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                                                                    EXHIBIT 10.6

                              EMPLOYMENT AGREEMENT

                  AGREEMENT, dated this 21st day of July 2003, between CFS
Bancorp, Inc. (the "Corporation"), a Delaware corporation, and John T. Stephens
(the "Executive").

                                   WITNESSETH

                  WHEREAS, the Executive is presently an officer of the
Corporation and Citizens Financial Services, FSB (the "Bank") (together, the
"Employers");

                  WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers;

                  WHEREAS, the Corporation and the Bank desire to enter into
separate agreements with the Executive with respect to his employment by each of
the Employers; and

                  WHEREAS, in order to induce the Executive to remain in the
employ of the Employers and in consideration of the Executive's agreeing to
remain in the employ of the Employers, the parties desire to specify the
severance benefits which shall be due the Executive by the Corporation in the
event that his employment with the Corporation is terminated under specified
circumstances;

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

1)       DEFINITIONS.

         The following words and terms shall have the meanings set forth below
for the purposes of this Agreement:

         a)       Average Annual Compensation. The Executive's "Average Annual
                  Compensation" for purposes of this Agreement shall be deemed
                  to mean the average level of compensation paid to the
                  Executive by the Employers or any subsidiary thereof during
                  the most recent five taxable years preceding the Date of
                  Termination and which was either (i) included in the
                  Executive's gross income for tax purposes, including but not
                  limited to Base Salary, bonuses and amounts taxable to the
                  Executive under any qualified or non-qualified employee
                  benefit plans of the Employers, or (ii) deferred at the
                  election of the Executive.

         b)       Base Salary. "Base Salary" shall have the meaning set forth in
                  Section 4(a) hereof.

         c)       Cause. Termination of the Executive's employment for "Cause"
                  shall mean termination because of personal dishonesty,
                  incompetence, willful misconduct, 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.

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         d)       Change in Control. "Change in Control" means the occurrence of
                  any of the following: (i) an event that would be required to
                  be reported in response to Item 1(a) of Form 8-K or Item 6(e)
                  of Schedule 14A of Regulation 14A pursuant to the Securities
                  and Exchange Act of 1934 Act, as amended (1934 Act), or any
                  successor thereto, whether or not any class of securities of
                  the Corporation is registered under the 1934 Act; (ii) any
                  "person" is or becomes the "beneficial owner" (as defined in
                  Rule 13d-3 under the 1934 Act), directly or indirectly, of
                  securities of the Corporation representing 20% or more of the
                  combined voting power of the Corporation's then outstanding
                  securities; or (iii) during any period of thirty-six
                  consecutive months, individuals who at the beginning of such
                  period constitute the Board of Directors of the Corporation
                  cease for any reason to constitute at least a majority thereof
                  unless the election, or the nomination for election by
                  stockholders, of each new director was approved by a vote of
                  at least two-thirds of the directors then still in office who
                  were directors at the beginning of the period.

                  i)       For purposes of the definition of "Change in
                           Control," a Person or group of Persons does not
                           include the CFS Bancorp, Inc. Employee Stock
                           Ownership Plan Trust which forms a part of the CFS
                           Bancorp, Inc. Employee Stock Ownership Plan (the
                           "ESOP"), or any other employee benefit plan,
                           subsidiary or affiliate of the Corporation, and the
                           outstanding shares of common stock of the
                           Corporation, on a fully diluted basis, include all
                           shares owned by the ESOP, whether allocated or
                           unallocated to the accounts of participants,
                           thereunder.

                  ii)      For purposes of the definition of "Change in
                           Control," the term "Person" means any natural person,
                           proprietorship, partnership, corporation, limited
                           liability company, organization, firm, business,
                           joint venture, association, trust or other entity and
                           any government agency, body or authority.

         e)       Code. "Code" shall mean the Internal Revenue Code of 1986, as
                  amended.

         f)       Date of Termination. "Date of Termination" shall mean (i) if
                  the Executive's employment is terminated for Cause or for
                  Disability, the date specified in the Notice of Termination,
                  and (ii) if the Executive's employment is terminated for any
                  other reason, the date on which a Notice of Termination is
                  given or as specified in such Notice.

         g)       Disability. Termination by the Corporation of the Executive's
                  employment based on "Disability" shall mean termination
                  because of any physical or mental impairment which qualifies
                  the Executive for disability benefits under the applicable
                  long-term disability plan maintained by the Employers or any
                  subsidiary or, if no such plan applies, which would qualify
                  the Executive for disability benefits under the Federal Social
                  Security System.

         h)       Good Reason. Termination by the Executive of the Executive's
                  employment for "Good Reason" shall mean termination by the
                  Executive within twenty-four (24) months following a Change in
                  Control of the Corporation based on:

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                           (i)      Without the Executive's express written
                                    consent, the failure to elect or to re-elect
                                    or to appoint or to re-appoint the Executive
                                    to the offices of Executive Vice President,
                                    Treasurer and Chief Financial Officer of the
                                    Employers or a material adverse change made
                                    by the Employers in the Executive's
                                    functions, duties or responsibilities as
                                    Executive Vice President, Treasurer and
                                    Chief Financial Officer of the Employers;

                           (ii)     Without the Executive's express written
                                    consent, a reduction by either of the
                                    Employers in the Executive's Base Salary as
                                    the same may be increased from time to time
                                    or, except to the extent permitted by
                                    Section 4(b) hereof, a reduction in the
                                    package of fringe benefits provided to the
                                    Executive, taken as a whole;

                           (iii)    The principal executive office of either of
                                    the Employers is relocated outside of the
                                    Munster, Indiana area or, without the
                                    Executive's express written consent, either
                                    of the Employers require the Executive to be
                                    based anywhere other than an area in which
                                    the Employers' principal executive office is
                                    located, except for required travel on
                                    business of the Employers to an extent
                                    substantially consistent with the
                                    Executive's present business travel
                                    obligations;

                           (iv)     Any purported termination of the Executive's
                                    employment for Disability or Retirement
                                    which is not effected pursuant to a Notice
                                    of Termination satisfying the requirements
                                    of paragraph (j) below; or

                           (v)      The failure by the Corporation to obtain the
                                    assumption of and agreement to perform this
                                    Agreement by any successor.

         i)       IRS. "IRS" shall mean the Internal Revenue Service.

         j)       Notice of Termination. Any purported termination of the
                  Executive's employment by the Corporation for any reason,
                  including without limitation for Cause, Disability or
                  Retirement, or by the Executive for any reason, including
                  without limitation for Good Reason, shall be communicated by
                  written "Notice of Termination" to the other party hereto. For
                  purposes of this Agreement, a "Notice of Termination" shall
                  mean a dated notice which (i) indicates the specific
                  termination provision in this Agreement relied upon, (ii) sets
                  forth in reasonable detail the facts and circumstances claimed
                  to provide a basis for termination of the Executive's
                  employment under the provision so indicated, (iii) specifies a
                  Date of Termination, which shall be not less than thirty (30)
                  nor more than ninety (90) days after such Notice of
                  Termination is given, except in the case of the Corporation's
                  termination of the Executive's employment for Cause, which
                  shall be effective immediately; and (iv) is given in the
                  manner specified in Section 11 hereof.

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         k)       Retirement. "Retirement" shall mean voluntary termination by
                  the Executive after the Executive attains the age fifty-five
                  (55), with at least five years of active service.

2)       TERM OF EMPLOYMENT.

         a)       The Corporation hereby employs the Executive as Executive as
                  Executive Vice President, Treasurer and Chief Financial
                  Officer, and the Executive hereby accepts said employment and
                  agrees to render such services to the Corporation on the terms
                  and conditions set forth in this Agreement. The term of this
                  Agreement shall be a period of three years commencing as of
                  the date hereof (the "Commencement Date"), subject to earlier
                  termination as provided herein. Beginning on the day following
                  the Commencement Date, and on each day thereafter, the term of
                  this Agreement shall be extended for a period of one day in
                  addition to the then-remaining term, provided that the
                  Corporation has not given notice to the Executive in writing
                  at least 60 days prior to such day that the term of this
                  Agreement shall not be extended further. Reference herein to
                  the term of this Agreement shall refer to both such initial
                  term and such extended terms. The Board of Directors of the
                  Corporation shall review on a periodic basis (and no less
                  frequently than annually) whether to permit further extensions
                  of the term of this Agreement. As part of such review, the
                  Board of Directors shall consider all relevant factors,
                  including the Executive's performance hereunder, and shall
                  either expressly approve further extensions of the time of
                  this Agreement or decide to provide notice to the contrary.

         b)       During the term of this Agreement, the Executive shall perform
                  such executive services for the Corporation as may be
                  consistent with his titles and from time to time assigned to
                  him by the Corporation's Board of Directors. The Executive
                  further agrees to serve without additional compensation as an
                  officer and director of any of the Corporation's subsidiaries
                  and agrees that any amounts received from such corporation may
                  be offset against the amounts due hereunder. In addition, it
                  is agreed that the Corporation may assign the Executive to one
                  of its subsidiaries for payroll purposes.

3)       LOYALTY, CONFIDENTIALITY AND NON-COMPETITION

         a)       The Executive shall devote his or her full time and best
                  efforts to the performance of his employment under this
                  Agreement. During the term of this Agreement, the Executive
                  shall not, at any time or place, either directly or indirectly
                  engage in any business or activity in competition with the
                  business affairs or interests of the Corporation or be a
                  director, officer or consultant to any bank, savings and loan
                  association, credit union, thrift, savings bank, or similar
                  institution in the Chicago CMSA.

         b)       For a period of one year from the date of voluntary
                  termination, or termination for Cause, the Executive shall
                  not, at any time or place, either directly or indirectly
                  engage in any business or activity in competition with the
                  business affairs or interests of the Corporation

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                  or be a director, officer or consultant to any bank, savings
                  and loan association, credit union, thrift, savings bank, or
                  similar institution in the Chicago CMSA.

         c)       For purposes of this Agreement, directly or indirectly
                  engaging in any business activity in competition with the
                  business or affairs of the Corporation includes, but is not
                  limited to, serving or acting as an owner, partner, agent,
                  beneficiary, or employee of any person, firm or corporate
                  entity so engaged; except that nothing herein contained shall
                  be deemed to prevent or limit the right of Executive to invest
                  any of his surplus funds in the capital stock or other
                  securities of any corporation whose stock or securities are
                  publicly owned or are regularly traded on any public exchange,
                  nor shall anything herein contained be deemed to prevent
                  Executive from investing or limit Executive's right to invest
                  his surplus funds in real estate.

         d)       All information relating to business of the Employers
                  including, but not limited to, that business obtained or
                  serviced by Executive and all customer listings, contact
                  lists, expiration cards, asset reports, instruments,
                  documents, papers and other material used in connection with
                  such business, shall be the exclusive property of the
                  Employers. Executive shall keep all such information and
                  material confidential; none of it will be copied, reproduced
                  or duplicated without the express written permission of the
                  Employers, and Executive shall return all material containing
                  such information to the Employers upon their request or upon
                  termination of employment. Executive also agrees that he or
                  she will not utilize the confidential information or trade
                  secrets of the Employers, either directly or indirectly, for
                  any purposes except performance of the Executive's
                  responsibilities and in furtherance of the Employers'
                  business, unless otherwise expressly authorized by the
                  Employers in writing in advance.

         e)       Executive agrees that, during his employment, and for a period
                  of three (3) years following the date of his involuntary
                  termination of employment for Cause, or his voluntary
                  termination without Good Reason, the Executive:

                  i)       will not solicit any of the Employers' past or
                           current customers or clients for the benefit of
                           anyone other than the Employers or their affiliates;

                  ii)      will not divulge the names of any of the Employers'
                           past or then current customers to any other person,
                           corporation or entity;

                  iii)     will not divulge to anyone, except the Employers or
                           their representatives, any information regarding
                           their management strategies, marketing information or
                           goals, policies and/or other information regarding
                           the affairs of the Employer, all of which Executive
                           is hereby obligated to keep secret, however and
                           whenever such information comes to his or her
                           attention; and

                  iv)      will not, either directly or indirectly, induce or
                           solicit any person to leave the employ of the
                           Employers.

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4)       COMPENSATION AND BENEFITS.

         a)       The Employers shall compensate and pay the Executive for his
                  services during the term of this Agreement at a minimum base
                  salary of $223,496 per year ("Base Salary"), which may be
                  increased from time to time in such amounts as may be
                  determined by the Boards of Directors of the Employers and may
                  not be decreased without the Executive's express written
                  consent. In addition to his Base Salary, the Executive shall
                  be entitled to receive during the term of this Agreement such
                  bonus payments as may be determined by the Boards of Directors
                  of the Employers.

         b)       During the term of this Agreement, the Executive shall be
                  entitled to participate in and receive the benefits of any
                  pension or other retirement benefit plan, profit sharing,
                  stock option, employee stock ownership, or other plans,
                  benefits and privileges given to employees and executives of
                  the Employers, to the extent commensurate with his then duties
                  and responsibilities, as fixed by the Boards of Directors of
                  the Employers. The Corporation shall not make any changes in
                  such plans, benefits or privileges which would adversely
                  affect the Executive's rights or benefits thereunder, unless
                  such change occurs pursuant to a program applicable to all
                  executive officers of the Corporation and does not result in a
                  proportionately greater adverse change in the rights of or
                  benefits to the Executive as compared with any other executive
                  officer of the Corporation. Nothing paid to the Executive
                  under any plan or arrangement presently in effect or made
                  available in the future shall be deemed to be in lieu of the
                  salary payable to the Executive pursuant to Section 4(a)
                  hereof.

         c)       During the term of this Agreement, the Executive shall be
                  entitled to paid annual vacation in accordance with the
                  policies as established from time to time by the Boards of
                  Directors of the Employers. The Executive shall not be
                  entitled to receive any additional compensation from the
                  Employers for failure to take a vacation, nor shall the
                  Executive be able to accumulate unused vacation time from one
                  year to the next, except to the extent authorized by the
                  Boards of Directors of the Employers.

         d)       In the event the Executive's employment is terminated due to
                  Disability or Retirement, the Employers shall provide
                  continued life, medical, dental and disability coverage
                  substantially identical to the coverage maintained by the
                  Employers for the Executive immediately prior to his
                  termination. Such coverage such spouse attains shall cease
                  upon the expiration of the remaining term of this Agreement.

         e)       In the event of the Executive's death during the term of this
                  Agreement, the Employers shall provide to the Executive's
                  spouse continued medical and dental coverage substantially
                  identical to the coverage maintained by the Employers for the
                  Executive immediately prior to his death until such spouse
                  attains the age of 65.

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         f)       The Executive's compensation, benefits and expenses shall be
                  paid by the Corporation and the Bank in the same proportion as
                  the time and services actually expended by the Executive on
                  behalf of each respective Employer.

         g)       During the term of the Agreement, the Employers will provide
                  suitable office space, desk, chairs, filing cabinets,
                  telephones and other usual and customary office furniture,
                  fixtures and equipment adequate for the efficient performance
                  of the duties assigned to the Executive.

         h)       During the term of this Agreement, the Employers shall provide
                  to the Executive, at the Employer's cost, all perquisites
                  which other senior executives of the Company are generally
                  entitled to receive, including the payment of his or her
                  annual dues at the Briar Ridge Country Club.

5)       EXPENSES. The Employers shall reimburse the Executive or otherwise
         provide for or pay for all reasonable expenses incurred by the
         Executive in furtherance of or in connection with the business of the
         Employers, including, but not by way of limitation, automobile expenses
         and other traveling expenses, and all reasonable entertainment expenses
         (whether incurred at the Executive's residence, while traveling or
         otherwise), subject to such reasonable documentation and other
         limitations as may be established by the Boards of Directors of the
         Employers. If such expenses are paid in the first instance by the
         Executive, the Employers shall reimburse the Executive therefor.

6)       TERMINATION.

         a)       The Corporation shall have the right, at any time upon prior
                  Notice of Termination, to terminate the Executive's employment
                  hereunder for any reason, including without limitation
                  termination for Cause, Disability or Retirement, and the
                  Executive shall have the right, upon prior Notice of
                  Termination, to terminate his employment hereunder for any
                  reason.

         b)       In the event that (i) the Executive's employment is terminated
                  by the Corporation for Cause or (ii) the Executive terminates
                  his employment hereunder other than for Disability,
                  Retirement, death or Good Reason, the Executive shall have no
                  right pursuant to this Agreement to compensation or other
                  benefits for any period after the applicable Date of
                  Termination.

         c)       In the event that the Executive's employment is terminated as
                  a result of Disability, Retirement or the Executive's death
                  during the term of this Agreement, the Executive shall have no
                  right pursuant to this Agreement to compensation or other
                  benefits for any period after the applicable Date of
                  Termination, except as provided for in Sections 4(d) and 4(e)
                  hereof.

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         d)       In the event that (i) the Executive's employment is terminated
                  by the Corporation for other than Cause, Disability,
                  Retirement or the Executive's death or (ii) such employment is
                  terminated by the Executive (a) due to a material breach of
                  this Agreement by the Corporation, which breach has not been
                  cured within fifteen (15) days after a written notice of
                  non-compliance has been given by the Executive to the
                  Employers, or (b) for Good Reason, then the Corporation shall:

                  i)       pay to the Executive, in either thirty-six (36) equal
                           monthly installments beginning with the first
                           business day of the month following the Date of
                           Termination or in a lump sum within five business
                           days of the Date of Termination (at the Executive's
                           election), a cash severance amount equal to three (3)
                           times that portion of the Executive's Average Annual
                           Compensation paid by the Corporation, and

                  ii)      maintain and provide for a period ending at the
                           earlier of (i) the expiration of the remaining term
                           of employment pursuant hereto prior to the Notice of
                           Termination or (ii) the date of the Executive's
                           full-time employment by another employer (provided
                           that the Executive is entitled under the terms of
                           such employment to benefits substantially similar to
                           those described in this subparagraph (B)), at no cost
                           to the Executive, the Executive's continued
                           participation in all group insurance, life insurance,
                           health and accident insurance, disability insurance
                           and other employee benefit plans, programs and
                           arrangements offered by the Corporation in which the
                           Executive was entitled to participate immediately
                           prior to the Date of Termination (excluding (x) stock
                           option and restricted stock plans of the Employers,
                           (y) bonuses and other items of cash compensation
                           included in Average Annual Compensation, and (z)
                           other benefits, or portions thereof, included in
                           Average Annual Compensation), provided that in the
                           event that the Executive's participation in any plan,
                           program or arrangement as provided in this
                           subparagraph (B) is barred, or during such period any
                           such plan, program or arrangement is discontinued or
                           the benefits thereunder are materially reduced, the
                           Corporation shall arrange to provide the Executive
                           with benefits substantially similar to those which
                           the Executive was entitled to receive under such
                           plans, programs and arrangements immediately prior to
                           the Date of Termination.

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7)       PAYMENT OF ADDITIONAL BENEFITS UNDER CERTAIN CIRCUMSTANCES.

         a)       If the payments and benefits pursuant to Section 4 hereof,
                  either alone or together with other payments and benefits
                  which the Executive has the right to receive from the
                  Employers (including, without limitation, the payments and
                  benefits which the Executive would have the right to receive
                  from the Bank pursuant to Section 4 of the Agreement between
                  the Bank and the Executive dated this even date ("Bank
                  Agreement"), before giving effect to any reduction in such
                  amounts pursuant to Section 7 of the Bank Agreement), would
                  constitute a "parachute payment" as defined in Section
                  280G(b)(2) of the Code (the "Initial Parachute Payment," which
                  includes the amounts paid pursuant to clause (A) below), then
                  the Corporation shall pay to the Executive, in thirty-six (36)
                  equal monthly installments beginning with the first business
                  day of the month following the Date of Termination or in a
                  lump sum within five business days of the Date of Termination
                  (at the Executive's election), a cash amount equal to the sum
                  of the following:

                  i)       the amount by which the payments and benefits that
                           would have otherwise been paid by the Bank to the
                           Executive pursuant to Section 4 of the Bank Agreement
                           are reduced by the provisions of Section 7 of the
                           Bank Agreement;

                  ii)      twenty (20) percent (or such other percentage equal
                           to the tax rate imposed by Section 4999 of the Code)
                           of the amount by which the Initial Parachute Payment
                           exceeds the Executive's "base amount" from the
                           Employers, as defined in Section 280G(b)(3) of the
                           Code, with the difference between the Initial
                           Parachute Payment and the Executive's base amount
                           being hereinafter referred to as the "Initial Excess
                           Parachute Payment";

                  iii)     such additional amount (tax allowance) as may be
                           necessary to compensate the Executive for the payment
                           by the Executive of state and federal income and
                           excise taxes on the payment provided under clause (B)
                           above and on any payments under this clause (C). In
                           computing such tax allowance, the payment to be made
                           under clause (B) above shall be multiplied by the
                           "gross up percentage" ("GUP"). The GUP shall be
                           determined as follows:

                                    GUP = Tax Rate/1 - Tax Rate

                  iv)      Tax Rate

                           The Tax Rate for purposes of computing the GUP shall
                           be the highest marginal federal and state income and
                           employment-related tax rate, including any applicable
                           excise tax rate, applicable to the Executive in the
                           year in which the payment under clause (B) above is
                           made.

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                  v)       Notwithstanding the foregoing, if it shall
                           subsequently be determined in a final judicial
                           determination or a final administrative settlement to
                           which the Executive is a party that the actual excess
                           parachute payment as defined in Section 280G(b)(1) of
                           the Code is different from the Initial Excess
                           Parachute Payment (such different amount being
                           hereafter referred to as the "Determinative Excess
                           Parachute Payment"), then the Corporation's
                           independent tax counsel or accountants shall
                           determine the amount (the "Adjustment Amount") which
                           either the Executive must pay to the Corporation or
                           the Corporation must pay to the Executive in order to
                           put the Executive (or the Corporation, as the case
                           may be) in the same position the Executive (or the
                           Corporation, as the case may be) would have been if
                           the Initial Excess Parachute Payment had been equal
                           to the Determinative Excess Parachute Payment. In
                           determining the Adjustment Amount, the independent
                           tax counsel or accountants shall take into account
                           any and all taxes (including any penalties and
                           interest) paid by or for the Executive or refunded to
                           the Executive or for the Executive's benefit. As soon
                           as practicable after the Adjustment Amount has been
                           so determined, the Corporation shall pay the
                           Adjustment Amount to the Executive or the Executive
                           shall repay the Adjustment Amount to the Corporation,
                           as the case may be.

         b)       In each calendar year that the Executive receives payments of
                  benefits under this Section 7, the Executive shall report on
                  his state and federal income tax returns such information as
                  is consistent with the determination made by the independent
                  tax counsel or accountants of the Corporation as described
                  above. The Corporation shall indemnify and hold the Executive
                  harmless from any and all losses, costs and expenses
                  (including without limitation, reasonable attorneys' fees,
                  interest, fines and penalties) which the Executive incurs as a
                  result of so reporting such information. The Executive shall
                  promptly notify the Company in writing whenever the Executive
                  receives notice of the institution of a judicial or
                  administrative proceeding, formal or informal, in which the
                  federal tax treatment under Section 4999 of the Code of any
                  amount paid or payable under this Section 7 is being reviewed
                  or is in dispute. The Corporation shall assume control, at its
                  expense, over all legal and accounting matters pertaining to
                  such federal tax treatment (except to the extent necessary or
                  appropriate for the Executive to resolve any such proceeding
                  with respect to any matter unrelated to amounts paid or
                  payable pursuant to this Section) and the Executive shall
                  cooperate fully with the Corporation in any such proceeding.
                  The Executive shall not enter into any compromise or
                  settlement or otherwise prejudice any rights the Corporation
                  may have in connection therewith without the prior consent of
                  the Corporation.

8)       MITIGATION; EXCLUSIVITY OF BENEFITS.

         a)       The Executive shall not be required to mitigate the amount of
                  any benefits hereunder by seeking other employment or
                  otherwise, nor shall the amount of any such benefits be
                  reduced by any compensation earned by the Executive as a
                  result of employment by another employer after the Date of
                  Termination or otherwise.

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         b)       The specific arrangements referred to herein are not intended
                  to exclude any other benefits which may be available to the
                  Executive upon a termination of employment with the Employers
                  pursuant to employee benefit plans of the Employers or
                  otherwise.

9)       WITHHOLDING. All payments required to be made by the Corporation
         hereunder to the Executive shall be subject to the withholding of such
         amounts, if any, relating to tax and other payroll deductions as the
         Corporation may reasonably determine should be withheld pursuant to any
         applicable law or regulation.

10)      ASSIGNABILITY. The Corporation may assign this Agreement and its rights
         and obligations hereunder in whole, but not in part, to any
         corporation, bank or other entity with or into which the Corporation
         may hereafter merge or consolidate or to which the Corporation may
         transfer all or substantially all of its assets, if in any such case
         said corporation, bank or other entity shall by operation of law or
         expressly in writing assume all obligations of the Corporation
         hereunder as fully as if it had been originally made a party hereto,
         but may not otherwise assign this Agreement or its rights and
         obligations hereunder. The Executive may not assign or transfer this
         Agreement or any rights or obligations hereunder.

11)      NOTICE. For the purposes of this Agreement, notices and all other
         communications provided for in this Agreement shall be in writing and
         shall be deemed to have been duly given when delivered or mailed by
         certified or registered mail, return receipt requested, postage
         prepaid, addressed to the respective addresses set forth below:

         a)       To the Corporation:        Secretary
                                             CFS Bancorp, Inc.
                                             707 Ridge Road
                                             Munster, Indiana  46321

         b)       To the Bank:               Secretary
                                             Citizens Financial Services, FSB
                                             707 Ridge Road
                                             Munster, Indiana  46321

         c)       To the Executive:          John T. Stephens
                                             1940 Birchwood Court
                                             Munster, Indiana 46321

12)      AMENDMENT; WAIVER. No provisions of this Agreement may be modified,
         waived or discharged unless such waiver, modification or discharge is
         agreed to in writing and signed by the Executive and such officer or
         officers as may be specifically designated by the Board of Directors of
         the Corporation to sign on its behalf. No waiver by any party hereto at
         any time of any breach by any other party hereto of, or compliance
         with, any condition or provision of this

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         Agreement to be performed by such other party shall be deemed a waiver
         of similar or dissimilar provisions or conditions at the same or at any
         prior or subsequent time.

13)      GOVERNING LAW. The validity, interpretation, construction and
         performance of this Agreement shall be governed by the laws of the
         United States where applicable and otherwise by the substantive laws of
         the State of Indiana.

14)      NATURE OF OBLIGATIONS. Nothing contained herein shall create or require
         the Corporation to create a trust of any kind to fund any benefits
         which may be payable hereunder, and to the extent that the Executive
         acquires a right to receive benefits from the Corporation hereunder,
         such right shall be no greater than the right of any unsecured general
         creditor of the Corporation.

15)      HEADINGS. The section headings contained in this Agreement are for
         reference purposes only and shall not affect in any way the meaning or
         interpretation of this Agreement.

16)      VALIDITY. The invalidity or unenforceability of any provision of this
         Agreement shall not affect the validity or enforceability of any other
         provisions of this Agreement, which shall remain in full force and
         effect.

17)      COUNTERPARTS. This Agreement may be executed in one or more
         counterparts, each of which shall be deemed to be an original but all
         of which together will constitute one and the same instrument.

18)      REGULATORY PROHIBITION. Notwithstanding any other provision of this
         Agreement to the contrary, any payments made to the Executive 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, including 12 C.F.R. Part 359. In the event of the
         Executive's termination of employment with the Bank for Cause, all
         employment relationships and managerial duties with the Bank shall
         immediately cease regardless of whether the Executive remains in the
         employ of the Corporation following such termination. Furthermore,
         following such termination for Cause, the Executive will not, directly
         or indirectly, influence or participate in the affairs or the
         operations of the Bank.

19)      PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF BENEFITS. In the
         event any dispute or controversy arising under or in connection with
         the Executive's termination is resolved in favor of the Executive,
         whether by judgment, arbitration or settlement, the Executive shall be
         entitled to the payment of (a) all legal fees incurred by the Executive
         in resolving such dispute or controversy, and (2) any back-pay,
         including Base Salary, bonuses and any other cash compensation, fringe
         benefits and any compensation and benefits due to the Executive under
         this Agreement.

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<PAGE>

20)      INDEMNIFICATION. The Corporation shall provide the Executive (including
         his heirs, executors and administrators) with coverage under a standard
         directors' and officers' liability insurance policy at its expense, or
         in lieu thereof, shall indemnify the Executive (and his heirs,
         executors and administrators) to the fullest extent permitted under
         Delaware law against all expenses and liabilities reasonably incurred
         by him in connection with or arising out of any action, suit or
         proceeding in which he may be involved by reason of his having been a
         director or officer of the Corporation (whether or not he continues to
         be a director or officer at the time of incurring such expenses or
         liabilities). Such expenses and liabilities shall include, but shall
         not be limited to, judgments, court costs and attorneys' fees and the
         cost of reasonable settlements.

21)      ENTIRE AGREEMENT. This Agreement embodies the entire agreement between
         the Corporation and the Executive with respect to the matters agreed to
         herein. All prior agreements between the Corporation and the Executive
         with respect to the matters agreed to herein are hereby superseded and
         shall have no force or effect. Notwithstanding the foregoing, nothing
         contained in this Agreement shall affect the agreement of even date
         being entered into between the Bank and the Executive.

         IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.

Attest:                                                 CFS BANCORP, INC.

/s/ Monica F. Sullivan                                  By: James W. Prisby
----------------------                                      --------------------

                                                        EXECUTIVE

                                                        /s/ John T. Stephens
                                                        ------------------------
                                                        John T. Stephens

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