EXHIBIT 10.5

                               FIRST AMENDMENT TO

                          SALARY CONTINUATION AGREEMENT


     First Amendment,  dated as of _________ __, 2008 (the "Amendment"),  to the
Salary  Continuation  Agreement,  dated as of January 1, 2004 (as  amended,  the
"Salary Continuation Agreement"),  by and among Citizens South Bank (the "Bank")
and _______________  (the "Executive").  Capitalized terms which are not defined
herein  shall  have the same  meaning  as set forth in the  Salary  Continuation
Agreement.

                              W I T N E S S E T H:

     WHEREAS,  the parties desire to amend the Salary Continuation  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  Sections  7.1 and 7.14 of the  Salary  Continuation
Agreement,  the parties to the Salary Continuation Agreement desire to amend the
Salary Continuation 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 Executive hereby agree as follows:

     Section 1. Amendment to Section 1.4 of the Salary  Continuation  Agreement.
The  definition  of Change in Control in Section 1.4 of the Salary  Continuation
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 Salary  Continuation  Agreement.
The definition of Disability in Section 1.5 of the Salary Continuation Agreement
is hereby amended to read in its entirety as follows:

          "Disability  means  the  Executive  (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

<PAGE>



     for a period of not less than three  months  under an  accident  and health
     Agreement covering employees of the Bank."

     Section 3. Amendment to Section 1.9 of the Salary  Continuation  Agreement.
The  definition  of  Good  Reason  in  Section  1.9 of the  Salary  Continuation
Agreement is hereby amended to read in its entirety as follows:

          "Good Reason means the occurrence of any of the following conditions:

          (i) any  material  breach of this  Agreement  by the  Bank,  including
     without limitation any of the following:  (A) a material  diminution in the
     Executive's base compensation, (B) a material diminution in the Executive's
     authority, duties or responsibilities,  or (C) a material diminution in the
     authority,  duties or responsibilities of the officer to whom the Executive
     is required to report, or

          (ii) any  material  change  in the  geographic  location  at which the
     Executive must perform his services under this Agreement;

     provided,  however,  that prior to any  termination  of employment for Good
     Reason,  the Executive must first provide written notice to the Bank within
     ninety (90) days of the initial existence of the condition,  describing the
     existence of such condition,  and the Bank shall  thereafter have the right
     to  remedy  the  condition  within  thirty  (30)  days of the date the Bank
     received the written  notice from the  Executive.  If the Bank remedies the
     condition  within  such thirty  (30) day cure  period,  then no Good Reason
     shall be deemed to exist with respect to such  condition.  If the Bank does
     not remedy the condition within such thirty (30) day cure period,  then the
     Executive may deliver a notice of  termination  for Good Reason at any time
     within sixty (60) days following the expiration of such cure period."

     Section 4. Amendment to Section 1.16 of the Salary Continuation  Agreement.
Section 1.16 of the Salary  Continuation  Agreement is hereby amended to read in
its entirety as follows:

          "Termination  of Employment,"  for purposes of this  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  Executive
     reasonably  anticipated that no further services would be performed after a
     certain date or that the level of bona fide  services the  Executive  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
     Executive has been providing services to the Bank less than thirty-six (36)
     months)."

<PAGE>

     Section 5.  Deletion of Section 2.6 of the Salary  Continuation  Agreement.
Section  2.6 of the  Salary  Continuation  Agreement  is hereby  deleted  in its
entirety.

     Section 6. New  Section  2.8 of the Salary  Continuation  Agreement.  A new
Section 2.8 of the Salary Continuation  Agreement is hereby added to read in its
entirety as follows:

     "2.8  Restriction on Commencement  of  Distributions.  Notwithstanding  any
     provision of this Agreement to the contrary, if the Executive is considered
     a  Specified   Employee   (within   the  meaning  of  Treasury   Regulation
     1.409A-1(i)), the provisions of this Section 2.8 shall govern the timing of
     all  distributions  under Sections 2.1, 2.2, 2.3 and 2.4 of this Agreement.
     In the event the  Executive  is a  Specified  Employee,  and to the  extent
     necessary to avoid  penalties  under Section 409A of the Code,  payments to
     the  Executive  shall not commerce  until the later of (i) the first day of
     the  month  following  the  lapse  of six  months  after  the  date  of the
     Termination of Employment, or (ii) the first day of the month following the
     Executive's  attainment of Normal  Retirement Age. Any  distribution  which
     would  otherwise  be paid to the  Executive  during  such  period  shall be
     accumulated and paid to the Executive in a lump sum on the first day of the
     month  following the lapse of six months after the date of the  Termination
     of  Employment.  All subsequent  distributions  shall be paid in the manner
     specified."

     Section 7. Amendment to Section 7.1 of the Salary  Continuation  Agreement.
Section 7.1 of the Salary  Continuation  Agreement is hereby  amended to read in
its entirety as follows:

     "7.1 Amendments and Termination.

          (a) Subject to Section 7.14 of this Agreement,  (a) this Agreement may
     be  amended  solely  by a written  agreement  signed by the Bank and by the
     Executive,  and (b) except for termination  occurring under Article 5, this
     Agreement may be  terminated  solely by a written  agreement  signed by the
     Bank and by the  Executive.  Except as  provided  in  Section  7.1(b),  the
     termination  of this Agreement  shall not cause a distribution  of benefits
     under this Agreement.

          (b) Notwithstanding anything to the contrary in Section 7.1(a), if the
     Bank irrevocably terminates this 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 Agreement and further
          provided that all of the arrangements sponsored by the Bank that would
          be  aggregated   with  this  Agreement   under   Treasury   Regulation
          ss.1.409A-1(c)(2)  are  terminated so the Executive and all Executives
          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;

<PAGE>

               (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 U.S.C. ss.503(b)(1)(A), provided that the amounts
          deferred  under this Agreement are included in the  Executive's  gross
          income in the latest of (i) the calendar year in which this  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 Agreement  pursuant to
          Treasury  Regulation  ss.1.409A-1(c) if the Executive  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 Agreement;

               the Bank may distribute the Accrual Balance, determined as of the
          date of the  termination of this Agreement  (without regard to vesting
          in the event of a  termination  pursuant to Section  7(b)(i)),  to the
          Executive in a lump sum subject to the above terms.

     Section 8. Amendment to Section 7.13 of the Salary Continuation  Agreement.
The second to last sentence in Section 7.13 of the Salary Continuation Agreement
is hereby amended to read in its entirety as follows:

          "The fees and  expenses of counsel  selected  from time to time by the
     Executive as provided in this section  shall be paid or  reimbursed  to the
     Executive by the Bank on a regular, periodic basis upon presentation within
     thirty (30) days following the  Executive'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 9.  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 Salary Continuation  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 10.  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 11.  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  12.   Compliance  with  Section  409A.  This  Agreement  shall  be
interpreted and administered consistent with Section 409A of the Code.

     IN WITNESS  WHEREOF,  the Bank and the  Executive  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



                                               EXECUTIVE

Attest:



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