HOME FEDERAL SAVINGS AND LOAN ASSOCIATION OF ELGIN
                              EMPLOYMENT AGREEMENT


                  This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of September 26, 1996 by and between HOME FEDERAL SAVINGS AND LOAN
ASSOCIATION OF ELGIN, a savings and loan association organized and operating
under the federal laws of the United States and having an office at 16 North
Spring Street, Elgin, Illinois 60120 ("Association") and KENNETH L. MORAN, an
individual residing at 1021 Mohawk Drive, Elgin, Illinois 60120, ("Executive").


                              W I T N E S S E T H :
                              ---------------------

                  WHEREAS, Executive currently serves the Association in the
capacity of Senior Vice President and Chief Lending Officer; and

                  WHEREAS, effective as of the date of this Agreement, the
Association has converted from a federal mutual savings and loan association to
a federal stock savings and loan association and has become the wholly-owned
subsidiary of Home Bancorp of Elgin, Inc., a publicly-held Delaware corporation
("Holding Company"); and

                  WHEREAS, the Association desires to assure for itself the
continued availability of the Executive's services and the ability of the
Executive to perform such services with a minimum of personal distraction in the
event of a pending or threatened Change of Control (as hereinafter defined); and

                  WHEREAS, the Executive is willing to continue to serve the
Association on the terms and conditions hereinafter set forth;

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Association and the
Executive hereby agree as follows:

                  SECTION 1.        EMPLOYMENT.

                  The Association agrees to continue to employ the Executive,
and the Executive hereby agrees to such continued employment, during the period
and upon the terms and conditions set forth in this Agreement.


                  SECTION 2.        EMPLOYMENT PERIOD; REMAINING UNEXPIRED
                                    EMPLOYMENT PERIOD.

                  (a) The terms and conditions of this Agreement shall be and
remain in effect during the period of employment established under this section
2 ("Employment Period"). The Employment Period shall be for an initial term of
two (2) years beginning on the date of this Agreement. Prior to the first (1st)
anniversary of the date of this Agreement and on each


                                    Page 1 of 18

<PAGE>



anniversary date thereafter (each, an "Anniversary Date"), the Board of
Directors of the Association ("Board") shall review the terms of this Agreement
and the Executive's performance of services hereunder and may, in the absence of
objection from the Executive, approve an extension of the Employment Agreement.
In such event, the Employment Agreement shall be extended to the second (2nd)
anniversary of the relevant Anniversary Date.

                  (b) For all purposes of this Agreement, the term "Remaining
Unexpired Employment Period" as of any date shall mean the period beginning on
such date and ending on the Anniversary Date on which the Employment Period (as
extended pursuant to section 2(a) of this Agreement) is then scheduled to
expire.

                  (c) Nothing in this Agreement shall be deemed to prohibit the
Association at any time from terminating the Executive's employment during the
Employment Period with or without notice for any reason; PROVIDED, HOWEVER, that
the relative rights and obligations of the Association and the Executive in the
event of any such termination shall be determined under this Agreement.


                  SECTION 3.        DUTIES.

                  Executive shall serve as the Senior Vice President and Chief
Lending Officer of the Association, having such power, authority and
responsibility and performing such duties as are prescribed by or under the
By-Laws of the Association and as are customarily associated with such position,
including without limitation, the general direction of all of the business and
affairs of the Association, the hiring and supervision of all senior management
personnel, and long-term strategic planning for the Association, including
growth by merger and acquisition. The Executive shall devote his full business
time and attention (other than during holidays, approved vacation periods, and
periods of illness or approved leaves of absence) to the business and affairs of
the Association and shall use his best efforts to advance the interests of the
Association.


                  SECTION 4.        CASH COMPENSATION.

                  In consideration for the services to be rendered by the
Executive hereunder, the Association shall pay to him a salary at an initial
annual rate of ONE HUNDRED AND NINE THOUSAND, TWO HUNDRED AND FORTY-TWO DOLLARS
($109,242), payable in approximately equal installments in accordance with the
Association's customary payroll practices for senior officers. The Board shall
review the Executive's annual rate of salary at such times as it deems
appropriate, but not less frequently than once every twelve months, and may, in
its discretion, approve an increase therein. In addition to salary, Executive
may receive other cash compensation from the Association for services hereunder
at such times, in such amounts and on such terms and conditions as the Board may
determine from time to time.



                                    Page 2 of 18

<PAGE>



                  SECTION 5.        EMPLOYEE BENEFIT PLANS AND PROGRAMS.

                  During the Employment Period, the Executive shall be treated
as an employee of the Association and shall be eligible to participate in and
receive benefits under any and all qualified or non-qualified retirement,
pension, savings, profit-sharing or stock bonus plans, any and all group life,
health (including hospitalization, medical and major medical), dental, accident
and long-term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover employees of,
the Association, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Association's customary practices.


                  SECTION 6.        INDEMNIFICATION AND INSURANCE.

                  (a) During the Employment Period and for a period of six (6)
years thereafter, the Association shall cause the Executive to be covered by and
named as an insured under any policy or contract of insurance obtained by it to
insure its directors and officers against personal liability for acts or
omissions in connection with service as an officer or director of the
Association or service in other capacities at the request of the Association.
The coverage provided to the Executive pursuant to this section 6 shall be of
the same scope and on the same terms and conditions as the coverage (if any)
provided to other officers or directors of the Association.

                  (b) To the maximum extent permitted under applicable law,
during the Employment Period and for a period of six (6) years thereafter, the
Association shall indemnify, and shall cause its subsidiaries and affiliates to
indemnify the Executive against and hold him harmless from any costs,
liabilities, losses and exposures to the fullest extent and on the most
favorable terms and conditions that similar indemnification is offered to any
director or officer of the Association or any subsidiary or affiliate thereof.
This section 6(b) shall not be applicable where section 18 is applicable.


                  SECTION 7.        OUTSIDE ACTIVITIES.

                  Executive may serve as a member of the boards of directors of
such business, community and charitable organizations as he may disclose to and
as may be approved by the Board (which approval shall not be unreasonably
withheld); PROVIDED, HOWEVER, that such service shall not materially interfere
with the performance of his duties under this Agreement. Executive may also
engage in personal business and investment activities which do not materially
interfere with the performance of his duties hereunder; PROVIDED, HOWEVER, that
such activities are not prohibited under any code of conduct or investment or
securities trading policy established by the Association and generally
applicable to all similarly situated executives. Executive may also serve as an
officer or director of the Holding Company on terms and conditions as the
Association and the Holding Company may mutually agree upon, and such service
shall not be deemed to materially interfere with the Executive's performance of
his duties hereunder or otherwise to result in a material breach of this
Agreement.

                                    Page 3 of 18

<PAGE>




                  SECTION 8.        WORKING FACILITIES AND EXPENSES.

                  Executive's principal place of employment shall be at the
Association's executive offices at the address first above written, or at such
other location within a 25-mile radius thereof at which the Association shall
maintain its principal executive offices, or at such other location as the
Association and Executive may mutually agree upon. The Association shall provide
the Executive at his principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
position with the Association and necessary or appropriate in connection with
the performance of his assigned duties under this Agreement. The Association
shall reimburse Executive for his ordinary and necessary business expenses,
including, without limitation, fees for memberships in such clubs and
organizations as Executive and the Association shall mutually agree are
necessary and appropriate for business purposes, and his travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the Association of an
itemized account of such expenses in such form as the Association may reasonably
require.


                  SECTION 9.        TERMINATION OF EMPLOYMENT WITH SEVERANCE
                                    BENEFITS.

                  (a) Executive shall be entitled to the severance benefits
described herein in the event that his employment with the Association
terminates during the Employment Period under any of the following
circumstances:

                  (i) Executive's voluntary resignation from employment with the
         Association within ninety (90) days following:

                           (A) the failure of the Board to appoint or re-appoint
                  or elect or re-elect the Executive to the office described in
                  section 3 of this Agreement (or a more senior office) of the
                  Association;

                           (B) if the Executive is a member of the Board as of
                  the date of this Agreement, the failure of the stockholders of
                  the Association to elect or re-elect Executive to the Board or
                  the failure of the Board (or the nominating committee thereof)
                  to nominate Executive for such election or re-election;

                           (C) the expiration of a thirty (30) day period
                  following the date on which the Executive gives written notice
                  to the Association of its material failure, whether by
                  amendment of the Association's Organization Certificate or
                  By-Laws, action of the Board or the Association's stockholders
                  or otherwise, to vest in the Executive the functions, duties,
                  or responsibilities prescribed in section 3 of this Agreement,
                  unless, during such thirty (30) day period, the Association
                  fully cures such failure;

                           (D) the expiration of a thirty (30) day period
                  following the date on which the Executive gives written notice
                  to the Association of its



                                    Page 4 of 18

<PAGE>



                  material breach of any term, condition or covenant contained
                  in this Agreement (including, without limitation any reduction
                  of Executive's rate of base salary in effect from time to time
                  and any change in the terms and conditions of any compensation
                  or benefit program in which the Executive participates which,
                  alone or together with other changes, has a material adverse
                  effect on the aggregate value of his total compensation
                  package), unless, during such thirty (30) day period, the
                  Association fully cures such failure; or

                  (ii) the termination of Executive's employment with the
         Association for any other reason not described in section 10(a);

then, subject to section 25, the Association shall provide the benefits and pay
to Executive the amounts described in section 9(b).

                  (b) Upon the termination of the Executive's employment with
the Association under circumstances described in section 9(a) of this Agreement,
the Association shall pay and provide to the Executive (or, in the event of his
death, to his estate):

                  (i) his earned but unpaid compensation (including, without
         limitation, all items which constitute wages under applicable law and
         the payment of which is not otherwise provided for under this section
         9(b)) as of the date of the termination of his employment with the
         Association, such payment to be made at the time and in the manner
         prescribed by law applicable to the payment of wages but in no event
         later than thirty (30) days after termination of employment;

                  (ii) the benefits, if any, to which he is entitled as a former
         employee under the employee benefit plans and programs and compensation
         plans and pro grams maintained for the benefit of the Association's
         officers and employees;

                  (iii) continued group life, health (including hospitalization,
         medical and major medical), dental, accident and long term disability
         insurance benefits, in addition to that provided pursuant to section
         9(b)(ii), and after taking into account the coverage provided by any
         subsequent employer, if and to the extent necessary to provide for the
         Executive, for the Remaining Unexpired Employment Period, coverage
         equivalent to the coverage to which he would have been entitled under
         such plans (as in effect on the date of his termination of employment,
         or, if his termination of employment occurs after a Change of Control,
         on the date of such Change of Control, whichever benefits are greater)
         if he had continued working for the Association during the Remaining
         Unexpired Employment Period at the highest annual rate of compensation
         achieved during that portion of the Employment Period which is prior to
         Executive's termination of employment with the Association;

                  (iv) within thirty (30) days following his termination of
         employment with the Association, a lump sum payment, in an amount equal
         to the present value of the salary that Executive would have earned if
         he had continued working for the



                                    Page 5 of 18

<PAGE>



         Association during the Remaining Unexpired Employment Period at the
         highest annual rate of salary achieved during that portion of the
         Employment Period which is prior to Executive's termination of
         employment with the Association, where such present value is to be
         determined using a discount rate equal to the applicable short-term
         federal rate prescribed under section 1274(d) of the Internal Revenue
         Code of 1986 ("Code"), compounded using the compounding period
         corresponding to the Association's regular payroll periods for its
         officers, such lump sum to be paid in lieu of all other payments of
         salary provided for under this Agreement in respect of the period
         following any such termination;

                  (v) within thirty (30) days following his termination of
         employment with the Association, a lump sum payment in an amount equal
         to the excess, if any, of:

                           (A) the present value of the aggregate benefits to
                  which he would be entitled under any and all qualified and
                  non-qualified defined benefit pension plans maintained by, or
                  covering employees of, the Association) if he were one-hundred
                  percent (100%) vested thereunder and had continued working for
                  the Association during the Remaining Unexpired Employment
                  Period, such benefits to be determined as of the date of
                  termination of employment by adding to the service actually
                  recognized under such plans an additional period equal to the
                  Remaining Unexpired Employment Period and by adding to the
                  compensation recognized under such plans for the year in which
                  termination of employment occurs all amounts payable under
                  sections 9(b)(i), (iv) and (vii); over

                           (B) the present value of the benefits to which he is
                  actually entitled under such defined benefit pension plans as
                  of the date of his termination;

         where such present values are to be determined using the mortality
         tables prescr ibed under section 415(b)(2)(E)(v) of the Code and a
         discount rate, compounded monthly, equal to the annualized rate of
         interest prescribed by the Pension Benefits Guaranty Corporation for
         the valuation of immediate annuities payable under terminating
         single-employer defined benefit plans for the month in which
         Executive's termination of employment occurs ("Applicable PBGC Rate");

                  (vi) within thirty (30) days following his termination of
         employment with the Association, a lump sum payment in an amount equal
         to the present value of the additional employer contributions (or if
         greater in the case of a leveraged employee stock ownership plan or
         similar arrangement, the additional assets allocable to him through
         debt service, based on the fair market value of such assets at
         termination of employment) to which he would have been entitled under
         any and all qualified and non-qualified defined contribution plans
         maintained by, or covering employees of, the Association, if he were
         one-hundred percent (100%) vested thereunder and had continued working
         for the Association during the Remaining Unexpired Em ployment Period
         at the highest annual rate of compensation achieved during that


                                    Page 6 of 18

<PAGE>



         portion of the Employment Period which is prior to Executive's
         termination of employment with the Association, and making the maximum
         amount of employee contributions, if any, required under such plan or
         plans, such present value to be determined on the basis of a discount
         rate, compounded using the compounding period that corresponds to the
         frequency with which employer contributions are made to the relevant
         plan, equal to the Applicable PBGC Rate; and

                  (vii) the payments that would have been made to Executive
         under any cash bonus or long-term or short-term cash incentive
         compensation plan maintained by, or covering employees of, the
         Association if he had continued working for the Association during the
         Remaining Unexpired Employment Period and had earned a bonus or
         incentive award in each calendar year that ends during the Remaining
         Unexpired Employment Period in an amount equal to the highest annual
         bonus or incentive award actually paid to him in any calendar year
         ending during the three-year period ending on the date of his
         termination of employment.

The Association and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b) constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage and without regard to Executive's efforts, if any, to
mitigate damages. The Association and the Executive further agree that the
Association may condition the payments and benefits (if any) due under sections
9(b)(iii), (iv), (v), (vi) and (vii) on the receipt of Executive's resignation
from any and all positions which he holds as an officer, director or committee
member with respect to the Association, the Holding Company or any subsidiary or
affiliate of either of them.


                  SECTION 10.       TERMINATION WITHOUT ADDITIONAL ASSOCIATION
                                    LIABILITY.

                  In the event that the Executive's employment with the
Association shall terminate during the Employment Period on account of:

                  (a) the discharge of the Executive for "cause," which, for
         purposes of this Agreement shall mean 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 any material
         breach of this Agreement, in each case as measured against standards
         generally prevailing at the relevant time in the savings and community
         banking industry; PROVIDED, HOWEVER, that the Executive shall not be
         deemed to have been discharged for cause unless and until the following
         procedures shall have been followed:

                           (i) the Board shall adopt a resolution duly approved
                  by affirmative vote of a majority of the entire Board at a
                  meeting called and held for such purpose calling for the
                  Executive's termination for cause and

                                    Page 7 of 18

<PAGE>



                  setting forth the purported grounds for such termination
                  ("Proposed Termination Resolution");

                           (ii) as soon as practicable, and in any event within
                  five (5) days, after adoption of such resolution, the Board
                  shall furnish to the Executive a written notice of termination
                  which shall be accompanied by a certified copy of the Proposed
                  Termination Resolution ("Notice of Proposed Termination");

                           (iii) the Executive shall be afforded a reasonable
                  opportunity to make oral and written presentations to the
                  members of the Board, on his own behalf, or through a
                  representative, who may be his legal counsel, to refute the
                  grounds set forth in the Proposed Termination Resolution at
                  one or more meetings of the Board to be held no sooner than
                  fifteen (15) days and no later than thirty (30) after the
                  Executive's receipt of the Proposed Termination Notice
                  ("Termination Hearings"); and

                           (iv) within ten (10) days following the end of the
                  Termination Hearings, the Board shall adopt a resolution duly
                  approved by affirmative vote of a majority of the entire Board
                  at a meeting called and held for such purpose (A) finding that
                  in the good faith opinion of the Board the grounds for
                  termination set forth in the Proposed Termination Resolution
                  exist and (B) terminating the Executive's employment
                  ("Termination Resolution"); and

                           (v) as promptly as practicable, and in any event
                  within one (1) business day after adoption of the Termination
                  Resolution, the Board shall furnish to the Executive written
                  notice of termination, which notice shall include a copy of
                  the Termination Resolution and specify an effective date of
                  termination that is not later than the date on which such
                  notice is given;

                  (b) the Executive's voluntary resignation from employment with
         the Association for reasons other than those specified in section
         9(a)(i);

                  (c) the Executive's death; or

                  (d) a determination that the Executive is eligible for
         long-term disability benefits under the Association's long-term
         disability insurance program or, if there is no such program, under the
         federal Social Security Act;

         then the Association shall have no further obligations under this
         Agreement, other than the payment to Executive (or, in the event of his
         death, to his estate) of his earned but unpaid salary as of the date of
         the termination of his employment, and the provision of such other
         benefits, if any, to which he is entitled as a former employee under
         the employee benefit plans and programs and compensation plans and
         programs maintained by, or covering employees of, the Association.



                                    Page 8 of 18

<PAGE>



                  (e) For purposes of section 10(a), no act or failure to act,
         on the part of the Executive, shall be considered "willful" unless it
         is done, or omitted to be done, by the Executive in bad faith or
         without reasonable belief that the Executive's action or omission was
         in the best interests of the Association. Any act, or failure to act,
         based upon authority given pursuant to a resolution duly adopted by the
         Board or based upon the written advice of counsel for the Association
         shall be conclusively presumed to be done, or omitted to be done, by
         the Executive in good faith and in the best interests of the
         Association. The cessation of employment of the Executive shall not be
         deemed to be for "cause" within the meaning of section 10(a) unless and
         until there shall have been delivered to Executive a copy of a
         resolution duly adopted by the affirmative vote of three-fourths of the
         non-employee members of the Board at a meeting of the Board called and
         held for such purpose (after reasonable notice is provided to Executive
         and Executive is given an opportunity, together with counsel, to be
         heard before the Board), finding that, in the good faith opinion of the
         Board, Executive is guilty of the conduct described in section 10(a)
         above, and specifying the particulars thereof in detail.


                  SECTION 11.       TERMINATION UPON OR FOLLOWING A CHANGE OF
                                    CONTROL.

                  (a) A Change of Control of the Association ("Change of
Control") shall be deemed to have occurred upon the happening of any of the
following events:

                  (i) approval by the stockholders of the Association of a
         transaction that would result in the reorganization, merger or
         consolidation of the Association, respectively, with one or more other
         persons, other than a transaction following which:

                           (A) at least fifty-one percent (51%) of the equity
                  ownership interests of the entity resulting from such
                  transaction are beneficially owned (within the meaning of Rule
                  13d-3 promulgated under the Securities Exchange Act of 1934,
                  as amended ("Exchange Act")) in substantially the same
                  relative proportions by persons who, immediately prior to such
                  transaction, beneficially owned (within the meaning of Rule
                  13d-3 promulgated under the Exchange Act) at least fifty-one
                  percent (51%) of the outstanding equity ownership interests in
                  the Association; and

                           (B) at least fifty-one percent (51%) of the
                  securities entitled to vote generally in the election of
                  directors of the entity resulting from such transaction are
                  beneficially owned (within the meaning of Rule 13d-3
                  promulgated under the Exchange Act) in substantially the same
                  relative proportions by persons who, immediately prior to such
                  transaction, beneficially owned (within the meaning of Rule
                  13d-3 promulgated under the Exchange Act) at least fifty-one
                  percent (51%) of the securities entitled to vote generally in
                  the election of directors of the Association;


                                    Page 9 of 18

<PAGE>



                  (ii) the acquisition of all or substantially all of the assets
         of the Association or beneficial ownership (within the meaning of Rule
         13d-3 promulgated under the Exchange Act) of twenty-five percent (25%)
         or more of the outstanding securities of the Association entitled to
         vote generally in the election of directors by any person or by any
         persons acting in concert, or approval by the stockholders of the
         Association of any transaction which would result in such an
         acquisition; or

                  (iii) a complete liquidation or dissolution of the
         Association, or approval by the stockholders of the Association of a
         plan for such liquidation or dissolution; or

                  (iv) the occurrence of any event if, immediately following
         such event, at least fifty percent (50%) of the members of the board of
         directors of the Association do not belong to any of the following
         groups:

                           (A) individuals who were members of the board of
                  directors of the Association on the date of this Agreement; or

                           (B) individuals who first became members of the board
                  of directors of the Association after the date of this
                  Agreement either:

                                    (I) upon election to serve as a member of
                           the board of directors of the Association by
                           affirmative vote of three-quarters (3/4) of the
                           members of such board, or of a nominating committee
                           thereof, in office at the time of such first
                           election; or

                                    (II) upon election by the stockholders of
                           the Association to serve as a member of the board of
                           directors of the Association, but only if nominated
                           for election by affirmative vote of three-quarters
                           (3/4) of the members of the board of directors of the
                           Association, or of a nominating committee thereof, in
                           office at the time of such first nomination;

                  PROVIDED, HOWEVER, that such individual's election or
                  nomination did not result from an actual or threatened
                  election contest (within the meaning of Rule 14a-11 of
                  Regulation 14A promulgated under the Exchange Act) or other
                  actual or threatened solicitation of proxies or consents
                  (within the meaning of Rule 14a-11 of Regulation 14A
                  promulgated under the Exchange Act) other than by or on behalf
                  of the board of directors of the Association;

                  (v) any event which would be described in section 11(a)(i),
         (ii), (iii) or (iv) if the term "Holding Company" were substituted for
         the term "Association" therein.


                                  Page 10 of 18

<PAGE>



In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Holding Company, the
Association, or a subsidiary of either of them, by the Holding Company, the
Association, or a subsidiary of either of them, or by any employee benefit plan
maintained by any of them. For purposes of this section 11 the term "person"
shall have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the
Exchange Act.

                  (b) In the event of a Change of Control, the Executive shall
be entitled to the payments and benefits contemplated by section 9(b) in the
event of his termination employment with the Association under any of the
circumstances described in section 9(a) of this Agreement or under any of the
following circumstances:

                  (i) resignation, voluntary or otherwise, by the Executive at
         any time during the Employment Period and within ninety (90) days
         following his demotion, loss of title, office or significant authority
         or responsibility, or following any material reduction in any element
         of his package of compensation and benefits;

                  (ii) resignation, voluntary or otherwise, by the Executive at
         any time during the Employment Period and within ninety (90) days
         following (A) any relocation of his principal place of employment
         outside of a 25-mile radius of the principal place of employment
         immediately prior to the Change of Control that would require a
         relocation of his residence in order to be able to commute to such new
         place of employment within a commuting time not in excess of the
         greater of sixty (60) minutes or the Executive's commuting time prior
         to the Change of Control or (B) any material adverse change in working
         conditions at such principal place of employment; or

                  (iii) resignation, voluntary or otherwise, by the Executive at
         any time during the Employment Period following the failure of any
         successor to the Association in the Change of Control to include the
         Executive in any compensation or benefit program maintained by it or
         covering any of its executive officers, unless the Executive is already
         covered by a substantially similar plan of the Association which is at
         least as favorable to him.

                  SECTION 12.       COVENANT NOT TO COMPETE.

                  In the event of the Executive's termination of employment with
the Association prior to the expiration of the Employment Period, for a period
of one (1) year following the date of his termination of employment with the
Association (or, if less, for the Remaining Unexpired Employment Period), the
Executive shall not, without the written consent of the Association, become an
officer, employee, consultant, director or trustee of any competitor (as herein
defined) if in this capacity he would be working within one hundred (100) miles
of the place where the headquarters of the Association are located on the date
of the Executive's termination of employment. For this purpose, a "competitor"
is any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company, or any direct or indirect subsidiary or
affiliate of any such entity. This section 12 shall not apply if the Executive's
em-


                                 Page 11 of 18


<PAGE>


ployment is terminated without cause or due to death or voluntary resignation
as described in section 9(a). If the Executive's employment shall be terminated
on account of disability as provided in section 10(d) of this Agreement, this
section 12 shall not apply if (a) the Executive first offers, by written notice,
to accept a similar position with, or perform similar services for, the
Association on substantially the same terms and conditions proposed by the
competitor and (b) the Association declines to accept such offer within ten (10)
days after such notice is given.


                  SECTION 13.       CONFIDENTIALITY.

                  Unless the Executive obtains the prior written consent of the
Association, he shall keep confidential and shall refrain from using for the
benefit of himself, or any person or entity other than the Association or any
entity which is a subsidiary of the Association or of which the Association is a
subsidiary, any material document or information obtained from the Association,
or from its parent or subsidiaries, in the course of his employment with any of
them concerning their properties, operations or business (unless such document
or information is readily ascertainable from public or published information or
trade sources or has otherwise been made available to the public through no
fault of his own) until the same ceases to be material (or becomes so
ascertainable or available); PROVIDED, HOWEVER, that nothing in this section 13
shall prevent the Executive, with or without the Association's consent, from
participating in or disclosing documents or information in connection with any
judicial or administrative investigation, inquiry or proceeding to the extent
that such participation or disclosure is required under applicable law.


                  SECTION 14.       SOLICITATION.

                  Executive hereby covenants and agrees that, for a period of
one (1) year following his termination of employment with the Association, he
shall not, without the written consent of the Association, either directly or
indirectly:

                  (a) solicit, offer employment to, or take any other action
         intended, or that a reasonable person acting in like circumstances
         would expect, to have the effect of causing any officer or employee of
         the Association, the Holding Company or any affiliate, as of the date
         of this Agreement, of either of them to terminate his employment and
         accept employment or become affiliated with, or provide services for
         compensation in any capacity whatsoever to, any savings bank, savings
         and loan association, bank, bank holding company, savings and loan
         holding company, or other institution engaged in the business of
         accepting deposits and making loans, doing business within one hundred
         (100) miles of the headquarters of the Association, the Holding Company
         or any affiliate, as of the date of this Agreement, of either of them;

                  (b) provide any information, advice or recommendation with
         respect to any such officer or employee of any savings bank, savings
         and loan association, bank, bank holding company, savings and loan
         holding company, or other


                                   Page 12 of 18

<PAGE>



         institution engaged in the business of accepting deposits and making
         loans, doing business within one hundred (100) miles of the
         headquarters of the Association, the Holding Company or any affiliate,
         as of the date of this Agreement, of either of them that is intended,
         or that a reasonable person acting in like circumstances would expect,
         to have the effect of causing any officer or employee of the
         Association, the Holding Company or any affiliate, as of the date of
         this Agreement, of either of them to terminate his employment and
         accept employment or become affiliated with, or provide services for
         compensation in any capacity whatsoever to, any savings bank, savings
         and loan association, bank, bank holding company, savings and loan
         holding company, or other institution engaged in the business of
         accepting deposits and making loans, doing business within one hundred
         (100) miles of the headquarters of the Association, the Holding
         Company, or any affiliate, as of the date of this Agreement, of either
         of them;

                  (c) solicit, provide any information, advice or recommendation
         or take any other action intended, or that a reasonable person acting
         in like circumstances would expect, to have the effect of causing any
         customer of the Association to terminate an existing business or
         commercial relationship with the Association.


                  SECTION 15.       NO EFFECT ON EMPLOYEE BENEFIT PLANS OR
                                    PROGRAMS.

                  The termination of Executive's employment during the term of
this Agreement or thereafter, whether by the Association or by Executive, shall
have no effect on the rights and obligations of the parties hereto under the
Association's qualified or non-qualified retirement, pension, savings, thrift,
profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or such other employee benefit plans or programs, or
compensation plans or programs, as may be maintained by, or cover employees of,
the Association from time to time.


                  SECTION 16.       SUCCESSORS AND ASSIGNS.

                  This Agreement will inure to the benefit of and be binding
upon Executive, his legal representatives and testate or intestate distributees,
and the Association and its successors and as signs, including any successor by
merger or consolidation or any other person or firm or corporation to which all
or substantially all of the assets and business of the Association may be sold
or otherwise transferred. Failure of the Association to obtain from any
successor its express written assumption of the Association's obligations
hereunder at least sixty (60) days in advance of the scheduled effective date of
any such succession shall be deemed a material breach of this Agreement unless
cured within ten (10) days after notice thereof by Executive to the Association.



                                   Page 13 of 18

<PAGE>



                  SECTION 17.     NOTICES.

                  Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:

                  If to the Executive:

                           Kenneth L. Moran
                           1021 Mohawk Drive
                           Elgin, Illinois 60120

                  If to the Association:

                           Home Federal Savings and Loan Association of Elgin
                           16 Spring Street
                           Elgin, Illinois  60120

                           Attention:  BOARD OF DIRECTORS -- NON-EMPLOYEE
                                       DIRECTORS

                           WITH A COPY TO:

                           Thacher Proffitt & Wood
                           Two World Trade Center
                           New York, New York 10048

                           Attention:       W. EDWARD BRIGHT, ESQ.


                  SECTION 18.       INDEMNIFICATION FOR ATTORNEYS' FEES.

                  The Association shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved, as a result of his efforts, in good faith, to defend or enforce the
terms of this Agreement; PROVIDED, HOWEVER, that Executive shall have
substantially prevailed on the merits pursuant to a judgment, decree or order of
a court of competent jurisdiction or of an arbitrator in an arbitration
proceeding, or in a settlement. For purposes of this Agreement, any settlement
agreement which provides for payment of any amounts in settlement of the
Association's obligations hereunder shall be conclusive evidence of Executive's
entitlement to indemnification hereunder, and any such indemnification payments
shall be in addition to amounts payable pursuant to such settlement agreement,
unless such settlement agreement expressly provides otherwise. This provision
shall be inoperative if and to the extent



                                   Page 14 of 18

<PAGE>



that, but only if and to the extent that, it shall be determined that compliance
herewith would violate any applicable law or regulation.


                  SECTION 19.       SEVERABILITY.

                  A determination that any provision of this Agreement is
invalid or unenforceable shall not affect the validity or enforceability of any
other provision hereof.


                  SECTION 20.       WAIVER.

                  Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.


                  SECTION 21.       COUNTERPARTS.

                  This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.


                  SECTION 22.       GOVERNING LAW.

                  This Agreement shall be governed by and construed and enforced
in accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the State of
Illinois applicable to contracts entered into and to be performed entirely
within the State of Illinois.


                  SECTION 23.       HEADINGS AND CONSTRUCTION.

                  The headings of sections in this Agreement are for convenience
of reference only and are not intended to qualify the meaning of any section.
Any reference to a section number shall refer to a section of this Agreement,
unless otherwise stated.


                  SECTION 24.       ENTIRE AGREEMENT; MODIFICATIONS.

                  This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supersedes in its entirety any and
all prior agreements, understandings or rep-


                                 Page 15 of 18

<PAGE>


resentations relating to the subject matter hereof. No modifications of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.


                  SECTION 25.       REQUIRED REGULATORY PROVISIONS.

                  The following provisions are included for the purposes of
complying with various laws, rules and regulations applicable to the
Association:

                  (a) Notwithstanding anything herein contained to the contrary,
         in no event shall the aggregate amount of compensation payable to
         Executive under section 9(b) hereof (exclusive of amounts described in
         section 9(b)(i)) exceed the lesser of (i) three times the Executive's
         average annual total compensation for the last five consecutive
         calendar years to end prior to his termination of employment with the
         Association (or for his entire period of employment with the
         Association if less than five calendar years) and (ii) the maximum
         amount that may be paid without producing an "excess parachute payment"
         (as such term is defined in section 280G of the Code), the
         applicability of such provision to the Executive and any such maximum
         amount to be determined in good faith by the firm of independent
         certified public accountants regularly retained to audit the
         Association's books and records.

                  (b) Notwithstanding anything herein contained to the contrary,
         any payments to Executive by the Association, whether pursuant to this
         Agreement or otherwise, are subject to and conditioned upon their
         compliance with section 18(k) of the Federal Deposit Insurance Act
         ("FDI Act"), 12 U.S.C. ss.1828(k), and any regulations promulgated
         thereunder.

                  (c) Notwithstanding anything herein contained to the contrary,
         if Executive is suspended from office and/or temporarily prohibited
         from participating in the conduct of the affairs of the Association
         pursuant to a notice served under section 8(e)(3) or 8(g)(1) of the FDI
         Act, 12 U.S.C. ss.1818(e)(3) or 1818(g)(1), the Association's
         obligations under this Agreement shall be suspended as of the date of
         service of such notice, unless stayed by appropriate proceedings. If
         the charges in such notice are dismissed, the Association, in its
         discretion, may (i) pay to Executive all or part of the compensation
         withheld while the Association's obligations hereunder were suspended
         and (ii) reinstate, in whole or in part, any of the obligations which
         were suspended.

                  (d) Notwithstanding anything herein contained to the contrary,
         if Executive is removed and/or permanently prohibited from
         participating in the conduct of the Association's affairs by an order
         issued under section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C.
         ss.1818(e)(4) or (g)(1), all prospective obligations of the Association
         under this Agreement shall terminate as of the effective date of the
         order, but vested rights and obligations of the Association and
         Executive shall not be affected.



                                  Page 16 of 18

<PAGE>



                  (e) Notwithstanding anything herein contained to the contrary,
         if the Association is in default (within the meaning of section 3(x)(1)
         of the FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of
         the Association under this Agreement shall terminate as of the date of
         default, but vested rights and obligations of the Association and
         Executive shall not be affected.

                  (f) Notwithstanding anything herein contained to the contrary,
         all prospective obligations of the Association hereunder shall be
         terminated, except to the extent that a continuation of this Agreement
         is necessary for the continued operation of the Association: (i) by the
         Director of the Office of Thrift Supervision ("OTS") or his designee at
         the time the Federal Deposit Insurance Corporation ("FDIC") enters into
         an agreement to provide assistance to or on behalf of the Association
         under the authority contained in section 13(c) of the FDI Act, 12
         U.S.C. ss.1823(c); (ii) by the Director of the OTS or his designee at
         the time such Director or designee approves a supervisory merger to
         resolve problems related to the operation of the Association or when
         the Association is determined by such Director to be in an unsafe or
         unsound condition. The vested rights and obligations of the parties
         shall not be affected.

If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.


                  IN WITNESS WHEREOF, the Association has caused this Agreement
to be executed and Executive has hereunto set his hand, all as of the day and
year first above written.



                                      /s/ Kenneth L. Moran
                                      ------------------------------------------
                                          KENNETH L. MORAN



ATTEST:                               HOME FEDERAL SAVINGS AND LOAN
                                       ASSOCIATION OF ELGIN



By /s/ Kathleen A. Schroeder
   -------------------------
       Secretary                     By /s/ Leigh C. O'Connor
                                       ----------------------------------------
                                        NAME:  Leigh C. O'Connor
                                        TITLE: Chairman, Compensation Committee

[Seal]

                                   Page 17 of 18

<PAGE>


STATE OF ILLINOIS                   )
                                    : ss.:
COUNTY OF                           )

                  On this 15th day of January, 1998, before me
personally came KENNETH L. MORAN, to me known, and known to me to be the
individual described in the foregoing instrument, who, being by me duly sworn,
did depose and say that he resides at the address set forth in said instrument,
and that he signed his name to the foregoing instrument.



                                   /s/ Ruth E. Bart
                                   ------------------------------
                                       Notary Public


          [SEAL]




STATE OF ILLINOIS                   )
                                    : ss.:
COUNTY OF                           )

                  On this 15th day of January, 1998, before me
personally came LEIGH C. O'CONNOR, to me known, who, being by me duly sworn, did
depose and say that he resides at
366 Hamilton Ave., Elgin, IL  60123, that he is a member of the Board
of Directors of HOME FEDERAL SAVINGS AND LOAN ASSOCIATION, the savings and loan
association described in and which executed the foregoing instrument; that he
knows the seal of said mutual savings and loan association; that the seal
affixed to said instrument is such seal; that it was so affixed by order of the
Board of Directors of said savings and loan association; and that he signed his
name thereto by like order.



                                   /s/ Ruth E. Bart
                                   ------------------------------
                                       Notary Public


          [SEAL]

                                   Page 18 of 18