EXHIBIT 10.4
                 EMPLOYMENT AGREEMENT BETWEEN FIRST FEDERAL BANK
                                AND SANDRA SABEL





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                               FIRST FEDERAL BANK
                              EMPLOYMENT AGREEMENT

         This Agreement is made effective as of the ____ day of October, 1999 by
and between First Federal Bank (the "Bank"), a federally-chartered stock savings
bank, with its principal administrative office at 329 Pierce Street, Sioux City,
Iowa 51102 and Sandra Sabel (the "Executive"). Any reference to "Company" herein
shall mean First Federal  Bankshares,  Inc., a Delaware stock corporation or any
successor thereto.

         WHEREAS,  the Bank wishes to assure itself of the continued services of
Executive for the period provided in this Agreement; and

         WHEREAS, Executive is willing to continue to serve in the employ of the
Bank on a full-time basis for said period.

         NOW,  THEREFORE,  in  consideration  of  the  mutual  covenants  herein
contained,  and upon the other terms and conditions  hereinafter  provided,  the
parties hereby agree as follows:

1.       POSITION AND RESPONSIBILITIES

         During  the period of her  employment  hereunder,  Executive  agrees to
serve as Senior Vice President of the Bank and the Company.  During said period,
Executive  also agrees to serve,  if elected,  as an officer and director of any
subsidiary or affiliate of the Bank. Failure to reelect Executive as Senior Vice
President without the consent of the Executive during the term of this Agreement
shall constitute a breach of this Agreement.

2.       TERMS AND DUTIES

         (a) The period of Executive's  employment  under this  Agreement  shall
begin as of the date first  above  written  and shall  continue  for a period of
thirty-six  (36)  full  calendar  months   thereafter   ("Employment   Period").
Commencing on each annual anniversary of the date of this Agreement (the date of
each  annual  anniversary  hereof  shall  be  hereinafter  referred  to  as  the
"Anniversary   Date"),   unless  the  Employment   Period  has  been  previously
terminated,  the Board  shall,  at least 60 days prior to each such  Anniversary
Date, conduct a comprehensive performance evaluation and review of the Executive
for  purposes of  determining  whether to extend the  Agreement  and the results
thereof shall be included in the minutes of the Board  meeting.  The Board shall
give  the  Executive  notice  of its  decision  whether  or not  to  extend  the
Employment  Period at least 60 days prior to the  Anniversary  Date, and if such
notice is that the  Employment  Period  shall not be  extended  (a  "Non-Renewal
Notice"),  the  Employment  Period  shall not be  extended.  In such  case,  the
Agreement shall terminate in accordance with its terms at the end of twenty-four
(24) months following such Anniversary Date.

         (b)  Executive's  duties as Senior Vice  President  of the Bank are set
forth on Exhibit A attached  hereto.  During the Employment  Period,  except for
periods of absence  occasioned  by illness,  reasonable  vacation  periods,  and
reasonable  leaves of absence,  Executive  shall  faithfully  perform her duties
hereunder  including  activities  and  services  related  to  the  organization,
operation and management of the Bank. For these purposes,  "reasonable" shall be
determined  by reference  to similarly  situated  financial  institutions  or in
accordance with industry standards.
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3.       COMPENSATION AND REIMBURSEMENT

         (a) The  compensation  specified under this Agreement shall  constitute
the salary and benefits paid for the duties  described in Section 2(b). The Bank
shall pay Executive as  compensation  a salary of not less than $82,000 per year
("Base Salary"). Such Base Salary shall be payable in accordance with the normal
payroll  practices of the Bank. During the Employment  Period,  Executive's Base
Salary shall be reviewed at least  annually;  the first such review will be made
no later than  January 31,  2000.  Such review shall be conducted by a Committee
designated  by the  Board,  and  the  Board  may  increase,  but  not  decrease,
Executive's  Base Salary (any  increase  in Base Salary  shall  become the "Base
Salary" for purposes of this Agreement). In addition to the Base Salary provided
in this Section 3(a),  the Bank shall provide  Executive at no cost to Executive
with all such other  benefits as are provided  uniformly to permanent  full-time
employees of the Bank.

         (b) The Bank  will  provide  Executive  with  employee  benefit  plans,
arrangements  and  perquisites   substantially  equivalent  to  those  in  which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement,  and the Bank will not,  without
Executive's prior written consent, make any changes in such plans,  arrangements
or  perquisites  which  would  adversely  affect  Executive's  vested  rights or
benefits thereunder. Without limiting the generality of the foregoing provisions
of this Subsection (b),  Executive will be entitled to participate in or receive
benefits  under  any  employee  benefit  plans  including  but not  limited  to,
retirement plans,  supplemental retirement plans, pension plans,  profit-sharing
plans, stock option plans, stock award plans, health-and-accident plans, medical
coverage or any other employee benefit plan or arrangement made available by the
Bank in the  future  to its  senior  executives  and key  management  employees,
subject to and on a basis  consistent  with the terms,  conditions  and  overall
administration  of such plans and  arrangements.  Executive  will be entitled to
incentive  compensation and bonuses as provided in any plan of the Bank in which
Executive  is eligible to  participate  (and she shall be entitled to a pro rata
distribution  under any incentive  compensation  or bonus plan as to any year in
which a termination of employment  occurs,  other than  termination  for Cause).
Nothing paid to the Executive under any such plan or arrangement  will be deemed
to be in lieu of other  compensation  to which the  Executive is entitled  under
this Agreement.

         (c) In addition to the Base Salary  provided  for by  paragraph  (a) of
this Section 3, the Bank shall pay or  reimburse  Executive  for all  reasonable
travel and other  reasonable  expenses  incurred  by  Executive  performing  her
obligations under this Agreement and may provide such additional compensation in
such form and such amounts as the Board may from time to time determine.

4.       PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION

         The  provisions of this Section shall in all respects be subject to the
terms and conditions stated in Sections 7 and 15.

         (a) The  provisions of this Section shall apply upon the  occurrence of
an Event of Termination  (as herein defined)  during the Employment  Period.  As
used in this Agreement, an "Event of Termination" shall mean and include any one
or more of the following:

         (i) the termination by the Bank or the Company of Executive's full-time
employment hereunder for any reason other than (A) Disability or Retirement,  as
defined in Section 5 below, or (B) Termination for Cause as defined in Section 6
hereof; or
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         (ii) Executive's resignation from the Bank's employ, upon any

                  (A)  failure to elect or  reelect  or to appoint or  reappoint
                  Executive  as Senior  Vice  President  or failure to  nominate
                  Executive as a Director of the Bank,

                  (B)  material  change  in  Executive's  function,  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
                  Section 1, above,

                  (C) a relocation of Executive's  principal place of employment
                  by more than 30 miles from its location at the effective  date
                  of this Agreement, or a material reduction in the benefits and
                  perquisites  to the Executive  from those being provided as of
                  the effective date of this Agreement,

                   (D)  liquidation  or dissolution of the Bank or Company other
                  than   liquidations  or   dissolutions   that  are  caused  by
                  reorganizations that do not affect the status of Executive, or

                  (E) breach of this Agreement by the Bank.

Upon the occurrence of any event described in clauses (ii) (A), (B), (C), (D) or
(E), above,  Executive shall have the right to elect to terminate her employment
under this  Agreement by  resignation  upon sixty (60) days prior written notice
given  within a  reasonable  period of time not to exceed four  calendar  months
after the initial event giving rise to said right to elect.  Notwithstanding the
preceding sentence, in the event of a continuing breach of this Agreement by the
Bank, the Executive, after giving due notice within the prescribed time frame of
an initial event specified above, shall not waive any of her rights solely under
this  Agreement  and this  Section 4 by virtue  of the fact that  Executive  has
submitted her  resignation but has remained in the employment of the Bank and is
engaged  in good  faith  discussions  to  resolve  any  occurrence  of an  event
described in clauses (A), (B), (C), (D) and (E) above.

         (iii) Executive's  voluntary  resignation from the Bank's employ on the
effective  date of, or at any time  within six (6) months  following a Change in
Control.  For these  purposes,  a 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 1(a) of the  current  report on Form 8-K,  as in
effect on the date  hereof,  pursuant  to Section 13 or 15(d) of the  Securities
Exchange  Act of 1934  (the  "Exchange  Act");  or (ii)  results  in a Change in
Control of the Bank or the Company  within the meaning of the Home  Owners' Loan
Act  and  the  Rules  and  Regulations  promulgated  by  the  Office  of  Thrift
Supervision (or its  predecessor  agency),  as in effect on the date hereof;  or
(iii)  without  limitation  such a Change  in  Control  shall be  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,  of securities of
the Bank or the Company  representing 25% or more of the Bank's or the Company's
outstanding  securities,  except for any securities of the Bank purchased by the
Company in  connection  with the second step  conversion  of the mutual  holding
company parent of the Bank to the stock form and any securities purchased by the
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Bank's  employee  stock  ownership  plan  and  trust;  or  (b)  individuals  who
constitute  the Board on the date hereof (the  "Incumbent  Board") cease for any
reason to constitute at least a majority thereof,  provided,  however, that this
sub-section  (b) shall  not  apply 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's  stockholders  was approved by the same Nominating  Committee  serving
under an Incumbent Board, shall be, for purposes of this clause (b),  considered
as though she were a member of the  Incumbent  Board;  or (c) a proxy  statement
soliciting  proxies from stockholders of the Company,  by someone other than the
current  management of the Company,  seeking  stockholder  approval of a plan of
reorganization,  merger  or  consolidation  of the  Company  or Bank or  similar
transaction  with one or more  corporations as a result of which the outstanding
shares of the class of securities  then subject to 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 proxies
approving such plan of reorganization, merger or consolidation of the Company or
Bank are received and voted in favor of such transactions; or (d) a tender offer
is made for 25% or more of the outstanding securities of the Bank or Company and
shareholders  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.

         (b) Upon the  occurrence  of an  Event of  Termination,  on the Date of
Termination,  as defined in Section 7, the Bank shall pay Executive,  or, in the
event of her subsequent death, her beneficiary or beneficiaries,  or her estate,
as the case may be, as severance pay or liquidated damages, or both, a sum equal
to 299% of the Executive's "base amount" of compensation,  as defined in Section
280G(b)(3)  of the  Internal  Revenue  Code  ("Code").  At the  election  of the
Executive,  which  election is to be made on an annual basis during the month of
January,  and which election is irrevocable  for the year in which made and upon
the occurrence of an Event of Termination,  any payments shall be made in a lump
sum or paid monthly during the remaining  term of this  Agreement  following the
Executive's  termination.  In the event that no election is made, payment to the
Executive  will be made on a monthly  basis  during the  remaining  term of this
Agreement. Such payments shall not be reduced in the event the Executive obtains
other employment following termination of employment.

         (c) Upon the occurrence of an Event of Termination, the Bank will cause
to be continued  life,  medical,  dental and disability  coverage  substantially
identical  to the coverage  maintained  by the Bank for  Executive  prior to her
termination.  Such  coverage  shall  continue  for 36  months  from  the Date of
Termination.

         (d) Notwithstanding the preceding  paragraphs of this Section 4, in the
event that:

                  (i)      the  aggregate  payments  or  benefits  to be made or
                           afforded  to  Executive  under said  paragraphs  (the
                           "Termination Benefits") would be deemed to include an
                           "excess parachute  payment" under Section 280G of the
                           Code or any successor thereto, and
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                  (ii)     if  such  Termination  Benefits  were  reduced  to an
                           amount (the  "Non-Triggering  Amount"),  the value of
                           which is one dollar ($1.00) less than an amount equal
                           to the total  amount of  payments  permissible  under
                           Section 280G of the Code or any successor thereto,

                           then the Termination Benefits to be paid to Executive
                           shall  be so  reduced  so  as to be a  Non-Triggering
                           Amount.

5.       TERMINATION UPON RETIREMENT, DISABILITY OR DEATH

         Termination by the Bank of the Executive  based on  "Retirement"  shall
mean  termination  in  accordance  with  the  Bank's  retirement  policy  or  in
accordance with any retirement arrangement  established with Executive's consent
with respect to him. Upon  termination of Executive upon  Retirement,  Executive
shall be  entitled to all  benefits  under any  retirement  plan of the Bank and
other plans to which Executive is a party.

         In the event  Executive  is unable to  perform  her  duties  under this
Agreement  on a full-time  basis for a period of six (6)  consecutive  months by
reason of illness or other  physical  or mental  disability,  the  Employer  may
terminate  this  Agreement,  provided  that the  Employer  shall  continue to be
obligated to pay the  Executive  her Base Salary for the  remaining  term of the
Agreement,  or one year,  whichever is the longer  period of time,  and provided
further that any amounts  actually paid to Executive  pursuant to any disability
insurance or other  similar such program  which the Employer has provided or may
provide  on behalf of its  employees  or  pursuant  to any  workman's  or social
security  disability  program  shall reduce the  compensation  to be paid to the
Executive pursuant to this paragraph.

         In the event of Executive's death during the term of the Agreement, her
estate,  legal  representatives or named beneficiaries (as directed by Executive
in writing) shall be paid  Executive's  Base Salary as defined in Paragraph 3(a)
at the rate in effect at the time Executive's death for a period of one (1) year
from the date of the  Executive's  death,  and the  Employers  will  continue to
provide  medical,  dental,  family and other benefits  normally  provided for an
Executive's family for one (1) year after the Executive's death.

6.        TERMINATION FOR CAUSE

         The term "Termination for Cause" shall mean termination  because of the
Executive's personal dishonesty, incompetence, willful misconduct, any breach of
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  willful  violation of any law, rule, or regulation  (other than traffic
violations or similar  offenses) or final  cease-and-desist  order,  or material
breach of any provision of this Agreement. In determining incompetence, the acts
or omissions shall be measured  against  standards  generally  prevailing in the
savings institutions industry. For purposes of this paragraph, no act or failure
to act on the part of Executive  shall be considered  "willful"  unless done, or
omitted to be done, by the  Executive  not in good faith and without  reasonable
belief that the  Executive's  action or omission was in the best interest of the
Bank. Notwithstanding the foregoing,  Executive shall not be deemed to have been
Terminated  for Cause unless and until there shall have been  delivered to her a
copy of a  resolution  duly adopted by the  affirmative  vote of not less than a
majority  of the  disinterested  members  of the Board at a meeting of the Board
<PAGE>
called and held for that purpose  (after  reasonable  notice to Executive and an
opportunity  for him,  together  with  counsel,  to be heard  before the Board),
finding  that in the good faith  opinion of the Board,  Executive  was guilty of
conduct justifying  Termination for Cause and specifying the particulars thereof
in detail.  For these purposes,  reasonable  notice shall be deemed to have been
provided if delivered in person or by registered mail,  telegram,  or courier to
the  principal  residence of the  Executive no less than five (5) business  days
prior to such Board meeting. Notwithstanding the above, the Board shall have the
right to place Executive on paid administrative leave until the Board meeting at
which  Termination  for  Cause is  determined,  if to do so would be in the best
interest of the Bank. If in the good faith  opinion of the Board,  the Executive
is guilty of conduct  justifying  Termination for Cause, a Notice of Termination
shall be issued to Executive in accordance with Section 7 hereof.  The Executive
shall not have the  right to  receive  compensation  or other  benefits  for any
period  after  Termination  for  Cause,  except  in the  event  that  a  dispute
concerning the Termination  for Cause is resolved in favor of the Executive,  in
accordance  with Section 7(c). Any stock options  granted to Executive under any
stock  option  plan of the Bank,  the  Company or any  subsidiary  or  affiliate
thereof, shall become null and void effective upon Executive's receipt of Notice
of  Termination  for  Cause  pursuant  to  Section  7  hereof,  and shall not be
exercisable by Executive at any time  subsequent to such  Termination for Cause,
except  in the event  that a dispute  concerning  the  Termination  for Cause is
resolved in favor of the Executive, in accordance with Section 7(c) hereof.

7.       NOTICE

         (a) Any  purported  termination  by the Bank or by  Executive  shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this  Agreement,  a "Notice of  Termination"  shall mean a written  notice which
shall indicate the specific termination  provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances  claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.  Notice of Termination  must be delivered,  in person,  by registered
mail, telegram or courier to the principal administrative office of the Bank, in
the  case of  Notice  given  by the  Executive,  and in the  case of  Notice  of
Termination of the Executive,  to the  Executive's  principal place of residence
within 72 hours of the determination of termination.

         (b) "Date of Termination"  shall mean (A) if Executive's  employment is
terminated  for  Disability,  thirty (30) days after a Notice of  Termination is
given  (provided  that she shall not have  returned  to the  performance  of her
duties on a full-time basis during such thirty (30) day period),  and (B) if her
employment is terminated for any other reason,  the date specified in the Notice
of Termination  (which, in the case of a Termination for Cause, may be immediate
if, in the sole discretion of the Board of Directors,  immediate  termination is
in the best interest of the Bank).

         (c) If,  within  thirty  (30) days after any Notice of  Termination  is
given,  the party receiving such Notice of Termination  notifies the other party
that a dispute  exists  concerning  the  termination  (except upon the voluntary
termination by the Executive or in the event of Termination  for Cause, in which
case the Date of  Termination  shall be the date  specified in the Notice),  the
Date  of  Termination  shall  be the  date  on  which  the  dispute  is  finally
determined,  either by mutual  written  agreement of the  parties,  by a binding
arbitration  award,  or by a final  judgment,  order  or  decree  of a court  of
<PAGE>
competent  jurisdiction (the time for appeal having expired and no appeal having
been  perfected)  and  provided  further that the Date of  Termination  shall be
extended  by a notice of dispute  only if such notice is given in good faith and
the party  giving  such notice  pursues  the  resolution  of such  dispute  with
reasonable diligence.  Notwithstanding the pendency of any such dispute,  except
in the case of voluntary  termination by the Executive or Termination for Cause,
the Bank will continue to pay Executive her full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue Executive as a participant in all compensation, benefit and
insurance  plans in which she was  participating,  until the  dispute is finally
resolved in accordance  with this  Agreement,  provided such dispute is resolved
within the term of this  Agreement.  In the event of Termination  for Cause,  no
compensation  shall be paid to the Executive during the pendency of any dispute,
provided,  however,  that in the event such  dispute is finally  determined  (by
mutual written agreement of the parties, binding arbitration or final judgement,
order or decree of a court of competent jurisdiction) in favor of the Executive,
the  Executive  shall  be  entitled  to  all  compensation  previously  withheld
(including Base Salary, incentive compensation, stock options, and contributions
to qualified and nonqualifed  benefit plans) and reimbursement for any insurance
coverage purchased by the Executive to replace coverage  previously  provided by
the  Bank  pursuant  to the  terms of this  Agreement.  If such  dispute  is not
resolved  within the term of this  Agreement,  the Bank shall not be  obligated,
upon final resolution of such dispute,  to pay Executive  compensation and other
payments  accruing  beyond the term of this  Agreement.  Amounts paid under this
Section  shall be offset  against  or reduce  any other  amounts  due under this
Agreement.

8.       POST-TERMINATION OBLIGATIONS

         (a) All payments and benefits to Executive  under this Agreement  shall
be subject to Executive's compliance with paragraph (b) of this Section 8 during
the term of this  Agreement  and for one (1) full year after the  expiration  or
termination hereof.

         (b) Executive shall, upon reasonable  notice,  furnish such information
and  assistance  to the  Bank  as may  reasonably  be  required  by the  Bank in
connection  with  any  litigation  in  which  it or any of its  subsidiaries  or
affiliates is, or may become, a party.

9.       NON-COMPETITION

         (a) Upon any  termination  of  Executive's  employment  hereunder  as a
result of which the Bank is paying  Executive  benefits  under Section 4 of this
Agreement,  other than a  termination  coincident  to or  following  a Change in
Control,  Executive agrees not to compete with the Bank and/or the Company for a
period of one (1) year following such termination in any city, town or county in
which the Bank and/or the Company has an office or has filed an application  for
regulatory approval to establish an office,  determined as of the effective date
of such  termination,  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
and/or the Company. The parties hereto, recognizing that irreparable injury will
result to the Bank and/or the Company, its business and property in the event of
<PAGE>
Executive's  breach of this  Subsection 9(a) agree that in the event of any such
breach by Executive,  the Bank and/or the Company will be entitled,  in addition
to any other  remedies and damages  available,  to an injunction to restrain the
violation  hereof  by  Executive,   Executive's  partners,   agents,   servants,
employers,  employees and all persons  acting for or with  Executive.  Executive
represents and admits that Executive's experience and capabilities are such that
Executive can obtain employment in a business engaged in other lines and/or of a
different nature than the Bank and/or 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/or the
Company  from  pursuing  any other  remedies  available  to the Bank  and/or the
Company for such breach or threatened breach,  including the recovery of damages
from Executive.

         (b) Executive  recognizes  and  acknowledges  that the knowledge of the
business activities and plans for business activities of the Bank and affiliates
thereof,  as it may exist from time to time,  is a valuable,  special and unique
asset of the business of the Bank.  Executive will not, during or after the term
of her  employment,  disclose  any  knowledge of the past,  present,  planned or
considered  business activities of the Bank or affiliates thereof to any person,
firm, corporation,  or other entity for any reason or purpose whatsoever (except
for such  disclosure  as may be required  to be provided to any federal  banking
agency  with  jurisdiction  over the  Bank or  Executive).  Notwithstanding  the
foregoing,  Executive  may disclose any knowledge of 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,  and Executive may
disclose any  information  regarding  the Bank or the Company which is otherwise
publicly  available.  In the  event  of a breach  or  threatened  breach  by the
Executive of the  provisions  of this Section 9, the Bank will be entitled to an
injunction  restraining  Executive  from  disclosing,  in whole or in part,  the
knowledge of the past, present, planned or considered business activities of the
Bank or affiliates thereof, or from rendering any services to any person,  firm,
corporation,  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 the Bank for
such  breach or  threatened  breach,  including  the  recovery  of damages  from
Executive.

10.      SOURCE OF PAYMENTS

         All payments provided in this Agreement shall be timely paid in cash or
check from the  general  funds of the Bank.  The  Company,  however,  guarantees
payment and  provision of all amounts and  benefits  due  hereunder to Executive
and,  if such  amounts  and  benefits  due from the Bank are not timely  paid or
provided by the Bank, such amounts and benefits shall be paid or provided by the
Company.

11.      EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS

         This Agreement  contains the entire  understanding  between the parties
hereto and supersedes  any prior  employment  agreement  between the Bank or any
predecessor  of the Bank and  Executive,  except that this  Agreement  shall not
affect or operate to reduce any benefit or compensation inuring to the Executive
of  a  kind  elsewhere  provided.  No  provision  of  this  Agreement  shall  be
interpreted to mean that  Executive is subject to receiving  fewer benefits than
those available to her without reference to this Agreement.
<PAGE>
12.      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 and the Bank and their respective successors and assigns.

13.      MODIFICATION AND WAIVER

         (a)  This  Agreement  may  not be  modified  or  amended  except  by an
instrument in writing signed by the parties hereto.

         (b) 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 as to any act other than that specifically
waived.

14.      REQUIRED PROVISIONS

         (a) The  Bank's  Board  of  Directors  may  terminate  the  Executive's
employment at any time,  but any  termination  by the Bank's Board of Directors,
other than  Termination  for Cause,  shall not  prejudice  Executive's  right to
compensation  or other benefits under this  Agreement.  Executive shall not have
the  right to  receive  compensation  or other  benefits  for any  period  after
Termination for Cause as defined in Section 7 herein above.

         (b) If the  Executive  is  suspended  from  office  and/or  temporarily
prohibited from  participating  in the conduct of the Bank's affairs by a notice
served under Section  8(e)(3) (12 U.S.C.  ss.ss.  1818(e)(3)) or 8(g) (12 U.S.C.
ss. 1818(g)) of the Federal  Deposit  Insurance Act, as amended by the Financial
Institutions   Reform,   Recovery  and  Enforcement  Act  of  1989,  the  Bank's
obligations  under this  contract  shall be suspended as of the date of service,
unless  stayed by  appropriate  proceedings.  If the  charges  in the notice are
dismissed,  the Bank may in its  discretion (i) pay the Executive all or part of
the  compensation  withheld while their contract  obligations were suspended and
(ii)  reinstate  (in  whole  or in  part)  any of  the  obligations  which  were
suspended.

         (c) If the  Executive is removed  and/or  permanently  prohibited  from
participating  in the  conduct of the Bank's  affairs by an order  issued  under
Section 8(e) (12 U.S.C.  ss.ss.  1818(e)) or 8(g) (12 U.S.C. ss. 1818(g)) of the
Federal Deposit Insurance Act, as amended by the Financial  Institutions Reform,
Recovery and  Enforcement  Act of 1989,  all  obligations of the Bank under this
contract  shall  terminate  as of the  effective  date of the order,  but vested
rights of the contracting parties shall not be affected.
<PAGE>
         (d) If the Bank is in default as defined in Section 3(x) (12 U.S.C. ss.
1813(x)(1))  of the Federal  Deposit  Insurance Act, as amended by the Financial
Institutions  Reform,  Recovery and  Enforcement Act of 1989, all obligations of
the Bank under this contract shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.

         (e)  All   obligations  of  the  Bank  under  this  contract  shall  be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued  operation of the institution,  (i) by the Director,
at the time Federal  Deposit  Insurance  Corporation  ("FDIC") or the Resolution
Trust Corporation enters into an agreement to provide assistance to or on behalf
of the Bank; or (ii) by the Office of Thrift Supervision ("OTS") at the time the
OTS or its District Director  approves a supervisory  merger to resolve problems
related to the  operations of the Bank or when the Bank is determined by the OTS
or FDIC to be in an unsafe or unsound condition.  Any rights of the parties that
have already vested, however, shall not be affected by such action.

         (f) Any  payments  made to  Executive  pursuant to this  Agreement,  or
otherwise,  are subject to and  conditioned  upon their  compliance  with 12 USC
Section 1828(k) and any regulations promulgated thereunder.

15.      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.

16.      HEADINGS FOR REFERENCE ONLY

         The headings of sections and paragraphs  herein are included solely for
convenience of reference and shall not control the meaning or  interpretation of
any of the provisions of this Agreement.

17.      GOVERNING LAW

         This  Agreement  shall be governed by the laws of the State of Iowa but
only to the extent not superseded by federal law.

18.      ARBITRATION

         Any dispute or  controversy  arising under or in  connection  with this
Agreement shall be settled exclusively by arbitration,  conducted before a panel
of three arbitrators sitting in a location selected by the employee within fifty
(50) miles from the location of the Bank,  in  accordance  with the rules of the
American Arbitration  Association ("AAA") applicable to commercial  arbitrations
(the "Rules")  except as modified by this Section.  The Executive  shall appoint
one arbitrator,  the Bank shall appoint one  arbitrator,  and the third shall be
appointed by the two arbitrators  appointed by the parties. The third arbitrator
shall  serve  as  chairman  of  the  panel.  The  parties  shall  appoint  their
arbitrators  within thirty (30) days after the demand for arbitration is served,
failing which the AAA promptly  shall appoint a defaulting  party's  arbitrator,
and the two arbitrators  shall select the third  arbitrator  within fifteen (15)
days after their  appointment,  or if they  cannot  agree or fail to so appoint,
then the AAA promptly shall appoint the third arbitrator.  The arbitrators shall
render  their  decision  in writing  within  thirty (30) days after the close of
<PAGE>
evidence or other  termination of the proceedings by the panel, and the decision
of a majority of the  arbitrators  shall be final and binding  upon the parties.
The  Judgment  may be  entered  on the  arbitrator's  award in any court  having
jurisdiction;  provided,  however,  that  Executive  shall be  entitled  to seek
specific  performance  of her  right to be paid  until  the Date of  Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement. The costs of arbitration,  including the fees of AAA, shall
be borne as directed by decision of the panel.

19.      PAYMENT OF LEGAL FEES

         All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of  interpretation  relating to this Agreement shall be paid
or reimbursed by the Bank,  provided that the dispute or interpretation has been
settled by Executive and the Bank or resolved in the Executive's favor.

20.      INDEMNIFICATION

         The Bank shall provide  Executive  (including her heirs,  executors and
administrators)   with  coverage  under  a  standard  directors'  and  officers'
liability  insurance policy at its expense,  and shall indemnify  Executive (and
her heirs,  executors and  administrators) to the fullest extent permitted under
federal law against all expenses and liabilities  reasonably  incurred by her in
connection  with or arising out of any action,  suit or  proceeding in which she
may be involved  by reason of her having been a trustee,  director or officer of
the Bank (whether or not she  continues to be a trustee,  director or officer at
the  time  of  incurring  such  expenses  or  liabilities),  such  expenses  and
liabilities  to  include,  but not be limited  to,  judgments,  court  costs and
reasonable  attorneys'  fees  and  the  cost  of  reasonable  settlements  (such
settlements  must be  approved by the Bank's  Board).  If such  action,  suit or
proceeding is brought against Executive in her capacity as an officer,  trustee,
or  director  of the Bank,  however,  such  indemnification  shall not extend to
matters as to which  Executive  is  finally  adjudged  to be liable for  willful
misconduct in the performance of her duties.

21.      SUCCESSOR TO THE BANK

         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 Bank or the Company,  expressly
and  unconditionally to assume and agree to perform the Bank's obligations under
this Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.


<PAGE>



                                   SIGNATURES

         IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement
to be executed and their seals to be affixed  hereunto by their duly  authorized
officers,  and Executives have signed this Agreement,  on the day and date first
above written.

ATTEST:                                           FIRST FEDERAL BANK

                                             By:
-----------                                       ----------------------------
Secretary                                         Name:
                                                  Title:


ATTEST:                                           FIRST FEDERAL BANKSHARES, INC.


                                             By:
-----------                                       ----------------------------
Secretary                                         Name:
                                                  Title:


WITNESS:                                          EXECUTIVE:



                                         By:
-----------                                       ----------------------------



<PAGE>

                                    Exhibit A

         Duties of the Senior Vice President:

         Conducts and  supervises  broad  activities  involved in promotion  and
handling  of savings  accounts.  Supervises  work of savings  officers  and,  in
general,  the handling of all account  holders.  May  coordinate  branch savings
operations and many supervise other departments.