<PAGE>

                                                                    EXHIBIT 10.7

                                    FORM OF
                        CITIZENS FEDERAL SAVINGS BANK
                            DEFERRED FEE AGREEMENT


     THIS AGREEMENT is made this _____ day of ______________________,
________________ by and between Citizens Federal Savings Bank (the "Company"),
and _________________________ (the "Director").

                                 INTRODUCTION

     To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide to the Director a deferred fee
opportunity.  The Company will pay the benefits from its general assets.

                                   AGREEMENT

     The Director and the Company agree as follows:

                                   Article I

                                  Definitions

     1.1  Definitions.  Whenever used in this Agreement, the following words and
phrases shall have the meanings specified:

          1.1.1  "Change in Control" means the conversion from a mutual
     association to a stock association and the transfer of 51% or more of the
     Company's outstanding voting common stock followed withing twelve (12)
     months by termination of the Director's status as a member of the Company's
     Board of Directors.

          1.1.2  "Code" means the Internal Revenue Code of 1986, as amended.
     References to a Code section shall be deemed to be to that section as it
     now exists and to any successor provision.

          1.1.3  "Disability" means, if the Director is covered by a Company-
     sponsored disability insurance policy, total disability as defined in such
     policy without regard to any waiting period. If the Director is not covered
     by such a policy, Disability means the Director suffering a sickness,
     accident or injury which, in the judgement of a physician satisfactory to
     the Company, prevents the Director from performing substantially all of the
     normal duties of a director. As a condition to any benefits, the Company
     may require the Director to submit to such physical or mental evaluations
     and tests as the Company's Board of Directors deems appropriate.

                                       1
<PAGE>

          1.1.4  "Election Form" means the Form attached as Exhibit 1.

          1.1.5  "Fees" means the total directors fees payable to the Director.

          1.1.6  "Normal Termination Date" means the Director attaining age 70
     and completing 10 Years of Service.

          1.1.7  "Termination of Service" means the Director's ceasing to be a
     member of the Company's Board of Directors for any reason whatsoever.

          1.1.8  "Years of Service" means the total number of twelve-month
     periods during which the Director serves as a member of the Company's Board
     of Directors.

                                   Article 2

                               Deferral Election

     2.1  Initial Election.  The Director shall make an initial deferral
election under this Agreement by filing with the Company a signed Election Form
within 30 days after the date of this Agreement. The Election Form shall set
forth the amount of Fees to be deferred and the form of benefit payment. The
Election Form shall be effective to defer only Fees earned after the date the
Election Form is received by the Company.

     2.2  Election Changes

          2.2.1  Generally.  The Director may modify the amount of Fees to be
     deferred by filing a subsequent signed Election Form with the Company. The
     modified deferral shall not be effective until the calendar year following
     the year in which the subsequent Election Form is received by the Company.
     The Director my change the form of benefit payment initially elected under
     Section 2.1, during a six-month period ending at least 180 days prior to
     the Director's Normal Retirement date from the Board.

          2.2.2  Hardship.  If an unforeseeable financial emergency arising from
     the death of a family member, divorce, sickness, injury, catastrophe or
     similar event outside the control of the Director occurs, the Director, by
     written instructions to the Company may reduce or cease deferrals under
     this Agreement.

                                   Article 3

                               Deferral Account

     3.1  Establishing and Crediting.  The Company shall establish a Deferral
Account on its books for the Director, and shall credit to the Deferral Account
the following amounts:

                                       2
<PAGE>

          3.1.1 Deferrals.  The Fees deferred by the Director as of the time the
     Fees would have otherwise been paid to the Director.

          3.1.2 Interest.  On the first day of each month and immediately prior
     to the payment of any benefits, interest on the account balance since the
     preceding credit under this Section 3.1.2, if any, at a rate adjusted
     annually on January 1, and equal to the rate on high grade long-term
     corporate bonds. The rate effective January 1, 1995 shall be 8.60%.

     3.2  Statement of Accounts.  The Company shall provide to the Director,
within one hundred twenty (120) days after each anniversary of this Agreement, a
statement setting forth the Deferral Account balance.

     3.3  Accounting Device Only.  The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement.  The Deferral Account is not
a trust fund of any kind.  The Director is a general unsecured creditor of the
Company for the payment of benefits.  The benefits represent the mere Company
promise to pay such benefits.  The Director's rights are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director's creditors.

                                   Article 4

                               Benefit Payments

     4.1  Normal Termination Benefit.  Upon the Director's Termination of
Service, the Company shall pay to the Director the benefit described in this
Section 4.1.

          4.1.1 Amount of Benefit.  The benefit under this Section 4.1 is the
     Deferral Account balance at the Director's Termination of Service.

          4.1.2 Payment of Benefit.  The Company shall pay the benefit to the
     Director in the form elected by the Director on the Election Form.  The
     Company shall continue to credit interest under Section 3.1.2.

     4.2  Early Termination Benefit.  If the Director terminates service as a
director before the Normal Termination Date, and for reasons other than death or
Disability, the Company shall pay to the Director the benefit described in this
Section 4.2.

          4.2.1 Amount of Benefit.  The benefit under this Section 4.2 is the
     Deferral Account balance at the Director's Termination of Service.

          4.2.2 Payment of Benefit.  The Company shall pay the benefit to the
     Director in the form elected by the Director on the Election Form.  The
     Company shall continue to credit interest under Section 3.1.2.

                                       3
<PAGE>

     4.3  Disability Benefit.  If the Director terminates service as a director
for Disability prior to the Normal Retirement Date, the Company shall pay to the
Director the benefit described in this Section 4.3.

          4.3.1 Amount of Benefit.  The benefit under this Section 4.3 is the
     Deferral Account balance at the Director's Termination of Service.

          4.3.2 Payment of Benefit.  The Company shall pay the benefit to the
     Director in the form elected by the Director on the Election Form.  The
     Company shall continue to credit interest under Section 3.1.2.

     4.4  Change of Control Benefit. Upon a Change of Control while the Director
is in the active service of the Company, the Company shall pay to the Director
the benefit described in this Section 4.4 in lieu of any other benefit under
this Agreement.

          4.4.1 Amount of Benefit.  The benefit under this Section 4.4 is the
     Deferral Account balance at the date of the Director's Termination of
     Service.

          4.4.2 Payment of Benefit.  The Company shall pay the benefit to the
     Director in the form elected by the Director on the Election Form.  The
     Company shall continue to credit interest under Section 3.1.2.

     4.5  Hardship Distribution.  Upon the Company's determination (following
petition by the Director) that the Director has suffered an unforeseeable
financial emergency as described in Section 2.2.2, the Company shall distribute
to the Director all or a portion of the Deferral Account balance as determined
by the Company, but in no event shall the distribution be greater than is
necessary to relieve the financial hardship.

                                   Article 5

                                Death Benefits

     5.1  Death During Active Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 5.1.

          5.1.1 Amount of Benefit.  The benefit under Section 5.1 is Deferral
     Account balance at the director's Termination of Service.

          5.1.2 Payment of Benefit.  The Company shall begin paying the benefit
     to the beneficiary pursuant to the Deferral Election Form, within 90 days
     following the Director's death.  The Company shall continue to credit
     interest under Section 3.1.2.

                                       4
<PAGE>

     5.2  Death During Benefit Period.  If the Director dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have been paid
to the Director had the Director survived.

                                   Article 6

                                 Beneficiaries

     6.1  Beneficiary Designations. The Director shall designate a beneficiary
by filing a written designation with the Company. The Director may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Director and accepted by
the Company during the Director's lifetime. The Director's beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Director, or if the Director names a spouse as beneficiary and the marriage
is subsequently dissolved. If the Director dies without a valid beneficiary
designation, all payments shall be made to the Director's surviving spouse, if
any, and if none, to the Director's surviving children and the descendants of
any deceased child by right of representation, and if no children or descendants
survive, to the Director's estate.

     6.2  Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetency,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.

                                   Article 7

                              General Limitations

     Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement that is attributable to
the Company's matching contributions or the interest earned on such
contributions:

     7.1  Excess Parachute Payment. To the extent the benefit would be an excess
parachute payment under Section 280G of the Code.

     7.2  Termination for Cause. If the Company terminates the Director's
service as a director for:

          7.2.1 Gross negligence or gross neglect of duties;

                                       5
<PAGE>

          7.2.2 Commission of a felony or of a gross misdemeanor involving moral
     turpitude; or

          7.2.3 Fraud, disloyalty, dishonesty or willful violation of any law or
     significant Company policy committed in connection with the Director's
     service and resulting in an adverse financial effect on the Company.

                                   Article 8

                         Claims and Review Procedures

     8.1 Claims Procedure.  The Company shall notify the Director's beneficiary
in writing, within ninety (90) days of his or her written application for
benefits, of his or her eligibility or noneligibility for benefits under the
Agreement.  If the Company determines that the beneficiary is not eligible for
benefits or full benefits, the notice shall set forth (1) the specific reasons
for such denial, (2) a specific reference to the provisions of the Agreement on
which the denial is based, (3) a description of any additional information or
material necessary for the claimant to perfect his or her claim, and a
description of why it is needed, and (4) an explanation of the Agreement's
claims review procedure and other appropriate information as to the steps to be
taken if the beneficiary wishes to have the claim reviewed.  If the Company
determines that there are special circumstances requiring additional time to
make a decision, the Company shall notify the beneficiary of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional ninety-day period.

     8.2 Review Procedure.  If the beneficiary is determined by the Company
not to be eligible for benefits, or if the beneficiary believes that he or she
is entitled to greater or different benefits, the beneficiary shall have the
opportunity to have such claim reviewed by the Company by filing a petition for
review with the Company within sixty (60) days after receipt of the notice
issued by the Company. Said petition shall state the specific reasons with the
beneficiary believes entitle him or her to benefits or to greater or different
benefits. Within sixty (60) days after receipt by the Company of the petition,
the Company shall afford the beneficiary (and counsel, if any) an opportunity to
present his or her position to the Company orally or in writing, and the
beneficiary (or counsel) shall have the right to review the pertinent documents.
The Company shall notify the beneficiary of its decision in writing within the
sixty-day period, stating specifically the basis of its decision, written in a
manner calculated to be understood by the beneficiary and the specific
provisions of the Agreement on which the decision is based. If, because of the
need for a hearing, the sixty-day period is not sufficient, the decision may be
deferred for up to another sixty-day period at the election of the Company, but
notice of this deferral shall be given to the beneficiary.

                                       6
<PAGE>

                                   Article 9

                          Amendments and Termination

      The Company may amend or terminate this Agreement at any time if, pursuant
to legislative, judicial or regulatory action, continuation of the Agreement
would (i) cause benefits to be taxable to the Director prior to actual receipt,
or (ii) result in significant financial penalties or other significantly
detrimental ramifications to the Company (other than the financial impact of
paying the benefits). In no event shall this Agreement be terminated without
payment to the Director of the Deferral Account balance attributable to the
Director's deferrals and interest credited on such amounts.

                                  Article 10

                                 Miscellaneous

     10.1 Binding Effect.  This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.

     10.2 No Guaranty of Employment.  This Agreement is not a contract for
services.  It does not give the Director the right to remain a director of the
Company, nor does it interfere with the shareholders' rights to replace the
Director.  It also does not require the Director to remain a director nor
interfere with the Director's right to terminate services at any time.

     10.3 Non-Transferability.  Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner.

     10.4 Tax Withholding.  The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

     10.5 Applicable Law.  The Agreement and all rights hereunder shall be
governed by the laws of Michigan, except to the extent preempted by the laws of
the United States of America.

     10.6 Unfunded Arrangement.  The Director and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement.  The benefits represent the mere promise by the Company to pay such
benefits.  The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors.  Any insurance on the Director's life is a general
asset of the Company to which the Director and beneficiary have no preferred or
secured claim.

     10.7 Life Insurance.  The Company may acquire insurance to informally
fund this Agreement.  Should this Agreement terminate or the Director terminate
the service to the Board,

                                       7
<PAGE>

the Company will not sell, surrender or transfer ownership of any life insurance
on the life of the Director, without first giving the Director the right to
purchase the net insurance benefit (cash surrender value less total death
benefit) from the insurance company. After written notice by the Company of its
intention to sell or surrender said policy, the Director will have 30 days to
notify the Company of his intention to purchase the net insurance benefit from
the insurance company.

     IN WITNESS WHEREOF, the Director and a duly authorized Company officer has
signed this Agreement.

DIRECTOR:                     COMPANY: Citizens Federal Savings Bank



_____________________         By:    _____________________________
                              Title: _____________________________

                                       8