<PAGE>

                                                                    EXHIBIT 10.3

                          FRANKFORT FIRST BANCORP, INC.

                               Guaranty Agreement

         THIS AGREEMENT is entered into this 30TH DAY OF JUNE, 2004 (the
"Effective Date"), by and between Frankfort First Bancorp, Inc. (the "Company")
and DON D. JENNINGS (the "Employee").

         WHEREAS, the Employee has heretofore been employed by First Federal
Savings Bank of Frankfort (the "Bank") as its EXECUTIVE VICE PRESIDENT, and has
entered into an agreement (the "Bank Agreement") dated JUNE 30, 2004, with the
Employee; and

         WHEREAS, the Board of Directors (the "Board") of the Company believes
it is in the best interests of the Company to enter into this Agreement with the
Employee in order to assure continuity of management of the Bank and to
reinforce and encourage the long-term retention of the Employee; and

         WHEREAS, the parties desire by this writing to set forth the Company's
commitment to guarantee the Bank's obligations under the Bank Agreement with the
Employee.

         NOW, THEREFORE, it is AGREED as follows:

         1. Consideration from Company: Joint and Several Liability. The Company
hereby agrees that to the extent permitted by law, it shall be jointly and
severally liable with the Bank for the payment of all amounts due under the Bank
Agreement, provided that the paragraphs of the Bank Agreement that appear under
the heading "Termination or Suspension under Federal Law" shall be inapplicable
to this Agreement. The Board may in its discretion at any time during the term
of this Agreement agree to pay the Employee a base salary for the remaining term
of this Agreement. If the Board agrees to pay such salary, the Board shall
thereafter review, not less often than annually, the rate of the Employee's
salary, and in its sole discretion may decide to increase his salary.

         2. Discretionary Bonuses; Participation in Retirement, Medical and
Other Plans. The Employee shall participate in an equitable manner with all
other senior management employees of the Company in discretionary bonuses that
the Board may award from time to time to the Company's senior management
employees, as well as in (i) any of the following plans or programs that the
Company may now or in the future maintain: group hospitalization, disability,
health, dental, sick leave, life insurance, travel and/or accident insurance,
auto allowance/auto lease, retirement, pension, and/or other present or future
qualified plans provided by the Company, generally which benefits, taken as a
whole, must be at least as favorable as those in effect on the Effective Date;
and (ii) any fringe benefits which are or may become available to the Company's
senior management employees, including for example: any stock option or
incentive compensation plans, and any other benefits which are commensurate with
the responsibilities and functions to be performed by the Employee under this
Agreement.

<PAGE>

         3. Indemnification. The Company agrees that its Bylaws shall continue
to provide for indemnification of directors, officers, employees and agents of
the Company, including the Employee, during the full term of this Agreement, and
to at all times provide adequate insurance for such purposes.

         4. Successors and Assigns.

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

                  (b) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.

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

         6. Applicable Law. Except to the extent preempted by Federal law, the
laws of the Commonwealth of Kentucky shall govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or
otherwise.

         7. 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.

         8. 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.

                                        2

<PAGE>

         IN WITNESS HEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.

ATTEST:                                    FRANKFORT FIRST BANCORP, INC.

/s/ Danny A. Garland                       By: /s/ William C. Jennings
------------------------                       ---------------------------------
Secretary                                      Its Chairman of the Board

WITNESS:

/s/ Teresa Kuhl                            /s/ Don D. Jennings
------------------------                   ------------------------------------
                                           Don D. Jennings

                                       3