.S. Dollar deposits). Each determination of LIBOR
made by the Agent shall be conclusive and binding on the Company and the Lenders
absent manifest error.

         "Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise.

         "Agent" means Harris Trust and Savings Bank and any successor thereto
appointed pursuant to Section 10.1 hereof.

         "Agreement" means this Credit Agreement, as the same may be amended,
modified or restated from time to time in accordance with the terms hereof.

         "Assignment Agreements" is defined in Section 11.10 hereof.

         "Authorized Representative" means those persons shown on the list of
officers provided by the Company pursuant to Section 7.2(a) hereof or on any
update of any such list provided by the Company to the Agent, or any further or
different officer of the Company so named by any Authorized Representative of
the Company in a written notice to the Agent.

                                      -11-
<PAGE>
     "Banking Subsidiary" means any Subsidiary of the Company which is a bank
or thrift organized under the laws of the United States of America or any state
thereof.

     "Borrowing" means the total of Loans of a single type made to the Company
by all the Lenders on a single date, and if such Loans are to be part of a LIBOR
Portion, for a single Interest Period. Borrowings of Loans are made and
maintained ratably from each of the Lenders according to their Percentages of
the Revolving Credit Commitments.

     "Business Day" means any day other than a Saturday or Sunday on which banks
are not authorized or required to close in Chicago, Illinois and, when used with
respect to LIBOR Portions, a day on which banks are also dealing in United
States Dollar deposits in London, England and Nassau, Bahamas.

     "Capital Lease" means any lease of Property which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.

     "Capitalized Lease Obligation" means the amount of the liability shown on
the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.

     "Change of Management Event" means Craig J. Cerny, at any time and for any
reason, ceases to be actively involved in the management of the Company.

     "Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.

     "Collateral" means all properties, rights, interests and privileges from
time to time subject to the Liens granted to the Agent for the benefit of the
Lenders pursuant to the Collateral Documents.

     "Collateral Documents" is defined in Section 4.1 hereof.

     "Commitments" means the Revolving Credit Commitments.

     "Company" is defined in the introductory paragraph hereof.

     "Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person,
or agrees to maintain the net worth or working capital or other financial
condition of any other Person, or otherwise assures any creditor of such other
Person against loss, including, without limitation, any comfort letter,
operating agreement, take-or-pay contract or application for a letter of credit.

     "Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together

                                      -12-
<PAGE>
with the Company or any of its Subsidiaries, are treated as a single employer
under Section 414 of the Code.

     "Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.

     "Domestic Rate" means, for any day, the rate of interest announced by the
Agent from time to time as its prime commercial rate, as in effect on such day
(it being understood and agreed that such rate may not be the Agent's best or
lowest rate).

     "Domestic Rate Portion" is defined in Section 2.1(a) hereof.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.

     "Event of Default" means any event or condition identified as such in
Section 9.1 hereof.

     "GAAP" means generally accepted accounting principles as in effect from
time to time, applied by the Company and its Subsidiaries on a basis consistent
with the preparation of the Company's most recent financial statements furnished
to the Lenders pursuant to Section 6.5 hereof.

     "Guarantor" is defined in Section 4.2 hereof.

     "Guaranty" is defined in Section 4.2 hereof.

     "Indebtedness for Borrowed Money" means for any Person (without
duplication) (i) all indebtedness created, assumed or incurred in any manner by
such Person representing money borrowed (including by the issuance of debt
securities), (ii) all indebtedness for the deferred purchase price of property
or services (other than trade accounts payable arising in the ordinary course of
business), (iii) all indebtedness secured by any Lien upon Property of such
Person, whether or not such Person has assumed or become liable for the payment
of such indebtedness, (iv) all Capitalized Lease Obligations of such Person, (v)
all Contingent Obligations of such Person, (vi) all obligations of such Person
on or with respect to letters of credit, bankers' acceptances and other
extensions of credit whether or not representing obligations for borrowed money,
and (vii) Permitted Banking Subsidiary Indebtedness of such Person.

     "Interest Period" means, with respect to any LIBOR Portion, the period
commencing on, as the case may be, the creation, continuation or conversion
date with respect to such LIBOR Portion and ending 1, 2, 3 or 6 months
thereafter as selected by the Company in its notice as provided herein; provided
that, all of the foregoing provisions relating to Interest Periods are subject
to the following:

                                      -13-
<PAGE>
          (i) if any Interest Period would otherwise end on a day which is not a
     Business Day, that Interest Period shall be extended to the next succeeding
     Business Day, unless the result of such extension would be to carry such
     Interest Period into another calendar month in which event such Interest
     Period shall end on the immediately preceding Business Day;

          (ii) no Interest Period may extend beyond the Revolving Credit
     Termination Date;

          (iii) the interest rate to be applicable to each Portion for each
     Interest Period shall apply from and including the first day of such
     Interest Period to but excluding the last day thereof; and

          (iv) no Interest Period may be selected if after giving effect thereto
     the Company will be unable to make a principal payment scheduled to be made
     during such Interest Period without paying part of a LIBOR Portion on a
     date other than the last day of the Interest Period applicable thereto.

For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the
month in which an Interest Period is to end, then such Interest Period shall
end on the last Business Day of such month.

     "Lenders" means Harris Trust and Savings Bank, the other signatories hereto
(other than the Company) and all other lenders becoming parties hereto pursuant
to Section 11.10 hereof.

     "LIBOR Portions" is defined in Section 2.1(a) hereof.

     "Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.

     "Loan Documents" means this Agreement, the Notes, the Collateral Documents,
the Guaranty, the Assignment Agreements and each other instrument or document to
be delivered hereunder or thereunder or otherwise in connection therewith.

     "Loans" means the Revolving Credit Loans.

     "Loan to Value Ratio" is defined in Section 8.9 hereof.

     "Los Padres" means Los Padres Savings Bank, F.S.B., a federally chartered
savings bank.

                                      -14-

<PAGE>
     "Margin Debt" means debt incurred by the Company from time to time secured
by marketable equity securities.

     "Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations or
business prospects of the Company and its Subsidiaries taken as a whole or of
any Banking Subsidiary individually, (ii) the ability of the Company to perform
its obligations under the Loan Documents, or (iii) the validity or
enforceability of any of the Loan Documents or the rights or remedies of the
Agent or the Lenders thereunder.

     "Mortgage Derivatives" means IOs (interest only), POs (principal only)
mortgage securities and residuals or collateralized mortgage obligations defined
as high-risk mortgage securities by the Federal Financial Institutions
Examination Council (FFIEC), provided, however, that in no event shall the
foregoing include fixed and floating CMO Bonds that fail the FFIEC Test due to
higher average life volatility, initial average life or price sensitivity.

     "Net Worth" means, with reference to any Person at any time the same is to
be determined, the total shareholders' equity (including capital stock,
additional paid-in capital and retained earnings after deducting treasury stock,
but excluding any minority interests in subsidiaries) which would appear on the
balance sheet of such Person determined in accordance with GAAP or, when such
term is used with respect to the Loan to Value Ratio of a Banking Subsidiary,
regulatory accounting principles of the applicable bank or thrift regulatory
authority.

     "Non-Performing Assets" means with reference to any Person, as of any time
the same is to be determined, the sum of all non-performing assets of such
Person as determined in accordance with regulatory accounting principles
applicable to such Person, but in any event including, without limitation, (i)
loans or other extensions of credit on which any payment (whether principal or
interest or otherwise) is not made within 90 days of its original due date, (ii)
loans which have been placed on a non-accrual basis and (iii) property acquired
by repossession or foreclosure and, without duplication, property acquired
pursuant to in-substance foreclosure.

     "Notes" means the Revolving Credit Notes.

     "Obligations" means all obligations of the Company to pay principal and
interest on the Loans, all fees and charges payable hereunder, and all other
payment obligations of the Company arising under or in relation to any Loan
Document, in each case whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever evidenced,
held or acquired.

     "PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.

     "Percentage" means, for each Lender, the percentage of the aggregate
Commitments represented by such Lender's Commitment or, if the relevant
Commitments have been

                                      -15-
<PAGE>
terminated, the percentage held by such Lender of the aggregate principal
amount of the relevant outstanding Obligations.

     "Permitted Banking Subsidiary Indebtedness" means obligations incurred by
any Banking Subsidiary in the ordinary course of business in such circumstances
as may be incidental or usual in carrying on the banking or trust business of a
bank, thrift or trust company incurred in accordance with applicable laws and
regulations and safe and sound banking practices including, without limitation,
deposit accounts, repurchase agreements, dollar rolls, and other borrowings
arising in the ordinary course of business.

     "Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision
thereof.

     "Plan" means any employee pension benefit plan covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code that
either (i) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group, or (ii) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.

     "Portion" is defined in Section 2.1(a) hereof.

     "Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

     "Required Lenders" means, as of the date of determinations thereof, those
Lenders holding at least 75% of the Commitments or, in the event that no
Commitments are outstanding hereunder, holding at least 75% in aggregate
principal amount of the Loans outstanding hereunder.

     "Revolving Credit" is defined in Section 1.1 hereof.

     "Revolving Credit Commitments" means that commitments of the Lenders to
extend credit under the Revolving Credit in the amounts for the applicable
period set forth opposite their signatures hereto under the heading "Revolving
Credit Commitment" and opposite their signatures on Assignment Agreements
delivered pursuant to Section 11.10 hereof under the heading "Revolving Credit
Commitment", as such amounts may be reduced pursuant hereto.

     "Revolving Credit Loan" is defined in Section 1.2 hereof.

     "Revolving Credit Note" is defined in Section 1.2 hereof.

                                      -16-
<PAGE>
     "Revolving Credit Termination Date" means September 23, 2000, as such date
may be extended pursuant to Section 3.5 hereof, or such earlier date on which
the Revolving Credit Commitments are terminated in whole pursuant to Section
3.2, 9.2 and 9.3 hereof.

     "Stock Ownership Event" means any time when less than 106,575 shares of the
issued and outstanding capital stock of the Company having the power to vote (or
such greater number representing the sum of such shares plus all additional
shares of voting stock issued in connection with any stock split, stock dividend
or any other distribution of voting stock relating to such original shares or
any such additional shares) ceases at any time and for any reason to be
beneficially owned by Craig J. Cerny, William Ross and Douglas T. Breeden.

     "Subsidiary" means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Company, by one or more of its
Subsidiaries, or by the Company and one of more of its Subsidiaries.

     "Tier I Leverage Ratio" of any Banking Subsidiary means, at any time, the
ratio of regulatory "core" capital (Tier I) to total assets, all as defined and
determined from time to time by the bank or thrift regulatory authority having
jurisdiction over the applicable Banking Subsidiary.

     "Tier I Risk Based Capital Ratio" of any Banking Subsidiary means the ratio
of regulatory "core" capital (Tier I) to risk-weighted assets and the credit
equivalent amount of off-balance sheet items, all as defined and determined from
time to time by the bank or thrift regulatory authority having jurisdiction over
the applicable Banking Subsidiary.

     "Total Risk Based Capital Ratio" of any Banking Subsidiary means, at any
time, the ratio of regulatory "core" capital (Tier I) and supplementary capital
elements (Tier II) to risk-weighted assets and the credit-equivalent amount of
off-balance sheet items, all as defined and determined from time to time by the
bank or thrift regulatory authority having jurisdiction over the applicable
Banking Subsidiary.

     "Unfunded Vested Liabilities" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.

     "Welfare Plan" means a "welfare plan" as defined in Section 3(I) of ERISA.

     "Wholly-Owned Subsidiary" means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors' qualifying shares as
required by law) or other equity interests are owned by the Company and/or one
or more Wholly-Owned Subsidiaries within the meaning of this definition.

                                      -17-

<PAGE>
     Section 5.2.  Interpretation.  The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The
words "hereof", "herein", and "hereunder" and words of like import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All references to time of day herein
are references to Chicago, Illinois time unless otherwise specifically
provided. Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP except where such
principles are inconsistent with the specific provisions of this Agreement.

SECTION 6.  REPRESENTATIONS AND WARRANTIES.

     The Company represents and warrants to the Agent and the Lenders as
follows:

     Section 6.1.  Organization and Qualification.  The Company is duly
organized, validly existing and in good standing as a corporation under the
laws of the State of Delaware, has full and adequate corporate power to own its
Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction where the failure to do so
is reasonably likely to have a Material Adverse Effect. Without limiting the
generality of the foregoing, the Company is a savings and loan holding company
and, as such, the Company has received all necessary approvals from, and has
filed all necessary reports with, all applicable federal and state regulatory
authorities.

     Section 6.2.  Subsidiaries.  Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly
licensed or qualified and in good standing in each jurisdiction where the
failure to do so is reasonably likely to have a Material Adverse Effect.
Schedule 6.2 hereto identifies each Subsidiary, the jurisdiction of its
incorporation or organization, as the case may be, the percentage of issued and
outstanding shares of each class of its capital stock or other equity interests
owned by the Company and the Subsidiaries and, if such percentage is not 100%
(excluding directors' qualifying shares as required by law), a description of
each class of its authorized capital stock and other equity interests and the
number of shares of each class issued and outstanding. All of the outstanding
shares of capital stock and other equity interests of each Subsidiary are
validly issued and outstanding and fully paid and nonassessable and all such
shares and other equity interests indicated on Schedule 6.2 as owned by the
Company or a Subsidiary are owned, beneficially and of record, by the Company
or such Subsidiary free and clear of all Liens. There are no outstanding
commitments or other obligations of any Subsidiary to issue, and no options,
warrants or other rights of any Person to acquire, any shares of any class of
capital stock or other equity interests of any Subsidiary.

     Section 6.3.  Corporate Authority and Validity of Obligations.  The
Company has full right and authority to enter into this Agreement and the other
Loan Documents, to make the borrowings herein provided for, to issue its Notes
in evidence thereof, and to perform

                                      -18-

<PAGE>
all of its obligations hereunder and under the other Loan Documents. The Loan
Documents delivered by the Company have been duly authorized, executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable in accordance with their terms except as enforceability may
be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law); and this Agreement and the other Loan
Documents do not, nor does the performance or observance by the Company of any
of the matters and things herein or therein provided for, contravene or
constitute a default under any provision of law or any judgment, injunction,
order or decree binding upon the Company or any provision of the charter,
articles of incorporation or by-laws of the Company or any covenant, indenture
or agreement of or affecting the Company or any of its Properties, or result in
the creation or imposition of any Lien on any Property of the Company.

     Section 6.4. Use of Proceeds; Margin Stock. The Company shall use the
proceeds of the Revolving Credit Loans made available hereunder for equity
contributions to Los Padres and to pay debt service of the Company in the
ordinary course of business. No part of the proceeds of any Revolving Credit
Loan made hereunder will be used to purchase or carry any margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), or to extend credit to others for the purpose of purchasing or
carrying any such margin stock. Margin stock (as defined above) constitutes
less than 25% of those assets of the Company and its Subsidiaries which are
subject to any limitation on sale, pledge, or other restriction hereunder.

     Section 6.5. Financial Reports. The unaudited interim consolidated balance
sheet of the Company and its Subsidiaries as at June 30, 1997, and the related
consolidated statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for the six (6) months then ended, heretofore
furnished to the Lenders, fairly present the consolidated financial condition of
the Company and its Subsidiaries as at said date and the consolidated results of
their operations and cash flows for the period then ended in conformity with
generally accepted accounting principles applied on a consistent basis. Neither
the Company nor any Subsidiary has contingent liabilities which are material to
it other than as indicated on such financial statements or, with respect to
future periods, on the financial statements furnished pursuant to Section 8.5
hereof.

     Section 6.6. No Material Adverse Change. Since June 30, 1997, there has
been no change in the condition (financial or otherwise) or business prospects
of the Company or any Subsidiary which is reasonably likely to have a Material
Adverse Effect.

     Section 6.7. Full Disclosure. The written statements and information
furnished to the Lenders in connection with the negotiation of this Agreement
and the other Loan Documents and the commitments by the Lenders to provide all
or part of the financing contemplated hereby do not contain any untrue
statements of a material fact or omit a material fact necessary to make the
material statements contained herein or therein not misleading, the Lenders
acknowledging that as to any projections furnished to Lenders, the

                                      -19-
<PAGE>
Company only represents that the same were prepared on the basis of information
and estimates the Company believed to be reasonable.

     Section 6.8.  Good Title. The Company and its Subsidiaries each have good
and defensible title to all material portions of their assets as reflected on
the most recent consolidated balance sheet of the Company and its Subsidiaries
furnished to the Lenders and, in the case of assets consisting of stock or
other equity interests in Subsidiaries, subject to no Liens.

     Section 6.9.  Litigation and Other Controversies. There is no litigation or
governmental proceeding or labor controversy pending, nor to the knowledge of
the Company threatened, against the Company or any Subsidiary which if adversely
determined is reasonably likely to have a Material Adverse Effect.

     Section 6.10.  Taxes. All tax returns required to be filed by the Company
or any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary or upon any of their respective Properties, income or franchises,
which are shown to be due and payable in such returns, have been paid, except
such taxes, assessments, fees and governmental charges, if any, as are being
contested in good faith by appropriate proceedings which prevent enforcement of
the matter under contest. The Company does not know of any proposed additional
tax assessment against it or its Subsidiaries for which adequate provision in
accordance with GAAP has not been made on its accounts. Adequate provisions in
accordance with GAAP for taxes on the books of the Company and each Subsidiary
have been made for all open years, and for its current fiscal period.

     Section 6.11.  Approvals. No authorization, consent, license, or exemption
from, or filing or registration with, any court or governmental department,
agency or instrumentality, nor any approval or consent of the stockholders of
the Company or any other Person, is or will be necessary to the valid execution,
delivery or performance by the Company of this Agreement or any other Loan
Document.

     Section 6.12.  Affiliate Transactions. Except as disclosed on Schedule
6.12 hereto, neither the Company nor any Subsidiary is a party to any contracts
or agreements with any of its Affiliates on terms and conditions which are less
favorable to the Company or such Subsidiary than would be usual and customary
in similar contracts or agreements between Persons not affiliated with each
other.

     Section 6.13.  Investment Company: Public Utility Holding Company. Neither
the Company nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

     Section 6.14.  ERISA. The Company and each other member of its Controlled
Group has fulfilled its obligations under the minimum funding standards of and
is in compliance in

                                      -20-
<PAGE>
all material respects with ERISA and the Code to the extent applicable to it
and has not incurred any liability to the PBGC or a Plan under Title IV of
ERISA other than a liability to the PBGC for premiums under Section 4007 of
ERISA. Neither the Company nor any Subsidiary has any contingent liabilities
with respect to any post-retirement benefits under a Welfare Plan, other than
liability for continuation coverage described in article 6 of Title I of ERISA.

     Section 6.15. Compliance with Laws. The Company and each of its
Subsidiaries are in compliance with the requirements of all federal, state and
local laws, rules and regulations applicable to or pertaining to their
Properties or business operations, non-compliance with which is reasonably
likely to have a Material Adverse Effect. Neither the Company (or any of its
directors or officers) nor any Banking Subsidiary (or any of its directors or
officers) is a party to, or subject to, any agreement with, or directive or
order issued by, any federal or state bank or thrift regulatory authority which
imposes restrictions or requirements on it which are not generally applicable
to banks or thrifts, or their holding companies; and no action or
administrative proceeding is pending or, to the Company's knowledge, threatened
against the Company or any Banking Subsidiary or any of their directors or
officers which seeks to impose any such restriction or requirement. Neither the
Company nor any Subsidiary has received notice to the effect that its
operations are not in compliance with any of the requirements of applicable
federal, state or local environmental, health and safety statutes and
regulations or are the subject of any governmental investigation evaluating
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action is reasonably likely to have a Material Adverse Effect.

     Section 6.16. Other Agreements. Neither the Company nor any Subsidiary is
in default under the terms of any covenant, indenture or agreement of or
affecting the Company, any Subsidiary or any of their Properties, which default
if uncured is reasonably likely to have a Material Adverse Effect.

     Section 6.17. No Default. No Default or Event of Default has occurred and
is continuing.

SECTION 7.     CONDITIONS PRECEDENT.

     The obligation of the Lenders to make any Loan under this Agreement is
subject to the following conditions precedent:

     Section 7.1. All Advances. As of the time of the making of each extension
of credit (including the initial extension of credit) hereunder:

          (a) each of the representations and warranties set forth in Section 6
     hereof and in the other Loan Documents shall be true and correct as of such
     time, except to the extent the same expressly relate to an earlier date;

                                      -21-
<PAGE>
          (b)  the Company shall be in full compliance with all of the terms and
     conditions of this Agreement and of the other Loan Documents, and no
     Default or Event of Default shall have occurred and be continuing or would
     occur as a result of making such extension of credit.

          (c)  after giving effect to such extension of credit the aggregate
     principal amount of all Revolving Credit Loans outstanding under this
     Agreement shall not exceed the Revolving Credit Commitments then in effect;
     and

          (d)  such extension of credit shall not violate any order, judgment or
     decree of any court or other authority or any provision of law or
     regulation applicable to the Agent or any Lender (including, without
     limitation, Regulation U of the Board of Governors of the Federal Reserve
     System) as then in effect.

The Company's request for any Loan shall constitute its warranty as to the facts
specified in subsections (a) through (d), both inclusive, above.

     Section 7.2.   Initial Advance.   At or prior to the making of the initial
extension of credit hereunder, the following conditions precedent shall also
have been satisfied:

          (a)  the Agent shall have received the following for the account of
     the Lenders (each to the properly executed and completed) and the same
     shall have been approved as to form and substance by the Agent:

               (i)       the Notes;

               (ii)      an amendment to the Pledge and Security Agreement duly
          executed by the Company;

               (iii)     an amendment to the Guaranty duly executed by the
          Guarantor;

               (iv)      copies (executed or certified, as may be appropriate)
          of all legal documents or proceedings taken in connection with the
          execution and delivery of this Agreement and the other Loan Documents
          to the extent the Agent or its counsel may reasonably request; and

               (v)       an incumbency certificate containing the name, title
          and genuine signatures of each of the Company's Authorized
          Representatives;

          (b)  legal matters incident to the execution and delivery of this
     Agreement and the other Loan Documents and to the transactions contemplated
     hereby shall be satisfactory to each Lender and its counsel; and the Agent
     shall have received for the account of the Lenders the favorable written
     opinion of counsel for the Company and the Guarantor as to the matters set
     forth on Exhibit C hereto in form and substance satisfactory to the Lender
     and its counsel;

                                      -22-

<PAGE>
          (c) the Agent shall have received for the account of the Lenders
     certificates as to the status of the Company and Los Padres (dated as of
     the date no earlier than 30 days prior to the date hereof) from the office
     of the secretary of state of the state of its incorporation and each state
     in which it is qualified to do business as a foreign corporation indicating
     each such Person is existing and is in good standing (or words of like
     import) in each such jurisdiction; and

          (d) the Agent shall have received for the account of the Lenders such
     other agreements, instruments, documents, certificates and opinions as the
     Agent or the Lenders may reasonably request.

     Upon the effectiveness of this Agreement, each Lender shall promptly return
to the Company the promissory note, if any, issued to that Lender under the
Original Credit Agreement which is being replaced by the Notes contemplated by
this Agreement.

     Section 7.3. Loan by New Lender. If upon this Agreement becoming effective
there are Loans outstanding under this Agreement, then in the event anything
contained herein to the contrary notwithstanding, substantially concurrent with
this Agreement becoming effective there shall be such nonratable borrowings and
repayments under this Agreement, so that, after giving effect thereto, the Loans
outstanding under this Agreement are held by each of the Lenders in accordance
with their Percentages; provided, however, that if there are LIBOR Portions
outstanding on such date which, if prepaid, would require the Company to make a
payment under Section 2.8 hereof, then in that event and to that extent the
Company may defer such adjusting refunding borrowings until the end of the
Interest Period applicable to such LIBOR Portions and all LIBOR Loans made and
repaid during such deferral period shall be allocated in accordance with each
Lender's Percentage. The parties hereto understand and acknowledge and agree
that the Percentage of the New Lender's Revolving Credit Commitments in use in
the form of LIBOR Portions may, upon the effectiveness of this Amendment, be
less than the percentage of the other Lenders' Revolving Credit Commitments in
use in the form of LIBOR Portions.

SECTION 8.     COVENANTS.

     The Company agrees that, so long as any credit is available to or in use by
the Company hereunder, except to the extent compliance in any case or cases is
waived in writing by the Required Lenders:

     Section 8.1. Maintenance of Business. The Company shall, and shall cause
each Subsidiary to, preserve and maintain its existence. The Company shall, and
shall cause each Subsidiary to, preserve and keep in force and effect all
licenses, permits and franchises necessary to the proper conduct of its
business.

     Section 8.2. Maintenance of Properties. The Company shall maintain,
preserve and keep its property, plant and equipment in good repair, working
order and condition (ordinary wear and tear excepted) and shall from time to
time make all needful and proper repairs, renewals, replacements, additions and
betterments thereto so that at all times the

                                      -23-
<PAGE>

efficiency thereof shall be fully preserved and maintained, and shall cause
each Subsidiary to do so in respect of Property owned or used by it; provided,
however, that nothing in this Section shall prevent (a) the Company or any
Subsidiary (other than a Banking Subsidiary) from discontinuing the operation
and maintenance of any of its properties if such discontinuation is, in the
judgment of the Company, desirable in the conduct of its business and is not
disadvantageous in any material respect to the Lenders or (b) any Banking
Subsidiary from selling property acquired by repossession or foreclosure,
closing or selling a branch office if such sale, closing or sale is, in the
judgment of the Company, desirable in the conduct of its business and is not
disadvantageous in any material respect to the Lenders.

     Section 8.3. Taxes and Assessments. The Company shall duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees and governmental charges upon or against it or its
Properties, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves are provided therefor.

     Section 8.4. Insurance. The Company shall insure and keep insured, and
shall cause each Subsidiary to insure and keep insured, with good and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and the Company shall insure, and shall cause each Subsidiary to
insure, such other hazards and risks (including employers' and public liability
risks) with good and responsible insurance companies as and to the extent
usually insured by Persons similarly situated and conducting similar businesses.
The Company shall upon request furnish to the Agent and each Lender a
certificate setting forth in summary form the nature and extent of the insurance
maintained pursuant to this Section.

     Section 8.5. Financial Reports. The Company shall, and shall cause each
Subsidiary to, maintain a standard system of accounting in accordance with GAAP
and shall furnish to the Agent and each Lender and their duly authorized
representatives, such information respecting the business and financial
condition of the Company and its Subsidiaries (including non-financial
information and examination reports and supervisory letters to the extent
permitted by applicable regulatory authorities) as the Agent or such Lender may
reasonably request; and without any request, shall furnish to the Lenders:

          (a) as soon as available, and in any event within 60 days after the
     close of each fiscal quarter of the Company, a copy of the consolidated
     balance sheet of the Company and its Subsidiaries as of the last day of
     such period and the consolidated statements of income, retained earnings
     and cash flows of the Company and its Subsidiaries for the quarter and the
     fiscal year-to date period then ended, each in reasonable detail showing in
     comparative form the figures for the corresponding date and period in the
     previous fiscal year, prepared by the Company in accordance with GAAP
     (subject to year-end audit adjustments and the absence of footnote
     disclosures) and certified to by the President or chief financial officer
     of the Company;

                                      -24-
<PAGE>
          (b)  as soon as available, and in any event within 105 days after the
     close of each fiscal year of the Company, a copy of the consolidated
     balance sheet of the Company and its Subsidiaries as of the close of such
     fiscal year and the consolidated statements of income, retained earnings
     and cash flows of the Company and its Subsidiaries for such fiscal year,
     and accompanying notes thereto, each in reasonable detail showing in
     comparative form the figures for the previous fiscal year, accompanied by
     an unqualified opinion thereon of Deloitte & Touche or another firm of
     independent public accountants of recognized national standing, selected by
     the Company and satisfactory to the Required Lenders, to the effect that
     the financial statements have been prepared in accordance with GAAP and
     present fairly in accordance with GAAP the consolidated financial condition
     of the Company and its Subsidiaries as of the close of such fiscal year and
     the results of their operations and cash flows for the fiscal year then
     ended and that an examination of such accounts in connection with such
     financial statements has been made in accordance with generally accepted
     auditing standards and, accordingly, such examination included such tests
     of the accounting records and such other auditing procedures as were
     considered necessary in the circumstances;

          (c)  as soon as available, and in any event within 45 days after the
     close of each fiscal quarter of each Banking Subsidiary, all call reports
     and other financial statements required to be delivered by such Banking
     Subsidiary to any governmental authority or authorities having jurisdiction
     over such Banking Subsidiary and all schedules thereto;

          (d)  promptly after receipt thereof, any additional written reports,
     management letters or other detailed information contained in writing
     concerning significant aspects of the Company's or any Subsidiary's
     operations and financial affairs given to it by its independent public
     accountants;

          (e)  promptly upon the furnishing thereof to the shareholders of the
     Company, copies of all financial statements, reports and proxy statements
     so furnished;

          (f)  promptly upon the receipt or execution thereof, (i) notice by
     the Company or any Banking Subsidiary that (1) it has received a request or
     directive from any federal or state regulatory agency which requires it to
     submit a capital maintenance or restoration plan or restricts the payment
     of dividends by any Banking Subsidiary to the Company or (2) it has
     submitted a capital maintenance or restoration plan to any federal or state
     regulatory agency or has entered into a memorandum or agreement with any
     such agency, including, without limitation, any agreement which restricts
     the payment of dividends by any Banking Subsidiary to the Company or
     otherwise imposes restrictions or requirements on it which are not
     generally applicable to banks or thrifts or their holding companies, and
     (ii) copies of any such plan, memorandum, or agreement, unless disclosure
     is prohibited by applicable law or regulation or by the terms thereof and,
     after the Company or such Banking Subsidiary has in good faith attempted to
     obtain the consent of such regulatory agency, such

                                      -25-
<PAGE>
     agency will not consent to the disclosure of such plan, memorandum, or
     agreement to the Lenders;

          (g)  prompt written notice of a Change of Management Event or Stock
     Ownership Event; and

          (h)  promptly after knowledge thereof shall have come to the
     attention of any responsible officer of the Company, written notice of any
     threatened or pending litigation or governmental proceeding or labor
     controversy against the Company or any Subsidiary which, if adversely
     determined, is reasonably likely to have a Material Adverse Effect or of
     the occurrence of any Default or Event of Default hereunder.

Each of the financial statements furnished to the Lenders pursuant to
subsections (a) and (b) of this Section shall be accompanied by a written
certificate in the form attached hereto as Exhibit B signed by the President or
chief financial officer of the Company to the effect that to the best of such
officer's knowledge and belief no Default or Event of Default has occurred
during the period covered by such statements or, if any such Default or Event
of Default has occurred during such period, setting forth a description of such
Default or Event of Default and specifying the action, if any, taken by the
Company to remedy the same, such certificate to also set forth the calculations
supporting such statements in respect of Sections 8.7 through 8.10 hereof.

     Section 8.6.   Inspection.    The Company shall, and shall cause each
Subsidiary to, permit the Agent and any Lender and their duly authorized
representatives and agents to visit and inspect any of the Properties,
corporate books and financial records of the Company and each Subsidiary, to
examine and make copies of the books of accounts and other financial records of
the Company and each Subsidiary, and to discuss the affairs, finances and
accounts of the Company and each Subsidiary with, and to be advised as to the
same by, its officers, employees and independent public accountants (and by
this provision the Company hereby authorizes such accountants to discuss with
the Agent and any Lender the finances and affairs of the Company and of each
Subsidiary) at such reasonable times and reasonable intervals as the Agent or
any such Lender may designate; provided, however, that neither the Company nor
any Subsidiary shall be required to make available to the Agent or any Lender
any customer lists or other proprietary information unless such information is
required by the Agent or such Lender to determine the financial condition of
the Company or any Subsidiary or to determine the ability of the Company to
meet its obligations hereunder.

     Section 8.7.   Non-Performing Assets.   The Company shall, as of the last
day of each fiscal quarter, maintain on a consolidated basis with its Banking
Subsidiaries, a ratio (a) of Non-Performing Assets of the Company on such
consolidated basis, to (b) the sum of (i) stockholders' equity for the Company,
plus (ii) loan loss reserves established by the Company on a consolidated basis
in accordance with GAAP or, if applicable, regulatory accounting principles of
not more than .30 to 1.0.

                                      -26-
<PAGE>
    Section 8.8  Regulatory Capital Requirements. (a) The Company shall cause
each Banking Subsidiary to maintain on an individual basis:

           (i) a Tier I Leverage Ratio of not less than 5% or such greater
     amount as may be required to be considered "adequately capitalized" by
     applicable regulatory authorities from time to time;

          (ii) a Total Risk Based Capital Ratio of not less than 10% or such
     greater amount as may be required to be considered "adequately capitalized"
     by applicable regulatory authorities from time to time; and

         (iii) a Tier I Risk Based Capital Ratio of not less than 6% or such
     greater amount as may be required to be considered "adequately
     capitalized" by applicable regulatory authorities from time to time.

     (b) Each Banking Subsidiary shall at all times be at least "adequately
capitalized" as defined in the Federal Deposit Insurance Corporation Improvement
Act of 1991 and any regulations to be issued thereunder, as such statute or
regulations may each be amended or supplemented from time to time.

     (c) Each requirement described in subsections (a) and (b) above shall be
computed and determined in accordance with the rules and regulations as in
effect from time to time established by the appropriate governmental authority
having jurisdiction over such Banking Subsidiary. In addition to the provisions
set forth above, the Company shall, and shall cause each Banking Subsidiary to,
comply with any and all capital guidelines and requirements as in effect from
time to time established by the relevant governmental authority or authorities
having jurisdiction over the Company or any Banking Subsidiary.

    Section 8.9   Loan to Value Ratio. The Company shall, as of the last day of
each month, maintain the ratio of (a) the average daily principal amount of the
Loans outstanding during such month to (b) Net Worth of all Banking Subsidiaries
as of such day ("Loan to Value Ratio") of less than .50 to 1.00.

    Section 8.10  Mortgage Derivatives. The Company shall, as of the last day of
each month, cause Mortgage Derivatives held by its Banking Subsidiaries to be in
an amount not more than the greater of (a) $15,000,000 or (b) 7.5% of the
aggregate market value of each such Banking Subsidiary's securities portfolio.

    Section 8.11  Indebtedness for Borrowed Money. The Company shall not, nor
shall it permit any Subsidiary to, issue, incur, assume, create or have
outstanding any Indebtedness for Borrowed Money; provided, however, that the
foregoing shall not restrict nor operate to prevent:

         (a)  the Obligations of the Company owing to the Agent and the Lenders
hereunder and under the other Loan Documents:

                                      -27-
<PAGE>
          (b)  Permitted Banking Subsidiary Indebtedness;

          (c)  indebtedness of the Company or any Subsidiary owing to the
     Company or any Subsidiary;

          (d)  Contingent Obligations incurred with respect to the endorsement
     of instruments for deposit or collection in the ordinary course of
     business; and

          (e)  Margin Debt of the Company in an aggregate principal amount not
     to exceed $500,000 at any one time outstanding.

     Section 8.12.  Liens. The Company shall not, nor shall it permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
stock or other equity interest of any kind in any Subsidiary, whether now or
hereafter owned, directly or indirectly, by the Company or any other
Subsidiary, except for the Lien granted to the Agent for the benefit of the
lenders in the capital stock of each Banking Subsidiary.

     Section 8.13.  Mergers and Consolidations. The Company shall not be a party
to any merger or consolidation in which the Company is not the surviving entity.
In addition, the Company shall not permit any Banking Subsidiary to be a party
to any merger or consolidation in which such Banking Subsidiary is not the
surviving entity except where the resulting Person is a Wholly-Owned Subsidiary
of the Company which is a Banking Subsidiary and whose capital stock shall be
subject to a first priority Lien in favor of the Agent pursuant to the terms of
the Collateral Documents.

     Section 8.14.  Maintenance of Subsidiaries. The Company shall not assign,
sell or transfer, or permit any Banking Subsidiary to issue, assign, sell or
transfer, or amend the terms and conditions applicable to any shares of capital
stock of a Banking Subsidiary; provided that the foregoing shall not operate to
prevent (a) the issuance of additional shares of capital stock of a Banking
Subsidiary to the Company and which are made subject to the Lien of the
Collateral documents in favor of the Agent and (b) the issuance, sale and
transfer to any person of any shares of capital stock of a Banking Subsidiary
solely for the purpose of qualifying, and to the extent legally necessary to
qualify, such person as a director of such Banking Subsidiary.

     Section 8.15.  Dividends and Certain Other Restricted Payments. The
Company shall not during any fiscal year (a) declare or pay any dividends on or
make any other distributions in respect of any class or series of its capital
stock (other than dividends payable solely in its capital stock) or (b)
directly or indirectly purchase, redeem or otherwise acquire or retire any of
its capital stock.

     Section 8.16.  ERISA. The Company shall, and shall cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed might result in the
imposition of a Lien against any of its Properties. The Company shall, and
shall cause each Subsidiary to, promptly notify the Agent and the Lenders of
(i) the occurrence of any reportable event (as defined in ERISA)

                                      -28-
<PAGE>
with respect to a Plan which is reasonably likely to have a Material Adverse
Effect, (ii) receipt of any notice from the PBGC of its intention to seek
termination of any Plan or appointment of a trustee therefor, (iii) its
intention to terminate or withdraw from any Plan, and (iv) the occurrence of
any event with respect to any Plan which would result in the incurrence by the
Company or any Subsidiary of any material liability, fine or penalty, or any
material increase in the contingent liability of the Company or any Subsidiary
with respect to any post-retirement Welfare Plan benefit.

     Section 8.17.  Compliance with Laws.  The Company shall, and shall cause
each Subsidiary to, comply in all respects with the requirements of all
federal, state and local laws, rules, regulations, ordinances and orders
applicable to or pertaining to their Properties or business operations,
non-compliance with which is reasonably likely to have Material Adverse Effect.

     Section 8.18.  Burdensome Contracts With Affiliates.  Except as disclosed
on Schedule 6.12 hereto, the Company shall not, nor shall it permit any
Subsidiary to, enter into any contract, agreement or business arrangement with
any of its Affiliates on terms and conditions which are less favorable to the
Company or such Subsidiary than would be usual and customary in similar
contracts, agreements or business arrangements between Persons not affiliated
with each other.

     Section 8.19.  Change in the Nature of Business. The Company shall not,
and shall not permit any Subsidiary to, engage in any business or activity if
as a result the general nature of the business of the Company or any Subsidiary
would be changed in any material respect from the general nature of the
business engaged in by the Company or such Subsidiary on the date of this
Agreement.

SECTION 9.     EVENTS OF DEFAULT AND REMEDIES.

     Section 9.1.  Events of Default.  Any one or more of the following shall
constitute an "Event of Default" hereunder:

          (a)  default for a period of two Business Days in the payment when due
     of all or any part of the principal of any Note (whether at the stated
     maturity thereof or at any other time provided for in this Agreement) or
     default for a period of five Business Days in the payment when due of any
     interest on any Note or of any fee or other Obligation payable by the
     Company hereunder or under any other Loan Document; or

          (b)  default in the observance or performance of any covenant set
     forth in Sections 8.5, 8.13, or 8.15 hereof; or

          (c)  default in the observance or performance of any other provision
     hereof or of any other Loan Document which is not remedied within 30 days
     after the earlier of (i) the date on which such default shall first become
     known to any officer of the

                                      -29-

<PAGE>
Company or (ii) written notice thereof is given to the Company by the Agent or
any Lender; or

     (d)  any representation or warranty made by the Company or the Guarantor
herein or in any other Loan Document, or in any statement or certificate
furnished by it or him pursuant hereto or thereto, or in connection with any
extension of credit made hereunder, proves untrue in any material respect as of
the date of the issuance or making thereof; or

     (e)  any event occurs or condition exists (other than those described in
subsections (a) through (d) above) which is specified as an event of default in
any other Loan Document, or any of the Loan Documents shall for any reason not
be or cease to be in full force and effect, or any of the Loan Documents is
declared to be null and void, or the Guarantor shall purport to terminate,
repudiate or disavow his Guaranty, or any of the Collateral Documents shall for
any reason fail to create a valid and perfected first priority Lien in favor of
the Agent for the benefit of the Lenders in any Collateral purported to be
covered thereby except as expressly permitted by the terms thereof; or

     (f)  default shall occur under any Indebtedness for Borrowed Money issued,
assumed or guaranteed by the Company or any Subsidiary, or under any indenture,
agreement or other instrument under which the same may be issued, and such
default shall continue for a period of time sufficient to permit the
acceleration of the maturity of any such Indebtedness for Borrowed Money
(whether or not such maturity is in fact accelerated), or any such Indebtedness
for Borrowed Money shall not be paid when due (whether by lapse of time,
acceleration or otherwise); or

     (g)  any judgment or judgments, writ or writs, or warrant or warrants of
attachment, or any similar process or processes, the aggregate amount of which
(after reduction by the amount covered by insurance) exceeds $1,000,000, shall
be entered or filed against the Company or any Subsidiary or against any of
their Property and which remains unvacated, unbonded, unstayed or unsatisfied
for a period of 30 days; or

     (h)  the Company or any member of its Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess $100,000 which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice
of intent to terminate a Plan or Plans having aggregate Unfunded Vested
Liabilities in excess of $100,000 (collectively, a "Material Plan") shall be
filed under Title IV of ERISA by the Company or any other member of its
Controlled Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any Material Plan or a proceeding
shall be instituted by a fiduciary of any Material Plan against the Company or
any member of its Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA
and such proceeding shall not have been dismissed within 30 days thereafter; or
a condition shall exist by reason of

                                      -30-

<PAGE>
which the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or

     (i) dissolution or termination of the existence of the Company or any
Subsidiary (other than Valley Oaks Financial Corp.); or

     (j) any conservator or receiver shall be appointed for the Company or any
Banking Subsidiary under applicable federal or state law applicable to banks,
thrifts, or their holding companies, or any Banking Subsidiary shall suspend
payment of its obligations, or any Banking Subsidiary shall cease to be a
federally insured depositary institution, or a cease and desist order shall be
issued against the Company or any Subsidiary pursuant to applicable federal or
state law applicable to banks, thrifts, or their holding companies relating to
its capital or earnings or, if relating to an other matter, which is reasonably
likely to have a Material Adverse Effect, or the Company or any Subsidiary shall
enter into any commitment to maintain the capital of an insured depository
institution in a required amount with any federal or state regulator or any such
regulator shall require the Company or any Subsidiary to enter into a memorandum
of understanding (or the equivalent thereof) relating to its capital or earnings
or, if relating to any other matter, which is reasonably likely to have a
Material Adverse Effect or submit a capital maintenance or restoration plan; or

     (k) a Change of Management Event or Stock Ownership Event shall occur;

     (l) the Company or any Subsidiary or the Guarantor shall (i) have entered
involuntarily against it an order for relief under the United States Bankruptcy
Code, as amended, (ii) not pay, or admit in writing its inability to pay, its
debts generally as they become due, (iii) make an assignment for the benefit of
creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of
a receiver, custodian, trustee, examiner, liquidator or similar official for it
or any substantial part of its Property, (v) institute any proceeding seeking to
have entered against it an order for relief under the United States Bankruptcy
Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding
up, liquidation, reorganization, arrangement, adjustment or composition of it or
its debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) take any
corporate action in furtherance of any matter described in parts (i) through (v)
above, or (vii) fail to contest in good faith any appointment or proceeding
described in Section 9.1(m) hereof; or

     (m) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Company or any Subsidiary or the Guarantor
or any substantial part of any of their Property, or a proceeding described in
Section 9.1(l)(v) shall be instituted against the Company or any Subsidiary or
the Guarantor, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 60 days.

                                      -31-
<PAGE>
     Section 9.2. Non-Bankruptcy Defaults. When any Event of Default other than
those described in subsection (l) or (m) of Section 9.1 hereof has occurred and
is continuing, the Agent shall, by written notice to the Company: (a) if so
directed by the Required Lenders, terminate the remaining Commitments and all
other obligations of the Lenders hereunder on the date stated in such notice
(which may be the date thereof); and (b) if so directed by the Required Lenders,
declare the principal of and the accrued interest on all outstanding Notes to be
forthwith due and payable and thereupon all outstanding Notes, including both
principal and interest thereon, shall be and become immediately due and payable
together with all other amounts payable under the Loan Documents without further
demand, presentment, protest or notice of any kind.

     Section 9.3. Bankruptcy Defaults. When any Event of Default described in
subsection (l) or (m) of Section 9.1 hereof has occurred and is continuing, then
all outstanding Notes shall immediately become due and payable together with all
other amounts payable under the Loan Documents without presentment, demand,
protest or notice of any kind, the obligation of the Lenders to extend further
credit pursuant to any of the terms hereof shall immediately terminate.

SECTION 10. THE AGENT

     Section 10.1. Appointment and Authorization. Each Lender hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers hereunder and under the other Loan Documents as are
designated to the Agent by the terms hereof and thereof together with such
powers as are reasonably incidental thereto. The Lenders expressly agree that
the Agent is not acting as a fiduciary of the Lenders in respect of the Loan
Documents, the Company or otherwise, and nothing herein or in any of the other
Loan Documents shall result in any duties or obligations on the Agent or any of
the Lenders except as expressly set forth herein. The Agent may resign at any
time by sending 20 days prior written notice to the Company and the Lenders. In
the event of any such resignation, the Required Lenders may appoint a new agent
after consultation with the Company, which shall succeed to all the rights,
powers and duties of the Agent hereunder and under the other Loan Documents. Any
resigning Agent shall be entitled to the benefit of all the protective
provisions hereof with respect to its acts as an agent hereunder, but no
successor Agent shall in any event be liable or responsible for any actions of
its predecessor. If the Agent resigns and no successor is appointed, the rights
and obligations of such Agent shall be automatically assumed by the Required
Lenders and (i) the Company shall be directed to make all payments due each
Lender hereunder directly to such Lender and (ii) the Agent's rights in any
collateral shall be assigned without representation, recourse or warranty to the
Lenders as their interests may appear.

     Section 10.2. Rights as a Lender. The Agent has and reserves all of the
rights, powers and duties hereunder and under the other Loan Documents as any
Lender may have and may exercise the same as though it were not the Agent and
the terms "Lender" or "Lenders" as used herein and in all of such documents
shall, unless the context otherwise expressly indicates, include the Agent in
its individual capacity as a Lender.

                                      -32-

<PAGE>
     Section 10.3. Standard of Care. The Lenders acknowledge that they have
received and approved copies of the Loan Documents and such other information
and documents concerning the transactions contemplated and financed hereby as
they have requested to receive and/or review. The Agent makes no representations
or warranties of any kind or character to the Lenders with respect to the
validity, enforceability, genuineness, perfection, value, worth or
collectibility hereof or of the Notes or any of the other Obligations or of any
of the other Loan Documents or of the Liens provided for thereby or of any other
documents called for hereby or thereby or of any collateral. Neither the Agent
nor any director, officer, employee, agent or representative thereof (including
any security trustee therefor) shall in any event be liable for any clerical
errors or errors in judgment, inadvertence or oversight, or for action taken or
omitted to be taken by it or them hereunder or under the other Loan Documents or
in connection herewith or therewith except for its or their own gross negligence
or willful misconduct. The Agent shall incur no liability under or in respect of
this Agreement or the other Loan Documents by acting upon any notice,
certificate, warranty, instruction or statement (oral or written) of anyone
(including anyone in good faith believed by it to be authorized to act on behalf
of the Company), unless it has actual knowledge of the untruthfulness of same.
The Agent may execute any of its duties hereunder by or through employees,
agents, and attorneys-in-fact and shall not be answerable to the Lenders for the
default or misconduct (other than gross negligence or willful misconduct) of any
such agents or attorneys-in-fact selected with reasonable care. The Agent shall
be entitled to advice of counsel concerning all matters pertaining to the
agencies hereby created and its duties hereunder, and shall incur no liability
to anyone and be fully protected in acting upon the advice of such counsel. The
Agent shall be entitled to assume that no Default or Event of Default exists
unless notified to the contrary by a Lender. The Agent shall in all events be
fully protected in acting or failing to act in accord with the instructions of
the Required Lenders. Upon the occurrence of an Event of Default hereunder, the
Agent shall take such action with respect to the enforcement of any Liens on any
collateral and the preservation and protection thereof as it shall be directed
to take by the Required Lenders but unless and until the Required Lenders have
given such direction the Agent shall take or refrain from taking such actions as
it deems appropriate and in the best of interest of all Lenders. The Agent shall
in all cases be fully justified in failing or refusing to act hereunder unless
it shall be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by the Agent by reason of taking or
continuing to take any such action. The Agent may treat the owner of any Note as
the holder thereof until written notice of transfer shall have been filed with
the Agent signed by such owner in form satisfactory to the Agent. Each Lender
acknowledges that it has independently and without reliance on the Agent or any
other Lender and based upon such information, investigations and inquiries as it
deems appropriate made its own credit analysis and decision to extend credit to
the Company. It shall be the responsibility of each Lender to keep itself
informed as to the creditworthiness of the Company and the Agent shall have no
liability to any Lender with respect thereto.

     Section 10.4. Costs and Expenses. Each Lender agrees to reimburse the Agent
for all reasonably necessary costs and expenses suffered or incurred by the
Agent or any security trustee in performing its duties hereunder and under the
other Loan Documents, or in the exercise of any right or power imposed or
conferred upon the Agent hereby or thereby, to

                                      -33-

<PAGE>
the extent that the Agent is not promptly reimbursed for same by the Company or
out of proceeds of any collateral, all such costs and expenses to be borne by
the Lenders ratably in accordance with the amounts of their respective
Commitments. If any Lender fails to reimburse the Agent for such Lender's share
of any such costs and expenses, such costs and expenses shall be paid pro rata
by the remaining Lenders, but without in any manner releasing the defaulting
Lender from its liability hereunder.

     Section 10.5. Indemnity. The Lenders shall ratably indemnify and hold the
Agent, and its directors, officers, employees, agents and representatives
(including as such any security trustee therefor) harmless from and against any
liabilities, losses, costs and expenses suffered or incurred by them hereunder
or under the other Loan Documents or in connection with the transactions
contemplated hereby or thereby, regardless of when asserted or arising, except
to the extent they are promptly reimbursed for the same by the Company or out of
the proceeds of any collateral and except to the extent that any event giving
rise to a claim was caused by the gross negligence or willful misconduct of the
party seeking to be indemnified. If any Lender defaults in its obligations
hereunder, its share of the obligations shall be paid pro rata by the remaining
Lenders, but without in any manner releasing the defaulting Lender from its
liability hereunder.

SECTION 11. MISCELLANEOUS.

     Section 11.1. Withholding Taxes. (a) Payments Free of Withholding. Except
as otherwise required by law and subject to Section 11.1(b) hereof, each payment
by the Company under this Agreement and under any other Loan Document shall be
made without withholding for or on account of any present or future taxes (other
than overall net income taxes on the Recipient) imposed by or within the
jurisdiction in which the Company is domiciled, any jurisdiction from which the
Company makes any payment, or (in each case) any political subdivision or taxing
authority thereof or therein. If any such withholding is so required, the
Company shall make the withholding, pay the amount withheld to the appropriate
governmental authority before penalties attach thereto or interest accrues
thereon and forthwith pay such additional amount as may be necessary to ensure
that the net amount actually received by each Lender and the Agent free and
clear of such taxes (including such taxes on such additional amount) is equal to
the amount which that Lender or the Agent (as the case may be) would have
received had such withholding not been made. If the Agent or any Lender pays any
amount in respect of any such taxes, penalties or interest, the Company shall
reimburse the Agent or such Lender for that payment on demand in the currency in
which such payment was made. If the Company pays any such taxes, penalties or
interest, it shall deliver official tax receipts evidencing that payment or
certified copies thereof to the Lender or Agent on whose account such
withholding was made (with a copy to the Agent if not the recipient of the
original) on or before the thirtieth day after payment.

     (b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code)
shall submit to the Company and the Agent on or before the earlier of the date
the initial Borrowing is made hereunder and 30 days after the date hereof, two
duly completed and signed copies of either Form 1001 (relating to such Lender
and entitling it to a complete exemption from

                                      -34-
<PAGE>
withholding under the Code on all amounts to be received by such Lender,
including fees, pursuant to the Loan Documents and the Loans) or Form 4224
(relating to all amounts to be received by such Lender, including fees,
pursuant to the Loan Documents and the Loans) of the United States Internal
Revenue Service. Thereafter and from time to time, each Lender shall submit to
the Company and the Agent such additional duly completed and signed copies of
one or the other of such Forms (or such successor forms as shall be adopted
from time to time by the relevant United States taxing authorities) as may be
(i) requested by the Company in a written notice, directly or through the
Agent, to such Lender and (ii) required under then-current United States law or
regulations to avoid or reduce United States withholding taxes on payments in
respect of all amounts to be received by such Lender, including fees, pursuant
to the Loan Documents or the Loans.

       (c)  Inability of Bank to Submit Forms. If any Lender determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Company or the Agent any form or certificate that such Lender is obligated to
submit pursuant to subsection (b) of this Section 11.1 or that such Lender is
required to withdraw or cancel any such form or certificate previously submitted
or any such form or certificate otherwise becomes ineffective or inaccurate,
such Lender shall promptly notify the Company and Agent of such fact and the
Lender shall to that extent not be obligated to provide any such form or
certificate and will be entitled to withdraw or cancel any affected form or
certificate, as applicable.

     Section 11.2.  Non-Business Days. If any payment hereunder becomes due and
payable on a day which is not a Business Day, the due date of such payment
shall be extended to the next succeeding Business Day on which date such
payment shall be due and payable. In the case of any payment of principal
falling due on a day which is not a Business Day, interest on such principal
amount shall continue to accrue during such extension at the rate per annum
then in effect, which accrued amount shall be due and payable on the next
scheduled date for the payment of interest.

     Section 11.3.  No Waiver, Cumulative Remedies. No delay or failure on the
part of any Lender or on the part of any holder of any of the Obligations in
the exercise of any power or right shall operate as a waiver thereof or as an
acquiescence in any default, nor shall any single or partial exercise of any
power or right preclude any other or further exercise thereof or the exercise
of any other power or right. The rights and remedies hereunder of the Lenders
and any of the holders of the Obligations are cumulative to, and not exclusive
of, any rights or remedies which any of them would otherwise have.

     Section 11.4.  Amendments. Any provision of this Agreement or the other
Loan Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by (a) the Company, (b) the Required
Lenders, and (c) if the rights or duties of the Agent are affected thereby, the
Agent; provided that, notwithstanding the foregoing:

          (i) no amendment or waiver shall (A) increase any Commitment of any
     Lender without the consent of such Lender, (B) reduce the amount of or
     postpone the

                                      -35-
<PAGE>
          date for payment of any principal of or interest on any Loan or of any
          fee payable hereunder without the consent of the Lenders to which such
          payment is owing or which has committed to make such Loan hereunder or
          (C) change the definition of the Revolving Credit Termination Date
          without the consent of all the Lenders holding Revolving Credit
          Commitments; and

               (ii) no amendment or waiver shall, unless signed by each Lender,
          change the provisions of this Section 11.4, the definition of Required
          Lenders, or affect the number of Lenders required to take any action
          hereunder or under any other Loan Document.

     Section 11.5. Costs and Expenses. The Company agrees to pay on demand the
costs and expenses of the Agent in connection with the negotiation, preparation,
execution and delivery of this Agreement, the other Loan Documents and the other
instruments and documents to be delivered hereunder or thereunder, and in
connection with the transactions contemplated hereby or thereby, and in
connection with any consents hereunder or waivers or amendments hereto or
thereto, including the fees and expenses of Messrs. Chapman and Cutler, counsel
for the Agent. The Company further agrees to pay to Agent and the Lenders and
any other holders of the Obligations all costs and expenses (including court
costs and attorneys' fees), if any, incurred or paid by the Agent, the Lenders
or any other holders of the Obligations in connection with any Default or Event
of Default or in connection with the enforcement of this Agreement or any of the
other Loan Documents or any other instrument or document delivered hereunder or
thereunder. The Company further agrees to indemnify and save the Lenders, the
Agent and any security trustee for the Lenders harmless from any and all
liabilities, losses, costs and expenses incurred by the Lenders or the Agent in
connection with any action, suit or proceeding brought against the Agent, or any
security trustee or any Lender by any Person (but excluding attorneys' fees for
litigation solely between the Lenders to which the Company is not a party) which
arises out of the transactions contemplated or financed hereby or out of any
action or inaction by the Agent, any security trustee or any Lender hereunder or
thereunder, except for such thereof as is caused by the gross negligence or
willful misconduct of the party seeking to be indemnified. The provisions of
this Section and the protective provisions of Section 2 hereof shall survive
payment of the Obligations.

     Section 11.6. Documentary Taxes. The Company agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.

     Section 11.7. Survival of Representations. All representations and
warranties made herein or in any of the other Loan Documents or in certificates
given pursuant hereto or thereto shall survive the execution and delivery of
this Agreement and the other Loan Documents, and shall continue in full force
and effect with respect to the date as of which they were made as long as any
credit is in use or available hereunder.

                                      -36-
<PAGE>
     Section 11.8.  Survival of Indemnities. All indemnities and other
provisions relative to reimbursement to the Agent and the Lenders of amounts
sufficient to protect the yield of the Agent and the Lenders with respect to the
Loans, including, but not limited to, Sections 2.7 and 2.8 hereof, shall survive
the termination of this Agreement and the payment of the Obligations.

     Section 11.9.  Participations. Any Lender may grant participations in its
extensions of credit hereunder to any other Lender or other lending institution
(a "Participant"), provided that (i) no Participant shall thereby acquire any
direct rights under this Agreement, (ii) no Lender shall agree with a
Participant not to exercise any of such Lender's rights hereunder without the
consent of such Participant, except that such agreements may provide that such
Lender will not agree to any modifications, amendments, or waivers of the Loan
Documents that would reduce the principal amount of or interest owing on, or
extend the scheduled maturity date of, any Obligation in which such participant
has an interest, and (iii) no sale of a participation in extensions of credit
shall in any manner relieve the selling Lender of its obligations hereunder.

     Section 11.10.  Assignment Agreements. Each Lender may, from time to time
upon at least 5 Business Days' prior written notice to the Agent, assign to
other commercial lenders part of its rights and obligations under this Agreement
(including without limitation the indebtedness evidenced by any of the Notes
then owned by such assigning Lender, together with an equivalent proportion of
its Commitments to make such Loans hereunder) pursuant to written agreements
executed by such assigning Lender, such assignee lender or lenders, the Company
and the Agent, which agreements shall specify in each instance the portion of
the indebtedness evidenced by the relevant Notes which is to be assigned to each
such assignee lender and the portion of the relevant Commitments of the
assigning Lender to be assumed by it (the "Assignment Agreements"); provided,
however, that (i) each such assignment shall be of a constant, and not a
varying, percentage of the assigning Lender's Revolving Credit Commitment; (ii)
unless the Agent otherwise consents, the aggregate amount of the Commitments,
Loans and Notes of the assigning Lender being assigned pursuant to each such
assignment (determined as of the effective date of the relevant Assignment
Agreement) shall in no event be less than $3,000,000 and shall be an integral
multiple of $1,000,000; (iii) the Agent and the Company must each consent, which
consent shall not be unreasonably withheld (it being agreed that the Company's
refusal to grant its consent on the basis that the proposed assignee is not a
U.S. person shall not be deemed unreasonable), to each such assignment to a
party which was not an original signatory of this Agreement; and (iv) the
assigning Lender must pay to the Agent a processing and recordation fee of
$2,500 and any out-of-pocket attorneys' fees and expenses incurred by the Agent
in connection with such Assignment Agreement. Upon the execution of each
Assignment Agreement by the assigning Lender thereunder, the assignee lender
thereunder, the Company and the Agent and payment to such assigning Lender by
such assignee lender of the purchase price for the portion of the indebtedness
of the Company being acquired by it, (i) such assignee lender shall thereupon
become a "Lender" for all purposes of this Agreement with Commitments in the
amounts set forth in such Assignment Agreement and with all the rights, powers
and obligations afforded a Lender hereunder, (ii) such assigning Lender shall
have no further liability for funding the portion of its Commitments assumed

                                      -37-
<PAGE>
by such other Lender and (iii) the address for notices to such assignee Lender
shall be as specified in the Assignment Agreement executed by it. Concurrently
with the execution and delivery of such Assignment Agreement, the Company shall
execute and deliver Notes to the assignee Lender in the respective amounts of
its Revolving Credit Commitment and new Notes to the assigning Lender in the
respective amounts of its Revolving Credit Commitment after giving effect to the
reduction occasioned by such assignment, all such Notes to constitute "Notes"
for all purposes of this Agreement and of the other Loan Documents.

         Section 11.11. Notices. Except as otherwise specified herein, all
notices hereunder shall be in writing (including, without limitation, notice by
telecopy) and shall be given to the relevant party at its address or telecopier
number set forth below, in the case of the Company, or on the appropriate
signature page hereof, in the case of the Lenders and the Agent, or such other
address or telecopier number as such party may hereafter specify by notice to
the Agent and the Company given by United States certified or registered mail,
by telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices hereunder to the Company shall
be addressed to:

                           Harrington West Financial Group, Inc.
                           7300 College Boulevard - Suite 430
                           Overland Park, Kansas 66210
                           Attention:   Craig J. Cerny
                           Telephone:   (913) 451-1566
                           Telecopy:    (913) 451-6313

Each such notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication
is deposited in the mail, certified or registered with return receipt
requested, addressed as aforesaid or (iii) if given by any other means, when
delivered at the addresses specified in this Section; provided that any notice
given pursuant to Section 1 or Section 2 hereof shall be effective only upon
receipt.

         Section 11.12. Headings. Section headings used in this Agreement are
for convenience of reference only and are not a part of this Agreement for any
other purpose.

         Section 11.13. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. All rights, remedies and powers provided in this Agreement and
the other Loan Documents may be exercised only to the extent that the exercise
thereof does not violate any applicable mandatory provisions of law, and all
the provisions of this Agreement and the other Loan Documents are intended to
be subject to all applicable mandatory provisions of law which may be
controlling and to be limited to the extent necessary so that they will not
render this Agreement or the other Loan Documents invalid or unenforceable.

                                      -38-
<PAGE>
     Section 11.14. Counterparts. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.

     Section 11.15. Entire Understanding. This Agreement together with the other
Loan Documents constitute the entire understanding of the parties with respect
to the subject matter hereof and any prior agreements, whether written or oral,
with respect thereto are superseded hereby except for prior understandings
related to fees payable to the Agent upon the initial closing of the
transactions contemplated hereby.

     Section 11.16. Binding Nature, Governing Law, Etc. This Agreement shall be
binding upon the Company and its successors and assigns, and shall inure to the
benefit of the Agent and the Lenders and the benefit of their successors and
assigns, including any subsequent holder of an interest in the Obligations. The
Company may not assign its rights hereunder without the written consent of the
Lenders. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

     Section 11.17. Submission to Jurisdiction. The Company hereby submits to
the non-exclusive jurisdiction of the United States District Court for the
Northern District of Illinois and of any Illinois State court sitting in the
City of Chicago for purposes of all legal proceedings arising out of or relating
to this Agreement, the other Loan Documents or the transactions contemplated
hereby or thereby. The Company irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.

     Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.

     Dated as of this 30th day of October, 1997.

                                       HARRINGTON WEST FINANCIAL GROUP, INC.

                                       By  /s/ CRAIG J. CERNY
                                          ---------------------------------
                                                                      CEO
                                          ---------------------------------
                                          (Print or Type Name)      (Title)

                                      -39-
<PAGE>
     Accepted and Agreed to at Chicago, Illinois as of the day and year last
above written.

     Each of the Lenders hereby agrees with each other Lender that if it should
receive or obtain any payment (whether by voluntary payment, by realization
upon collateral, by the exercise of rights of set-off or banker's lien, by
counterclaim or cross action, or by the enforcement of any rights under this
Agreement, any of the other Loan Documents or otherwise) in respect of the
Obligations in a greater amount than such Lender would have received had such
payment been made to the Agent and been distributed among the Lenders as
contemplated by Section 3.3 hereof then in that event the Lender receiving such
disproportionate payment shall purchase for cash without recourse from the
other Lenders an interest in the Obligations of the Company to such Lenders in
such amount as shall result in a distribution of such payment as contemplated
by Section 3.4 hereof. In the event any payment made to a Lender and shared
with the other Lenders pursuant to the provisions hereof is ever recovered from
such Lender, the Lenders receiving a portion of such payment hereunder shall
restore the same to the payor Lender, but without interest.

Amount of Revolving Credit Commitments:

For the Period:     Revolving Credit Commitment:
---------------     ----------------------------

10/30/97 through    $6,500,000
9/23/98                                           HARRIS TRUST AND SAVINGS BANK

9/24/98 through     $6,045,000     8,835          By  /s/ Patrick A. Horne
9/23/99                                               -------------------------
                                                      Its Vice President

9/24/99 through     $5,395,000     7,885          111 West Monroe Street
Revolving Credit                                  Chicago, Illinois 60603
Termination Date                                  Attention: Mr. Patrick Horne
                                                  Telephone: (312) 461-7514
                                                  Telecopy:  (312) 765-8353

                                      -40-

<PAGE>
For the Period:          Revolving Credit Commitment:
---------------          ----------------------------

10/30/97 through         $2,000,000
9/23/98

9/24/98 through
9/23/99                  $1,860,000

9/24/99 through          $1,660,000
Revolving Credit
Termination Date

MERCANTILE BANK NATIONAL ASSOCIATION

By /s/ MARK R. JORGENSEN
  ------------------------------
  Its VP
     ---------------------------

       Mark R. Jorgensen
--------------------------------
      (Print or Type Name)

4700 West 50th Place
Roeland Park, Kansas 66205
Attention: Mark Jorgenson
Telephone: (913) 261-5539
Telecopy: (913) 261-5548

For the Period:          Revolving Credit Commitment:
---------------          ----------------------------

10/30/97 through         $1,000,000
9/23/98

9/24/98 through          $930,000
9/23/99

9/24/99 through          $830,000
Revolving Credit
Termination Date

FIRST COMMERCIAL BANK, N.A.

By /s/ THOMAS E. BISHOP JR.
  ------------------------------
  Its Chairman
     ---------------------------

      Thomas E. Bishop Jr.
--------------------------------
      (Print or Type Name)

12695 Metcalf Avenue
Overland Park, Kansas 66213
Attention: Tom Bishop
Telephone: (913) 663-5525
Telecopy: (913) 663-3948

                                      -41-
<PAGE>
                                   EXHIBIT A

                     HARRINGTON WEST FINANCIAL GROUP, INC.
                             REVOLVING CREDIT NOTE

                                                               Chicago, Illinois
$__________                                                     October 30, 1997

     On the Revolving Credit Termination Date, for value received, the
undersigned, HARRINGTON WEST FINANCIAL GROUP, INC., a Delaware corporation (the
"Company"), hereby promises to pay to the order of ______________ (the
"Lender"), at the principal office of Harris Trust and Savings Bank in Chicago,
Illinois, the principal sum of (i) _______________ and no/100 Dollars
($__________), or (ii) such lesser amount as may at the time of the maturity
hereof, whether by acceleration or otherwise, be the aggregate unpaid principal
amount of all Revolving Credit Loans owing from the Company to the Lender under
the Revolving Credit provided for in the Credit Agreement hereinafter mentioned.

     This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Amended and
Restated Credit Agreement dated as of October 30, 1997, between the Company,
Harris Trust and Savings Bank, individually and as Agent thereunder, and the
other Lenders which are now or may from time to time hereafter become parties
thereto (said Credit Agreement, as the same may be amended, modified or
restated from time to time, being referred to herein as the "Credit Agreement")
made and to be made to the Company by the Lender under the Revolving Credit
provided for under the Credit Agreement, and the Company hereby promises to pay
interest at the office described above on each loan evidenced hereby at the
rates and at the times and in the manner specified therefor in the Credit
Agreement.

     Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees that
in any action or proceeding instituted to collect or enforce collection of this
Note, the entries so endorsed on a schedule to this Note or recorded on the
books and records of the holder hereof shall be prima facie evidence of the
unpaid principal balance of this Note, the status of each such loan from time
to time as part of the Domestic Rate Portion or a LIBOR Portion, and, in the
case of any LIBOR Portion, the interest rate and Interest Period applicable
thereto.

<PAGE>
     This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit Agreement.

     This Note is issued in substitution and replacement for, and evidences in
part the indebtedness currently evidenced by, those certain Revolving Credit
Notes of the Company dated September 23, 1996 payable to the order of certain
of the Lenders in the aggregate principal amount of $7,000,000.

     The Company hereby promises to pay all costs and expenses (including
attorneys' fees) suffered or incurred by the holder hereof in collecting this
Note or enforcing any rights in any collateral therefor. The Company hereby
waives presentment for payment and demand. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

                                           HARRINGTON WEST FINANCIAL GROUP, INC.

                                           By _________________________________

                                              _________________________________
                                              (Print or Type Name)     (Title)

                                      -2-
<PAGE>
                                   EXHIBIT B

                             COMPLIANCE CERTIFICATE

To:  Harris Trust and Savings Bank, as Agent
     under, and the Lenders party to, the
     Amended and Restated Credit Agreement
     described below

     This Compliance Certificate is furnished to the Agent and the Lenders
pursuant to that certain Amended and Restated Credit Agreement dated as of
October 30, 1997, by and among Harrington West Financial Group, Inc. (the
"Company") and you (the "Credit Agreement"). Unless otherwise defined herein,
the terms used in this Compliance Certificate have the meanings ascribed
thereto in the Credit Agreement.

     THE UNDERSIGNED HEREBY CERTIFIES THAT:

     1.   I am the duly elected ___________________ of the Company;

     2.   I have reviewed the terms of the Credit Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Company and its Subsidiaries during the
accounting period covered by the attached financial statements;

     3.   The examinations described in paragraph 2 did not disclose, and I
have no knowledge, of the existence of any condition or the occurrence of any
event which constitutes a Default or Event of Default during or at the end of
the accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below;

     4.   The financial statements required by Section 8.5 of the Credit
Agreement and being furnished to you concurrently with this Certificate are
true, correct and complete as of the date and for the periods covered thereby;
and

     5.   The Attachment hereto sets forth financial data and computations
evidencing the Company's compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my knowledge,
true, complete and correct and have been made in accordance with the relevant
Sections of the Credit Agreement.

     Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Company has taken, is taking, or proposes to
take with respect to each such condition or event:
<PAGE>

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

     The foregoing certifications, together with the computations set forth in
the Attachment hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this ______ day of
________ 19__.

                                         _______________________________________
                                         ____________________ , ________________
                                         (Print or Type Name)       (Title)

                                      -2-
<PAGE>
                      ATTACHMENT TO COMPLIANCE CERTIFICATE
                     HARRINGTON WEST FINANCIAL GROUP, INC.

       Compliance Calculations for Amended and Restated Credit Agreement
                          Dated as of October 30, 1997
                     Calculations as of _____________, 19__

_______________________________________________________________________________

A.   Ratio of Non-performing Assets to Stockholder's Equity (Section 8.7)

     1.   Non-performing Assets for the Company

          (a)  Loans more than 90 days past due   __________

          (b)  Loans placed on non-accrual status __________

          (c)  Assets acquired by repossession or
               foreclosure                        __________

          (d)  Sum of lines a-c                               __________

     2.   Stockholder's Equity and Loan Loss Reserves

          (a)  Stockholder's Equity               __________

          (b)  Loan loss reserves                 __________

          (c)  Sum of a-b                                     __________

     3.   Ratio of 1d to 2c                                   ___ to ___

          Lines 3 must not exceed                             0.30 to 1

B.   Capital Ratios (Section 8.8)

     1.   Tier I Leverage Ratio

          (a)  Total Assets                       __________

               Less: Intangibles                  __________  __________

          (b)  Tier I Equity                      __________
<PAGE>
               Less: Intangibles                  __________  __________

          (c)  Ratio of 1b to 1a                              ____ to 1

          Line 1c must not be less than                       0.05 to 1

     2.   Risk Based Capital Rates

          (a)  Total Risk-weighted Assets         __________

          (b)  Tier 1 Capital                     __________

               Less: Intangibles                  __________  __________

          (c)  Tier 2 Capital                     __________

          (d)  Total Qualifying Capital (Line 2b
               plus 2c)                                       __________

          (e)  Ratio of 2b to 2a                              ____ to 1

          (f)  Line 2e must not be less than                  0.06 to 1

          (g)  Ratio of 2d to 2a                              ____ to 1

          (h)  Line 2g must not be less than                  0.10 to 1

C.   Loan to Value Ratio (Section 8.9)

     1.   Average debt outstanding                __________

     2.   Net Worth of Banking Subsidiary(ies)    __________

     3.   Ratio of 1 to 2                                     ____ to 1

     4.   Line 3 must be less than                            0.05 to 1

D.   Mortgage Derivative Securities Ratio (Section 8.10)

     1.   Mortgage derivative securities          __________

     2.   Aggregate market value of securities
          portfolio                               __________

     3.   Line 2 x 7.5%                           __________

                                      -2-
<PAGE>
     4.   Which is larger: Line 3 or $15,000,000  __________

     5.   Does line 1 exceed line 4?              yes/no

                                      -3-
<PAGE>
                                   EXHIBIT C

                               OPINION OF COUNSEL

October 30, 1997

Harris Trust and Savings Bank,
 Individually and as Agent
111 West Monroe Street
Chicago, Illinois 60603

Mercantile Bank, as Lender
4700 West 50th Place
Roeland Park, Kansas 66205

First Commercial Bank, N.A., as Lender
12695 Metcalf Avenue
Overland Park, Kansas 66213

Ladies and Gentlemen:

     We have served as counsel to Harrington West Financial Group, Inc., a
Delaware corporation (the "Company"), in connection with the amendment and
restatement of a revolving credit facility being made available by you to the
Company. We have also served as counsel for Los Padres Savings Bank, FSB (the
"Subsidiary") and, solely for purposes of the issuance of this opinion and at
the request of the Company, as special counsel to Douglas T. Breeden (the
"Guarantor"). This opinion is delivered to you at the request of the Company
pursuant to Section 7.2(c) of the Amended and Restated Credit Agreement
referred to below. All capitalized terms not otherwise defined herein shall
have meanings ascribed to them in the Loan Documents, as defined below.

     As such counsel, we have examined fax copies of executed originals of the
following:

1.   Amended and Restated Credit Agreement by and among the Company, Harris
     Trust and Savings Bank, as Agent (the "Agent") and the other lenders party
     thereto (collectively, the "Lenders");

2.   Revolving Credit Notes of the Company each payable to the order of a Lender
     in the aggregate principal sum of $9,500,000 (the "Revolving Credit
     Notes");

3.   First Amendment to Pledge and Security Agreement from the Company to the
     Agent for the benefit of the Lenders; and

<PAGE>
October 30, 1997
Page 2

4.   First Amendment to Guaranty Agreement from the Guarantor to the Agent for
     the benefit of the Lenders (the "Guaranty Amendment").

     We have also reviewed executed originals of the Pledge and Security
Agreement and Guaranty Agreement.

     The documents described above in subparagraphs (1) through (4) are
hereinafter collectively referred to as "Loan Documents." We have also examined
and are familiar with:

1.   A copy of the Certificate of Incorporation of the Company certified as of
     October 29, 1997 by the Secretary of the State of Delaware;

2.   Certificates dated October 27, 1997 and October 24, 1997 from the Secretary
     of the State of Delaware and the Office of Thrift Supervision,
     respectively, as to the good standing of the Company and the Subsidiary in
     the applicable jurisdiction;

3.   A letter dated October 29, 1997 from the Office of Thrift Supervision as to
     the registration of the Company as a savings and loan holding company;

4.   A copy of the By-laws of the Company certified by the Secretary of the
     Company as being the By-laws of the Company in effect at all times since
     September 19, 1995;

5.   A copy certified by the President of the Company as being all resolutions
     adopted by the board of directors of the Company relating to the Loan
     Documents and the transactions contemplated thereby;

6.   The stock transfer records of the Subsidiary;

7.   The Charter of the Subsidiary certified by the Office of Thrift Supervision
     and the President of the Subsidiary; and

8.   A certificate of the President of the Company and the Chief Executive
     Officer of the Subsidiary as to certain factual matters, a copy of which is
     attached hereto.

     We have also examined such other instruments and records and inquired into
such other factual matters and matters of law as we deem necessary or pertinent
to the formulation of the opinions hereinafter expressed. As to questions of
fact relevant to the opinions stated herein, we have relied upon information
obtained from the officers of the Company or the Subsidiary and, with your
permission, we have assumed, without independent investigation, the accuracy of
such information.
<PAGE>
October 30, 1997
Page 3

     Whenever our opinion herein is stated to be to our knowledge, such
statement is intended to signify that, during the course of our representation
of the Company, the Subsidiary or the Guarantor in connection with the
transactions contemplated by the Loan Documents, no information has come to the
attention of the lawyers within our firm with principal responsibility for the
aforementioned transactions or other representation of the Company or the
Subsidiary which would give us actual knowledge of facts contrary to the
existence or absence of the facts indicated. However, we have not undertaken
any special or independent investigation to determine the existence or absence
of such facts, and no inference as to our knowledge of the existence or absence
of such facts should be drawn from our representation of the Company or the
Subsidiary in connection with the transactions contemplated by the Loan
Documents or otherwise.

     In rendering the opinions expressed below, we have examined originals, or
copies of originals certified to our satisfaction to be complete and accurate,
of such agreements, documents, certificates and other statements of government
officials and corporate officers and such other papers and evidence as we have
deemed relevant and necessary as a basis for these opinions. We have assumed
the genuineness of all signatures (other than those of the Company and the
Guarantor), the authenticity of all documents submitted to us as originals and
the conformity with the original documents of any copies thereof submitted to
us for our examination.

     Based upon the foregoing, we are of the opinion that:

1.   The Company is a corporation duly organized and validly existing and in
     good standing under the laws of the State of Delaware with corporate power
     and corporate authority to carry on its business as now conducted and is
     duly qualified and in good standing in each jurisdiction wherein the
     conduct of its business or the assets and properties owned or leased by it
     require such qualification, where the failure to be so qualified would have
     a material adverse effect upon the financial condition or business
     operations of the Company. The Company is a registered savings and loan
     holding company under the federal Savings and Loan Holding Company Act, as
     amended.

2.   The Subsidiary is a corporation duly organized and validly existing and in
     good standing under the laws of the United States of America with corporate
     power and corporate authority to carry on its business as now conducted and
     is duly licensed or qualified and in good standing in each jurisdiction
     wherein the conduct of its business or the assets and properties owned or
     leased by it require such licensing or qualification where the failure to
     be so licensed or qualified would have a material adverse effect upon the
     financial condition or business operations of the Company.

3.   The Company has fully corporate power and authority to borrow, to pledge
     and grant a lien and security interest in the Pledged Securities as
     collateral security for such borrowings, to execute and deliver the Loan
     Documents executed by it and to perform all of its obligations
<PAGE>
October 30, 1997
Page 4

          thereunder. The execution and delivery by the Company of the Loan
          Documents executed by it does not, nor will the performance by it of
          any of its obligations thereunder, contravene any provision of law or
          of the Certificate of Incorporation or by-laws of the Company (there
          being no other agreements under which the Company is organized) or, to
          our knowledge, of any covenant, indenture or agreement binding upon or
          affecting the Company or any of its properties or assets, the breach
          of which would have a material adverse effect upon the financial
          condition or business operations of the Company.

     4.   The Loan Documents executed by the Company have been duly authorized
          by all necessary corporate action and have been duly executed and
          delivered on behalf of the Company. We assume with your consent that
          the Agent is domiciled in the State of Illinois, and that the proceeds
          of loans will be made available to the Company in the State of
          Illinois, and based thereon, in any action or proceeding arising out
          of or relating to the Loan Documents executed by the Company, in a
          court of the State of California or a federal court sitting in the
          State of California, such court, when properly presented with the
          issues, should recognize and give effect to the provisions of the Loan
          Documents executed by the Company by which the parties agree that such
          Loan Documents shall be governed by, and construed in accordance with,
          the laws of the State of Illinois. Without limiting the generality of
          the foregoing, and based upon the assumptions set forth in the
          preceding sentence, a court of the State of California or a federal
          court sitting in the State of California, when properly presented with
          the issues, should apply the usury law of the State of Illinois and
          should not apply the usury law of the State of California to the Loan
          Documents. However, if a court were to hold that the Loan Documents
          executed by the Company are governed by, and to be construed in
          accordance with, the laws of the State of California, the Loan
          Documents would be, under the laws of the State of California, binding
          obligations of the Company enforceable against it in accordance with
          their respective terms. Without limiting the generality of the
          foregoing, the interest rate charged by the Lenders on the loans which
          are or are to be evidenced by the Revolving Credit Notes, would not
          violate the usury laws of the State of California if the laws of the
          State of California were applicable to such loans.

     5.   If a court were to hold that the Guaranty Amendment is governed by,
          and is to be construed in accordance with, the laws of the State of
          California, the Guaranty Amendment would be, under the laws of the
          State of California, binding obligations of the Guarantor enforceable
          against it in accordance with its terms.

     6.   The authorized capital stock of the Subsidiary consists of 4,000,000
          shares of common stock, $4.00 par value, of which, to our knowledge,
          707,803 shares have been duly authorized and validly issued, and
          2,000,000 shares of preferred stock, no par value, none of which, to
          our knowledge, are outstanding. The Company is the owner of record of
          the Pledged Securities, and the Pledged Securities have been duly
          authorized and validly issued and are fully paid and nonassessable.

<PAGE>
October 30, 1997
Page 5

7.   No order, authorization, consent, license or exemption of, or filing or
     registration with, any court or governmental department, agency,
     instrumentality or regulatory body, whether local, state or federal, is or
     will be required in connection with the lawful execution and delivery of
     the Loan Documents, or the grant of the lien on and security interest in
     the Pledged Securities set forth in the Pledge and Security Agreement, or
     the observance and performance by the Company of any of the terms thereof.

8.   To our knowledge, there is no action, suit, proceeding or investigation at
     law or in equity before or by any court or public body pending or
     threatened against or affecting the Company or the Company's assets and
     properties which, if adversely determined, could result in any material
     adverse change in the properties, business, operations or financial
     condition of the Company.

     Our opinions set forth above in paragraphs 4 and 5 with respect to the
enforceability of the Loan Documents against the Company and the Guaranty
against the Guarantor are subject to the following limitations (i) limitations
on enforcement under bankruptcy, insolvency, liquidation, receivership,
conservatorship, moratorium, or other laws relating to or affecting the
enforcement of creditors' rights generally, or under general principles of
equity (whether considered in a proceeding in equity or at law); (ii) the
enforceability of provisions to the effect that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy may be limited under certain circumstances or prohibited as a matter of
public policy; (iii) the enforceability of provisions requiring one party to
indemnify another party for the party's wrongful acts may be limited or
prohibited under certain circumstances; (iv) the enforceability of provisions
imposing default interest, funding indemnities and other fees may be limited to
the extent a court determines that such interest, indemnities or fees is not
reasonably related to the damage or harm suffered by the party assessing such
interest, indemnity, or fee and (v) the enforceability of waivers of certain
rights or remedies of a guarantor may be limited by California case law
interpreting Sections 2787 through 2855 of the California Civil Code.

     Our opinions expressed above are limited to the laws of the State of
California, the corporate laws of the State of Delaware and the federal laws of
the United States of America, to present judicial decisions thereof and to facts
as they presently exist. In rendering this opinion, we shall have no obligation
to revise or supplement it should the current laws of the United States of
America, or the States of Delaware or California be changed by legislative
action, judicial decision or otherwise, or should the facts upon which this
opinion is based subsequently change.

                         Very truly yours,
<PAGE>
                                   SCHEDULE 6.2

                                   SUBSIDIARIES

                                   JURISDICTION
                                        OF                    PERCENTAGE
           NAME                   INCORPORATION                OWNERSHIP
           ----                   -------------               ----------
Los Padres Savings Bank       United States of America      Company - 100%

Valley Oaks Financial Corp.         California              Los Padres Savings
                                                            Bank - 100%
<PAGE>
                                 SCHEDULE 6.12

                              AFFILIATE CONTRACTS

                                      NONE
<PAGE>
                                                                    Exhibit 10.2
                                                                           cont.

            FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

To Each of the Lenders Signatory Hereto

Ladies and Gentlemen:

     Reference is hereby made to that certain Amended and Restated Credit
Agreement dated as of October 30, 1997 (the "Credit Agreement"), between the
undersigned, Harrington West Financial Group, Inc., a Delaware corporation, the
Lenders party thereto, and Harris Trust and Savings Bank, as Agent for the
Lenders. All capitalized terms used herein without definition shall have the
same meanings herein as such terms have in the Credit Agreement.

     The Company has requested that the Lenders increase the aggregate
Commitments to $15,000,000, release the Guaranty, and make certain other
amendments to the Credit Agreement, and the Lenders are willing to so amend the
Credit Agreement and release the Guaranty on the terms and conditions set forth
in this amendment (herein, the "Amendment").

1.   INCREASE OF COMMITMENT AMOUNTS.

     1.1.  Upon the satisfaction of the conditions precedent set forth in
Section 4 hereof, the amount of each Lender's Revolving Credit Commitment set
forth opposite its name on its signature page to the Credit Agreement shall be
amended and as so amended shall be restated as follows:

<TABLE>
<CAPTION>
                                                         REVOLVING CREDIT
                                 REVOLVING CREDIT       COMMITMENT FOR THE
                                COMMITMENT FOR THE     PERIOD FORM 10/01/03
                               PERIOD FROM 10/01/99    THROUGH THE REVOLVING
          LENDER                 THROUGH 09/30/03     CREDIT TERMINATION DATE
<S>                            <C>                    <C>
Harris Trust and Savings Bank      $10,000,000              $ 8,571,429
Mercantile Bank                    $ 3,500,000              $ 3,000,000
First Commercial Bank, N.A.        $ 1,500,000              $ 1,285,714
                                   -----------              -----------
     TOTAL                         $15,000,000              $12,857,143
                                   ===========              ===========
</TABLE>

     1.2  New Revolving Credit Notes. In replacement for the outstanding
Revolving Credit Notes payable to the order of each Lender (the "Existing
Revolving Credit Notes") now outstanding and evidencing the Revolving Credit
Loans made by the Lenders to the Company pursuant to the Credit Agreement and
the other changes made hereby, the Company shall execute and deliver to each
Lender a new revolving credit note in the amount of such Lender's Revolving
Credit Commitment as increased hereby dated as of the date of its issuance and
otherwise in the form (with appropriate insertions) annexed hereto as Exhibit A
(collectively for all Lenders, the "New Revolving Credit Notes") which shall be
issued in substitution and
<PAGE>
replacement for the Existing Revolving Credit Notes and shall evidence all
Revolving Credit Loans now or hereafter outstanding under the Revolving Credit.
All references in the Credit Agreement or in any other instrument or document
referring to the Existing Revolving Credit Notes shall be deemed references to
the New Revolving Credit Notes.

2. AMENDMENTS.

     Subject to the satisfaction of the conditions set forth in Section 4
below, the Credit Agreement shall be and hereby is amended as follows:

     2.1. Section 2.1(b) of the Credit Agreement is hereby amended in its
entirety and as so amended shall be restated to read as follows:

               (b) Domestic Rate Portion. Each Domestic Rate Portion shall bear
          interest at the rate per annum equal to the Domestic Rate as in effect
          from time to time, provided that if a Domestic Rate Portion or any
          part thereof is not paid when due (whether by lapse of time,
          acceleration or otherwise) such Portion shall bear interest, whether
          before or after judgment, until payment in full thereof at the rate
          per annum determined by adding 2% to the interest rate which would
          otherwise be applicable thereto from time to time. Interest on each
          Domestic Rate Portion shall be payable quarterly in arrears on the
          last day of each March, June, September and December in each year and
          at maturity of the Notes, and interest after maturity (whether by
          lapse of time, acceleration or otherwise) shall be due and payable
          upon demand. Any change in the interest rate on the Domestic Rate
          Portions resulting from a change in the Domestic Rate shall be
          effective on the date of the relevant change in the Domestic Rate.

     2.2. Section 3 of the Credit Agreement shall be amended by adding thereto
the following new Section 3.6:

          Section 3.6. Revolving Credit Commitment Fee. The Company shall pay to
          the Agent for the ratable account of the Lenders in accordance with
          their Percentages a commitment fee at the rate per annum equal to
          one-fourth of one percent (0.25%) (computed on the basis of a year of
          360 days and the actual number of days elapsed) on the average daily
          unused portion of the Revolving Credit Commitments. Such commitment
          fees shall being to accrue on October 1, 1999, and shall be payable
          quarterly in arrears on the last day of each March, June, September
          and December in each year (commencing December 31, 1999) and on the
          Revolving Credit Termination Date.

                                      -2-
<PAGE>
     2.3. Section 5.1 of the Credit Agreement is hereby amended by adding
thereto the following new definition in the appropriate alphabetical location:

          "Core Profitability" means, for any period with respect to the Company
          and its Subsidiaries, total net revenues less operating expenses plus
          (minus) gain (loss) on real estate owned but before tax provision and
          before gain (loss) on securities (whether realized or unrealized), all
          as computed in accordance with GAAP and in a manner consistent with
          past practice.

     2.4. The definitions of "Mortgage Derivatives" and "Revolving Credit
Termination Date" appearing in Section 5.1 of the Credit Agreement are hereby
amended in their entirety and as so amended shall be restated to read as
follows:

          "Mortgage Derivatives" means IOs (interest only) and POs (principal
          only) mortgage securities and residuals as defined or otherwise
          classified by the Federal Financial Institutions Examination Council
          (FFIEC).

          "Revolving Credit Termination Date" means September 30, 2004, as such
          date may be extended pursuant to Section 3.5 hereof, or such earlier
          date on which the Revolving Credit Commitments are terminated in whole
          pursuant to Section 3.2, 9.2 or 9.3 hereof.

     2.5. Section 8.7 of the Credit Agreement is hereby amended in its entirety
and as so amended shall be restated to read as follows:

          Section 8.7. Non-Performing Assets. The Company shall, as of the last
          day of each fiscal quarter, cause each Banking Subsidiary to maintain
          a ratio (a) of Non-Performing Assets of such Banking Subsidiary, to
          (b) the sum of (i) regulatory "core" capital (Tier I) of such Banking
          Subsidiary, plus (ii) loan loss reserves established by such Banking
          Subsidiary in accordance with regulatory accounting principles of not
          more than .20 to 1.0.

     2.6  Section 8.10 of the Credit Agreement is hereby amended in its
entirety and as so amended shall be restated to read as follows:

          Section 8.10. Mortgage Derivative. The Company shall, as of the last
          day of each month, cause Mortgage Derivatives held by its Banking
          Subsidiaries to be in an amount not in excess of $15,000,000.

                                      -3-
<PAGE>
     2.7  Section 8 of the Credit Agreement shall be amended by adding thereto
a new Section 8.20 which reads as follows:

               Section 8.20. Minimum Core Profitability. As of the last day of
               each fiscal quarter, the Company's Core Profitability for the
               four fiscal quarters then ended shall not be less than
               $2,500,000.

3.   RELEASE OF GUARANTY.

     Upon the satisfaction of the conditions precedent set forth in Section 4
hereof, the Agent and the Lenders hereby agree that the Guaranty Agreement
dated as of September 23, 1996 from Douglas T. Breeden shall be released and no
longer in effect.

4.   CONDITIONS PRECEDENT.

     The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:

          (a)  The Company, the Agent and the Lenders shall have executed and
     delivered this Amendment.

          (b)  The Company shall have executed and delivered to the Agent the
     New Revolving Credit Notes and the Agent's arrangement letter (and the
     Company shall have paid to the Agent the fee due thereunder).

          (c)  The Agent shall have received, in form and substance satisfactory
     to the Lenders, corporate resolutions of the Company authorizing the
     execution and delivery of this Amendment and the New Revolving Credit Notes
     and the other instruments and documents to be executed and delivered in
     connection with the transactions contemplated hereby.

          (d)  The Agent shall have received a good standing certificate for the
     Company from the state of its incorporation dated no earlier than 30 days
     prior to the date hereof.

          (e)  Legal matters incident to the execution and delivery of this
     Amendment and the New Revolving Credit Notes, and the other matters
     incident to the transaction contemplated hereby, shall be satisfactory to
     the Agent and its counsel.

     Upon the effectiveness of this Amendment, each Lender shall promptly
return to the Company the Existing Revolving Credit Notes issued to that Lender
which are being replaced by the New Revolving Credit Notes contemplated by this
Amendment.

5.   REPRESENTATIONS.

     In order to induce the Lenders to execute and deliver this Amendment, the
Company hereby represents to the Agent and the Lenders that as of the date
hereof, and after giving effect

                                      -4-
<PAGE>
to this Amendment, the representations and warranties set forth in Section 6 of
the Credit Agreement are and shall be and remain true and correct (except that
the representations contained in Section 6.5 shall be deemed to refer to the
most recent financial statements of the Company delivered to the Lenders) and
the Company is in full compliance with all of the terms and conditions of the
Credit Agreement and no Default or Event of Default has occurred and is
continuing under the Credit Agreement or shall result after giving effect to
this Amendment.

6.   MISCELLANEOUS.

     (a) Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.

     (b) The Company heretofore executed and delivered, among other things, the
Pledge and Security Agreement and hereby acknowledges and agrees that the
security interests and liens created and provided for therein continue to secure
the payment and performance of the Obligations of the Company owing to the
Lenders, including, without limitation, all indebtedness of the Company
evidenced by the New Revolving Credit Notes, both for principal and interest,
which are entitled to all of the benefits and privileges set forth therein.

     (c) The Company agrees to pay on demand all costs and expenses of or
incurred by the Agent in connection with the negotiation, preparation, execution
and delivery of this Amendment and the other instruments and documents to be
executed and delivered in connection herewith, including the fees and expenses
of counsel for the Agent up to $3,000.

     (d) This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.

                          [SIGNATURE PAGES TO FOLLOW]

                                      -5-

<PAGE>
     This First Amendment to Amended and Restated Credit Agreement is dated as
of October 1, 1999.

                                   HARRINGTON WEST FINANCIAL GROUP, INC.

                                   By /s/ CRAIG J. CERNY
                                     -----------------------------------
                                     Name  Craig J. Cerny
                                     Title VP

     Accepted and agreed to as of the date and year last above written.

                                   HARRIS TRUST AND SAVINGS BANK,
                                     individually and as Agent

                                   By /s/ PATRICK A. HORNE
                                     -----------------------------------
                                     Name  Patrick A. Horne
                                     Title VP

                                   MERCANTILE BANK

                                   By /s/ MARK R. JORGENSEN
                                     -----------------------------------
                                     Name  Mark R. Jorgensen
                                     Title VP

                                   FIRST COMMERCIAL BANK, N.A.

                                   By /s/ THOMAS E. BISHOP JR.
                                     -----------------------------------
                                     Name  Thomas E. Bishop Jr.
                                     Title Chairman

                                      -6-
<PAGE>
                                   EXHIBIT A

                     HARRINGTON WEST FINANCIAL GROUP, INC.
                             REVOLVING CREDIT NOTE

$____________________                                      _____________________

     On the Revolving Credit Termination Date, for value received, the
undersigned, HARRINGTON WEST FINANCIAL GROUP, INC., a Delaware corporation (the
"Company"), hereby promises to pay to the order of ____________________ (the
"Lender"), at the principal office of Harris Trust and Savings Bank in Chicago,
Illinois, the principal sum of (i) ____________________ and no/100 Dollars
($__________), or (ii) such lesser amount as may at the time of the maturity
hereof, whether by acceleration or otherwise, be the aggregate unpaid principal
amount of all Revolving Credit Loans owing from the Company to the Lender under
the Revolving Credit provided for in the Credit Agreement hereinafter mentioned.

     This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Amended and
Restated Credit Agreement dated as of October 30, 1997, between the Company,
Harris Trust and Savings Bank, individually and as Agent thereunder, and the
other Lenders which are now or may from time to time hereafter become parties
thereto (said Credit Agreement, as heretofore amended and as the same may be
amended, modified or restated from time to time, being referred to herein as the
"Credit Agreement") made and to be made to the Company by the Lender under the
Revolving Credit provided for under the Credit Agreement, and the Company hereby
promises to pay interest at the office described above on each loan evidenced
hereby at the rates and at the times and in the manner specified therefor in the
Credit Agreement.

     Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees that
in any action or proceeding instituted to collect or enforce collection of this
Note, the entries so endorsed on a schedule to this Note or recorded on the
books and records of the holder hereof shall be prima facie evidence of the
unpaid principal balance of this Note, the status of each such loan from time to
time as part of the Domestic Rate Portion or a LIBOR Portion, and, in the case
of any LIBOR Portion, the interest rate and Interest Period applicable thereto.

     This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to

<PAGE>
be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit
Agreement.

     This Note is issued in substitution and replacement for, and evidences in
part the indebtedness currently evidenced by, those certain Revolving Credit
Notes of the Company dated October 30, 1997, payable to the order of certain of
the Lenders in the aggregate principal amount of $9,500,000.

     The Company hereby promises to pay all costs and expenses (including
attorneys' fees) suffered or incurred by the holder hereof in collecting this
Note or enforcing any rights in any collateral therefor. The Company hereby
waives presentment for payment and demand. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

                                           HARRINGTON WEST FINANCIAL GROUP, INC.

                                               By
                                                 -------------------------------

                                                 Name
                                                     ---------------------------

                                                 Title
                                                      --------------------------

                                      -2-
<PAGE>
                                                            Exhibit 10.2 (cont.)

                     HARRINGTON WEST FINANCIAL GROUP, INC.
           SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

To Each of the Lenders Signatory Hereto

Ladies and Gentlemen:

        Reference is hereby made to that certain Amended and Restated Credit
Agreement dated as of October 30, 1997 (the Amended and Restated Credit
Agreement, as the same has been amended prior to the date hereof, being referred
to herein as the "Credit Agreement"), between the undersigned, Harrington West
Financial Group, Inc., a Delaware corporation, the Lenders party thereto, and
Harris Trust and Savings Bank, as Agent for the Lenders. All capitalized terms
used herein without definition shall have the same meanings herein as such terms
have in the Credit Agreement.

        The Company has requested that the Lenders amend Section 6.4 of the
Credit Agreement ("Use of Proceeds; Margin Stock") to permit use of loan
proceeds for general corporate purposes, amend Section 8.15 of the Credit
Agreement ("Dividends and Certain Other Restricted Payments") to permit payment
of certain dividends by the Company, and make certain other amendments to the
Credit Agreement, and the Lenders are willing to so amend the Credit Agreement
on the terms and conditions set forth in this amendment (herein, the
"Amendment").

1.      AMENDMENTS.

        Subject to the satisfaction of the a conditions set forth in Section 2
below, the Credit Agreement shall be and hereby is amended as follows:

        1.1.    Section 6.4 of the Credit Agreement is hereby amended and
restated in its entirely to read as follows:

                        Section 6.4   Use of Proceeds; Margin Stock. The Company
                shall use the proceeds of the Revolving Credit Loans made
                available hereunder for any general corporate purposes
                permitted hereby and by applicable law. No part of the proceeds
                of any Revolving Credit Loan made hereunder will be used to
                purchase or carry any margin stock (within the meaning of
                Regulation U of the Board of Governors of the Federal Reserve
                System), or to extend credit to others for the purpose of
                purchasing or carrying any such margin stock. Margin stock (as
                defined above) constitutes less than 25% of those assets of the
                Company and its Subsidiaries which are subject to any limitation
                on sale, pledge, or other restriction hereunder.

        1.2.    Section 8.15 of the Credit Agreement shall be amended and
restated in its entirety to read as follows:

<PAGE>
                        Section 8.15. Dividends and Certain Other Restricted
                Payments. The Company shall not declare or pay any dividend on
                or make any other distributions in respect of any class or
                series of its capital stock (other than dividends payable solely
                in its capital stock) or directly or indirectly purchase, redeem
                or otherwise acquire or retire any of its capital stock;
                provided, however, that (a) the Company may pay a one-time
                dividend in an aggregate amount not to exceed $812,000 on or
                before June 30, 2000, so long as at the time of, and after
                giving effect to, such dividends no Default or Event of Default
                then exists and (b) the Company may pay dividends in an
                aggregate amount not to exceed $100,000 during any fiscal
                quarter of the Company ending after June 30, 2000, so long as at
                the time of, and after giving effect to, such dividend no
                Default or Event of Default then exists.

2.      CONDITIONS PRECEDENT.

        The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:

        2.1.    The Company, the Agent and the Required Lenders shall have
executed and delivered this Amendment.

        2.2     Legal matters incident to the execution and delivery of this
Amendment and the New Revolving Credit Notes, and the other matters incident to
the transaction contemplated hereby, shall be satisfactory to the Agent and its
counsel.

3.      REPRESENTATIONS.

        In order to induce the Lenders to execute and deliver this Amendment,
the Company hereby represents to the Agent and the Lenders that, as of the date
hereof, the representations and warranties set forth in Section 6 of the Credit
Agreement are and shall be and remain true and correct (except that the
representations contained in Section 6.5 shall be deemed to refer to the
most recent financial statements of the Company delivered to the Lenders) and
the Company is in full compliance with all of the terms and conditions of the
Credit Agreement and no Default or Event of Default has occurred and is
continuing under the Credit Agreement or shall result after giving effect to
this Amendment.

                                      -2-

<PAGE>

4.      MISCELLANEOUS.

        (a)     Except as specifically herein, the Credit Agreement shall
continue in full force and effect in accordance with original terms. Reference
to this specific Amendment need not be made in the Credit Agreement, the Notes,
or any other instrument or document executed in connection therewith, or in any
certificate, letter or communication issued or made pursuant to or with respect
to the Credit Agreement, any reference in any of such items to the Credit
Agreement being sufficient to refer to the Credit Agreement as amended hereby.

        (b)     The Company heretofore executed and delivered among other
things, the Pledge and Security Agreement and hereby acknowledges and agrees
that the security interests and liens created and provided for therein continue
to secure the payment and performance of the Obligations of the Company owing to
the Lenders, including, without limitation, all indebtedness of the Company
evidenced by the Revolving Credit Notes, both for principal and interest, which
are entitled to all of the benefits and privileges set forth therein.

        (c)     The Company agrees to pay on demand all costs and expenses of or
incurred by the Agent in connection with the negotiation, preparation, execution
and delivery of this Amendment and the other instruments and documents to be
executed and delivered in connection herewith, including the fees and expenses
of counsel for the Agent up to $1,000.

        (d)     This Amendment may be executed in any number of counterparts,
and by the different parties on different counterpart signature pages, all of
which taken together shall constitute one and the same agreement. Any of the
parties hereto may execute this Amendment by signing any such counterpart and
each of such counterparts shall for all purposes be deemed to be an original.
This Amendment shall be governed by the internal laws of the State of Illinois.

                          [SIGNATURE PAGES TO FOLLOW]

                                       -3-

<PAGE>

        This Second Amendment to Amended and Restated Credit Agreement is dated
as of May 2, 2000.

                                           HARRINGTON WEST FINANCIAL GROUP, INC.

                                           By: /s/ CRAIG J. CERNY
                                              --------------------------------
                                              Name  Craig J. Cerny
                                                   ---------------------------
                                              Title Chairman/CEO
                                                    --------------------------

        Accepted and agreed to as of the date and year last above written.

                                           HARRIS TRUST AND SAVINGS BANK,
                                             individually and as Agent

                                           By: /s/ DAVID J. KONRAD
                                              --------------------------------
                                              Name  David J. Konrad
                                                   ---------------------------
                                              Title  Vice President
                                                    --------------------------

                                           FIRSTAR BANK MIDWEST (f/k/a
                                             MERCANTILE BANK)

                                           By: /s/ LORRIE McEACHERN
                                              --------------------------------
                                              Name Lorrie McEachern
                                                   ---------------------------
                                              Title  Vice President
                                                    --------------------------

                                           FIRST COMMERCIAL BANK, N.A.

                                           By: /s/ STEPHEN R. MORRIS
                                              --------------------------------
                                              Name  STEPHEN R. MORRIS
                                                   ---------------------------
                                              Title  Vice President
                                                    --------------------------

                                      -4-

<PAGE>
                                                              Exhibit 10.2 cont.

                     HARRINGTON WEST FINANCIAL GROUP, INC.
            THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

To Each of the Lenders Signatory Hereto

Ladies and Gentlemen:

     Reference is hereby made to that certain Amended and Restated Credit
Agreement dated as of October 30, 1997 (the Amended and Restated Credit
Agreement, as the same has been amended prior to the date hereof, being referred
to herein as the "Credit Agreement"), among the undersigned, Harrington West
Financial Group, Inc., a Delaware corporation, the Lenders party thereto, and
Harris Trust and Savings Bank, as Agent for the Lenders. All capitalized terms
used herein without definition shall have the same meanings herein as such terms
have in the Credit Agreement.

     The Company, the Lenders and the Agent wish to amend the Credit Agreement
to (a) increase the aggregate amount of the Commitments to $20,000,000, (b)
increase the Revolving Credit Commitment of Firstar Bank, N.A. (f/k/a Firstar
Bank Midwest, N.A.) (the "Increasing Lender") to $8,000,000, (c) remove
Enterprise Bank (f/k/a First Commercial Bank, N.A.) as a Lender thereunder, (d)
add 1st Financial Bank as a new Lender thereunder with a Revolving Credit
Commitment of $2,000,000, (e) provide that the interest rate margin for LIBOR
Portions and Domestic Rate Portions be adjusted subject to agreed performance
criteria, and make certain other amendments all on the terms and conditions
specifically set forth below in this amendment (herein, the "Amendment").

1.   REMOVAL OF LENDER.

     Upon satisfaction of the conditions precedent set forth in Section 4 below,
Enterprise Bank (f/k/a First Commercial Bank, N.A.) (herein, the "Departing
Lender") shall cease to be a Lender under the Credit Agreement and shall have no
rights or obligations (including any commitment to make loans under the
Revolving Credit) thereunder. The parties hereto consent to such termination of
the Departing Lender's Percentage of the Revolving Credit and agree that all
references in the Loan Documents to the Lenders (or the Banks) or any Lender (or
any Bank) shall no longer include the Departing Lender.

2.   ADDITION OF NEW LENDER AND INCREASE IN REVOLVING CREDIT COMMITMENT.

     Upon satisfaction of the conditions precedent set forth in Section 4 below,
the Credit Agreement shall be and hereby is amended as follows:

     2.1  1st Financial Bank (the "New Lender") shall be deemed a Lender
signatory to the Credit Agreement and shall have all the rights, benefits,
duties and obligations of a Lender under the Credit Agreement and the Loan
Documents. Accordingly, all references in the Credit Agreement and the Loan
Documents to the terms "Lender" and "Lenders" shall be deemed to include, and be
a reference to, the New Lender. The New Lender agrees that it will perform all
<PAGE>
of the duties and obligations which by the terms of the Credit Agreement and the
Loan Documents are required to be performed by it as a Lender with a Revolving
Credit Commitment, on the date hereof, of $2,000,000 and a Percentage equal to
the fraction, expressed as a percentage, the numerator of which is $2,000,000
and the denominator of which is $20,000,000 as of the date hereof.

     2.2 The following address shall be deemed to appear on the New Lender's
signature page in the Credit Agreement as so amended for the New Lender:

                          1st Financial Bank
                          11120 West 135th Street
                          Overland Park, KS 66221-9731
                          Attention: Tom Bishop
                          Telephone: (913) 681-2223
                          Telecopy: (913) 681-0309

     2.3 The Revolving Credit Commitment of the Increasing Lender shall be
increased to $8,000,000 with the result that the aggregate amount of the
Commitments of all of the Lenders shall be increased to $20,000,000, subject to
future reductions all as more fully set forth in Exhibit D hereto.

3. AMENDMENTS.

     Upon satisfaction of the conditions precedent set forth in Section 4
below, the Credit Agreement shall be and hereby is amended as follows:

     3.1. The amount of each Lender's Revolving Credit Commitment set forth in
the Credit Agreement shall be amended to be, for each period from the effective
date of this Amendment through the Revolving Credit Termination Date, the amount
set forth for such period on Exhibit D attached hereto, and the Credit Agreement
is hereby amended by including Exhibit D hereto as a new Exhibit D to the Credit
Agreement, immediately following Exhibit C thereto.

     3.2. The first sentence of Section 2.1(b) of the Credit Agreement is
hereby amended to read in its entirety as follows:

          Each Domestic Rate Portion shall bear interest at the rate per annum
     determined by SUBTRACTING the Applicable Margin from the Domestic Rate as
     in effect from time to time, provided that if a Domestic Rate Portion or
     any part thereof is not paid when due (whether by lapse of time,
     acceleration or otherwise) such Portion shall bear interest, whether before
     or after judgment, until payment in full thereof at the rate per annum
     determined by adding 2% to the interest rate which would otherwise be
     applicable thereto from time to time.

                                      -2-

<PAGE>
     3.3. Section 2.1(c) of the Credit Agreement is hereby amended by deleting
the reference to "3%" set forth in the second line of the first sentence thereof
and replacing it with the words "the Applicable Margin".

     3.4. Section 5.1 of the Credit Agreement is hereby amended by adding the
following new definitions thereto, each in its appropriate place in the
alphabetical sequence:

          "Applicable Margin" means, with respect to interest payable on
     Domestic Rate Portions or LIBOR Portions under Section 2.1 hereof, the rate
     of interest per annum shown below for the date and manner of calculation
     specified below:

<Table>
<Caption>
                              Level 1        Level 2        Level 3
<S>                           <C>            <C>            <C>
Domestic Rate Portions        0.50%          0.50%             0%

LIBOR Portions                2.00%          2.50%          3.00%
</Table>

     The Applicable Margin will be adjusted upon receipt of the Company's
financial statements for each fiscal quarter of the Company and the related
compliance certificate, and will, for the period after the effective date of the
Third Amendment, initially be based on such financial statements and compliance
certificate for the fiscal quarter ended September 30, 2001 to be delivered on
or before the effective date of the Third Amendment. Not later than 5 Business
Days after receipt by the Bank of the financial statements and related
compliance certificate called for by Section 8.5 hereof for each fiscal quarter
of the Company, the Bank shall determine the Non-Performing Assets Ratio and
Core Profitability for the applicable period and shall promptly notify the
Company of such determination and of any change in the Applicable Margin
resulting therefrom. Any such change in the Applicable Margin shall be effective
as of the first day of the fiscal quarter immediately following such
determination and such new Applicable Margin shall continue in effect until the
first day of the next succeeding fiscal quarter (each such first day of a fiscal
quarter a "Pricing Date"). Each determination of the Applicable Margin made by
the Bank in accordance with the foregoing shall be conclusive and binding on the
Company if reasonably determined.

     "Level 1 Period" is a period commencing on one Pricing Date and ending on
the succeeding Pricing Date with respect to which the Company's most recent
financial statements show both (i) Core Profitability greater than $1,750,000
for the most recent fiscal quarter, and (ii) a Non-Performing Assets Ratio of
less than 0.06 to 1.0 as of the end of such fiscal quarter.

     "Level 2 Period" is a period commencing on one Pricing Date and ending on
the succeeding Pricing Date which does not qualify as a Level 1 Period and with
respect to

                                      -3-
<PAGE>
     which the Company's most recent financial statements show both (i) Core
     Profitability greater than $1,000,000 for the most recent fiscal quarter,
     and (ii) a Non-Performing Assets Ratio of less than 0.12 to 1.0 as of the
     end of such fiscal quarter.

          "Level 3 Period" is a period commencing on one Pricing Date and ending
     on the succeeding Pricing Date which does not qualify as a Level 1 Period
     or as a Level 2 Period.

          "Non-Performing Assets Ratio" means the financial covenant ratio set
     forth in Section 8.7 of the Agreement.

          "Third Amendment" means that certain Third Amendment to Amended and
     Restated Credit Agreement dated as of October   , 2001 among the Company,
     the Lenders and the Agent.

     3.5. The definition of "Interest Period" in Section 5.1 of the Credit
Agreement is hereby amended by deleting the phrase "1, 2, 3 or 6 months
thereafter" in the third line thereof and replacing it with the phrase "1, 2 or
3 months thereafter".

     3.6  Section 8.15 of the Credit Agreement is hereby amended to read in its
entirety as follows:

               Section 8.15.  Dividends and Certain Other Restricted Payments.
          the Company shall not declare or pay any dividend on or make any other
          distributions in respect of any class or series of its capital stock
          (other than dividends payable solely in its capital stock) or directly
          or indirectly purchase, redeem or otherwise acquire or retire any of
          its capital stock; provided, however, that the Company may pay
          dividends in an aggregate amount not to exceed $150,000 during any
          fiscal quarter of the Company, so long as at the time of, and after
          giving effect to, such dividend no Default or Event of Default then
          exists.

     3.7. Section 8.20 of the Credit Agreement is hereby amended to read in its
entirety as follows:

               Section 8.20.  Minimum Core Profitability. As of the last day of
          each fiscal quarter, the Company's Core Profitability for the four
          fiscal quarters then ended shall not be less than (a) $3,500,000 as of
          the end of each fiscal quarter ending during the period from June 1,
          2001 through September 30, 2002, (b) $4,000,000 as of the end of each
          fiscal quarter ending during the period from October 1, 2002 through
          September 30, 2003 and (c) $4,500,000 as of the end of each fiscal
          quarter thereafter.

                                      -4-

<PAGE>
     3.8.  The contact information for Harris Trust and Savings Bank set forth
on its signature page of the Credit Agreement is hereby amended to read in its
entirety as follows:

                    111 West Monroe Street
                    Chicago, Illinois 60603
                    Attention: David Konrad
                    Telephone: 312-461-7112
                    Facsimile: 312-765-8253

     3.9  The contact information for the Company set forth in Section 11.11 of
the Credit Agreement is hereby amended to read in its entirety as follows:

                    Harrington West Financial Group, Inc.
                    610 Alamo Pintado Rd.
                    Solvang, CA 93463
                    Attention: Craig J. Cerny
                    Telephone: 913-451-1566
                    Facsimile: 913-451-6313

4.   CONDITIONS PRECEDENT.

     The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:

     4.1.  The Company, the Agent and the Lenders, including without limitation
the Departing Lender and the New Lender, shall have executed and delivered this
Amendment.

     4.2.  The principal amount of all Loans, all accrued interest and all other
amounts accrued and unpaid to the Departing Lender shall be paid in full.

     4.3.  Legal matters incident to the execution and delivery of this
Amendment and the new Notes described in Section 4.4 hereof, and the other
matters incident to the transaction contemplated hereby, shall be satisfactory
to the Agent and its counsel.

     4.4.  The Agent shall have received for each of the New Lender and the
Increasing Lender Notes in the form of Exhibit A hereto with appropriate
insertions evidencing the Loans made or to be made by such Lenders each in the
amount of such Lender's Revolving Credit Commitment as set forth on Exhibit D
hereto.

     4.5.  The Agent shall have received the Company's quarterly financial
statements described in Section 8.5(a) of the Credit Agreement for the quarter
ended September 30, 2001, certified to by the President or chief financial
officer of the Company.

                                      -5-
<PAGE>
5.   REPRESENTATIONS.

     In order to induce the Lenders to execute and deliver this Amendment, the
Company hereby represents to the Agent and the Lenders that, as of the date
hereof, the representations and warranties set forth in Section 6 of the Credit
Agreement are and shall be and remain true and correct (except that the
representations contained in Section 6.5 shall be deemed to refer to the most
recent financial statements of the Company delivered to the Lenders) and the
Company is in full compliance with all of the terms and conditions of the
Credit Agreement and no Default or Event of Default has occurred and is
continuing under the Credit Agreement or shall result after giving effect to
this Amendment.

6.   EQUALIZATION OF OUTSTANDING LOANS.

     On October__, 2001, the New Lender shall fund its Percentage of the
outstanding Loans and the Increasing Lender shall fund its increase in
Percentage of the outstanding Loans to the Agent so that after giving effect
thereto each Lender, including the New Lender and the Increasing Lender, holds
a pro rata share (in proportion to its respective Revolving Credit Commitment
as set forth in Exhibit D hereto) of the outstanding Loans and, in connection
therewith, the Company shall prepay all outstanding LIBOR Portions and pay to
each Lender all amounts due such Lender under Section 2.8 of the Credit
Agreement (it being understood that the Company may, subject to the conditions
precedent and notice requirements set forth in the Credit Agreement, make a new
Borrowing of Loans concurrently with such prepayment).

7.   MISCELLANEOUS.

     (a)  Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.

     (b)  The Company heretofore executed and delivered, among other things,
the Pledge and Security Agreement and hereby acknowledges and agrees that the
security interests and liens created and provided for therein continue to
secure the payment and performance of the Obligations of the Company owing to
the Lenders, including, without limitation, all indebtedness of the Company
evidenced by the Revolving Credit Notes, both for principal and interest, which
are entitled to all of the benefits and privileges set forth therein.

     (c)  The Company agrees to pay on demand all costs and expenses of or
incurred by the Agent in connection with the negotiation, preparation,
execution and delivery of this Amendment and the other instruments and
documents to be executed and delivered in connection herewith, including the
fees and expenses of counsel for the Agent up to $2,000.

     (d)  This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall

                                      -6-
<PAGE>
constitute one and the same agreement. Any of the parties hereto may execute
this Amendment by signing any such counterpart and each or such counterparts
shall for all purposes be deemed to be an original. This Amendment shall be
governed by the internal laws of the State of Illinois.

     (e) By signing below, the New Lender hereby (i) confirms that it has
received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered to the Lenders pursuant to the terms
thereof and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Amendment; (ii)
agrees that it will, independently and without reliance upon the Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iii) appoints and authorizes the
Agent to take such action as Agent on its behalf and to exercise such powers
under the Credit Agreement and the other Loan Documents as are delegated to the
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; and (iv) agrees that it will perform all of the obligations
which by the terms of the Credit Agreement and the other Loan Documents are
required to be performed by it as a Lender.

                          [SIGNATURE PAGES TO FOLLOW]

                                      -7-

<PAGE>
     This Third Amendment to Amended and Restated Credit Agreement is dated as
of November 1, 2001.

                                      HARRINGTON WEST FINANCIAL GROUP, INC.

                                      By /s/ CRAIG J. CERNY
                                        -----------------------------------
                                      Name  Craig J. Cerny
                                      Title Chief Executive Officer

     Accepted and agreed to as of the date and year last above written.

                                      HARRIS TRUST AND SAVINGS BANK,
                                        individual and as Agent

                                      By /s/ DAVID J. KONRAD
                                        -----------------------------------
                                      Name  David J. Konrad
                                      Title Vice President

                                      FIRSTAR BANK, N.A. (f/k/a FIRSTAR
                                        BANK MIDWEST, N.A.)

                                      By /s/ LORRIE McCACHERN
                                        -----------------------------------
                                      Name  Lorrie McCachern
                                      Title Vice President

                                      1ST FINANCIAL BANK

                                      By /s/ TOM BISHOP
                                        -----------------------------------
                                      Name  Tom Bishop
                                      Title Chairman and Chief Executive Officer

                                      -8-

<PAGE>
                                   ENTERPRISE BANK (F/K/A FIRST COMMERCIAL
                                     BANK, N.A.), solely with respect to the
                                     provisions of Section 1 regarding its
                                     status as a Departing Lender

                                   By /s/ STEPHEN R. MORRIS
                                     -----------------------------------
                                     Name  Stephen R. Morris
                                     Title Vice President

                                      -9-
<PAGE>
                                   EXHIBIT A

                     HARRINGTON WEST FINANCIAL GROUP, INC.
                             REVOLVING CREDIT NOTE

$__________________                                        ____________________

     On the Revolving Credit Termination Date, for value received, the
undersigned, HARRINGTON WEST FINANCIAL GROUP, INC., a Delaware corporation (the
"Company"), hereby promises to pay to the order of ____________________ (the
"Lender"), at the principal office of Harris Trust and Savings Bank in Chicago,
Illinois, the principal sum of (i) ____________________ and no/100 Dollars
($________), or (ii) such lesser amount as may at the time of the maturity
hereof, whether by acceleration or otherwise, be the aggregate unpaid principal
amount of all Revolving Credit Loans owing from the Company to the Lender under
the Revolving Credit provided for in the Credit Agreement hereinafter mentioned.

     This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Amended and
Restated Credit Agreement dated as of October 30, 1997, as amended, between the
Company, Harris Trust and Savings Bank, individually and as Agent thereunder,
and the other Lenders which are now or may from time to time hereafter become
parties thereto (said Credit Agreement, as heretofore amended and as the same
may be amended, modified or restated from time to time, being referred to herein
as the "Credit Agreement") made and to be made to the Company by the Lender
under the Revolving Credit provided for under the Credit Agreement, and the
Company hereby promises to pay interest at the office described above on each
loan evidenced hereby at the rates and at the times and in the manner specified
therefor in the Credit Agreement.

     Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees that
in any action or proceeding instituted to collect or enforce collection of this
Note, the entries so endorsed on a schedule to this Note or recorded on the
books and records of the holder hereof shall be prima facie evidence of the
unpaid principal balance of this Note, the status of each such loan from time to
time as part of the Domestic Rate Portion or a LIBOR Portion, and, in the case
of any LIBOR Portion, the interest rate and Interest Period applicable thereto.

     This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to

<PAGE>
be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit Agreement.

     This Note is issued in substitution and replacement for, and evidences in
part the indebtedness currently evidenced by, those certain Revolving Credit
Notes of the Company dated October 30, 1997.

     The Company hereby promises to pay all costs and expenses (including
attorneys' fees) suffered or incurred by the holder hereof in collecting this
Note or enforcing any rights in any collateral therefor. The Company hereby
waives presentment for payment and demand. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

                                       HARRINGTON WEST FINANCIAL GROUP, INC.

                                       By
                                         Name
                                             -------------------------------
                                         Title
                                              ------------------------------

                                      -2-
<PAGE>
                                   EXHIBIT D

                                  COMMITMENTS

<Table>
<Caption>
                                            REVOLVING CREDIT
                                            COMMITMENT FROM
                       REVOLVING CREDIT      AND INCLUDING
                       COMMITMENT FROM      10/01/03 THROUGH
                       AND INCLUDING THE     THE REVOLVING
                          DATE HEREOF            CREDIT
                          THROUGH AND          TERMINATION
NAME OF LENDER        INCLUDING 09/30/03          DATE
<S>                   <C>                   <C>
Harris Trust and          $10,000,000         $ 8,750,000
Savings Bank

Firstar Bank, N.A         $ 8,000,000         $ 7,000,000

1st Financial Bank        $ 2,000,000         $ 1,750,000

Total                     $20,000,000         $17,500,000
</Table>

                                      -3-<PAGE>
                                                                    Exhibit 10.3

              INVESTMENT AND INTEREST RATE RISK ADVISORY AGREEMENT

This Investment and Interest Rate Risk Advisory Agreement, made and entered
into as of this 3 day of February, 1997, by and between LOS PADRES SAVINGS
BANK, FSB ("Customer") and SMITH BREEDEN ASSOCIATES, INC., a Kansas Corporation
("Smith Breeden" or "Advisor").

WHEREAS, Smith Breeden is engaged in the business of rendering investment
advice and has available the personnel, facilities and equipment necessary for
carrying on investment advisory and research functions; and

WHEREAS, Customer desires to appoint Smith Breeden and Smith Breeden desires to
accept such appointment to render such services to Customer on the terms and
conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual promises and the terms and
conditions set forth herein, the parties hereto agree as follows:

     1. Appointment. Upon and subject to the terms and conditions of this
        Agreement, Customer, being duly authorized, hereby appoints Smith
        Breeden as investment advisor with respect to the management of certain
        assets of Customer (the "Account"). The appointment of Smith Breeden as
        investment advisor shall be effective as of the date of this agreement.

     2. Authority and Services of Smith Breeden

        (a) Smith Breeden will provide Customer with the following services: (i)
            consulting services, (ii) investment advice, and (iii) securities
            transactions services.

               (i). Consulting Services: Smith Breeden will provide consulting
        services related to asset/liability management and interest rate risk,
        pricing strategies for assets and liabilities, and other areas on a
        project basis as mutually agreed to by Smith Breeden and Customer. The
        asset/liability management and interest rate risk consulting services
        will include a monthly analysis of current market conditions by Smith
        Breeden, the risk exposure of Customer's securities portfolio and
        balance sheet, the performance of hedging strategies and recent
        securities transactions, and analysis of investment transactions.
        Consulting services related to asset and liability strategies will
        include assistance in developing loan and deposit pricing strategies and
        assistance in developing and maintaining computer based worksheets to
        implement the strategies. Smith Breeden will provide consulting services
        for Customer in other areas, such as acquisition analysis, on a project
        basis. Both Smith Breeden and Customer must agree that the projects are
        appropriate and Smith Breeden and Customer may negotiate additional fees
        for such projects.

               (ii). Investment Advice: Smith Breeden will offer investment
        advice and recommendations with respect to the Account. As part of its
        services, Smith Breeden may recommend the acquisition of investment
        securities, including but not limited to, mortgage-backed securities,
        Treasury securities and/or corporate bonds, and certain hedging
        transactions to reduce the interest rate risk of the Account's
        investments. Smith Breeden may also make recommendations regarding the
        funding sources for these

                                       1
<PAGE>
     investment securities, as well as of the other assets and liabilities of
     the Customer. Smith Breeden may make either oral or written recommendations
     with respect to the Account.

          (iii).    Securities Transactions Services: Pursuant to the limited
     power of attorney herein granted to Smith Breeden by the Customer, Smith
     Breeden may, as agent and attorney-in-fact with respect to the Account (a)
     buy, sell, exchange and otherwise transact in mortgage-backed securities,
     other investments, or hedging instruments, and (b) arrange for necessary
     placement of orders, execution of transactions, purchases, sales and
     conveyances with or through such brokers, dealers, or issuers as Smith
     Breeden may select from the Customer's list of approved brokers, dealers
     and issuers and establish the price and other such conditions of the
     transaction. Customer shall approve all transactions prior to execution.
     Brokers, dealers, or issuers selected by Smith Breeden must be from
     Customer's list of approved brokers, dealers, and issuers. For each
     transaction, Smith Breeden will provide Customer a trade sheet which
     documents the rationale for the transaction and the cover prices obtained.
     The trade sheet will provide written explanation for selection of any
     broker, dealer, or issuer for a transaction that occurs at other than the
     most favorable price of the prices obtained, or for which there were no
     cover prices.

     (b) In connection with and in furtherance of the services to be provided to
     Customer by Smith Breeden hereunder, Customer hereby appoints Smith Breeden
     as its agent and attorney-in-fact, in its name, place and stead, to effect
     the transactions enumerated in paragraphs (a) of this Section 2, subject to
     the prior approval and direction of Customer. Further, Customer agrees to
     execute a limited power of attorney in substantially the form included as
     Appendix A hereto.

3.   Duties of Customer.

     (a) Customer shall provide, or shall cause the Custodian to provide,
     Advisor with all of the information that Advisor may reasonably require
     with respect to Customer or the Account including, without limitation,
     such periodic reports on the status of the Account as Smith Breeden may
     request.

     (b) Customer shall provide all information required by Smith Breeden to
     conduct its analysis. Customer will be solely responsible for collecting
     such data, and for delivery to Smith Breeden of such information in the
     format required by Smith Breeden. Customer shall be solely responsible for
     the accuracy of such information.

     (c) Customer shall cause the Custodian to receive and maintain at all
     times custody and control of all property in the Account and to consummate
     transactions as directed by Advisor by payment or delivery by the Custodian
     of all funds, securities, instruments, assets or other properties due from
     the Account and to receive all funds, securities, instruments, assets or
     other properties due to the Account.

     (d) Customer shall inform Smith Breeden in writing of the investment
     objectives and restrictions of the Account through its periodically updated
     investment policy and of any changes or modifications applicable thereto
     and shall give prompt written notice if Customer deems any investments
     proposed for the Account to be in violation of such objectives or
     restrictions. Unless Customer notifies Smith Breeden in writing of specific
     restrictions, the investments recommended for, or on behalf of, the Account
     shall be

                                       2

<PAGE>
     deemed not to be restricted under the current or future laws or regulations
     of any state or by virtue of the terms of any other contract or instrument
     purporting to bind Customer or Smith Breeden.

4.   Transaction Procedures.  All transactions will be consummated by payment to
     or delivery by Customer, or such other party(ies) as Customer may designate
     in writing (the "Custodian"), of all cash and/or securities due to or from
     the Account. The Customer has sole authority to designate the custodian.
     Smith Breeden shall not act as Custodian for the Account but is hereby
     authorized to issue such instructions to the Customer as may be appropriate
     in connection with the settlement of transactions initiated by Smith
     Breeden pursuant to Section 2 hereof. Instructions of Smith Breeden to the
     Customer need not be in writing. Smith Breeden will instruct all brokers
     and dealers executing orders on behalf of the Account to forward
     confirmations to Customer and/or the Custodian. Smith Breeden is not
     authorized to direct delivery of securities or payments to itself but may
     direct that additional copies of all confirmations of Account transactions
     be sent to Smith Breeden. Smith Breeden will not be responsible for any
     loss incurred by reason of any act or omission of any broker or dealer or
     the Customer and/or Custodian; provided, however, that Smith Breeden will
     make reasonable efforts to require that brokers and dealers recommended by
     Smith Breeden perform their obligations with respect to the Account. The
     physical possession of any and all property in the Account shall at all
     times, except when securities are held by seller pending delivery to or in
     the hands of a transfer agent, be held, controlled and administered by the
     Customer and/or Custodian. Smith Breeden shall have no responsibility with
     respect to the collection of income relating to the Account or physical
     acquisition or the safekeeping of any property in the Account. All such
     duties of collection, physical acquisition or safekeeping shall be the
     sole obligation of the Customer and/or Custodian.

5.   Review of Transaction Records.  Customer or its agent and Customer's
     primary federal regulator shall have the right to audit, examine, or review
     the records of Smith Breeden that pertain to transactions conducted for the
     Customer.

6.   Proxies.  Advisor will not be required to take any action or render any
     advice with respect to the voting of proxies solicited by or with respect
     to the issuers of securities in which assets of the Account may be invested
     from time to time.

7.   Scope of Services of Adviser.  Smith Breeden will provide investment
     advisory and related services only. Smith Breeden will not provide advice
     concerning, and Customer will not rely upon any Smith Breeden statement
     relating to, tax advice, regulatory compliance, accounting issues, or the
     credit risk involved in any recommended transaction. Customer recognizes
     the inherent market fluctuation risks that surround the investment and
     reinvestment of monies and the use of hedge instruments. These risks and
     the scope of Smith Breeden's services are detailed in the Disclosure
     Statement in Appendix C to this agreement and have been previously
     acknowledged by the Customer. By signing this agreement, Customer
     acknowledges that it understands, and can bear, the risks involved in
     implementing hedge and investment transactions as detailed in the
     Disclosure Statement. Smith Breeden, or any of its officers, directors or
     employees, shall be liable to Customer for acts or omissions arising out of
     this agreement only if its conduct, or that of its officers, directors or
     employees, was willful or grossly negligent. Nothing herein shall in any
     way constitute a waiver or limitation of any rights that Customer may have
     under any State or Federal Securities laws. It is agreed that Smith
     Breeden, in connection with the

                                       3
<PAGE>
     maintenance of records, does not assume responsibility for the accuracy of
     information furnished by Customer or any other party.

8.   Limitation on Liability and Indemnification. Subject to the second
     paragraph of Section 7 above, Customer shall indemnify Smith Breeden and
     save it harmless from all suits, actions, debts, accounts, damages, costs,
     losses, expenses, and other proceedings, sustained, brought, prosecuted, or
     threatened to be brought or prosecuted in connection with this agreement by
     any shareholder of Customer, creditor of Customer, or any other person or
     entity that is not a party to this contract.

9.   Confidential Relationship. All information and advice furnished by either
     party to the other hereunder, including their agents and employees, except
     such information that is publicly available or has been properly obtained
     from other sources, shall be treated as confidential and shall not be
     disclosed to third parties except as required by law.

10.  Service To Other Clients. It is understood that Smith Breeden performs
     investment advisory and management services for various clients. Customer
     agrees that Smith Breeden may give advice and take action with respect to
     any of its other clients or its own accounts that may differ from advice
     given or the timing or nature of action taken with respect to the Account,
     so long as it is Smith Breeden's practice, to the extent practical, to
     allocate investment opportunities to the Account over a period of time on a
     fair and equitable basis relative to other clients.

11.  Conflicts of Interest. It is understood and agreed by the parties that
     Smith Breeden and/or its principals, affiliates or employees expect to
     purchase interests in thrifts and other financial institutions (which may
     include the Customer) and may invest in securities of the type recommended
     for investment in or invested in by Customer. Nothing in this Agreement
     shall be deemed to impose upon Smith Breeden any obligation to purchase,
     sell or recommend for Customer any security or other property that Smith
     Breeden, and/or its principals, affiliates or employees may purchase or
     sell for its or their own accounts. In addition, nothing in this Agreement
     shall be deemed to impose upon Smith Breeden any restrictions on the
     purchase or sale by Smith Breeden, and/or its principals, affiliates or
     employees of securities also invested in by Customer.

12.  Fees. Fees are as provided in the attached appendix B. Provided, however,
     that with respect to the month during which this agreement is terminated,
     Smith Breeden will receive a fee in an amount equal to the pro-rated amount
     of its monthly fee calculated to the day of dismissal or resignation. Smith
     Breeden will have the right to increase or otherwise modify its fees upon
     thirty (30) days written notice thereof to Customer.

13.  Reimbursement of Travel Expenses. Customer shall reimburse Smith Breeden
     for all reasonable travel and lodging expenses incurred to meet with
     Customer's personnel.

14.  Representations and Warranties of Customer. Customer hereby represents and
     warrants to Smith Breeden that, except as otherwise specifically disclosed
     to Smith Breeden in writing concurrently with the execution of the
     Agreement, (i) it is a Corporation duly organized and existing in good
     standing under the laws of California; (ii) that all necessary corporate
     action has been taken by Customer to authorize the execution, delivery and
     performance of this Agreement and the transactions contemplated hereby;
     (iii) that it has

                                       4
<PAGE>
     the power and authority and the legal right to execute, deliver and perform
     its obligations under this Agreement and to enter into the transactions
     contemplated by this Agreement; (iv) that no authorization, consent,
     approval, filing or registration with any court, governmental agency or
     regulatory authority (Federal, state or local) which has not already been
     obtained is required in connection with the execution, delivery and
     performance by Customer of this Agreement or in connection with the
     transactions contemplated hereby, provided, however, that the foregoing
     shall not limit or negate the power of the Office of Thrift Supervision, as
     the primary regulator of the Customer, to take action under applicable law
     to terminate the Customer's obligations under this Agreement or to compel
     the Customer to terminate such obligations; (v) that this Agreement
     constitutes the legal and binding obligation of Customer enforceable
     against Customer in accordance with its terms, except as enforcement may be
     limited by laws concerning creditors' rights and by general principles of
     equity; and (vi) that neither this Agreement nor the consummation of the
     transactions contemplated hereby will violate any provisions of its
     articles of incorporation or bylaws or any lien, lease, agreement,
     instrument, order, judgment, decree, law, rule, regulation or any other
     restriction of any kind or character to which Customer or the assets
     included in the Account are subject.

15.  Representations and Warranties of Advisor.  Advisor hereby represents and
     warrants to Customer that, except as otherwise specifically disclosed to
     Customer in writing concurrently with the execution of the Agreement, (i)
     it is a corporation duly organized and existing in good standing under the
     laws of the State of Kansas; (ii) that all necessary corporate action has
     been taken by Advisor to authorize the execution, delivery and performance
     of this Agreement and the transactions contemplated hereby; (iii) that it
     has the power and authority and the legal right to execute, deliver and
     perform its obligations under this Agreement and to enter into transactions
     contemplated hereby; (iv) that no authorization, consent, approval, filing
     or registration with any court, governmental agency or regulatory authority
     (Federal, state or local) which has not already been obtained is required
     in connection with the execution, delivery and performance by Advisor of
     this Agreement or in connection with the transactions contemplated hereby;
     (v) that this Agreement constitutes the legal and binding obligation of
     Advisor enforceable against Advisor in accordance with its terms, except as
     enforcement may be limited by laws concerning creditors' rights and by
     general principles of equity; (vi) that it is an investment advisor, duly
     registered as such under the Investment Advisers Act of 1940, as amended,
     and a commodity trading advisor duly registered as such under the Commodity
     Exchange Act, as amended; and (vii) that neither this Agreement nor the
     consummation of the transactions contemplated hereby will violate any
     provisions of its articles of incorporation or bylaws or any lien, lease,
     agreement, instrument, order, judgment, decree, law rule, regulations or
     any other restriction of any kind or character to which Advisor is subject.

16.  Bond.  If required by law, Customer agrees to obtain and maintain for the
     period of this Agreement a bond in the amount as required by law and to
     include among those covered by such bond Smith Breeden and any of its
     officers, directors or employees required by law to be so covered.

17.  Termination.  This Agreement may be terminated by either party giving
     thirty (30) days written notice of termination to the other party hereto
     with no contractual obligations by either party thereafter, except for
     payment to Smith Breeden of unpaid accrued fees under Sections 12 and 13.

                                       5

<PAGE>
18. Assignment. The rights and obligations of the parties under this Agreement
may not be assigned by either party hereto.

19. Notices. Unless otherwise specified herein, all notices, instructions and
advice with respect to transactions or any other matters contemplated by this
Agreement shall be deemed duly given when received in writing by either party
at the address set forth below, or on the fifth day after deposit by certified
mail return receipt requested at the address set forth below, or at such other
address or addresses as shall be specified by either party in a notice
similarly given. Either party may rely upon any notice from the other party or
other communication reasonably believed by it to be genuine.

    If to Customer:
          Los Padres Savings Bank, FSB
          610 Alamo Pintado at Highway 246
          Solvang, CA 93463
          Attn: William D. Ross, President

    If to Smith Breeden:
          Smith Breeden Associates, Inc.
          100 Europa Drive, Suite 200
          Chapel Hill, NC 27514
          Attention: Ms. Marianthe S. Mewkill, Treasurer

20. Governing Law. This Agreement, and all rights and obligations of the
parties hereunder, shall be governed by, and construed in accordance with, the
laws of the State of Kansas.

21. Exemption from Commodities Future Trading Commission. PURSUANT TO AN
EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH
ACCOUNTS OF QUALIFIED ELIGIBLE CLIENTS. THIS AGREEMENT IS NOT REQUIRED TO BE,
AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY FUTURES TRADING
COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN AN ADVISORY
PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF THE COMMODITY TRADING ADVISOR
DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT
REVIEWED OR APPROVED THIS ADVISORY PROGRAM OR THIS AGREEMENT.

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

SMITH BREEDEN ASSOCIATES, INC.               LOS PADRES SAVINGS BANK, FSB

By: /s/ M.S. Mewkill                         By: /s/ William D. Ross
    -----------------------------                ----------------------------

Title: V.P.                                  Title: President
       --------------------------                   -------------------------

                                       6

<PAGE>
                                   APPENDIX A

                     POWER OF ATTORNEY LIMITED TO PURCHASES
                    AND SALES OF SECURITIES AND COMMODITIES

     The undersigned ("Customer") hereby appoints Smith Breeden Associates,
Inc. as its agent and attorney-in-fact in its name, place and stead to buy and
sell (including short sales) securities, futures, commodities, options and/or
engage in off-balance sheet transactions, including interest rate swaps and
caps, on margin or otherwise for the undersigned's account and risk, subject to
prior approval of Customer as described in Section 2 of the Investment and
Interest Rate Risk Advisory Agreement between Customer and Smith Breeden
Associates, Inc.

     Except as herein otherwise provided, the undersigned hereby authorizes
Smith Breeden Associates, Inc. to act for the undersigned in the same manner
and with the same force and effect as the undersigned might or could do with
respect to such purchases and sales as well as with respect to all other things
necessary or incidental thereto, except that Smith Breeden Associates, Inc. is
not authorized to withdraw any money, securities, or other property either in
the name of the undersigned or otherwise.

     IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 28 day of Jan, 1997.

                                        By:

                                           /s/ Willaim D. Ross
                                           ----------------------

                                           PRESIDENT
                                           ----------------------
                                           Title

                                ACKNOWLEDGEMENT

State of California      )
                         ) ss:
County of Santa Barbara  )

     The foregoing instrument was acknowledged before me this 28 day of Jan,
1997, by Grace R. Horn.
         --------------------------------
         (Name and Title)   Notary Public

                                                   /s/ Grace R. Horn
                                                   ----------------------
                                                   Notary Public

[NOTARY       GRACE R HORN       ]                 My Commission Expires:
[ SEAL       COMM. #1120411      ]                 1-18-2001
[       NOTARY PUBLIC-CALIFORNIA ]
[         SANTA BARBARA COUNTY   ]
[      MY COMM. EXP JAN. 18, 2001]

                                       7

<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
--------------------------------------------------------------------------------

State of California
         __________

County of Santa Barbara
          ______________

On 1/28/97 before me,            Grace R. Horn
   ______            ___________________________________________________________
    Date             Name and Title of Officer (e.g., "Jane Doe, Notary Public")

personally appeared   William D. Ross
                     ___________________________________________________________
                     Name(s) of Signer(s)

[ ] personally known to me -- OR -- [X] proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to
                                                        --
the within instrument and acknowledged to me that he/she/they executed the same
                                                  --
in his/her/their authorized capacity(ies), and that by his/her/their
   ---                                                 ---
signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.

                                             WITNESS my hand and official seal.

---------------------------------------
                 GRACE R. HORN
[NOTARY          COMM. #1120411
 SEAL]      NOTARY PUBLIC-CALIFORNIA                 /s/ Grace R. Horn
              SANTA BARBARA COUNTY           _________________________________
           MY COMM. EXP. JAN. 18, 2001           Signature of Notary Public
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DESCRIPTION OF ATTACHED DOCUMENT

Title or Type of Document: _____________________________________________________

Document Date: ____________________________________  Number of Pages:___________

Signer(s) Other Than Named Above: ______________________________________________

CAPACITY(IES) CLAIMED BY SIGNER(S)

Signer's Name: ______________________      Signer's Name: ______________________

[ ] Individual                             [ ] Individual
[ ] Corporate Officer                      [ ] Corporate Officer
    Title(s): _______________________          Title(s): _______________________
[ ] Partner - [ ] Limited [ ] General      [ ] Partner - [ ] Limited [ ] General
[ ] Attorney-in-Fact                       [ ] Attorney-in-Fact
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[ ] Guardian or Conservator                [ ] Guardian or Conservator
[ ] Other: ________________                [ ] Other: ________________
    _______________________                    _______________________
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___________________________                ___________________________
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<PAGE>

                                  FEE SCHEDULE
                              INVESTMENT ADVISORY

<Table>
<Caption>

ASSETS (MM)         ANNUAL FEES PAYABLE MONTHLY
-----------         ---------------------------
<S>                 <C>
(less than or
  equal to) $100    $90,000 plus 5 basis points on Total Assets
$100 to $400        $140,000 plus 4 basis points on Total Assets greater than $100 MM
$400 to $1,000      $260,000 plus 2 basis points on Total Assets greater than $400 MM
over $1,000         $380,000 plus 1.5 basis points on Total Assets greater than $1 Billion
</Table>

One-twelfth of the annual fees will be due and payable in advance on the first
day of each month (the "monthly fee"). For purposes of the fee calculation,
Total Assets is defined as the value of the total assets in the Account as of
the last business day of the most recent month end or as of the last business
day of the month prior to the most recent month-end, depending on which
information is readily available.

                                       8

<PAGE>
                                   APPENDIX C
                              DISCLOSURE STATEMENT

SMITH BREEDEN DOES NOT PREDICT GENERAL MOVEMENTS IN INTEREST RATES. Smith
Breeden does not provide advice to Customers based on whether Smith Breeden
believes interest rates will generally rise or fall. Smith Breeden also does
not believe Customer should attempt to predict general movements in interest
rates.

HEDGING TRANSACTIONS. For some Customers, Smith Breeden analyzes the extent to
which the economic value of Customer's assets and liabilities may change if
interest rates change in the future. Smith Breeden may then recommend to
Customer transactions to hedge the identified interest rate risk. The purpose
of Smith Breeden's hedging recommendations is to protect Customer from risk of
loss because of movements in interest rates. An effective hedge transaction,
when analyzed independent of the assets and liabilities being hedged, may lose
money. Nevertheless, a hedge transaction may still be effective in reducing a
Customer's interest rate risk even if any losses on the hedge, transaction
costs paid for that hedge, and Smith Breeden's fees are not offset by gains in
the value of the assets and liabilities being hedged.

As interest rates fluctuate, the economic value of Customer's assets and
liabilities may rise or fall. If interest rate fluctuations cause Customer's
assets and liabilities to increase in value and Customer has decided to hedge
its interest rate risk, the cost of, and any loss on, those hedge transactions
themselves will likely erode at least a portion of the appreciation in value or
profit Customer would receive on the underlying assets and liabilities. Thus,
by entering into a hedge transaction, Customer may sacrifice future gains on
its interest rate sensitive assets and liabilities. By accepting Smith
Breeden's hedging recommendations, Customer is sacrificing such potential
profits in order to achieve a more stable interest rate risk profile.

INVESTMENT ADVICE. For some Customers, Smith Breeden may identify certain
assets and liabilities that, in Smith Breeden's opinion, provide potential
profit opportunities on a hedged basis. Smith Breeden may then recommend to
Customer the acquisition of such assets or assumption of such liabilities
combined with an appropriate hedge transaction to help reduce the interest rate
risk that such assets or liabilities might have. While Smith Breeden has
identified profitable investment opportunities in the past, Smith Breeden's
past performance is not a guarantee of future profitability. Because Smith
Breeden cannot guarantee profitability, a Customer risks losing all or some of
any investment it undertakes upon the advice of Smith Breeden.

SMITH BREEDEN'S ADVICE DEPENDS ON ACCURATE INFORMATION FROM CUSTOMER. In
determining the extent to which Customer has interest rate risk, Smith Breeden
depends upon information obtained from the Customer. As a result, the quality
of Smith Breeden's corresponding hedge recommendations depends on the accuracy
of the information obtained from the Customer. Smith Breeden is not responsible
for any errors or omissions in the information provided by the Customer.

BASIS RISK IN HEDGING TRANSACTIONS. The market value of Customer's assets and
liabilities are subject to change because of fluctuating interest rates. The
purpose of Smith Breeden's hedging recommendations is to recommend hedges that
will change in value in reaction to fluctuating interest rates so as to
generally offset changes in the value of the assets and liabilities being
hedged. No hedge, however, could ever totally protect Customer against such
interest rate risk. Every attempt to hedge interest rate risk leaves a residual
risk known as "basis risk". Basis risk is

                                       9

<PAGE>
the risk that changes in the value of the hedge transaction will not completely
offset changes in the value of the assets and liabilities being hedged.

Basis risk may occur in many ways. For example, a hedge transaction may rise in
value by $100 in response to higher interest rates. At the same time,
Customer's assets may decline in value by $102 in response to the same market
factor--higher interest rates-- and other factors unique to those assets
including credit risks that might be reflected in the assets' value. The hedge
would therefore not fully cover the loss in value of Customer's assets caused
by higher rates since a $2 differential would exist between the gain in value
on the hedge and the assets' loss in value. The $2 differential reflects basis
risk. Despite that basis risk, the hedge transaction has been successful in
reducing Customer's exposure to losing value on its assets due to higher
interest rates.

Basis risk can manifest itself in other ways; for example when a small change
in interest rates occurs. In that context, both the hedge transaction and the
hedged assets could decline in value, although by different amounts, following
an interest rate change. This possibility also reflects basis risk.

Smith Breeden designs its hedging recommendations not only to mitigate interest
rate risk but also to reduce basis risk when possible. Nevertheless, it is
impossible to remove basis risk completely from any hedging transaction.
Customer should understand that basis risk similar to that outlined in the
previous two paragraphs is possible under Smith Breeden's hedging strategies.

OTHER RISKS IN HEDGING TRANSACTIONS. Customer faces risks of losses in its
hedging transactions from many risks other than interest rate risk. Smith
Breeden's hedging recommendations are not designed to protect Customer against
any risk of loss other than interest rate risk.

TAX ADVICE. Smith Breeden's investment and hedging recommendations may or may
not have tax consequences for Customer. Smith Breeden believes it is informed
with respect to certain of the tax consequences of its recommendations.
However, Smith Breeden is not an expert on taxation and Customer should not
rely on written or oral statements Smith Breeden makes with respect to the tax
effects of its hedging or investment advice. Customer should consult with its
accountants and lawyers on any tax implications of Smith Breeden's investment
and hedging recommendations.

ACCOUNTING ADVICE. Smith Breeden's investment and hedging recommendations may
or may not have accounting consequences for Customer. Smith Breeden believes it
is informed with respect to certain of the accounting consequences of its
recommendations. However, Smith Breeden is not an accounting firm and Customer
should not rely on written or oral statements Smith Breeden makes with respect
to the accounting effects of its hedging or investment advice. Customer should
consult with its accountants on any accounting implications of Smith Breeden's
investment and hedging recommendations.

LEGAL AND REGULATORY ADVICE. Smith Breeden's investment and hedging
recommendations may or may not have legal or regulatory consequences for
Customer. Smith Breeden believes it is informed with respect to certain of the
legal and regulatory consequences of its recommendations. However, Smith Breeden
is not a law firm and Customer should not rely on written or oral statements
Smith Breeden makes with respect to the legal or regulatory effects of its
hedging or investment advice. Customer should consult with its lawyers on any
legal or regulatory implications of Smith Breeden's investment and hedging
recommendations.

                                       10

<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Disclosure Statement on
the 28th day of Jan., 1997.

                                        LOS PADRES SAVINGS

                                        By:

                                        /s/ William D. Ross
                                        -------------------------------------

                                        President
                                        -------------------------------------
                                        Title

                                       11

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