Document:

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                                                                   EXHIBIT 10.16

                         EXECUTIVE EMPLOYMENT AGREEMENT

      This Amended and Restated EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is
dated as of DECEMBER 17, 2003. The effective date of this Agreement is JANUARY
1, 2002 (the "Effective Date"). The parties to this Agreement ("Parties") are
INTERMOUNTAIN COMMUNITY BANCORP F/K/A PANHANDLE BANCORP, an Idaho corporation
("IMCB"), PANHANDLE STATE BANK, an Idaho state-chartered bank ("PSB") (IMCB and
PSB individually and collectively being "Employer") and JERROLD B. SMITH
("Executive").

                                    RECITALS

      A. Executive is employed by Employer in an executive management capacity,
presently holding the position of President of Panhandle State Bank and
Intermountain Community Bank (ICB), a Division of PSB. The Parties wish to
continue Executive's employment in that capacity under the terms and conditions
of this Agreement.

      B. Executive previously entered into (i) an Executive Employment Agreement
with Employer dated as of January 1, 2002, and (ii) an Executive Severance
Agreement dated as of September 15, 1999, as amended, with Panhandle Bancorp
(the "Change in Control Agreement"), which provides for certain severance
payments to Executive in the event of a change in control of IMCB.

                                    AGREEMENT

1)    TERM OF AGREEMENT. The term of this employment agreement is three (3)
      years, commencing on the Effective Date (the "Term"). The agreement will
      automatically renew every three years unless cancelled by the Board of
      Directors within 60 days of the expiration of the term. Notwithstanding
      the preceding, if a definitive agreement providing for a Change in Control
      (defined below) is entered into (i) on or before the expiration of the
      Term or (ii) within twelve (12) months after Executive's involuntary
      termination other than for Cause, Disability, Retirement or death, then
      expiration of such Term shall be extended through the Severance Protection
      Period (defined below).

2)    EMPLOYMENT. Employer will continue Executive's employment during the Term,
      and Executive accepts employment by Employer on the terms and conditions
      set forth in this Agreement. Executive's title will be "President" for PSB
      and ICB.

3)    DUTIES OF EXECUTIVE. Executive will report directly to the Chief Executive
      Officer of PSB. Executive will be responsible for the following duties:

            a)    Functions as administrative head of staff in absence of CEO

            b)    Assisting in the developing of and compliance with all bank
                  policies

            c)    Responsible for the development and production of the bank's
                  loan and deposit portfolio

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            d)    Responsible for management of branch NIE

            e)    Responsible for development and production of NII of branch
                  banks

            f)    Calling on the most important existing and potential corporate
                  customers

            g)    Responsible for expansion into new markets and recruitment of
                  employees

            h)    Monitoring PSB/ICB's branch progress relative to the financial
                  plan. Directs management to take action accordingly. Reports
                  variances to the CEO.

            i)    Responsible for the development and implementation of the
                  products and services of the Home Loan Center. Oversees
                  staffing requirements and administration.

            j)    Serves on bank committees such as: Executive Management, Human
                  Resources, Loan, ALCO, and other committees assigned by the
                  CEO

            k)    Serves as commercial loan officer to a few of the bank's most
                  important business customers.

            l)    Represents the bank at civic and community activities

            l)    Oversees operations of branch offices. Responsible for
                  efficient operation, adequate staffing, financial planning,
                  goals, marketing within their respective areas, and
                  establishing market share. Monitors progress through financial
                  reports, communication and coordination with each Branch
                  Manager. Recommends operational improvements, policy changes,
                  and strategies relative to financial planning and annual
                  budgeting.

            m)    Conducts regular meetings with Branch managers to analyze and
                  discuss overall branch production, effectiveness, goals, and
                  strategies. Promotes and encourages a "sales and service"
                  culture throughout the branch office system.

            n)    Interviews, hires, trains, supervises and evaluates Branch
                  Managers and Senior Commercial Loan Officers. Performs
                  terminations if necessary after all other options have been
                  exhausted.

            o)    Assists Branch Managers with recruiting branch personnel.

4)    COMMITMENT OF EXECUTIVE. (a) Executive will faithfully and diligently
      perform the duties set forth in Section 3 and such other duties as may be
      assigned to Executive from time to time by IMCB's board of directors (the
      "Board"). Executive will use his best efforts to perform his duties and
      will devote full time and attention to these duties during working hours.
      Executive may engage in non-IMCB business activities with prior Board
      approval, which approval will not be unreasonably withheld.

      (b) In the event that any person extends any proposal or offer which is
      intended to or may result in a Change in Control, defined below (a "Change
      in Control Proposal"), Executive shall, at Employer's request, assist
      Employer in evaluating such proposal or offer. Further, as a condition to
      receipt of the Severance Payment (defined below), Executive agrees not to
      voluntarily resign (including resignation for Good Reason) Executive's
      position with Employer during any period from the receipt of a specific
      Change in Control Proposal up to the consummation or abandonment of the
      transaction contemplated by such Proposal.

5)    SALARY. Executive will receive an annual base salary of $147,500 beginning
      January 1, 2002, to be paid in accordance with PSB's regular payroll
      schedule. The

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      Executive Committee of the Board will review Executive's salary in
      connection with its performance review on an annual basis.

6)    OTHER COMPENSATION. Executive will participate in both the Long-Term
      Incentive Plan and Executive Incentive Plan administered by the Human
      Resource Committee.

            a) Executive is eligible to participate in PSB's 401K retirement
      plan with employer match of 50% of first 6% of salary contributed.

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

            c) As "Additional Consideration" for Executive entering into this
      agreement, IMCB and Executive shall enter into a bonus agreement
      contingent upon Executive purchasing stock, which agreement is referred to
      as "Stock Purchase Agreement for Jerrold B. Smith."

7)    SALARY CONTINUATION PLAN. In consideration of this agreement, IMCB has
      entered into a Salary Continuation Agreement with Executive, substantially
      in the form approved by IMCB's board of directors on October 22, 2003 (the
      "Salary Continuation Agreement").

8)    VACATION AND BENEFITS. Executive 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 Executive and
      $2,000 for Executive'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. Executive shall also be entitled to
      use of a company automobile with gas card.

9)    TERMINATION AND SEVERANCE PROVISIONS. If, during the Term, either Employer
      or Executive terminates Executive's employment with Employer for any
      reason, and provided that such termination does not otherwise entitle
      Executive to receive a Severance Payment (as defined below) under Section
      10 of this Agreement, Executive will be entitled to receive a termination
      payment equal to two (2) times Executive's annual base salary the
      ("Termination Payment"). The Termination Payment shall be paid in one lump
      sum payment, payable upon the date that Executive's employment is
      terminated. Notwithstanding the preceding, in the event that a definitive
      agreement providing for a Change in Control (each as defined below) is
      entered into within twelve (12) months after Executive's involuntary
      termination other than for Cause, Disability, Retirement or death,
      Executive shall be entitled to receive the difference between the
      Severance Payment and the Termination Payment upon the effective date of
      the Change in Control.

10)   CHANGE IN CONTROL/SEVERANCE PAYMENT.

            a)    Payment Events. Subject to the requirements of Section 4(b) of
                  this Agreement, in the event of involuntary termination of
                  Executive's employment with Employer, other than for Cause,
                  Disability, Retirement, (each defined below) or death, or in
                  the event of voluntary termination for Good Reason

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                  (defined below), (i) within the Severance Protection Period
                  after a Change in Control, or (ii) within twelve (12) months
                  before a definitive agreement providing for a Change in
                  Control is entered into, Employer will pay Executive a
                  severance payment in the amount determined pursuant to the
                  next section ("Severance Payment"), payable on the later of
                  the date of termination or the effective date of the Change in
                  Control. The "Severance Protection Period" shall be the period
                  beginning on the effective date of the Change of Control and
                  continuing thereafter for twenty-four (24) months.

            b)    Amount of Payment. The Severance Payment shall be an amount
                  equal to the Payment Multiple (defined below) multiplied by
                  one-twelfth of Executive's compensation as reported on
                  Executive's IRS Form W-2 for the most recent calendar year
                  less compensation payable to Executive that was deferred or
                  carried over from prior years. In the event the Executive is
                  not employed for a full calendar year prior to the Change in
                  Control, the Severance Payment shall be an amount equal to the
                  Payment Multiple multiplied by one-twelfth of Executive's
                  annual base salary. The "Payment Multiple" shall be
                  twenty-four (24). The Severance Payment shall be reduced by an
                  amount equal to any compensation which would be reported on
                  Executive's IRS Form W-2 for the period following the Change
                  in Control; provided, however, the Severance Payment shall not
                  be reduced by the amount of any bonus or other compensation
                  received in the period following the Change in Control that is
                  based on Executive's performance during the period prior to
                  the Change in Control.

11)   EXCISE TAX UNDER INTERNAL REVENUE CODE SECTIONS 280G AND 4999.

            a)    Partial Reimbursement of Excise Tax. If a Change in Control
                  occurs the Executive may become entitled to acceleration of
                  benefits under this Agreement or under any other plan or
                  agreement of or with PSB or IMCB, including accelerated
                  vesting of stock options and acceleration of benefits under
                  any other benefit, compensation, or incentive plan or
                  arrangement with PSB or IMCB (collectively, the "Total
                  Benefits"). If a Change in Control occurs, IMCB and PSB shall
                  cause the certified public accounting firm retained by IMCB as
                  of the date immediately before the Change in Control (the
                  "Accounting Firm") to calculate the Total Benefits and any
                  excise tax payable by the Executive under sections 280G and
                  4999 based upon the Total Benefits. If the Accounting Firm
                  determines that an excise tax is payable, at the same time PSB
                  pays the Change in Control benefit under Section 10 of this
                  Agreement PSB shall also pay to the Executive an amount in
                  cash equal to the excise tax calculated by the Accounting Firm
                  (the "Excise Tax"). The Executive acknowledges and agrees that
                  this Section 11 provides for partial reimbursement only of the
                  final excise tax that may be payable by him, and that
                  additional unreimbursed excise taxes may be payable by him
                  after taking into account the reimbursement payment provided
                  under this Section 11. The partial reimbursement of the excise
                  tax under this Section 11 shall be made in addition to the
                  amount set forth in Section 10.

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            (b)   Calculating the Excise Tax. For purposes of determining
                  whether any of the Total Benefits will be subject to the
                  Excise Tax and for purposes of determining the amount of the
                  Excise Tax,

                  1) Determination of "Parachute Payments" Subject to the Excise
                  Tax: any other payments or benefits received or to be received
                  by the Executive in connection with a Change in Control or the
                  Executive's Termination of Employment (whether under the terms
                  of this Agreement or any other agreement, stock option plan or
                  any other benefit plan or arrangement with PSB or IMCB, any
                  person whose actions result in a Change in Control or any
                  person affiliated with PSB, IMCB, or such person) shall be
                  treated as "parachute payments" within the meaning of section
                  280G(b)(2) of the Internal Revenue Code, and all "excess
                  parachute payments" within the meaning of section 280G(b)(1)
                  shall be treated as subject to the Excise Tax, unless in the
                  opinion of the Accounting Firm such other payments or benefits
                  do not constitute (in whole or in part) parachute payments, or
                  such excess parachute payments represent (in whole or in part)
                  reasonable compensation for services actually rendered within
                  the meaning of section 280G(b)(4) of the Internal Revenue Code
                  in excess (as defined in section 280G(b)(3) of the Internal
                  Revenue Code), or are otherwise not subject to the Excise Tax,

                  2) Calculation of Benefits Subject to Excise Tax: the amount
                  of the Total Benefits that shall be treated as subject to the
                  Excise Tax shall be equal to the lesser of (a) the total
                  amount of the Total Benefits reduced by the amount of such
                  Total Benefits that in the opinion of the Accounting Firm are
                  not parachute payments, or (b) the amount of excess parachute
                  payments within the meaning of section 280G(b)(1) (after
                  applying clause (i), above), and

                  3) Value of Noncash Benefits and Deferred Payments: the value
                  of any noncash benefits or any deferred payment or benefit
                  shall be determined by the Accounting Firm in accordance with
                  the principles of sections 280G(d)(3) and (4) of the Internal
                  Revenue Code.

            (c)   Assumed Marginal Income Tax Rate. For purposes of determining
                  the amount of the partial Excise Tax reimbursement payment to
                  be made under this Section 11, the Executive shall be deemed
                  to pay federal income taxes at the highest marginal rate of
                  federal income taxation in the calendar year in which the
                  partial Excise Tax reimbursement under this Section 11 is to
                  be made and state and local income taxes at the highest
                  marginal rate of taxation in the state and locality of the
                  Executive's residence on the date of Termination of
                  Employment, net of the reduction in federal income taxes that
                  can be obtained from deduction of such state and local taxes
                  (calculated by assuming that any reduction under section 68 of
                  the Internal Revenue Code in the amount of itemized deductions
                  allowable to the Executive applies first to reduce the amount
                  of such state and local income taxes that would

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                  otherwise be deductible by the Executive, and applicable
                  federal FICA and Medicare withholding taxes).

            (d)   Accounting Firm's Determinations Are Final and Binding. All
                  determinations made by the Accounting Firm under this Section
                  11 shall be final and binding on PSB, IMCB, and the Executive.
                  All determinations required to be made under this Section 11 -
                  including the assumptions used to calculate Total Benefits and
                  the Excise Tax - shall be made by the Accounting Firm, which
                  shall provide detailed supporting calculations both to PSB and
                  the Executive.

12)   DEFINITIONS

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

                        1)    Willful misfeasance or gross negligence in the
                              performance of Executive's duties;

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

                        3)    Conduct demonstrably and significantly harmful to
                              the financial condition of the PSB and/or IMCB.

            c)    Change in Control. "Change in Control" shall mean any of the
                  following:

                        1)    Merger. IMCB merges into or consolidates with
                              another corporation, or merges another corporation
                              into IMCB, and as a result less than 50% of the
                              combined voting power of the resulting corporation
                              immediately after the merger or consolidation is
                              held by persons who were the holders of IMCB's
                              voting securities immediately before the merger or
                              consolidation;

                        2)    Acquisition of Significant Share Ownership. A
                              report on Schedule 13D or another form or schedule
                              (other than Schedule 13G) is filed or is required
                              to be filed under sections 13(d) or 14(d) of the
                              Securities Exchange Act of 1934, if the schedule
                              discloses that the filing person or persons acting
                              in concert has or have become the beneficial owner
                              of 25% or more of a class of IMCB's voting
                              securities, or if IMCB does not then have equity
                              securities registered under section 12 of the
                              Securities Exchange Act of 1934 a person or group
                              acting in concert has or have become the
                              beneficial owner of 25% or more of a class of
                              IMCB's voting securities, but this paragraph (2)
                              shall not apply to beneficial ownership of voting
                              shares of IMCB held in a fiduciary capacity by an
                              entity in which IMCB directly or indirectly
                              beneficially owns 50% or more of the outstanding
                              voting securities;

                        3)    Change in Board Composition. During any period of
                              two consecutive years, individuals who constitute
                              IMCB's board of directors at the beginning of the
                              two-year period cease for any reason to constitute
                              at least a majority thereof; provided, however,
                              that -- for purposes of this paragraph (c) -- each
                              director who is first elected by the board (or
                              first nominated by the board for election by
                              stockholders) by a vote of at least two-thirds
                              (2/3) of the directors who were directors at the

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                              beginning of the period shall be deemed to have
                              been a director at the beginning of the two-year
                              period; or

                        4)    Sale of Assets. IMCB sells to a third party all or
                              substantially all of IMCB's assets. For this
                              purpose, sale of all or substantially all of
                              IMCB's assets includes sale of the shares or
                              assets of the PSB alone.

            d)    Change in Control Proposal. "Change in Control Proposal" has
                  the meaning assigned in Section 4(b) of this Agreement.

            e)    Disability. "Disability" means a physical or mental impairment
                  which renders Executive incapable of substantially performing
                  the essential functions of such Executive's position, and
                  which is expected to continue rendering Executive so incapable
                  for the reasonably foreseeable future, with or without
                  reasonable accommodation.

            f)    Retirement. "Retirement" shall mean voluntary termination by
                  Executive in accordance with PSB's retirement policies,
                  including early retirement, if applicable to their salaried
                  employees.

            g)    Good Reason. "Good Reason" shall mean any of the following:

                        1)    Substantial diminution of the Executive's duties
                              compared to the Executive's duties prior to the
                              Change in Control;

                        2)    Substantial diminution of the Executive's
                              compensation compared to the Executive's
                              compensation prior to the Change in Control;

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

13)   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
      Employer or its business operations or customers, unless (1) Employer
      consents to the use or disclosure of its confidential information, (2) the
      use or disclosure is consistent with Executive's duties under this
      Agreement, or (3) disclosure is required by law or court order.
      Confidential information includes, but is not limited to, financial
      information, customer lists, marketing strategies, and business plans.

14)   RETURN OF EMPLOYER PROPERTY. If and when Executive ceases, for any reason,
      to be employed by Employer, Executive must return to Employer all keys,
      pass cards, identification cards and any other property of Employer. At
      the same time, Executive also must return to Employer 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
      Employer. The obligations in this Section include the return of documents
      and other materials which may be in Executive's desk at work, in

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      Executive's car or place of residence, or in any other location under
      Executive's control.

15)   NON-SOLICITATION. Executive shall not solicit or cause to be solicited for
      employment any employee of Employer for a period of two (2) years
      following Executive's termination; nor solicit or cause to be solicited
      the business and/or accounts of customers of Employer for a period of two
      years following Executive's termination. Executive's obligations under
      this Section 15 terminate immediately upon a Change in Control.

16)   NON-COMPETITION. Except as otherwise expressly provided in this Agreement,
      while Executive is employed by Employer and for two years following
      termination of Executive's employment for any reason, , Executive 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 Executive may acquire and passively own an interest not
      exceeding 2% of the total equity interest in a Competing Business.
      Executive's obligations under this Section 16 terminate immediately upon a
      Change in Control. 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 in the State of
      Idaho, or southeastern Oregon, or eastern Washington.

17)   ENFORCEMENT.

      a) Employer and Executive stipulate that, in light of all of the facts and
circumstances of the relationship between Executive and Employer, the agreements
referred to in Sections 15 and 16 (including without limitation their scope,
duration and geographic extent) are fair and reasonably necessary for the
protection of Employer's goodwill and other protectable interests. If a court of
competent jurisdiction should decline to enforce any of those covenants and
agreements, Executive and Employer request the court to reform these provisions
to restrict Executive's ability to compete with Employer to the maximum extent,
in time, scope of activities, and geography, the court finds enforceable.

      b) Executive acknowledges that Employer 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 15 and 16 or threatens
or attempts to do so. For this reason, under these circumstances, Employer, 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 Employer will not be required to post a bond as a condition for the
granting of this relief.

18) ADEQUATE CONSIDERATION. Executive specifically acknowledges the receipt of
adequate consideration, including without limitation the Termination Payment,
identified

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in Section 9, if due and owing, for the covenants contained in Sections 15 and
16 and that Employer is entitled to require him to comply with those Sections
regardless of the reasons(s) for Executive's separation of employment with
Employer. Sections 15 and 16 will survive termination of this Agreement, but
will expire no later than two years from the date of the termination of
employment or the maturity of this agreement, whichever is later. Executive
represents that if his employment is terminated, whether voluntarily or
involuntarily, Executive has experience and capabilities sufficient to enable
Executive to obtain employment in areas which do not violate this Agreement and
that Employer's enforcement of a remedy by way of injunction will not prevent
Executive from earning a livelihood.

19) ENTIRE AGREEMENT. This agreement constitutes the entire understanding
between the parties concerning its subject matter and supersedes all prior
agreements, including that certain employment agreement between Executive and
Employer effective January 1, 2002 and the Change in Control Agreement.
Accordingly, Executive specifically waives the terms of and all of Executive's
rights under any severance provisions of any employment and/or change-in-control
agreements, whether written or oral, previously entered into with PSB and/or
IMCB. Notwithstanding the preceding, the terms of this agreement are separate
from and do not supercede the terms of the Salary Continuation Agreement.

20)   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, shall, 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 shall 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 shall
                  render a written decision, naming the substantially prevailing
                  party in the action, and shall award such party all costs and
                  expenses incurred, including reasonable attorneys' fees.
                  Notwithstanding the foregoing, if Executive violates Sections
                  13 or 14, Employer will have the right to initiate the court
                  proceedings described in Section 15(b), in lieu of an
                  arbitration proceeding under this Section. Employer may
                  initiate these proceedings wherever appropriate within the
                  State of Idaho; but Executive will consent to venue and
                  jurisdiction in Bonner 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 shall be entitled to

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                  recover from the non-prevailing party any and all such fees,
                  costs and expenses, including attorneys' fees.

            d)    Successors. This Agreement shall bind and inure to the benefit
                  of the Parties and each of their respective affiliates, legal
                  representatives, heirs, successors and assigns.

            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 shall not be
                  construed to modify or otherwise affect in any respect any of
                  the provisions of the Agreement.

            g)    Counsel Review. Executive 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.

IMCB                                        EXECUTIVE
Intermountain Community Bancorp,            Jerrold B. Smith
an Idaho Corporation                        President
                                            Panhandle State Bank and
                                            Intermountain Community Bank

/s/ Curt Hecker                             /s/ Jerrold B. Smith
----------------                            --------------------
Curt Hecker                                 Jerrold B. Smith
President & CEO                             Date: _____________
Date: ______________

PSB
Panhandle State Bank,
an Idaho state chartered bank

/s/ Curt Hecker
--------------------
Curt Hecker
Chief Executive Officer
Date:  _____________

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                FIRST AMENDMENT OF EXECUTIVE EMPLOYMENT AGREEMENT

      This First Amendment of Executive Employment Agreement (the "Amendment")
is made and entered into as of March 24, 2004. The parties to this Amendment
(the "Parties") are INTERMOUNTAIN COMMUNITY BANCORP F/K/A PANHANDLE BANCORP, an
Idaho corporation ("IMCB"), PANHANDLE STATE BANK, an Idaho state-chartered bank
("PSB") (IMCB and PSB individually and collectively being "Employer") and
JERROLD B. SMITH ("Executive").

                                    RECITALS

      A. The Parties entered into an Executive Employment Agreement dated as of
December 17, 2003 and effective as of January 1, 2002 (the "Agreement"), which
Agreement governs the terms of Executive's employment with Employer.

      B. Among other things, the Agreement addresses the Severance Payment to be
received by Executive in the event of a Change in Control. The Agreement sets
forth a formula for determining the amount of the Severance Payment. Since the
Employment Agreement was executed, the Parties have determined that the formula
set forth in the Agreement does not accurately reflect the Parties' intent.

      C. In order to manifest the Parties' intent regarding the Severance
Payment, the Parties wish to amend the terms of the Agreement as set forth in
this Amendment. Unless otherwise defined in this Amendment, capitalized terms
used in this Amendment have the meanings assigned to them in the Agreement.

                               TERMS OF AMENDMENT

      In consideration of the foregoing, the Parties agree as follows:

      1. Section 10 of the Agreement is amended by deleting subsection (b) in
its entirety and inserting the following in its place:

            Amount of Payment. The Severance Payment shall be an amount equal to
      two (2) times the average of the total base compensation and short term
      bonus received by Executive for each of the two most recent calendar
      years.

      2. This Amendment may be executed in one or more counterparts, each of
will be deemed an original, but all of which taken together will constitute one
and the same document.

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Dated as of March 24, 2004.

IMCB                                        EXECUTIVE
Intermountain Community Bancorp,            Jerrold B. Smith
an Idaho Corporation                        President
                                            Panhandle State Bank and
                                            Intermountain Community Bank

/s/ Curt Hecker                             /s/ Jerrold B. Smith
-----------------                           -----------------------
Curt Hecker                                 Jerrold B. Smith
President & CEO                             Date: _________________
Date: _______________

PSB
Panhandle State Bank,
an Idaho State Chartered Bank

/s/ Curt Hecker
--------------------
Curt Hecker
Chief Executive Officer
Date: _________________

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               SECOND AMENDMENT OF EXECUTIVE EMPLOYMENT AGREEMENT

      This SECOND AMENDMENT OF EXECUTIVE EMPLOYMENT AGREEMENT (this "Amendment")
is dated as of this 4th day of March, 2005 by and among Jerrold B. Smith,
Executive Vice President (the "Executive") of Intermountain Community Bancorp,
Inc., an Idaho corporation ("Intermountain"), and President of Panhandle State
Bank, an Idaho bank and wholly owned subsidiary of Intermountain (the "Bank").

      WHEREAS, the Executive, Intermountain, and the Bank entered into an
Executive Employment Agreement dated as of December 17, 2003 (as amended by the
First Amendment of Executive Employment Agreement dated as of March 24, 2004,
the "Executive Employment Agreement"), which agreement establishes the terms and
conditions of the Executive's employment with the Bank and Intermountain,

      WHEREAS, the parties desire now to amend certain provisions of the
Executive Employment Agreement, consistent with the terms of section 20(e) of
that agreement, and

      WHEREAS, the parties intend that the amendments of the Executive
Employment Agreement made by this Amendment shall become effective immediately,
and that the Executive Employment Agreement shall, as amended, remain in full
force and effect according to its terms.

      NOW THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.

      1. DELETION OF THE ARBITRATION CLAUSE AND LEGAL FEE CLAUSE IN SECTIONS
20(b) AND 20(c); REPLACEMENT WITH A NEW LEGAL FEE REIMBURSEMENT CLAUSE.
Paragraph (b) of section 20 of the Executive Employment Agreement, captioned
"Arbitration," and paragraph (c) of section 20, captioned "Attorney Fees," shall
be deleted in their entirety and replaced by a new paragraph (b), captioned
"Payment of Legal Fees." The deleted paragraphs (b) and (c) are as follows -

      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, shall, 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 shall 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
            shall render a written decision, naming the substantially prevailing
            party in the action, and shall award such party all costs and
            expenses incurred, including reasonable attorneys' fees.
            Notwithstanding the foregoing, if Executive violates Sections 13 or
            14, Employer will have the right to initiate the court proceedings
            described in Section 15(b), in lieu of an arbitration proceeding
            under this Section. Employer may initiate these proceedings wherever
            appropriate within the State of Idaho; but Executive will consent to
            venue and jurisdiction in Bonner County, Idaho.

<PAGE>

      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 shall be entitled to recover from the non-prevailing party any
            and all such fees, costs and expenses, including attorneys' fees.

      The deleted paragraphs (b) and (c) of section 20 shall be replaced by new
paragraph (b), as follows -

      b)    Payment of Legal Fees. Employer is aware that after a Change in
            Control management could cause or attempt to cause Employer to
            refuse to comply with the obligations under this Agreement, or could
            institute or cause or attempt to cause Employer to institute
            litigation seeking to have this Agreement declared unenforceable, or
            could take or attempt to take other action to deny Executive the
            benefits intended under this Agreement. In these circumstances the
            purpose of this Agreement would be frustrated. It is Employer's
            intention that the Executive not be required to incur the expenses
            associated with the enforcement of his rights under this Agreement,
            whether by litigation or other legal action, because the cost and
            expense thereof would substantially detract from the benefits
            intended to be granted to the Executive hereunder. It is Employer's
            intention that the Executive not be forced to negotiate settlement
            of his rights under this Agreement under threat of incurring
            expenses. Accordingly, if after a Change in Control occurs it
            appears to the Executive that (a) Employer has failed to comply with
            any of its obligations under this Agreement, or (b) Employer or any
            other person has taken any action to declare this Agreement void or
            unenforceable, or instituted any litigation or other legal action
            designed to deny, diminish, or to recover from the Executive the
            benefits intended to be provided to the Executive hereunder,
            Employer irrevocably authorize the Executive from time to time to
            retain counsel of his choice, at Employer's expense as provided in
            this paragraph (b), to represent the Executive in connection with
            the initiation or defense of any litigation or other legal action,
            whether by or against Employer or any director, officer,
            stockholder, or other person affiliated with Employer, in any
            jurisdiction. Notwithstanding any existing or previous
            attorney-client relationship between Employer and any counsel chosen
            by the Executive under this paragraph (b), Employer irrevocably
            consents to the Executive entering into an attorney-client
            relationship with that counsel, and Employer and the Executive agree
            that a confidential relationship shall exist between the Executive
            and that counsel. The fees and expenses of counsel selected from
            time to time by the Executive as provided in this section shall be
            paid or reimbursed to the Executive by Employer on a regular,
            periodic basis upon presentation by the Executive of a statement or
            statements prepared by such counsel in accordance with such
            counsel's customary practices, up to a maximum aggregate amount of
            $500,000, whether suit be brought or not, and whether or not
            incurred in trial, bankruptcy, or appellate proceedings. Employer's
            obligation to pay the Executive's legal fees provided by this
            paragraph (b) operates separately from and in addition to any legal
            fee reimbursement obligation Employer may have with the Executive
            under any separate severance, employment, salary continuation, or
            other agreement. Anything in this paragraph (b) to the contrary
            notwithstanding however, Employer shall not be required to pay or
            reimburse the Executive's legal expenses if doing so would violate
            section 18(k) of the Federal Deposit Insurance Act [12 U.S.C.
            1828(k)] and Rule 359.3 of the Federal Deposit Insurance Corporation
            [12 CFR 359.3].

      Paragraphs (d) through (h) of section 20 of the Executive Employment
Agreement shall remain in full force and effect, except that they shall be
redesignated paragraphs (c) through (g).

<PAGE>

      2. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of will be deemed an original, but all of which taken
together will constitute one and the same document.

      IN WITNESS WHEREOF, this Second Amendment of Executive Employment
Agreement has been executed by Jerrold B. Smith, Intermountain Community
Bancorp, Inc., and Panhandle State Bank as of the date first written above.

EXECUTIVE                              PANHANDLE STATE BANK

/s/ Jerrold B. Smith                   By: /s/ Curt Hecker
-----------------------                    --------------------
Jerrold B. Smith                               Curt Hecker
                                       Its: Chief Executive Officer

                                       INTERMOUNTAIN COMMUNITY BANCORP, INC.

                                       By: /s/ Curt Hecker
                                           -----------------------
                                            Curt Hecker
                                       Its: President and Chief Executive
                                            Officer<PAGE>

                                                                   EXHIBIT 10.18

                          EXECUTIVE SEVERANCE AGREEMENT

      This Amended and Restated EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is
dated as of DECEMBER 17, 2003 (the "Effective Date"). The parties to this
Agreement ("Parties") are PANHANDLE STATE BANK ("PSB"), and DOUG WRIGHT
("Executive"). This Agreement has been ratified by INTERMOUNTAIN COMMUNITY
BANCORP ("IMCB"), the parent company of PSB.

A.    Executive is employed by PSB in a managerial capacity, presently holding
      the position of EXECUTIVE VICE PRESIDENT & CHIEF OPERATING OFFICER,
      PANHANDLE STATE BANK.

B.    PSB wishes to ensure the continued availability of Executive's services in
      the event of a change in the control of PSB, thereby allowing PSB to
      maximize the benefits obtainable from any such change. To that end, PSB
      desires to provide incentive for Executive's continued employment with
      PSB.

NOW THEREFORE, PSB and Executive agree as follows:

                                    AGREEMENT

1.    EFFECTIVE DATE AND TERM. As of the Effective Date, this Agreement shall be
      a binding obligation of the parties, not subject to revocation or
      amendment except by mutual consent or in accordance with its terms. The
      term of this Agreement ("Term") shall commence as of the Effective Date
      and shall expire upon Executive's termination of employment with PSB.
      Notwithstanding the preceding, if a definitive agreement providing for a
      Change in Control (defined below) is entered into (i) on or before the
      expiration of the Term or (ii) within twelve (12) months after Executive's
      involuntary termination other than for Cause, Disability, Retirement or
      death, then expiration of such Term shall be extended through the
      Severance Protection Period (defined below).

2.    COMMITMENT OF EXECUTIVE. In the event that any person extends any proposal
      or offer which is intended to or may result in a Change in Control,
      defined below (a "Change in Control Proposal"), Executive shall, at PSB's
      request, assist PSB and/or IMCB in evaluating such proposal or offer.
      Further, as a condition to receipt of the Severance Payment (defined
      below), Executive agrees not to voluntarily resign (including resignation
      for Good Reason) Executive's position with PSB during any period from the
      receipt of a specific Change in Control Proposal up to the consummation or
      abandonment of the transaction contemplated by such Proposal.

3.    SEVERANCE PAYMENT.

            a)    Payment Events. Subject to the requirements of Section 2 of
                  this Agreement, in the event of involuntary termination of
                  Executive's employment with PSB, other than for Cause,
                  Disability, Retirement,

<PAGE>

                  (each defined below) or death, or in the event of voluntary
                  termination for Good Reason (defined below), (i) within the
                  Severance Protection Period after a Change in Control, or (ii)
                  within twelve (12) months before a definitive agreement
                  providing for a Change in Control is entered into, PSB will
                  pay Executive a severance payment in the amount determined
                  pursuant to the next section ("Severance Payment"), payable on
                  the later of the date of termination or the effective date of
                  the Change in Control. The "Severance Protection Period" shall
                  be the period beginning on the effective date of the Change of
                  Control and continuing thereafter for twenty-four (24) months.

            b)    Amount of Payment. The Severance Payment shall be an amount
                  equal to two (2) times the average of the total base
                  compensation and short term bonus payments received by
                  Executive for each of the two most recent calendar years.

            c)    Limitation on Payment. Notwithstanding anything in this
                  Agreement to the contrary, the Severance Payment shall not
                  exceed an amount equal to One Dollar ($1.00) less that the
                  amount which would cause the payment, together with any other
                  payments received from PSB and/or IMCB to be a "parachute
                  payment" as defined in Section 280G(b)(2)(A) of the Internal
                  Revenue Code of 1986, as amended.

4.    DEFINITIONS

            a)    IMCB. "IMCB" means Intermountain Community Bancorp.

            b)    PSB. "PSB" means Panhandle State Bank. PSB is a wholly owned
                  subsidiary of IMCB.

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

                        1)    Willful misfeasance or gross negligence in the
                              performance of Executive's duties;

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

                        3)    Conduct demonstrably and significantly harmful to
                              the financial condition of the PSB and/or IMCB.

            c)    Change in Control. "Change in Control" shall mean any of the
                  following:

                        1)    Merger. IMCB merges into or consolidates with
                              another corporation, or merges another corporation
                              into IMCB, and as a result less than 50% of the
                              combined voting power of the resulting corporation
                              immediately after the merger or consolidation is
                              held by persons who were the holders of IMCB's
                              voting securities immediately before the merger or
                              consolidation;

                        2)    Acquisition of Significant Share Ownership. A
                              report on Schedule 13D or another form or schedule
                              (other than Schedule 13G) is filed or is required
                              to be filed under sections 13(d) or 14(d) of the
                              Securities Exchange Act of 1934, if the

                                       2
<PAGE>

                              schedule discloses that the filing person or
                              persons acting in concert has or have become the
                              beneficial owner of 25% or more of a class of
                              IMCB's voting securities, or if IMCB does not then
                              have equity securities registered under section 12
                              of the Securities Exchange Act of 1934 a person or
                              group acting in concert has or have become the
                              beneficial owner of 25% or more of a class of
                              IMCB's voting securities, but this paragraph (2)
                              shall not apply to beneficial ownership of voting
                              shares of IMCB held in a fiduciary capacity by an
                              entity in which IMCB directly or indirectly
                              beneficially owns 50% or more of the outstanding
                              voting securities;

                        3)    Change in Board Composition. During any period of
                              two consecutive years, individuals who constitute
                              IMCB's board of directors at the beginning of the
                              two-year period cease for any reason to constitute
                              at least a majority thereof; provided, however,
                              that -- for purposes of this paragraph (c) -- each
                              director who is first elected by the board (or
                              first nominated by the board for election by
                              stockholders) by a vote of at least two-thirds
                              (2/3) of the directors who were directors at the
                              beginning of the period shall be deemed to have
                              been a director at the beginning of the two-year
                              period; or

                        4)    Sale of Assets. IMCB sells to a third party all or
                              substantially all of IMCB's assets. For this
                              purpose, sale of all or substantially all of
                              IMCB's assets includes sale of the shares or
                              assets of the PSB alone.

            d)    Change in Control Proposal. "Change in Control Proposal" has
                  the meaning assigned in Section 2 of this Agreement.

            e)    Disability. "Disability" means a physical or mental impairment
                  which renders Executive incapable of substantially performing
                  the essential functions of such Executive's position, and
                  which is expected to continue rendering Executive so incapable
                  for the reasonably foreseeable future, with or without
                  reasonable accommodation.

            f)    Retirement. "Retirement" shall mean voluntary termination by
                  Executive in accordance with PSB's retirement policies,
                  including early retirement, if applicable to their salaried
                  employees.

            g)    Good Reason. "Good Reason" shall mean any of the following:

                        1)    Substantial diminution of the Executive's duties
                              compared to the Executive's duties prior to the
                              Change in Control;

                        2)    Substantial diminution of the Executive's
                              compensation compared to the Executive's
                              compensation prior to the Change in Control;

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

                                       3
<PAGE>

5.    NOT AN EMPLOYMENT AGREEMENT. Nothing in this Agreement, express or
      implied, is intended to confer upon Executive the right to employment with
      PSB. Accordingly, except with respect to the Severance Payment, this
      Agreement shall have no effect on the determination of any compensation
      payable by PSB to Executive, or upon any of the other terms of Executive's
      employment with PSB. The specific arrangements referred to herein are not
      intended to exclude any other benefits which may be available to Executive
      upon a termination of employment with PSB pursuant to employee benefit
      plans of PSB or otherwise.

6.    WITHHOLDING. All payments required to be made by PSB hereunder to
      Executive shall be subject to the withholding of such amounts, if any,
      relating to tax and other payroll deductions as PSB may reasonably
      determine should be withheld pursuant to any applicable law or regulation.

7.    ASSIGNABILITY. PSB may assign the Agreement and its rights hereunder in
      whole, but not in part, to any corporation, bank or other entity with or
      into which PSB may hereafter merge or consolidate or to which PSB may
      transfer all or substantially all of its assets, if in any such case said
      corporation, bank or other entity shall by operation of law or expressly
      in writing assume all obligations of PSB hereunder as fully as if it had
      been originally made a party hereto, but may not otherwise assign this
      Agreement or its rights hereunder. Executive may not assign or transfer
      this Agreement or any rights or obligations hereunder.

8.    ENTIRE AGREEMENT. This agreement constitutes the entire understanding
      between the parties concerning its subject matter and supersedes all prior
      agreements, including that certain agreement between Executive and PSB
      dated May 31, 2002. Accordingly, Executive specifically waives the terms
      of and all of Executive's rights under any severance provisions of any
      employment and/or change-in-control agreements, whether written or oral,
      previously entered into with PSB and/or IMCB.

9.    GENERAL 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, shall, 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 shall 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 shall
                  render a written decision, naming the substantially prevailing
                  party in the action, and shall award such party all costs and
                  expenses incurred, including reasonable attorneys' fees.

                                       4
<PAGE>

            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 shall be entitled to
                  recover from the non-prevailing party any and all such fees,
                  costs and expenses, including attorneys' fees.

            d)    Successors. This Agreement shall bind and inure to the benefit
                  of the Parties and each of their respective affiliates, legal
                  representatives, heirs, successors and assigns.

            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 shall not be
                  construed to modify or otherwise affect in any respect any of
                  the provisions of the Agreement.

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

PSB                                         Executive
Panhandle State Bank                        Executive Vice President &
                                            Chief Operating Officer

By: /s/ Curt Hecker                         /s/ Doug Wright
    --------------------------              ------------------
    Curt Hecker, CEO        Date            Doug Wright     Date

AGREED TO AND RATIFIED by:

IMCB
Intermountain Community Bancorp

By: /s/ Curt Hecker
   -------------------
     Curt Hecker
     President & CEO   Date

                                       5
<PAGE>

                              AMENDMENT NUMBER ONE
                      OF THE EXECUTIVE SEVERANCE AGREEMENT

      This AMENDMENT NUMBER ONE OF THE EXECUTIVE SEVERANCE AGREEMENT (this
"Amendment") is dated as of this 4th day of March, 2005 by and among Douglas
Wright, Executive Vice President and Chief Financial Officer (the "Executive")
of Intermountain Community Bancorp, Inc., an Idaho corporation
("Intermountain"), and Panhandle State Bank, an Idaho bank and wholly owned
subsidiary of Intermountain (the "Bank").

      WHEREAS, the Executive, Intermountain, and the Bank entered into an
Executive Severance Agreement dated as of December 17, 2003, which provides for
payment of severance to the Executive if he is terminated involuntarily but
without cause within 24 months after a change in control or within 12 months
before a definitive agreement for a change in control is entered into, or if the
executive voluntarily terminates his employment for good reason during those
periods,

      WHEREAS, the parties desire now to amend certain provisions of the
December 17, 2003 Executive Severance Agreement, consistent with the terms of
section 9(e) of that agreement, and

      WHEREAS, the parties intend that the amendments of the December 17, 2003
Executive Severance Agreement made by this Amendment shall become effective
immediately, and that the December 17, 2003 Executive Severance Agreement shall,
as amended, remain in full force and effect according to its terms.

      NOW THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.

      1. DELETION OF THE ARBITRATION CLAUSE AND LEGAL FEE CLAUSE IN SECTIONS
9(b) AND 9(c); REPLACEMENT WITH A NEW LEGAL FEE REIMBURSEMENT CLAUSE. Paragraph
(b) of section 9 of the December 17, 2003 Executive Severance Agreement,
captioned "Arbitration," and paragraph (c) of section 9, captioned "Attorney
Fees," shall be deleted in their entirety and replaced by a new paragraph (b),
captioned "Payment of Legal Fees." The deleted paragraphs (b) and (c) are as
follows -

      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, shall, 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 shall 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
            shall render a written decision, naming the substantially prevailing
            party in the action, and shall award such party all costs and
            expenses incurred, including reasonable attorneys' fees.

      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

<PAGE>

            prevailing party shall be entitled to recover from the
            non-prevailing party any and all such fees, costs and expenses,
            including attorneys' fees.

      The deleted paragraphs (b) and (c) of section 9 shall be replaced by new
paragraph (b), as follows -

      b)    Payment of Legal Fees. PSB and IMCB are aware that after a Change in
            Control management could cause or attempt to cause PSB and IMCB to
            refuse to comply with the obligations under this Agreement, or could
            institute or cause or attempt to cause PSB or IMCB to institute
            litigation seeking to have this Agreement declared unenforceable, or
            could take or attempt to take other action to deny Executive the
            benefits intended under this Agreement. In these circumstances the
            purpose of this Agreement would be frustrated. It is PSB's and
            IMCB's intention that the Executive not be required to incur the
            expenses associated with the enforcement of his rights under this
            Agreement, whether by litigation or other legal action, because the
            cost and expense thereof would substantially detract from the
            benefits intended to be granted to the Executive hereunder. It is
            PSB's and IMCB's intention that the Executive not be forced to
            negotiate settlement of his rights under this Agreement under threat
            of incurring expenses. Accordingly, if after a Change in Control
            occurs it appears to the Executive that (a) either of PSB or IMCB
            has failed to comply with any of its obligations under this
            Agreement, or (b) either of PSB or IMCB or any other person has
            taken any action to declare this Agreement void or unenforceable, or
            instituted any litigation or other legal action designed to deny,
            diminish, or to recover from the Executive the benefits intended to
            be provided to the Executive hereunder, PSB and IMCB irrevocably
            authorize the Executive from time to time to retain counsel of his
            choice, at PSB's and IMCB's expense as provided in this paragraph
            (b), to represent the Executive in connection with the initiation or
            defense of any litigation or other legal action, whether by or
            against PSB or IMCB or any director, officer, stockholder, or other
            person affiliated with PSB or IMCB, in any jurisdiction.
            Notwithstanding any existing or previous attorney-client
            relationship between PSB or IMCB and any counsel chosen by the
            Executive under this paragraph (b), PSB and IMCB irrevocably consent
            to the Executive entering into an attorney-client relationship with
            that counsel, and PSB and IMCB and the Executive agree that a
            confidential relationship shall exist between the Executive and that
            counsel. The fees and expenses of counsel selected from time to time
            by the Executive as provided in this section shall be paid or
            reimbursed to the Executive by PSB or IMCB on a regular, periodic
            basis upon presentation by the Executive of a statement or
            statements prepared by such counsel in accordance with such
            counsel's customary practices, up to a maximum aggregate amount of
            $300,000, whether suit be brought or not, and whether or not
            incurred in trial, bankruptcy, or appellate proceedings. PSB's and
            IMCB's obligation to pay the Executive's legal fees provided by this
            paragraph (b) operates separately from and in addition to any legal
            fee reimbursement obligation PSB or IMCB may have with the Executive
            under any separate severance, employment, salary continuation, or
            other agreement. Anything in this paragraph (b) to the contrary
            notwithstanding however, PSB and IMCB shall not be required to pay
            or reimburse the Executive's legal expenses if doing so would
            violate section 18(k) of the Federal Deposit Insurance Act [12
            U.S.C. 1828(k)] and Rule 359.3 of the Federal Deposit Insurance
            Corporation [12 CFR 359.3].

      Paragraphs (d) through (f) of section 9 of the December 17, 2003 Executive
Severance Agreement shall remain in full force and effect, except that they
shall be redesignated paragraphs (c) through (e).

<PAGE>

      2. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of will be deemed an original, but all of which taken
together will constitute one and the same document.

      IN WITNESS WHEREOF, this Amendment Number One of the Executive Severance
Agreement has been executed by Douglas Wright, Intermountain Community Bancorp,
Inc., and Panhandle State Bank as of the date first written above.

EXECUTIVE                                PANHANDLE STATE BANK

/s/ Douglas Wright                       By: /s/ Curt Hecker
---------------------                        --------------------------
Douglas Wright                               Curt Hecker
                                         Its: Chief Executive Officer

                                         INTERMOUNTAIN COMMUNITY BANCORP, INC.

                                         By: /s/ Curt Hecker
                                             -----------------
                                             Curt Hecker
                                         Its: President and Chief Executive
                                              Officer

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