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                                                                    EXHIBIT 10.4



                                    AGREEMENT

         AGREEMENT, dated this 26th day of May 1999, between First Keystone
Financial, Inc. (the "Corporation"), a Pennsylvania corporation, and Stephen J.
Henderson (the "Executive").

                                   WITNESSETH

         WHEREAS, the Executive is presently an officer of the Corporation and
First Keystone Federal Savings Bank (the "Savings Bank") (together, the
"Employers");

         WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers;

         WHEREAS, the Employers currently have an agreement with the Executive
dated January 25, 1995, which is being amended and superseded by this Agreement,
and in accordance with the provisions of Office of Thrift Supervision ("OTS")
Regulatory Bulletin 27a, the Corporation and the Savings Bank desire to enter
into separate agreements with the Executive with respect to his employment by
each of the Employers; and

         WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive by the Corporation in the event that his
employment with the Corporation is terminated under specified circumstances;

         NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:

         1. DEFINITIONS. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:

         (a) AVERAGE ANNUAL COMPENSATION. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the average
level of compensation paid to the Executive by the Employers or any subsidiary
thereof during the most recent five taxable years preceding the Date of
Termination, including Base Salary and benefits and bonuses under any employee
benefit plans of the Employers.

         (b) BASE SALARY. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.

         (c) CAUSE. Termination of the Executive's employment for "Cause" shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of this Agreement.
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         (d) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of the
Corporation" shall mean a change in control of a nature 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, whether or not the Corporation is registered
under the Exchange Act; provided that, without limitation, such 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 of the Corporation representing 25% or more of the
combined voting power of the Corporation's then outstanding securities; or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Corporation 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.

         (e) CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.

         (f) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.

         (g) DISABILITY. Termination by the Corporation of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.

         (h) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following a
Change in Control of the Corporation based on:

                  (i)      Without the Executive's express written consent, a
                           reduction by the Employers in the Executive's Base
                           Salary as the same may be increased from time to time
                           or, except to the extent permitted by Section 3(b)
                           hereof, a reduction in the package of fringe benefits
                           provided to the Executive, taken as a whole;

                  (ii)     The principal executive office of the Employers is
                           relocated outside of the Media, Pennsylvania, area
                           or, without the Executive's express written consent,
                           the Employers require the Executive to be based
                           anywhere other

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                           than an area in which the Employers' principal
                           executive office is located, except for required
                           travel on business of the Employers to an extent
                           substantially consistent with the Executive's present
                           business travel obligations;

                  (iii)    Any purported termination of the Executive's
                           employment for Cause, Disability or Retirement which
                           is not effected pursuant to a Notice of Termination
                           satisfying the requirements of paragraph (j) below;
                           or

                  (iv)     The failure by the Corporation to obtain the
                           assumption of and agreement to perform this Agreement
                           by any successor as contemplated in Section 9 hereof.

         (i) IRS. IRS shall mean the Internal Revenue Service.

         (j) NOTICE OF TERMINATION. Any purported termination of the Executive's
employment by the Corporation for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. 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 of Executive's employment 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 the Corporation's termination of Executive's employment for Cause;
and (iv) is given in the manner specified in Section 10 hereof.

         (k) RETIREMENT. Termination by the Corporation of the Executive's
employment based on "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employers' retirement policies, including early
retirement, generally applicable to their salaried employees.

         2. TERM OF EMPLOYMENT.

         (a) The Corporation hereby employs the Executive as Senior Vice
President and Chief Lending Officer of the Corporation and Executive hereby
accepts said employment and agrees to render such services to the Corporation on
the terms and conditions set forth in this Agreement. The term of employment
under this Agreement shall be for three years, commencing on the date of this
Agreement and, subject to the requirements of the succeeding sentence, shall be
deemed automatically, without further action, to extend for an additional year
on each annual anniversary of the date of this Agreement. Prior to the
anniversary of the date of this Agreement and each annual anniversary
thereafter, the Board of Directors of the Corporation shall consider and review
(with appropriate corporate documentation thereof, and after taking into account
all relevant factors,

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including the Executive's performance hereunder) extension of the term under
this Agreement, and the term shall continue to extend in the manner set forth
above unless either the Board of Directors does not approve such extension and
provides written notice to the Executive of such event or the Executive gives
written notice to the Corporation of the Executive's election not to extend the
term, in each case with such written notice to be given not less than thirty
(30) days prior to any such anniversary date. References herein to the term of
this Agreement shall refer both to the initial term and successive terms.

         (b) During the term of this Agreement, the Executive shall perform such
executive services for the Corporation as may be consistent with his titles and
from time to time assigned to him by the Corporation's Board of Directors.

         3. COMPENSATION AND BENEFITS.

         (a) The Employers shall compensate and pay Executive for his services
during the term of this Agreement at a minimum base salary of $88,000 per year
("Base Salary"), which may be increased from time to time in such amounts as may
be determined by the Board of Directors of the Employers and may not be
decreased without the Executive's express written consent. In addition to his
Base Salary, the Executive shall be entitled to receive during the term of this
Agreement such bonus payments as may be determined by the Board of Directors of
the Employers.

         (b) During the term of the Agreement, Executive shall be entitled to
participate in and receive the benefits of any pension or other retirement
benefit plan, profit sharing, stock option, employee stock ownership, or other
plans, benefits and privileges given to employees and executives of the
Employers, to the extent commensurate with his then duties and responsibilities,
as fixed by the Board of Directors of the Employers. 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 of or
benefits to Executive as compared with any other executive officer of the
Corporation. Nothing paid to Executive under any plan or arrangement presently
in effect or made available in the future shall be deemed to be in lieu of the
salary payable to Executive pursuant to Section 3(a) hereof.

         (c) During the term of this Agreement, Executive shall be entitled to
paid annual vacation in accordance with the policies as established from time to
time by the Board of Directors of the Employers. Executive shall be entitled to
receive any additional compensation from the Employers for failure to take a
vacation and shall be able to accumulate unused vacation time from one year to
the next.

         (d) In the event of the Executive's death during the term of this
Agreement, his spouse, estate, legal representative or named beneficiaries (as
directed by the Executive in writing) shall be paid on a monthly basis the
Executive's annual compensation from the Employers at the rate in effect

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at the time of the Executive's death for a period equal to the period then
remaining under this Agreement.

         (e) The Executive's compensation, benefits and expenses shall be paid
by the Corporation and the Savings Bank in the same proportion as the time and
services actually expended by the Executive on behalf of each respective
Employer.

         4. EXPENSES. The Employers shall reimburse Executive or otherwise
provide for or pay for all reasonable expenses incurred by Executive in
furtherance of, or in connection with the business of the Employers, including,
but not by way of limitation, automobile (including costs of leasing, insurance,
repairs, maintenance, and licensing) and traveling expenses, and all reasonable
entertainment expenses (whether incurred at the Executive's residence, while
traveling or otherwise), subject to such reasonable documentation and other
limitations as may be established by the Board of Directors of the Employers. If
such expenses are paid in the first instance by Executive, the Employers shall
reimburse the Executive therefor.

         5. TERMINATION.

         (a) The Corporation shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause or Retirement, and
Executive shall have the right, upon prior Notice of Termination, to terminate
his employment hereunder for any reason.

         (b) In the event that (i) Executive's employment is terminated by the
Corporation for Cause or Retirement or in the event of the Executive's death, or
(ii) Executive terminates his employment hereunder other than for Good Reason,
Executive shall have no right pursuant to this Agreement to compensation or
other benefits for any period after the applicable Date of Termination except as
otherwise provided herein.

         (c) In the event that (i) Executive's employment is terminated
(including termination due to Disability) by the Corporation for other than
Cause, Retirement or the Executive's death or (ii) such employment is terminated
by the Executive (a) due to a material breach of this Agreement by the
Corporation, which breach has not been cured within fifteen (15) days after a
written notice of non-compliance has been given by the Executive to the
Corporation, or (b) for Good Reason, then the Corporation shall, subject to the
provisions of Section 6 hereof, if applicable

                  (A) pay to the Executive, in thirty-six (36) equal monthly
                  installments beginning with the first business day of the
                  month following the Date of Termination, a cash severance
                  amount equal to three (3) times the Executive's Base Salary,
                  and

                  (B) maintain and provide for a period ending at the earlier of
                  (i) the expiration of the remaining term of employment
                  pursuant hereto prior to the Notice of Termination or (ii) the
                  date of the Executive's full-time employment by another
                  employers

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                  (provided that 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 the Executive was entitled to
                  participate immediately prior to the Date of Termination
                  (other than stock option and restricted stock plans of the
                  Employers), provided that in the event that the 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 Corporation
                  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 Date of Termination.

         (d) In the event of the failure by the Employers to elect or to
re-elect or to appoint or to re-appoint the Executive to the offices of Senior
Vice President and Chief Lending Officer of the Corporation and the Savings Bank
or a material adverse change made by the Employers in the Executive's functions,
duties or responsibilities as Senior Vice President and Chief Lending Officer of
the Corporation and the Savings Bank without the Executive's express written
consent, the Executive shall be entitled to terminate his employment hereunder
and shall be entitled to the payments and benefits provided for in Section
5(c)(A) and (B); however, such termination shall not otherwise constitute a
material breach of this Agreement by the Corporation.

         6. PAYMENT OF ADDITIONAL BENEFITS UNDER CERTAIN CIRCUMSTANCES.

         (a) If the payments and benefits pursuant to Section 5 hereof, either
alone or together with other payments and benefits which the Executive has the
right to receive from the Employers (including, without limitation, the payments
and benefits which the Executive would have the right to receive from the
Savings Bank pursuant to Section 5 of the Agreement between the Savings Bank and
the Executive dated as of the date hereof (the "Savings Bank Agreement"), before
giving effect to any reduction in such amounts pursuant to the provisions of
Section 6 of the Savings Bank Agreement), would constitute a "parachute payment"
as defined in Section 280G(b)(2) of the Code (the "Initial Parachute Payment,"
which includes the amounts paid pursuant to clause (A) below), then the
Corporation shall pay to the Executive, in thirty-six (36) equal monthly
installments beginning with the first business day of the month following the
Date of Termination or in a lump sum within five business days of the Date of
Termination (at the Executive's election), a cash amount equal to the sum of the
following:

                           (A) the amount by which the payments and benefits
                  that would have otherwise been paid by the Savings Bank to the
                  Executive pursuant to Section 5 of the Savings Bank Agreement
                  are reduced by the provisions of Section 6 of the Savings Bank
                  Agreement;

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                           (B) twenty (20) percent (or such other percentage
                  equal to the tax rate imposed by Section 4999 of the Code) of
                  the amount by which the Initial Parachute Payment exceeds the
                  Executive's "base amount" from the Employers, as defined in
                  Section 280G(b)(3) of the Code, with the difference between
                  the Initial Parachute Payment and the Executive's base amount
                  being hereinafter referred to as the "Initial Excess Parachute
                  Payment"; and

                           (C) such additional amount (tax allowance) as may be
                  necessary to compensate the Executive for the payment by the
                  Executive of state and federal income and excise taxes on the
                  payment provided under clause (B) above and on any payments
                  under this clause (C). In computing such tax allowance, the
                  payment to be made under clause (B) above shall be multiplied
                  by the "gross up percentage" ("GUP"). The GUP shall be
                  determined as follows:

                                                     Tax Rate
                                        GUP =       -----------
                                                    1- Tax Rate

                  The Tax Rate for purposes of computing the GUP shall be the
                  highest marginal federal and state income and
                  employment-related tax rate, including any applicable excise
                  tax rate, applicable to the Executive in the year in which the
                  payment under clause (B) above is made.

         (b) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final administrative
settlement to which the Executive is a party that the actual excess parachute
payment as defined in Section 280G(b)(1) of the Code is different from the
Initial Excess Parachute Payment (such different amount being hereafter referred
to as the "Final Excess Parachute Payment"), then the Corporation's independent
tax counsel or accountants shall determine the amount (the "Adjustment Amount")
which either the Executive must pay to the Corporation or the Corporation must
pay to the Executive in order to put the Executive (or the Corporation, as the
case may be) in the same position the Executive (or the Corporation, as the case
may be) would have been if the Initial Excess Parachute Payment had been equal
to the Final Excess Parachute Payment. In determining the Adjustment Amount, the
independent tax counsel or accountants shall take into account any and all taxes
(including any penalties and interest) paid by or for the Executive or refunded
to the Executive or for the Executive's benefit. As soon as practicable after
the Adjustment Amount has been so determined, the Corporation shall pay the
Adjustment Amount to the Executive or the Executive shall repay the Adjustment
Amount to the Corporation, as the case may be.

         (c) In each calendar year that the Executive receives payments of
benefits under this Section 6, the Executive shall report on his state and
federal income tax returns such information as is consistent with the
determination made by the independent tax counsel or accountants of the
Corporation as described above. The Corporation shall indemnify and hold the
Executive harmless

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from any and all losses, costs and expenses (including without limitation,
reasonable attorneys' fees, interest, fines and penalties) which the Executive
incurs as a result of so reporting such information. The Executive shall
promptly notify the Corporation in writing whenever the Executive receives
notice of the institution of a judicial or administrative proceeding, formal or
informal, in which the federal tax treatment under Section 4999 of the Code of
any amount paid or payable under this Section 6 is being reviewed or is in
dispute. The Corporation shall assume control at its expense over all legal and
accounting matters pertaining to such federal tax treatment (except to the
extent necessary or appropriate for the Executive to resolve any such proceeding
with respect to any matter unrelated to amounts paid or payable pursuant to this
Section 6) and the Executive shall cooperate fully with the Corporation in any
such proceeding. The Executive shall not enter into any compromise or settlement
or otherwise prejudice any rights the Corporation may have in connection
therewith without the prior consent of the Corporation.

         7. MITIGATION; EXCLUSIVITY OF BENEFITS.

         (a) 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 employers after the Date of
Termination or otherwise.

         (b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.

         8. WITHHOLDING. All payments required to be made by the Corporation
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Corporation may
reasonably determine should be withheld pursuant to any applicable law or
regulation.

         9. ASSIGNABILITY. The Corporation may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Corporation may hereafter merge or
consolidate or to which the Corporation may transfer all or substantially all of
its assets, if in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations of the
Corporation hereunder as fully as if it had been originally made a party hereto,
but may not otherwise assign this Agreement or its rights and obligations
hereunder. The Executive may not assign or transfer this Agreement or any rights
or obligations hereunder.

         10. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:

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                  To the Corporation:        President
                                             First Keystone Financial, Inc.
                                             22 West State Street
                                             Media, Pennsylvania  19063

                  To the Executive:          Stephen J. Henderson
                                             325 Spalding Road
                                             Wilmington, Delaware 19803

         11. AMENDMENT; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Corporation to sign on
its behalf. No waiver by any party hereto at any time of any breach by any 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.

         12. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.

         13. NATURE OF OBLIGATIONS. Nothing contained herein shall create or
require the Corporation to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Corporation hereunder, such right shall be no
greater than the right of any unsecured general creditor of the Corporation.

         14. HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

         15. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.

         16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         17. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Corporation and the Executive with respect to the matters agreed to
herein. All prior agreements between the Corporation and the Executive with
respect to the matters agreed to herein, including without limitation the
Agreement between the Employers and the Executive dated January 25, 1995, are
hereby superseded and shall have no force or effect. Notwithstanding the
foregoing, nothing

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contained in this Agreement shall affect the agreement of even date being
entered into between the Savings Bank and the Executive.

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         IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.


Attest:                            FIRST KEYSTONE FINANCIAL, INC.



/s/ Carol Walsh                    By:      /s/ Donald S. Guthrie
Carol Walsh                                 Donald S. Guthrie
                                            President


Attest:                            EXECUTIVE


/s/ Carol Walsh                    By:      /s/ Stephen J. Henderson
Carol Walsh                                 Stephen J. Henderson, Individually


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