**Exhibit
      10.4**




**FIRST
      FEDERAL BANKSHARES, INC.**





**CHANGE
      IN CONTROL AGREEMENT**





This
      Agreement is made effective as of the 2nd day of January, 2007, by and between
      First Federal Bankshares, Inc., a Delaware corporation (the “Company”), with its
      principal administrative office at 329 Pierce Street, Sioux City, Iowa 51101
      and
      First Federal Bank, the federal stock savings bank subsidiary of the Company
      (the “Bank”) and Peggy E. Smith (“Executive”).




**WHEREAS** ,
      Executive is employed as the Operations Manager of the Bank; and




**WHEREAS** ,
      the
      Company and the Bank recognize the substantial contribution that Executive
      makes
      or will make to the Company and the Bank; and




**WHEREAS,** the
      Company and the Bank wish to provide Executive with certain protections and
      benefits in the event of a Change in Control of the Company or the Bank, as
      provided in this Agreement




**NOW,
      THEREFORE** ,
      in
      consideration of Executive’s contributions to the Company and the Bank, and upon
      the other terms and conditions hereinafter provided, the parties hereto agree
      as
      follows:


**1.**
            **TERM
                OF AGREEMENT**


The
      “term” of this Agreement shall be twelve (12) full calendar months from the
      effective date of this Agreement set forth above, and shall include any
      extension or renewal made pursuant to this Section. Commencing on January 2,
      2007, and continuing on January 2nd of each year thereafter (the “Anniversary
      Date”), this Agreement shall renew for an additional year such that the
      remaining term shall be one year unless written notice of non-renewal
      (“Non-Renewal Notice”) is provided to Executive at least thirty (30) days and
      not more than sixty (60) days prior to any such Anniversary Date, that this
      Agreement shall terminate at the end of twelve (12) months following such
      Anniversary Date.


**2.**
            **PAYMENTS
                TO EXECUTIVE**


(a)  Upon
      the
      occurrence of either the Executive’s involuntary termination of employment or
      the Executive’s voluntary termination of employment for “Good Reason” (as
      defined below), either occurring within twelve (12) months following the
      effective date of a “Change in Control” (as defined below) (“Termination of
      Employment”), the Company or the Bank shall pay Executive (or in the event of
      his subsequent death, his estate), his base salary in effect on the date of
      Executive’s Termination of Employment (“Base Salary”) for twelve (12) months
      following the date of such Termination of Employment, provided, however, (i)
      that such Termination of Employment must qualify as a “Separation from Service”
as defined below; and (ii) to the extent that Executive is a “Specified
      Employee” (as defined below), payments shall not begin hereunder until the first
      day of the seventh month following Executive’s
      Separation from





Service
      and the first payment owed to the Executive shall equal the first six (6) months
      of accumulated payments owed to Executive hereunder, and thereafter regular
      payments owed to Executive shall be made starting with the seventh month after
      the Executive’s Separation from Service. To the extent amounts payable under
      this Agreement are determined by the Bank, in good faith, to be subject to
      federal, state or local income tax, the Bank may withhold from each such payment
      an amount necessary to meet the Bank’s obligation to withhold amounts under the
      applicable federal, state or local law.




(b)  In
      addition, upon the occurrence of Executive’s Termination of Employment,
      Executive will have such rights as specified in any other employee benefit
      plan
      (including, but not limited to, equity compensation plans and COBRA rights
      under
      the Bank’s group health plan).




(c)  Voluntary
      Termination of Employment for “Good Reason” following a Change in Control shall
      mean Executive’s resignation from the Bank’s employ within one hundred and
      twenty (120) days after the occurrence of any of the following events, provided,
      however, that Executive must give the Bank at least sixty (60) days prior
      written notice of intent to terminate employment due to Good
      Reason:


(i)
              failure
                  to elect or reelect or to appoint or reappoint Executive to a position
                  or
                  substantially equivalent position as that held by the Executive
                  prior to
                  the effective date of the Change in
                  Control,
 (ii)
              material
                  change in Executive’s functions, duties, or responsibilities, which change
                  would cause Executive’s position to become one of lesser responsibility,
                  importance, or scope from the position and attributes thereof described
                  in
                  the opening paragraphs of this Agreement,
 (iii)
              relocation
                  of the Executive’s principal place of business with the Company or the
                  Bank to a location that is more than 50 miles from his current
                  principal
                  place of business with the Company or the Bank, without the Executive’s
                  consent;
 (iv)
              liquidation
                  or dissolution of the Company or the Bank other than liquidations
                  or
                  dissolutions that are caused by reorganizations that do not affect
                  the
                  status of Executive, or
 (v)
              material
                  breach of this Agreement by the Company.
 (d)  “Change
        in Control” of the Bank or the Company shall mean **** a
        change
        in control of a nature that:
 (i)
              would
                  be required to be reported in response to Item 5.01 of the current
                  report
                  on Form 8-K, as ineffect
                  on the date hereof, pursuant to Section 13 or 15(d) of the Securities
                  Exchange Act of 1934 (the“Exchange
                  Act”);
                  or


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(ii)
            results
                in a Change in Control of the Bank or the Company within themeaning
                of the Home Owners’ Loan Act and the Rules and Regulations promulgated by
                the Officeof
                Thrift Supervision (or its predecessor agency), as in effect on the
                date
                hereof; or


(iii)
            without
                limitation such a Change in Controlshallbe
                deemed to have occurred at such time as:


(a)
            any“Person”
                (as the term is used in Sections 13(d) and 14(d) of the Exchange
                Act) is
                or becomes the“beneficial
                owner” (as defined in Rule 13d-3 under the Exchange Act),
                directly or indirectly, ofsecurities
                of the Bank or the Company representing 25% or more of the Bank’s or the
                Company’soutstanding securities;or





(b)
            individuals
                who constitute the Board on the date hereof (the “Incumbent Board”) cease
                for anyreason
                to constitute at least a majority thereof,*provided,
                however,*that
                this subsection (b) shall notapply if the Incumbent Board is replaced by the appointment by a
                Federal
                banking agency of a conservator or receiver for the Bank and,*provided
                further*that
                any person becoming a director subsequent to the date hereof whose
                election was approved by a vote of at least two-thirds of the directors
                comprising the Incumbent Board or whose nomination for election by
                the
                Company’sstockholders
                was approved by the same Nominating Committee serving under an Incumbent
                Board,shall
                be, for purposes of this clause (b), considered as though he were
                a member
                of the IncumbentBoard;
                or





(c)
            a
                proxy statement soliciting proxies from stockholders of the Company,
                by
                someoneother than the currentmanagementof
                the Company, seeking stockholder approval of a plan ofreorganization,
                merger or consolidation of the Company or Bank or similar transaction
                with
                one ormore
                corporations as a result of which the outstanding shares of the class
                of
                securities then subjectto
                such plan or transaction are exchanged for or converted into cash
                or
                property or securities not issued by the Bank or the Company shall
                be
                distributed and the requisite number of proxiesapproving
                such plan of reorganization, merger or consolidation of the Company
                or
                Bank are receivedand voted in favor of such transactions;
                or





(d)
            a
                tender offer is made for 25% or more of theoutstanding
                securities of the Bank or Company and
                shareholders


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owning
      beneficially or of record  25%
      or
      more of the outstanding securities of the Bank or Company have tendered or
      offered to sell  their
      shares pursuant to such tender offer and such tendered shares have been accepted
      by the tender offeror.





(e)  “Separation
      from Service” shall mean the date of cessation of the employment relationship
      (other than an approved leave of absence) between Executive and the Bank and
      its
      affiliates and subsidiaries (including any successor in interest, if
      applicable), and shall be construed to comply with Code Section 409A and
      Proposed Treasury Regulations Section 1.409A-1(h).




(f)  “Specified
      Employee” shall mean a key employee of the Bank within the meaning of Code
      Section 416(i) without regard to paragraph 5 thereof, determined in accordance
      with Code Section 409A and Proposed Treasury Regulations Section
      1.409A-1(i).




(g)
“Base
      Salary” as used in this Agreement shall carry its commonly-accepted meaning and
      shall exclude all cash bonuses, equity bonuses, incentive pay, retirement
      contributions, employee health and dental benefits, allowances, expense
      reimbursements, and other non-salary-related payments.





**3.**
            **SOURCE
                OF PAYMENTS**


It
      is
      intended by the parties hereto that all payments provided in this Agreement
      shall be paid in cash or check from the general funds of the Company or the
      Bank, provided, however, that in the event that the payment of any amounts
      due
      under Section 3 above is made by the Bank, such payment shall offset the payment
      due from the Company hereunder.


**4.**
            **POST
                TERMINATION OBLIGATIONS**


(a)  **General** .
      All
      payments under this Agreement shall be subject to Executive’s compliance with
      this Section 5.




(b)  **Litigation
      Cooperation** .
      Executive shall, upon reasonable notice, furnish such information and assistance
      to the Bank or the Company as may reasonably be required by the Bank or the
      Company in connection with any litigation in which it or any of its subsidiaries
      or affiliates is, or may become, a party; provided, however, that Executive
      shall not be required to provide information or assistance with respect to
      any
      litigation between Executive and the Bank or the Company or any of its
      subsidiaries or affiliates.




(c)  **Confidentiality** .
      Executive recognizes and acknowledges that the knowledge of the business
      activities and plans for business activities of the Bank and the Company and
      affiliates thereof, as it may exist from time to time, is a valuable, special
      and unique asset of the business of the Bank and the Company and affiliates
      thereof. Accordingly, Executive will not, for an twelve (12) month period
      following his Termination of Employment, disclose any knowledge of the past,
      present, planned or considered business activities, including, but not limited
      to, customer information, of the Bank and the Company and affiliates thereof
      to
      any person, firm, corporation, or other entity for any reason or purpose
      whatsoever (except for such


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disclosure
      as may be required to be provided to any regulatory agency with jurisdiction
      over the Bank or the Company or any affiliate). Notwithstanding the foregoing,
      Executive may disclose any knowledge of general banking, financial, and/or
      economic principles, concepts or ideas which are not solely and exclusively
      derived from the business plans and activities of the Bank or the Company,
      and
      Executive may disclose any information regarding the Bank or the Company which
      is otherwise publicly available or that he is otherwise legally required to
      disclose. In the event of a breach or threatened breach by Executive of the
      provisions of this Section 5(c), the Bank and the Company will be entitled
      to an
      injunction restraining Executive from disclosing, in whole or in part, his
      knowledge of the past, present, planned or considered business activities of
      the
      Bank or any of their affiliates, or from rendering any services to any person,
      firm, corporation or other entity to whom such knowledge, in whole or in part,
      has been disclosed or is threatened to be disclosed. Nothing herein will be
      construed as prohibiting the Bank from pursuing any other remedies available
      to
      them for such breach or threatened breach, including the recovery of damages
      from Executive.




(d)  **Non-Compete** .
      Executive agrees not to compete with the Bank and the Company and any affiliate
      for a period of twelve (12) months following his Termination of Employment
      within twenty-five (25) miles of any city, town or county in which, as of the
      date of the Change in Control, the Bank has an office or has filed an
      application for regulatory approval to establish an office, determined as of
      the
      date of his Termination of Employment, except as agreed to pursuant to a
      resolution duly adopted by the Board. Executive agrees that during such period
      and within said cities, towns and counties, Executive shall not work for or
      advise, consult or otherwise serve with, directly or indirectly, any entity
      whose business materially competes with the depository, lending or other
      business activities of the Bank or the Company. The parties hereto, recognizing
      that irreparable injury will result to the Bank and the Company, their business
      and property in the event of Executive’s breach of this Section 5(d), agree that
      in the event of any such breach by Executive, the Bank and the Company shall
      immediately cease all payments hereunder and shall also be entitled to any
      other
      remedies and damages available, to an injunction to restrain the violation
      hereof by Executive, his partners, agents, servants, employers, employees and
      all persons acting for or with him. Executive represents and admits that his
      experience and capabilities are such that he can obtain employment in a business
      engaged in other lines and/or of a different nature than the Bank and the
      Company, and that the enforcement of a remedy by way of injunction will not
      prevent Executive from earning a livelihood. Nothing herein will be construed
      as
      prohibiting the Bank and the Company from pursuing any other remedies available
      to them for such breach or threatened breach, including the recovery of damages
      from Executive.




(e)  **Non-Solicitation** .
      Executive further agrees that he will not, in any manner whatsoever, for a
      period of twelve (12) months following his Termination of Employment, either
      as
      an individual or as a partner, stockholder, director, officer, principal,
      employee, agent, consultant, or in any other relationship or capacity, with
      any
      person, firm, corporation or other business entity, either directly or
      indirectly, solicit or induce or aid in the solicitation or inducement of (i)
      any employees of the Bank or the Company to leave their employment with the
      Bank
      or the Company or (ii) any customers of the Bank to leave their customer
      relationship with the Bank. Executive further agrees that he will not, in any
      manner whatsoever, for a period of twelve (12) months following the his
      Termination of Employment, either as an individual or as a  5


partner,
      stockholder, director, officer, principal, employee, agent, consultant or in
      any
      other relationship or capacity with any person, firm, corporation or other
      business entity, either directly or indirectly, solicit the business of any
      customers or clients of the Bank or the Company. Any breach of this subsection
      (e) shall result in immediate cessation of any payments being made
      hereunder.




(f)  **Non-Disparagement** .
      Executive and the Bank and the Company agree that they will engage in no conduct
      which is either intended to or could reasonably be expected to harm each other
      in the operation of their business. Both parties agree they will not take any
      action, legal or otherwise, which might embarrass, harass, or adversely affect
      each other or which might in any way work to the detriment of each other,
      whether directly or indirectly. In particular and by way of illustration not
      limitation, each party agrees that it will not directly or indirectly contact
      customers or any entity that has a business relationship with the other, in
      order to disparage the good morale or business reputation or business practices
      of Executive or the Bank and the Company, or any of its current and former
      officers, directors, managers or employees.





(g)  **Return
      of Property** .
      Immediately upon his Termination of Employment, Executive shall return to the
      Bank and/or the Company all of the property which belongs to the Bank and/or
      the
      Company, including, but not limited to, computers, keys, cell phones, credit
      cards and other tangible property, as well as all original or copies of records,
      notes, reports, proposals, lists, correspondence, materials or other
      documents.





(h)  **Duty
      to Mitigate** .
      In the
      event the Executive becomes employed at a position where he earns less than
      the
      amount of his Base Salary as of the date of his Termination of Employment,
      the
      obligations of the Bank and/or the Company to pay benefits hereunder shall
      be
      reduced such that the combination of Executive’s Base Salary with the new
      employer and the Bank’s or Company’s payments hereunder shall, when taken
      together, approximate the amount of Executive’s Base Salary as of the date of
      his Termination of Employment. If the Executive earns more than the Base Salary
      as of the date of his Termination from his new employer, the Bank and/or the
      Company’s payments hereunder shall cease. If the Executive fails to provide the
      information necessary to determine the Executive’s Base Salary with the new
      employer (including self-employment), all payments hereunder shall cease.
      Furthermore, if the Base Salary paid by the Executive’s new employer is deemed
      by the Bank or Company to be substantially below an amount that would be
      considered reasonable in light of available market information for similar
      positions, payments hereunder shall be reduced by the difference.





**5.**
            **AMENDMENT
                AND TERMINATION.**


(a)  **Amendment** .
      The
      Bank or the Company may at any time amend the Agreement in whole or in part,
      provided, however, that no amendment shall decrease or restrict the amount
      accrued to the date of amendment.




(b)  **Termination** . The Bank
      or the Company may at any time partially or completely terminate the Agreement,
      if, in its judgment, the tax, accounting, or other effects of the continuance
      of
      the Agreement, or potential payments thereunder, would not be in the best
      interests of the Bank or the Company.


6


(i)  Partial
      Termination .
      In the
      event of a partial termination, the Agreement shall continue to operate and
      be
      effective with regard to benefits accrued prior to the effective date of such
      partial termination, but no further benefits shall accrue after the date of
      such
      partial termination.




(ii)  Complete
      Termination .
      Subject
      to the requirements of Code Section 409A, in the event of complete termination,
      the Agreement shall cease to operate and the Bank shall pay the Executive any
      benefits owed hereunder as a cash lump sum as of the effective date of the
      complete termination. Such complete termination of the Agreement shall occur
      only under the following circumstances and conditions.




(A)  The
      Bank
      may terminate the Agreement within 12 months of a corporate dissolution taxed
      under Code section 331, or with approval of a bankruptcy court pursuant to
      11
      U.S.C. §503(b)(1)(A), provided that the amounts accrued under the Agreement are
      included in the Executive’s gross income in the latest of (i) the calendar year
      in which the Agreement terminates; (ii) the calendar year in which the amount
      is
      no longer subject to a substantial risk of forfeiture; or (iii) the first
      calendar year in which the payment is administratively practicable.




(B)  The
      Bank
      may terminate the Agreement within the thirty (30) days preceding a Change
      in
      Control (but not following a Change in Control), provided that the Agreement
      shall only be treated as terminated if all substantially similar arrangements
      sponsored by the Bank are terminated so that the Executive and all participants
      under substantially similar arrangements are required to receive all amounts
      of
      compensation deferred under the terminated arrangements within twelve (12)
      months of the date of the termination of the arrangements.




(C)  The
      Bank
      may terminate the Agreement provided that (i) all arrangements sponsored by
      the
      Bank that would be aggregated with this Agreement under Proposed Treasury
      regulations section 1.409A-1(c) if any individual; covered by this Agreement
      was
      also covered by any of those other arrangements are also terminated; (ii) no
      payments other than payments that would be payable under the terms of the
      arrangement if the termination had not occurred are made within twelve (12)
      months of the termination of the arrangement; (iii) all payments are made within
      twenty-four (24) months of the termination of the arrangements; and (iv) the
      Bank does not adopt a new arrangement that would be aggregated with any
      terminated arrangement under Proposed Treasury regulations section 1.409A-1(c)
      if the same individual participated in both arrangements, at any time within
      five years following the date of termination of the arrangement.




(D)  The
      Bank
      may terminate the Agreement pursuant to such other terms and conditions as
      the
      Internal Revenue Service may permit from time to time.


**6.**
            **EFFECT
                ON PRIOR AGREEMENTS AND EXISTING BENEFIT
                PLANS**


This
      Agreement contains the entire understanding between the parties hereto and
      supersedes any prior agreement between the Company, the Bank and Executive,
      except that this Agreement shall not affect or operate to reduce any benefit
      or
      compensation inuring to Executive of a kind elsewhere provided. No provision
      of
      this Agreement shall be interpreted to mean that


7


Executive
      is subject to receiving fewer benefits than those available to him without
      reference to this Agreement.


**7.**
            **NO
                ATTACHMENT**


(a)  Except
      as
      required by law, no right to receive payments under this Agreement shall be
      subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
      charge, pledge, or hypothecation, or to execution, attachment, levy, or similar
      process or assignment by operation of law, and any attempt, voluntary or
      involuntary, to affect any such action shall be null, void, and of no
      effect.




(b)  This
      Agreement shall be binding upon, and inure to the benefit of, Executive, the
      Company, the Bank and their respective successors and assigns.


**8.**
            **WAIVER**


No
      term
      or condition of this Agreement shall be deemed to have been waived, nor shall
      there be any estoppel against the enforcement of any provision of this
      Agreement, except by written instrument of the party charged with such waiver
      or
      estoppel. No such written waiver shall be deemed a continuing waiver unless
      specifically stated therein, and each such waiver shall operate only as to
      the
      specific term or condition waived and shall not constitute a waiver of such
      term
      or condition for the future or as to any act other than that specifically
      waived.


**9.**
            **REQUIRED
                PROVISIONS**





Notwithstanding
      anything herein contained to the contrary, any payments to Executive by the
      Company or the Bank, whether pursuant to this Agreement or otherwise, are
      subject to and conditioned upon their compliance with Section 18(k) of the
      Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations
      promulgated thereunder in 12 C.F.R. Part 359.


**10.**
            **SEVERABILITY**


If,
      for
      any reason, any provision of this Agreement, or any part of any provision,
      is
      held invalid, such invalidity shall not affect any other provision of this
      Agreement or any part of such provision not held so invalid, and each such
      other
      provision and part thereof shall to the full extent consistent with law continue
      in full force and effect.


**11.**
            **GOVERNING
                LAW**


(a)  The
      validity, interpretation, performance, and enforcement of this Agreement shall
      be governed by the laws of the State of Iowa.




(b)  Any
      dispute or controversy arising under or in connection with this Agreement shall
      be settled exclusively by arbitration, conducted before a single arbitrator,
      mutually agreed upon by the parties. Such arbitration shall be conducted in
      a
      location within fifty (50) miles from the location of the Company, in accordance
      with the rules of the Judicial Mediation and Arbitration Systems (JAMS) then
      in
      effect. Judgment may be entered on the arbitrator’s award in any court having
      jurisdiction.


8


**12.**
            **SUCCESSOR
                TO THE COMPANY OR BANK**


The
      Company and the Bank shall require any successor or assignee, whether direct
      or
      indirect, by purchase, merger, consolidation or otherwise, to all or
      substantially all the business or assets of the Company or the Bank, expressly
      and unconditionally to assume and agree to perform the Company’s or the Bank’s
      obligations under this Agreement, in the same manner and to the same extent
      that
      the Company or the Bank would be required to perform if no such succession
      or
      assignment had taken place.




**13.**
            **NOT
                AN EMPLOYMENT AGREEMENT**


This
      Agreement does not guarantee employment with the Bank or the Company and the
      Bank and the Company has not waived its rights to treat the Executive as an
“at
      will” employee.


**14.**
            **SIGNATURES**


**IN
      WITNESS WHEREOF** ,
      the
      Company and the Bank have caused this Agreement to be executed by its duly
      authorized officers, and Executive has signed this Agreement, effective as
      of
      the date first above written.




**FIRST
                FEDERAL BANKSHARES, INC**.January
                2, 2007
            By:
            /s/
                Michael W. DoslandDate
            
            Michael
                W. DoslandPresident
                and Chief Executive Officer**FIRST
                FEDERAL BANK**January
                2, 2007
            By:
            /s/
                Michael W. DoslandDate
            
            Michael
                W. DoslandPresident
                and Chief Executive Officer**EXECUTIVE**January
                2, 2007
            
            /s/
                Peggy E. SmithDate
            
            Peggy
                E. Smith





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