EXHIBIT
10.7





HOME
FEDERAL BANK


AMENDED
AND RESTATED


EMPLOYEE
SEVERANCE COMPENSATION PLAN





PLAN
PURPOSE





The
purpose of Home Federal Bank Employee Severance Compensation Plan (the "Plan")
is to assure for Home Federal Bank (the "Bank") the services of the Employees in
the event of a Change in Control of Home Federal Bancorp, Inc. (the "Holding
Company") or the Bank. The benefits contemplated by the Plan recognize the value
to the Bank of the services and contributions of the eligible Employees and the
effect upon the Bank resulting from uncertainties relating to continued
employment, reduced employee benefits, management changes and employee relations
that may arise if a Change in Control occurs or is threatened. The Bank's and
the Holding Company's Boards of Directors believe that it is in the best
interests of the Bank and the Holding Company to provide eligible Employees with
such benefits in order to defray the costs and changes in employee status that
could follow a Change in Control. The Boards of Directors believe that the Plan
will also aid the Bank in attracting and retaining highly qualified individuals
who are essential to its success and that the Plan's assurance of fair treatment
of the Bank's employees will reduce the distractions and other adverse effects
on Employees' performance if a Change in Control occurs or is
threatened.





ARTICLE
I


ESTABLISHMENT
OF PLAN





1.1
Establishment of Plan





As of the
Effective Date, the Bank hereby establishes a severance compensation plan to be
known as the "Home Federal Bank Employee Severance Compensation Plan." The
purposes of the Plan are as set forth above.





1.2
Applicability of Plan





The
benefits provided by this Plan shall be available to all Employees, who, at or
after the Effective Date, meet the eligibility requirements of Article III. The
Plan shall not apply to any Employee whose employment was terminated prior to
the Effective Date.





1.3
Contractual Right to Benefits





This Plan
establishes and vests in each Participant a contractual right to the benefits to
which each Participant is entitled hereunder, enforceable by the Participant
against the Employer.





ARTICLE
II


DEFINITIONS
AND CONSTRUCTION





2.1
Definitions





Whenever
used in the Plan, the following terms shall have the meanings set forth
below.





(a)
            "Annual
      Compensation" of a Participant means and includes all wages, salary,
      bonus, and incentive compensation (other than stock based compensation),
      paid (including accrued amounts) by the Employer as consideration for the
      Participant's services during the twelve (12) months ended the date as of
      which Annual Compensation is to be determined, which are or would be
      includable in the gross income of the Participant receiving the same for
      federal income tax purposes.





(b)
            "Bank"
      means Home Federal Bank or any successor as provided for in Article VII
      hereof.












(c)
            "Change
      in Control," for purposes of determining under the Plan whether there has
      been a change in control of the Bank or the Holding Company, means (1) an
      event of a nature that results in the acquisition of control of the
      Holding Company or the Bank within the meaning of the Savings and Loan
      Holding Company Act under 12 U.S.C. Section 1467a and 12 C.F.R. Part 574
      (or any successor statute or regulation) or requires the filing of a
      notice with the Federal Deposit Insurance Corporation under 12 U.S.C.
      Section 1817(j) (or any successor statute or regulation); (2) an event
      that would be required to be reported in response to Item 1 of the current
      report on Form 8-K, as in effect on the Effective Date, pursuant to
      Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
      Act"); (3) any person (as the term is used in Sections 13(d) and 14(d) of
      the Exchange Act) is or becomes the beneficial owner (as defined in Rule
      13d-3 under the Exchange Act) directly or indirectly of securities of the
      Holding Company or the Bank representing 25% or more of the combined
      voting power of the Holding Company's or the Bank's outstanding
      securities; (4) individuals who are members of the board of directors of
      the Holding Company immediately following the Effective Date or who are
      members of the board of directors of the Bank immediately following the
      Effective Date (in each case, the "Incumbent Board") cease for any reason
      to constitute at least a majority thereof, provided that any person
      becoming a director subsequently whose election was approved by a vote of
      at least three-quarters of the directors comprising the Incumbent Board,
      or whose nomination for election by the Holding Company's or the Bank's
      stockholders was approved by the nominating committee serving under an
      Incumbent Board, shall be considered a member of the Incumbent Board; or
      (5) consummation of a plan of reorganization, merger, consolidation, sale
      of all or substantially all of the assets of the Holding Company or a
      similar transaction in which the Holding Company is not the resulting
      entity, or a transaction at the completion of which the former
      stockholders of the acquired corporation become the holders of more than
      40% of the outstanding common stock of the Holding Company and the Holding
      Company is the resulting entity of such transaction; provided that the
      term "Change in Control" shall not include an acquisition of securities by
      an employee benefit plan of the Bank or the Holding
    Company.





(d)
            "Continuous
      Employment" means the absence of any interruption or termination of
      service as an Employee of the Bank or an affiliate. Service shall not be
      considered interrupted in the case of sick leave, military leave or any
      other leave of absence approved by the Bank or in the case of transfers
      between payroll locations of the Bank or between the Bank, its Parent, its
      Subsidiary or its successor.





(e)
            "Effective
      Date," as to Employees of an Employer, means the date the Plan is approved
      by the Board of Directors of the Bank, or such other date as the Board
      shall designate in its resolution approving the
  Plan.





(f)
            "Employee"
      means an individual employed by the Employer on a full-time basis,
      excluding any executive officer of the Employer who is covered by an
      employment contract or a change in control severance agreement with the
      Employer.





(g)
            "Employer"
      means the Bank or a Subsidiary or a Parent which has adopted the Plan
      pursuant to Article VI hereof.





(h)
            "Expiration
      Date" means the date fifteen (15) years from the Effective Date unless
      earlier terminated pursuant to Section 8.2 or extended pursuant to Section
      8.1.





(i)
            "Holding
      Company" means Home Federal Bancorp, Inc., the Parent of the
      Bank.





(j)
            "Just
      Cause," with respect to termination of employment, means an act or acts of
      personal dishonesty, incompetence, willful misconduct, breach of fiduciary
      duty involving personal profit, intentional failure to perform stated
      duties, willful violation of any law, rule, or regulation (other than
      traffic violations or similar offenses) or final cease-and-desist order.
      In determining incompetence, acts or omissions shall be measured against
      standards generally prevailing in the financial services
      industry.





(k)
            "Parent"
      means any corporation which holds a majority of the voting power of the
      outstanding shares of the Bank's common
stock.





(l)
            "Participant"
      means an Employee who meets the eligibility requirements of Article
      III.












(m)
            "Payment"
      means the payment of severance compensation as provided in Article IV
      hereof.





(n)
            "Plan"
      means the Home Federal Bank Employee Severance Compensation
      Plan.





(o)
            "Subsidiary"
      means any corporation in which the Bank, directly or indirectly, holds a
      majority of the voting power of its outstanding shares of capital
      stock.





2.2
Applicable Law





To the
extent not preempted by the laws of the United States as now or hereafter in
effect, the laws of the State of Idaho shall be the controlling law in all
matters relating to the Plan.





The Plan
neither requires nor establishes an ongoing administrative system for its effect
or operation. Payments under the Plan are precipitated by a single event, a
Change in Control, which event is the sole focus of the Plan. Consequently, it
is intended that the Plan shall not be covered by or be subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").





2.3
Severability





If a
provision of this Plan shall be held illegal or invalid, the illegality or
invalidity shall not affect the remaining parts of the Plan, and the Plan shall
be construed and enforced as if the illegal or invalid provision had not been
included.





ARTICLE
III


ELIGIBILITY





3.1
Participation





Each
Employee who has completed at least one (1) year of Continuous Employment as of
the Effective Date shall become a Participant on the Effective Date. Thereafter,
each Employee shall become a Participant on the day on which he or she completes
one (1) year of Continuous Employment. Notwithstanding the foregoing, persons
who have entered into and continue to be covered by an employment or change in
control severance agreement with the Employer shall not be entitled to
participate in the Plan.





3.2
Duration of Participation





A
Participant shall cease to be a Participant in the Plan when the Participant
ceases to be an Employee of the Employer unless such Participant is entitled to
a Payment as provided in the Plan. Furthermore, an Employee shall cease to be a
Participant upon entering into an employment or change in control severance
agreement with the Employer. A Participant entitled to receipt of a Payment
shall remain a Participant in this Plan until the full amount of such Payment
has been paid to the Participant.





ARTICLE
IV


PAYMENTS





4.1
Right to Payment





A
Participant shall be entitled to receive from his or her respective Employer a
Payment in the amount provided in Section 4.3 if there has been a Change in
Control of the Bank or the Holding Company and if, within one (1) year
thereafter, the Participant's employment by an Employer shall terminate for any
reason specified in Section 4.2, whether the termination is voluntary or
involuntary. A Participant shall not be entitled to a Payment if termination
occurs by reason of death, voluntary retirement, voluntary termination other
than for reasons specified in Section 4.2, total and permanent disability, or
for Just Cause.











4.2 Reasons for
Termination


Following
a Change in Control, a Participant shall be entitled to a Payment if his or her
employment with an Employer is terminated, voluntarily or involuntarily, within
one (1) year following such Change in Control, for any one or more of the
following reasons:





(a)
            The
      Employer reduces the Participant's base salary or rate of compensation as
      in effect immediately prior to the Change in Control, or as the same may
      have been increased thereafter.





(b)
            The
      Employer requires the Participant to change the location of the
      Participant's job or office, so that such Participant will be based at a
      location more than thirty-five (35) miles from the location of the
      Participant's job or office immediately prior to the Change in Control,
      provided that such new location is not closer to Participant's
      home.





(c)
            The
      Employer materially reduces the benefits and perquisites, taken as a
      whole, available to the Participant immediately prior to the Change in
      Control; provided, however, that a material reduction on a
      nondiscriminatory basis in the benefits and perquisites generally provided
      to all employees of the Bank that does not reduce a Participant's Annual
      Compensation shall not trigger a
Payment.





(d)
            A
      successor bank or company fails or refuses to assume the Bank's
      obligations under this Plan, as required by Article
  VII.





(e)
            The
      Bank or any successor company breaches any other provisions of the
      Plan.





(f)
            The
      Employer terminates the employment of a Participant at or after a Change
      in Control other than for Just
Cause.





4.3
Amount of Payment








(a)
            Each
      Participant entitled to a Payment under this Plan shall receive from the
      Employer a lump sum cash payment equal to Monthly Compensation totaling
      (i) 12 months if the Participant was an Executive or a Senior Vice
      President; (ii) 3 months plus 0.25 months for each year of continuous
      employment, not to exceed 6 months in the aggregate, if the Participant
      was an Officer other than an Executive or a Senior Vice President; or
      (iii) 0.25 months for each year of continuous employment if the
      Participant was not an Officer, not to exceed 6 months in the
      aggregate.





For
      purposes of this Section 4.3(a): (i) the Participant's years of service
      (including partial years rounded up to the nearest full month) are
      computed from the Employee's date of hire through the date of termination;
      (ii) "Monthly Compensation" of a Participant means such Participant's
      Annual Compensation divided by twelve (12); and (iii) “Officer” means a
      Participant who was an Executive Vice President, a Senior Vice President
      or a Vice President on the date of the Change in
  Control.





(b)
            Notwithstanding
      the provisions of (a) above, if a Payment to a Participant who is a
      "disqualified individual" shall be in an amount which includes an "excess
      parachute payment," the payment hereunder to that Participant shall be
      reduced to the maximum amount which does not include an "excess parachute
      payment." The terms "disqualified individual" and "excess parachute
      payment" shall have the same meaning as defined in Section 280G of the
      Internal Revenue Code of 1986, as amended, or any successor section of
      similar import. The Participant shall not be required to mitigate damages
      on the amount of the Payment by seeking other employment or otherwise, nor
      shall the amount of such Payment be reduced by any compensation earned by
      the Participant as a result of employment after termination of employment
      with an Employer.














4.4 Time of
Payment


The
Payment to which a Participant is entitled shall be paid to the Participant by
the Employer or the successor to the Employer, in cash and in full, not later
than twenty-five (25) business days after the termination of the Participant's
employment. If any Participant should die after termination of employment but
before all amounts have been paid, such unpaid amounts shall be paid to the
Participant's surviving spouse, or if none, to the Participant's named
beneficiary, if living, otherwise to the personal representative on behalf of or
for the benefit of the Participant's estate.





No
payment shall be made hereunder unless the Participant experiences a “separation
from service” (as that phrase is defined in Section 409A of the Internal Revenue
Code and the regulations thereunder (“Section 409A”), taking into account all
rules and presumptions provided for in the Section 409A regulations). If and to
the extent the payment under this Section 4.4 constitutes deferred compensation
within the meaning of Section 409A, and the Participant is a “specified
employee” (as defined in Section 409A), then the deferred compensation portion
of the payment shall be delayed until the first day of the seventh month
following the Participant’s “separation from service” (as defined above) or his
death, if earlier.





ARTICLE
V


OTHER
RIGHTS AND BENEFITS NOT AFFECTED





5.1
Other Benefits





Neither
the provisions of the Plan nor the Payment provided for hereunder shall reduce
any amounts otherwise payable, or in any way diminish the Participant's rights
as an Employee of the Employer, whether existing now or hereafter, under any
benefit, incentive, retirement, stock option, stock bonus, stock ownership or
any employment agreement or other plan or arrangement.





5.2
Employment Status





This Plan
does not constitute a contract of employment or impose on the Participant or the
Participant's Employer any obligation to retain the Participant as an Employee,
to change the status of the Participant's employment, or to change the
Employer's policies regarding termination of employment.





ARTICLE
VI


PARTICIPATING
EMPLOYERS





Upon
approval by the Board of Directors of the Bank, this Plan may be adopted by any
Subsidiary or Parent of the Bank. Upon such adoption, the Subsidiary or Parent
shall become an Employer hereunder and the provisions of the Plan shall be fully
applicable to the Employees of that Subsidiary or Parent.





ARTICLE
VII


SUCCESSOR
TO THE BANK





The Bank
shall require any successor to or assignee of, whether direct or indirect, by
purchase, merger, consolidation or otherwise, all or substantially all the
business or assets of the Bank, expressly and unconditionally to assume and
agree to perform the Bank's obligations under the Plan.





ARTICLE
VIII


DURATION,
AMENDMENT AND TERMINATION





8.1
Duration





If a
Change in Control has not occurred, the Plan shall expire fifteen (15) years
from the Effective Date, unless sooner terminated as provided in Section 8.2, or
unless extended for an additional period or periods by resolution adopted by the
Board of Directors of the Bank. Notwithstanding the foregoing, if a Change in
Control occurs, the Plan shall continue in full force and effect, and shall not
terminate or expire until such date as all Participants who become entitled to
Payments hereunder shall have received such Payments in full.





8.2
Amendment and Termination





The Plan
may be terminated or amended in any respect by resolution adopted by a majority
of the Board of Directors of the Bank, unless (i) a Change in Control has
previously occurred, (ii) the Bank shall have in the previous year received an
offer, which was not subsequently withdrawn, from a third party to engage in a
transaction which would involve a Change in Control or (iii) a third party shall
have disclosed in a filing with the Securities and Exchange Commission ("SEC")
its intent to engage in a transaction which would result in a Change in Control
and has not subsequently indicated in another SEC filing that it no longer had
such intention. For so long as any of the events listed in paragraphs (i), (ii)
and (iii) persist, the Plan shall not be subject to amendment, change,
substitution, deletion, revocation or termination in any respect whatsoever
unless any acquiror of the Bank shall agree in writing to provide benefits to
covered employees which are at least as substantial as those set forth herein if
such employees are terminated without cause within one year of a Change in
Control of the Bank.





8.3
Form of Amendment





The form
of any proper amendment or termination of the Plan shall be a written instrument
signed by the duly authorized officer or officers of the Bank, certifying that
the amendment or termination has been approved by the Board of Directors. A
proper amendment of the Plan automatically shall effect a corresponding
amendment to all Participant's rights hereunder, regardless of whether the
Participants receive notice of such action. A proper termination of the Plan
automatically shall effect a termination of all Participants' rights and
benefits hereunder, regardless of whether the Participants receive notice of
such action.





ARTICLE
IX


LEGAL
FEES AND EXPENSES





9.1
Subject to the notice provision in Section 9.2 hereof, the Bank shall pay all
legal fees, costs of litigation, and other expenses incurred by each Participant
as a result of the Bank's refusal to make the Payment to which the Participant
becomes entitled under this Plan, or as a result of the Bank's unsuccessfully
contesting the validity, enforceability or interpretation of the
Plan.





9.2 A
Participant must provide the Bank with 10 (ten) business days notice of a
complaint of entitlement under the Plan before the Bank shall be liable for the
payment of any legal fees, costs of litigation or other expenses referred to in
Section 9.1 hereof.





ARTICLE
X


ARBITRATION





Any
dispute or controversy arising under or in connection with the Plan shall be
settled exclusively by arbitration, conducted before a panel of three
arbitrators sitting in a location selected by the Participant within fifty (50)
miles from the location of the Bank, in accordance with rules of the American
Arbitration Association then in effect. Judgment may be entered on the award of
the arbitrator in any court having jurisdiction.





Having
been adopted by its Board of Directors on December 31, 2008, the Plan is
executed by its duly authorized officers as of the 31st day of
December, 2008.





Attest                                                                             HOME
FEDERAL BANK





/s/ Eric S.
Nadeau                                                     
   By /s/ Len E. Williams


Eric S.
Nadeau                                                                                   
Len E. Williams


Secretary                                                                                            
President and Chief Executive Officer





Having
been adopted by its Board of Directors on December 31, 2008, the Plan is
executed by its duly authorized officers as of the 31st day of
December, 2008.





Attest                                                                           
                      HOME
FEDERAL BANCORP, INC.





/s/ Eric S.
Nadeau                                                                             
By /s/ Len E. Williams


Eric S.
Nadeau                                                                                   
Len E. Williams


Secretary                                                                                            
President and Chief Executive Officer