EMPLOYMENT AGREEMENT


         This  Agreement,  made and dated as of July 1, 1999, by and between MFB
Financial  (formerly   Mishawaka  Federal  Savings),   a  federal  savings  bank
("Employer"),  and Donald R. Kyle,  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 Executive Vice
President  and  Chief  Operating  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  Executive  Vice  President  and Chief  Operating
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 Executive Vice President and
Chief Operating Officer, and Employee accepts such employment.


          2. Employee agrees to serve as Employer's Executive Vice President and
Chief  Operating  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 July 1, 1999 (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.

          4. Employee  shall receive an annual salary of  $_____________  ("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, 1995, 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
Employee  chooses  to  substitute  incentive   compensation  for  a  portion  of
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  Employee's  recognition  and retention plan and trust),  consistent
with his Base  Compensation  and his position as Executive  Vice  President  and
Chief Operating 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, 1998,  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. So long
as Employee is employed by Employer  pursuant to this Agreement,  Employee shall
be entitled to the use of a company car provided by the Employer.

          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,  (vii) any  material  breach of any term,  condition or
                  covenant of this  Agreement,  or (viii) any breach by Employee
                  of any of the provisions  contained in paragraphs 5, 6 or 7 of
                  Employee's Employment Agreement with National City Corporation
                  and the  surviving  corporation  of the  merger of Fort  Wayne
                  National  Corporation into National City, Valley American Bank
                  dated as of April ___,  1998 (the  "National  City  Employment
                  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 Executive  Vice  President and Chief  Operating  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 Executive Vice President and Chief
                  Operating  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.

         (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.

         (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  the  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.  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:

         (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. CODE ss.  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.

         (E)      Employee   agrees  to  comply  with  the  terms  of,  and  the
                  restrictions  imposed on his conduct by, paragraphs 5, 6 and 7
                  of the National City Employment Agreement.

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.

         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.

         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:            Donald R. Kyle
                                    51364 Lake Pointe Court
                                    Granger, Indiana   46530

         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.

         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  hereinbefore  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.

         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:
                                          ------------------------------------
                                        Name:
                                          ------------------------------------
                                        Title:
                                          ------------------------------------
                                        "Employer"


                                        Donald R. Kyle

                                        "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:
                                          ------------------------------------
                                       Name:
                                            ----------------------------------
                                       Title:
                                             ---------------------------------