CHANGE IN CONTROL SEVERANCE AGREEMENT
                      -------------------------------------

     THIS CHANGE IN CONTROL SEVERANCE AGREEMENT  ("Agreement") entered into this
3rd day of May, 1999  ("Effective  Date"),  by and between Third Federal Savings
Bank (the "Savings Bank") and Dennis R. Stewart (the "Employee").

     WHEREAS, the Employee is currently employed by the Savings Bank as a Senior
Vice President and Chief  Financial  Officer and is experienced in all phases of
the business of the Savings Bank; and

     WHEREAS,  the  parties  desire by this  writing to set forth the rights and
responsibilities  of the Savings  Bank and  Employee if the Savings  Bank should
undergo a change in control (as defined  hereinafter in the Agreement) after the
Effective Date.

     NOW, THEREFORE, it is AGREED as follows:

     1.  Employment.  The  Employee is employed in the capacity as a Senior Vice
President and Chief  Financial  Officer of the Savings Bank.  The Employee shall
render such  administrative  and management  services to the Savings Bank and TF
Financial   Corporation   ("Parent")  as  are  currently  rendered  and  as  are
customarily  performed by persons situated in a similar executive capacity.  The
Employee's  other duties shall be such as the Board of Directors for the Savings
Bank (the  "Board of  Directors"  or "Board")  may from time to time  reasonably
direct, including normal duties as an officer of the Savings Bank.

     2. Term of Agreement.  The term of this  Agreement  shall be for the period
commencing on the Effective Date and ending  twenty-four (24) months thereafter.
Additionally,  on, or before,  each annual  anniversary  date from the Effective
Date,  the term of this  Agreement  may be extended for an  additional  one year
period  beyond  the then  effective  expiration  date upon a  determination  and
resolution of the Board of Directors  that the  performance  of the Employee has
met the  requirements  and  standards  of the  Board,  and that the term of such
Agreement shall be extended.


     3.   Termination of Employment in Connection with or Subsequent to a Change
          in Control.
          ----------------------------------------------------------------------

     (a) Notwithstanding  any provision herein to the contrary,  in the event of
the  involuntary  termination  of Employee's  employment  under this  Agreement,
absent Just Cause, in connection with, or within  twenty-four (24) months after,
any Change in Control  of the Bank or Parent,  Employee  shall be paid an amount
equal to two (2) times the prior three (3)  calendar  year (or lesser  period if
not employed for such 3 year period)  average  annual  compensation  paid to the
Employee by the Bank  (whether  said  amounts  were  received or


                                       1
<PAGE>

deferred by the Employee) and the costs  associated  with  maintaining  coverage
under the Bank's  medical and dental  insurance  reimbursement  plans similar to
that in effect on the date of termination of employment for a period of one year
thereafter. Said sum shall be paid, at the option of Employee, either in one (1)
lump sum within thirty (30) days of such  termination,  or in periodic  payments
over the next 24 months,  and such payments shall be in lieu of any other future
payments   which  the  Employee   would  be   otherwise   entitled  to  receive.
Notwithstanding  the forgoing,  all sums payable  hereunder  shall be reduced in
such  manner and to such extent so that no such  payments  made  hereunder  when
aggregated with all other payments to be made to the Employee by the Bank or the
Parent shall be deemed an "excess parachute  payment" in accordance with Section
280G of the  Internal  Revenue  Codes of 1986,  as amended  (the  "Code") and be
subject to the  excise tax  provided  at Section  4999(a) of the Code.  The term
"Change in Control" shall mean: (i) the sale of all, or a material  portion,  of
the assets of the Bank or the Parent; (ii) the merger or recapitalization of the
Bank or the Parent  whereby the Bank or the Parent is not the surviving  entity;
(iii) a change in control of the Bank or the  Parent,  as  otherwise  defined or
determined by the Office of Thrift Supervision or regulations promulgated by it;
or (iv) the  acquisition,  directly or indirectly,  of the beneficial  ownership
(within  the  meaning  of  that  term  as it is used  in  Section  13(d)  of the
Securities  Exchange  Act of 1934  and the  rules  and  regulations  promulgated
thereunder)  of  twenty-five  percent  (25%) or more of the  outstanding  voting
securities of the Bank or the Parent by any person,  trust, entity or group. The
term "person"  means an individual  other than the Employee,  or a  corporation,
partnership,   trust,   association,   joint  venture,  pool,  syndicate,   sole
proprietorship,  unincorporated  organization  or any other  form of entity  not
specifically listed herein.

     (b)  Notwithstanding  any other provision of this Agreement to the contrary
except as  provided at Sections  4(b),  4(c),  4(d),  4(e) and 5,  Employee  may
voluntarily  terminate his employment  under this Agreement  within  twenty-four
(24) months  following a Change in Control of the Bank or Parent,  and  Employee
shall  thereupon  be entitled to receive the payment and  benefits  described in
Section 3(a) of this Agreement,  upon the occurrence, or within ninety (90) days
thereafter,  of any of the following events, which have not been consented to in
advance by the  Employee in writing:  (i) if Employee  would be required to move
his personal  residence or perform his principal  executive  functions more than
fifty (50) miles from the  Employee's  primary  office as of the signing of this
Agreement;  (ii) if in the  organizational  structure  of the  Bank  or  Parent,
Employee  would be required  to report to a person or persons  deemed to be at a
management  level below the management  level to which Employee was reporting to
prior to the  Change  in  Control;  (iii) if the Bank or Parent  should  fail to
maintain the Employee's base compensation in effect as of the date of the Change
in Control and existing  employee  benefits  plans,  including  material  fringe

                                       2
<PAGE>

benefit,  stock  option and  retirement  plans,  except to the extent  that such
reduction in benefit  programs is part of an overall  adjustment in benefits for
all  employees of the Bank or Parent and does not  disproportionately  adversely
impact  the   Employee;   (iv)  if  Employee   would  be  assigned   duties  and
responsibilities  other than those  normally  associated  with his  position  as
referenced at Section 1, herein, for a period of more than six months; or (v) if
Employee's  responsibilities  or  authority  have  in any  way  been  materially
diminished or reduced for a period of more than six months.

     4.   Other Changes in Employment Status.
          ----------------------------------

     (a) Except as provided for at Section 3, herein, the Board of Directors may
terminate the  Employee's  employment at any time,  but any  termination  by the
Board of Directors other than  termination  for Just Cause,  shall not prejudice
the Employee's right to compensation or other benefits under the Agreement.  The
Employee shall have no right to receive  compensation  or other benefits for any
period  after  termination  for Just Cause.  Termination  for "Just Cause" shall
include termination because of the Employee's 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 material breach of any provision of the Agreement.

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

     (c) If the Savings  Bank is in default  (as  defined in Section  3(x)(1) of
FDIA) all  obligations  under this Agreement  shall  terminate as of the date of
default,  but  this  paragraph  shall  not  affect  any  vested  rights  of  the
contracting parties.

     (d) All obligations under this Agreement shall be terminated, except to the
extent  determined  that  continuation  of this  Agreement is necessary  for the
continued  operation of the Savings  Bank:  (i) by the Director of the Office of
Thrift Supervision ("Director of OTS"), or his or her designee, at the time that
the Federal Deposit Insurance  Corporation  ("FDIC") enters into an agreement to
provide  assistance  to or on behalf of the  Savings  Bank  under the  authority
contained in Section  13(c) of FDIA;  or (ii) by the Director of the OTS, or his
or her  designee,  at the time  that  the  Director  of the  OTS,  or his or her
designee approves a supervisory  merger to resolve problems related to operation
of the Savings  Bank or when

                                       3
<PAGE>

the Savings Bank is  determined by the Director of the OTS to be in an unsafe or
unsound condition.  Any rights of the parties that have already vested, however,
shall not be affected by such action.

     (e) Notwithstanding  anything herein to the contrary,  any payments made to
the Employee  pursuant to the Agreement,  or otherwise,  shall be subject to and
conditioned   upon  compliance  with  12  USC  ss.1828(k)  and  any  regulations
promulgated thereunder.

     5.  Suspension  of  Employment  .  If  the  Employee  is  suspended  and/or
temporarily  prohibited from  participating in the conduct of the Savings Bank's
affairs  by a notice  served  under  Section  8(e)(3)  or (g)(1) of the FDIA (12
U.S.C.  1818(e)(3)  and  (g)(1)),  the  Savings  Bank's  obligations  under  the
Agreement  shall  be  suspended  as of the date of  service,  unless  stayed  by
appropriate proceedings. If the charges in the notice are dismissed, the Savings
Bank shall, (i) pay the Employee all or part of the compensation  withheld while
its  contract   obligations  were  suspended  and  (ii)  reinstate  any  of  its
obligations which were suspended.

     6.   Successors and Assigns.
          ----------------------

     (a) This  Agreement  shall inure to the benefit of and be binding  upon any
corporate or other  successor of the Savings Bank which shall acquire,  directly
or  indirectly,  by  merger,  consolidation,   purchase  or  otherwise,  all  or
substantially all of the assets or stock of the Savings Bank.

     (b) The Employee shall be precluded from assigning or delegating his rights
or duties  hereunder  without first obtaining the written consent of the Savings
Bank.

     7.  Amendments.  No  amendments  or  additions to this  Agreement  shall be
binding  upon the  parties  hereto  unless  made in  writing  and signed by both
parties, except as herein otherwise specifically provided.

     8. Applicable Law. This agreement shall be governed by all respects whether
as to validity, construction, capacity, performance or otherwise, by the laws of
the Commonwealth of Pennsylvania, except to the extent that Federal law shall be
deemed to apply.

     9. Severability. The provisions of this Agreement shall be deemed severable
and the  invalidity or  unenforceability  of any provision  shall not affect the
validity or enforceability of the other provisions hereof.

     10.  Arbitration.  Any  controversy  or claim arising out of or relating to
this  Agreement,  or the breach  thereof,  shall be settled  by  arbitration  in
accordance  with the rules then in effect of the district office of the American
Arbitration  Association ("AAA")


                                       4
<PAGE>

nearest to the home  office of the Savings  Bank,  and  judgment  upon the award
rendered may be entered in any court having jurisdiction thereof,  except to the
extent that the parties may otherwise  reach a mutual  settlement of such issue.
The Savings Bank shall incur the cost of all fees and expenses  associated  with
filing a request for  arbitration  with the AAA,  whether such filing is made on
behalf of the Savings  Bank or the  Employee,  and the costs and  administrative
fees  associated  with  employing  the  arbitrator  and  related  administrative
expenses  assessed  by the AAA.  Each party  shall be  responsible  for any fees
incurred on its own behalf with respect to other expenses,  including attorneys'
fees, arising from such dispute, proceedings or actions.

     11.  Confidentiality.
          ---------------

     (a)  Employee  agrees  that,  at all  times  hereafter,  he will  keep  all
confidential and proprietary  business and marketing  strategies of Savings Bank
and any and all other  information  which he learned  regarding the Savings Bank
during the course of his employment by Savings Bank, in strictest confidence and
will not  disclose  any part or aspect  thereof to anyone for any reason  unless
required by law to do so.

     (b) All marketing and business materials,  existing or prospective customer
lists  or  statements,  seminar  materials,  drawings,  designs,  books,  cards,
records,  accounts,  audio visual reports,  slides, files, notes, memoranda, and
other papers, and any software,  computer programs,  or data base information or
any other  information  obtained from Savings Bank or connected  with or arising
from any affairs of Savings Bank or his employment hereunder (the "Records"), in
the  charge or  possession  or  knowledge  of  Employee  shall be and remain the
exclusive  property  of  Savings  Bank and  shall  not be used,  transferred  or
disclosed  in  any  way  by  Employee  except  in the  ordinary  performance  of
Employee's  duties for Savings Bank while an employee of Savings Bank.  Upon the
termination of Employee's  employment,  any and all Records of whatever kind and
in whatever form maintained,  as well as all copies and reproductions thereof in
the  possession  or control of Employee  shall be turned over and  delivered  by
Employee to Savings Bank without any hesitancy or delay.

     12. Entire  Agreement.  This Agreement  together with any  understanding or
modifications  thereof as agreed to in writing by the parties,  shall constitute
the entire agreement between the parties hereto.

                                       5