EXHIBIT 10.6

                               FIRST AMENDMENT TO

                      AMENDED DIRECTOR RETIREMENT AGREEMENT


     First Amendment,  dated as of _________ __, 2008 (the "Amendment"),  to the
Amended Director Retirement  Agreement,  dated as of March 15, 2004 (as amended,
the "Director  Retirement  Agreement"),  by and among  Citizens  South Bank (the
"Bank") and  _______________  (the "Director").  Capitalized terms which are not
defined  herein  shall  have  the same  meaning  as set  forth  in the  Director
Retirement Agreement.

                              W I T N E S S E T H:

     WHEREAS,  the parties desire to amend the Director Retirement  Agreement to
comply with the final  regulations  issued in April 2007 by the Internal Revenue
Service under Section 409A of the Internal Revenue Code of 1986, as amended (the
"Code"); and

     WHEREAS,  pursuant to Section 8.1 of the Director Retirement Agreement, the
parties  to the  Director  Retirement  Agreement  desire to amend  the  Director
Retirement Agreement;

     NOW,  THEREFORE,  in consideration of the premises,  the mutual  agreements
herein set forth and such other consideration the sufficiency of which is hereby
acknowledged, the Bank and the Director hereby agree as follows:

     Section 1. Amendment to Section 1.4 of the Director  Retirement  Agreement.
The  definition  of Change in Control in Section 1.4 of the Director  Retirement
Agreement is hereby amended to read in its entirety as follows:

          "Change in Control means a change in the  ownership of Citizens  South
     Banking  Corporation (the "Company") or the Bank, a change in the effective
     control  of the  Company  or the Bank or a  change  in the  ownership  of a
     substantial  portion of the assets of the Company or the Bank, in each case
     as provided under Section 409A of the Code and the regulations thereunder."

     Section 2. Amendment to Section 1.5 of the Director  Retirement  Agreement.
The definition of Disability in Section 1.5 of the Director Retirement Agreement
is hereby amended to read in its entirety as follows:

          "Disability  means  the  Director  (i)  is  unable  to  engage  in any
     substantial  gainful  activity  by  reason  of any  medically  determinable
     physical or mental  impairment  which can be expected to result in death or
     can be expected to last for a continuous period of not less than 12 months,
     or (ii) is, by  reason of any  medically  determinable  physical  or mental
     impairment  which can be  expected to result in death or can be expected to
     last for a continuous  period of not less than 12 months,  receiving income
     replacement  benefits  for a period of not less than three  months under an
     accident and health agreement

<PAGE>

     covering  employees of the Bank (or would be receiving  such benefits if he
     was eligible to participate in such plan)."

     Section 3. Amendment to Section 1.16 of the Director Retirement  Agreement.
Section 1.16 of the Director  Retirement  Agreement is hereby amended to read in
its entirety as follows:

          "Termination  of Service,"  for purposes of this  Director  Retirement
     Agreement,  shall mean a "Separation  from Service" as such term is defined
     in Section 409A of the Code and the final  regulations  issued  thereunder,
     provided  that  whether a Separation  from  Service has  occurred  shall be
     determined based on whether the facts and  circumstances  indicate that the
     Bank and the Director reasonably anticipated that no further services would
     be performed  after a certain date or that the level of bona fide  services
     the Director would perform after such date (whether as an employee or as an
     independent  contractor)  would  permanently  decrease  to less than  fifty
     percent (50%) of the average level of bona fide services performed (whether
     as an employee or an independent contractor) over the immediately preceding
     thirty-six (36) month period (or the full period of services to the Bank if
     the Director has been providing  services to the Bank less than  thirty-six
     (36) months)."

     Section 4. Amendment to Section 8.1 of the Director  Retirement  Agreement.
Section 8.1 of the Director  Retirement  Agreement is hereby  amended to read in
its entirety as follows:

     "8.1 Amendment and Termination.

          (a) This  Director  Retirement  Agreement  may be amended  solely by a
     written agreement signed by the Bank and by the Director, and (b) except as
     provided in Article 5, this Director Retirement Agreement may be terminated
     solely  by a  written  agreement  signed  by the Bank and by the  Director.
     Except as provided in Section  8.1(b),  the  termination  of this  Director
     Retirement  Agreement shall not cause a distribution of benefits under this
     Director Retirement Agreement.

          (b) Notwithstanding anything to the contrary in Section 8.1(a), if the
     Bank  irrevocably  terminates  this  Director  Retirement  Agreement in the
     following circumstances:

               (i) Within thirty (30) days before a Change in Control,  provided
          that all  distributions  are made no later  than  twelve  (12)  months
          following such  irrevocable  termination  of this Director  Retirement
          Agreement and further provided that all of the arrangements  sponsored
          by the Bank that would be  aggregated  with this  Director  Retirement
          Agreement under Treasury Regulation  ss.1.409A-1(c)(2)  are terminated
          so  the  Director  and  all  Directors  under  the  other   aggregated
          arrangements  are  required  to receive  all  amounts of  compensation
          deferred under the terminated  arrangements  within twelve (12) months
          of the  date  the Bank  irrevocably  takes  all  necessary  action  to
          terminate such arrangements;

               (ii) With twelve (12) months of a  dissolution  of the Bank taxed
          under  Section 331 of the Code or with the  approval  of a  bankruptcy
          court pursuant to 11

<PAGE>

          U.S.C. ss.503(b)(1)(A),  provided that the amounts deferred under this
          Director  Retirement  Agreement are included in the  Director's  gross
          income in the latest of (i) the calendar  year in which this  Director
          Retirement 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   distribution   is
          administratively practicable; or

               (iii)  Upon  the  Bank's   termination  of  this  and  all  other
          arrangements  that would be aggregated  with this Director  Retirement
          Agreement  pursuant  to  Treasury  Regulation  ss.1.409A-1(c)  if  the
          Director participated in such arrangements  ("Similar  Arrangements"),
          provided  that (i) the  termination  and  liquidation  does not  occur
          proximate to a downturn in the financial  health of the Bank,  (ii) no
          payments are made within twelve (12) months of the  termination of the
          arrangements other than payments that would be payable under the terms
          of the  arrangements if the  termination  had not occurred,  (iii) all
          termination  distributions  are made no later  than  twenty-four  (24)
          months  following such  termination,  and (iv) the Bank does not adopt
          any new arrangement that would be a Similar  Arrangement for a minimum
          of three (3) years  following  the date the Bank  takes all  necessary
          action to irrevocably  terminate and liquidate the Director Retirement
          Agreement;

               the Bank will distribute (i) the Accrual Balance determined as of
          the date of the termination of this Director Retirement Agreement,  or
          (ii) the  Normal  Retirement  Age  Accrual  Balance  in the event of a
          termination  pursuant to Section 8.1(b)(i) above, to the Director in a
          lump sum subject to the above terms.

     Section 5. Amendment to Section 8.13 of the Director Retirement  Agreement.
The second to last sentence in Section 8.13 of the Director Retirement Agreement
is hereby amended to read in its entirety as follows:

          "The fees and  expenses of counsel  selected  from time to time by the
     Director as provided in this  section  shall be paid or  reimbursed  to the
     Director by the Bank on a regular,  periodic basis upon presentation within
     thirty (30) days  following the Director's  presentation  of a statement or
     statements  prepared  by such  counsel in  accordance  with such  counsel's
     customary practices, up to a maximum aggregate amount of $25,000."

     Section 6.  Effectiveness.  This Amendment shall be deemed  effective as of
the date first above written,  as if executed on such date.  Except as expressly
set forth herein,  this Amendment  shall not by implication or otherwise  alter,
modify,  amend or in any way affect any of the terms,  conditions,  obligations,
covenants or agreements contained in the Director Retirement  Agreement,  all of
which are ratified and affirmed in all respects and shall continue in full force
and effect and shall be otherwise unaffected.

     Section 7.  Governing  Law. This  Amendment and the rights and  obligations
hereunder  shall be governed by and construed in accordance with the laws of the
State of North Carolina.

<PAGE>

     Section 8.  Counterparts.  This  Amendment may be executed in any number of
counterparts,  each of which shall for all purposes be deemed an  original,  and
all of which together shall constitute but one and the same instrument.

     Section 9. Compliance with Section 409A. This Director Retirement Agreement
shall be interpreted and administered consistent with Section 409A of the Code.

     IN WITNESS  WHEREOF,  the Bank and the  Director  have duly  executed  this
Amendment as of the day and year first written above.

                                               CITIZENS SOUTH BANK

Attest:


                                           By:
---------------------------------------        ---------------------------------
Name:  Paul L. Teem, Jr.                       Name:  Kim S. Price
Title: Executive Vice President,               Title: President and Chief
         Chief Administrative Officer                   Executive Officer



                                               DIRECTOR

Attest:


------------------------                       ---------------------------------
Name:  Paul L. Teem, Jr.                       ---------------------