Exhibit 10.3

                                HOME FEDERAL BANK
                      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 "Savings Bank") the
services of the Employees in the event of a Change in Control of Home Federal
Bancorp, Inc. (the "Holding Company") or the Savings Bank. The benefits
contemplated by the Plan recognize the value to the Savings Bank of the services
and contributions of the eligible Employees and the effect upon the Savings 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 Savings Bank's and the Holding Company's
Boards of Directors believe that it is in the best interests of the Savings 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 Savings 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 Savings 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 Savings 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.

<PAGE>

                                   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" means (i) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any Consolidated
Subsidiaries (as hereinafter defined), any person (as hereinabove defined)
acting on behalf of the Company as underwriter pursuant to an offering who is
temporarily holding securities in connection with such offering, any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, or any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities; (ii) individuals who are members of the Board on the
Commencement Date (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the Commencement Date whose election was approved by a vote of at
least three-quarters of the


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<PAGE>


directors comprising the Incumbent Board or whose nomination for election by the
Company's stockholders was approved by the nominating committee serving under an
Incumbent Board or who was appointed as a result of a change at the direction of
the Office of Thrift Supervision ("OTS") or the Federal Deposit Insurance
Corporation ("FDIC"), shall be considered a member of the Incumbent Board; (iii)
the stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than (1) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (2) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person (as hereinabove defined) acquires
more than 25% of the combined voting power of the Company's then outstanding
securities; or (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets (or any transaction
having a similar effect); provided that the term "Change in Control" shall not
include an acquisition of securities by an employee benefit plan of the Savings
Bank or the Company or a change in the composition of the Board at the direction
of the OTS or the FDIC. Notwithstanding the foregoing, a "Change in Control"
shall not be deemed to have occurred in the event of a conversion of the
Company's mutual holding company to stock form or in connection with any
reorganization or action used to effect such conversion.


         (d)      "Continuous Employment" means the absence of any interruption
or termination of service as an Employee of the Savings 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 Savings Bank or in the case
of transfers between payroll locations of the Savings Bank or between the
Savings 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 Savings 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.

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<PAGE>

         (g)      "Employer" means the Savings 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 Savings 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 Savings 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 Savings 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").

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<PAGE>

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 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 (1) 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 or (2) a Payment
would cause the Savings Bank to be "undercapitalized" for purposes of 12 C.F.R.
565.4 or any successor provision.


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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
Savings 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
Savings Bank's obligations under this Plan, as required by Article VII.

         (e)      The Savings 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:

                  Participant's               Amount of Monthly Compensation
         Years of Continuous Employment    Payment to be Paid to the Participant
         ------------------------------    -------------------------------------

             0 to 1 year of service             0
             Over 1 year to 2 years             3 months
             Over 2 years to 3 years            6 months
             Over 3 years                       6 months plus one month for each
                                                year of Continuous Employment
                                                over three years

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<PAGE>

         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 and
(ii) "Monthly Compensation" of a Participant means such Participant's Annual
Compensation divided by twelve (12).

         Notwithstanding anything herein to the contrary, the following rules
shall apply to the determination of any Payment due a Participant under this
Plan: (i) a Participant entitled to a Payment under this Plan who was an officer
of the Savings Bank immediately prior to the effective date of a Change in
Control shall receive a minimum Payment equal to one (1) times the Participant's
Annual Compensation; (ii) a Participant entitled to a Payment under this Plan
who was a middle manager immediately prior to the effective date of a Change in
Control shall receive a minimum Payment equal to one-half (1/2) the
Participant's Annual Compensation; and (iii) the maximum Payment to any
Participant under the Plan shall not exceed one and one-half (1-1/2) times the
Participant's Annual Compensation. For purposes of this Section 4.3, "middle
manager" shall mean a Participant who, immediately prior to the effective date
of a Change in Control, was employed in a supervisory capacity but was not also
an officer of the Savings Bank.

         (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.

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<PAGE>

                                    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 Savings Bank, this Plan
may be adopted by any Subsidiary or Parent of the Savings 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 SAVINGS BANK

         The Savings 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 Savings Bank, expressly and
unconditionally to assume and agree to perform the Savings Bank's obligations
under the Plan.

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<PAGE>

                                  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 Savings 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 Savings Bank, unless (i)
a Change in Control has previously occurred, (ii) the Savings 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 Holding Company 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.


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
Savings 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.

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<PAGE>

                                   ARTICLE IX

                             LEGAL FEES AND EXPENSES

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

         9.2      A Participant must provide the Savings Bank with 10 (ten)
business days notice of a complaint of entitlement under the Plan before the
Savings 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 Savings 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.

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<PAGE>

         Having been adopted by its Board of Directors on _________, 200_, the
Plan is executed by its duly authorized officers as of the ___ day of _______,
200_.

Attest                              HOME FEDERAL BANK


                                    By
-------------------------------       ----------------------------------
Secretary                             President and Chief Executive
                                      Officer


         Having been adopted by its Board of Directors on ________, 200_, the
Plan is executed by its duly authorized officers this ____ day of _______, 200_.


Attest                              HOME FEDERAL BANCORP, INC.


                                    By
-------------------------------       ----------------------------------
Secretary                             President and Chief Executive
                                      Officer

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