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                                                                   EXHIBIT 10.12

                         ST. FRANCIS CAPITAL CORPORATION

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT is effective as of January 1, 2000 (the
"Commencement Date") between St. Francis Capital Corporation, its successors and
assigns, a Wisconsin corporation (hereinafter referred to as the "Company"),
having its principal offices located at 13400 Bishops Lane, Brookfield,
Wisconsin 53005, and Thomas R. Perz (the "Executive").

                                    RECITALS

         WHEREAS, Executive is a key employee, whose extensive background,
knowledge and experience in the financial services industry has substantially
benefited both St. Francis Bank, FSB (the "Bank") and the Company and whose
continued employment by the Company in the capacities of President, Chief
Executive Officer and Chairman of the Board ("Corporate Position") will benefit
the Company in the future; and

         WHEREAS, the parties are mutually desirous of entering into this
Agreement setting forth the terms and conditions for the employment relationship
between the Company and Executive; and

         WHEREAS, the Company's Board of Directors has approved and authorized
its entry into this Agreement with Executive.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below:

         1. Employment. The Company shall employ Executive, and Executive shall
serve the Company, on the terms and conditions set forth in this Agreement.

         2. Term of Employment. The period of Executive's employment under this
Agreement shall coincide with his period of employment by the Bank under the St.
Francis Bank, FSB Employment Agreement (the "Bank Agreement") entered into
between the Bank and Executive and bearing even date herewith. The term of
employment as in effect from time to time hereunder shall be referred to as the
"Employment Term".

         3. Position and Duties. Executive shall serve the Company in his
Corporate Position as its President and Chief Executive Officer. As such,
Executive shall report directly to the Company's Board of Directors, be
nominated as a management candidate for election to the Board of Directors upon
expiration of each term thereon while this Agreement remains in effect, and be
generally responsible for selection and supervision of the Company's management
team and for the formulation of Company business and personnel policies, and
shall render executive, policy-making and other management services of the type
customarily performed by persons serving in similar capacities at other bank and
savings bank holding companies, together with such other duties and
responsibilities as may be appropriate to Executive's position and as may


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be from time to time determined by the Bank's Board of Directors to be necessary
to its operations and in accordance with its bylaws.

         4. Compensation. As compensation for services provided pursuant to this
Agreement, Executive shall receive from the Company the compensation and
benefits set forth below:

              (i) Base Salary. During the Employment Term, Executive shall
         receive a base salary payable by the Bank ("Base Salary") in such
         amount as may from time to time be approved by the Board of Directors
         of the Bank; provided, however, that the Company and Executive agree
         that (i) a portion of the amount received by Executive from the Bank
         will be allocable to time and effort of the Executive spent on behalf
         of the Company pursuant to this Agreement, and (ii) that the Company
         may reimburse the Bank in an amount jointly determined by the Boards of
         Directors of the Company and Bank to reflect such allocable portion. No
         increase in Base Salary paid by the Bank (or the amount thereof
         reimbursed by the Company) or other compensation granted by the Company
         or Bank shall in any way limit or reduce any other obligation of the
         Company under this Agreement. Executive's Base Salary and other
         compensation shall be paid in accordance with the Bank's regular
         payroll practices, as then in effect.

              (ii) Bonus Payments. In addition to Base Salary, Executive shall
         be entitled, during the Employment Term, to participate in and receive
         payments from all bonus and other incentive compensation plans (as
         currently in effect, as modified from time to time, or as subsequently
         adopted) of the Company; provided, however, that nothing contained
         herein shall grant Executive the right to continue in any bonus or
         other incentive compensation plan following its discontinuance by the
         Board (except to the extent Executive had earned or otherwise
         accumulated vested rights therein prior to such discontinuance).

              (iii) Other Benefits. During the Employment Term, the Company
         shall provide to Executive all other benefits of employment (or, with
         Executive's consent, equivalent benefits) generally made available to
         other Executive Officers of the Company. In addition, Executive shall
         participate in any stock purchase, stock option or stock appreciation
         rights, plans, or any other stock based program of any type, made
         available by the Company to its Executive Officers.

              Executive shall be entitled to the same vacation, sick time,
         personal days and other perquisites in the same manner and to the same
         extent as such benefits are available under the Bank Agreement;
         provided that this Agreement is intended to allow Executive to utilize
         the perquisites as provided pursuant to the Bank Agreement and not to
         create additional perquisites hereunder.

              Nothing contained herein shall be construed as granting Executive
         the right to continue in any benefit plan or program, or to receive any
         other perquisite of employment provided under this paragraph 4(iii)
         (except to the extent Executive had previously earned or accumulated
         vested rights therein) following termination or discontinuance of such
         plan, program or perquisite by the Board.

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         5. Termination. This Agreement shall terminate upon the effective date
of termination of the Bank Agreement.

         Upon termination of this Agreement simultaneous with termination of the
Bank Agreement, Executive shall be entitled to the receipt of
termination/severance benefits from the Bank as determined under all applicable
provisions of the Bank Agreement ("Severance Benefits"). The Bank shall be
primarily responsible for the payment of Severance Benefits; provided, however,
that the Company may reimburse the Bank for a portion of the cost of Executive's
Severance Benefits in any amount jointly determined by the Boards of Directors
of the Company and Bank to correspond to the allocation of Executive's time and
effort between Bank and Company matters during the 12-month period preceding
termination of the Bank Agreement. Notwithstanding the foregoing, if the
application of Section 6 of the Bank Agreement results in Unpaid Severance as
defined therein, the Company shall be responsible for payment to Executive of
the entire amount of the Unpaid Severance and shall also pay to Executive an
additional amount (the "Reimbursement Payment") such that the net amount
retained by Executive after deduction of (i) any tax imposed by Section 4999 of
the Internal Revenue Code (the "Excise Tax") and any interest charges or
penalties in respect to the imposition of such Excise Tax (but not any federal,
state or local income tax) on the Total Payments (which shall include Severance
Benefits and the Unpaid Severance, together with any other payments and/or the
value of any benefits provided by the Bank or Company, including but not limited
to any amount or value attributable to the vesting of stock options upon
Executive's termination and to which said Excise Tax applies by reason of
Section 280G of the Code), and (ii) any federal, state and local income tax and
Excise Tax upon the payment pursuant to Section 5(i) above, so that the total
received by Executive after deduction of said Excise Taxes shall be equal to the
Total Payments. For purposes of determining the amount of Reimbursement Payment,
Executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Reimbursement
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of Executive's domicile for income
tax purposes on the date the Reimbursement Payment is made, net of the maximum
reduction of federal income taxes that could be obtained from deduction of such
state and local taxes.

         6.   General Provisions.


              (i) Successors; Binding Agreement.


              (A)   The Company will require any successor (whether direct or
                    indirect, by purchase, merger, consolidation or otherwise)
                    to all or substantially all of the business and/or assets of
                    the Company ("successor organization") to expressly assume
                    and agree to perform this Agreement in the same manner and
                    to the same extent that the Company would have been required
                    to perform if no such succession had taken place. If such
                    succession is the result of a "change in control" as defined
                    herein, such assumption shall specifically preserve to
                    Executive, for the greater of twelve (12) months or the then
                    remaining term under the Bank Agreement, the same rights and
                    remedies (recognizing them as being available and

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                    applicable as the result of the "change in control"
                    effectuating said succession) provided under this Agreement
                    upon a "change in control".

                        As used in this Agreement "Company" shall mean the
                    Company as hereinbefore defined and any successor to its
                    business and/or assets as aforesaid which executes and
                    delivers the agreement provided for in this Section 6 or
                    which otherwise becomes bound by the terms and provisions of
                    this Agreement by operation of this Agreement or law.
                    Failure of the Company to obtain such agreement prior to the
                    effectiveness of any such succession shall be a breach of
                    this Agreement and shall entitle Executive as his exclusive
                    remedy to compensation from the Company in the same amount
                    and on the same terms as he would be entitled to pursuant to
                    this Agreement under Section 5. For purposes of implementing
                    the foregoing, the date on which any such succession becomes
                    effective shall be deemed the Termination Date.

              (B)   No right or interest to or in any payments or benefits under
                    this agreement shall be assignable or transferable in any
                    respect by the Executive, nor shall any such payment, right
                    or interest be subject to seizure, attachment or creditor's
                    process for payment of any debts, judgments, or obligations
                    of Executive.

              (C)   This Agreement shall be binding upon and inure to the
                    benefit of and be enforceable by Executive and his heirs,
                    beneficiaries and personal representatives and the Company
                    and any successor organization.

              (ii) Noncompetition Provision. Executive acknowledges that the
         development of personal contacts and relationships is an essential
         element in the financial services industry, that the Company has
         invested considerable time and money in his development of such
         contacts and relationships, that the Company could suffer irreparable
         harm if he were to leave employment and solicit the business of Company
         customers, and that it is reasonable to protect the Company against
         competitive activities by Executive. Executive covenants and agrees, in
         recognition of the foregoing and in consideration of the mutual
         promises contained herein, that in the event of a voluntary termination
         of employment by Executive pursuant to Section 5(iii) of the Bank
         Agreement, or upon expiration of the Bank Agreement as a result of
         Executive's election (but not as the result of an election by the
         Company) not to continue automatic annual renewals, Executive shall not
         accept employment with any Significant Competitor of the Bank or
         Company for a period of twelve (12) months following such termination.
         For purposes of this Agreement, the term Significant Competitor means
         any financial institution including, but not limited to, any commercial
         bank, savings bank, savings and loan association, credit union, or
         mortgage banking corporation which, at the time of termination of this
         Agreement, or during the period of this covenant not to compete, has a
         home, branch or other office in Milwaukee County or which has, during
         the twelve (12) months preceding Executive's termination, originated,
         or which during the period of this covenant not to compete originates,
         more than $50,000,000 in commercial or mortgage loans secured by real
         property in any such county.



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              Executive agrees that the non-competition provisions set forth
         herein are necessary for the protection of the Bank and Company and are
         reasonably limited as to (i) the scope of activities affected, (ii)
         their duration and geographic scope, and (iii) their effect on
         Executive and the public. In the event Executive violates the
         non-competition provisions set forth herein, Bank shall be entitled, in
         addition to its other legal remedies, to enjoin the employment of
         Executive with any Significant Competitor for the period set forth
         herein. If Executive violates this covenant and the Company brings
         legal action for injunctive or other relief, the Company shall not, as
         a result of the time involved in obtaining such relief, be deprived of
         the benefit of the full period of the restrictive covenant.
         Accordingly, the covenant shall be deemed to have the duration
         specified herein, computed from the date such relief is granted, but
         reduced by any period between commencement of the period and the date
         of the first violation. In addition to such other relief as may be
         awarded, if the Company is the prevailing party it shall be entitled to
         reimbursement for all reasonable costs, including attorneys' fees,
         incurred in enforcing its rights hereunder.

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

                      If to the Company:
                      St. Francis Capital Corporation
                      13400 Bishops Lane
                      Brookfield, WI 53005
         or if to Executive, at the address set forth below:
                      Mr. Thomas R. Perz
                      2326 Misty Lane
                      Waukesha, WI 53186

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

              (iv) Expenses. In the event of any legal proceedings to enforce or
         interpret the terms of this Agreement (or to recover damages for breach
         of it) in the absence of a change in control, each of the parties shall
         be responsible for their own respective attorneys' fees and necessary
         costs and disbursements incurred in such proceeding regardless of the
         outcome.

              Notwithstanding the foregoing, in the event of a legal proceeding
         to enforce or interpret the terms of this Agreement following a change
         in control, or an assumption or re-execution of this Agreement pursuant
         to section 6(i), the only recoverable costs shall be those which
         Executive shall be entitled to recover from the Bank (i.e. reasonable
         attorneys' fees and necessary costs and disbursements incurred in such
         litigation), which fees shall be recoverable only if the Executive is
         the prevailing party. Recovery of



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         attorneys' fees and costs as provided herein following a change in
         control or re-execution shall be in addition to any other relief to
         which Executive may be entitled.

              (v) Withholding. The Company shall be entitled to withhold from
         amounts to be paid to Executive under this Agreement any federal,
         state, or local withholding or other taxes of charges which it is from
         time to time required to withhold. The Company shall be entitled to
         rely on an opinion of counsel if any question as to the amount or
         requirement of any such withholding shall arise.

              (vi) Miscellaneous. No provision of this Agreement may be amended,
         waived or discharged unless such amendment, waiver of discharge is
         agreed to in writing and signed by Executive and such Company officer
         as may be specifically designated by the Board. 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 similar or
         dissimilar provisions or conditions at the same or at any prior or
         subsequent time. No agreements or representations, oral or otherwise,
         express or implied, with respect to the subject matter hereof have been
         made by either party which are not expressly set forth in this
         Agreement. The validity, interpretation, construction and performance
         of this Agreement shall be governed by the laws of the State of
         Wisconsin.

              (vii) Validity. The invalidity or unenforceability of any
         provision of this Agreement shall not affect the validity or
         enforceability of any other provision of this Agreement, which shall
         remain in full force and effect.

              (viii) Counterparts. This Agreement may be executed in several
         counterparts, each of which together will constitute one and the same
         instrument.

              (ix) Headings. Headings contained in this Agreement are for
         reference only and shall not affect the meaning or interpretation of
         any provision of this Agreement.

              (x) Effective Date. The effective date of this Agreement shall be
         the date indicated in the first section of this Agreement,
         notwithstanding the actual date of execution by any party.

         IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of this 19th day of January, 2000.

St. Francis Capital Corporation                               Executive:

By /s/ Judith M. Gauvin                              /s/ Thomas R. Perz
   ------------------------------------------        -------------------------
Title Senior Vice President - Human Resources        Thomas R. Perz
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