<PAGE>   1
                              EMPLOYMENT AGREEMENT


     THIS EMPLOYMENT AGREEMENT is effective as of JANUARY 6, 1997 between St.
Francis Capital Corporation (the "Company"), a Wisconsin-chartered corporation,
St. Francis Bank, F.S.B. (the "Bank"), a federally-chartered savings and loan
and wholly-owned subsidiary of the Company, their respective successors and
assigns, and Bradley J. Smith (the "Executive").


                                    RECITALS

     WHEREAS, Executive is a key employee, whose extensive background, knowledge
and experience in the banking industry are expected to substantially benefit the
Bank and Company and whose employment as an executive member of their respective
management teams in the position of Executive Vice President, Retail for the
Bank ("Corporate Position") will benefit the Bank and 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 Bank, Company (sometimes collectively referred to herein as the
"Employers"), and Executive; and

     WHEREAS, the respective Boards of Directors of the Employers have approved
and authorized their entry into this Agreement with Executive.

                                    AGREEMENT

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

     1. Employment. The Bank and Company shall employ Executive, and Executive
shall serve the Bank and Company, on the terms, conditions and for the period
set forth in Section 2 of this Agreement.

     2. Term of Employment. The period of Executive's employment under this
Agreement shall begin as of JANUARY 6, 1997 (the Commencement Date) and
expire on the third anniversary of the date immediately preceding the
Commencement Date, unless sooner terminated as provided herein; provided that,
on each date immediately preceding the anniversary of the Commencement Date, the
term of employment may be extended by action of the Bank's and Company's Boards
of Directors, following an explicit review by said Boards of the Executive's
performance under this Agreement (with appropriate documentation thereof and
after taking into account all relevant factors including Executive's performance
hereunder), to add one additional year to the remaining term of employment
annually restoring such term to a full three-years. The Board of




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Directors or Executive shall each provide the other with at least ninety (90)
days' advance written notice of any decision on their respective parts not to
extend the Agreement on any date immediately preceding an anniversary of the
Commencement Date. The term of employment as in effect from time to time
hereunder shall be referred to as the "Employment Term".

     3. Positions and Duties. Executive shall serve the Bank and Company,
respectively, in his Corporate Position, reporting directly to their Chief
Executive Officers and rendering executive, policy-making and other management.
services of the type customarily performed by persons serving in similar
capacities at other institutions, together with such other duties and
responsibilities as may be appropriate to Executive's position and as may be
from time to time determined by the Bank's and Company's Boards of Directors to
be necessary to their operations and in accordance with their bylaws.

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

        (i) Base Salary. During the Employment Term, Executive shall receive
     from Employers a base salary ("Base Salary") in such amount as may from
     time to time be approved by their Boards of Directors. The Base Salary
     shall at no time be less than $147,000.00 per annum, payable by the Bank
     and Company in such proportion as shall be determined by their Boards of
     Directors. The Base Salary may be increased from time to time as determined
     by the Employers' Boards of Directors, provided that no such increase in
     Base Salary or other compensation shall in any way limit or reduce any
     other obligation of the Employers under this Agreement. Once established at
     a specified annual rate, Executive's Base Salary shall not thereafter be
     reduced except as part of a general pro-rata reduction in compensation
     applicable to all Executive Officers; provided, however, that no such
     reduction shall be permitted following a "change in control" as defined
     herein. Executive's Base Salary and other compensation shall be paid in
     accordance with the Employers' regular payroll practices as from time to
     time in effect. For purposes of this Agreement, the term "Executive
     officers" shall mean all officers of the Bank and/or Company having a
     written Employment Agreement.

        (ii) Bonus and Incentive Plans. Executive shall be entitled, during the
     Employment Term, to participate at an appropriate level in all bonus and
     other incentive compensation plans (as currently in effect, as modified
     from time to time, or as subsequently adopted); provided, however, that
     nothing contained herein shall grant Executive the right to continue in any
     bonus or other incentive compensation plan





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     following its discontinuance by the Board or Boards (except to the extent
     Executive had earned or otherwise accumulated vested rights therein prior
     to such discontinuance). In addition, Executive shall participate in all
     stock purchase, stock option, stock appreciation right, stock grant, or
     other stock based incentive programs of any type made available by
     Employers to their Executive Officers. The Employers shall not make any
     changes in such plans, benefits or privileges which would adversely
     affect Executive's rights or benefits thereunder, unless such change occurs
     pursuant to a program applicable to all Executive officers of the Employers
     and does not result in a proportionately greater adverse change in the
     rights and benefits of Executive as compared with other Executive Officers.

        (iii) Other Benefits. During the Employment Term, Employers shall
     provide to Executive all other benefits of employment (or, with Executive's
     consent, equivalent benefits) generally made available to other Executive
     Officers. Such benefits shall include participation by Executive in any
     group health, life, disability, or similar insurance program. and in any
     pension, profit-sharing, Employee Stock Ownership Plan ("ESOP"), 401(k) or
     other or similar retirement program.

     Executive shall receive vacation, sick time, personal days and other
     perquisites pursuant to Employers' policies as in effect from time to time
     for Executive Officers. Employers shall also reimburse Executive or
     otherwise provide for or pay all reasonable expenses incurred by Executive
     in furtherance of or in connection with the business of Employers,
     including but not by way of limitation, travel expenses and all reasonable
     entertainment expenses (whether incurred at Executive's residence, while
     traveling or otherwise) subject to such reasonable documentation and other
     limitations as may be imposed by the Boards of Directors of the Employers.

        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 subsection 4(iii) following
     termination or discontinuance of such plan, program or perquisite by the
     Board (except to the extent Executive had previously earned or accumulated
     vested rights therein).

     5. Termination Other Than Following a Change-in-Control. This Agreement may
be terminated, subject to payment of the compensation and other benefits
described below, upon occurrence of any of the events described herein. In case
of such termination, the date on which Executive ceases to be employed under
this Agreement, after giving effect to any prior notice requirement, is referred
to as the "Termination Date".





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     (i) Death, Retirement. This Agreement shall terminate at the death or
retirement of Executive. As used herein, the term "retirement" shall mean
Executive's retirement in accordance with and pursuant to any retirement plan of
the Employers generally applicable to Executive Officers or in accordance with
any retirement arrangement established for Executive with his consent.

     If termination occurs for such reason, no additional compensation shall be
payable to Executive under this Agreement except as specifically provided
herein. Notwithstanding anything to the contrary contained herein, Executive
shall receive all compensation and other benefits to which he was entitled under
Section 4 through the Termination Date and, in addition, shall receive all other
benefits available to him under the Bank's benefit plans and programs to which
he was entitled by reason of employment through the Termination Date.

     (ii) Disability. This Agreement shall terminate upon the disability of
Executive. As used in this Agreement, "disability" shall mean Executive's
inability, as the result of physical or mental incapacity, to substantially
perform his employment duties for a period of 90 consecutive days. Any question
as to the existence of Executive's disability upon which Executive and Employers
cannot agree shall be determined by a qualified independent physician mutually
agreeable to Executive and Employers or, if the parties are unable to agree upon
a physician within ten (10) days after notice from either to the other
suggesting a physician, by a physician designated by the then president of the
medical society for the county in which Executive maintains his principal
residence. The costs of any such medical examination shall be borne by the
Employers. If Executive is terminated due to disability, he shall be paid 100%
of his Base Salary at the rate in effect at the time notice of termination is
given for one year and thereafter an annual amount equal to 75% of such Base
Salary for any remaining portion of the Employment Term, such amounts to be paid
in substantially equal monthly installments and offset by any monthly payments
actually received by Executive during the payment period from (i) any disability
plans provided by the Employers, and/or (ii) any governmental social security or
workers compensation program.

     If termination occurs for such reason, no additional compensation shall be
payable to Executive except as specifically provided herein. Notwithstanding
anything to the contrary contained herein, Executive shall receive all
compensation and other benefits to which he was entitled under Section 4 through
the Termination Date and, in addition, shall receive all other benefits under
the Employers' benefit plans and programs to which he was entitled by reason of
employment through the Termination Date.




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     (iii) Cause. Employers may terminate Executive's employment under this
Agreement for cause at any time, and thereafter their obligations under this
Agreement shall cease and terminate. Notwithstanding anything to the contrary
contained herein, Executive shall receive all compensation and other benefits in
which he was vested or to which he was otherwise entitled under Section 4, and
the plans and programs provided therein, by reason of employment through the
Termination Date.

     For purposes of this Agreement, "Cause" shall mean:

     (A)     The intentional failure by Executive to substantially perform
             assigned duties (appropriate to his position and level of
             compensation) with the Bank (other than any such failure resulting
             from the Executive's incapacity due to physical or mental illness)
             after a written demand for substantial performance is delivered to
             Executive by the Board, which demand specifically identifies the
             manner in which the Board believes Executive has not substantially
             performed his duties, advises Executive of what steps must be taken
             to achieve substantial performance, and allows Executive Sixty (60)
             days in which to demonstrate such performance,

     (B)     Any willful act of misconduct by Executive;

     (C)     A criminal conviction of Executive for any act involving dishonesty
             breach of trust or a violation of the banking or savings and loan
             laws of the United States;

     (D)     A criminal conviction of Executive for the commission of any
             felony;

     (E)     A breach of fiduciary duty involving personal profit;

     (F)     A willful violation of any law, rule or regulation (other than a
             traffic violation or similar offenses) or final cease and desist
             order; or

     (G)     Personal dishonesty or material breach of any provision of this
             Agreement.

For purposes of this Subsection (5)(iii), no act, or failure to act, on
Executive's part shall be deemed "willful" unless done, or omitted to be done,
by Executive not in good faith and without reasonable belief that the action or
omission was in the best interest of the Employers.





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     (iv) Voluntary Termination by Executive. Executive may voluntarily
terminate his employment under this Agreement at any time by giving at least
thirty (30) days prior written notice to Employers. In such event, Executive
shall receive all compensation and other benefits in which he was vested or to
which he was otherwise entitled under Section 4 through the date specified in
such notice (the "Termination Date"), in addition to all other benefits
available to him under benefit plans and programs to which he was entitled by
reason of employment through the Termination Date.

     (v)  Suspension or Termination Required by the OTS

     (A)  if Executive is suspended and/or temporarily prohibited from
          participating in the conduct of the Employers' affairs by a notice
          served under section 8 (e)(3), or section 8 (g)(1), of the Federal
          Deposit Insurance Act [12 U.S.C. section 1818(e)(3) and (g)(1)], the
          Employers' obligations under the Agreement shall be suspended as of
          the date of service of the notice unless stayed by appropriate
          proceedings. If the charges in the notice are dismissed, the Employers
          shall (i) pay Executive all of the compensation withheld while their
          obligations under this Agreement were suspended, and (ii) reinstate
          such obligations as were suspended.

     (B)  If Executive is removed and/or permanently prohibited from
          participating in the conduct of the Employers' affairs by an order
          issued under section 8(e)(4) or section 8(g)(1) of the Federal Deposit
          Insurance Act [12 U.S.C. section1818(e)(4) or (g)(1)], the obligations
          of the Employers under the Agreement shall terminate as of the 
          effective date of the order, but vested rights of the contracting 
          parties shall not be affected.

     (C)  If the Bank is in default as defined in section 3(x) (1) of the
          Federal Deposit insurance Act [ 12 U.S.C. 1813 (x)(1)], all
          obligations under the Agreement shall terminate as of the date of
          default, but this paragraph shall not affect any vested rights of the
          Executive.

     (D)  All obligations under the Agreement shall be terminated, except to the
          extent determined that continuation of the contract is necessary for
          the Employers' continued operations (i) by the Director of the OTS, or
          his or her designee at the time the FDIC or Resolution Trust
          Corporation ("RTC") enters




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          into an agreement to provide assistance to or on behalf of the
          Employers under the authority contained in section 13(c) of the
          Federal Deposit Insurance Act; or (ii) by the Director of the OTS, or
          his or her designee, at the time it approves a supervisory merger to
          resolve problems related to operation of the Employers or when the
          Employers are 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)  In the event that 12 C.F.R. Section 563.39, or any successor
          regulation, is repealed, this section 5(v) shall cease to be effective
          on the effective date of such repeal. In the event that 12 C.F.R.
          Section 563.39, or any successor regulation, is amended or modified,
          this Agreement shall be revised to reflect the amended or modified
          provisions if: (1) the amended or modified provision is required to be
          included in this Agreement; or (2) if not so required, the Executive
          requests that the Agreement be so revised.

     (vi) other Termination. if this Agreement is terminated (1) by the
Employers other than for cause, death, disability or retirement (and other than
following a change in control as defined in Section 6), or (2) by Executive due
to a failure by Employers to comply with any material provision of this
Agreement, which failure has not been cured within thirty (30) days after notice
of such non-compliance has been given by Executive to Employers; then following
the Termination Date;

     (A)  In lieu of any further salary payments to Executive subsequent to the
          Termination Date, Executive shall receive Severance Pay for a twelve
          (12) month period in accordance with the Employers' normal payroll
          practices, beginning with the first pay date following the Termination
          Date. The monthly rate of Severance Pay shall be the monthly Base
          Salary received by Executive (based on his highest rate of Base Salary
          within the 3 years preceding his Termination Date) plus one-twelfth of
          the total bonus and incentive compensation paid to or vested in
          Executive on the basis of his most recently completed calendar year of
          employment.

     (B)  Employers shall maintain and provide for the period during which
          Severance Payments are to be made and ending at the earlier of (i) the
          expiration of such period, or (ii) the date of the Executive's
          full-time employment by another employer (provided that






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          the Executive is entitled under the terms of such employment to
          benefits substantially similar to those described in this subparagraph
          (B)), at no cost to the Executive, the Executive's continued
          participation in all group insurance, life insurance, health and
          accident, disability and other employee benefit plans, programs and
          arrangements in which Executive was entitled to participate
          immediately prior to the Termination Date (other than retirement
          plans, deferred compensation, or stock compensation plans of the
          Employers), provided that in the event Executive's participation in
          any plan, program or arrangement as provided in this subparagraph (B)
          is barred, or during such period any such plan, program or arrangement
          is discontinued or the benefits thereunder are materially reduced, the
          Employers shall arrange to provide the Executive with benefits
          substantially similar to those which the Executive was entitled to
          receive under such plans, programs and arrangements immediately prior
          to the Termination Date.

     (C)  In addition to such Severance Pay and continued benefits, Executive
          shall receive all other compensation and benefits in which he was
          vested or to which he was otherwise entitled under Section 4 and the
          plans and programs provided therein by reason of employment through
          the Termination Date.

6.   Termination by Executive After Change in Control.

     (i)  Definition "Change in Control". For purposes of this Agreement, a
"change in control" shall mean any change in control with respect to the Bank or
Company that would be required to be reported in response to item 6(e) of
Schedule 14A of Regulation 14A promulgated under the securities Exchange Act of
1934, as amended ("Exchange Act") or any successor thereto; provided that,
without limitation, a change in control shall be deemed to have occurred if (i)
any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities representing 25% or more
of the combined voting power of the Bank's or Company's then outstanding
securities; or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of the Bank
or Company cease for any reason to constitute at least a majority thereof unless
the election, or the nomination for election by stockholders, of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period.





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     (ii) Good Reason for Executive Termination. The Executive may terminate his
employment under this Agreement for "good reason" by giving at least thirty (30)
days prior written notice to the Bank at any time within twenty-four (24) months
of the effective date of a change in control. Occurrence of any of the following
events shall constitute good reason:

     (A)  Without the Executive's express written consent, assignment by the
          Employers of any duties which are materially inconsistent with
          Executive's positions, duties, responsibilities and status with the
          Employers immediately prior to a change in control, or a material
          change in the Executive's reporting responsibilities, titles or
          offices as in effect immediately prior to such change in control, or
          any removal of the Executive from or any failure to re-elect the
          Executive to all or any portion of his Corporate Position, except in
          connection with a termination of Executive's employment for cause,
          disability, retirement or death (or by the Executive other than for
          good reason as defined in this section 6(B)).

     (B)  Without the Executive's express written consent, a reduction by the
          Employers in the Executive's Base Salary as in effect on the date of
          the change in control or as the same may have been increased from time
          to time thereafter;

     (C)  The principal executive offices of either of the Employers are
          relocated outside of the Milwaukee, Wisconsin metropolitan area or,
          without the Executive's express written consent, the Employers require
          the Executive to be based anywhere other than an area in which the
          Employers principal executives offices are located, except for
          required travel on business of the Employers to an extent
          substantially consistent with the Executive's present business travel
          obligations;

     (D)  Without Executive's express written consent, the Employers fail or
          refuse to continue Executive's participation in incentive compensation
          and stock incentive programs comparable to either (1) those in effect
          prior to the change in control or (2) those subsequently in effect for
          the senior executives of any acquiring company effecting the change in
          control;





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     (E)  Without Executive's express written consent, Employers failure to
          provide the Executive with the same fringe benefits that were provided
          to Executive immediately prior to a change in control, or with a
          package of fringe benefits (including paid vacations) that, though one
          or more of such benefits may vary from those in effect immediately
          prior to such change in control, is substantially comparable in all
          material respects to such fringe benefits taken as a whole;

     (F)  Any purported termination of the Executive's employment for cause,
          disability or retirement which is not effected in accordance with the
          notice requirements applicable under this Agreement; or

     (G)  The failure by either of the Employers to obtain the assumption of, or
          an agreement to perform this Agreement by any successor as
          contemplated in Section 7(i) hereof;

     (iii) Benefits Upon Termination by Executive After "Change in Control". if
this Agreement is terminated by Executive for good reason following a change in
control, then following the Termination Date:

     (A)  In lieu of any further salary payments to Executive subsequent to the
          Termination Date, Executive shall receive Severance Pay for the longer
          of (i) the remaining unexpired term of the agreement as in effect
          immediately prior to the Termination Date, or (ii) a thirty-six (36)
          month period. Payments shall be made in accordance with the Employers'
          normal payroll practices, beginning with the first pay date following
          the Termination Date. The monthly rate of Severance Pay shall be the
          average monthly Base Salary received by Executive (based on his
          highest rate of Base Salary within the 3 years preceding his
          Termination Date) plus one-twelfth of the total bonus and incentive
          compensation paid to or vested in Executive on the basis of his most
          recently completed calendar year of employment.

     (B)  Employers shall maintain and provide for the period during which
          Severance Payments are to be made and ending at the earlier of (i) the
          expiration of such period, or (ii) the date of the Executive's full-
          time employment by another employer (provided that the Executive is
          entitled under the terms of such other employment to benefits
          substantially similar to those described in this subparagraph (B)), at
          no cost to the Executive, the Executive's continued





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          participation in all group insurance, life insurance, health and
          accident, disability and other employee benefit plans, programs and
          arrangements in which the Executive was entitled to participate
          immediately prior to the Termination Date (other than retirement and
          deferred compensation plans and individual insurance policies
          covered under subsection 6 (C) or stock compensation plans of the
          Employers), provided that in the event Executive's participation in
          any plan, program or arrangement as provided in this subparagraph (B)
          is barred, or during such period any such plan, program or arrangement
          is discontinued or the benefits thereunder are materially reduced, the
          Employers shall arrange to provide Executive with benefits
          substantially similar to those Executive was entitled to receive under
          such plans, programs and arrangements immediately prior to the
          Termination Date.

     (C)  Executive shall also receive all other compensation and benefits in
          which he was vested or to which he was otherwise entitled under
          section 4 and the plans and programs provided therein by reason of
          employment through the Termination Date. In addition to benefits to
          which Executive is entitled under retirement and deferred compensation
          plans and individual insurance policies maintained by Employers
          (hereinafter collectively referred to as "Plan"), Executive shall
          receive as additional severance benefits a benefit paid under this
          Agreement, which benefit shall be determined in accordance with and
          paid under this Agreement, but in the form and at the times provided
          in the Plan. Such benefits shall be determined as if Executive were
          fully vested under the Plan and had accumulated (after any termination
          under this Agreement) the additional years of credit service under the
          applicable Plan that he would have received had he continued in the
          employment of the Bank for the period during which Severance Payments
          are to be made and at the annual compensation level represented by
          such payments. Such severance Payment level shall be deemed to
          represent the compensation received by Executive during each such
          additional year for purposes of determining his additional benefits
          under this Subsection 6(C).

     (iv) Limitation of Benefits under Certain Circumstances. If the severance
benefits payable to Executive under this Section 6 ("Severance Benefits"), or
any other payments or benefits received or to be received by Executive from
Employers (whether payable





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pursuant to the terms of this Agreement, any other plan, agreement or
arrangement with the Employers or any corporation affiliated with the Employers
("Affiliate") within the meaning of Section 1504 of the Internal Revenue Code of
1954, as amended (the "Code")), in the opinion of tax counsel selected by the
Employers's independent auditors and acceptable to Executive, constitute
"parachute payments" within the meaning of Section 280G(b)(2) of the Code,
and the present value of such "parachute payments" equals or exceeds three times
the average of the annual compensation payable to Executive by the Employers (or
an Affiliate) and includable in Executive's gross income for federal income tax
purposes for the five (5) calendar years preceding the year in which a change in
ownership or control of the Employers occurred ("Base Amount"), such Severance
Benefits shall be reduced, in a manner determined by Executive, to an amount the
present value of which (when combined with the present value of any other
payments or benefits otherwise received or to be received by Executive from the
Employers (or an Affiliate) that are deemed "parachute payments") is equal to
2.99 times the Base Amount, notwithstanding any other provision to the contrary
in this Agreement. The Severance Benefits shall not be reduced if (A) Executive
shall have effectively waived his receipt or enjoyment of any such payment or
benefit which triggered the applicability of this Section 6(iv), or (B) in the
opinion of such tax counsel, the Severance Benefits (in its full amount or as
partially reduced, as the case may be) plus all other payments or benefits which
constitute "parachute payments" within the meaning of Section 280G(b)(2) of the
Code are reasonable compensation for services actually rendered, within the
meaning of section 28OG (b)(4) of the code, and such payments are deductible by
the Employers. The Base Amount shall include every type and form of compensation
includable in Executive's gross income in respect of his employment by the
Employers (or an Affiliate), except to the extent otherwise provided in
temporary or final regulations promulgated under Section 280G (b) of the Code.
For purposes of this Section 6(iv), a "change in ownership or control" shall
have the meaning set forth in Section 280G(b) of the code and any temporary or
final regulations promulgated thereunder. The present value of any non-cash
benefit or any deferred cash payment shall be determined by the Employers'
independent auditors in accordance with the principles of Sections 280G (b)(3)
and (4) of the Code.

     In the event that Employers and/or the Executive do not agree with the
opinion of such counsel, (A) Employers shall pay to the Executive the maximum
amount of payments and benefits pursuant to Section 6, as selected by the
Executive, which such opinion indicates that there is a high probability do not
result in any of such payments and benefits being non-deductible to the
Employers and subject to the imposition of the excise tax imposed under Section
4999 of the Code and (B) Employers may request, and Executive shall have the
right to demand the Employers request, a ruling from the IRS as to whether the
disputed payments and





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benefits pursuant to Section 6 hereof have such consequences. Any such request
for a ruling from the IRS shall be promptly prepared and filed by the Employers,
but in no event later than thirty (30) days from the date of the opinion of
counsel referred to above, and shall be subject to Executive's approval prior to
filing, which shall not be unreasonably withheld. Employers and Executive agree
to be bound by any ruling received from the IRS and to make appropriate payments
to each other to reflect any such rulings, together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code.
Nothing contained herein shall result in a reduction of any payments or
benefits to which the Executive may be entitled upon termination of employment
under any circumstances other than as specified herein or a reduction in
payments and benefits other than those provided in this Section 6.

     In the event that Section 280G, or any successor statute, is repealed, this
section 6 shall cease to be effective on the effective date of such repeal. The
parties to this Agreement recognize that final regulations under Section 280G of
the Code may affect the amounts that may be paid under this Agreement and agreed
that, upon issuance of such final regulations this Agreement may be modified as
in good faith deemed necessary in light of the provisions of such regulations to
achieve the purposes of this Agreement, and that consent to such modifications
shall not he unreasonably withheld.

     7. General Provisions.

        (i)  Successors; Binding Agreement.

        (A)  Employers 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 Employers
             ("successor organization") to expressly assume and agree to perform
             this Agreement in the same manner and to the same extent that
             Employers would have been required to perform if no such
             succession had taken place or to re-execute this Agreement as
             provided pursuant to section 6 (ii)(G) . 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
             twenty-four (24) months or the then remaining term of this
             Agreement, the same rights and remedies (recognizing them as being
             available and applicable as the result of the "change in control"
             effectuating said succession) as provided under this Agreement upon
             a "change in control".

                   As used in this Agreement "Employers" shall mean the 
             Employers as hereinbefore defined (and any






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             successor to their business and/or assets) which executes and
             delivers the agreement provided for in this Section 7 or which
             otherwise becomes bound by the terms and provisions of this
             Agreement by operation of this Agreement or law. Failure of the
             Employers to obtain such agreement prior to the effectiveness of
             any such succession shall be a breach of this Agreement and shall
             entitle Executive, if he elects to terminate this Agreement, to
             compensation from the Employers in the same amount and on the same
             terms as he would be entitled to under this Agreement if he
             terminated his employment under Section 6. 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 (1) Executive and his heirs, beneficiaries
             and personal representatives, and (2) the Employers and any
             successor organization.

        (ii) Noncompetition Provision. Executive acknowledges that the
     development of personal contacts and relationships is an essential element
     of the savings and loan business, that Employers has invested considerable
     time and money in his development of such contacts and relationships, that
     Employers could suffer irreparable harm if he were to leave employment and
     solicit the business of the Employers customers, and that it is reasonable
     to protect the Employers 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), or upon expiration of this Agreement as a result of Executive's
     election (but not as the result of an election by Employers) not to
     continue automatic annual renewals, Executive shall not accept employment
     with any Significant Competitor of Bank 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





                                      -14-
<PAGE>   15
     union, or mortgage banking corporation which, at the time of termination of
     Executive's employment, 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.

           Executive agrees that the non-competition provisions set forth herein
     are necessary for the protection of the Employers 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, the Employers 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 Employers bring legal action for injunctive or other
     relief, the Employers 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.

           (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 United
     States registered mail, return receipt requested, postage prepaid,
     addressed as follows:

           If to the Bank or Company:

                   St. Francis Capital Corporation
                   3545 South Kinnickinnic Avenue
                   Milwaukee, Wisconsin 53207
                   Attn: Secretary

           If to the Executive:

                   Mr. Bradley J. Smith

     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.





                                      -15-
<PAGE>   16

           (iv) Expenses. If any legal proceeding is necessary 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, the prevailing party shall be
     entitled to recover from the other party reasonable attorneys' fees and
     necessary costs and disbursements incurred in such litigation, in addition
     to any other relief to which such prevailing party may be entitled.

           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 a re-execution of this Agreement pursuant to section 6(ii)(G),
     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
     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. Employers shall be entitled to withhold from amounts
     to be paid to Executive under this Agreement any federal, state, or local
     withholding or other taxes or charges which it is from time to time
     required to withhold. Employers 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) Notice of Termination. Any purported termination by the
     Employers under Sections 5(i), (ii), (iii) or (iv), or by Executive under
     Sections 5(vi) or 6(ii) shall be communicated by written "Notice of
     Termination" to the other party. For purposes of this Agreement, a "Notice
     of Termination" shall mean a dated notice which (i) indicates the specific
     termination provision in this Agreement relied upon, (ii) sets forth in
     reasonable detail the facts and circumstances claimed to provide a basis
     for termination under the provision so indicated, (iii) specifies a Date of
     Termination, which shall be not less than thirty (30) nor more than ninety
     (90) days after such Notice of Termination is given, except in the case of
     termination of Executive's employment for Cause; and (iv) is given in the
     manner specified in Section 7(iii) of this Agreement.

           (vii) Miscellaneous. No provision of this Agreement may be amended,
     waived or discharged unless such amendment waiver or discharge is agreed to
     in writing and signed by Executive and such officers of the Employers as
     may be specifically designated by the Board. No waiver by either party
     hereto at any time of any breach by the other party





                                      -16-
<PAGE>   17



     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
     and it is agreed that execution of this Agreement shall result in its
     superseding and extinguishing any rights of Executive under any other
     employment agreement previously in effect between himself, the Employers,
     or any of their affiliates. The validity, interpretation, construction and
     performance of this Agreement shall be governed by the laws of the State of
     Wisconsin.

           (viii) Mitigation; Exclusivity of Benefits. The Executive shall not
     be required to mitigate the amount of any benefits hereunder by seeking
     other employment or otherwise, nor shall the amount of any such benefits be
     reduced by any compensation earned by the Executive as a result of
     employment by another employer after the Termination Date or otherwise.

           (ix) 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.

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

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

           (xii) 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 the date first above written.


                                             Executive:


                                             /s/ BRADLEY J. SMITH
                                             -----------------------------------
                                             Bradley J. Smith




                                      -17-
<PAGE>   18



                                             ST.  FRANCIS CAPITAL CORPORATION

                                             By: /s/ THOMAS R. PERZ
                                                -----------------------------
                                             Its: Executive Vice President 
                                                 ----------------------------


                                             ST.  FRANCIS BANK, F.S.B.


                                             By: /s/ JUDITH M. GAUVIN
                                                -----------------------------
                                             Its: Sr. Vice President
                                                 ----------------------------




                                      -18-