PANHANDLE STATE BANK
 Amended and Restated
 2006-2008 LONG TERM EXECUTIVE INCENTIVE PLAN
PLAN DOCUMENT
 Approved by the Board of Directors on April 28, 2006
 Approved by the Shareholders April 25, 2007
 Amended and Restated January 23, 2008




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TABLE OF CONTENTS
 SECTION
    
    PAGEPurpose
    
    
    3Administration
    
    
    3Plan Description
    
    
    3Eligibility
    
    
    3Size of Award Opportunities
    
    
    4Performance Criteria and Goals
    
    
    4Payout and Vesting Schedule
    
    
    4Withholding
    
    
    4Payment
    
    
    4Automatic Vesting
    
    
    5No Guarantee of Employment
    
    
    6Modification and Termination
    
    
    6Extraordinary Items
    
    
    6Termination
    
    
    6Exhibit A ParticipantsExhibit B Matrix of Performance
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PANHANDLE STATE BANK
2006-2008 LONG-TERM INCENTIVE PLAN
  1.
    
    Purpose.The purpose of the Plan is to provide motivation and direction to key executives to achieve
the long-term strategic goals of the Bank. Specific objectives of the Plan include:
 
    
    Support the Banks long-term strategic plan.
    
    Provide long-term orientation to decision making
    
    Focus participants attention on maximizing long-term shareholder value.
 2.
    
    Administration.The Plan will be administered by the Compensation Committee of the Board of Directors of
Intermountain Community Bancorp (the Committee). The Committee will assure that the Plan is
implemented and maintained according to Plan provisions.3.
    
    Plan Description.The Plan will provide participants with long-term financial reward opportunities based on
achieving minimum levels of long-term performance goals. The Plan consists of a matrix
which will reward the participants providing the minimum long-term corporate goals are
obtained, and, if achieved, stock awards will be provided to Plan participants such that, if
the eligibility requirements are met, a restricted stock award will be granted on January 5,
2009, and will vest one-third at the time of grant, one-third on January 5, 2010 and the
remaining one-third on January 5, 2011. The minimum performance levels are to be based upon
a three (3) year (2006-2008) running average of return on equity and net asset growth (the
Plan Performance Period).4.
    
    Eligibility.Participants in the Plan will include key members of the executive team of the Bank. The
CEO of the Bank will recommend who participates in the Plan for Committee approval.
Participants must be continuously employed at the Bank during the Plan Performance Period
and must further be employed on January 5, 2009, the date the award is granted, and remain
employed on each vesting date. The CEO will communicate such participation to each
participant at the beginning of the Plan Performance Period. Participants in the Plan are
listed on Exhibit A.
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At the beginning of each calendar year, the CEO will review and, if appropriate, revise Plan
participation for the remaining period of the Long-Term Plan.5.
    
    Size of Award Opportunities.To be most effective, payout opportunities must be meaningful and competitive. To
accomplish this, there has been established a matrix which will award participants for Bank
performance so long as minimum levels of return on equity and average asset growth over the
Plan Performance Period are met. If the Banks performance is in excess of the minimums,
the Plans participant benefits will increase as performance increases. The performance
matrix for each participant in this Plan is attached hereto as Exhibit B. The restricted
stock award shall be adjusted for any stock splits/dividends issued during the term of the
Plan.6.
    
    Performance Criteria and Goals.The performance criteria of consolidated average annual return on equity of Intermountain
Community Bancorp and consolidated average annual asset growth of Intermountain Community
Bancorp for the Plan Performance Period will support the maximization of long-term
shareholder value. At the beginning of each fiscal year, the CEO will provide to the
Committee the performance pursuant to the Plan for the prior calendar year.7.
    
    Payout Schedule.The benefits, if any, to be paid to the executives shall vest such that one-third of the
benefits paid on January 5, 2009 will vest at the time of grant, one-third on January 5,
2010 and the remaining one-third on January 5, 2011. As a condition precedent to the award
of any benefits pursuant to this Plan, the executive will be required to be employed by the
Bank on each vesting date.8.
    
    Withholding.The participant shall be solely responsible for all federal, state, local and foreign income
and payroll taxes relating to the grant and vesting of awards and shares of restricted stock
received pursuant to awards. The Bank shall withhold from compensation otherwise payable to
a participant such amount as the Bank determines is required to be withheld under applicable
law with respect to the taxes; provided, however, that in lieuof such withholding, a
participant may pay to the Bank, if the participant makes such payment in a timely manner,
the amount that would otherwise be withheld. Payment by the participant under the
immediately preceding sentence may be either in the form of cash or a surrender of shares of
restricted stock that have vested with a fair market value equal to the amount that the Bank
determines is required to be withheld under applicable law with respect to the taxes.9.
    
    Payment.Benefits to be awarded pursuant to this Plan, if any, shall be in the form of a restricted
stock grant to the executive according to the applicable matrix attached as Exhibit B, the full
amount of which will be granted on January 5, 2009, vesting in the amounts and on such
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dates as set forth in Section 7 of the Plan.10.
    
    Automatic Vesting.If a change in control of Intermountain Community Bancorp or the Bank occurs before the end
of the Plan Performance Period, the stock grants awarded to participants under the Plan
shall be determined as of the date the change in control occurred rather than as of the end
of the Plan Performance Period. The stock grants shall be determined by the Committee based
on Intermountain Community Bancorps consolidated average annual return on equity and
consolidated average annual asset growth through the most recent quarter end before the
change in control occurred. If the most recent quarter end is an interim period, the
Committee may make annualizing or other appropriate adjustments to consolidated average
annual return on equity and consolidated average annual asset growth. The stock awards
shall be similarly determined for any participant who dies or who becomes disabled (as
determined by the Committee) before the end of the Plan Performance Period, based on
consolidated average annual return on equity and consolidated average annual asset growth
through the most recent quarter end before death or disability occurred. Once a
participants stock award is determined after a change in control or after the participants
death or disability, the stock award shall be paid to the participant as promptly as
practicable, rather than according to the schedule set forth in Section 7 (one-third January
5, 2009,one-third on January 5, 2010 and one-third on January 5, 2011), and the requirement
that a participant remain employed through January5, 2011 to claim entitlement to the full
amount of this stock award shall not apply. If a change in control occurs after December
31, 2008, or if the participant dies or becomes disabled after December 31, 2008, but before
the stock award fully vests according to the schedule described in Section 7, the stock
award shall likewise be considered fully vested and the requirement that the participant
remain employed through January 5, 2011 to claim entitlement to the full amount of his stock
award shall not apply.For purposes of this section 10, the term change in control shall mean a change in the
ownership of Intermountain Community Bancorp, a change in effective control of Intermountain
Community Bancorp, or a change in the ownership of a substantial portion of the assets of
Intermountain Community Bancorp, as those terms are defined in Internal Revenue Code section
409A or in regulations or guidance of general applicability issued by the Treasury
Department under Section 409A of the Internal Revenue Code, including the Treasury
Departments Notice 2005-1, Part IV.B (questions 11 through 14), contained in Internal
Revenue Bulletin 2005-2 (January 10, 2005). For purposes of this section 10, the term
disability means that, because of any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a continuous period
of at least 12 months, the participant is unable to engage in any substantial gainful
activity or the participant is receiving income replacement benefits for a period of at
least three months under an accident and health plan covering employees of the Bank. The
existence of disability shall be determined by the Committee.
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11.
    
    No Guarantee of Employment.Nothing in the Plan or any Plan materials guarantees employment at the Bank. Further, this
Plan should not be implied as any contract agreement.12.
    
    Modification and Termination.The Committee has the right to amend or terminate the Plan at any time. However,
termination or modification of the Plan during the Plan Performance Period will not
negatively affect performance goals and payout opportunities up until the point of
termination.13.
    
    Extraordinary Items.The Committee has the authority but no obligation to exclude any extraordinary accounting
items such as changes in generally accepted accounting procedures, sales or major assets or
regulatory changes.14.
    
    Termination.Participants must be continuously employed by the Bank throughout the Plan Performance
Period and must further be employed on January 5, 2009 in order to receive the award, the
first one-third of which will vest on the date of grant. The Participant must continue to
remain employed on the vesting dates of January 5, 2010 and January 5, 2011 to receive the
remaining two-thirds of the award. Participants who become fully disabled or die during the
term of the Plan will receive benefits pursuant to the Plan on a pro-rata basis based upon
the performance results through the most recent quarter end. Participants who voluntarily
or involuntarily terminate their employment prior to receiving benefits under the Plan will
forfeit automatically their rights to any unvested portions of the award.
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Curt Hecker
    
    Chief Executive OfficerJerry Smith
    
    President, Branch AdministrationDoug Wright
    
    Executive Vice President
& Chief Financial OfficerJohn Nagel
    
    Executive Vice President
& Credit AdministratorPam Rasmussen
    
    Executive Vice President
& Chief Operating Officer
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