Intermountain Community Bancorp (IMCB) Announces First Quarter Earnings

SANDPOINT, Idaho--(Business Wire)--
Intermountain Community Bancorp (OTCBB:IMCB), the holding company
for Panhandle State Bank, the largest locally owned state bank in
Idaho, announced first quarter 2008 earnings today. Net income was
$1.7 million, down 21.0% from the $2.1 million reported for the
quarter ended March 31, 2007. Earnings per fully diluted share
decreased by 20.8% to $0.19 per share for the quarter ended March 31,
2008. The decline in earnings reflected slowing revenue growth and
increased non-interest expenses related to higher employee benefits,
credit and compliance costs. Both net interest income and non-interest
income have been negatively impacted by deteriorating economic
conditions, as asset growth has slowed and rapidly declining market
interest rates have led to compression in the bank's net interest
margin. While overall staffing levels have decreased over last year,
increased costs related to credit management, regulatory compliance
requirements, and higher employee benefit costs have combined to
create an increase in non-interest expenses.

Subsequent to the end of the first quarter, as part of its
interest rate and investment program, the Company sold $32.0 million
in investment securities, resulting in an after-tax gain on sale of
investments of approximately $1.4 million. This will be reflected in
second quarter 2008 income.

"We're in the midst of one of the most difficult periods the
banking sector has experienced over the past several decades," noted
Chief Executive Officer Curt Hecker, "and it's not likely to improve
in 2008. In this environment, our skilled community bankers are
working proactively and carefully to provide sound banking advice and
deliver quality solutions to improve the financial position of our
clients. By focusing on the long-term financial health of our
customers and communities, and refining our business processes to
streamline delivery of quality solutions, we believe we can weather
the current challenges and build a strong foundation for future
growth," he added.

First Quarter 2008 Notes

-- Net income for the quarter ended March 31, 2008 totaled $1.7
million

-- Net interest income increased 4.4% to $11.3 million compared
to the same period last year

-- Total assets grew to $1.028 billion as of March 31, 2008, an
increase of 9.2% over the same period last year

-- Net loans receivable increased to $748.3 million, up 9.2% over
March 31, 2007, but down 1.1% from the December 31, 2007
balance

-- Deposits increased 1.7% over March 31, 2007 and were down 4.0%
from December 31, 2007

-- Book value per share increased 2.6% to $11.14 per share,
compared to the quarter ended March 31, 2007, primarily due to
the retention of net income and the increase in the fair
market value of the available-for-sale investment portfolio

Financial Summary:

Net income for the quarter ended March 31, 2008 totaled $1.7
million, a decrease of 21.0% over the same period in 2007. Return on
average assets and return on average equity for the three months ended
March 31, 2008 decreased to 0.64% and 7.3% compared to 0.92% and 10.7%
for the same period one year ago. The decrease in both the return on
average assets and the return on average equity resulted from the
decrease in net income, as decreases in non interest income and
increases in operating expenses offset increases in net interest
income. In April 2008, the Company sold $32.0 million in investments
resulting in an after-tax gain on sale of investments of approximately
$1.4 million. This will be reflected in second quarter 2008 income.

Net interest income after provision for loan losses rose to $11.1
million for the quarter ended March 31, 2008, an improvement of $1.1
million, or 10.5% over the same period last year. The company
continued to experience growth in earning assets while maintaining a
net interest margin that compares favorably to its national peer
group. However, the rapid and unexpectedly large drop in short-term
market interest rates over the past eight months caused the net
interest margin to decrease to 4.87% for the quarter ended March 31,
2008 compared to 5.24% for the quarter ended March 31, 2007.

The provision for losses on loans decreased to $258,000 for the
quarter ended March 31, 2008 compared to a provision for losses on
loans of $834,000 for the quarter ended March 31, 2007. The decrease
is due primarily to the absence of any large credit write-downs during
the quarter and a decrease in the loan portfolio since December 31,
2007. The loan loss allowance to total loans ratio was 1.57% at March
31, 2008, compared to 1.52% at March 31, 2007, and remains at a level
higher than its national peer group. Management believes that the
level of the loan loss allowance as of March 31, 2008 is adequate for
the prevailing economic conditions and the balance and mix of the loan
portfolio.

Non-interest income for the quarter ended March 31, 2008 decreased
8.6% or $263,000 over the quarter ended March 31, 2007. Fees and
services charges improved 12.1% or $217,000 for the quarter, as debit
card income and trust and investment income continued to increase.
This increase was offset by a 44.0% drop in mortgage banking
operations for the quarter ended March 31, 2008 over first quarter
2007, as mortgage originations declined significantly. Secured card
contract income also dropped as a result of declining volumes. In
April 2008, the Company sold $32.0 million in investments resulting in
an after-tax gain on sale of investments of approximately $1.4
million. This will be reflected in second quarter 2008 income.

Non-interest expense for the quarter ended March 31, 2008
increased 16.4%, or $1.6 million compared to the quarter ended March
31, 2007. The rate of increase in salary expense has slowed to only
7.0% over the same period last year. Additional regulatory compliance
and audit staff comprised approximately 25% of the overall salary
increase, with merit and promotional increases generating much of the
rest. Benefits expense rose significantly as a result of a large
increase in medical and dental insurance premiums at the beginning of
2008. Occupancy expenses increased 18.7%, reflecting additional
building expense from new branches opened in late 2006 and 2007, and
additional computer hardware and software purchased to enhance
security, compliance and business continuity. Other expenses increased
$499,000 or 16.4% over the same period last year, driven by the
reinstatement of FDIC insurance premiums and additional consulting
expenses. The Company has engaged consulting assistance to improve its
business processes and enhance efficiency, and expects to see the
benefits of these efforts in future periods.

Earnings per share for the quarter ended March 31, 2008 totaled
$0.20, and on a fully diluted basis, $0.19 per share. This compares to
earnings per share of $0.26 and fully diluted earnings per share of
$0.24 for the same time period last year.

As of March 31, 2008, assets totaled $1.02 billion, an increase of
$86.0 million, or 9.2% over March 31, 2007 and a decrease of $31.0
million, or 3.0% over December 31, 2007. The decline in assets in the
first quarter of 2008 reflects both seasonal factors and the effect of
the softening national and regional real estate economy. Total
deposits grew 1.7%, or $11.9 million over March 31, 2007 to a total of
$727.1 million, and loans receivable increased $63.3 million or 9.2%
over March 31, 2007. Strong market presence in the bank's existing
markets and increasing contributions from its new Spokane and
southwest Idaho markets accounted for the growth in loans over the
same period last year. Deposit growth slowed as a result of tougher
economic conditions, a significant decrease in deposit rates over the
past eight months, and the runoff of some higher rate deposits.

Reflective of the challenging economy, the Company's overall
credit quality worsened from the same period last year. Non-performing
loans totaled $7.1 million or 0.95% of net loans as of March 31, 2008,
compared to $1.8 million or 0.26% of net loans at March 31, 2007.
Residential land and construction loans comprise the majority of the
current total of non-performing loans, reflecting the current weakness
in the housing market. The Company has evaluated and is carefully
monitoring its exposure to these types of assets in the current
challenging environment. Annualized net charge-offs to average net
loans were 0.04% for the quarter ended March 31, 2008 compared to
0.06% for the quarter ended March 31, 2007.

Total equity increased to $92.3 million at March 31, 2008, a 14.1%
increase over March 31, 2007. The increase in equity resulted from the
retention of the bank's net income and the increase in the market
value of the available for sale investment portfolio. Book value per
share at March 31, 2008 totaled $11.14 versus $10.86 at March 31,
2007.

"2008 continues to be a changing, and much more challenging
economic environment for banks," states Hecker. "It requires us to
focus on the fundamentals of managing credit and continuing to build
our customer and community relationships. Because of the experience,
knowledge and commitment of our employees, we believe that IMCB is
well-positioned to maintain this focus, while simultaneously enhancing
business processes."

Company Activities:

The Sandpoint Center, IMCB's new corporate headquarters, is
nearing completion. Administrative staff relocated to the building and
it is anticipated that the bank and branch will move in second quarter
2008. The building is anticipated to be an economic and learning
center for the community, with local professional firms occupying part
of the space, and the rest devoted to meeting rooms, state-of-the-art
learning facilities, a cafe and a green space atrium.

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*T
Key Financial Results ($ in thousands, except per share data):
----------------------------------------------------------------------

At March 31, (dollars in
thousands,
except per share data)
------------------------ Actual
Balance Sheet 2008 2007 Change % Change
------------ ----------- --------- ----------
Loans Receivable, net $ 748,349 $ 685,068 $ 63,281 9.24%
Allowance for Loan Loss 11,942 10,568 1,374 13.00%
Goodwill, net 11,662 11,662 - -
Other Intangible Assets,
net 686 841 (155) (18.43)%
Total Assets 1,017,701 931,667 86,034 9.23%
Total Deposits 727,148 715,287 11,861 1.66%
Shareholder's Equity 92,282 80,864 11,418 14.12%
Book Value Per Share $ 11.14 $ 10.86 $ 0.28 2.58%
Shares Outstanding at
end of Period 8,283,176 7,443,140 840,036 11.29%

Three Months Ended
March 31,
------------------------
Income Statement 2008 2007
------------ -----------
Total Interest Income $ 17,201 $ 17,056
Total Interest Expense 5,875 6,208
Provision for Losses on
Loans 258 834
Net Interest Income
After Provision 11,068 10,014
Total Other Income 2,778 3,041
Total Operating Expenses 11,259 9,677
Income Before Taxes 2,587 3,378
Income Tax Provision 933 1,285
Net Income $ 1,654 $ 2,093
Basic Earnings Per Share $ 0.20 $ 0.26
Diluted Earnings Per
Share $ 0.19 $ 0.24
Wtd-Avg Shares O/S Basic 8,271,104 8,161,310
Wtd-Avg Shares O/S Fully
Diluted 8,564,618 8,615,307
Annualized Return on
Assets 0.64% 0.92%
Annualized Return on
Equity 7.3% 10.7%
Operating Efficiency
Ratio 79.8% 69.7%
Net Interest Spread 4.84% 5.19%
Net Interest Margin 4.87% 5.24%
*T

First-Quarter 2008 Earnings Conference Call

IMCB will provide a conference call the morning of April 23, 2008,
at 10:00 a.m. (Pacific) to discuss the company's fiscal year end 2007
and first quarter 2008 financial results. To listen to the conference
call, callers should log onto the web at:
here at 10:00 a.m.
(Pacific) on April 23, 2008 for the call in number and pass code.

The call will be available at the number listed on the website for
approximately three business days and then archived on the Company's
web site at www.intermountainbank.com under Investor Relations.

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 offices in Sandpoint, Ponderay, Bonners Ferry, Priest
River, Coeur d'Alene, Post Falls, Rathdrum and Kellogg in northern
Idaho. 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 a branch in downtown Spokane and a branch in 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, can be found at www.intermountainbank.com.

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 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.

Intermountain Community Bancorp
Carolyn Gay, 509-944-3888
Vice President, Financial Accounting Officer
carolyng@panhandlebank.com

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