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                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

     This Employment Agreement ("Agreement"), signed this 23rd day of October,
2000, between FRONTIER BANK ("Frontier") and RONALD O. BROWN ("Executive") takes
effect on the consummation of the Mergers ("Effective Date").

                                    RECITALS

A.   Frontier Financial Corporation ("FFC") and Frontier Bank have entered into
     a Plan and Agreement of Mergers ("Plan") with Interbancorp, Inc. and Inter
     Bank, under which Interbancorp, Inc. will be merged into FFC, and Inter
     Bank will be merged into Frontier (collectively, the "Mergers").

B.   Frontier wishes to retain Executive, who is presently a Vice President of
     Inter Bank, to serve as a Vice President of Frontier Bank. Executive wishes
     to accept employment in that capacity with Frontier.

C.   This Agreement sets forth the terms and conditions of Executive's
     employment with Frontier.

                                    AGREEMENT

     The parties agree as follows:

1.   Employment. Upon the Effective Date, Frontier shall employ Executive, and
     Executive agrees to be employed, as a Vice President of Frontier Bank.

2.   Term. The term of this Agreement shall be two (2) years beginning on the
     Effective Date (the "Term"). After the expiration of the Term, Executive
     shall be an employee at will. The obligations under this Agreement, which
     by their nature survive the Term, shall remain in full force and effect
     after the Term. If the Plan terminates before closing of the Mergers, this
     Agreement will not become effective and will be void.

3.   Duties. Executive will faithfully and diligently perform the duties
     assigned to Executive from time to time by Frontier. Executive will use his
     best efforts to perform his duties and will devote full time and attention
     to these duties during working hours.

4.   Salary. Executive will receive an annual salary of $70,000, to be paid in
     accordance with Frontier's regular payroll schedule.

5.   Benefits. Executive will have available all the benefit plans that are
     available to similarly situated employees of Frontier. Executive will
     participate in the stock option plan(s) of Frontier to a comparable extent
     and at a comparable level to those persons at Frontier of comparable status
     (one year wait after the Effective Date for officers). Notwithstanding the
     foregoing, Executive will be eligible for options granted for services
     rendered in 2001 whether or not a full year from the Effective Date has
     expired. In determining eligibility for benefits/vesting at Frontier,
     Executive will receive credit for each year employed at Interbancorp, Inc.,
     as though employed at Frontier.

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6.   Required Notice. Notwithstanding any provision of this Agreement to the
     contrary, during the two (2) year period following the Effective Date: (a)
     Frontier is required to give Executive one hundred twenty (120) days
     written notice prior to terminating Executive's employment for any reason
     other than for Cause; and (b) Executive is required to give Frontier one
     hundred twenty (120) days written notice before retiring or otherwise
     terminating his employment with Frontier (in both cases, the "Required
     Notice").

7.   Termination. Upon termination of Executive's employment with Frontier,
     Frontier will pay Executive the following:

     (a)  If Executive is terminated for Cause, Executive will receive any
          salary accrued through the date of termination.

     (b)  If Frontier terminates Executive's employment before expiration of the
          first year of the Term for any reason other than Cause, and Frontier
          has provided the Required Notice, Frontier shall pay Executive, in a
          lump sum, an amount equal to the balance of the salary that Executive
          would have been entitled to receive through the first year of the
          Term.

     (c)  If Frontier terminates Executive's employment before expiration of the
          first year of the Term for any reason other than Cause, and Frontier
          has not provided the Required Notice, Frontier shall pay Executive, in
          a lump sum, an amount equal to the greater of: (i) the balance of the
          salary that Executive would have been entitled to receive through the
          first year of the Term; or (ii) four months salary reduced by 1/120
          for each day of notice actually given.

     (d)  If Frontier terminates Executive's employment during the second year
          of the Term for any reason other than Cause, and Frontier has provided
          the Required Notice, Executive will receive any salary accrued through
          the date of termination.

     (e)  If Frontier terminates Executive's employment during the second year
          of the Term for any reason other than Cause, and Frontier has not
          provided the Required Notice, Frontier shall pay Executive, in a lump
          sum, an amount equal to four months salary reduced by 1/120 for each
          day of notice actually given.

     (f)  If Executive terminates his employment with Frontier during the first
          year of the Term, with or without providing the Required Notice,
          Frontier shall pay Executive, in a lump sum, the balance of the salary
          that Executive would have been entitled to receive through the first
          year of the Term.

     (g)  If Executive terminates his employment with Frontier after the
          expiration of the first year of the Term, with or without providing
          the Required Notice, Executive will receive any salary accrued through
          the date of termination.

     (h)  If Executive terminates his employment with Frontier within the first
          or second year of the Term, without providing the Required Notice, the
          non-competition


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          period set forth in Section 9 shall be extended by the difference
          between the Required Notice period and the notice actually given.

     If and when Executive ceases, for any reason, to be employed by Frontier,
Executive must return to Frontier all keys, pass cards, identification cards and
any other property of Frontier. At the same time, Executive also must return to
Frontier all originals and copies (whether in hard copy, electronic or other
form) of any documents, manuals and any other materials which constitute
proprietary information of Frontier. The obligations in this paragraph include
the return of documents and other materials which may be in Executive's desk at
work, in Executive's car or place of residence, or in any other location under
Executive's control.

8.   Definition of "Cause". "Cause" means any one or more of the following, as
     reasonably determined by the Board in good faith: (a) Willful misfeasance
     or gross negligence in the performance of Executive's duties; (b)
     Conviction of a crime in connection with his duties; (c) Conduct
     demonstrably and significantly harmful to Frontier, as reasonably
     determined by the Board on the advice of legal counsel; or (d) Willful
     failure to follow the directives of Frontier Senior Management or the
     Frontier Board of Directors.

9.   Noncompetition Agreement. Executive agrees that during the period of
     employment with Frontier and for two years after the Effective Date
     (subject to extension under the provisions of Section 7(h) hereof), he will
     not, directly or indirectly, become involved in, as an employee, principal
     shareholder, director or officer, "founder," or other agent of, any
     financial institution or trust company that competes or will compete with
     Interbancorp, FFC, Frontier, or any of their subsidiaries or affiliates,
     within a thirty-mile radius of any office of Inter Bank. Executive also
     agrees that during the period of employment with Frontier and for two years
     after the Effective Date, Executive will not directly or indirectly solicit
     or attempt to solicit: (1) any employees of Interbancorp, Frontier, FFC, or
     any of their subsidiaries or affiliates, to leave their employment or (2)
     any customers of Interbancorp, FFC, Frontier, or any of their subsidiaries
     or affiliates to remove their business from Interbancorp, FFC, Frontier, or
     any of their subsidiaries or affiliates, or to participate in any manner in
     any financial institution or trust company that competes or will compete
     with Interbancorp, FFC, Frontier, or any of their subsidiaries or
     affiliates. Solicitation prohibited under this section includes
     solicitation by any means, including, without limitation, meetings,
     telephone calls, letters or other mailings, electronic communication of any
     kind, and Internet communications. Notwithstanding the foregoing, if
     Executive is terminated by Frontier for any reason other than for Cause,
     this Section 9 shall terminate and be of no force and effect the later of:
     (a) one (1) year after the Effective Date; (b) the date of termination; or
     (c) the expiration of the 120 day notice period (see Section 6, above).

10.  Confidentiality. Executive will not, after signing this Agreement,
     including during and after its Term, use for his own purposes or disclose
     to any other person or entity any confidential information concerning
     Frontier or its business operations or customers, unless (i) Frontier
     consents to the use or disclosure of their respective confidential
     information, (ii) the use or disclosure is consistent with Executive's
     duties under this Agreement or (iii) disclosure is required by law or court
     order.

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11.  Enforcement.

     (a)  Frontier and Executive stipulate that, in light of all of the facts
          and circumstances of the relationship between Executive and
          FFC/Frontier, the agreements referred to in Sections 9 and 10 are fair
          and reasonably necessary for the protection of Frontier's confidential
          information, goodwill and other protectable interests. If a court of
          competent jurisdiction should decline to enforce any of those
          covenants and agreements, Executive and FFC/Frontier request the court
          to reform these provisions to restrict Executive's use of confidential
          information and Executive's ability to compete with FFC or its
          subsidiaries to the maximum extent, in time, scope of activities and
          geography, the court finds enforceable.

     (b)  Executive acknowledges that FFC/Frontier will suffer immediate and
          irreparable harm that will not be compensable by damages alone, if
          Executive repudiates or breaches any of the provisions of Sections 9
          and 10 or threatens or attempts to do so. For this reason, under these
          circumstances, FFC/Frontier, in addition to and without limitation of
          any other rights, remedies or damages available to it at law or in
          equity, will be entitled to obtain temporary, preliminary, and
          permanent injunctions in order to prevent or restrain the breach, and
          FFC/Frontier will not be required to post a bond as a condition for
          the granting of this relief.

12.  Adequate Consideration. Executive specifically acknowledges the receipt of
     adequate consideration for the covenants contained in Section 9 and that
     Frontier is entitled to require him to comply with this Section, which
     shall survive termination of this Agreement.

13.  Arbitration.

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

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

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     (c)  Exception to Arbitration. Notwithstanding the above, if Executive
          violates Sections 9 or 10, Frontier will have the right to initiate
          the court proceedings described in Section 11(b), in lieu of an
          arbitration proceeding under this Section 13. Frontier may initiate
          these proceedings wherever appropriate within the state of Washington;
          but Executive will consent to venue and jurisdiction in Snohomish
          County, Washington.

14.  Miscellaneous Provisions.

     (a)  Defined Terms. Capitalized terms used as defined terms, but not
          defined in this Agreement, will have the meanings assigned to those
          terms in the Plan.

     (b)  Entire Agreement. This Agreement embodies the entire agreement of the
          parties hereto with respect to its subject matter and merges with and
          supersedes all prior discussion, agreements, commitments, or
          understandings of every kind and nature relating thereto, whether oral
          or written, between Executive and FFC/Frontier. Neither party shall be
          bound by any term or condition other than as is expressly set forth
          herein. Executive specifically waives the terms of and all of his
          rights under all employment, change-in-control, severance, salary
          continuation, or similar agreements, whether written or oral, he has
          previously entered into with Interbancorp, Inc. or any of its
          subsidiaries or affiliates.

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

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

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

     (f)  Counsel Review. Executive represents and agrees that he fully
          understands his right to discuss all aspects of this Agreement with
          his private attorney, that to the extent he desired, he availed
          himself of this right, that he has carefully read and fully
          understands all of the provisions of the Agreement, that he is
          competent to execute this Agreement, that his decision to execute this
          Agreement has not been obtained by any duress and that he freely and
          voluntarily enters into this Agreement, and that he has read this
          document in its entirety and fully understands the meaning, intent,
          and consequences of this Agreement.

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

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

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

     (j)  Governing Law and Venue. This Agreement will be governed by and
          construed in accordance with Washington law, except to the extent that
          certain matters may be governed by federal law. Except as otherwise
          provided in Section 13(c), the parties must bring any legal proceeding
          arising out of this Agreement in Snohomish County, Washington, and the
          parties will submit to jurisdiction in that county.

     (k)  Counterparts. This Agreement may be executed in one or more
          counterparts, each of which will be deemed an original, but all of
          which taken together will constitute one and the same document.

Signed: October 23, 2000.

                                             FRONTIER BANK



                                             By: /s/ ROBERT J. DICKSON
                                                 -------------------------------
                                                 Robert J. Dickson, President


                                             /s/ RONALD O. BROWN
                                             -----------------------------------
                                             RONALD O. BROWN