Intermountain Community Bancorp Reports Q3 2009 Results with Improving Asset Quality, Solid Liquidity and 13.1% Total Risk Based Capital Ratio

http://www.businesswire.com/news/home/20091030005233/en

SANDPOINT, Idaho--(Business Wire)--
Intermountain Community Bancorp (OTCBB:IMCB), the holding company for Panhandle
State Bank, reported third quarter 2009 financial results with strong deposit
growth, lower loan delinquencies, improving asset quality, solid liquidity and
capital ratios. As credit quality metrics improved, provisioning for loan losses
moderated in the third quarter generating a net loss applicable to common
stockholders of $2.7 million, or $0.32 per share, down substantially from the
net loss applicable to common stockholders of $11.4 million, or $1.37 per share,
in the preceding quarter. In the third quarter of 2008, net income totaled
$226,000, or $0.03 per share.

For the first nine months of 2009, the net loss applicable to stockholders was
$14.6 million, or $1.75 per share, and included a $25.2 million provision for
loan losses and $1.2 million preferred dividend paid to the U.S. Treasury,
versus net income of $4.1 million, or $0.49 per diluted share, with a loan loss
provision of $4.9 million and no preferred dividend in the same period of 2008.

Third Quarter 2009 Highlights (at or for the period ended Sept. 30, 2009,
compared to Sept. 30, 2008 or June 30, 2009)

* Deposits increased 8.9% year-over-year.
* Capital ratios are substantially above minimum regulatory levels for well
capitalized institutions; Risk Based Capital Ratio is 13.1% and Tier 1 Leverage
Ratio is 9.4%.
* Liquidity continues at historically high levels represented by cash and cash
equivalents, marketable securities, local deposit growth and borrowing line
availability.
* Reserves for potential loan losses increased substantially year-over-year,
with the allowance for loan loss to total loans ratio at 2.46% compared to 1.67%
a year ago.
* Asset quality improved from the immediate prior quarter with nonperforming
assets (NPAs) to total assets falling to 3.47% from 3.73% and loan delinquencies
(30 days past due and over) down to 1.48% from 2.10%.
* Book value per common share was $8.63 and tangible book value per common share
was $7.18.
* Headquarters building sale leaseback was completed, enhancing cash management
and liquidity.
* Our Powered by Community initiative is gaining momentum throughout the Idaho,
Eastern Oregon and Eastern Washington market areas. Recent efforts include
organizing and hosting small business improvement seminars, funding affordable
housing organizations and initiatives, and working with non-profit boards and
staff to improve fundraising efforts.

"We are starting to see credit metrics improve this quarter, with total
classified loans leveling off, loan delinquencies falling, and nonperforming
asset levels moderating from the preceding quarter, as the pace of new
non-performing loans slowed more than those that were resolved or charged down,"
said Curt Hecker, Chief Executive Officer. "We are also encouraged by the
increasing activity in the greater Boise market, where residential homes are
selling and investor activity is increasing. Boise and the surrounding
communities in Southwest Idaho is one of the areas hardest hit by the recession,
and the residential construction industry there has been one of the sources of
our credit quality issues. Fortunately, we have limited exposure to commercial
real estate in any of our markets, particularly non-owner occupied commercial
real estate. Our concentration ratios for total commercial real estate and
non-owner occupied rank well below our peer group."

"We continue to maintain high levels of liquidity and we have built solid
reserves against loan losses," continued Hecker. "Our proactive approach to
working with struggling customers, and the local stimulus efforts we are
creating through our Powered by Community initiative are helping to build
positive change in our communities."

Asset Quality and Credit Review

While credit quality remains challenged by the weak economy and falling real
estate values, third quarter results showed some improvement over the preceding
quarter. At September 30, 2009, nonperforming loans fell $5.2 million, and total
NPAs fell $4.4 million from the preceding quarter. At quarter end, NPAs to total
assets fell to 3.47% from 3.73% in the preceding quarter. Loan delinquencies (30
days or more past due) also declined during the third quarter to 1.48% from
2.10% of total loans at the end of the second quarter.

Residential land and construction assets continue to comprise most of the
nonperforming loans and OREO totals, reflecting the weakness in the housing
market. "The geographic breakout of the nonperforming loans below reflects both
the strong market presence we have built in Northern Idaho - Eastern Washington
and the progress we have made in the greater Boise market through property sales
and loan writedowns we have already booked," said Hecker. The following table
summarizes nonperforming assets by geographic region.

Southwest
North Idaho Idaho,
NPA by location - Eastern Magic Valley Greater Boise excluding
September 30, 2009 Washington Idaho Area Boise Other Total
(Dollars in thousands)
Commercial $ 2,903 $ 350 $ 516 $ 190 $ - $ 3,959 10.8 %
Commercial real estate 2,051 1,149 402 9 32 3,643 9.9 %
Commercial construction, including all land development loans 2,267 2,355 4,163 1,675 2,875 13,335 36.3 %
Multifamily - 188 - - - 188 0.5 %
Residential real estate 2,278 149 1,668 984 103 5,182 14.1 %
Residential construction 9,401 - 914 - - 10,315 28.1 %
Consumer 52 28 21 1 - 102 0.3 %
Total $ 18,952 $ 4,219 $ 7,684 $ 2,859 $ 3,010 $ 36,724 100.0 %

Percent of total NPA 51.6 % 11.5 % 20.9 % 7.8 % 8.2 % 100.0 %

"Our loan portfolio is spread throughout our market areas," noted Hecker, "with
about 50% of the portfolio in north Idaho and eastern Washington based on branch
totals, 18% in southwest Idaho and eastern Oregon, 14% in the greater Boise
area, and 8% in the Magic Valley area of southern Idaho. Generally, North Idaho,
Spokane and the Magic Valley economies and real estate markets have held up much
better than the Boise areas through this downturn. Much of our portfolio in
southwestern Idaho is resident in the `Tri-County` area along the border of
Idaho and Oregon, which are largely agribusiness communities, and are doing
relatively well. We have been focused on resolving problem credits throughout
our market areas, but particularly in the Boise area."

Balance Sheet and Loan Portfolio Summary:

As of September 30, 2009, assets totaled $1.06 billion, a decrease of 4.1% in
the quarter and a 0.9% increase from a year ago. Liquidation of problem loans,
conservative balance sheet management and credit underwriting, together with
lower borrowing demand from credit-worthy borrowers, combined to create a
moderate decrease in loan balances during the third quarter. "As part of our
Powered by Community initiative, we are continuing to meet the financing needs
of our customers, although the economic environment has dampened loan demand in
most of our markets," Hecker said.

INTERMOUNTAIN COMMUNITY BANCORP
LOANS BY CATEGORIES

(Dollars in thousands) September 30, 2009 June 30, 2009 September 30, 2008

Commercial $ 222,381 31.1 % $ 227,857 31.0 % $ 231,364 29.7 %
Commercial real estate 176,347 24.6 164,272 22.4 143,239 18.4
Commercial construction, includes all land development loans 74,032 10.3 76,794 10.5 85,285 10.9
Multifamily 17,938 2.5 18,093 2.5 18,729 2.4
Residential real estate 94,659 13.2 95,617 13.0 107,175 13.7
Residential construction 105,960 14.8 124,076 16.9 164,846 21.1
Consumer 19,424 2.7 22,290 3.0 24,123 3.1
Municipal 5,835 0.8 5,588 0.7 5,182 0.7
Total loans receivable 716,576 100.0 % 734,587 100.0 % 779,943 100.0 %
Net deferred origination fees 84 24 (285 )
Allowance for losses on loans (17,613 ) (24,300 ) (13,033 )
Loans receivable, net $ 699,047 $ 710,311 $ 766,625

"Small Business Administration loans continue to be popular with business owners
in our markets, and we are continuing to see mortgage refinancing, reflecting
historically low mortgage rates. "Year-over-year, our land development and
commercial construction loans fell almost $11.3 million to 10.3% of the
portfolio and residential construction balances are down $59 million to 14.8% of
the overall portfolio," Hecker noted.

"Commercial real estate loans grew to 24.6% of the portfolio, up $33 million
from the same period last year. Virtually all of this increase is comprised of
owner-occupied loans made to established, profitable businesses. Agricultural
lending, which comprises about half of our commercial loans, continues to
contribute to overall loan quality, in part because we focus on making operating
loans that renew annually. In addition, we have limited exposure to agricultural
real estate or equipment loans and virtually no exposure to the highly volatile
dairy industry."

Total deposits increased $11.1 million, or 1.3%, over June 30, 2009, and $68.3
million, or 8.9%, from September 30, 2008 to a total of $838.7 million. Retail
core deposits now total $657.6 million, compared to $655.3 million at June 30,
2009 and $629.2 million a year ago, representing increases of 0.1% and 4.5%,
respectively. Deposits gathered within the bank`s branch footprint increased to
$762.5 million at the end of the quarter, compared to $717.6 million a year ago.
At June 30, 2009 locally gathered deposits totaled $765.4 million.

INTERMOUNTAIN COMMUNITY BANCORP
DEPOSITS

(Dollars in thousands) September 30, 2009 June 30, 2009 September 30, 2008

Non-interest bearing demand accounts $ 153,271 18.3 % $ 155,446 18.8 % $ 147,816 19.2 %
NOW & Money market accounts 340,722 40.6 335,606 40.6 323,484 42.0
Savings & IRA accounts 80,182 9.6 80,782 9.8 80,290 10.4
Certificates of deposit (CDs) 89,457 10.7 91,837 11.1 83,112 10.8
Jumbo CDs 83,774 10.0 82,278 9.9 82,157 10.8
Brokered CDs 76,136 9.0 62,152 7.5 52,808 6.9
CDARS CDs to local customers 15,123 1.8 19,445 2.3 700 0.1
Total Deposits $ 838,665 100.0 % $ 827,546 100.0 % $ 770,367 100.0 %

"We continue to focus on gathering low-cost retail deposits to build both our
customer base and long-term franchise value," said Doug Wright, Chief Financial
Officer. "Interest bearing checking accounts and retail CD growth, including CDs
sold to local depositors under the Certificate of Deposit Account Registry
Service (CDARS) program generated much of our deposit growth over the past year.
Despite lower interest rates and a competitive deposit environment, we continue
to attract local deposits. In that vein, we are extremely proud of our banking
team for their effective sales and marketing efforts. In the third quarter, we
also purchased $20.3 million in long-term callable brokered certificates of
deposit at very favorable rates, anticipating the runoff of a similar amount at
much higher rates in the fourth quarter of this year." Core deposits are made up
of non-interest bearing checking, money market checking, savings accounts, and
certificate of deposit accounts of less than $100,000.

Available-for-sale investments totaled $180.8 million at September 30, 2009, a
decrease of 1.8%, over June 30, 2009, and an increase of $48.8 million, or
37.0%, over September 30, 2008. "The short term reduction in our securities
portfolio reflects the normal pay downs and prepayments on mortgage-backed
securities as low interest rates increased refinancing activity," Wright noted.
"The significant increase from a year ago reflects our decision to boost
liquidity and maintain a more conservative balance sheet by purchasing higher
levels of liquid marketable securities. Although we have booked impairment
charges on one of our private mortgage-backed securities over the past year, we
are beginning to see signs of recovery in the secondary market for these types
of securities, which is reflected in the valuations that make up the other
comprehensive income line on our balance sheet."

Office properties and equipment totaled $42.8 million at September 30, 2009, a
decrease of $111,000, or 0.3%, over June 30, 2009, and a decrease of $2.1
million, or 4.7%, over September 30, 2008. The decreases over prior periods
primarily reflect depreciation, combined with a reduction in new equipment,
software, hardware and building purchases. "As part of our long-term fixed asset
strategy, we sold the Sandpoint Center where we are headquartered for $24.8
million during the third quarter," commented Wright. "The transaction was
completed with our operating subsidiary Panhandle State Bank and was booked as a
sale-leaseback arrangement. Because of the financing terms offered by PSB, the
lease is treated as an operating lease utilizing the financing method for
accounting purposes. Consequently, there was no gain recognized at the time of
the transaction and the building will remain on our consolidated financial
statements with depreciation and interest expense recognized over the life of
the lease."

Federal Home Loan Bank advances declined to $24.0 million at September 30, 2009,
from $36.0 million at the end of June and $54.0 million a year ago, as advances
with relatively high interest rates rolled off. Because Intermountain paid off
$23.1 million of loans related to its headquarters building, other borrowings
declined to $16.5 million from $39.5 million at June 30, 2009. Paying off these
loans reduces Intermountain`s exposure to adverse market conditions and improves
its future funding and capital flexibility.

Stockholders` equity totaled $97.6 million at September 30, 2009, a decrease
from the second quarter of $983,000 and an increase of $8.6 million over
September 30, 2008. The decline from the second quarter reflects the Company`s
net loss and the payment of preferred stock dividends to the U.S. Treasury on
the funds received through the Treasury`s Capital Purchase Program, offset by an
increase in the market value of the available-for-sale investment portfolio. The
increase from a year ago includes the impact of the December 2008 issuance of
$27.0 million of preferred stock to the U.S. Treasury, offset by the Company`s
operating loss and a decrease in the market value of the available-for-sale
investment portfolio. Book value per common share at September 30, 2009 totaled
$8.63 compared to $8.76 at June 30, 2009, and $10.71 at September 30, 2008.
Tangible book value per common share totaled $7.18 versus $7.31 at June 30, 2009
and $9.23 at September 30, 2008. Tangible stockholders equity to tangible assets
improved to 8.17%, from 7.92% at June 30, 2009 and 7.40% at September 30, 2008.
Tangible common equity to tangible assets totaled 5.74%, compared to 5.60% at
June 30, 2009 and 7.40% at September 30, 2008.

Income Statement Summary

Net interest income before provision for loan losses totaled $9.7 million for
the quarter ended September 30, 2009, a decrease of $551,000, or 5.4%, from the
second quarter 2009 (sequential quarter) and a decline of $1.4 million or 13.1%
from the third quarter of 2008. The decline from the sequential quarter
reflected the continuing shift to a more conservative asset mix to provide our
depositors with more liquidity, as well as interest reversals on some relatively
large loans written down in the third quarter. In addition to reflecting these
factors, the impact of declining market interest rates beginning in the second
half of 2008 also contributed to the lower net interest income.

The net interest margin was 3.91%, for the quarter compared to 4.11% for the
sequential quarter and 4.56% for the same quarter last year. Intermountain`s net
interest margin performance continues to rank near the top of its peer group.
The major decline in net interest margin is related to the reversal of interest
on loans placed in non-accrual status or charged down. A 34 basis point drop in
the yield on earning assets during the quarter was partially offset by a 15
basis point drop in the cost of interest-bearing liabilities. At 1.61%, the
Company`s cost on interest bearing liabilities continues to lead its peer group,
and reflects a strong, low-cost funding mix consisting primarily of local core
deposits.

Intermountain added $3.8 million to its allowance for loan loss in the third
quarter, compared to $18.7 million in the sequential quarter and $2.5 million
for the third quarter of 2008. Net charge-offs for the current quarter totaled
$10.4 million compared to $11.8 million in the sequential quarter and $2.3
million for September 30, 2008. Third quarter charge-offs primarily reflect
write downs in the southwestern Idaho (Treasure Valley and Magic Valley)
residential construction and development portfolio that were identified and
reserved for in the preceding quarter. "Although our net charge-offs were still
at elevated levels this quarter, the properties contributing to these charges
are not new problems. While we can`t be certain about future events, given our
current loan portfolio and expectations, we don`t anticipate future provision
levels like we took in the second quarter of 2009," Hecker said. At the end of
the quarter, the allowance for loan loss totaled 2.46% of total loans and 78.88%
of nonperforming loans compared to 1.67% of total loans and 66% of nonperforming
loans a year ago. At June 30, 2009 the allowance totaled 3.31% of total loans
and 88.37% of nonperforming loans.

Other income, which included $500,000 pre-tax gains on the sale of investment
securities and a $55,000 increase in fees and service charges over the preceding
quarter, totaled $3.1 million for the third quarter, compared to $2.7 million
for the sequential quarter and $3.0 million for the third quarter 2008. Loan
related fee income decreased by $39,000 from the sequential quarter due to lower
yields on mortgage loan sale volumes.

Non-interest expense for the third quarter of 2009 totaled $13.0 million, an
increase of $289,000 over the sequential quarter and an increase of $1.5 million
over third quarter 2008. The increase in non-interest expense over third quarter
2008 reflects an increase in FDIC insurance premium expenses of $265,000 and
increased expenses and write downs on the Company`s other real estate owned
("OREO") portfolio of $1.5 million. Other expenses increased $3.1 million for
the nine month period over the same period a year ago. The increases reflect
higher FDIC assessments, and increased credit costs, including legal fees,
collection expenses, and OREO write-downs and expenses.

Employee compensation and benefits expense increased only $20,000 over the
preceding quarter and decreased $773,000 compared to the same quarter a year ago
due to lower employee headcounts and bonus compensation accruals in comparison
to 2008. For the first nine months of 2009, compensation and benefits expense
decreased $1.9 million, or 10.0% below the comparable period in 2008, even with
the reversal of $640,000 in executive compensation expense in second quarter
2008 related to the termination of an executive bonus plan. Efforts to control
compensation expense continue in 2009, including suspending salary increases for
executives and officers, restricting hiring and reducing other compensation
plans.

Occupancy expenses increased $6,000 for the three-month period ended September
30, 2009 compared to the sequential quarter and decreased $191,000 from the same
period one year ago. The decreases were comprised of a decrease in computer
hardware and software expenses as additional cost control measures have been
implemented. Intermountain expects these expenses to continue declining in 2009,
as it has postponed building expansion plans, limited new hardware and software
purchases, and has started leasing out excess space in its headquarters
building.

About Intermountain Community Bancorp:

Intermountain is headquartered in Sandpoint, Idaho, and operates as four
separate divisions with twenty banking locations in three states. Its banking
subsidiary, Panhandle State Bank, offers financial services through northern
Idaho offices in Sandpoint, Ponderay, Bonners Ferry, Priest River, Coeur
d`Alene, Post Falls, Rathdrum and Kellogg. Intermountain Community Bank, a
division of Panhandle State Bank, operates branches in southwest Idaho in
Weiser, Payette, Nampa, Caldwell and Fruitland, as well as in Ontario, Oregon.
Intermountain Community Bank Washington, a division of Panhandle State Bank,
operates branches in downtown Spokane and Spokane Valley, Washington. Magic
Valley Bank, a division of Panhandle State Bank, operates branches in Twin Falls
and Gooding, Idaho.

All data contained in this report have been prepared on a consolidated basis for
Intermountain Community Bancorp. IMCB`s shares are listed on the OTC Bulletin
Board, ticker symbol IMCB.OB.

Additional information on Intermountain Community Bancorp, and its internet
banking services, can be found at www.intermountainbank.com.

Forward Looking Statements

This news release contains forward-looking statements within the Private
Securities Litigation Reform Act of 1995.Such forward-looking statements may
include but are not limited to statements about the Company`s plans, objectives,
expectations and intentions and other statements contained in this report that
are not historical facts.These forward-looking statements are inherently subject
to significant business, economic and competitive uncertainties and
contingencies, many of which are beyond the Company`s control.Actual results may
differ materially from the results discussed in these forward-looking statements
because of numerous possible risks and uncertainties.These include but are not
limited to the following and the other risks described in the "Risk Factors,"
"Business," and "Management`s Discussion and Analysis of Financial Condition and
Results of Operations" sections, as applicable, of the Company`s Annual Report
on Form 10-K for the fiscal year ended December 31, 2008 and the Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2009:the possibility
of adverse economic developments that may, among other things, increase default
and delinquency risks in the Company`s loan portfolio; shifts in interest rates
that may result in lower interest rate margins; shifts in the demand for the
Company`s loan and other products; lower-than-expected revenue or cost savings
in connection with acquisitions; changes in accounting policies; changes in the
monetary and fiscal policies of the federal government; and changes in laws,
regulations and the competitive environment. Readers are cautioned that
forward-looking statements in this release speak only as of the date of this
release.The Company does not undertake any obligation to update any
forward-looking statement, whether as a result of new information, future events
or otherwise.

INTERMOUNTAIN COMMUNITY BANCORP
CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30, June 30, September 30,
2009 2009 2008
(Dollars in thousands,
except per share amounts)
ASSETS

Cash and cash equivalents $ 50,519 $ 80,605 $ 46,265
Loans receivable, net 699,047 710,311 766,625
Loans held for sale 4,048 4,453 1,500
Investments and asset-backed securities ("ABS") available for sale 180,808 184,168 132,011
Investments and ABS held to maturity 15,189 17,395 16,110
Federal Home Loan Bank of Seattle stock, at cost 2,310 2,310 2,310
Office properties and equipment, net 42,749 42,860 44,843
Goodwill 11,662 11,662 11,662
Other intangible assets, net 472 507 612
Bank-owned life insurance 8,308 8,217 7,952
Other real estate owned 14,395 13,650 2,777
Prepaid expenses and other assets 28,818 27,742 16,578
Total assets $ 1,058,325 $ 1,103,880 $ 1,049,245

LIABILITIES
Deposits $ 838,665 $ 827,546 $ 770,367
Advances from Federal Home Loan Bank 24,000 36,000 54,000
Repurchase agreements 70,493 94,380 87,213
Other borrowings 16,527 39,507 40,623
Accrued expenses and other liabilities 11,038 7,862 8,082
Total liabilities 960,723 1,005,295 960,285

STOCKHOLDERS` EQUITY
Common stock 78,481 78,391 76,349
Preferred stock 25,381 25,303 -
Accumulated other comprehensive loss (1) (4,663 ) (6,170 ) (3,350 )
Retained earnings (deficit) (1,597 ) 1,061 15,961
Total stockholders` equity 97,602 98,585 88,960
Total liabilities and stockholders` equity $ 1,058,325 $ 1,103,880 $ 1,049,245

Book value per common share, excluding preferred stock $ 8.63 $ 8.76 $ 10.71
Tangible Book Value per common share, excluding preferred stock (2) $ 7.18 $ 7.31 $ 9.23
Shares outstanding at end of period 8,365,836 8,365,726 8,305,769
Stockholders` Equity to Total Assets 9.22 % 8.93 % 8.48 %
Tangible Stockholders` Equity to Tangible Assets (3) 8.17 % 7.92 % 7.40 %
Tangible Common Equity to Tangible Assets 5.74 % 5.60 % 7.40 %

(1) Net of deferred income taxes
(2) Amount represents common stockholders' equity less net goodwill and other intangible assets divided by total shares outstanding

(3) Amount represents stockholders' equity less net goodwill and other intangible assets divided by assets less net goodwill and other intangible assets

INTERMOUNTAIN COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended
September 30, June 30, September 30,
2009 2009 2008
(Dollars in thousands,
except per share amounts)
Interest income:
Loans $ 11,051 $ 11,703 $ 14,098
Investments 2,552 2,780 1,991
Total interest income 13,603 14,483 16,089

Interest expense:
Deposits 3,022 3,245 3,627
Borrowings 920 1,026 1,352
Total interest expense 3,942 4,271 4,979

Net interest income 9,661 10,212 11,110

Provision for losses on loans (3,756 ) (18,684 ) (2,474 )
Net interest income (loss) after provision for losses on loans 5,905 (8,472 ) 8,636

Other income:
Fees and service charges 1,941 1,886 1,973
Loan related fee income 624 663 765
Net gain on sale of securities 500 - -
Other-than-temporary impairment on investments (198 ) - -
Bank-owned life insurance 91 90 83
Other income 149 66 193
Total other income 3,107 2,705 3,014

Operating expenses:
Salaries and employee benefits 5,673 5,653 6,446
Occupancy expense 1,814 1,808 2,005
Other expenses 5,469 5,206 2,971
Total operating expenses 12,956 12,667 11,422

Income (loss) before income taxes (3,944 ) (18,434 ) 228
Income tax (provision) benefit 1,702 7,432 (2 )

Net income (loss) (2,242 ) (11,002 ) 226

Preferred stock dividend 416 415 -

Net income (loss) applicable to common stockholders $ (2,658 ) $ (11,417 ) $ 226

Earnings per share - basic $ (0.32 ) $ (1.37 ) $ 0.03
Earnings per share - diluted $ (0.32 ) $ (1.37 ) $ 0.03

Weighted-average common shares outstanding - basic 8,365,836 8,362,402 8,305,236
Weighted-average common shares outstanding - diluted 8,365,836 8,362,402 8,461,591

INTERMOUNTAIN COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)
Nine Months Ended
September 30, September 30,
2009 2008
(Dollars in thousands,
except per share amounts)
Interest income:
Loans $ 34,403 $ 43,058
Investments 8,030 6,073
Total interest income 42,433 49,131

Interest expense:
Deposits 9,609 10,932
Borrowings 3,049 4,588
Total interest expense 12,658 15,520

Net interest income 29,775 33,611

Provision for losses on loans (25,210 ) (4,872 )
Net interest income after provision for losses on loans 4,565 28,739

Other income:
Fees and service charges 5,497 5,812
Loan related fee income 1,828 2,064
Net gain on sale of securities 1,795 2,182
Other than temporary impairment on investments (442 ) -
Bank-owned life insurance 271 238
Other income 376 728
Total other income 9,325 11,024

Operating expenses:
Salaries and employee benefits 17,031 18,922
Occupancy expense 5,590 5,596
Other expenses 13,774 8,798
Total operating expenses 36,395 33,316

Income (loss) before income taxes (22,505 ) 6,447
Income tax (provision) benefit 9,143 (2,298 )

Net income (loss) (13,362 ) 4,149

Preferred stock dividend 1,245 -

Net income (loss) applicable to common stockholders $ (14,607 ) $ 4,149

Earnings per share - basic $ (1.75 ) $ 0.50
Earnings per share - diluted $ (1.75 ) $ 0.49

Weighted-average common shares outstanding - basic 8,358,908 8,287,541
Weighted-average common shares outstanding - diluted 8,358,908 8,531,037

INTERMOUNTAIN COMMUNITY BANCORP
KEY PERFORMANCE RATIOS

Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2009 2009 2008 2009 2008
Net Interest Spread:
Yield on Loan Portfolio 5.98 % 6.25 % 7.02 % 6.17 % 7.35 %
Yield on Investments & Cash 4.09 % 4.57 % 4.66 % 4.38 % 4.92 %
Yield on Interest-Earning Assets 5.50 % 5.84 % 6.61 % 5.72 % 6.93 %

Cost of Deposits 1.45 % 1.59 % 1.88 % 1.58 % 1.97 %
Cost of Advances 4.26 % 4.19 % 3.79 % 4.12 % 3.98 %
Cost of Borrowings 2.05 % 2.13 % 2.38 % 2.06 % 2.92 %
Cost of Interest-Bearing Liabilities 1.61 % 1.76 % 2.06 % 1.74 % 2.22 %

Net Interest Spread 3.90 % 4.08 % 4.54 % 3.98 % 4.71 %

Net Interest Margin 3.91 % 4.11 % 4.56 % 4.02 % 4.74 %

Performance Ratios:
Return on Average Assets -0.82 % -4.02 % 0.09 % -1.64 % 0.53 %
Return on Average Common Stockholders` Equity -14.49 % -58.18 % 1.01 % -24.79 % 6.13 %
Return on Average Common Tangible Equity -17.40 % -68.84 % 1.16 % -29.34 % 7.09 %
Operating Efficiency 101.48 % 98.07 % 80.86 % 93.08 % 74.64 %
Noninterest Expense to Average Assets 4.75 % 4.63 % 4.34 % 4.47 % 4.28 %

INTERMOUNTAIN COMMUNITY BANCORP
LOAN DATA

September 30, June 30, September 30,
2009 2009 2008
(Dollars in thousands)

Net Charge-Offs to Average Net Loans (Annualized) 5.84 % 6.31 % 1.17 %
Loan Loss Allowance to Total Loans 2.46 % 3.31 % 1.67 %

Nonperforming Assets:
Accruing Loans-90 Days Past Due $ 471 $ 2,966 $ 199
Nonaccrual Loans 21,858 24,532 19,682
Total Nonperforming Loans 22,329 27,498 19,881
OREO 14,395 13,650 2,777
Total Nonperforming Assets ("NPA") $ 36,724 $ 41,148 $ 22,658

NPA to Total Assets 3.47 % 3.73 % 2.16 %
NPA to Net Loans Receivable 5.25 % 5.79 % 2.96 %
NPA to Risk Based Capital (Bank) (1) 33.79 % 38.67 % 20.86 %
NPA to Tangible Equity + Allowance for Loan Loss 35.63 % 37.17 % 25.25 %

Loan Delinquency Ratio (30 days and over) 1.48 % 2.10 % 1.09 %

(1) Estimated Risk Based Capital for September 30, 2009

Intermountain Community Bancorp
Senior Vice President, Risk Manager and Financial Accounting Officer
Carolyn Shaw, 509-944-3888
carolyng@intermountainbank.com

Copyright Business Wire 2009