Intermountain Community Bancorp Reports Third Quarter Earnings

Intermountain Community Bancorp Logo

SANDPOINT, Idaho, Oct. 24, 2013 (GLOBE NEWSWIRE) -- Intermountain Community Bancorp (Nasdaq:IMCB), the holding company for Panhandle State Bank, reported $1.5 million, or $0.23 per diluted share, in net income applicable to common shareholders for the quarter ended September 30, 2013, as compared to net income of $1.5 million, or $0.23 per share, and $343,000, or $0.05 per share, in the second quarter of 2013 and the third quarter of 2012, respectively. For the third quarter of 2013, lower interest and operating expense and a modest recovery of loan loss provision expense offset lower interest and other income to produce comparable results to the second quarter. Reductions in interest, operating and loan loss provision expenses also drove the improvement over the third quarter of last year.

For the nine-month period ending September 30, 2013, net income applicable to common shareholders was $4.0 million, or $0.62 per diluted share, compared to $978,000, or $0.17 per diluted share for the same time period in 2012 as a result of lower loan loss provisions, higher non-interest income and lower operating expenses, which offset lower net interest income.

"We continue to see steady growth in our regional markets despite uneven economic growth and external volatility," said Curt Hecker, Chief Executive Officer of the Company. "The Bank is actively engaged in fostering economic development through support of local businesses, and we feel this is key to our ongoing organic growth," he added.

Third Quarter 2013 Highlights (at or for the period ended September 30, 2013, compared to June 30, 2013, and September 30, 2012)

  • Interest expense continued to decline, totaling $901,000 for the third quarter of 2013, compared to $951,000 for the second quarter of 2013 and $1.3 million in the third quarter of 2012. For the 9 months ended September 30, 2013, interest expense is down $1.2 million or 30.3% from the same period a year ago.
  • Operating expense declined to $8.1 million from $8.2 million in both the second quarter of 2013 and third quarter of 2012, respectively. For the 9 months ended September 30, 2013, operating expense is down $272,000 or 1.1% from the prior year.
  • $82,000 in loan loss provision was recovered during the third quarter, resulting in total provision for the 9-month 2013 period of $344,000, a 90.7% reduction from the $3.7 million recorded for the same time period in 2012. The Company has experienced net recoveries of previous loans charged off for two consecutive quarters.
  • Nonperforming assets (NPAs) dropped to 0.77% of total assets at September 30, 2013 from 1.00% at June 30, 2013 and 1.18% at September 30, 2012, as the Company continued to reduce problem assets. The Company's "Texas Ratio" (Non-performing assets divided by tangible equity plus the allowance for loan loss) now stands at 5.8%.
  • Company CEO Curt Hecker represented Idaho and community bankers nationwide at a national forum hosted by the Federal Reserve Board and the Conference of State Bank Supervisors. He participated in a panel addressing the critical role community banks play for small businesses and overall US economic growth.

Assets and Loan Portfolio Summary

Assets totaled $923.8 million at September 30, 2013, compared to $930.6 million at June 30, 2013 and $953.3 million at September 30, 2012, respectively. The reduction from prior periods primarily reflects the use of cash to pay down non-core liabilities, including brokered Certificates of Deposit ("CDs") and Federal Home Loan Bank advances. Net loans receivable decreased by $2.5 million from June 30, but were up $17.4 million, or 3.5%, over September 30, 2012. Increases in commercial real estate and agricultural loans led to the improvement over last year, as the Company saw modest increases in loan demand in its markets.

The following tables summarize the Company's loan portfolio by type and geographic region, and provide trending information over the prior year.

LOANS BY CATEGORIES
(Dollars in thousands) 9/30/2013 % of total 6/30/2013 % of total 9/30/2012 % of total
Commercial loans $ 111,238 21.1% $ 113,699 21.4% $ 115,203 22.5%
Commercial real estate 185,116 35.1 190,816 36.0 174,965 34.2
Commercial construction 6,305 1.2 10,085 1.9 2,573 0.5
Land and land development 34,172 6.5 30,895 5.8 33,814 6.6
Agriculture 97,453 18.4 94,831 17.8 87,851 17.2
Multifamily 15,802 3.0 15,271 2.9 17,849 3.5
Residential real estate 61,185 11.6 58,309 11.0 59,367 11.6
Residential construction 1,721 0.3 2,004 0.4 532 0.1
Consumer 9,084 1.7 8,843 1.7 9,724 1.9
Municipal 6,107 1.1 6,029 1.1 9,827 1.9
Total loans receivable $ 528,183 100.0% $ 530,782 100.0% $ 511,705 100.0%
Allowance for loan losses (8,030) (8,042) (9,088)
Net deferred origination costs 86 235
Loans receivable, net $ 520,239 $ 522,740 $ 502,852
LOAN PORTFOLIO BY LOCATION
September 30, 2013
(Dollars in thousands) North Idaho -
Eastern
Washington

Magic Valley
Idaho

Greater Boise
Area
E. Oregon, SW
Idaho,
excluding Boise


Other


Total
% of Loan
type to
total loans
Commercial loans $ 80,249 $ 4,880 $ 9,741 $ 15,111 $ 1,257 $ 111,238 21.1%
Commercial real estate 126,447 10,191 9,401 17,943 21,134 185,116 35.1
Commercial construction 5,124 145 1,036 6,305 1.2
Land and land development 25,120 1,412 5,652 1,327 661 34,172 6.5
Agriculture 1,946 4,513 24,383 62,771 3,840 97,453 18.4
Multifamily 9,803 150 4,630 30 1,189 15,802 3.0
Residential real estate 43,910 3,435 4,564 6,809 2,467 61,185 11.6
Residential construction 1,608 113 1,721 0.3
Consumer 5,399 1,100 748 1,540 297 9,084 1.7
Municipal 4,784 1,323 6,107 1.1
Total $ 304,390 $ 27,004 $ 59,264 $ 105,644 $ 31,881 $ 528,183 100.0%
Percent of total loans in geographic area 57.7% 5.1% 11.2% 20.0% 6.0% 100.0%

Asset Quality

Nonperforming loans totaled $2.9 million at September 30, 2013, down from $4.8 million at June 30, 2013 and $5.6 million at the end of the same period last year. The allowance for loan loss coverage of non-performing loans increased to 281.8% in the third quarter, up from 167.6% at June 30, 2013 and 161.2% at September 30, 2012, respectively.

NPAs were $7.1 million at quarter end, compared to $9.3 million at June 30, 2013, and $11.3 million at September 30, 2012. Outstanding troubled debt restructured loans totaled $9.2 million, down from $11.8 million at June 30, 2013, but up from $2.9 million at September 30, 2012.

Classified loans totaled $23.1 million at quarter end, down from $26.3 million at June 30, 2013 and $32.7 million at September 30, 2012. Classified loans are loans in which the Company anticipates potential problems in obtaining repayment of principal and interest per the contractual terms, but does not necessarily believe that losses will occur.

The following table summarizes nonperforming assets by type and provides trending information over the prior year.

NPA BY CATEGORY
(Dollars in thousands) 9/30/2013 % of total 6/30/2013 % of total 9/30/2012 % of total
Commercial loans $ 1,066 15.0% $ 1,417 15.2% $ 3,400 30.2%
Commercial real estate 261 3.7 2,728 29.3 1,021 9.1
Land and land development 4,415 62.3 4,626 49.6 6,204 55.0
Agriculture 527 7.4 276 3.0 26 0.2
Residential real estate 814 11.5 173 1.9 609 5.4
Consumer 3 0.1 91 1.0 12 0.1
Total NPA by Categories $ 7,086 100.0% $ 9,311 100.0% $ 11,272 100.0%

Commercial, commercial real estate and land development NPAs all showed decreases from the prior quarter, reflecting paydowns from sales activity. The increase in agricultural loans reflects moderately increased stress on this portfolio, and the increase in residential real estate resulted from the addition of one larger home loan. Land and land development loans still comprise the greatest proportion of NPA totals, primarily as a result of one large relationship. The majority of NPAs are in the North Idaho/Eastern Washington region, reflecting the Company's higher loan totals in these areas.

OREO balances totaled $4.2 million at September 30, 2013, compared to $4.5 million at June 30, 2013 and $5.6 million at September 30, 2012. The Company sold 1 property totaling $280,000 in the third quarter and had a reduction of the net valuation adjustments of $14,000. A total of 3 properties remained in the OREO portfolio at quarter end, all of which are in land and land development.

Investment Portfolio, Deposit, Borrowings and Equity Summary

Investments available for sale increased by $8.4 million during the quarter, as the Company reinvested cash into a mix of shorter government agency securities and longer municipal bonds. The portfolio is down $25.3 million, however, from the same period ago, as the Company sold longer-term securities earlier in the year to reduce interest rate risk and moved several municipal bonds, totaling $8.2 million, into the held-to-maturity portfolio. The value of the Company's bond holdings generally stabilized during the third quarter, after falling in the second quarter as a result of increasing market rates in May and June. Prepayments on the Company's mortgage-backed securities also slowed, although they still remain at relatively high levels. "Weak economic growth, political uncertainty, and volatility resulting from speculation about Federal Reserve Board actions continue to create challenging investment and lending environments" said Chief Financial Officer Doug Wright. "Both the bank and its customers continue to approach the markets cautiously," he added.

Deposits totaled $711.1 million at September 30, 2013, compared to $699.5 million at June 30, 2013 and $722.1 million at the end of the third quarter last year. The table below provides information on both current composition and trends in the deposit portfolio.

DEPOSITS
(Dollars in thousands) 9/30/2013 % of total 6/30/2013 % of total 9/30/2012 % of total
Non-interest bearing demand accounts $ 240,116 33.8% $ 224,472 32.0% $ 214,524 29.7%
Interest bearing demand accounts 100,572 14.1 100,490 14.4 89,941 12.5
Money market accounts 217,110 30.5 222,161 31.8 216,767 30.0
Savings & IRA accounts 66,683 9.4 64,390 9.2 74,315 10.3
Certificates of deposit (CDs) 35,827 5.0 37,495 5.4 47,509 6.6
Jumbo CDs 50,613 7.1 50,362 7.2 59,433 8.2
Brokered CDs 18,994 2.6
CDARS CDs to local customers 151 0.1 151 601 0.1
Total Deposits $ 711,072 100.0% $ 699,521 100.0% $ 722,084 100.0%

Demand deposit account increases over both prior time periods reflect growth in business customer cash balances, customer preferences for shorter durations and seasonal activity. Money market accounts have been relatively stable, while the decrease in savings account balances from last year reflects the termination of a third party contract under which the Company held savings balances to secure credit cards. The Company continues to repay higher cost funding and has no brokered or other wholesale CDs outstanding. Non-interest bearing demand deposits comprise 33.8% of the deposit portfolio, as compared to 29.7% a year ago. Overall, low-cost transaction deposits represent 78.4% of the deposit portfolio, up from 72.2% at September 30, 2012.

Stockholders' equity totaled $115.0 million at September 30, 2013, compared to $113.0 million at June 30, 2013 and $113.6 million at September 30, 2012. The increase over last quarter and the prior year reflects earnings improvement, which more than offset the reduction in the value of the Company's securities portfolio since last year. Tangible book value per common share totaled $13.66 at September 30, 2013, compared to $13.38 at June 30, 2013 and $13.51 at September 30, 2012. The September 30, 2012 numbers have been adjusted for a 1-for-10 reverse stock split implemented by the Company in the fourth quarter of 2012.

Tangible stockholders' equity to tangible assets was 12.4%, compared to 12.1% at June 30, 2013 and 11.9% at the end of September last year. Tangible common equity to tangible assets was 9.5%, compared to 9.3% at June 30, 2013 and 9.1% at September 30, 2012.

Income Statement Summary

Net income applicable to common shareholders for the second quarter totaled $1.5 million, or $0.23 per common diluted share, compared to a net income applicable to common shareholders of $1.5 million, or $0.23 per common diluted share in the second quarter of 2013, and $343,000, or $0.05 per common diluted share in the third quarter of 2012. For the nine-month period ended September 30, 2013, net income applicable to common shareholders totaled $4.0 million, or $0.62 per common diluted share, compared to $978,000, or $0.17 per common diluted share for the same time period in 2012. Per share results for the quarter and nine-month period ending September 30, 2012 have been adjusted for the impact of a 1-for-10 reverse stock split, which became effective in October, 2012.

Third quarter 2013 net interest income before provision totaled $7.4 million, down from $7.5 million in the second quarter of 2013 and $7.7 million in the third quarter of 2012. The decrease from prior quarters reflects lower loan and investment interest income as downward pressure continued on asset yields. Decreasing interest expense partially offset the decrease in asset yields. The net interest margin was 3.46% for the third quarter, compared to 3.59% in the second quarter of 2013 and 3.47% in the third quarter of 2012. The yield on interest earning assets was 3.88% for the third quarter of 2013, versus 4.04% in both the second quarter of 2013 and the third quarter of 2012. The cost on interest-bearing liabilities was 0.44% for the quarter ended September 30, 2013, down from 0.48% and 0.60% for the quarters ended June 30, 2013 and September 30, 2012, respectively.

After experiencing two consecutive quarters of net recoveries on loans previously charged off, Intermountain recovered $82,000 of previously recorded provision for loan loss in the third quarter, after recording provisions of $247,000 in the second quarter of 2013 and $1.2 million in the third quarter of 2012, respectively. The Company experienced net recoveries of $70,000 during the third quarter, compared to net recoveries of $117,000 during the second quarter of 2013 and net chargeoffs of $2.3 million in the quarter ending September 30, 2012. For the nine-month period ended September 30, 2013, net charge-offs were $258,000 versus $7.3 million for the same period in 2012.

The tables below provide information on other income for the current three- and nine-month periods in comparison to prior periods.

Three Months Ended 9/30/2013 % of Total 6/30/2013 % of Total 9/30/2012 % of Total
(Dollars in thousands)
Fees and service charges $ 1,858 73% $ 1,964 68% $ 1,620 63%
Loan related fee income 506 20 627 22 768 30
Net gain on sale of securities 180 7 163 6
Net gain (loss) on sale of other assets (8) 2 (7)
Other-than-temporary credit impairment on investment securities (21) (1) (34) (1)
BOLI income 83 3 85 3 86 3
Hedge fair value adjustment 89 4 80 3 (6)
Unexercised warrant liability fair value adjustment (179) (7) (54) (2) (49) (2)
Other income (4) 40 1 174 7
Total $ 2,525 100% $ 2,886 100% $ 2,552 100%
Nine Months Ended 9/30/2013 % of Total 9/30/2012 % of Total
(Dollars in thousands)
Fees and service charges 5,429 68% 4,657 61%
Loan related fee income 1,768 22 2,216 29
Net gain on sale of securities 384 5 585 8
Net gain on sale of other assets (2) 15
Other-than-temporary credit impairment on investment securities (63) (1) (357) (5)
BOLI income 252 3 260 3
Hedge fair value adjustment 235 3 (300) (4)
Unexercised warrant liability fair value (177) (2) 108 1
Other income 149 2 572 7
Total 7,975 100% 7,756 100%

Other income in the third quarter of 2013 was $2.5 million, down from $2.9 million and $2.6 million in the second quarter of 2013 and third quarter of 2012, respectively. Lower mortgage origination income and a negative fair value adjustment on the Company's unexercised warrant liability produced most of the decrease. Reflecting higher mortgage rates in the third quarter, mortgage refinance activity slowed for both the Company and the industry.

For the comparative nine-month periods, other income increased by $219,000 as increases in investment services income and hedge fair value adjustments offset lower mortgage origination fees, secured savings contract income and unexercised warrant liability fair value adjustments.

The tables below provide information on operating expenses for the current three- and nine-month periods in comparison to prior periods.

Three Months Ended 9/30/13 % of Total 6/30/13 % of Total 9/30/12 % of Total
(Dollars in thousands)
Salaries and employee benefits $ 4,133 51% $ 4,283 53% $ 4,103 50%
Occupancy expense 1,120 14 1,174 14 1,230 15
Technology 982 12 925 11 894 11
Advertising 194 2 180 2 178 2
Fees and service charges 88 1 85 1 141 2
Printing, postage and supplies 176 2 173 2 178 2
Legal and accounting 350 5 483 6 507 6
FDIC assessment 145 2 165 2 306 4
OREO operations 139 2 32 39
Other expense 766 9 720 9 666 8
Total $ 8,093 100% $ 8,220 100% $ 8,242 100%
Nine Months Ended 9/30/2013 % of Total 9/30/2012 % of Total
(Dollars in thousands)
Salaries and employee benefits $ 12,591 52% $ 12,110 49%
Occupancy expense 3,479 14 3,688 15%
Technology 2,783 11 2,688 11%
Advertising 488 2 459 2%
Fees and service charges 267 1 466 2%
Printing, postage and supplies 566 2 779 3%
Legal and accounting 1,181 5 1,292 5%
FDIC assessment 495 2 927 4%
OREO operations 281 1 263 1%
Other expense 2,359 10 2,090 8%
Total $ 24,490 100% $ 24,762 100%

Operating expenses decreased to $8.1 million in the third quarter of 2013, compared to $8.2 million in both prior periods, as decreases in occupancy, FDIC insurance, legal and accounting expenses offset increases in technology and OREO expenses. Technology expenses included additional one-time costs related to system upgrades that are expected to result in cost savings in future periods.

The Company recorded $24.5 million in operating expense for the nine-month period ended September 30, 2013, down from $24.8 million for the same nine-month period in 2012. Occupancy, FDIC insurance, printing, supplies, legal and accounting expenses were lower, which offset increases in salary, technology and other expenses.

The Company did not record any income tax provision or benefit during the quarter as it offset taxable income with net operating losses that it has carried forward from prior years. The Company maintains a $6.8 million tax valuation allowance, resulting in a net deferred tax asset of $14.9 million.

About Intermountain Community Bancorp:

Intermountain is headquartered in Sandpoint, Idaho, and operates as four separate divisions with nineteen 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 quoted on the NASDAQ, ticker symbol IMCB. 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 meaning of 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, 2012: 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; declines in the housing and real estate market; increases in unemployment or sustained high levels of unemployment; 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)
9/30/2013 6/30/2013 9/30/2012
(Dollars in thousands, except per share amounts)
ASSETS
Cash and cash equivalents:
Interest-bearing $ 17,795 $ 33,474 $ 45,015
Non-interest bearing and vault 7,972 7,003 6,016
Restricted cash 12,236 12,464 12,710
Available-for-sale securities, at fair value 265,000 256,616 290,311
Held-to-maturity securities, at amortized cost 26,241 22,991 14,843
Federal Home Loan Bank of Seattle stock, at cost 2,228 2,228 2,290
Loans held for sale 721 1,081 5,070
Loans receivable, net 520,239 522,740 502,852
Accrued interest receivable 4,310 4,463 4,542
Office properties and equipment, net 35,420 35,408 36,031
Bank-owned life insurance 9,725 9,642 9,387
Other real estate owned ("OREO") 4,236 4,512 5,636
Prepaid expenses and other assets 17,641 17,936 18,589
Total assets $ 923,764 $ 930,558 $ 953,292
LIABILITIES
Deposits $ 711,072 $ 699,521 $ 722,084
Securities sold subject to repurchase agreements 64,409 85,605 56,989
Advances from Federal Home Loan Bank 4,000 4,000 29,000
Unexercised stock warrant liability 1,004 826 899
Cashier checks issued and payable 3,174 2,278 266
Accrued interest payable 307 316 2,124
Other borrowings 16,527 16,527 16,527
Accrued expenses and other liabilities 8,321 8,440 11,819
Total liabilities 808,814 817,513 839,708
STOCKHOLDERS' EQUITY
Common stock - voting shares 96,358 96,358 96,330
Common stock - non-voting shares 31,941 31,941 31,941
Preferred stock, Series A 26,894 26,770 26,430
Accumulated other comprehensive income (1) (331) (641) 3,724
Accumulated deficit (39,912) (41,383) (44,841)
Total stockholders' equity 114,950 113,045 113,584
Total liabilities and stockholders' equity $ 923,764 $ 930,558 $ 953,292
Book value per common share, excluding preferred stock $ 13.67 $ 13.39 $ 13.53
Tangible book value per common share, excluding preferred stock (2) $ 13.66 $ 13.38 $ 13.51
Shares outstanding at end of period (3) 6,443,294 6,443,294 6,441,986
Stockholders' Equity to Total Assets 12.44% 12.15% 11.91%
Tangible Common Equity to Tangible Assets 9.53% 9.27% 9.13%
(1) Net of deferred income taxes.
(2) Amount represents common stockholders' equity less other intangible assets divided by total common shares outstanding.
(3) Share numbers for September 30, 2012 have been adjusted to reflect the impact of a 1-for-10 reverse stock split, effective, October 5, 2012.
INTERMOUNTAIN COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
9/30/2013 6/30/2013 9/30/2012
(Dollars in thousands, except per share amounts)
Interest income:
Loans $ 6,802 $ 6,893 $ 7,031
Investments 1,517 1,580 1,896
Total interest income 8,319 8,473 8,927
Interest expense:
Deposits 471 510 736
Other borrowings 430 441 522
Total interest expense 901 951 1,258
Net interest income 7,418 7,522 7,669
Recovery of (provision for) losses on loans 82 (247) (1,154)
Net interest income after provision for losses on loans 7,500 7,275 6,515
Other income:
Fees and service charges 1,858 1,964 1,620
Loan related fee income 506 627 768
Net gain on sale of securities 180 163
Net gain (loss) on sale of other assets (8) 2 (7)
Other-than-temporary impairment ("OTTI") losses on investments (1) (21) (34)
Bank-owned life insurance 83 85 86
Fair value adjustment on cash flow hedge 89 80 (6)
Unexercised warrant liability fair value adjustment (179) (54) (49)
Other (4) 40 174
Total other income 2,525 2,886 2,552
Operating expenses:
Salaries and employee benefits 4,133 4,283 4,103
Occupancy 1,120 1,174 1,230
Technology 982 925 894
Advertising 194 180 178
Fees and service charges 88 85 141
Printing, postage and supplies 176 173 178
Legal and accounting 350 483 507
FDIC assessment 145 165 306
OREO operations 139 32 39
Other expenses 766 720 666
Total operating expenses 8,093 8,220 8,242
Net income before income taxes 1,932 1,941 825
Income tax expense
Net income 1,932 1,941 825
Preferred stock dividend 461 460 482
Net income applicable to common stockholders $ 1,471 $ 1,481 $ 343
Earnings per share — basic (1) 0.23 0.23 0.05
Earnings per share — diluted (1) 0.23 0.23 0.05
Weighted average common shares outstanding — basic (1) 6,443,294 6,443,294 6,441,986
Weighted average common shares outstanding — diluted (1) 6,497,886 6,484,762 6,458,227
(1) Share numbers for September 30, 2012 have been adjusted to reflect the impact of a 1-for-10 reverse stock split, effective, October 5, 2012.
INTERMOUNTAIN COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
9/30/2013 9/30/2012
(Dollars in thousands, except per share amounts)
Interest income:
Loans $ 20,406 $ 21,157
Investments 4,689 6,016
Total interest income 25,095 27,173
Interest expense:
Deposits 1,542 2,302
Borrowings 1,295 1,769
Total interest expense 2,837 4,071
Net interest income 22,258 23,102
Recovery of (provision for) losses on loans (344) (3,688)
Net interest income after provision for losses on loans 21,914 19,414
Other income (expense):
Fees and service charges 5,429 4,744
Loan related fee income 1,768 2,129
Net gain on sale of securities 384 585
Net gain on sale of other assets (2) 15
Other-than-temporary impairment on investments (63) (357)
Bank-owned life insurance 252 260
Fair value adjustment on cash flow hedge 235 (300)
Unexercised warrant liability fair value adjustment (177) 108
Other income 149 572
Total other income, net 7,975 7,756
Operating expenses:
Salaries and employee benefits 12,591 12,110
Occupancy expense 3,479 3,688
Technology 2,783 2,688
Advertising 488 459
Fees and service charges 267 466
Printing, postage and supplies 566 779
Legal and accounting 1,181 1,292
FDIC assessment 495 927
OREO operations 281 263
Other expenses 2,359 2,090
Total operating expenses 24,490 24,762
Income before income taxes 5,399 2,408
Income tax expense
Net income 5,399 2,408
Preferred stock dividend 1,380 1,430
Net Income applicable to common stockholders $ 4,019 $ 978
Income per share - basic (1) $ 0.62 $ 0.17
Income per share - diluted (1) 0.62 0.17
Weighted-average common shares outstanding - basic (1) 6,443,193 5,593,487
Weighted-average common shares outstanding - diluted (1) 6,488,094 5,610,026
(1) Share numbers for September 30, 2012 have been adjusted to reflect the impact of a 1-for-10 reverse stock split, effective, October 5, 2012.
INTERMOUNTAIN COMMUNITY BANCORP
KEY PERFORMANCE RATIOS
Three Months Ended Nine Months Ended
9/30/2013 6/30/2013 9/30/2012 9/30/2013 9/30/2012
Net Interest Spread:
Yield on Loan Portfolio 5.02% 5.29% 5.38% 5.18% 5.48%
Yield on Investments & Cash 1.92% 1.99% 2.10% 1.93% 2.30%
Yield on Interest-Earning Assets 3.88% 4.04% 4.04% 3.94% 4.19%
Cost of Deposits 0.26% 0.29% 0.40% 0.29% 0.43%
Cost of Advances 3.07% 1.99% 2.21% 2.60% 2.21%
Cost of Borrowings 1.72% 1.89% 1.74% 1.77% 2.10%
Cost of Interest-Bearing Liabilities 0.44% 0.48% 0.60% 0.47% 0.65%
Net Interest Spread 3.44% 3.56% 3.44% 3.47% 3.54%
Net Interest Margin 3.46% 3.59% 3.47% 3.49% 3.56%
Performance Ratios:
Return on Average Assets 0.83% 0.84% 0.34% 0.77% 0.34%
Return on Average Common Stockholders' Equity 6.70% 6.77% 1.58% 6.11% 2.04%
Return on Average Common Tangible Equity (1) 6.70% 6.77% 1.58% 6.12% 2.05%
Operating Efficiency 81.39% 78.98% 80.64% 81.00% 80.24%
Noninterest Expense to Average Assets 3.46% 3.54% 3.41% 3.48% 3.46%
(1) Average common tangible equity is average common stockholders' equity less average other intangible assets.
INTERMOUNTAIN COMMUNITY BANCORP
LOAN AND REGULATORY CAPITAL DATA
9/30/2013 6/30/2013 9/30/2012
(Dollars in thousands)
Loan Data
Net Charge-Offs to Average Net Loans (QTD Annualized) (0.05)% (0.09)% 1.79%
Loan Loss Allowance to Total Loans 1.52% 1.52% 1.79%
Nonperforming Assets:
Accruing Loans-90 Days Past Due $ 42 $ — $ —
Nonaccrual Loans 2,808 4,799 5,636
Total Nonperforming Loans 2,850 4,799 5,636
OREO 4,236 4,512 5,636
Total Nonperforming Assets ("NPA") $ 7,086 $ 9,311 $ 11,272
Outstanding Troubled Debt Restructured Loans 9,212 11,791 2,873
NPA to Total Assets 0.77% 1.00% 1.18%
NPA to Net Loans Receivable 1.36% 1.78% 2.24%
NPA to Estimated Risk Based Capital 5.60% 7.46% 9.17%
NPA to Tangible Equity + Allowance for Loan Loss 5.76% 7.69% 9.20%
Loan Delinquency Ratio (30 days and over) 0.31% 0.22% 0.21%
9/30/2013 6/30/2013 9/30/2012
Allowance for Loan Loss by Loan Type (Dollars in thousands)
Commercial loans $ 1,764 $ 1,900 $ 3,073
Commercial real estate loans 2,514 2,736 2,728
Commercial construction loans 154 231 67
Land and land development loans 1,206 956 1,654
Agriculture loans 928 692 187
Multifamily loans 35 54 56
Residential real estate loans 1,255 1,195 1,042
Residential construction loans 38 44 13
Consumer loans 107 203 198
Municipal loans 29 31 70
Totals $ 8,030 $ 8,042 $ 9,088
Regulatory Capital Estimated Actual Actual
Total capital (to risk-weighted assets): 9/30/2013 6/30/2013 9/30/2012
The Company 21.13% 20.93% 20.86%
Panhandle State Bank 20.08% 19.72% 19.28%
Tier 1 capital (to risk-weighted assets):
The Company 19.88% 19.67% 19.61%
Panhandle State Bank 18.83% 18.47% 18.02%
Tier 1 capital (to average assets):
The Company 12.92% 12.90% 11.97%
Panhandle State Bank 12.24% 12.12% 11.11%

CONTACT: Curt Hecker, CEO Intermountain Community Bancorp (208) 263-0505 curt.hecker@panhandlebank.com Doug Wright, Executive Vice President & CFO Intermountain Community Bancorp (509) 363-2635 doug.wright@intermountainbank.com

Source:Intermountain Community Bancorp