EXHIBIT 10.28

AMENDED DIRECTOR RETIREMENT AGREEMENT WITH JAMES J. FULLER

        THIS AMENDED DIRECTOR RETIREMENT AGREEMENT (this "Agreement") is made as
of March 15, 2004, by and between Citizens South Bank, a federally chartered
savings bank (the "Bank"), and James J. Fuller (the "Director").

        WHEREAS, to encourage the Director to remain a member of the Bank's
board of directors, the Bank is willing to provide retirement benefits to the
Director. The Bank will pay the benefits from its general assets,

        WHEREAS, none of the conditions or events included in the definition of
the term "golden parachute payment" that is set forth in section 18(k)(4)(A)(ii)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in
Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR
359.1(f)(1)(ii)] exists or, to the best knowledge of the Bank, is contemplated
insofar as the Bank is concerned,

        WHEREAS, the Director entered into a Director Retirement Agreement with
the Bank or its predecessor as of October 16, 2000, providing for specified
retirement benefits for the Director,

        WHEREAS, the Director has agreed to miscellaneous changes in the terms
and conditions of the October 16, 2000 Director Retirement Agreement, and

        WHEREAS, the Director and the Bank intend that the October 16, 2000
Director Retirement Agreement, as the same may have been amended, shall be of no
further force or effect and shall be superseded in its entirety by this
Agreement from and after the effective date of this Agreement.

        NOW THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and acceptance of which are hereby
acknowledged, the Director and the Bank hereby agree as follows.

                                    ARTICLE 1
                                   DEFINITIONS

        Whenever used in this Agreement, the following words and phrases shall
have the meanings specified:

        1.1     "Accrual Balance" means the liability that should be accrued by
the Bank under generally accepted accounting principles ("GAAP") for the Bank's
obligation to the Director under this Agreement, by applying Accounting
Principles Board Opinion No. 12, as amended by Statement of Financial Accounting
Standards No. 106, and the calculation method and discount rate specified
hereinafter. The Accrual Balance shall be calculated assuming a level principal
amount and interest as the discount rate is accrued each period. The principal
accrual is determined such that when it is credited with interest each month,
the Accrual Balance at Normal Retirement Age equals the present value of the
normal retirement benefits. The discount rate means the rate used by the Plan
Administrator for determining the Accrual Balance. The rate is based on the
yield on a 20-year corporate bond rated Aa by Moody's, rounded to the nearest
1/4%. The initial discount rate is 8.50%. However, the Plan Administrator, in
its sole discretion, may adjust the discount rate to maintain the rate within
reasonable standards according to GAAP.

                                       372
<PAGE>

        1.2     "Beneficiary" means each designated person, or the estate of the
Director, entitled to benefits, if any, upon the death of the Director,
determined according to Article 4.

        1.3     "Beneficiary Designation Form" means the form established from
time to time by the Plan Administrator that the Director completes, signs, and
returns to the Plan Administrator to designate one or more Beneficiaries.

        1.4     "Change in Control" means any of the following events occur:
                (a)     Merger: Citizens South Banking Corporation, a Delaware
        corporation of which the Bank is a wholly owned subsidiary, merges into
        or consolidates with another corporation, or merges another corporation
        into Citizens South Banking Corporation, and as a result less than a
        majority of the combined voting power of the resulting corporation
        immediately after the merger or consolidation is held by persons who
        were stockholders of Citizens South Banking Corporation immediately
        before the merger or consolidation,

                (b)     Acquisition of Significant Share Ownership: after the
        date of this Agreement a report on Schedule 13D, Schedule TO, or another
        form or schedule (other than Schedule 13G) is filed or is required to be
        filed under Sections 13(d) or 14(d) of the Securities Exchange Act of
        1934, if the schedule discloses that the filing person or persons acting
        in concert has or have become the beneficial owner of 25% or more of the
        combined voting power of Citizens South Banking Corporation's voting
        securities outstanding (but this clause (b) shall not apply to
        beneficial ownership of voting shares held by a subsidiary in a
        fiduciary capacity or beneficial ownership of voting shares held by an
        employee benefit plan of Citizens South Banking Corporation or any
        subsidiary(ies)). For purposes of this Agreement, "subsidiary" means an
        entity in which Citizens South Banking Corporation beneficially owns 50%
        or more of the outstanding voting securities, whether Citizens South
        Banking Corporation owns the shares directly or owns the shares
        indirectly through an intermediate subsidiary,

                (c)     Change in Board Composition. during any period of two
        consecutive years, individuals who constitute Citizens South Banking
        Corporation's board of directors at the beginning of the two-year period
        cease for any reason to constitute at least a majority thereof;
        provided, however, that -- for purposes of this clause (c) -- each
        director who is first elected by the board (or first nominated by the
        board for election by stockholders) by a vote of at least two-thirds
        (2/3) of the directors who were directors at the beginning of the period
        shall be deemed to have been a director at the beginning of the two-year
        period, or

                (d)     Sale of Assets: Citizens South Banking Corporation sells
        to a third party all or substantially all of its assets. For this
        purpose, sale of all or substantially all of Citizens South Banking
        Corporation's assets includes sale of the shares or assets of the Bank
        alone.

                                       373
<PAGE>

        1.5     "Disability" means, if the Director is covered by a
Bank-sponsored disability policy, total disability as defined in such policy
without regard to any waiting period. If the Director is not covered by such a
policy, Disability means the Director suffers a sickness, accident or injury
that, in the judgment of a physician satisfactory to the Bank, prevents the
Director from performing substantially all of the Director's normal duties for
the Bank. As a condition to receiving any Disability benefits, the Bank may
require the Director to submit to such physical or mental evaluations and tests
as the Bank's board of directors deems appropriate.

        1.6     "Early Termination" means Termination of Service before the
Normal Retirement Age for reasons other than death, Disability, Termination for
Cause, or following a Change in Control.

        1.7     "Early Termination Date" means the month, day, and year of Early
Termination.

        1.8     "Effective Date" means March 15, 2004.

        1.9     "Normal Retirement Age" means the Director's 70th birthday.

        1.10    "Normal Retirement Date" means the later of the Normal
Retirement Age or Termination of Service.

        1.11    "Plan Administrator" means the plan administrator described in
Article 7.

        1.12    "Plan Year" means each twelve-month period from the Effective
Date of this Agreement.

        1.13    "Termination for Cause" means the Director is not nominated by
the board or nominating committee for reelection as a director after the
expiration of his current term, or the Director is removed from the board of
directors, in either case --

                (a)     because of the Director's gross negligence or gross
        neglect of duties, or

                (b)     because of the Director's commission of or plea of nolo
        contendere to a felony, or commission of or plea of nolo contendere to a
        misdemeanor involving moral turpitude, or

                (c)     because of the Director's fraud, disloyalty, dishonesty,
        or willful violation of any applicable law or significant policy of the
        Bank committed in connection with the Director's service and resulting
        in an adverse effect on the Bank, or a breach of the Director's
        fiduciary duties for personal profit. For purposes of this Agreement,
        applicable laws include any statute, rule, regulatory order, statement
        of policy, or final cease-and-desist order of any governmental agency or
        body having regulatory authority over the Bank or Citizens South Banking
        Corporation, or,

                (d)     because of the Director's intentional wrongful damage to
        the business or property of the Bank or its affiliates, including
        without limitation the reputation of the Bank or Citizens South Banking
        Corporation, which in the judgment of the Bank causes material harm to
        the Bank or affiliates, or

                                       374
<PAGE>

                (e)     because of the occurrence of any event that results in
        the Director being excluded from coverage, or having coverage limited
        for the Director as compared to other Directors of the Bank, under a
        blanket bond or other fidelity or insurance policy covering directors,
        officers, or employees, or

                (f)     because the Director is removed from service or
        permanently prohibited from participating in the Bank's affairs by an
        order issued under Section 8(e)(4) or (g)(1) of the Federal Deposit
        Insurance Act [12 U.S.C. 1818(e)(4) or (g)(1)].

        1.14    "Termination of Service" means the Director ceases to be a
member of the Bank's board of directors for any reason whatsoever. For purposes
of this Agreement, if there is a dispute over the service status of the Director
or the date of the Director's Termination of Service, the Bank shall have the
sole and absolute right to decide the dispute unless a Change in Control shall
have occurred.

                                    ARTICLE 2
                                LIFETIME BENEFITS

        2.1     Normal Retirement Benefit. For Termination of Service on or
after Normal Retirement Age, the Bank shall pay to the Director the benefit
described in this Section 2.1 instead of any other benefit under this Agreement.

                2.1.1   Amount of Benefit. The annual benefit under this
        Section 2.1 is $8,000.

                2.1.2   Payment of Benefit. The Bank shall pay the annual
        benefit to the Director in 12 equal monthly installments payable on the
        first day of each month, beginning with the month after the Director's
        Normal Retirement Date. The annual benefit shall be paid to the Director
        for 15 years.

        2.2     Early Termination Benefit. After Early Termination, the Bank
shall pay to the Director the benefit described in this Section 2.2 instead of
any other benefit under this Agreement. The benefit shall consist of 180 equal
monthly payments, payable on the first day of each month, beginning with the
month after the Normal Retirement Age. The amount of the monthly payment shall
be calculated based on the Accrual Balance existing on the date of the
Director's Termination of Service. For illustrative purposes only, Schedule A
attached to this Agreement shows the projected annual Early Termination benefit
based on the Accrual Balance at each Plan Year end.

        2.3     Disability Benefit. If the Director terminates service because
of Disability before the Normal Retirement Age, the Bank shall pay to the
Director the benefit described in Section 2.1 instead of any other benefit under
this Agreement. The benefits shall be payable for 180 months on the first day of
each month, beginning with the month after the Normal Retirement Age.

        2.4     Change in Control Benefit. If the Director's service with the
Bank terminates within one year after a Change in Control (except for
Termination for Cause), the Bank shall pay to the Director the benefit described
in this Section 2.4 instead of any other benefit under this Agreement.

                2.4.1   Amount of Benefit. The benefit under this Section 2.4 is
        the Normal Retirement Age Accrual Balance required by Section 2.1,
        without reduction for the time value of money or other discount.

                                       375
<PAGE>

                2.4.2   Payment of Benefit. The Bank shall pay this benefit to
        the Director in a single lump sum within 3 days after the Director's
        Termination of Service.

        2.5     Contradiction in Terms of Agreement and Schedule A. If there is
a contradiction in the terms of this Agreement and Schedule A attached hereto
concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the
actual amount of benefits prescribed by this Agreement shall control.

                                    ARTICLE 3
                                 DEATH BENEFITS

        3.1     Death in Active Service. If the Director dies while in active
service to the Bank, instead of any other benefit under this Agreement the Bank
shall pay to the Director's Beneficiary the Normal Retirement Benefit set forth
in Section 2.1 of this Agreement. The Bank shall pay the annual benefit to the
Director's Beneficiary in 12 equal monthly installments payable on the first day
of each month, beginning with the month after the Director's death. The annual
benefit shall be paid to the Director's Beneficiary for 15 years.

        3.2     Death After Termination of Service. If the Director dies after
having terminated active service with the Bank but before receiving any or all
of the benefits to which the Director is entitled under Article 2 of this
Agreement, the Bank shall pay to the Director's Beneficiary the benefits set
forth in Article 2 to which the Director was entitled at the time of death. The
benefits shall be payable to the Director's Beneficiary at the same time and in
the same amounts they would have been paid to the Director had the Director
survived, except that benefit payments shall begin in the month immediately
after the Director's death if payments to the Director had not already commenced
by the date of the Director's death.

                                    ARTICLE 4
                                  BENEFICIARIES

        4.1     Beneficiary Designations. The Director shall have the right to
designate at any time a Beneficiary to receive any benefits payable under this
Agreement upon the death of the Director. The Beneficiary designated under this
Agreement may be the same as or different from the beneficiary designation under
any other benefit plan of the Bank in which the Director participates.

        4.2     Beneficiary Designation: Change. The Director shall designate a
Beneficiary by completing and signing the Beneficiary Designation Form and
delivering it to the Plan Administrator or its designated agent. The Director's
Beneficiary designation shall be deemed automatically revoked if the Beneficiary
predeceases the Director or if the Director names a spouse as Beneficiary and
the marriage is subsequently dissolved. The Director shall have the right to
change a Beneficiary by completing, signing, and otherwise complying with the
terms of the Beneficiary Designation Form and the Plan Administrator's rules and
procedures, as in effect from time to time. Upon the acceptance by the Plan
Administrator of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be cancelled. The Plan Administrator shall
be entitled to rely on the last Beneficiary Designation Form filed by the
Director and accepted by the Plan Administrator before the Director's death.

        4.3     Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received, accepted, and acknowledged in
writing by the Plan Administrator or its designated agent.

                                       376
<PAGE>

        4.4     No Beneficiary Designation. If the Director dies without a valid
beneficiary designation, or if all designated Beneficiaries predecease the
Director, then the Director's spouse shall be the designated Beneficiary. If the
Director has no surviving spouse, the benefits shall be made to the personal
representative of the Director's estate.

        4.5     Facility of Payment. If a benefit is payable to a minor, to a
person declared incapacitated, or to a person incapable of handling the
disposition of his or her property, the Bank may pay such benefit to the
guardian, legal representative, or person having the care or custody of the
minor, incapacitated person, or incapable person. The Bank may require proof of
incapacity, minority, or guardianship as it may deem appropriate before
distribution of the benefit. Distribution shall completely discharge the Bank
from all liability for the benefit.

                                    ARTICLE 5
                               GENERAL LIMITATIONS

        Notwithstanding any provision of this Agreement to the contrary, the
Bank shall not pay any benefit under this Agreement, and this Agreement shall
terminate, if the Director's Termination of Service is the result of Termination
for Cause. The board of directors or a duly authorized committee of the board
shall have the sole and absolute right to determine whether the bases for denial
of benefits for cause exist. Benefits may be denied for cause regardless of
whether the Director continued to serve as a director after the board or
committee made its determination not to nominate the Director for reelection.

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

        6.1     Claims Procedure. The Bank shall notify any person or entity
that makes a claim for benefits under this Agreement (the "Claimant") in
writing, within 90 days of Claimant's written application for benefits, of his
or her eligibility or noneligibility for benefits under the Agreement. If the
Bank determines that the Claimant is not eligible for benefits or full benefits,
the notice shall set forth (1) the specific reasons for such denial, (2) a
specific reference to the provisions of the Agreement on which the denial is
based, (3) a description of any additional information or material necessary for
the Claimant to perfect his or her claim, and a description of why it is needed,
and (4) an explanation of the Agreement's claims review procedure and other
appropriate information as to the steps to be taken if the Claimant wishes to
have the claim reviewed. If the Bank determines that there are special
circumstances requiring additional time to make a decision, the Bank shall
notify the Claimant of the special circumstances and the date by which a
decision is expected to be made, and may extend the time for up to an additional
90 days.

        6.2     Review Procedure. If the Claimant is determined by the Bank not
to be eligible for benefits, or if the Claimant believes that he or she is
entitled to greater or different benefits, the Claimant shall have the
opportunity to have such claim reviewed by the Bank by filing a petition for
review with the Bank within 60 days after receipt of the notice issued by the
Bank. Said petition shall state the specific reasons, which the Claimant
believes entitle him or her to benefits or to greater or different benefits.
Within 60 days after receipt by the Bank of the petition, the Bank shall afford
the Claimant (and counsel, if any) an opportunity to present his or her position
to the Bank verbally or in writing, and the Claimant (or counsel) shall have the
right to review the pertinent documents. The Bank shall notify the Claimant of
its decision in writing within the 60-day period, stating specifically the basis
of its decision, written in a manner to be understood by the Claimant and the
specific provisions of the Agreement on which the decision is based. If, because
of the need for a hearing, the 60-day period is not sufficient, the decision may
be deferred for up to another 60 days at the election of the Bank, but notice of
this deferral shall be given to the Claimant.

                                       377
<PAGE>

                                    ARTICLE 7
                           ADMINISTRATION OF AGREEMENT

        7.1     Plan Administrator Duties. This Agreement shall be administered
by a Plan Administrator consisting of the Bank's board of directors or such
committee or person(s) as the board shall appoint. The Director may be a member
of the Plan Administrator. The Plan Administrator shall also have the discretion
and authority to (a) make, amend, interpret, and enforce all appropriate rules
and regulations for the administration of this Agreement and (b) decide or
resolve any and all questions, including interpretations of this Agreement, as
may arise in connection with the Agreement.

        7.2     Agents. In the administration of this Agreement, the Plan
Administrator may employ agents and delegate to them such administrative duties
as it sees fit (including acting through a duly appointed representative), and
may from time to time consult with counsel, who may be counsel to the Bank.

        7.3     Binding Effect of Decisions. The decision or action of the Plan
Administrator with respect to any question arising out of or in connection with
the administration, interpretation, and application of the Agreement and the
rules and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Agreement. No Director or
Beneficiary shall be deemed to have any right, vested or nonvested, regarding
the continued use of any previously adopted assumptions, including but not
limited to the discount rate and calculation method employed in the
determination of the Accrual Balance.

        7.4     Indemnity of Plan Administrator. The Bank shall indemnify and
hold harmless the members of the Plan Administrator against any and all claims,
losses, damages, expenses, or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by
the Plan Administrator or any of its members.

        7.5     Bank Information. To enable the Plan Administrator to perform
its functions, the Bank shall supply full and timely information to the Plan
Administrator on all matters relating to the date and circumstances of the
retirement, Disability, death, or Termination of Service of the Director, and
such other pertinent information as the Plan Administrator may reasonably
require.

                                    ARTICLE 8
                                  MISCELLANEOUS

        8.1     Amendment and Termination. This Agreement may be amended solely
by a written agreement signed by the Bank and by the Director. Except as
provided in Article 5, this Agreement may be terminated solely by a written
agreement signed by the Bank and by the Director.

        8.2     Binding Effect. This Agreement shall bind the Director and the
Bank, and their beneficiaries, survivors, executors, successors, administrators,
and transferees.

                                       378
<PAGE>

        8.3     No Guarantee of Service. This Agreement is not a contract for
services. It does not give the Director the right to remain a Director of the
Bank, nor does the Agreement interfere with the rights of the Bank's
shareholders not to re-elect the Director or the right of shareholders or the
Board to remove an individual as a director of the Bank. The Agreement also does
not require the Director to remain a director nor interfere with the Director's
right to terminate services at any time.

        8.4     Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached, or encumbered in any manner.

        8.5     Successors; Binding Agreement. The Bank shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Bank, by
an assumption agreement in form and substance satisfactory to the Director, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Bank would be required to perform this Agreement if no
such succession had occurred. Failure of the Bank to obtain such assumption
agreement before effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Director to the Change in Control benefit
provided in Section 2.4.

        8.6     Tax Withholding. The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

        8.7     Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of North Carolina, except to the extent
preempted by the laws of the United States of America.

        8.8     Unfunded Arrangement. The Director and beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay benefits.
The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Director's life is a general
asset of the Bank to which the Director and beneficiary have no preferred or
secured claim.

        8.9     Entire Agreement. This Agreement constitutes the entire
agreement between the Bank and the Director concerning the subject matter
hereof. No rights are granted to the Director under this Agreement other than
those specifically set forth herein. The October 16, 2000 Director Retirement
Agreement, as the same may have been amended, shall be of no further force or
effect and shall be superseded in its entirety by this Agreement from and after
the effective date of this Agreement.

        8.10    Severability. If for any reason any provision of this Agreement
is held invalid, such invalidity shall not affect any other provision of this
Agreement not held invalid, and each such other provision shall continue in full
force and effect to the full extent consistent with law. If any provision of
this Agreement is held invalid in part, such invalidity shall not affect the
remainder of such provision, and the remainder of such provision, together with
all other provisions of this Agreement, shall continue in full force and effect
to the full extent consistent with law.

        8.11    Headings. The headings of Sections herein are included solely
for convenience of reference and shall not affect the meaning or interpretation
of any provision of this Agreement.

                                       379
<PAGE>

        8.12    Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested, with postage prepaid, to the following addresses or to such other
address as either party may designate by like notice. If to the Bank, notice
shall be given to the board of directors, Citizens South Bank, 519 South New
Hope Road, Gastonia, North Carolina 28054-4040, or to such other or additional
person or persons as the Bank shall have designated to the Director in writing.
If to the Director, notice shall be given to the Director at the address of the
Director appearing on the Bank's records, or to such other or additional person
or persons as the Director shall have designated to the Bank in writing.

        8.13    Payment of Legal Fees. The Bank is aware that after a Change in
Control management of the Bank could cause or attempt to cause the Bank to
refuse to comply with its obligations under this Agreement, or could institute
or cause or attempt to cause the Bank to institute litigation seeking to have
this Agreement declared unenforceable, or could take or attempt to take other
action to deny Director the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement would be frustrated. It is the
intention of the Bank that the Director not be required to incur the expenses
associated with the enforcement of his rights under this Agreement, whether by
litigation or other legal action, because the cost and expense thereof would
substantially detract from the benefits intended to be granted to the Director
hereunder. It is the intention of the Bank that the Director not be forced to
negotiate settlement of his rights under this Agreement under threat of
incurring expenses. Accordingly, if after a Change in Control occurs it appears
to the Director that (a) the Bank has failed to comply with any of its
obligations under this Agreement, or (b) the Bank or any other person has taken
any action to declare this Agreement void or unenforceable, or instituted any
litigation or other legal action designed to deny, diminish, or to recover from
the Director the benefits intended to be provided to the Director hereunder, the
Bank irrevocably authorizes the Director from time to time to retain counsel of
his choice, at the expense of the Bank as provided in this Section 8.13, to
represent the Director in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Bank or any
director, officer, stockholder, or other person affiliated with the Bank, in any
jurisdiction. Notwithstanding any existing or previous attorney-client
relationship between the Bank and any counsel chosen by the Director under this
Section 8.13, the Bank irrevocably consents to the Director entering into an
attorney-client relationship with that counsel, and the Bank and the Director
agree that a confidential relationship shall exist between the Director and that
counsel. The fees and expenses of counsel selected from time to time by the
Director as provided in this section shall be paid or reimbursed to the Director
by the Bank on a regular, periodic basis upon presentation by the Director of a
statement or statements prepared by such counsel in accordance with such
counsel's customary practices, up to a maximum aggregate amount of $25,000. The
Bank's obligation to pay the Director's legal fees provided by this Section 8.13
operates separately from and in addition to any legal fee reimbursement
obligation the Bank may have with the Director under any separate employment,
severance, or other agreement between the Director and the Bank.

        8.14    Liquidated Damages. The parties hereto, before entering into
this Agreement, have been concerned with the fact that substantial damages will
be suffered by the Director in the event that the Bank shall fail to perform
according to Section 2.4 of this Agreement following a Change in Control.
Following a Change in Control, in the event of nonperformance by the Bank for a
period of 30 days from the time payment was scheduled to be made pursuant to
Section 2.4 of this Agreement, the Director shall immediately be entitled to
liquidated damages equal to 1 1/2 times the remaining Accrual Balance due to the
Director under Section 2.4 of this Agreement. This provision shall not be
applicable in the event that such nonpayment is the result of prohibition of
such payment by law, regulation or order of a banking regulatory agency.

                                       380
<PAGE>

        IN WITNESS WHEREOF, the Director and a duly authorized Bank officer have
executed this Amended Deferred Compensation and Income Continuation Agreement as
of the date first written above.

DIRECTOR                                    CITIZENS SOUTH BANK

/s/ James J. Fuller                         By:    /s/ Kim S. Price
-------------------                                -----------------------------
James J. Fuller                             Title: President and Chief Executive
                                                   Officer

                                       381
<PAGE>

                             BENEFICIARY DESIGNATION
                               CITIZENS SOUTH BANK
                      AMENDED DIRECTOR RETIREMENT AGREEMENT

        I, James J. Fuller, designate the following as beneficiary of any death
benefits under this Amended Director Retirement Agreement:

Primary:


Contingent:


Note:   To name a trust as beneficiary, please provide the name of the
        trustee(s) and the exact name and date of the trust agreement.

        I understand that I may change these beneficiary designations by filing
a new written designation with the Bank. I further understand that the
designations will be automatically revoked if the beneficiary predeceases me,
or, if I have named my spouse as beneficiary and our marriage is subsequently
dissolved.

Signature:      /s/ James J. Fuller
                -------------------
                James J. Fuller

Date:           May 17, 2004


        Received by Citizens South Bank this 17th day of May, 2004.

        By:     /s/ Paul L. Teem, Jr.
                --------------------------------------
        Title:  Executive Vice President and Secretary

                                       382
<PAGE>

                                   SCHEDULE A
                               CITIZENS SOUTH BANK
                      AMENDED DIRECTOR RETIREMENT AGREEMENT

James J. Fuller
Normal Retirement Age: 70

<TABLE>
<CAPTION>
                                                    EARLY TERMINATION    CHANGE-IN-CONTROL
  PLAN YEAR                                          ANNUAL BENEFIT          BENEFIT
   ENDING      AGE AT PLAN    ACCRUAL BALANCE @     PAYABLE AT NORMAL      PAYABLE IN A
 DECEMBER 31,    YEAR END         8.50% (1)        RETIREMENT AGE (2)       LUMP SUM
------------   ------------   -----------------    ------------------   ------------------
  <S>               <C>       <C>                  <C>                  <C>
     2003           60        $          31,048    $            3,643   $           68,179
     2004           61        $          33,792    $            3,965   $           68,179
     2005           62        $          36,779    $            4,316   $           68,179
     2006           63        $          40,030    $            4,697   $           68,179
     2007           64        $          43,569    $            5,112   $           68,179
     2008           65        $          47,420    $            5,564   $           68,179
     2009           66        $          51,611    $            6,056   $           68,179
     2010           67        $          56,173    $            6,591   $           68,179
     2011           68        $          61,138    $            7,174   $           68,179
     2012           69        $          66,542    $            7,808   $           68,179
  April 2013        70        $          68,179(3) $            8,000   $           68,179
</TABLE>

        (1)     Calculations are approximations based on prior year-end Accrual
Balances. The Accrual Balance reflects payment at the beginning of each month
during retirement, beginning May 1, 2013.

        (2)     Based on the present value of the current payment stream of the
vested Accrual Balance at each year end using a standard discount rate (8.50%).
The benefit amounts shown are for illustrative purposes only. Actual Early
Termination benefits will be based on the Accrual Balance existing on the date
of the Director's Termination of Service.

        (3)     Projected retirement occurs on April 13, 2013, with the first
normal monthly retirement benefit commencing May 1, 2013.

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