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                                                                    EXHIBIT 10.9

                              PANHANDLE STATE BANK
                          SALARY CONTINUATION AGREEMENT
                             (AMENDED AND RESTATED)

      This AMENDED AND RESTATED SALARY CONTINUATION AGREEMENT (this "Agreement")
is entered into as of this 1st day of January, 2008, by and between Panhandle
State Bank, an Idaho-chartered bank (the "Bank"), and Curt Hecker, Chief
Executive Officer of the Bank (the "Executive").

      WHEREAS, the Executive and the Bank entered into a Salary Continuation
Agreement dated as of January 1, 2002,

      WHEREAS, the Executive and the Bank desire to amend the Salary
Continuation Agreement and, as amended, to restate the Salary Continuation
Agreement in its entirety,

      WHEREAS, none of the conditions or events included in the definition of
the term "golden parachute payment" that is contained in section 18(k)(4)(A)(ii)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in
Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR
359.1(f)(1)(ii)] exists or, to the best knowledge of the Bank, is contemplated
insofar as the Bank is concerned, and

      WHEREAS, the parties hereto intend that this Agreement shall be considered
an unfunded arrangement maintained primarily to provide supplemental retirement
benefits for the Executive, and to be considered a non-qualified benefit plan
for purposes of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The Executive is fully advised of the Bank's financial status.

      NOW THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Executive and the Bank hereby agree as follows.

                                    ARTICLE 1
                                   DEFINITIONS

      1.1 "ACCRUAL BALANCE" means the liability that should be accrued by the
Bank under generally accepted accounting principles ("GAAP") for the Bank's
obligation to the Executive under this Agreement, applying Accounting Principles
Board Opinion No. 12, as amended by Statement of Financial Accounting Standards
No. 106, and the calculation method and discount rate specified hereinafter. The
Accrual Balance shall be calculated such that when it is credited with interest
each month the Accrual Balance at Normal Retirement Age equals the present value
of the normal retirement benefits. The discount rate means the rate used by the
Plan Administrator for determining the Accrual Balance. The rate is based on the
yield on a 20-year corporate bond rated Aa by Moody's, rounded to the nearest
-1/4%. In its sole discretion, the Plan Administrator may adjust the discount
rate to maintain the rate within reasonable standards according to GAAP.

      1.2 "BENEFICIARY" means each designated person, or the estate of the
deceased Executive, entitled to benefits, if any, upon the death of the
Executive, determined according to Article 4.

      1.3 "BENEFICIARY DESIGNATION FORM" means the form established from time to
time by the Plan Administrator that the Executive completes, signs, and returns
to the Plan Administrator to designate one or more Beneficiaries.

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      1.4 "CHANGE IN CONTROL" means a change in control as defined in Code
section 409A and rules, regulations, and guidance of general application
thereunder issued by the Department of the Treasury, including -

      (a) Change in ownership: a change in ownership of Intermountain Community
Bancorp, an Idaho corporation of which the Bank is a wholly owned subsidiary,
occurs on the date any one person or group accumulates ownership of
Intermountain Community Bancorp stock constituting more than 50% of the total
fair market value or total voting power of Intermountain Community Bancorp
stock,

      (b) Change in effective control: (i) any one person, or more than one
person acting as a group, acquires within a 12-month period ownership of
Intermountain Community Bancorp stock possessing 30% or more of the total voting
power of Intermountain Community Bancorp stock, or (ii) a majority of
Intermountain Community Bancorp's board of directors is replaced during any
12-month period by directors whose appointment or election is not endorsed in
advance by a majority of Intermountain Community Bancorp's board of directors,
or

      (c) Change in ownership of a substantial portion of assets: a change in
ownership of a substantial portion of Intermountain Community Bancorp's assets
occurs if in a 12-month period any one person or more than one person acting as
a group acquires from Intermountain Community Bancorp assets having a total
gross fair market value equal to or exceeding 40% of the total gross fair market
value of all of Intermountain Community Bancorp's assets immediately before the
acquisition or acquisitions. For this purpose, gross fair market value means the
value of Intermountain Community Bancorp's assets, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
the assets.

      1.5 "CODE" means the Internal Revenue Code of 1986, as amended, and rules,
regulations, and guidance of general application issued thereunder by the
Department of the Treasury.

      1.6 "DISABILITY" means, because of a medically determinable physical or
mental impairment that can be expected to result in death or that can be
expected to last for a continuous period of at least 12 months, (i) the
Executive is unable to engage in any substantial gainful activity, or (ii) the
Executive is receiving income replacement benefits for a period of at least
three months under an accident and health plan of the employer. Medical
determination of disability may be made either by the Social Security
Administration or by the provider of an accident or health plan covering
employees of the Bank. Upon request of the Plan Administrator, the Executive
must submit proof to the Plan Administrator of the Social Security
Administration's or provider's determination.

      1.7 "EARLY TERMINATION" means the Executive's Separation from Service with
the Bank before Normal Retirement Age for reasons other than death or
Disability. Early Termination excludes a Separation from Service governed by
section 2.4.

      1.8 "EFFECTIVE DATE" means January 1, 2002.

      1.9 "NORMAL RETIREMENT AGE" means the Executive's 60th birthday.

      1.10 "PLAN ADMINISTRATOR" or "ADMINISTRATOR" means the plan administrator
described in Article 7.

      1.11 "PLAN YEAR" means a twelve-month period commencing on January 1 and
ending on the last day of December of each year. The initial Plan Year shall
commence on the Effective Date of this Agreement.

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      1.12 "SEPARATION FROM SERVICE" means the Executive's service as an
executive and independent contractor to the Bank and any member of a controlled
group, as defined in Code section 414, terminates for any reason, other than
because of a leave of absence approved by the Bank or the Executive's death. For
purposes of this Agreement, if there is a dispute about the employment status of
the Executive or the date of the Executive's Separation from Service, the Bank
shall have the sole and absolute right to decide the dispute unless a Change in
Control shall have occurred.

      1.13 "TERMINATION FOR CAUSE" and "CAUSE" mean the definition of
termination for cause specified in any severance or employment agreement
existing on the date hereof or hereafter entered into between the Executive and
the Bank or between the Executive and Intermountain Community Bancorp. If the
Executive is not a party to an effective severance or employment agreement
defining termination for cause, Termination for Cause means termination of the
Executive's employment for any of the following reasons -

      (a) the Executive's gross negligence or gross neglect of duties or
intentional and material failure to perform stated duties after written notice
thereof, or

      (b) disloyalty or dishonesty by the Executive in the performance of the
Executive's duties, or a breach of the Executive's fiduciary duties for personal
profit, in any case whether in the Executive's capacity as a director or
officer, or

      (c) intentional wrongful damage by the Executive to the business or
property of the Bank or its affiliates, including without limitation the
reputation of the Bank, which in the judgment of the Bank causes material harm
to the Bank or affiliates, or

      (d) a willful violation by the Executive of any applicable law or
significant policy of the Bank or an affiliate that, in the Bank's judgment,
results in an adverse effect on the Bank or the affiliate, regardless of whether
the violation leads to criminal prosecution or conviction. For purposes of this
Agreement, applicable laws include any statute, rule, regulatory order,
statement of policy, or final cease-and-desist order of any governmental agency
or body having regulatory authority over the Bank, or

      (e) the occurrence of any event that results in the Executive being
excluded from coverage, or having coverage limited for the Executive as compared
to other executives of the Bank, under the Bank's blanket bond or other fidelity
or insurance policy covering its directors, officers, or employees, or

      (f) the Executive is removed from office or permanently prohibited from
participating in the Bank's affairs by an order issued under section 8(e)(4) or
section 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or
(g)(1), or

      (g) conviction of the Executive for or plea of no contest to a felony or
conviction of or plea of no contest to a misdemeanor involving moral turpitude,
or the actual incarceration of the Executive for 45 consecutive days or more.

      1.14 "VOLUNTARY TERMINATION WITH GOOD REASON" means a voluntary Separation
from Service by the Executive within 24 months after a Change in Control if the
following conditions (i) and (ii) are satisfied: (i) a voluntary Separation from
Service by the Executive will be considered a Voluntary Termination for Good
Reason if any of the following occur without the Executive's advance written
consent -

            1) a material diminution of the Executive's base salary,

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            2) a material diminution of the Executive's authority, duties, or
      responsibilities,

            3) a material diminution in the authority, duties, or
      responsibilities of the supervisor to whom the Executive is required to
      report, including a requirement that the Executive report to a corporate
      officer or employee instead of reporting directly to the board of
      directors,

            4) a material diminution in the budget over which the Executive
      retains authority,

            5) a material change in the geographic location at which the
      Executive must perform services for the Bank, or

            6) any other action or inaction that constitutes a material breach
      by the Bank of the agreement under which the Executive provides services
      to the Bank.

      (ii) the Executive must give notice to the Bank of the existence of one or
more of the conditions described in clause (i) within 90 days after the initial
existence of the condition, and the Bank shall have 30 days thereafter to remedy
the condition. In addition, the Executive's voluntary termination because of the
existence of one or more of the conditions described in clause (i) must occur
within 24 months after the earlier of the initial existence of the condition or
the Change in Control.

                                    ARTICLE 2
                                LIFETIME BENEFITS

      2.1 NORMAL RETIREMENT. Unless Separation from Service occurs before Normal
Retirement Age, when the Executive attains Normal Retirement Age the Bank shall
pay to the Executive the benefit described in this section 2.1 instead of any
other benefit under this Agreement. If the Executive's Separation from Service
thereafter is a Termination for Cause or if this Agreement terminates under
Article 5, no further benefits shall be paid.

      2.1.1 Amount of benefit. The annual benefit under this section 2.1 is
            $147,657.

      2.1.2 Payment of benefit. Beginning with the month immediately after the
            month in which the Executive attains Normal Retirement Age, the Bank
            shall pay the annual benefit to the Executive in 12 equal monthly
            installments on the first day of each month. The annual benefit
            shall be paid to the Executive for ten years.

      2.2 EARLY TERMINATION. If Early Termination occurs before Normal
Retirement Age but ten years or more after the Effective Date, the Bank shall
pay to the Executive the benefit described in this section 2.2 instead of any
other benefit under this Agreement. If Early Termination occurs within ten years
after the Effective Date, no benefit shall be payable under this Agreement.
Additionally, no benefits shall be payable under this Agreement if the
Executive's employment is terminated under circumstances described in Article 5
of this Agreement. Neither the Bank nor the Executive shall be entitled to elect
in the 24-month period after a Change in Control between the benefit under this
section 2.2 versus the benefit under section 2.4. If the Executive's Separation
from Service within 24 months after a Change in Control is an involuntary
termination other than for Cause or a Voluntary Termination with Good Reason, no
benefit shall be payable under this section 2.2 and the Executive shall instead
be entitled to the benefit under section 2.4 (unless the Change in Control is
the result of a written supervisory determination by the FDIC that the Bank
should be sold) or, if the Executive first attained Normal Retirement Age,
section 2.1.

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      2.2.1 Amount of benefit. The annual benefit under this section 2.2 is
            calculated as the amount that fully amortizes the Accrual Balance
            existing at the end of the month immediately before the month in
            which Separation from Service occurs, amortizing that Accrual
            Balance over the ten-year period beginning with the Executive's
            Normal Retirement Age and taking into account interest at the
            discount rate or rates established by the Plan Administrator.

      2.2.2 Payment of benefit. Beginning with the later of (i) the seventh
            month after the month in which the Executive's Separation from
            Service occurs, or (ii) the month immediately after the month in
            which the Executive attains Normal Retirement Age, the Bank shall
            pay the annual benefit to the Executive in 12 equal monthly
            installments on the first day of each month. The annual benefit
            shall be paid to the Executive for ten years.

      2.3 DISABILITY. For Separation from Service because of Disability before
Normal Retirement Age, the Bank shall pay to the Executive the benefit described
in this section 2.3 instead of any other benefit under this Agreement.

      2.3.1 Amount of benefit. The annual benefit under this section 2.3 is
            calculated as the amount that fully amortizes the Accrual Balance
            existing at the end of the month immediately before the month in
            which Separation from Service occurs, amortizing that Accrual
            Balance over the ten-year period beginning with the Executive's
            Normal Retirement Age and taking into account interest at the
            discount rate or rates established by the Plan Administrator.

      2.3.2 Payment of benefit. Beginning with the later of (i) the seventh
            month after the month in which the Executive's Separation from
            Service occurs, or (ii) the month immediately after the month in
            which the Executive attains Normal Retirement Age, the Bank shall
            pay the annual benefit to the Executive in 12 equal monthly
            installments on the first day of each month. The annual benefit
            shall be paid to the Executive for ten years.

      2.4 CHANGE-IN-CONTROL. If the Executive's Separation from Service is an
involuntary termination without Cause or a Voluntary Termination with Good
Reason, in either case within 24 months after a Change in Control, the Bank
shall pay to the Executive the benefit described in this section 2.4 instead of
any other benefit under this Agreement, unless the Change in Control is the
result of a written supervisory determination by the FDIC that the Bank should
be sold. No benefits shall be payable under this Agreement if the Executive's
employment is terminated under circumstances described in Article 5 of this
Agreement. Neither the Bank nor the Executive shall be entitled to elect in the
24-month period after a Change in Control between the benefit under this section
2.4 versus the Early Termination benefit under section 2.2. If the Executive's
Separation from Service within 24 months after a Change in Control is an
involuntary termination without Cause or a Voluntary Termination with Good
Reason, no benefit shall be payable under section 2.2 and the Executive shall
instead be entitled to the benefit under this section 2.4, unless the Change in
Control is the result of a written supervisory determination by the FDIC that
the Bank should be sold. But if the Executive shall have attained Normal
Retirement Age when Separation from Service within 24 months after a Change in
Control occurs, whether Separation from Service is voluntary or involuntary for
any reason other than Termination for Cause, the Executive shall be entitled
solely to the benefit provided by section 2.1, not this section 2.4.

      2.4.1 Amount of benefit. The benefit under this section 2.4 is the Normal
            Retirement Age Accrual Balance required by section 2.1, discounting
            the Normal Retirement Age Accrual Balance to present value using a
            discount rate selected by the Plan Administrator, but the discount
            rate selected by the Plan Administrator shall not exceed the
            discount rate employed at the time of the Change in Control for
            purposes of calculating the Accrual Balance.

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      2.4.2 Payment of benefit. The Bank shall pay the benefit under this
            section 2.4 to the Executive in a single lump sum on the first day
            of the seventh month after the month in which the Executive's
            Separation from Service occurs.

      2.5 LUMP-SUM PAYOUT OF REMAINING NORMAL RETIREMENT BENEFIT, EARLY
TERMINATION BENEFIT, OR DISABILITY BENEFIT WHEN A CHANGE IN CONTROL OCCURS. If a
Change in Control occurs while the Executive is receiving the Normal Retirement
Age benefit under section 2.1, the Bank shall pay the remaining salary
continuation benefits to the Executive in a single lump sum on the date of the
Change in Control. If a Change in Control occurs after Separation from Service
but while the Executive is receiving or is entitled at Normal Retirement Age to
receive the Early Termination benefit under section 2.2 or the Disability
benefit under section 2.3, the Bank shall pay the remaining salary continuation
benefits to the Executive in a single lump sum on the later of (i) the date of
the Change in Control or (ii) the first day of the seventh month after the month
in which the Executive's Separation from Service occurs. The lump-sum payment
due to the Executive as a result of a Change in Control shall be an amount equal
to the Accrual Balance amount corresponding to the particular benefit when the
Change in Control occurs.

      2.6 ANNUAL BENEFIT STATEMENT. Within 120 days after the end of each Plan
Year the Plan Administrator shall provide or cause to be provided to the
Executive an annual benefit statement showing benefits payable or potentially
payable to the Executive under this Agreement. Each annual benefit statement
shall supersede the previous year's annual benefit statement. If there is a
contradiction between this Agreement and the annual benefit statement concerning
the amount of a particular benefit payable or potentially payable to the
Executive under sections 2.2, 2.3, or 2.4 hereof, the amount of the benefit
determined under the Agreement shall control.

      2.7 SAVINGS CLAUSE RELATING TO COMPLIANCE WITH CODE SECTION 409A. Despite
any contrary provision of this Agreement, if when the Executive's employment
terminates the Executive is a specified employee, as defined in Code section
409A, and if any payments under Article 2 of this Agreement will result in
additional tax or interest to the Executive because of section 409A, the
Executive shall not be entitled to the payments under Article 2 until the
earliest of (i) the date that is at least six months after termination of the
Executive's employment for reasons other than the Executive's death, (ii) the
date of the Executive's death, or (iii) any earlier date that does not result in
additional tax or interest to the Executive under section 409A. If any provision
of this Agreement would subject the Executive to additional tax or interest
under section 409A, the Bank shall reform the provision. However, the Bank shall
maintain to the maximum extent practicable the original intent of the applicable
provision without subjecting the Executive to additional tax or interest, and
the Bank shall not be required to incur any additional compensation expense as a
result of the reformed provision.

      2.8 ONE BENEFIT ONLY. Despite anything to the contrary in this Agreement,
the Executive and Beneficiary are entitled to one benefit only under this
Agreement, which shall be determined by the first event to occur that is dealt
with by this Agreement. Except as provided in section 2.5 or Article 3,
subsequent occurrence of events dealt with by this Agreement shall not entitle
the Executive or Beneficiary to other or additional benefits under this
Agreement.

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                                    ARTICLE 3
                                 DEATH BENEFITS

      3.1 DEATH BEFORE SEPARATION FROM SERVICE AND NORMAL RETIREMENT AGE. If the
Executive dies in active service to the Bank before Normal Retirement Age, at
the Executive's death the Executive's Beneficiary shall be entitled solely to
the benefit, if any, provided by the Split Dollar Agreement and Endorsement
attached to this Agreement as Addendum A instead of any benefit payable under
this Agreement. If the Executive dies after Separation from Service or after
attaining Normal Retirement Age, the Executive's Beneficiary shall be entitled
to no benefits under the Split Dollar Agreement and Endorsement attached to this
Agreement as Addendum A.

      3.2 DEATH AFTER SEPARATION FROM SERVICE OR NORMAL RETIREMENT AGE. If the
Executive dies after Normal Retirement Age or after Separation from Service
occurring at any age, at the Executive's death the Executive's Beneficiary shall
be entitled to the benefits, if any, that would have been payable to the
Executive under Article 2 had the Executive survived. The benefits shall be
payable to the Executive's Beneficiary in the same amounts they would have been
paid to the Executive had the Executive survived, except that payments shall
commence in the month after the Executive's death.

      3.3 CHANGE-IN-CONTROL PAYOUT OF BENEFITS UNDER SECTION 3.2. If a Change in
Control occurs while the Executive's Beneficiary is receiving the benefit
provided by section 3.2, the Bank shall pay the remaining benefits to the
Executive's Beneficiary in a single lump sum within three days after the Change
in Control. The lump-sum payment shall be an amount equal to the Accrual Balance
amount corresponding to the benefit being paid.

                                    ARTICLE 4
                                  BENEFICIARIES

      4.1 BENEFICIARY DESIGNATIONS. The Executive shall have the right to
designate at any time a Beneficiary to receive any benefits payable under this
Agreement at the Executive's death. The Beneficiary designated under this
Agreement may be the same as or different from the beneficiary designation under
any other benefit plan of the Bank in which the Executive participates.

      4.2 BENEFICIARY DESIGNATION: CHANGE. The Executive shall designate a
Beneficiary by completing and signing the Beneficiary Designation Form and
delivering it to the Plan Administrator or its designated agent. The Executive's
Beneficiary designation shall be deemed automatically revoked if the Beneficiary
predeceases the Executive or if the Executive names a spouse as Beneficiary and
the marriage is subsequently dissolved. The Executive shall have the right to
change a Beneficiary by completing, signing, and otherwise complying with the
terms of the Beneficiary Designation Form and the Plan Administrator's rules and
procedures, as in effect from time to time. Upon the acceptance by the Plan
Administrator of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be cancelled. The Plan Administrator shall
be entitled to rely on the last Beneficiary Designation Form filed by the
Executive and accepted by the Plan Administrator before the Executive's death.

      4.3 ACKNOWLEDGMENT. No designation or change in designation of a
Beneficiary shall be effective until received, accepted, and acknowledged in
writing by the Plan Administrator or its designated agent.

      4.4 NO BENEFICIARY DESIGNATION. If the Executive dies without a valid
beneficiary designation, or if all designated Beneficiaries predecease the
Executive, then the Executive's spouse shall be the designated Beneficiary. If
the Executive has no surviving spouse, the benefits shall be made to the
personal representative of the Executive's estate.

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      4.5 FACILITY OF PAYMENT. If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Bank may pay the benefit to the guardian, legal
representative, or person having the care or custody of the minor, incapacitated
person, or incapable person. The Bank may require proof of incapacity, minority,
or guardianship as it may deem appropriate before distribution of the benefit.
Distribution shall completely discharge the Bank from all liability for the
benefit.

                                    ARTICLE 5
                               GENERAL LIMITATIONS

      5.1 TERMINATION FOR CAUSE. Despite any contrary provision of this
Agreement, the Bank shall not pay any benefit under this Agreement and this
Agreement shall terminate if Separation from Service is a Termination for Cause
or if Separation from Service is an Early Termination occurring within ten years
after the Effective Date. Likewise, the Beneficiary shall be entitled to no
benefits under the Split Dollar Agreement attached to this Agreement as Addendum
A and the Split Dollar Agreement also shall terminate if Separation from Service
is a Termination for Cause or if Separation from Service is an Early Termination
occurring within ten years after the Effective Date.

      5.2 MISSTATEMENT. The Bank shall not pay any benefit under this Agreement
and the Beneficiary shall be entitled to no benefits under the Split Dollar
Agreement attached as Addendum A if the Executive makes any material
misstatement of fact on any application or resume provided to the Bank or on any
application for benefits provided by the Bank.

      5.3 REMOVAL. If the Executive is removed from office or permanently
prohibited from participating in the Bank's affairs by an order issued under
section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order, and the Split Dollar Agreement
also shall terminate as of the effective date of the order.

      5.4 DEFAULT. Despite any contrary provision of this Agreement, if the Bank
is in "default" or "in danger of default," as those terms are defined in section
3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations
under this Agreement shall terminate.

      5.5 FDIC OPEN-BANK ASSISTANCE. All obligations under this Agreement shall
terminate, except to the extent determined that continuation of the contract is
necessary for the continued operation of the Bank, when the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Federal Deposit Insurance
Act section 13(c). 12 U.S.C. 1823(c). Rights of the parties that have already
vested shall not be affected by such action, however.

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

      6.1 CLAIMS PROCEDURE. A person or beneficiary ("claimant") who has not
received benefits under this Agreement that he or she believes should be paid
shall make a claim for such benefits as follows -

      6.1.1 Initiation - written claim. The claimant initiates a claim by
      submitting to the Administrator a written claim for the benefits. If the
      claim relates to the contents of a notice received by the

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      claimant, the claim must be made within 60 days after the notice was
      received by the claimant. All other claims must be made within 180 days
      after the date of the event that caused the claim to arise. The claim must
      state with particularity the determination desired by the claimant.

      6.1.2 Timing of Bank response. The Bank shall respond to the claimant
      within 90 days after receiving the claim. If the Bank determines that
      special circumstances require additional time for processing the claim,
      the Bank may extend the response period by an additional 90 days by
      notifying the claimant in writing before the end of the initial 90-day
      period that an additional period is required. The notice of extension must
      state the special circumstances and the date by which the Bank expects to
      render its decision.

      6.1.3 Notice of decision. If the Bank denies part or all of the claim, the
      Bank shall notify the claimant in writing of the denial. The Bank shall
      write the notification in a manner calculated to be understood by the
      claimant. The notification shall set forth -

            6.1.3.1     the specific reasons for the denial,

            6.1.3.2     a reference to the specific provisions of the Agreement
                        on which the denial is based,

            6.1.3.3     a description of any additional information or material
                        necessary for the claimant to perfect the claim and an
                        explanation of why it is needed,

            6.1.3.4     an explanation of the Agreement's review procedures and
                        the time limits applicable to such procedures, and

            6.1.3.5     a statement of the claimant's right to bring a civil
                        action under ERISA section 502(a) following an adverse
                        benefit determination on review.

      6.2 REVIEW PROCEDURE. If the Bank denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the Bank of
the denial, as follows -

      6.2.1 Initiation - written request. To initiate the review, the claimant,
      within 60 days after receiving the Bank's notice of denial, must file with
      the Bank a written request for review.

      6.2.2 Additional submissions - information access. The claimant shall then
      have the opportunity to submit written comments, documents, records, and
      other information relating to the claim. The Bank shall also provide the
      claimant, upon request and free of charge, reasonable access to and copies
      of all documents, records, and other information relevant (as defined in
      applicable ERISA regulations) to the claimant's claim for benefits.

      6.2.3 Considerations on review. In considering the review, the Bank shall
      take into account all materials and information the claimant submits
      relating to the claim, without regard to whether the information was
      submitted or considered in the initial benefit determination.

      6.2.4 Timing of Bank response. The Bank shall respond in writing to the
      claimant within 60 days after receiving the request for review. If the
      Bank determines that special circumstances require additional time for
      processing the claim, the Bank may extend the response period by an
      additional 60 days by notifying the claimant in writing before the end of
      the initial 60-day period that an additional period is required. The
      notice of extension must state the special circumstances and the date by
      which the Bank expects to render its decision.

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      6.2.5 Notice of decision. The Bank shall notify the claimant in writing of
      its decision on review. The Bank shall write the notification in a manner
      calculated to be understood by the claimant. The notification shall set
      forth -

            6.2.5.1     the specific reason for the denial,

            6.2.5.2     a reference to the specific provisions of the Agreement
                        on which the denial is based,

            6.2.5.3     a statement that the claimant is entitled to receive,
                        upon request and free of charge, reasonable access to
                        and copies of all documents, records, and other
                        information relevant (as defined in applicable ERISA
                        regulations) to the claimant's claim for benefits, and

            6.2.5.4     a statement of the claimant's right to bring a civil
                        action under ERISA section 502(a).

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                                    ARTICLE 7
                           ADMINISTRATION OF AGREEMENT

      7.1 PLAN ADMINISTRATOR DUTIES. This Agreement shall be administered by a
Plan Administrator consisting of the board or such committee or person(s) as the
board shall appoint. The Executive may be a member of the Plan Administrator.
The Plan Administrator shall also have the discretion and authority to (i) make,
amend, interpret, and enforce all appropriate rules and regulations for the
administration of this Agreement and (ii) decide or resolve any and all
questions, including interpretations of this Agreement, as may arise in
connection with the Agreement.

      7.2 AGENTS. In the administration of this Agreement, the Plan
Administrator may employ agents and delegate to them such administrative duties
as it sees fit (including acting through a duly appointed representative) and
may from time to time consult with counsel, who may be counsel to the Bank.

      7.3 BINDING EFFECT OF DECISIONS. The decision or action of the Plan
Administrator concerning any question arising out of the administration,
interpretation, and application of the Agreement and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Agreement. No Executive or Beneficiary shall be
deemed to have any right, vested or non-vested, regarding the continued use of
any previously adopted assumptions, including but not limited to the discount
rate and calculation method employed in the determination of the Accrual
Balance.

      7.4 INDEMNITY OF PLAN ADMINISTRATOR. The Bank shall indemnify and hold
harmless the members of the Plan Administrator against any and all claims,
losses, damages, expenses, or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by
the Plan Administrator or any of its members.

      7.5 BANK INFORMATION. To enable the Plan Administrator to perform its
functions, the Bank shall supply full and timely information to the Plan
Administrator on all matters relating to the date and circumstances of the
retirement, Disability, death, or Separation from Service of the Executive, and
such other pertinent information as the Plan Administrator may reasonably
require.

                                    ARTICLE 8
                                  MISCELLANEOUS

      8.1 AMENDMENTS AND TERMINATION. Subject to section 8.15 of this Agreement,
this Agreement may be amended solely by a written agreement signed by the Bank
and by the Executive, and except for termination occurring under Article 5 this
Agreement may be terminated solely by a written agreement signed by the Bank and
by the Executive.

      8.2 BINDING EFFECT. This Agreement shall bind the Executive, the Bank, and
their beneficiaries, survivors, executors, successors, administrators, and
transferees.

      8.3 NO GUARANTEE OF EMPLOYMENT. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain an employee of
the Bank nor does it interfere with the Bank's right to discharge the Executive.
It also does not require the Executive to remain an employee or interfere with
the Executive's right to terminate employment at any time.

                                       11
<PAGE>

      8.4 NON-TRANSFERABILITY. Benefits under this Agreement may not be sold,
transferred, assigned, pledged, attached, or encumbered.

      8.5 SUCCESSORS; BINDING AGREEMENT. By an assumption agreement in form and
substance satisfactory to the Executive, the Bank shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Bank to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Bank would be required to perform this Agreement had no
succession occurred.

      8.6 TAX WITHHOLDING. The Bank shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.

      8.7 APPLICABLE LAW. Except to the extent preempted by the laws of the
United States of America, the validity, interpretation, construction, and
performance of this Agreement shall be governed by and construed in accordance
with the laws of the State of Idaho, without giving effect to the principles of
conflict of laws of such state.

      8.8 UNFUNDED ARRANGEMENT. The Executive and the Beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay benefits.
The rights to benefits are not subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors. Any insurance on the Executive's life is a general asset of the Bank
to which the Executive and Beneficiary have no preferred or secured claim.

      8.9 SEVERABILITY. If any provision of this Agreement is held invalid, such
invalidity shall not affect any other provision of this Agreement, and each such
other provision shall continue in full force and effect to the full extent
consistent with law. If any provision of this Agreement is held invalid in part,
such invalidity shall not affect the remainder of the provision, and the
remainder of such provision together with all other provisions of this Agreement
shall continue in full force and effect to the full extent consistent with law.

      8.10 HEADINGS. The headings of sections herein are included solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.

      8.11 NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested, with postage prepaid. Unless otherwise changed by notice, notice
shall be properly addressed to the Executive if addressed to the address of the
Executive on the books and records of the Bank at the time of the delivery of
such notice, and properly addressed to the Bank if addressed to the Board of
Directors, Panhandle State Bank, Third and Oak Streets, Sandpoint, Idaho 83864.

      8.12 ENTIRE AGREEMENT. This Agreement and the Split Dollar Agreement
attached as Addendum A constitute the entire agreement between the Bank and the
Executive concerning the subject matter. No rights are granted to the Executive
under this Agreement other than those specifically set forth. The Executive
acknowledges and agrees that this Agreement satisfies in full Intermountain
Community Bancorp's and the Bank's obligation to provide a salary continuation
plan for the benefit of the Executive, which obligation is stated in section 7
of the Executive Employment Agreement dated as of December 17, 2003 by and among
the Executive, Intermountain Community Bancorp, and the Bank, as the same may be
amended.

                                       12
<PAGE>

      8.13 PAYMENT OF LEGAL FEES. The Bank is aware that after a Change in
Control management of the Bank could cause or attempt to cause the Bank to
refuse to comply with its obligations under this Agreement, or institute or
cause or attempt to cause the Bank to institute litigation seeking to have this
Agreement declared unenforceable, or take or attempt to take other action to
deny the Executive the benefits intended under this Agreement. In these
circumstances the purpose of this Agreement would be frustrated. The Bank
desires that the Executive not be required to incur the expenses associated with
the enforcement of rights under this Agreement by litigation or other legal
action because the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Executive hereunder. The Bank desires
that the Executive not be required to negotiate any settlement of rights under
threat of incurring expenses. Accordingly, if after a Change in Control (i) it
appears to the Executive that the Bank has failed to comply with any of its
obligations under this Agreement, or (ii) the Bank or any other person takes any
action to declare this Agreement void or unenforceable, or institutes any
litigation or other legal action designed to deny, diminish, or to recover from
the Executive the benefits intended to be provided to the Executive hereunder,
the Bank irrevocably authorizes the Executive from time to time to retain
counsel of the Executive's choice, at the Bank's expense as provided in this
section 8.13, to represent the Executive in any litigation or other legal
action, whether by or against the Bank or any director, officer, stockholder, or
other person affiliated with the Bank, in any jurisdiction. Despite any existing
or previous attorney-client relationship between the Bank and any counsel chosen
by the Executive under this section 8.13, the Bank irrevocably consents to the
Executive entering into an attorney-client relationship with that counsel, and
the Bank and the Executive agree that a confidential relationship shall exist
between the Executive and that counsel. The fees and expenses of counsel
selected from time to time by the Executive as herein above provided shall be
paid or reimbursed to the Executive by the Bank on a regular, periodic basis
upon presentation by the Executive of a statement or statements prepared by such
counsel in accordance with such counsel's customary practices, up to a maximum
aggregate amount of $500,000, whether suit be brought or not, and whether or not
incurred in trial, bankruptcy, or appellate proceedings. The Bank's obligation
to pay the Executive's legal fees provided by this section 8.13 operates
separately from and in addition to any legal fee reimbursement obligation the
Bank or Intermountain Community Bancorp may have with the Executive under any
separate employment, severance, or other agreement. Despite anything in this
Agreement to the contrary however, the Bank shall not be required to pay or
reimburse the Executive's legal expenses if doing so would violate section 18(k)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of the
Federal Deposit Insurance Corporation [12 CFR 359.3].

      8.14 EXCISE TAX UNDER INTERNAL REVENUE CODE SECTIONS 280G AND 4999. (a)
Partial reimbursement of the Excise Tax. If a Change in Control occurs the
Executive may become entitled to acceleration of benefits under this Agreement
or under another plan or agreement of or with the Bank or Intermountain
Community Bancorp, including accelerated vesting of stock options and
acceleration of benefits under any other benefit, compensation, or incentive
plan or arrangement with the Bank or Intermountain Community Bancorp
(collectively, the "Total Benefits"). If a Change in Control occurs,
Intermountain Community Bancorp and the Bank shall cause the certified public
accounting firm retained by Intermountain Community Bancorp as of the date
immediately before the Change in Control (the "Accounting Firm") to calculate
the Total Benefits and any excise tax payable by the Executive under Code
sections 280G and 4999 based upon the Total Benefits. If the Accounting Firm
determines that an excise tax is payable, at the same time the Bank pays the
Change in Control benefit under section 2.4 of this Agreement the Bank shall
also pay or cause to be paid to the Executive an amount in cash equal to the
excise tax calculated by the Accounting Firm (the "Excise Tax"). The Executive
acknowledges and agrees that this section 8.14 provides for partial
reimbursement only of the final excise tax that may be payable by him, and that
additional unreimbursed excise taxes may be payable after taking into account
the reimbursement payment provided under this section 8.14. The partial

                                       13
<PAGE>

reimbursement of the excise tax under this section 8.14 shall be made in
addition to the amount set forth in section 2.4.

      (b) Calculating the Excise Tax. For purposes of determining whether any of
the Total Benefits will be subject to the Excise Tax and for purposes of
determining the amount of the Excise Tax,

      1)    Determination of "parachute payments" subject to the Excise Tax: any
            other payments or benefits received or to be received by the
            Executive in connection with a Change in Control or the Executive's
            Separation from Service (whether under the terms of this Agreement
            or any other agreement, stock option plan or any other benefit plan
            or arrangement with the Bank or Intermountain Community Bancorp, any
            person whose actions result in a Change in Control or any person
            affiliated with the Bank, Intermountain Community Bancorp, or such
            person) shall be treated as "parachute payments" within the meaning
            of Code section 280G(b)(2), and all "excess parachute payments"
            within the meaning of section 280G(b)(1) shall be treated as subject
            to the Excise Tax, unless in the opinion of the Accounting Firm such
            other payments or benefits do not constitute (in whole or in part)
            parachute payments, or such excess parachute payments represent (in
            whole or in part) reasonable compensation for services actually
            rendered within the meaning of Code section 280G(b)(4) in excess of
            the base amount (as defined in Code section 280G(b)(3)), or are
            otherwise not subject to the Excise Tax,

      2)    Calculation of benefits subject to the Excise Tax: the amount of the
            Total Benefits that shall be treated as subject to the Excise Tax
            shall be equal to the lesser of (i) the total amount of the Total
            Benefits reduced by the amount of such Total Benefits that in the
            opinion of the Accounting Firm are not parachute payments, or (ii)
            the amount of excess parachute payments within the meaning of
            section 280G(b)(1) (after applying clause (1), above), and

      3)    Value of noncash benefits and deferred payments: the value of any
            noncash benefits or any deferred payment or benefit shall be
            determined by the Accounting Firm in accordance with the principles
            of Code sections 280G(d)(3) and (4).

      (c) Assumed marginal income tax rate. For purposes of determining the
amount of the partial Excise Tax reimbursement payment to be made under this
section 8.14, the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which
the partial Excise Tax reimbursement under this section 8.14 is to be made and
state and local income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence on the date of Separation from
Service, net of the reduction in federal income taxes that can be obtained from
deduction of such state and local taxes (calculated by assuming that any
reduction under Code section 68 in the amount of itemized deductions allowable
to the Executive applies first to reduce the amount of such state and local
income taxes that would otherwise be deductible by the Executive, and applicable
federal FICA and Medicare withholding taxes).

      (d) Accounting firm's determinations are final and binding. All
determinations made by the Accounting Firm under this section 8.14 shall be
final and binding on the Bank, Intermountain Community Bancorp, and the
Executive. All determinations required to be made under this section 8.14 -
including the assumptions used to calculate Total Benefits and the Excise Tax -
shall be made by the Accounting Firm, which shall provide detailed supporting
calculations both to the Bank and the Executive.

                                       14
<PAGE>

      8.15 TERMINATION OR MODIFICATION OF AGREEMENT BECAUSE OF CHANGES IN TAX
STATUTES, RULES, OR REGULATIONS. The Bank is entering into this Agreement on the
assumption that certain existing tax statutes, rules, and regulations will
continue in effect in their current form. If that assumption materially changes
and the change has a material detrimental effect on this Agreement, the Bank
reserves the right to terminate or modify this Agreement accordingly, subject to
obtaining the written consent of the Executive, which shall not be unreasonably
withheld. This section 8.15 shall become null and void effective immediately
upon a Change in Control.

      IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have
executed this Amended Salary Continuation Agreement as of the date first written
above.

THE EXECUTIVE:                                THE BANK:
                                              PANHANDLE STATE BANK

-----------------------------
Curt Hecker                                   By:
                                                   -----------------------------

                                              Its:
                                                   -----------------------------

      Despite any existing or previous attorney-client relationship between
Intermountain Community Bancorp and any counsel chosen by the Executive under
section 8.13, Intermountain Community Bancorp irrevocably consents to the
Executive's entering into an attorney-client relationship with that counsel, and
Intermountain Community Bancorp agrees that a confidential relationship shall
exist between the Executive and that counsel.

                                              INTERMOUNTAIN COMMUNITY BANCORP

                                              By:
                                                   -----------------------------

                                              Its:

                                       15
<PAGE>

                             BENEFICIARY DESIGNATION
                              PANHANDLE STATE BANK
                      AMENDED SALARY CONTINUATION AGREEMENT

      I, Curt Hecker, designate the following as beneficiary of any death
benefits under this Amended Salary Continuation Agreement -

      Primary:
               ________________________________________________________________
_______________________________________________________________________________.

      Contingent:
                  _____________________________________________________________
_______________________________________________________________________________.

      NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE
TRUSTEE(S) AND THE EXACT NAME AND DATE OF THE TRUST AGREEMENT.

      I understand that I may change these beneficiary designations by filing a
new written designation with the Bank. I further understand that the
designations will be automatically revoked if the beneficiary predeceases me, or
if I have named my spouse as beneficiary and our marriage is subsequently
dissolved.

      Signature: /s/
                 -----------------------------
                 Curt Hecker

      Date:      _____________________, 2007

      Accepted by the Bank this _______ day of ______________, 2007

            By:         /s/
                        ------------------------------

            Print Name:
                        ------------------------------

            Title:
                        ------------------------------

                                       16
<PAGE>

                                   SCHEDULE A
                              PANHANDLE STATE BANK
                          SALARY CONTINUATION AGREEMENT
                                   CURT HECKER

<TABLE>
<CAPTION>
                                                       Early
                                                    Termination
        Plan                                       annual benefit      Disability
        year     Age at                              payable at      annual benefit    Change-in-
        ending    Plan     Accrual     Vested          Normal          payable at    Control benefit
 Plan  December   year     balance     accrual     Retirement Age        Normal        payable in a
 year     31,     end       (1)        balance         (2)           Retirement Age     lump sum
-----  --------  ------  -----------  ----------   ---------------   --------------  ---------------
<S>    <C>       <C>     <C>          <C>          <C>               <C>             <C>
 1       2002      42    $    17,280  $        0      $       0        $    7,771      $   328,312

 2       2003      43    $    36,978  $        0      $       0        $   15,543      $   351,294

 3       2004      44    $    59,350  $        0      $       0        $   23,314      $   375,885

 4       2005      45    $    84,673  $        0      $       0        $   31,086      $   402,197

 5       2006      46    $   113,250  $        0      $       0        $   38,857      $   430,351

 6       2007      47    $   145,413  $        0      $       0        $   46,628      $   460,475

 7       2008      48    $   181,524  $        0      $       0        $   54,400      $   492,708

 8       2009      49    $   221,978  $        0      $       0        $   62,171      $   527,198

 9       2010      50    $   267,206  $        0      $       0        $   69,943      $   564,102

 10      2011      51    $   317,678  $        0      $       0        $   77,714      $   603,589

 11      2012      52    $   373,907  $  373,907      $  85,485        $   85,485      $   645,840

 12      2013      53    $   436,452  $  436,452      $  93,257        $   93,257      $   691,049

 13      2014      54    $   505,921  $  505,921      $ 101,028        $  101,028      $   739,422

 14      2015      55    $   582,976  $  582,976      $ 108,800        $  108,800      $   791,182

 15      2016      56    $   668,340  $  668,340      $ 116,571        $  116,571      $   846,565

 16      2017      57    $   762,799  $  762,799      $ 124,342        $  124,342      $   905,824

 17      2018      58    $   867,207  $  867,207      $ 132,114        $  132,114      $   969,232

 18      2019      59    $   982,495  $  982,495      $ 139,885        $  139,885      $ 1,037,078

 19      2020      60    $ 1,109,673  $1,109,673      $ 147,657        $  147,657      $ 1,109,673

 20      2021      61    $ 1,029,358  $1,029,358

 21      2022      62    $   943,421  $  943,421
</TABLE>

                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                       Early
                                                    Termination
        Plan                                       annual benefit      Disability
        year     Age at                              payable at      annual benefit    Change-in-
        ending    Plan     Accrual     Vested          Normal          payable at    Control benefit
 Plan  December   year     balance     accrual     Retirement Age        Normal        payable in a
 year     31,     end       (1)        balance         (2)           Retirement Age     lump sum
-----  --------  ------  -----------  ----------   ---------------   --------------  ---------------
<S>    <C>       <C>     <C>          <C>          <C>               <C>             <C>
 22      2023      63    $   851,468  $  851,468

 23      2024      64    $   753,078  $  753,078

 24      2025      65    $   647,801  $  647,801

 25      2026      66    $   535,155  $  535,155

 26      2027      67    $   414,623  $  414,623

 27      2028      68    $   285,654  $  285,654

 28      2029      69    $   147,657  $  147,657

 29      2030      70    $         0  $        0
</TABLE>

         (1)      Calculations are approximations. Benefit calculations are
based on prior year-end accrual balances. The accrual balance reflects payment
at the beginning of each month during retirement, beginning in October 2020.

         (2)      Early termination benefits are not payable if Termination of
Employment occurs within 10 years after the Effective Date of the Agreement.

                                       18
<PAGE>

                                   ADDENDUM A
                              PANHANDLE STATE BANK
                             SPLIT DOLLAR AGREEMENT

         THIS SPLIT DOLLAR AGREEMENT is entered into as of this _____ day of ___
, 2003, by and between Panhandle State Bank, an Idaho-chartered, FDIC-insured
bank with its main office in Sandpoint, Idaho (the "Bank") and Curt Hecker,
Chief Executive Officer of the Bank (the "Executive"). This Split Dollar
Agreement shall append the Split Dollar Policy Endorsement entered into on even
date herewith, or as subsequently amended, by and between the aforementioned
parties.

         To encourage the Executive to remain an employee of the Bank, the Bank
is willing to divide the death proceeds of a life insurance policy on the
Executive's life to be effective until the Executive's Normal Retirement Age of
60. The Bank will pay life insurance premiums from its general assets.

                                    ARTICLE 1
                               GENERAL DEFINITIONS

         Capitalized terms not otherwise defined in this Split Dollar Agreement
are used herein as defined in the Salary Continuation Agreement dated as of the
date of this Split Dollar Agreement between the Bank and the Executive. The
following terms shall have the meanings specified:

         1.1      Administrator means the administrator described in Article 7.

         1.2      Executive's Interest means the benefit set forth in Section
                  2.2.

         1.3      Insured means the Executive.

         1.4      Insurer means each life insurance carrier for which there is a
                  Split Dollar Policy Endorsement attached to this Split Dollar
                  Agreement.

         1.5      Net Death Proceeds means the total death proceeds of the
                  Policy minus the cash surrender value.

         1.6      Policy means the specific life insurance policy or policies
                  issued by the Insurer(s).

         1.7      Split Dollar Policy Endorsement means the form required by the
                  Administrator or the Insurer to indicate the Executive's
                  interest, if any, in a Policy on the Executive's life.

                                    ARTICLE 2
                           POLICY OWNERSHIP/INTERESTS

         2.1      Bank Ownership. The Bank is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership. The Bank shall be
the beneficiary of any death proceeds remaining after the Executive's interest
has been paid under Section 2.2 of this Split Dollar Agreement.

         2.2      Executive's Interest. The Executive shall have the right to
designate the beneficiary(ies) of the Executive's Interest, which shall be an
amount equal to $1,109,673 of the Net Death Proceeds. The Executive shall also
have the right to elect and change settlement options specified in the Policy
that may be permitted. However, the Executive, the Executive's transferee, or
the Executive's beneficiary(ies) shall have no rights or interests in the Policy
for that portion of the death proceeds designated in this Section 2.2 if the
Executive is not in the full-time employment of the Bank at the time of death,
except for reason of a leave of absence approved by the Bank, or if benefits
under the Salary Continuation Agreement of even date herewith are denied under
Article 5 of that Salary Continuation Agreement.

         2.3      Option to Purchase. The Bank shall not sell, surrender, or
transfer ownership of the Policy while this Split Dollar Agreement is in effect
without first giving the Executive or the Executive's transferee a right of
first refusal to purchase the Policy for the Policy's interpolated terminal
reserve value. The right of first refusal to

                                       1
<PAGE>

purchase the Policy must be exercised within 60 days from the date the Bank
gives written notice of the Bank's intention to sell, surrender or transfer
ownership of the Policy. This provision shall not impair the right of the Bank
to terminate this Split Dollar Agreement.

         2.4      Comparable Coverage. Upon execution of this Split Dollar
Agreement, the Bank shall maintain the Policy in full force and effect, and the
Bank shall not amend, terminate, or otherwise abrogate the Executive's interest
in the Policy unless the Bank (a) replaces the Policy with a comparable
insurance policy to cover the benefit provided under this Split Dollar Agreement
and (b) executes a new Split Dollar Agreement and Endorsement for the comparable
insurance policy. The Policy or any comparable policy shall be subject to the
claims of the Bank's creditors.

                                    ARTICLE 3
                                    PREMIUMS

         3.1      Premium Payment. The Bank shall pay any premiums due on the
Policy.

         3.2      Imputed Income. The Bank shall impute income to the Executive
in an amount equal to (a) the current term rate for the Executive's age,
multiplied by (b) the net death benefit payable to the Executive's
beneficiary(ies). The "current term rate" is the minimum amount required to be
imputed under Revenue Rulings 64-328 and 66-110, or any subsequent applicable
authority.

                                    ARTICLE 4
                                   ASSIGNMENT

         The Executive may assign without consideration all interests in the
Policy and in this Split Dollar Agreement to any person, entity, or trust. If
the Executive transfers all of the Executive's interest in the Policy, then all
of the Executive's interest in the Policy and in the Split Dollar Agreement
shall be vested in the Executive's transferee, who shall be substituted as a
party hereunder, and the Executive shall have no further interest in the Policy
or in this Split Dollar Agreement.

                                    ARTICLE 5
                                     INSURER

         The Insurer shall be bound only by the terms of the Policy. Any
payments the Insurer makes or actions it takes in accordance with the Policy
shall fully discharge it from all claims, suits, and demands of all entities or
persons. The Insurer shall not be bound by or be deemed to have notice of the
provisions of this Split Dollar Agreement.

                                    ARTICLE 6
                                CLAIMS PROCEDURE

         6.1      Claims Procedure. A person or beneficiary (a "claimant") who
has not received benefits under the Split Dollar Agreement that he or she
believes should be paid shall make a claim for such benefits as follows:

         6.1.1    Initiation - Written Claim. The claimant initiates a claim by
                  submitting to the Bank a written claim for the benefits.

         6.1.2    Timing of Bank Response. The Bank shall respond to such
                  claimant within 90 days after receiving the claim. If the Bank
                  determines that special circumstances require additional time
                  for processing the claim, the Bank can extend the response
                  period by an additional 90 days by notifying the claimant in
                  writing, prior to the end of the initial 90-day period, that
                  an additional period is required. The notice of extension must
                  set forth the special circumstances and the date by which the
                  Bank expects to render its decision.

                                       2
<PAGE>

         6.1.3    Notice of Decision. If the Bank denies part or all of the
                  claim, the Bank shall notify the claimant in writing of such
                  denial. The Bank shall write the notification in a manner
                  calculated to be understood by the claimant. The notification
                  shall set forth:

                  6.1.3.1  The specific reasons for the denial,

                  6.1.3.2  A reference to the specific provisions of the Split
                           Dollar Agreement on which the denial is based,

                  6.1.3.3  A description of any additional information or
                           material necessary for the claimant to perfect the
                           claim and an explanation of why it is needed,

                  6.1.3.4  An explanation of the Split Dollar Agreement's review
                           procedures and the time limits applicable to such
                           procedures, and

                  6.1.3.5  A statement of the claimant's right to bring a civil
                           action under ERISA Section 502(a) following an
                           adverse benefit determination on review.

         6.2      Review Procedure. If the Bank denies part or all of the claim,
the claimant shall have the opportunity for a full and fair review by the Bank
of the denial, as follows:

         6.2.1    Initiation - Written Request. To initiate the review, the
                  claimant, within 60 days after receiving the Bank's notice of
                  denial, must file with the Bank a written request for review.

         6.2.2    Additional Submissions - Information Access. The claimant
                  shall then have the opportunity to submit written comments,
                  documents, records and other information relating to the
                  claim. The Bank shall also provide the claimant, upon request
                  and free of charge, reasonable access to, and copies of, all
                  documents, records and other information relevant (as defined
                  in applicable ERISA regulations) to the claimant's claim for
                  benefits.

         6.2.3    Considerations on Review. In considering the review, the Bank
                  shall take into account all materials and information the
                  claimant submits relating to the claim, without regard to
                  whether such information was submitted or considered in the
                  initial benefit determination.

         6.2.4    Timing of Bank Response. The Bank shall respond in writing to
                  such claimant within 60 days after receiving the request for
                  review. If the Bank determines that special circumstances
                  require additional time for processing the claim, the Bank can
                  extend the response period by an additional 60 days by
                  notifying the claimant in writing, prior to the end of the
                  initial 60-day period, that an additional period is required.
                  The notice of extension must set forth the special
                  circumstances and the date by which the Bank expects to render
                  its decision.

         6.2.5    Notice of Decision. The Bank shall notify the claimant in
                  writing of its decision on review. The Bank shall write the
                  notification in a manner calculated to be understood by the
                  claimant. The notification shall set forth:

                  6.2.5.1  The specific reason for the denial,

                  6.2.5.2  A reference to the specific provisions of the Split
                           Dollar Agreement on which the denial is based,

                  6.2.5.3  A statement that the claimant is entitled to receive,
                           upon request and free of charge, reasonable access
                           to, and copies of, all documents, records and other
                           information relevant (as defined in applicable ERISA
                           regulations) to the claimant's claim for benefits,
                           and

                                        3
<PAGE>

                  6.2.5.4  A statement of the claimant's right to bring a civil
                           action under ERISA Section 502(a).

                                    ARTICLE 7
                    ADMINISTRATION OF SPLIT DOLLAR AGREEMENT

         7.1      Administrator Duties. This Split Dollar Agreement shall be
administered by an Administrator, which shall consist of the board or such
committee as the board shall appoint. The Executive may be a members of the
Administrator. The Administrator shall also have the discretion and authority to
(a) make, amend, interpret, and enforce all appropriate rules and regulations
for the administration of this Split Dollar Agreement and (b) decide or resolve
any and all questions, including interpretations of this Split Dollar Agreement,
as may arise in connection with the Split Dollar Agreement.

         7.2      Agents. In the administration of this Split Dollar Agreement,
the Administrator may employ agents and delegate to them such administrative
duties as it sees fit (including acting through a duly appointed representative)
and may from time to time consult with counsel, who may be counsel to the Bank.

         7.3      Binding Effect of Decisions. The decision or action of the
Administrator with respect to any question arising out of or in connection with
the administration, interpretation, and application of this Split Dollar
Agreement and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the Split Dollar
Agreement.

         7.4      Indemnity of Administrator. The Bank shall indemnify and hold
harmless the members of the Administrator against any and all claims, losses,
damages, expenses, or liabilities arising from any action or failure to act with
respect to this Split Dollar Agreement, except in the case of willful misconduct
by the Administrator or any of its members.

         7.5      Information. To enable the Administrator to perform its
functions, the Bank shall supply full and timely information to the
Administrator on all matters relating to the date and circumstances of the
retirement, death, or Termination of Employment of the Executive and such other
pertinent information as the Administrator may reasonably require.

                                    ARTICLE 8
                                  MISCELLANEOUS

         8.1      Amendment and Termination. Subject to Section 8.11 of this
Split Dollar Agreement, this Split Dollar Agreement may be amended or terminated
solely by a writing signed by the Bank and the Executive. However, this Split
Dollar Agreement will terminate automatically and the Executive's interest shall
be forfeited if benefits under the Salary Continuation Agreement are neither
paid nor payable because of termination under Article 5 of the Salary
Continuation Agreement. This Split Dollar Agreement shall also terminate upon
the occurrence of any one of the following:

         (a)      Surrender, lapse, or other termination of the Policy by the
                  Bank, or

         (b)      Distribution of the death benefit proceeds in accordance with
                  Section 2.2 above.

         8.2      Binding Effect. This Split Dollar Agreement shall bind the
Executive and the Bank and their beneficiaries, survivors, executors,
administrators, transferees, and any Policy beneficiary.

         8.3      No Guarantee of Employment. This Split Dollar Agreement is not
an employment policy or contract. It does not give the Executive the right to
remain an employee of the Bank, nor does it interfere with the Bank's right to
discharge the Executive. It also does not require the Executive to remain an
employee nor interfere with the Executive's right to terminate employment at any
time.

                                        4
<PAGE>

         8.4      Successors; Binding Agreement. By an assumption agreement in
form and substance satisfactory to the Executive, the Bank shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Bank to
expressly assume and agree to perform this Split Dollar Agreement in the same
manner and to the same extent that the Bank would be required to perform this
Split Dollar Agreement if no succession had occurred. The Bank's failure to
obtain such an assumption agreement before succession becomes effective shall be
considered a breach of the Split Dollar Agreement and shall entitle the
Executive to the Change-in-Control Benefits payable under Section 2.4 of the
Salary Continuation Agreement between the Bank and the Executive of even date
herewith.

         8.5      Applicable Law. The Split Dollar Agreement and all rights
hereunder shall be governed by and construed according to the laws of the State
of Idaho, except to the extent preempted by the laws of the United States of
America.

         8.6      Entire Agreement. This Split Dollar Agreement and the Salary
Continuation Agreement constitute the entire agreement between the Bank and the
Executive concerning the subject matter hereof. No rights are granted to the
Executive under this Split Dollar Agreement other than those specifically set
forth herein.

         8.7      Severability. If for any reason any provision of this Split
Dollar Agreement is held invalid, such invalidity shall not affect any other
provision of this Split Dollar Agreement not held invalid, and to the full
extent consistent with the law each such other provision shall continue in full
force and effect. If any provision of this Split Dollar Agreement is held
invalid in part, such invalidity shall not affect the remainder of such
provision, and to the full extent consistent with the law the remainder of such
provision, together with all other provisions of this Split Dollar Agreement,
shall continue in full force and effect.

         8.8      Headings. The caption headings herein are included solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Split Dollar Agreement.

         8.9      Notices. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or mailed, certified or registered mail, return
receipt requested, with postage prepaid, to the following addresses or to such
other address as either party may designate by like notice.

                  (a)   If to the Bank, to:
                        Board of Directors
                        Panhandle State Bank
                        Third and Oak Streets
                        Sandpoint, Idaho 83864

                  (b)   If to the Executive,
                        to: Curt Hecker
                        Panhandle State Bank
                        Third and Oak Streets
                        Sandpoint, Idaho 83864

and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.

         8.10     IRC Section 1035 Exchanges. The Executive recognizes and
agrees that the Bank may after this Split Dollar Agreement is adopted wish to
exchange the Policy for another contract of life insurance insuring the
Executive's life. Provided that the Policy is replaced (or intended to be
replaced) with a comparable policy of life insurance consistent with the
requirements of section 2.4 herein, the Executive agrees to provide medical
information and cooperate with medical insurance-related testing required by a
prospective Insurer for implementing the Policy or, if necessary, for modifying
or updating to a comparable Insurer per section 2.4. The Executive's

                                        5
<PAGE>

inability to pass an insurability determination for purposes of obtaining a
comparable replacement Policy does not permit the Bank to abrogate the
Executive's interest in the Policy without the Executive's consent.

         8.11     Termination or Modification of Split Dollar Agreement Because
of Changes in Tax Statutes, Rules, or Regulations. The Bank is entering into
this Split Dollar Agreement on the assumption that certain existing tax
statutes, rules, and regulations will continue in effect in their current form.
If that assumption materially changes and the change has a material detrimental
effect on this Split Dollar Agreement, the Bank reserves the right to terminate
or modify this Split Dollar Agreement accordingly, subject to obtaining the
written consent of the Executive, which shall not be unreasonably withheld. This
Section 8.11 shall become null and void effective immediately upon a Change in
Control.

         IN WITNESS WHEREOF, the Bank and the Executive have executed this Split
Dollar Agreement as of the date first written above.

THE EXECUTIVE:                                THE BANK:
                                                  PANHANDLE STATE BANK

___________________________
Curt Hecker                                   By: ______________________________

                                              Its: _____________________________

 AGREEMENT TO COOPERATE WITH INSURANCE UNDERWRITING INCIDENT TO I.R.C. SECTION
                                 1035 EXCHANGE

         I acknowledge that I have read the Split Dollar Agreement and agree to
be bound by its terms, particularly the covenant on my part set forth in section
8.10 of the Split Dollar Agreement to provide medical information and cooperate
with medical insurance-related testing required by an Insurer to issue a
comparable insurance policy to cover the benefit provided under this Split
Dollar Agreement.

______________________________          ___________________________________
Witness                                 Executive

                                        6
<PAGE>

                              PANHANDLE STATE BANK
                         SPLIT DOLLAR POLICY ENDORSEMENT

Insured: Curt Hecker                  Insurer: West Coast Life Insurance Company
Policy No. ZUA391030

         Pursuant to the terms of the Panhandle State Bank Split Dollar
Agreement dated as of _____________, 2003, the undersigned Owner requests that
the above-referenced policy issued by the Insurer provide for the following
beneficiary designation and limited contract ownership rights to the Insured:

         1. Upon the death of the Insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of its interest in the
policy. It is hereby provided that the Insurer may rely solely upon a statement
from the Owner as to the amount of proceeds it is entitled to receive under this
paragraph.

         2. Any proceeds at the death of the Insured in excess of the amount
paid under the provisions of the preceding paragraph shall be paid in one sum
to:

________________________________________________________________________________
PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER

________________________________________________________________________________
CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER

The exclusive right to change the beneficiary for the proceeds payable under
this paragraph, to elect any optional method of settlement for the proceeds paid
under this paragraph which are available under the terms of the policy, and to
assign all rights and interests granted under this paragraph are hereby granted
to the Insured. The sole signature of the Insured shall be sufficient to
exercise said rights. The Owner retains all contract rights not granted to the
Insured under this paragraph.

         3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.

         4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.

         The undersigned for the Owner is signing in a representative capacity
and warrants that he or she has the authority to bind the entity on whose behalf
this document is being executed.

         Signed at _____________, Sandpoint, Idaho, this _____day of ____, 2003.

INSURED:                                     OWNER:
                                                 Panhandle State Bank

                                             By: ______________________________
_______________________________
Curt Hecker

                                             Its: ______________________________

                                        1
<PAGE>

                              PANHANDLE STATE BANK

                         SPLIT DOLLAR POLICY ENDORSEMENT

Insured: Curt Hecker                     Insurer: Clarica Life Insurance Company
Policy No. 665513

         Pursuant to the terms of the Panhandle State Bank Split Dollar
Agreement dated as of __________________, 2003, the undersigned Owner requests
that the above-referenced policy issued by the Insurer provide for the following
beneficiary designation and limited contract ownership rights to the Insured:

         1. Upon the death of the Insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of its interest in the
policy. It is hereby provided that the Insurer may rely solely upon a statement
from the Owner as to the amount of proceeds it is entitled to receive under this
paragraph.

         2. Any proceeds at the death of the Insured in excess of the amount
paid under the provisions of the preceding paragraph shall be paid in one sum
to:

________________________________________________________________________________
PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER

________________________________________________________________________________
CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER

The exclusive right to change the beneficiary for the proceeds payable under
this paragraph, to elect any optional method of settlement for the proceeds paid
under this paragraph which are available under the terms of the policy, and to
assign all rights and interests granted under this paragraph are hereby granted
to the Insured. The sole signature of the Insured shall be sufficient to
exercise said rights. The Owner retains all contract rights not granted to the
Insured under this paragraph.

         3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.

         4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.

         The undersigned for the Owner is signing in a representative capacity
and warrants that he or she has the authority to bind the entity on whose behalf
this document is being executed.

         Signed at _________, Sandpoint, Idaho, this _____day of________, 2003.

INSURED:                                     OWNER:
                                                Panhandle State Bank

                                             By:________________________________
__________________________________
Curt Hecker
                                             Its: ______________________________

                                        2
<PAGE>

                              PANHANDLE STATE BANK
                         SPLIT DOLLAR POLICY ENDORSEMENT

Insured: Curt Hecker               Insurer: Ohio National Life Insurance Company
Policy No. C6475172

         Pursuant to the terms of the Panhandle State Bank Split Dollar
Agreement dated as of ________________, 2003, the undersigned Owner requests
that the above-referenced policy issued by the Insurer provide for the following
beneficiary designation and limited contract ownership rights to the Insured:

         1. Upon the death of the Insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of its interest in the
policy. It is hereby provided that the Insurer may rely solely upon a statement
from the Owner as to the amount of proceeds it is entitled to receive under this
paragraph.

         2. Any proceeds at the death of the Insured in excess of the amount
paid under the provisions of the preceding paragraph shall be paid in one sum
to:

________________________________________________________________________________
PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER

________________________________________________________________________________
CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER

The exclusive right to change the beneficiary for the proceeds payable under
this paragraph, to elect any optional method of settlement for the proceeds paid
under this paragraph which are available under the terms of the policy, and to
assign all rights and interests granted under this paragraph are hereby granted
to the Insured. The sole signature of the Insured shall be sufficient to
exercise said rights. The Owner retains all contract rights not granted to the
Insured under this paragraph.

         3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.

         4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.

         The undersigned for the Owner is signing in a representative capacity
and warrants that he or she has the authority to bind the entity on whose behalf
this document is being executed.

        Signed at _________, Sandpoint, Idaho, this _____day of _________, 2003.

INSURED:                                OWNER:
                                           Panhandle State Bank

                                        By: ___________________________________
__________________________________
Curt Hecker
                                        Its: ___________________________________

                                       3