Exhibit 10(7)
                                                                   -------------

                              EMPLOYMENT AGREEMENT


     This  Agreement,  made and dated as of  November 1, 2001 by and between MFB
Financial,  a federal  savings  bank  ("Employer"),  and  Thomas J.  Flournoy  a
resident of St. Joseph County, Indiana ("Employee").

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

     WHEREAS,  Employee is hereby employed by Employer as its Vice President and
Chief Financial Officer,  and is expected to make valuable  contributions to the
profitability and financial strength of Employer;

     WHEREAS,   Employer   desires  to  encourage   Employee  to  make  valuable
contributions  to  Employer's  business  operations  and not to  seek or  accept
employment elsewhere;

     WHEREAS,  Employee  desires to be assured of a secure minimum  compensation
from Employer for his services over a defined term;

     WHEREAS,  Employer desires to assure the continued  services of Employee on
behalf of Employer on an objective and impartial  basis and without  distraction
or  conflict  of  interest  in the event of an  attempt  by any person to obtain
control of Employer or of MFB Corp., the Indiana  corporation  which owns all of
the issued and outstanding capital stock of Employer (the "Holding Company");

     WHEREAS,  Employer  recognizes that when faced with a proposal for a change
of control of Employer or the Holding Company,  Employee will have a significant
role in helping the Boards of  Directors  assess the options  and  advising  the
Boards of  Directors on what is in the best  interests of Employer,  the Holding
Company,  and its  shareholders,  and it is necessary for Employee to be able to
provide this advice and counsel without being influenced by the uncertainties of
his own situation;

     WHEREAS,  Employer  desires  to provide  fair and  reasonable  benefits  to
Employee on the terms and subject to the conditions set forth in this Agreement;

     WHEREAS,   Employer  desires  reasonable  protection  of  its  confidential
business  and  customer  information  which it has  developed  over the years at
substantial  expense and assurance  that Employee will not compete with Employer
for a  reasonable  period  of time  after  termination  of his  employment  with
Employer, except as otherwise provided herein.

     NOW,  THEREFORE,  in consideration of these premises,  the mutual covenants
and undertakings  herein  contained and the continued  employment of Employee by
Employer  as its Vice  President  and  Chief  Financial  Officer,  Employer  and
Employee, each intending to be legally bound, covenant and agree as follows:



<PAGE>



     1.  Upon  the  terms  and  subject  to the  conditions  set  forth  in this
Agreement,  Employer  employs  Employee as Employer's  Vice  President and Chief
Financial Officer, and Employee accepts such employment.

     2.  Employee  agrees  to serve  as  Employer's  Vice  President  and  Chief
Financial Officer and to perform such duties in that office as may reasonably be
assigned to him by Employer's  Board of Directors;  provided,  however that such
duties shall be performed in or from the offices of Employer  currently  located
at Mishawaka,  Indiana,  and shall be of the same character as those  previously
performed by Employee's  predecessor  and generally  associated  with the office
held by Employee.  Employee shall not be required to be absent from the location
of the  principal  executive  offices of Employer on travel  status or otherwise
more than 45 days in any calendar year.  Employer shall not, without the written
consent of Employee,  relocate or transfer  Employee to a location  more than 30
miles  from his  principal  residence.  Although  while  employed  by  Employer,
Employee  shall  devote  substantially  all his  business  time and  efforts  to
Employer's business and shall not engage in any other related business, Employee
may use his discretion in fixing his hours and schedule of work  consistent with
the proper discharge of his duties.

     3. The term of this Agreement  shall begin November 1, 2001 (the "Effective
Date"),  and shall end on the date  which is three  years  following  such date;
provided,  however,  that such term shall be extended for an additional month on
the first day of each month  succeeding the Effective Date, so as to continue to
maintain a three-year  term and shall  continue to be so extended if  Employer's
Board of Directors  determines by resolution to extend this  Agreement  prior to
each  anniversary  of the  Effective  Date. If either party hereto gives written
notice to the other party not to extend this  Agreement in any given month or if
the Board does not determine to extend the Agreement  prior to each  anniversary
of the  Effective  Date, no further  extension  shall occur and the term of this
Agreement  shall end  three  years  subsequent  to the first day of the month in
which  such  notice  not to extend  is given or three  years  subsequent  to the
anniversary  as of which the Board  does not elect to  continue  extending  this
Agreement (such term,  including any extension  thereof shall herein be referred
to  as  the  "Term").   Notwithstanding  the  foregoing,  this  Agreement  shall
automatically  terminate  (and the Term of this Agreement  shall  thereupon end)
without notice when Employee attains 65 years of age.



<PAGE>

     4.   Employee   shall   receive  an  annual   salary  of  $102,000   ("Base
Compensation") payable at regular intervals in accordance with Employer's normal
payroll practices now or hereafter in effect.  Employer may consider and declare
from time to time increases in the salary it pays Employee and thereby increases
in his Base Compensation.  Employer may also declare incentive bonuses from time
to time to be paid to Employee in addition to his annual salary. During the Term
of this  Agreement,  but only  until  such time as a Change of  Control  occurs,
Employer  may also  declare  decreases  in the  salary it pays  Employee  if the
operating  results of Employer are  significantly  less favorable than those for
the fiscal year ending September 30, 2001, and Employer makes similar  decreases
in the salary it pays to other  executive  officers of  Employer.  In  addition,
immediately  following  the first twelve  months of the term of this  Agreement,
Employer  may make a one-time  reduction  in  Employee's  Base  Compensation  if
Employer  chooses  to  substitute  incentive  compensation  for a portion of the
Employee's previously established Base Compensation.  After a Change in Control,
no such decreases in Base  Compensation may be made, and Employer shall consider
and declare salary increases based upon the following standards:

     Inflation;

     Adjustments to the salaries of other senior management personnel; and

     Past performance of Employee and the  contribution  which Employee makes to
     the business and profits of Employer during the Term.

Any and all increases or decreases in Employee's salary pursuant to this section
shall cause the level of Base  Compensation  to be increased or decreased by the
amount of each such  increase or decrease  for purposes of this  Agreement.  The
increased or decreased  level of Base  Compensation  as provided in this section
shall  become the level of Base  Compensation  for the  remainder of the Term of
this  Agreement  until  there  is  a  further   increase  or  decrease  in  Base
Compensation as provided herein.

     5. So long as Employee is employed by Employer  pursuant to this  Agreement
and  subject to any  waiting  period  requirements  in such  plans,  he shall be
included  as  a  participant  in  all  present  and  future  employee   benefit,
retirement,  and compensation plans generally available to employees of Employer
(other than  Employer's  recognition  and retention plan and trust),  consistent
with  his  Base  Compensation  and his  position  as Vice  President  and  Chief
Financial Officer of Employer, including, without limitation,  Employer's or the
Holding  Company's  pension plan,  stock option plan,  employee stock  ownership
plan,  and  hospitalization,  major medical,  disability,  dental and group life
insurance plans, each of which Employer agrees to continue in effect on terms no
less  favorable  than  those  currently  in  effect  as of the date  hereof  (as
permitted by law) during the Term of this Agreement  unless prior to a Change of
Control the operating results of Employer are significantly  less favorable than
those for the fiscal year ending  September 30, 2001,  and unless (either before
or after a Change of Control) changes in the accounting or tax treatment of such
plans would adversely affect Employer's operating results or financial condition
in a material way, and the Board of Directors of Employer or the Holding Company
concludes that modifications to such plans need to be made to avoid such adverse
effects.

     6. So long as Employee is employed by Employer  pursuant to this Agreement,
Employee shall receive  reimbursement from Employer for all reasonable  business
expenses  incurred in the course of his employment by Employer,  upon submission
to Employer of written vouchers and statements for reimbursement. Employee shall
attend, at his discretion,  those  professional  meetings,  conventions,  and/or
similar  functions that he deems  appropriate and useful for purposes of keeping
abreast of current  developments in the industry and/or  promoting the interests
of Employer.  So long as Employee is employed by Employer  pursuant to the terms
of  this  Agreement,   Employer  shall  continue  in  effect  vacation  policies
applicable  to  Employee  no less  favorable  from his point of view than  those
written vacation policies in effect on the date hereof.



<PAGE>

     7.  Subject  to the  respective  continuing  obligations  of  the  parties,
including but not limited to those set forth in subsections 9(A), 9(B), 9(C) and
9(D) hereof,  Employee's  employment by Employer may be terminated  prior to the
expiration of the Term of this Agreement as follows:

     (A)  Employer,  by action of its Board of Directors and upon written notice
          to  Employee,   may  terminate  Employee's  employment  with  Employer
          immediately for cause. For purposes of this subsection  7(A),  "cause"
          shall be defined as (i) personal dishonesty, (ii) incompetence,  (iii)
          willful  misconduct,  (iv) breach of fiduciary duty involving personal
          profit, (v) intentional failure to perform stated duties, (vi) willful
          violation  of  any  law,  rule,  or  regulation  (other  than  traffic
          violations or similar  offenses) or final  cease-and-desist  order, or
          (vii) any material  breach of any term,  condition or covenant of this
          Agreement.

     (B)  Employer,  by  action  of  its  Board  of  Directors,   may  terminate
          Employee's  employment  with  Employer  without  cause  at  any  time;
          provided,  however,  that the "date of  termination"  for  purposes of
          determining  benefits payable to Employee under subsection 8(B) hereof
          shall be the date which is 60 days  after  Employee  receives  written
          notice of such termination.

     (C)  Employee, by written notice to Employer,  may terminate his employment
          with Employer  immediately for cause.  For purposes of this subsection
          7(B),  "cause" shall be defined as (i) any action by Employer's  Board
          of  Directors  to remove  the  Employee  as Vice  President  and Chief
          Financial  Officer of Employer,  except where the Employer's  Board of
          Directors  properly  acts to  remove  Employee  from such  office  for
          "cause" as  defined  in  subsection  7(A)  hereof,  (ii) any action by
          Employer's  Board of  Directors  which  Employee  reasonably  believes
          materially  limits,  increases,  or modifies  Employee's duties and/or
          authority as Vice  President and Chief  Financial  Officer of Employer
          (including  his  authority,  subject  to  corporate  controls  no more
          restrictive  than  those in  effect  on the date  hereof,  to hire and
          discharge employees who are not bona fide officers of Employer), (iii)
          any failure of Employer to obtain the  assumption of the obligation to
          perform this Agreement by any successor or the  reaffirmation  of such
          obligation by Employer,  as contemplated in section 20 hereof; or (iv)
          any  material  breach by Employer of a term,  condition or covenant of
          this Agreement.

     (D)  Employee,  upon  sixty  (60)  days  written  notice to  Employer,  may
          terminate his employment with Employer without cause.



<PAGE>

     (E)  Employee's  employment  with Employer shall  terminate in the event of
          Employee's  death or  disability.  For purposes  hereof,  "disability"
          shall be defined as Employee's inability by reason of illness or other
          physical or mental  incapacity  to perform the duties  required by his
          employment  for any  consecutive  One Hundred Eighty (180) day period,
          provided  that  notice  of any  termination  by  Employer  because  of
          Employee's "disability" shall have been given to Employee prior to the
          full resumption by him of the performance of such duties.

     8. In the event of  termination  of  Employee's  employment  with  Employer
pursuant to section 7 hereof, compensation shall continue to be paid by Employer
to Employee as follows:

     (A)  In the  event of  termination  pursuant  to  subsection  7(A) or 7(D),
          compensation  provided for herein (including Base Compensation)  shall
          continue to be paid, and Employee shall continue to participate in the
          employee benefit,  incentive bonus, retirement, and compensation plans
          and other perquisites as provided in sections 5 and 6 hereof,  through
          the date of termination  specified in the notice of  termination.  Any
          benefits payable under insurance,  health,  retirement and bonus plans
          as a result of  Employee's  participation  in such plans  through such
          date shall be paid when due under those plans. The date of termination
          specified in any notice of  termination  pursuant to  Subsection  7(A)
          shall be no later  than the last  business  day of the  month in which
          such notice is provided to Employee.



<PAGE>



     (B)  In the  event of  termination  pursuant  to  subsection  7(B) or 7(C),
          compensation  provided for herein (including Base Compensation)  shall
          continue to be paid, and Employee shall continue to participate in the
          employee benefit,  incentive bonus, retirement, and compensation plans
          and other perquisites as provided in sections 5 and 6 hereof,  through
          the date of termination  specified in the notice of  termination.  Any
          benefits payable under insurance,  health,  retirement and bonus plans
          as a result of  Employee's  participation  in such plans  through such
          date shall be paid when due under those plans.  In addition,  Employee
          shall be  entitled  to  continue  to receive  from  Employer  his Base
          Compensation  at the rate in effect at the time of  termination,  plus
          any incentive bonus he received for the tax year preceding the date of
          termination  (1)  for  three   additional   12-month  periods  if  the
          termination  follows a Change of Control or (2) for the remaining Term
          of the  Agreement  if the  termination  does not  follow  a Change  of
          Control;  provided,  however,  that for any  termination  of  employee
          pursuant to subsection  7(B) or 7(C) during his first twelve months of
          employment  not  following  a Change of Control,  the  maximum  amount
          payable to Employee  under this  paragraph  shall be six months of his
          Base  Compensation.  In addition,  during such period,  Employer  will
          maintain  in full  force  and  effect  for the  continued  benefit  of
          Employee each employee  welfare benefit plan and each employee pension
          benefit  plan (as such terms are  defined in the  Employee  Retirement
          Income  Security  Act of  1974,  as  amended)  in which  Employee  was
          entitled  to  participate   immediately  prior  to  the  date  of  his
          termination,  unless an  essentially  equivalent and no less favorable
          benefit is provided by a subsequent employer of Employee. If the terms
          of any employee  welfare benefit plan or employee pension benefit plan
          of Employer or applicable laws do not permit  continued  participation
          by  Employee,  Employer  will arrange to provide to Employee a benefit
          substantially  similar to, and no less favorable  than, the benefit he
          was  entitled  to receive  under such plan at the end of the period of
          coverage.  For purposes of this Agreement, a "Change of Control" shall
          mean an acquisition of "control" of the Holding Company or of Employer
          within the meaning of 12  C.F.R.ss.  574.4(a)  (other than a change of
          control  resulting from a trustee or other fiduciary holding shares of
          Common Stock under an employee  benefit plan of the Holding Company or
          any of its subsidiaries).

     (C)  In the event of termination pursuant to subsection 7(E),  compensation
          provided for herein (including Base Compensation) shall continue to be
          paid,  and  Employee  shall  continue to  participate  in the employee
          benefit, incentive bonus, retirement, and compensation plans and other
          perquisites  as provided in sections 5 and 6 hereof,  (i) in the event
          of Employee's  death,  through the date of death, or (ii) in the event
          of  Employee's  disability,  through  the  date of  proper  notice  of
          disability as required by subsection  7(D). Any benefits payable under
          insurance,   health,  retirement  and  bonus  plans  as  a  result  of
          Employer's participation in such plans through such date shall be paid
          when due under those plans.

     (D)  Employer  will permit  Employee or his personal  representative(s)  or
          heirs,   during  a  period  of  three  months   following   Employee's
          termination  of  employment  by Employer  for the reasons set forth in
          subsections  7(B) or 7(C),  if such  termination  follows  a Change of
          Control,  to require Employer,  upon written request,  to purchase all
          outstanding  stock options  previously  granted to Employee  under any
          Holding  Company stock option plan then in effect  whether or not such
          options are then  exercisable  or have  terminated  at a cash purchase
          price equal to the amount by which the  aggregate  "fair market value"
          of the shares  subject to such options  exceeds the  aggregate  option
          price for such shares. For purposes of this Agreement,  the term "fair
          market  value" shall mean the higher of (1) the average of the highest
          asked prices for Holding Company shares in the over-the-counter market
          as  reported  on the  NASDAQ  system if the  shares are traded on such
          system for the 30 business days preceding such termination, or (2) the
          average per share price actually paid for the most highly priced 1% of
          the Holding  Company shares  acquired in connection with the Change of
          Control of the Holding  Company by any person or group  acquiring such
          control.

     9. In order to  induce  Employer  to enter  into this  Agreement,  Employee
hereby agrees as follows:



<PAGE>



     (A)  While Employee is employed by Employer and for a period of three years
          after  termination of such employment for reasons other than those set
          forth in subsections  7(B) or 7(C) of this  Agreement,  Employee shall
          not divulge or furnish any trade  secrets (as defined in IND.  CODEss.
          24-2-3-2) of Employer or any confidential  information acquired by him
          while employed by Employer concerning the policies,  plans, procedures
          or customers  of Employer to any person,  firm or  corporation,  other
          than  Employer  or upon its  written  request,  or use any such  trade
          secret  or  confidential   information   directly  or  indirectly  for
          Employee's  own  benefit  or for the  benefit of any  person,  firm or
          corporation  other  than  Employer,   since  such  trade  secrets  and
          confidential  information  are  confidential  and  shall at all  times
          remain the property of Employer.

     (B)  For a period of three years after termination of Employee's employment
          by Employer for reasons other than those set forth in subsections 7(B)
          or 7(C) of this  Agreement,  Employee shall not directly or indirectly
          provide banking or bank-related  services to or solicit the banking or
          bank-related  business of any customer of Employer at the time of such
          provision of services or  solicitation  which  Employee  served either
          alone or with others  while  employed  by Employer in any city,  town,
          borough,  township, village or other place in which Employee performed
          services  for  Employer  during the last three years (or such  shorter
          period)  he was  employed  by it, or assist  any  actual or  potential
          competitor of Employer to provide banking or bank-related  services to
          or solicit any such customer's banking or bank-related business in any
          such place.

     (C)  While  Employee is  employed by Employer  and for a period of one year
          after  termination  of  Employee's  employment by Employer for reasons
          other  than  those  set  forth  in  subsections  7(B)  or 7(C) of this
          Agreement,  Employee shall not, directly or indirectly,  as principal,
          agent,  or  trustee,   or  through  the  agency  of  any  corporation,
          partnership, trade association, agent or agency, engage in any banking
          or  bank-related  business or venture which competes with the business
          of Employer as  conducted  during  Employee's  employment  by Employer
          within St.  Joseph  County or within a radius of 25 miles of any other
          office of  Employer  where  Employee  was  employed  for more than six
          months in the three years next preceding termination.

     (D)  If Employee's  employment  by Employer is  terminated  for any reason,
          Employee  will  turn  over  immediately  thereafter  to  Employer  all
          business correspondence,  letters, papers, reports,  customers' lists,
          financial statements, credit reports or other confidential information
          or  documents  of  Employer or its  affiliates  in the  possession  or
          control of Employee, all of which writings are and will continue to be
          the sole and exclusive property of Employer or its affiliates.


If  Employee's  employment  by  Employer is  terminated  during the Term of this
Agreement for reasons set forth in subsections  7(B) or 7(C) of this  Agreement,
Employee shall have no  obligations  to Employer with respect to  noncompetition
under sections 9(A) through (C) hereof.



<PAGE>



     10. Any termination of Employee's  employment with Employer as contemplated
by section 7 hereof,  except in the circumstances of Employee's death,  shall be
communicated by written "Notice of Termination" by the terminating  party to the
other party hereto.  Any "Notice of Termination"  pursuant to subsections  7(A),
7(C) or 7(E) shall  indicate the specific  provisions of this  Agreement  relied
upon and shall  set  forth in  reasonable  detail  the  facts and  circumstances
claimed to provide a basis for such termination.

     11.  If  Employee  is  suspended   and/or   temporarily   prohibited   from
participating  in the conduct of  Employer's  affairs by a notice  served  under
section  8(e)(3) or (g)(1) of the Federal Deposit  Insurance Act (12 U.S.C.  ss.
1818(e)(3) and (g)(1)),  Employer's  obligations  under this Agreement  shall be
suspended as of the date of service,  unless stayed by appropriate  proceedings.
If the charges in the notice are dismissed,  Employer shall (i) pay Employee all
or part of the compensation  withheld while its obligations under this Agreement
were suspended and (ii)  reinstate (in whole or in part) any of its  obligations
which were suspended.

     12. If Employee is removed and/or permanently prohibited from participating
in the conduct of Employer's affairs by an order issued under section 8(e)(4) or
(g)(1) of the  Federal  Deposit  Insurance  Act (12  U.S.C.  ss.  1818(e)(4)  or
(g)(1)),  all obligations of Employer under this Agreement shall terminate as of
the  effective  date of the  order,  but  vested  rights of the  parties  to the
Agreement shall not be affected.

     13. If Employer is in default (as defined in section 3(x)(1) of the Federal
Deposit  Insurance Act), all obligations under this Agreement shall terminate as
of the date of default, but this provision shall not affect any vested rights of
Employer or Employee.

     14. All  obligations  under this Agreement may be terminated  except to the
extent  determined  that the  continuation of the Agreement is necessary for the
continued  operation  of  Employer:  (i) by the Director of the Office of Thrift
Supervision,  or his or her designee (the  "Director"),  at the time the Federal
Deposit  Insurance  Corporation or Resolution Trust  Corporation  enters into an
agreement to provide  assistance to or on behalf of Employer under the authority
contained in Section 13(c) of the Federal Deposit  Insurance Act; or (ii) by the
Director  at the time the  Director  approves  a  supervisory  merger to resolve
problems  related to operation of Employer or when Employer is determined by the
Director  to be in an unsafe and  unsound  condition.  Any rights of the parties
that have already vested, however, shall not be affected by such action.

     15.  Anything in this  Agreement  to the contrary  notwithstanding,  in the
event that the  Employer's  independent  public  accountants  determine that any
payment by the Employer to or for the benefit of the  Employee,  whether paid or
payable pursuant to the terms of this Agreement,  would be non-deductible by the
Employer for federal income tax purposes because of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), then the amount payable to or for
the benefit of the Employee pursuant to this Agreement shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this section 15, the "Reduced
Amount" shall be the amount which  maximizes the amount payable  without causing
the payment to be  non-deductible by the Employer because of Section 280G of the
Code. Any payments made to Employee  pursuant to this  Agreement,  or otherwise,
are subject to and conditional upon their  compliance with 12 U.S.C.  ss.1828(k)
and any regulations  promulgated  thereunder,  to the extent  applicable to such
payments.



<PAGE>



     16. If a dispute arises  regarding the termination of Employee  pursuant to
section 7 hereof or as to the  interpretation  or  enforcement of this Agreement
said dispute shall be resolved by binding  arbitration  determined in accordance
with the rules of the American Arbitration Association and if Employee obtains a
final  award in his  favor or his  claim is  settled  by  Employer  prior to the
rendering  of an  award  by such  arbitration,  all  reasonable  legal  fees and
expenses incurred by Employee in contesting or disputing any such termination or
seeking to obtain or enforce any right or benefit provided for in this Agreement
or  otherwise  pursuing  his  claim  shall be paid by  Employer,  to the  extent
permitted by law.

     17. Should  Employee die after  termination of his employment with Employer
while any amounts are payable to him hereunder,  this  Agreement  shall inure to
the  benefit of and be  enforceable  by  Employee's  executors,  administrators,
heirs,  distributees,  devisees and legatees and all amounts  payable  hereunder
shall be paid in  accordance  with the  terms of this  Agreement  to  Employee's
devisee,  legatee or other  designee  or, if there is no such  designee,  to his
estate.

     18. For purposes of this  Agreement,  notices and all other  communications
provided  for herein  shall be in writing and shall be deemed to have been given
when delivered or mailed by United States  registered or certified mail,  return
receipt requested, postage prepaid, addressed as follows:

     If to Employee:   Thomas J. Flournoy
                       51780 Windyridge Drive
                       South Bend, IN  46628

     If to Employer:   MFB Financial
                       121 South Church Street
                       P.O. Box 528
                       Mishawaka, Indiana  46546

or to such address as either party hereto may have  furnished to the other party
in writing in  accordance  herewith,  except  that  notices of change of address
shall be effective only upon receipt.

     19. This  Agreement  supersedes  and replaces any  pre-existing  employment
agreement between the Employer and the Employee.  The validity,  interpretation,
and  performance of this Agreement shall be governed by the laws of the State of
Indiana, exist as otherwise required by mandatory operation of federal law.



<PAGE>



     20. Employer shall require any successor  (whether  direct or indirect,  by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of Employer, by agreement in form and substance  satisfactory
to Employee to expressly  assume and agree to perform this Agreement in the same
manner and same extent that Employer  would be required to perform it if no such
succession had taken place.  Failure of Employer to obtain such agreement  prior
to the  effectiveness  of any such  succession  shall be a material  intentional
breach of this Agreement and shall entitle  Employee to terminate his employment
with Employer  pursuant to subsection  7(C) hereof.  As used in this  Agreement,
"Employer" shall mean Employer as herein before defined and any successor to its
business or assets as aforesaid.

     21. No provision of this  Agreement  may be modified,  waived or discharged
unless such waiver,  modification or discharge is agreed to in writing signed by
Employee  and  Employer.  No waiver by  either  party  hereto at any time of any
breach by the other  party  hereto of, or  compliance  with,  any  condition  or
provision of this  Agreement to be performed by such other party shall be deemed
a waiver  of  dissimilar  provisions  or  conditions  at the  same or any  prior
subsequent time. No agreements or representation,  oral or otherwise, express or
implied,  with  respect to the  subject  matter  hereof have been made by either
party which are not set forth expressly in this Agreement.

     22. The invalidity or  unenforceability of any provisions 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.

     23. This  Agreement  may be executed in one or more  counterparts,  each of
which shall be deemed an original but all of which together shall constitute one
and the same agreement.

     24. This  Agreement is personal in nature and neither  party hereto  shall,
without consent of the other, assign or transfer this Agreement or any rights or
obligations  hereunder  except as  provided  in section 17 and section 20 above.
Without  limiting  the  foregoing,  Employee's  right  to  receive  compensation
hereunder shall not be assignable or transferable,  whether by pledge,  creation
of a security interest or otherwise, other than a transfer by his will or by the
laws of descent or  distribution  as set forth in section 17 hereof,  and in the
event of any  attempted  assignment  or  transfer  contrary  to this  paragraph,
Employer  shall have no liability to pay any amounts so attempted to be assigned
or transferred.

     25. If any of the  provisions  in this  Agreement  shall  conflict  with 12
C.F.R.ss. 563.39(b), as it may be amended from time to time, the requirements of
such  regulation  shall  supersede  any  contrary  provisions  herein  and shall
prevail.

<PAGE>

     IN WITNESS  WHEREOF,  the parties have caused the  Agreement to be executed
and delivered as of the day and year first above set forth.

                                  MFB FINANCIAL

                                  By: /s/ Charles J. Viater
                                     -------------------------------------------

                                  Name:   Charles J. Viater
                                       -----------------------------------------

                                  Title:  President
                                        ----------------------------------------

                                  "Employer"

                                  /s/ Thomas J. Flournoy
                                  ----------------------------------------------
                                  Thomas J. Flournoy

                                  "Employee"

     The undersigned,  MFB Corp, sole shareholder of Employer, agrees that if it
shall be determined  for any reason that any  obligation on the part of Employer
to  continue  to make any  payments  due under this  Agreement  to  Employee  is
unenforceable  for any  reason,  MFB  Corp.  agrees  to honor  the terms of this
Agreement  and  continue to make any such  payments  due  hereunder  to Employee
pursuant to the terms of this Agreement.

                                  MFB CORP.

                                  By: /s/ Charles J. Viater
                                     -------------------------------------------

                                  Name:  Charles J. Viater
                                       -----------------------------------------

                                  Title: President
                                        ----------------------------------------