Document:

<PAGE>
                                                             EXHIBIT 10.25

                                                             EXECUTION COPY

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this 23rd day of July, 2004, by and between PANHANDLE STATE BANK, an Idaho
banking corporation ("PSB") and PAMELA RASMUSSEN ("Employee"). This Agreement
will be effective as of the date (the "Effective Date") that the merger (the
"Merger") of Magic Valley Bank ("Magic Valley") with and into PSB becomes
effective under the terms of the Plan and Agreement of Merger dated as of the
date hereof (the "Bank Merger Agreement"). If the Bank Merger Agreement is
terminated for any reason, this Agreement will be null and void and of no
effect.

                                    RECITALS

      A. Employee is employed by Magic Valley in an executive management
capacity, presently holding the position of Senior Vice President and CFO of
Magic Valley.

      B. PSB desires to employ Employee, and Employee wishes to accept such
employment, from and after the Effective Date pursuant to the terms set forth in
this Agreement.

                                    AGREEMENT

1)    TERM OF AGREEMENT. The term of this employment agreement is two (2) years,
      commencing on the Effective Date (the "Term"). Should Employee's
      employment with PSB continue beyond the Term, she will be considered an
      at-will employee.

2)    EMPLOYMENT. PSB will continue Employee's employment during the Term, and
      Employee accepts employment by PSB on the terms and conditions set forth
      in this Agreement. Employee's title will be "Vice President and Senior
      Operations Officer, Magic Valley Bank, a division of Panhandle State
      Bank."

3)    DUTIES OF EMPLOYEE. Employee will report directly to PSB's COO. Employee
      will be responsible for Magic Valley's operational performance, as
      determined by PSB's COO.

4)    COMMITMENT OF EMPLOYEE. Employee will use her best efforts to perform her
      duties and will devote full time and attention to these duties during
      working hours. Employee may engage in non-bank business activities with
      prior approval of the PSB Board of Directors, which approval will not be
      unreasonably withheld.

5)    SALARY. Employee will receive an annual base salary of $93,150, to be paid
      in accordance with PSB's regular payroll schedule. The Human Resource
      Committee of the PSB Board will review Employee's salary in connection
      with its performance review on an annual basis. During the Term,
      Employee's base salary may not be decreased.

6)    OTHER COMPENSATION. For 2004, Employee will be eligible to receive a bonus
      pursuant to Magic Valley's bonus plan in effect as of the date of this
      agreement. Commencing in 2005,
<PAGE>
      Employee will participate in PSB's Short-Term Bonus Program and will be
      eligible for other incentives that will be administered by PSB's Human
      Resource Committee. In addition:

      a)    Employee is eligible to participate in PSB's 401K retirement plan
            with employer match of 50% of first 8% of salary contributed.

      b)    Employee may receive stock options annually, based on performance
            evaluation at the discretion of the Board of Directors.

      c)    Following the Effective Date, PSB will cause Intermountain Community
            Bancorp ("IMCB"), the parent company of PSB, to enter into a Stock
            Purchase Agreement with Employee, substantially in the form attached
            to this Agreement as Exhibit A.

7)    VACATION AND BENEFITS. Employee is eligible for four (4) weeks of paid
      vacation per year. Unused vacation time will not be carried over.
      Additional benefits include life insurance of $50,000 for Employee and
      $2,000 for Employee's spouse and $2,000 for each dependent, and
      miscellaneous firm-wide benefits such as free checking account, safe
      deposit box, no fee investments, etc. Employee will be eligible to
      participate in such other of PSB's employee benefit plans and to receive
      such other benefits for which her level of employment makes her eligible,
      in accordance with PSB's policies in effect from time to time during the
      Term. Employee will also be entitled to a social membership to Blue Lakes
      Country Club.

8)    TERMINATION AND SEVERANCE PROVISIONS.

      a)    Termination Benefit. If, during the Term, PSB terminates Employee's
            employment with PSB without Cause (as defined below) or Employee
            terminates for Good Reason (as defined below), Employee will be
            entitled to receive a termination payment equal to two (2) times
            Employee's annual base salary at the time of termination (the
            "Termination Benefit"). The Termination Benefit will be paid over a
            two-year period in accordance with the payroll schedule that applies
            to other salaried employees of PSB.

      b)    Definition of Cause. "Cause" means any one or more of the following:

            i)    Willful misfeasance or gross negligence in the performance of
                  Employee's duties;

            ii)   Conviction of a crime in connection with such duties; or

            iii)  Conduct demonstrably and significantly harmful to the
                  financial condition of the Magic Valley, PSB and/or IMCB.

      c)    Good Reason. "Good Reason" means any of the following:

            i)    Substantial diminution of Employee's duties;

            ii)   Diminution of Employee's compensation; or

            iii)  Significant relocation, where Significant means a change of
                  more than 60 miles (one way) in Employee's commute if Employee
                  does not agree to move.

      d)    Voluntary Termination. Notwithstanding the provisions of Section
            8(a) of this Agreement, if after the first anniversary of the
            Effective Date, Employee voluntarily terminates her employment with
            PSB, Employee will be entitled to receive her then-current base
            salary for the remainder of the Term (the "Voluntary Termination
            Benefit"). The Voluntary Termination Benefit will be paid over the
            remainder of the Term in equal

                                       2
<PAGE>
            regular periodic payments without interest in accordance with the
            payroll schedule that applies to other salaried employees of PSB.

9)    CONFIDENTIALITY. Employee will not, after signing this Agreement,
      including during and after its Term, use for her own purposes or disclose
      to any other person or entity any confidential information concerning
      Magic Valley, PSB or their business operations or customers, unless (a)
      PSB consents to the use or disclosure of its confidential information, (b)
      the use or disclosure is consistent with Employee's duties under this
      Agreement, (c) disclosure is required by law or court order, or (d) the
      information becomes or is made public. Confidential information includes,
      but is not limited to, financial information, customer lists, marketing
      strategies, and business plans.

10)   RETURN OF PSB PROPERTY. If and when Employee ceases, for any reason, to be
      employed by PSB, Employee must return to PSB all keys, pass cards,
      identification cards and any other property of PSB. At the same time,
      Employee also must return to PSB all originals and copies (whether in hard
      copy, electronic or other form) of any documents, notes, memoranda,
      designs, devices, diskettes, tapes, manuals, and specifications which
      constitute proprietary information or material of PSB. The obligations in
      this Section 10 include the return of documents and other materials which
      may be in Employee's desk at work, in Employee's car or place of
      residence, or in any other location under Employee's control.

11)   NON-SOLICITATION. Employee will not solicit or cause to be solicited for
      employment any employee of PSB for a period of two (2) years following
      Employee's termination; nor solicit or cause to be solicited the business
      and/or accounts of customers of PSB for a period of two years following
      Employee's termination.

12)   NON-COMPETITION. Except as otherwise expressly provided in this Agreement,
      while Employee is employed by PSB and for any period during which Employee
      is receiving or is entitled to receive payments pursuant to Section 8 (a)
      or (c) of this Agreement, Employee will not become involved with a
      Competing Business or serve, directly or indirectly, a Competing Business
      in any manner, including, without limitation, as a shareholder, member,
      partner, director, officer, manager, investor, organizer, "founder,"
      employee, consultant, or agent; provided, however, that Employee may
      acquire and passively own an interest not exceeding 2% of the total equity
      interest in a Competing Business. For purposes of this Agreement, the term
      "Competing Business" means any financial service institutions, including
      without limitation banks, insurance companies, leasing companies, mortgage
      companies, and brokerage firms that engage in business within a 90 mile
      radius of Twin Falls, Idaho (the "Noncompetition Area"). Notwithstanding
      the previous sentence, "Competing Business" does not include a financial
      service institution with an office located within the Noncompetition Area,
      so long as Employee will not be engaged in any business activity within
      the Noncompetition Area.

13)   ENFORCEMENT.

      a) PSB and Employee stipulate that, in light of all of the facts and
circumstances of the relationship between Employee and PSB, the agreements
referred to in Sections 11 and 12

                                       3
<PAGE>
(including without limitation their scope, duration and geographic extent) are
fair and reasonably necessary for the protection of PSB's goodwill and other
protectable interests. If a court of competent jurisdiction should decline to
enforce any of those covenants and agreements, Employee and PSB request the
court to reform these provisions to restrict Employee's ability to compete with
PSB to the maximum extent, in time, scope of activities, and geography, the
court finds enforceable.

      b) Employee acknowledges that PSB will suffer immediate and irreparable
harm that will not be compensable by damages alone, if Employee repudiates or
breaches any of the provisions of Sections 11 and 12 or threatens or attempts to
do so. For this reason, under these circumstances, PSB, 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 PSB will
not be required to post a bond as a condition for the granting of this relief.

14) ADEQUATE CONSIDERATION. Employee specifically acknowledges the receipt of
adequate consideration, including without limitation the Termination Benefit,
identified in Section 8, if due and owing, for the covenants contained in
Sections 11 and 12 and that PSB is entitled to require her to comply with those
Sections regardless of the reason(s) for Employee's separation of employment
with PSB. Sections 11 and 12 will survive termination of this Agreement, but
will expire no later than two years from the date of the termination of
employment. Employee represents that if her employment is terminated, whether
voluntarily or involuntarily, Employee has experience and capabilities
sufficient to enable Employee to obtain employment in areas which do not violate
this Agreement and that PSB's enforcement of a remedy by way of injunction will
not prevent Employee from earning a livelihood.

15) ENTIRE AGREEMENT. This Agreement and Exhibit A to this Agreement constitute
the entire understanding between the parties concerning its subject matter and
supersede all prior agreements. Accordingly, Employee specifically waives the
terms of and all of Employee's rights under any severance provisions of any
employment and/or change-in-control agreements, whether written or oral,
previously entered into with Magic Valley and/or PSB.

16) MISCELLANEOUS PROVISIONS.

      a)    Choice of Law. This Agreement is made with reference to and is
            intended to be construed in accordance with the laws of the State of
            Idaho.

      b)    Arbitration. Any dispute, controversy or claim arising out of or in
            connection with, or relating to, this Agreement or any breach or
            alleged breach hereof, will, upon the request of any party involved,
            be submitted to, and settled by, arbitration pursuant to the rules
            then in effect of the American Arbitration Association (or under any
            other form of arbitration mutually acceptable to the parties so
            involved). Any award rendered will be final and conclusive upon the
            parties and a judgment thereon may be entered in the highest court
            of the forum having jurisdiction. The arbitrator will render a
            written decision, naming the substantially prevailing party in the
            action, and will award such party all costs and expenses incurred,
            including reasonable attorneys' fees. Notwithstanding the foregoing,
            if Employee violates Sections 11 or 12, PSB

                                       4
<PAGE>
            will have the right to initiate the court proceedings described in
            Section 13(b), in lieu of an arbitration proceeding under this
            Section 16. PSB may initiate these proceedings wherever appropriate
            within the State of Idaho; but Employee will consent to venue and
            jurisdiction in Twin Falls County, Idaho.

      c)    Attorney Fees. In the event of any breach of or default under this
            Agreement which results in either party incurring attorney or other
            fees, costs or expenses (including in arbitration), the prevailing
            party will be entitled to recover from the non-prevailing party any
            and all such fees, costs and expenses, including attorneys' fees.

      d)    Successors.

            (i)   This Agreement will bind and inure to the benefit of the
                  Parties and each of their respective affiliates, legal
                  representatives, heirs, Successors and Assigns (as defined
                  below).

            (ii)  For PSB only, the term "Successors and Assigns" means any
                  person or entity which buys all or substantially all of PSB's
                  or IMCB's assets, or with which either of them merger or
                  consolidate.

      e)    Amendment. This Agreement may be amended only in a writing signed by
            the Parties.

      f)    Headings. The headings of sections of this Agreement have been
            included for convenience of reference only. They will not be
            construed to modify or otherwise affect in any respect any of the
            provisions of the Agreement.

      g)    Counsel Review. Employee acknowledges that he has had the
            opportunity to consult with independent counsel with respect to the
            negotiation, preparation, and execution of this Agreement.

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

EXECUTED by each of the Parties effective as of the date first stated above.

PSB                                     EMPLOYEE
Panhandle State Bank

By: /s/ Curt Hecker                     /s/ Pamela R. Rasmussen
    --------------------------          ----------------------------------------
    Chief Executive Officer             Pamela Rasmussen

Date 7/23/04                            Date  7/23/04
     -------------------------          ----------------------------------------

m30463-520123.3.doc

                                       5
<PAGE>
                                                                       Exhibit A

                                     FORM OF
                            STOCK PURCHASE AGREEMENT

         THIS AGREEMENT is effective the ____ day of ____________, 200__ between
Intermountain Community Bancorp (IMCB) and PAMELA RASMUSSEN (Employee).

                                    RECITALS

      A.    On date of execution hereof, IMCB is willing to provide a bonus to
            Employee upon the terms and conditions set forth herein.

      B.    As consideration for receipt of said bonus, Employee will be bound
            to a right of first refusal for repurchase of the shares by IMCB of
            any and all IMCB stock obtained as part of this Agreement.

      WHEREFORE, BASED UPON THE FOREGOING RECITALS AND THE TERMS AND CONDITIONS
CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:

      1. Prior to December 15, 2005, Employee shall purchase shares of IMCB
stock for an aggregate purchase price of up to $9,000.00. Such purchases shall
be made on the open market. In the event Employee completes the stock purchase
as required by this agreement, IMCB shall pay to Employee in the form of a bonus
the lesser of the actual dollar amount of stock purchased including fees and/or
commissions or $9,000, which shall be paid in three annual installments of
$3,000.00 per year, with the first payment due on or before December 15, 2005,
and like annual payments due on or before the 15th day of December of 2006 and
2007. All annual payments shall be subject to standard withholding taxes.

      2. All shares of IMCB stock obtained as part of this Agreement are subject
to a right of first refusal for repurchase by IMCB.

      3. The annual bonus payments identified herein shall not be considered
earned until actually paid pursuant to this agreement and to qualify for each
annual payment, Employee must

                                       A-1
<PAGE>
still be a full time employee on each payment date. Any vested and unpaid bonus
will be forfeited if Employee leaves the employment of the bank (1) by his own
volition; or (2) is terminated for just cause. Under the following
circumstances, Employee will become fully vested and will be entitled to be
paid, in cash, the balance of the bonus amount upon the following events:

            (a)   Death;

            (b)   Permanent disability;

            (c)   In the event more than fifty (50%) percent of the stock of
                  IMCB is sold constituting a change of control as a result of a
                  merger or similar acquisition transaction;

            (d)   In the event that the Employee is re-assigned by IMCB to
                  another organization that is not directly controlled by IMCB;
                  or

            (e)   By mutual consent of IMCB and the Employee.

      4. The benefits contemplated by this agreement are hereby expressly
declared to be non-assignable and any such attempt at assignment shall be void
and of no effect.

      5. This agreement shall be binding upon and shall inure to the benefit of
the parties and their successors or assigns.

IMCB                                    EMPLOYEE

By: /s/ Curt Hecker                     /s/ Pamela R. Rasmussen
    ----------------------------        ----------------------------------------
    Chief Executive Officer             Pamela Rasmussen

Date 7/23/04                            Date  7/23/04
     ---------------------------              ----------------------------------

                                      A-2<PAGE>

                                                                   EXHIBIT 10.26

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this 23rd day of July, 2004, by and between PANHANDLE STATE BANK, an Idaho
banking corporation ("PSB") and ERNEST BENGOECHEA ("Employee"). This Agreement
will be effective as of the date (the "Effective Date") that the merger (the
"Merger") of Magic Valley Bank ("Magic Valley") with and into PSB becomes
effective under the terms of the Plan and Agreement of Merger dated as of the
date hereof (the "Bank Merger Agreement"). If the Bank Merger Agreement is
terminated for any reason, this Agreement will be null and void and of no
effect.

                                    RECITALS

      A.    Employee is employed by Magic Valley in an executive management
capacity, presently holding the position Senior Vice President and CCO of Magic
Valley.

      B.    PSB desires to employ Employee, and Employee wishes to accept such
employment, from and after the Effective Date pursuant to the terms set forth in
this Agreement.

                                    AGREEMENT

1) TERM OF AGREEMENT. The term of this employment agreement is two (2) years,
   commencing on the Effective Date (the "Term"). Should Employee's employment
   with PSB continue beyond the Term, he will be considered an at-will employee.

2) EMPLOYMENT. PSB will continue Employee's employment during the Term, and
   Employee accepts employment by PSB on the terms and conditions set forth in
   this Agreement. Employee's title will be "Vice President and Senior Loan
   Officer, Magic Valley Bank, a division of Panhandle State Bank."

3) DUTIES OF EMPLOYEE. Employee will report directly to Magic Valley's
   President. Employee will be responsible for Magic Valley's credit
   performance, as determined by Magic Valley's President.

4) COMMITMENT OF EMPLOYEE. Employee will use his best efforts to perform his
   duties and will devote full time and attention to these duties during working
   hours. Employee may engage in non-bank business activities with prior
   approval of the PSB Board of Directors, which approval will not be
   unreasonably withheld.

5) SALARY. Employee will receive an annual base salary of $99,782, to be paid in
   accordance with PSB's regular payroll schedule. The Human Resource Committee
   of the PSB Board will review Employee's salary in connection with its
   performance review on an annual basis. During the Term, Employee's base
   salary may not be decreased.

6) OTHER COMPENSATION. For 2004, Employee will be eligible to receive a bonus
   pursuant to Magic Valley's bonus plan in effect as of the date of this
   agreement. Commencing in 2005,

<PAGE>

   Employee will participate in PSB's Short-Term Bonus Program and will be
   eligible for other incentives that will be administered by PSB's Human
   Resource Committee. In addition:

   a) Employee is eligible to participate in PSB's 401K retirement plan with
      employer match of 50% of first 8% of salary contributed.

   b) Employee may receive stock options annually, based on performance
      evaluation at the discretion of the Board of Directors.

   c) Following the Effective Date, PSB will cause Intermountain Community
      Bancorp ("IMCB"), the parent company of PSB, to enter into a Stock
      Purchase Agreement with Employee, substantially in the form attached to
      this Agreement as Exhibit A.

7) VACATION AND BENEFITS. Employee is eligible for four (4) weeks of paid
   vacation per year. Unused vacation time will not be carried over. Additional
   benefits include life insurance of $50,000 for Employee and $2,000 for
   Employee's spouse and $2,000 for each dependent, and miscellaneous firm-wide
   benefits such as free checking account, safe deposit box, no fee investments,
   etc. Employee will be eligible to participate in such other of PSB's employee
   benefit plans and to receive such other benefits for which his level of
   employment makes him eligible, in accordance with PSB's policies in effect
   from time to time during the Term. Employee will also be entitled to use of a
   company automobile with gas card, as well as membership to Blue Lakes Country
   Club.

8) TERMINATION AND SEVERANCE PROVISIONS.

   a) Termination Benefit. If, during the Term, PSB terminates Employee's
      employment with PSB without Cause (as defined below) or Employee
      terminates for Good Reason (as defined below), Employee will be entitled
      to receive a termination payment equal to two (2) times Employee's annual
      base salary at the time of termination (the "Termination Benefit"). The
      Termination Benefit will be paid over a two-year period in accordance with
      the payroll schedule that applies to other salaried employees of PSB.

   b) Definition of Cause. "Cause" means any one or more of the following:

      i)   Willful misfeasance or gross negligence in the performance of
           Employee's duties;

      ii)  Conviction of a crime in connection with such duties; or

      iii) Conduct demonstrably and significantly harmful to the financial
           condition of the Magic Valley, PSB and/or IMCB.

   c) Good Reason. "Good Reason" means any of the following:

      i)   Substantial diminution of Employee's duties;

      ii)  Diminution of Employee's compensation; or

      iii) Significant relocation, where Significant means a change of more than
           60 miles (one way) in Employee's commute if Employee does not agree
           to move.

   d) Voluntary Termination. Notwithstanding the provisions of Section 8(a) of
      this Agreement, if after the first anniversary of the Effective Date,
      Employee voluntarily terminates his employment with PSB, Employee will be
      entitled to receive his then-current base salary for the remainder of the
      Term (the "Voluntary Termination Benefit"). The Voluntary Termination
      Benefit will be paid over the remainder of the Term in equal

                                        2

<PAGE>

      regular periodic payments without interest in accordance with the payroll
      schedule that applies to other salaried employees of PSB.

9) CONFIDENTIALITY. Employee 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 Magic Valley, PSB or
   their business operations or customers, unless (a) PSB consents to the use or
   disclosure of its confidential information, (b) the use or disclosure is
   consistent with Employee's duties under this Agreement, (c) disclosure is
   required by law or court order, or (d) the information becomes or is made
   public. Confidential information includes, but is not limited to, financial
   information, customer lists, marketing strategies, and business plans.

10) RETURN OF PSB PROPERTY. If and when Employee ceases, for any reason, to be
   employed by PSB, Employee must return to PSB all keys, pass cards,
   identification cards and any other property of PSB. At the same time,
   Employee also must return to PSB all originals and copies (whether in hard
   copy, electronic or other form) of any documents, notes, memoranda, designs,
   devices, diskettes, tapes, manuals, and specifications which constitute
   proprietary information or material of PSB. The obligations in this Section
   10 include the return of documents and other materials which may be in
   Employee's desk at work, in Employee's car or place of residence, or in any
   other location under Employee's control.

11) NON-SOLICITATION. Employee will not solicit or cause to be solicited for
   employment any employee of PSB for a period of two (2) years following
   Employee's termination; nor solicit or cause to be solicited the business
   and/or accounts of customers of PSB for a period of two years following
   Employee's termination.

12) NON-COMPETITION. Except as otherwise expressly provided in this Agreement,
   while Employee is employed by PSB and for any period during which Employee is
   receiving or is entitled to receive payments pursuant to Section 8 (a) or (c)
   of this Agreement, Employee will not become involved with a Competing
   Business or serve, directly or indirectly, a Competing Business in any
   manner, including, without limitation, as a shareholder, member, partner,
   director, officer, manager, investor, organizer, "founder," employee,
   consultant, or agent; provided, however, that Employee may acquire and
   passively own an interest not exceeding 2% of the total equity interest in a
   Competing Business. For purposes of this Agreement, the term "Competing
   Business" means any financial service institutions, including without
   limitation banks, insurance companies, leasing companies, mortgage companies,
   and brokerage firms that engage in business within a 90 mile radius of Twin
   Falls, Idaho (the "Noncompetition Area"). Notwithstanding the previous
   sentence, "Competing Business" does not include a financial service
   institution with an office located within the Noncompetition Area, so long as
   Employee will not be engaged in any business activity within the
   Noncompetition Area.

13) ENFORCEMENT.

   a) PSB and Employee stipulate that, in light of all of the facts and
circumstances of the relationship between Employee and PSB, the agreements
referred to in Sections 11 and 12

                                        3

<PAGE>

(including without limitation their scope, duration and geographic extent) are
fair and reasonably necessary for the protection of PSB's goodwill and other
protectable interests. If a court of competent jurisdiction should decline to
enforce any of those covenants and agreements, Employee and PSB request the
court to reform these provisions to restrict Employee's ability to compete with
PSB to the maximum extent, in time, scope of activities, and geography, the
court finds enforceable.

   b) Employee acknowledges that PSB will suffer immediate and irreparable harm
that will not be compensable by damages alone, if Employee repudiates or
breaches any of the provisions of Sections 11 and 12 or threatens or attempts to
do so. For this reason, under these circumstances, PSB, 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 PSB will
not be required to post a bond as a condition for the granting of this relief.

14) ADEQUATE CONSIDERATION. Employee specifically acknowledges the receipt of
adequate consideration, including without limitation the Termination Benefit,
identified in Section 8, if due and owing, for the covenants contained in
Sections 11 and 12 and that PSB is entitled to require him to comply with those
Sections regardless of the reason(s) for Employee's separation of employment
with PSB. Sections 11 and 12 will survive termination of this Agreement, but
will expire no later than two years from the date of the termination of
employment. Employee represents that if his employment is terminated, whether
voluntarily or involuntarily, Employee has experience and capabilities
sufficient to enable Employee to obtain employment in areas which do not violate
this Agreement and that PSB's enforcement of a remedy by way of injunction will
not prevent Employee from earning a livelihood.

15) ENTIRE AGREEMENT. This Agreement and Exhibit A to this Agreement constitute
the entire understanding between the parties concerning its subject matter and
supersede all prior agreements. Accordingly, Employee specifically waives the
terms of and all of Employee's rights under any severance provisions of any
employment and/or change-in-control agreements, whether written or oral,
previously entered into with Magic Valley and/or PSB.

16) MISCELLANEOUS PROVISIONS.

      a) Choice of Law. This Agreement is made with reference to and is intended
         to be construed in accordance with the laws of the State of Idaho.

      b) Arbitration. Any dispute, controversy or claim arising out of or in
         connection with, or relating to, this Agreement or any breach or
         alleged breach hereof, will, upon the request of any party involved, be
         submitted to, and settled by, arbitration pursuant to the rules then in
         effect of the American Arbitration Association (or under any other form
         of arbitration mutually acceptable to the parties so involved). Any
         award rendered will be final and conclusive upon the parties and a
         judgment thereon may be entered in the highest court of the forum
         having jurisdiction. The arbitrator will render a written decision,
         naming the substantially prevailing party in the action, and will award
         such party all costs and expenses incurred, including reasonable
         attorneys' fees. Notwithstanding the foregoing, if Employee violates
         Sections 11 or 12, PSB

                                        4

<PAGE>

         will have the right to initiate the court proceedings described in
         Section 13(b), in lieu of an arbitration proceeding under this Section
         16. PSB may initiate these proceedings wherever appropriate within the
         State of Idaho; but Employee will consent to venue and jurisdiction in
         Twin Falls County, Idaho.

      c) Attorney Fees. In the event of any breach of or default under this
         Agreement which results in either party incurring attorney or other
         fees, costs or expenses (including in arbitration), the prevailing
         party will be entitled to recover from the non-prevailing party any and
         all such fees, costs and expenses, including attorneys' fees.

      d) Successors.

         (i)  This Agreement will bind and inure to the benefit of the
              Parties and each of their respective affiliates, legal
              representatives, heirs, Successors and Assigns (as defined
              below).

         (ii) For PSB only, the term "Successors and Assigns" means any
              person or entity which buys all or substantially all of PSB's
              or IMCB's assets, or with which either of them merger or
              consolidate.

      e) Amendment. This Agreement may be amended only in a writing signed by
         the Parties.

      f) Headings. The headings of sections of this Agreement have been included
         for convenience of reference only. They will not be construed to modify
         or otherwise affect in any respect any of the provisions of the
         Agreement.

      g) Counsel Review. Employee acknowledges that he has had the opportunity
         to consult with independent counsel with respect to the negotiation,
         preparation, and execution of this Agreement.

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

EXECUTED by each of the Parties effective as of the date first stated above.

PSB                                        EMPLOYEE
Panhandle State Bank

By: /s/ Curt Hecker                        /s/ Ernest Bengoechea
    -------------------------------        -------------------------------------
    Chief Executive Officer                Ernest Bengoechea

Date 7/23/04                               Date  7/23/04

                                        5

<PAGE>

                                                                  EXECUTION COPY

                                                                       Exhibit A

                                     FORM OF
                            STOCK PURCHASE AGREEMENT

      THIS AGREEMENT is effective the ____ day of ____________, 200__ between
Intermountain Community Bancorp (IMCB) and ERNEST BENGOECHEA (Employee).

                                    RECITALS

         A. On date of execution hereof, IMCB is willing to provide a bonus to
            Employee upon the terms and conditions set forth herein.

         B. As consideration for receipt of said bonus, Employee will be bound
            to a right of first refusal for repurchase of the shares by IMCB of
            any and all IMCB stock obtained as part of this Agreement.

      WHEREFORE, BASED UPON THE FOREGOING RECITALS AND THE TERMS AND CONDITIONS
CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:

      1.    Prior to December 15, 2005, Employee shall purchase shares of IMCB
stock for an aggregate purchase price of up to $9,000.00. Such purchases shall
be made on the open market. In the event Employee completes the stock purchase
as required by this agreement, IMCB shall pay to Employee in the form of a bonus
the lesser of the actual dollar amount of stock purchased including fees and/or
commissions or $9,000, which shall be paid in three annual installments of
$3,000.00 per year, with the first payment due on or before December 15, 2005,
and like annual payments due on or before the 15th day of December of 2006 and
2007. All annual payments shall be subject to standard withholding taxes.

      2.    All shares of IMCB stock obtained as part of this Agreement are
subject to a right of first refusal for repurchase by IMCB.

      3.    The annual bonus payments identified herein shall not be considered
earned until actually paid pursuant to this agreement and to qualify for each
annual payment, Employee must

                                       A-1

<PAGE>

still be a full time employee on each payment date. Any vested and unpaid bonus
will be forfeited if Employee leaves the employment of the bank (1) by his own
volition; or (2) is terminated for just cause. Under the following
circumstances, Employee will become fully vested and will be entitled to be
paid, in cash, the balance of the bonus amount upon the following events:

         (a)  Death;

         (b)  Permanent disability;

         (c)  In the event more than fifty (50%) percent of the stock of IMCB is
              sold constituting a change of control as a result of a merger or
              similar acquisition transaction;

         (d)  In the event that the Employee is re-assigned by IMCB to another
              organization that is not directly controlled by IMCB; or

         (e)  By mutual consent of IMCB and the Employee.

      4.    The benefits contemplated by this agreement are hereby expressly
declared to be non-assignable and any such attempt at assignment shall be void
and of no effect.

      5.    This agreement shall be binding upon and shall inure to the benefit
of the parties and their successors or assigns.

IMCB                                       EMPLOYEE

By: /s/ Curt Hecker                        /s/ Ernest Bengoechea
    ---------------------------            -------------------------------------
    Chief Executive Officer                 Ernest Bengoechea

Date 7/23/04                               Date  7/23/04

                                       A-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]