<PAGE>

                                                                   EXHIBIT 10(b)

                              EMPLOYMENT AGREEMENT

      AGREEMENT between Glacier Bancorp, Inc., hereinafter called "Company", and
Michael J. Blodnick, hereinafter called "Executive",

                                    RECITALS

A.    Executive has served as President and Chief Executive Officer of the
      Company.

B.    The Company desires Executive to continue his employment at the Company
      under the terms and conditions of this Agreement.

C.    Executive desires to continue his employment at the Company under the
      terms and conditions of this Agreement.

                                    AGREEMENT

1.    EMPLOYMENT. The Company agrees to employ Executive and Executive accepts
      employment by the Company on the terms and conditions set forth in this
      Agreement. Executive's title will be President and Chief Executive Officer
      of the Company. During the term of this Agreement, Executive will serve as
      a director of the Company and of the Banks.

2.    TERM. The term of this Agreement ("Term") is one year, beginning on
      January 1, 2005.

3.    DUTIES. The Company will employ Executive as its President and Chief
      Executive Officer. Executive will faithfully and diligently perform his
      assigned duties, which are as follows:

      (a)   Company Performance. Executive will be responsible for all aspects
            of the Company's performance, including without limitation,
            directing that daily operational and managerial matters are
            performed in a manner consistent with the Company's policies.

      (b)   Development and Preservation of Business. Executive will be
            responsible for the development and preservation of banking
            relationships and other business development efforts (including
            appropriate civic and community activities).

      (c)   Report to Board. Executive will report directly to the Company's
            board of directors. The Company's board of directors may, from time
            to time, modify Executive's title or add, delete, or modify
            Executive's performance responsibilities to accommodate management
            succession, as well as any other management objectives of the
            Company. Executive will assume any additional positions, duties and
            responsibilities as may reasonably be requested of him with or
            without additional compensation, as appropriate and consistent with
            Sections 3(a) and 3(b) of this Agreement.

4.    EXTENT OF SERVICES. Executive will devote all of his working time,
      attention and skill to the duties and responsibilities set forth in
      Section 3. To the extent that such activities do not interfere with his
      duties under Section 3, Executive may participate in other businesses as a
      passive investor, but (a) Executive may not actively participate in the
      operation or management of those businesses, and (b) Executive may not,
      without the Company's prior written consent, make or maintain any
      investment in a business with which the

<PAGE>

      Company or its subsidiaries has an existing competitive or commercial
      relationship.

5.    COMPANY BOARD. During the term, the Company will use its best efforts to
      nominate and recommend Executive for election to the Company's board of
      directors.

6.    SALARY. Executive will receive an annual salary of $259,375.00, to be paid
      in accordance with the Company's regular payroll schedule. Subsequent
      salary increases are subject to the Company's annual review of Executive's
      compensation and performance.

7.    INCENTIVE COMPENSATION. During the Term, the Company's board of directors
      will determine the amount of bonus to be paid by the Company to Executive
      for that year. In making this determination, the Company's board of
      directors will consider factors such as Executive's performance of his
      duties and the safety, soundness and profitability of the Company.
      Executive's bonus will reflect Executive's contribution to the performance
      of the Company during the year, also taking into account the nature and
      extent of incentive bonuses paid to comparable senior officers at the
      Company. This bonus will be paid to Executive no later than January 31 of
      the year following the year in which the bonus is earned by Executive.

8.    INCOME DEFERRAL. Executive will be eligible to participate in any program
      available to the Company's senior management for income deferral, for the
      purpose of deferring receipt of any or all of the compensation he may
      become entitled to under this Agreement.

9.    VACATION AND BENEFITS.

      (a)   Vacation and Holidays. Executive will receive four weeks of paid
            vacation each year in addition to all holidays observed by the
            Company and its subsidiaries. Executive may carry over, in the
            aggregate, up to four weeks of unused vacation to a subsequent year.
            Any unused vacation time in excess of four weeks will not accumulate
            or carry over from one calendar year to the next. Each calendar
            year, Executive shall take not less than one (1) week vacation.

      (b)   Benefits. Executive will be entitled to participate in any group
            life insurance, disability, health and accident insurance plans,
            profit sharing and pension plans and in other employee fringe
            benefit programs the Company may have in effect from time to time
            for its similarly situated employees, in accordance with and subject
            to any policies adopted by the Company's board of directors with
            respect to the plans or programs, including without limitation, any
            incentive or employee stock option plan, deferred compensation plan,
            401(k) plan, and Supplemental Executive Retirement Plan (SERP). The
            Company through this Agreement does not obligate itself to make any
            particular benefits available to its employees.

      (c)   Business Expenses. The Company will reimburse Executive for ordinary
            and necessary expenses which are consistent with past practice at
            the Company (including, without limitation, travel, entertainment,
            and similar expenses) and which are incurred in performing and
            promoting the Company's business. Executive will present from time
            to time itemized accounts of these expenses, subject to any limits
            of the Company policy or the rules and regulations of the Internal
            Revenue Service.

10.   TERMINATION OF EMPLOYMENT.

      (a)   Termination by the Company for Cause. If the Company terminates
            Executive's employment for Cause (defined below) before this
            Agreement terminates, the Company will pay Executive the salary
            earned and expenses reimbursable under this Agreement incurred
            through the date of his termination. Executive will have no right to
            receive compensation or other benefits for any period after
            termination under this Section 10(a).

      (b)   Other Termination by the Company. If the Company terminates
            Executive's employment without Cause before this Agreement
            terminates, or Executive terminates his employment for Good Reason

<PAGE>

            (defined below), the Company will pay Executive for the remainder of
            the Term the compensation and other benefits he would have been
            entitled to if his employment had not terminated.

      (c)   Death or Disability. This Agreement terminates (1) if Executive dies
            or (2) if Executive is unable to perform his duties and obligations
            under this Agreement for a period of 90 consecutive days as a result
            of a physical or mental disability arising at any time during the
            term of this Agreement, unless with reasonable accommodation
            Executive could continue to perform his duties under this Agreement
            and making these accommodations would not pose an undue hardship on
            the Company. If termination occurs under this Section 10(c),
            Executive or his estate will be entitled to receive all compensation
            and benefits earned and expenses reimbursable through the date
            Executive's employment terminated.

      (d)   Termination Related to a Change in Control.

            (1)   Termination by Company. If the Company, or its successor in
                  interest by merger, or its transferee in the event of a
                  purchase in an assumption transaction (for reasons other than
                  Executive's death, disability, or Cause) (1) terminates
                  Executive's employment within 3 years following a Change in
                  Control (as defined below), or (2) terminates Executive's
                  employment before the Change in Control but on or after the
                  date that any party either announces or is required by law to
                  announce any prospective Change in Control transaction and a
                  Change in Control occurs within six months after the
                  termination, the Bank will provide Executive with the payment
                  and benefits described in Section 10(d)(3) below.

            (2)   Termination by Executive. If Executive terminates Executive's
                  employment, with or without Good Reason, within three years
                  following a Change in Control, the Company will provide
                  Executive with the payment and benefits described in Section
                  10(d)(3) below.

            (3)   Payments. If Section 10(d)(1) or (2) is triggered in
                  accordance with its terms, the Company will: (i) pay Executive
                  in 36 monthly installments in an amount equal to 2.99 times
                  the Executive's annual salary (determined as of the day before
                  the date Executive's employment was terminated) and (ii)
                  maintain and provide for 2.99 years following Executive's
                  termination, at no cost to Executive, the benefits described
                  in Section 9(b) to which Executive is entitled (determined as
                  of the day before the date of such termination); but if
                  Executive's participation in any such benefit is thereafter
                  barred or not feasible, or discontinued or materially reduced,
                  the Company will arrange to provide Executive with either
                  benefits substantially similar to those benefits or a cash
                  payment of substantially similar value in lieu of the
                  benefits.

      (e)   Limitations on Payments Related to Change in Control. The following
            apply notwithstanding any other provision of this Agreement:

            (1)   the total of the payments and benefits described in Section
                  10(d)(3) will be less than the amount that would cause them to
                  be a "parachute payment" within the meaning of Section
                  280G(b)(2)(A) of the Internal Revenue Code;

            (2)   the payment and benefits described in Section 10(d)(3) will be
                  reduced by any compensation (in the form of cash or other
                  benefits) received by Executive from the Company or its
                  successor after the Change in Control; and

            (3)   Executive's right to receive the payments and benefits
                  described in Section 10(d)(3) terminates (i) immediately if
                  before the Change in Control transaction closes, Executive
                  terminates his employment without Good Reason, or the Company
                  terminates Executive's employment for Cause, or (ii) three
                  years after a Change of Control occurs.

      (f)   Return of Bank Property. If and when Executive ceases, for any
            reason, to be employed by the Company, Executive must return to the
            Company all keys, pass cards, identification cards and any other
            property of the Company. At the same time, Executive also must
            return to the Company all originals and copies (whether in
            memoranda, designs, devices, diskettes, tapes, manuals, and

<PAGE>

            specifications) which constitute proprietary information or material
            of the Company and its subsidiaries. The obligations in this
            paragraph include the return of documents and other materials which
            may be in his desk at work, in his car, in place of residence, or in
            any other location under his control.

      (g)   Cause. "Cause" means any one or more of the following:

            (1)   Willful misfeasance or gross negligence in the performance of
                  Executive's duties;

            (2)   Conviction of a crime in connection with his duties;

            (3)   Conduct demonstrably and significantly harmful to the Company,
                  as reasonably determined on the advice of legal counsel by the
                  Company's board of directors; or

            (4)   Permanent disability, meaning a physical or mental impairment
                  which renders Executive incapable of substantially performing
                  the duties required under this Agreement, and which is
                  expected to continue rendering Executive so incapable for the
                  reasonably foreseeable future.

      (h)   Good Reason. "Good Reason" means only any one or more of the
            following:

            (1)   Reduction of Executive's salary or reduction or elimination of
                  any compensation or benefit plan benefiting Executive, unless
                  the reduction or elimination is generally applicable to
                  substantially all Company employees (or employees of a
                  successor or controlling entity of the Company) formerly
                  benefited;

            (2)   The assignment to Executive without his consent of any
                  authority or duties materially inconsistent with Executive's
                  position as of the date of this Agreement;

            (3)   The material breach of this Agreement by the Company, or

            (4)   A relocation or transfer of Executive's principal place of
                  employment outside Flathead County, Montana.

      (i)   Change in Control. "Change in Control" means a change "in the
            ownership or effective control" or "in the ownership of a
            substantial portion of the assets" of the Company, within the
            meaning of Section 280G of the Internal Revenue Code.

11.   CONFIDENTIALITY. Executive will not, after the date this Agreement was
      signed, including during and after its Term, use for his own purposes or
      disclose to any other person or entity any confidential business
      information concerning the Company or its business operations or that of
      its subsidiaries, unless (1) the Company consents to the use or disclosure
      of confidential information; (2) the use or disclosure is consistent with
      Executive's duties under this Agreement, or (3) disclosure is required by
      law or court order. For purposes of this Agreement, confidential business
      information includes, without limitation, trade secrets (as defined under
      the Montana Uniform Trade Secrets Act, Montana Code Section 30-14-402),
      various confidential information on investment management practices,
      marketing plans, pricing structure and technology of either the Company or
      its subsidiaries. Executive will also treat the terms of this Agreement as
      confidential business information.

12.   NONCOMPETITION. During the Term of this Agreement and for a period of
      three years after Executive's employment with the Company has terminated,
      Executive will not, directly or indirectly, as a shareholder, director,
      officer, employee, partner, agent, consultant, lessor, creditor or
      otherwise:

      (a)   provide management, supervisory or other similar services to any
            person or entity engaged in any business in counties in which the
            Company or its subsidiaries may have a presence which is competitive
            with the business of the Company or a subsidiary as conducted during
            the term of this Agreement or as conducted as of the date of
            termination of employment, including any preliminary steps
            associated with the formation of a new bank.

<PAGE>

      (b)   persuade or entice, or attempt to persuade or entice any employee of
            the Company or a subsidiary to terminate his/her employment with the
            Company or a subsidiary.

      (c)   persuade or entice or attempt to persuade or entice any person or
            entity to terminate, cancel, rescind or revoke its business or
            contractual relationships with the Company or its subsidiaries.

13.   ENFORCEMENT.

      (a)   The Company and Executive stipulate that, in light of all of the
            facts and circumstances of the relationship between Executive and
            the Company, the agreements referred to in Sections 11 and 12
            (including without limitation their scope, duration and geographic
            extent) are fair and reasonably necessary for the protection of the
            Company and its subsidiaries confidential information, goodwill and
            other protectable interests. If a court of competent jurisdiction
            should decline to enforce any of those covenants and agreements,
            Executive and the Company request the court to reform these
            provisions to restrict Executive's use of confidential information
            and Executive's ability to compete with the Company to the maximum
            extent, in time, scope of activities and geography, the court finds
            enforceable.

      (b)   Executive acknowledges the Company will suffer immediate and
            irreparable harm that will not be compensable by damages alone if
            Executive repudiates or breaches any of the provisions of Sections
            11 or 12 or threatens or attempts to do so. For this reason, under
            these circumstances, the Company, in addition to and without
            limitation of any other rights, remedies or damages available to it
            at law or in equity, will be entitled to obtain temporary,
            preliminary and permanent injunctions in order to prevent or
            restrain the breach, and the Company will not be required to post a
            bond as a condition for the granting of this relief.

14.   COVENANTS. Executive specifically acknowledges the receipt of adequate
      consideration for the covenants contained in Sections 11 and 12 and that
      the Company is entitled to require him to comply with these Sections.
      These Sections will survive termination of this Agreement. Executive
      represents that if his employment is terminated, whether voluntarily or
      involuntarily, Executive has experience and capabilities sufficient to
      enable Executive to obtain employment in areas which do not violate this
      Agreement and that the Company's enforcement of a remedy by way of
      injunction will not prevent Executive from earning a livelihood.

15.   ARBITRATION.

      (a)   Arbitration. At either party's request, the parties must submit any
            dispute, controversy or claim arising out of or in connection with,
            or relating to, this Agreement or any breach or alleged breach of
            this Agreement, to arbitration under the American Arbitration
            Association's rules then in effect (or under any other form of
            arbitration mutually acceptable to the parties). A single arbitrator
            agreed on by the parties will conduct the arbitration. If the
            parties cannot agree on a single arbitrator, each party must select
            one arbitrator and those two arbitrators will select a third
            arbitrator. This third arbitrator will hear the dispute. The
            arbitrator's decision is final (except as otherwise specifically
            provided by law) and binds the parties, and either party may request
            any court having jurisdiction to enter a judgment and to enforce the
            arbitrator's decision. The arbitrator will provide the parties with
            a written decision naming the substantially prevailing party in the
            action. This prevailing party is entitled to reimbursement from the
            other party for its costs and expenses, including reasonable
            attorneys' fees.

      (b)   Governing Law. All proceedings will be held at a place designated by
            the arbitrator in Flathead County, Montana. The arbitrator, in
            rendering a decision as to any state law claims, will apply Montana
            law.

      (c)   Exception to Arbitration. Notwithstanding the above, if Executive
            violates Section 11 or 12, the Company will have the right to
            initiate the court proceedings described in Section 13(b), in lieu
            of an arbitration proceeding under this Section 15.

<PAGE>

16.   MISCELLANEOUS PROVISIONS.

      (a)   Entire Agreement. This Agreement constitutes the entire
            understanding and agreement between the parties concerning its
            subject matter and supersedes all prior agreements, correspondence,
            representations, or understandings between the parties relating to
            its subject matter.

      (b)   Binding Effect. This Agreement will bind and inure to the benefit of
            the Company's, its subsidiaries' and Executive's heirs, legal
            representatives, successors and assigns.

      (c)   Litigation Expenses. If either party successfully seeks to enforce
            any provision of this Agreement or to collect any amount claimed to
            be due under it, this party will be entitled to reimbursement from
            the other party for any and all of its out-of-pocket expenses and
            costs including, without limitation, reasonable attorneys' fees and
            costs incurred in connection with the enforcement or collection.

      (d)   Waiver. Any waiver by a party of its rights under this Agreement
            must be written and signed by the party waiving its rights. A
            party's waiver of the other party's breach of any provision of this
            Agreement will not operate as a waiver of any other breach by the
            breaching party.

      (e)   Assignment. The services to be rendered by Executive under this
            Agreement are unique and personal. Accordingly, Executive may not
            assign any of his rights or duties under this Agreement.

      (f)   Amendment. This Agreement may be modified only through a written
            instrument signed by both parties.

      (g)   Severability. The provisions of this Agreement are severable. The
            invalidity of any provision will not affect the validity of other
            provisions of this Agreement.

      (h)   Governing Law and Venue. This Agreement will be governed by and
            construed in accordance with Montana law, except to the extent that
            certain regulatory matters may be governed by federal law. The
            parties must bring any legal proceeding arising out of this
            Agreement in Flathead County, Montana.

      (i)   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 taken together will constitute one and the same
            instrument.

      Signed this 26th day of January, 2005.

                                          GLACIER BANCORP, INC.

                                          /s/ John S. MacMillan
                                          --------------------------
                                          John S. MacMillan, Chairman

Attest:

/s/ James H. Strosahl
--------------------------
James H. Strosahl, Secretary

                                          EXECUTIVE

                                          /s/ Michael J. Blodnick
                                          ------------------------
                                          Michael J. Blodnick