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                                  EXHIBIT 10.6


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                         1998 EMPLOYEE STOCK OPTION PLAN
                                       OF
                        VALLEY COMMUNITY BANCSHARES, INC.


                                    RECITALS

     1.   On April 23, 1998, the shareholders of Puyallup Valley Bank adopted
the 1998 Employee Stock Option Plan of Puyallup Valley Bank. On the same
date, the shareholders approved a Plan of Reorganization ("Reorganization")
whereby Puyallup Valley Bank became a wholly-owned subsidiary of Valley
Community Bancshares, Inc. In approving the Reorganization, the shareholders
approved the conversion of the 1998 Employee Stock Option Plan of Puyallup
Valley Bank to the 1998 Employee Stock Option Plan of Valley Community
Bancshares, Inc.

     2.   The 1998 Employee Stock Option Plan has been modified to reflect
this change in name but has not been otherwise altered as a result of the
Reorganization. In particular, employees have not been granted additional
benefits, and the fair market value of granted stock options has not been
changed as a result of the Reorganization.

                                      PLAN

     1.   PURPOSE OF THE PLAN. The purpose of this Plan is to provide
additional incentives to Employees of Valley Community Bancshares, Inc. and
its present and future subsidiaries, thereby helping to attract and retain
the best available personnel for positions of responsibility with the
Corporation and otherwise promoting the success of the business activities of
the Corporation. It is intended that Options issued pursuant to this Plan
shall constitute either "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code or nonqualified stock options.

     2.   DEFINITIONS. As used herein, the following definitions shall apply:

          (a)   "Board" shall mean the Board of Directors of the Corporation.

          (b)   "Common Stock" shall mean the Corporation's common stock.

          (c)   "Committee" shall mean the Board or the Committee appointed by
     the Board in accordance with subsection 4(a) of the Plan

          (d)   "Continuous Status as an Employee" shall mean the absence of
     any interruption or termination of service as an Employee. Continuous
     Status as an Employee shall not be considered interrupted in the case of
     sick leave, military leave, or any other approved leave of absence.

          (e)   "Corporation" shall mean Valley Community Bancshares, Inc., a
     bank holding company.

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          (f)   "Employee" shall mean any person employed by the Corporation,
     or any Subsidiary which now exist or are hereafter organized or are
     acquired by the Corporation.

          (g)   "Nonqualified Stock Option" shall mean an Option other than
     an Incentive Stock Option.

          (h)   "Option" shall mean a stock option granted pursuant to the
     Plan. Options shall include both Incentive Stock Options under Section 422
     of the Internal Revenue Code and Nonqualified Stock Options, as the context
     requires.

          (i)   "Optioned Stock" shall mean the Common Stock subject to an
     Option.

          (j)   "Optionee" shall mean an Employee who receives an Option.

          (k)   "Plan" shall mean this 1998 Employee Stock Option Plan.

          (l)   "Parent" shall mean any corporation having a relationship
     with the Corporation as described in Section 424(e) of the Internal
     Revenue Code.

          (m)   "Shareholder-Employee" shall mean an Employee who owns stock
     representing more than 10 percent of the total combined voting power of
     all classes of stock of the Corporation. For this purpose, the
     attribution of stock ownership rules provided in Section 424(d) of the
     Internal Revenue Code shall apply.

          (n)   "Subsidiary" shall mean any corporation having a relationship
     with the Corporation as described in Section 424(f) of the Internal Revenue
     Code.

     3.   STOCK SUBJECT TO OPTIONS.

          (a)      NUMBER OF SHARES RESERVED. The maximum number of shares
     available pursuant to the Plan is 100,000 shares of the Common Stock of
     the Corporation (subject to adjustment as provided in subsection 6(i) of
     the Plan). During the term of this Plan, the Corporation will at all
     times reserve and keep available a sufficient number of shares of its
     Common Stock to satisfy the requirements of the Plan.

          (b)      EXPIRED OPTIONS. If any outstanding Option expires or
     becomes unexercisable for any reason without having been exercised in
     full, the shares of Common Stock allocable to the unexercised portion of
     such Option shall again become available for other Options.

     4.   ADMINISTRATION OF THE PLAN.

          (a)      THE COMMITTEE. The Plan shall be administered by the Board
     directly, acting as a Committee of the whole, or if the Board elects, by
     a separate Committee appointed by the Board for that purpose and
     consisting of at least three Board members. All references in the Plan
     to the "Committee" shall refer to such separate committee, if any is
     established, or if none is then in existence, shall refer to the Board
     as a whole.

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     Once appointed, any such Committee shall continue to serve until
     otherwise directed by the Board. From time to time the Board may
     increase the size of the Committee and appoint additional members
     thereof, remove members (with or without cause), appoint new members in
     substitution therefor, and fill vacancies however caused.

                  (1) The Committee shall select one of its members as chairman,
         and shall hold meetings at such times and places as the chairman or a
         majority of the Committee may determine.

                  (2) At least annually, the Committee shall present a written
         report to the Board indicating the persons to whom Options have been
         granted since the date of the last such report, and in each case the
         date or dates of Options granted, the number of shares optioned, and
         the Option price per share.

                  (3) At all times, the Board shall have the power to remove all
         members of the Committee and thereafter to directly administer the Plan
         as a Committee of the whole.

         (b)      POWERS OF THE COMMITTEE. Except for the terms and conditions
     explicitly set forth in the Plan, the Committee shall have the authority
     and discretion:

                  (1)      To determine the persons to whom Options are to
         be granted, the times of grant and the number of shares to be
         represented by each Option;

                  (2)      To determine the Option price for the shares of
         Common Stock to be issued pursuant to each Option, subject to the
         provisions of subsection 6(b) of the Plan;

                  (3)      To determine all other terms and conditions of each
         Option granted under the Plan, which need not be identical;

                  (4)      To modify or amend the terms of any Option previously
         granted, or to grant substitute Options, subject to the provisions of
         subsections 6(l) and 6(m) of the Plan;

                  (5)      To interpret the Plan;

                  (6)      To authorize any person or persons to execute and
         deliver Option agreements or to take any other actions deemed by the
         Committee to be necessary or appropriate to effectuate the grant of
         Options;

                  (7)      To make all other determinations and take all other
         actions which the Committee deems necessary or appropriate to
         administer the Plan in accordance with its terms and conditions.

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              All actions of the Committee shall be either by (i) a majority
     vote of the members of the full Committee at a meeting of the
     Committee, or (ii) by unanimous written consent of all members of the
     full Committee without a meeting thereof.

              All decisions, determinations and interpretations of the
     Committee shall be final and binding upon all persons, including all
     Optionees and any other holders or persons interested in any Options,
     unless otherwise expressly determined by a vote of the majority of the
     entire Board. No member of the Committee or of the Board shall be
     liable for any action or determination made in good faith with respect
     to the Plan or any Option.

     5.   ELIGIBILITY. Options may be granted only to Employees who the
Committee, in its discretion, from time to time selects.

     Granting of Options pursuant to the Plan shall be entirely discretionary
with the Committee, and the adoption of this Plan shall not confer upon any
person any right to receive any Option or Options pursuant to the Plan unless
and until said Options are granted by the Committee, in its sole discretion.
Neither the adoption of the Plan nor the granting of any Options pursuant to
the Plan shall confer upon any Employee any right with respect to
continuation of employment, nor shall the same interfere in any way with the
Employee's right or with the right of the Corporation or any Subsidiary to
terminate the employment relationship at any time.

     6.   TERMS AND CONDITIONS OF OPTIONS. All Options granted pursuant to
the Plan must be authorized by the Committee, and must be documented in
written agreements in such form as the Committee shall from time to time
approve, which agreements shall comply with and be subject to all of the
following terms and conditions, unless waived or modified by the Committee.

          (a)      NUMBER OF SHARES; ANNUAL LIMITATION. Each Option agreement
     shall state whether the Option is an Incentive Stock Option or a
     Nonqualified Stock Option and the number of shares subject to Option.
     Any number of Options may be granted to a single eligible person at any
     time and from time to time, except that in the case of Incentive Stock
     Options, the aggregate fair market value (determined as of the time each
     Option is granted) of all shares of Common Stock with respect to which
     Incentive Stock Options become exercisable for the first time by an
     Employee in any one calendar year (under all incentive stock option
     plans of the Corporation shall not exceed $100,000.

          (b)      OPTION PRICE AND CONSIDERATION. The Option price for the
     shares of Common Stock to be issued pursuant to the Option shall be such
     price as is determined by the Committee, but shall in no event be less
     than the fair market value of the Common Stock on the date of grant of
     the Option. In the case of an Incentive Stock Option granted to an
     Employee who, immediately before the grant of such Incentive Stock
     Option, is a Shareholder-Employee, the Incentive Stock Option price
     shall be at least 110 percent of the fair market value of the Common
     Stock on the date of grant of the Incentive Stock Option. The fair
     market value shall be determined by the Committee in its discretion;

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     PROVIDED, HOWEVER, that in the event there is a public market for the
     Common Stock, the fair market value shall be the mean of the bid and
     asked prices of the Common Stock as of the date of grant as reported on
     the National Association of Securities Dealers Automatic Quotation
     System (NASDAQ), or, in the event the Common Stock is listed on a stock
     exchange, the fair market value shall be the closing price on the
     exchange as of the date of grant of the Option.

          The Option price shall be payable either (i) in United States
     dollars upon exercise of the Option, or (ii) such other consideration of
     comparable value deemed to be acceptable by the Committee, including
     without limitation Common Stock of the Corporation, services or other
     property.

          (c)      TERM OF OPTION. No Incentive Stock Option granted pursuant
     to the Plan shall in any event be exercisable after the expiration of 10
     years from the date such Option is granted, except that the term of an
     Incentive Stock Option granted to an Employee who, immediately before
     such Incentive Stock Option is granted, is a Shareholder-Employee shall
     be for not more than 5 years from the date of grant thereof. Subject to
     the foregoing and other applicable provisions of the Plan including but
     not limited to subsection 6(e) herein, the term of each Option shall be
     determined by the Committee in its discretion.

          (d)      MANNER OF EXERCISE. An Option shall be deemed to be
     exercised when written notice of exercise has been given to the
     Corporation in accordance with the terms of the Option by the person
     entitled to exercise the Option, together with full payment for the
     shares of Common Stock subject to said notice.

          (e)      DEATH OF OPTIONEE. In the event of the death of an
     Optionee who at the time of his death was an Employee and who had been
     in Continuous Status as an Employee since the date of grant of the
     Option, the Option shall terminate on the earlier of (i) one year after
     the date of death of the Optionee or such later date as may be set in
     the discretion of the Committee; or (ii) the expiration date otherwise
     provided in the Option Agreement, except that if the expiration date of
     an Option should occur during the 90-day period immediately following
     the Optionee's death, such Option shall terminate at the end of such
     90-day period. The Option shall be exercisable at any time prior to such
     termination by the Optionee's estate, or by such person or persons who
     have acquired the right to exercise the Option by bequest or by
     inheritance or by reason of the death of the Optionee.

          (f)      DISABILITY OF OPTIONEE. If an Optionee's status as an
     Employee is terminated at any time during the Option period by reason of
     a disability (within the meaning of Section 22(e)(3) of the Internal
     Revenue Code) and if said Optionee had been in Continuous Status as an
     Employee at all times between the date of grant of the Option and the
     termination of his status as an Employee, his Incentive Stock Option
     shall terminate on the earlier of (i) one year after the date of
     termination of his status as an Employee, or (ii) the expiration date
     otherwise provided in his Option Agreement.

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          (g)      TERMINATION OF STATUS AS AN EMPLOYEE. If an Optionee's
     status as an Employee is terminated at any time after the grant of his
     Option for any reason other than death or disability, as provided in
     subparagraphs (e) and (f), above, and not by reason of fraud or willful
     misconduct, as provided below:

                   (1)    His Incentive Stock Option shall terminate on the
          earlier of (i) the same day of the third month after the date of
          termination of his status as an Employee, or (ii) the expiration
          date otherwise provided in his Option Agreement.

                   (2)    If an Optionee's status as an Employee is terminated
          at any time after the grant of his Option by reason of fraud or
          willful misconduct, then his Option shall terminate on the date of
          termination of his status as an Employee.

          (h)      NON-TRANSFERABILITY OF OPTIONS. No Option granted pursuant
     to the Plan may be sold, pledged, assigned, hypothecated, transferred,
     or disposed of in any manner other than by will or by the laws of
     descent or distribution and may be exercised during the lifetime of the
     Optionee, only by the Optionee.

          (i)      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
     required action by the shareholders of the Corporation, the number of
     shares of Common Stock covered by each outstanding Option, the number of
     shares of Common Stock available for grant of additional Options, and
     the price per share of Common Stock specified in each outstanding
     Option, shall be proportionately adjusted for any increase or decrease
     in the number of issued shares of Common Stock resulting from any stock
     split or other subdivision or consolidation of shares, the payment of
     any stock dividend (but only on the Common Stock) or any other increase
     or decrease in the number of such shares of Common Stock effected
     without receipt of consideration by the Corporation; PROVIDED, HOWEVER,
     that conversion of any convertible securities of the Corporation shall
     not be deemed to have been "effected without receipt of consideration."
     Such adjustment shall be made by the Committee, whose determination in
     that respect shall be final, binding and conclusive.

          No Incentive Stock Option shall be adjusted by the Committee
     pursuant to this subparagraph 6(i) in a manner which causes the
     Incentive Stock Option to fail to continue to qualify as an incentive
     stock option within the meaning of Section 422 of the Internal Revenue
     Code.

          Except as otherwise expressly provided in this subsection 6(i), no
     Optionee shall have any rights by reason of any stock split or the
     payment of any stock dividend or any other increase or decrease in the
     number of shares of Common Stock. Except as otherwise expressly provided
     in this subsection 6(i), any issue by the Corporation of shares of stock
     of any class, or securities convertible into shares of stock of any
     class, shall not affect the number of shares or price of Common Stock
     subject to any Options, and no adjustments in Options shall be made by
     reason thereof. The grant of an Option pursuant to the Plan shall not
     affect in any way the right or power of the Corporation to

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     make adjustments, reclassifications, reorganizations or changes of its
     capital or business structure.

          (j)      DATE OF GRANT OF OPTION. The date of grant of an Option
     shall, for all purposes, be the date on which the Committee makes the
     determination granting such Option. Said date of grant shall be
     specified in the Option Agreement.

          (k)      CONDITIONS UPON ISSUANCE OF SHARES. Shares of Common Stock
     shall not be issued with respect to an Option granted under the Plan
     unless the exercise of such Option and the issuance and delivery of such
     shares pursuant thereto shall comply with all relevant provisions of
     law, including applicable federal and state securities laws.

          As a condition to the exercise of an Option, the Corporation may
     require the person exercising such Option to represent and warrant at
     the time of exercise that the shares of Common Stock are being purchased
     only for investment and without any present intention to sell or
     distribute such Common Stock if, in the opinion of counsel for the
     Corporation, such a representation is required by any of the
     aforementioned relevant provisions of law.

          (l)      MERGER, SALE OF ASSETS, ETC. In the event of the merger or
     other reorganization of the Corporation with or into any other
     corporation, or in the event of a proposed sale of substantially all of
     the assets of the Corporation, or in the event of a proposed dissolution
     or liquidation of the Corporation, (i) all outstanding and unexercised
     Options shall become immediately exercisable, and (ii) such Options
     shall either be assumed by the successor corporation, or parent thereof,
     in the reorganization transaction described above or be replaced with a
     comparable award for the purchase of shares of the capital stock of the
     successor corporation, except that if such Options are not so assumed or
     replaced, then (iii) the Committee may, in the exercise of its sole
     discretion, terminate all outstanding Options as of a date fixed by the
     Committee which may be sooner than the originally stated option term.
     The Committee shall notify each Optionee of such action in writing not
     less than 60 days prior to the termination date fixed by the Committee,
     and each Optionee shall have the right to exercise his Option to and
     including said termination date.

          (m)      SUBSTITUTE STOCK OPTIONS. In connection with the
     acquisition or proposed acquisition by the Corporation or any
     Subsidiary, whether by merger, acquisition of stock or assets, or other
     reorganization transaction, of a business, any employees of which have
     been granted Incentive Stock Options, the Committee is authorized to
     issue, in substitution of any such unexercised stock option, a new
     Option under this Plan which confers upon the Optionee substantially the
     same benefits as the old option; PROVIDED, HOWEVER, that the issuance of
     any new Option for an old Incentive Stock Option shall satisfy the
     requirements of Section 424(a) of the Internal Revenue Code.

          (n)      TAX COMPLIANCE. The Corporation, in its sole discretion,
     may take any actions reasonable believed by it to be required to comply
     with any local, state or federal tax laws relating to the reporting or
     withholding of taxes attributable to the grant or

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     exercise of any Option or the disposition of any shares of Common Stock
     issued upon exercise of an Option, including, but not limited to, (i)
     withholding from any person exercising an Option a number of shares of
     Common Stock having a fair market value equal to the amount required to
     be withhold by the Corporation under applicable tax laws, and (ii)
     withholding from any form of compensation or other amount due an
     Optionee or holder of shares of Common Stock issued upon exercise of an
     Option any amount required to be withheld by the Corporation under
     applicable tax laws. Withholding or reporting shall be considered
     required for purposes of this subparagraph if any tax deduction or other
     favorable tax treatment available to the Corporation is conditioned upon
     such reporting or withholding.

          (o)      OTHER PROVISIONS. Option Agreements exercised pursuant to
     the Plan may contain such other provisions as the Committee shall deem
     advisable, provided in the case of Incentive Stock Options the
     provisions are not inconsistent with the provisions of Section 422(b) of
     the Internal Revenue Code or with any of the other terms and conditions
     of this Plan.

     7.   TERM OF THE PLAN. The Plan shall become effective on the earlier of
(a) the date of adoption of the Plan by the Board; or (b) the date of
shareholder approval of the Plan as provided in section 9 of the Plan. Unless
sooner terminated as provided in subsection 8(a) of the Plan, the Plan shall
terminate on the tenth anniversary of its effective date. Options may be granted
at any time after the effective date and prior to the date of termination of
the Plan.

     8.   AMENDMENT OR EARLY TERMINATION OF THE PLAN.

          (a)      AMENDMENT OR EARLY TERMINATION. The Board may terminate
     the Plan at any time. The Board may amend the Plan at any time and from
     time to time in such respects as the Board may deem advisable, except
     that, without approval of the holders of a majority of the outstanding
     shares of the Common Stock, no such revision or amendment shall:

                   (1)   Increase the number of shares of Common Stock subject
          to the Plan other than in connection with an adjustment under
          subsection 6(i) of the Plan; or

                   (2)   Change the designation of the class of persons eligible
          to be granted Options, as provided in section 5 of the Plan; or

                   (3)   Make any amendments to the Plan which would require
          shareholder approval under any applicable law or regulation.

          (b)      EFFECT OF AMENDMENT OR TERMINATION. No amendment or
     termination of the Plan shall affect Options granted prior to such
     amendment or termination, and all such Options shall remain in full force
     and effect notwithstanding such amendment or termination.

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     9.   SHAREHOLDER APPROVAL. The Plan shall be subject to approval by a
majority of the outstanding shares of Common Stock of the Corporation present
and entitled to vote at a duly convened meeting of the shareholders of the
Corporation.

                             CERTIFICATE OF ADOPTION

         I certify that the foregoing Plan was approved by the shareholders of
Valley Community Bancshares, Inc., on April 23, 1998.




                                   --------------------------------------
                                                  Secretary