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Intermountain Community Bancorp Reports Second Quarter Earnings

Intermountain Community Bancorp Logo

SANDPOINT, Idaho, July 25, 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 second quarter 2013, as compared to net income of $1.1 million, or $0.16 per share, and $301,000, or $0.05 per share, in the first quarter of 2013 and the second quarter of 2012, respectively. Higher net interest income and other income produced the improvement over first quarter 2013, and lower loan loss provisions drove the improvement over the second quarter last year.

For the six-month period ending June 30, 2013, net income applicable to common shareholders, was $2.5 million, or $0.39 per diluted share, compared to $636,000, or $0.12 per diluted share for the same time period in 2012 as a result of lower loan loss provisions and higher non-interest income, which offset lower net interest income.

"We continue to see steady improvement in earnings despite continuing tight interest rate spreads," said Chief Executive Officer Curt Hecker. "This is a reflection of the growing strength of our local economies and the loyalty of our targeted business base. We are encouraged by the pickup in economic activity and the recent moderate increase in longer term rates," he added.

Second Quarter 2013 Highlights (at or for the period ended June 30, 2013, compared to March 31, 2013, and June 30, 2012)

  • Net loans grew almost $24 million, or 4.8% during the second quarter of 2013.
  • Interest expense continued to decline, totaling $951,000 for the second quarter of 2013, compared to $985,000 for the first quarter of 2013 and $1.3 million in the second quarter of 2012. At $8.5 million, interest income also improved from the first quarter total of $8.3 million, although it was lower than the $9.1 million recorded in the quarter ending June 30, 2012.
  • Other income increased to $2.9 million from $2.6 million in the first quarter of 2013 and $2.8 million in the second quarter of last year, as both investment services and mortgage origination income improved during the quarter.
  • Loan loss provision totaled $247,000 during the second quarter, up modestly from $179,000 in the first quarter of 2013, but down significantly from the $1.6 million reported in the second quarter of 2012.
  • Nonperforming assets (NPAs) dropped to 1.00% of total assets at June 30, 2013 from 1.05% at March 31, 2013 and 1.24% at June 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 7.7%.
  • Loan delinquencies (30 days past due and over) continue to remain very low, at 0.22% of total loans compared to 0.14% in the first quarter of 2013 and 0.25% in the second quarter of 2012.
  • The Company was recognized as the "2013 Best Place to Work" and "2013 Friendliest Bank" in Bonner County, the Company's headquarters location, by the Bonner County Daily Bee.
  • The Company opened its new downtown Spokane office at the corner of Riverside and Howard Streets.

Assets and Loan Portfolio Summary

Assets totaled $930.6 million at June 30, 2013, compared to $933.9 million at March 31, 2013 and $953.6 million at June 30, 2012, respectively. The reduction from prior periods reflects the sale of securities and 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 increased by $24.0 million during the quarter, as seasonal agricultural and commercial borrowing picked up, and commercial real estate activity increased.

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) 6/30/2013 % of total 3/31/2013 % of total 6/30/2012 % of total
Commercial loans $ 113,699 21.4% $ 111,968 22.1% $ 115,481 22.2%
Commercial real estate 190,816 36.0% 183,796 36.3% 182,045 35.0%
Commercial construction 10,085 1.9% 8,068 1.6% 3,496 0.7%
Land and land development 30,895 5.8% 31,673 6.2% 32,271 6.2%
Agriculture 94,831 17.8% 80,854 16.0% 91,983 17.7%
Multifamily 15,271 2.9% 15,946 3.1% 18,325 3.5%
Residential real estate 58,309 11.0% 57,645 11.4% 58,580 11.3%
Residential construction 2,004 0.4% 1,318 0.3% 160 —%
Consumer 8,843 1.7% 8,909 1.8% 10,120 1.9%
Municipal 6,029 1.1% 6,151 1.2% 8,138 1.5%
Total loans receivable $ 530,782 100.0% $ 506,328 100.0% $ 520,599 100.0%
Allowance for loan losses (8,042) (7,678) (10,233)
Net deferred origination costs 104 318
Loans receivable, net $ 522,740 $ 498,754 $ 510,684
LOAN PORTFOLIO BY LOCATION
June 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 $ 81,190 $ 4,981 $ 7,810 $ 15,858 $ 3,860 $ 113,699 21.4%
Commercial real estate 130,795 10,229 8,491 19,483 21,818 190,816 36.0%
Commercial construction 5,085 5,000 10,085 1.9%
Land and land development 20,623 1,547 6,655 1,349 721 30,895 5.8%
Agriculture 1,902 3,633 18,925 65,836 4,535 94,831 17.8%
Multifamily 10,087 150 4,984 30 20 15,271 2.9%
Residential real estate 41,939 3,103 3,799 6,967 2,501 58,309 11.0%
Residential construction 1,214 193 597 2,004 0.4%
Consumer 5,256 782 610 1,875 320 8,843 1.7%
Municipal 4,678 1,351 6,029 1.1%
Total $ 302,769 $ 25,776 $ 56,467 $ 111,995 $ 33,775 $ 530,782 100.0%
Percent of total loans in geographic area 57.0% 4.9% 10.6% 21.1% 6.4% 100.0%

Asset Quality

Nonperforming loans totaled $4.8 million at June 30, 2013, down from $5.1 million at March 31, 2013 and $6.6 million at the end of the same period last year. The allowance for loan loss coverage of non-performing loans increased to 167.6% in the second quarter, up from 149.5% at March 31, 2013 and 155.2% at June 30, 2012, respectively.

Total nonperforming assets (NPAs) were $9.3 million at quarter end, compared to $9.8 million at March 31, 2013, and $11.9 million at June 30, 2012. Outstanding troubled debt restructured loans totaled $11.8 million, up from $7.8 million at March 31, 2013 and $5.2 million at June 30, 2012.

Classified loans totaled $26.3 million at quarter end, up slightly from $25.3 million at March 31, 2013 and down significantly from $35.8 million at June 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 Company anticipates the resolution of several larger classified loans in the latter half of this year.

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

NPA BY CATEGORY
(Dollars in thousands) 6/30/2013 % of total 3/31/2013 % of total 6/30/2012 % of total
Commercial loans $ 1,417 15.2% $ 1,573 16.0% $ 4,283 36.1%
Commercial real estate 2,728 29.3% 2,910 29.7% 682 5.7%
Land and land development 4,626 49.6% 4,852 49.5% 6,364 53.7%
Agriculture 276 3.0% 276 2.8% 34 0.3%
Residential real estate 173 1.9% 186 1.9% 479 4.0%
Consumer 91 1.0% 4 0.1% 20 0.2%
Total NPA by Categories $ 9,311 100.0% $ 9,801 100.0% $ 11,862 100.0%

The Company's delinquent, non-performing and classified loan totals continue to trend down from prior periods in most segments. Land and land development loans still comprise the greatest proportion of NPA totals, primarily as a result of one large relationship. Commercial, commercial real estate and land development NPAs all showed moderate decreases from the prior quarter, reflecting paydowns from sales activity. 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 $4.5 million at June 30, 2013, compared to $4.7 million at March 31, 2013 and $5.3 million at June 30, 2012. The Company sold 2 properties totaling $162,000 in the second quarter and had net valuation adjustments of $9,000. 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 decreased by $26.2 million during the quarter, as the Company sold some longer-term securities to reduce interest rate risk and moved several municipal bonds, totaling $8.2 million, into the held-to-maturity portfolio. Higher market rates also reduced the value of the Company's investment portfolio, and the Company continued to experience rapid prepayments on its mortgage-backed securities, although these speeds are expected to slow down with the recent rise in mortgage rates. "It continues to be a tough fixed income investment climate, as low overall market rates combined with the threat of additional increases in these rates requires a cautious approach," said Chief Financial Officer Doug Wright. "However, higher market rates also offer the opportunity for higher yields in both the Company's investment and loan portfolio," he added.

Deposits totaled $699.5 million at June 30, 2013, compared to $719.5 million at March 31, 2013 and $716.5 million at the end of the second quarter last year. The decrease from the first quarter reflects additional reductions in higher-cost retail CDs and the use of funds for operating and tax purposes by clients. The table below provides information on both current composition and trends in the deposit portfolio.

DEPOSITS
(Dollars in thousands) 6/30/2013 % of total 3/31/2013 % of total 6/30/2012 % of total
Non-interest bearing demand accounts $ 224,472 32.0% $ 236,250 32.8% $ 183,778 25.7%
Interest bearing demand accounts 100,490 14.4% 104,294 14.5% —%
NOW —% —% 105,128 14.7%
Money market accounts 222,161 31.8% 220,119 30.6% 214,975 30.0%
Savings & IRA accounts 64,390 9.2% 66,668 9.3% 73,803 10.3%
Certificates of deposit (CDs) 37,495 5.4% 39,087 5.4% 50,185 7.0%
Jumbo CDs 50,362 7.2% 52,898 7.4% 60,524 8.4%
Brokered CDs —% —% 26,667 3.7%
CDARS CDs to local customers 151 —% 151 —% 1,449 0.2%
Total Deposits $ 699,521 100.0% $ 719,467 100.0% $ 716,509 100.0%

Non-interest bearing demand deposits comprise 32.0% of the deposit portfolio, as compared to 25.7% a year ago. Overall, low-cost transaction deposits represent 78.2% of the deposit portfolio, up from 70.3% at June, 2012. The Company has no remaining brokered CDs outstanding.

Stockholders' equity totaled $113.0 million at June 30, 2013, compared to $115.9 million at March 31, 2013 and $111.7 million at June 30, 2012. The decrease from the sequential quarter reflects the negative $4.4 million impact of higher market rates on the value of the Company's securities portfolio. The increase over last year is a result of earnings improvement, which more than offset the reduction in the value of the Company's securities portfolio. Tangible book value per common share totaled $13.38 at June 30, 2013, compared to $13.85 at March 31, 2013 and $13.22 at June 30, 2012. The June 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 12.1%, compared to 12.4% at March 31, 2013 and 11.7% at the end of June last year. Tangible common equity to tangible assets was 9.3%, compared to 9.6% at March 31, 2013 and 8.9% at June 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 $1.1 million, or $0.16 per common diluted share in the first quarter of 2013, and $301,000, or $0.05 per common diluted share in the second quarter of 2012. For the six-month period ended June 30, 2013, net income applicable to common shareholders totaled $2.5 million, or $0.39 per common diluted share, compared to $636,000, or $0.12 per common diluted share for the same time period in 2012. Per share results for the quarter and six-month period ending June 30, 2012 have been adjusted for the impact of a 1-for-10 reverse stock split, which became effective in October, 2012.

Second quarter 2013 net interest income before provision totaled $7.5 million, up from $7.3 million in the first quarter of 2013, but down from $7.8 million in the second quarter of 2012. The increase from the first quarter reflects continued lower funding costs and higher loan interest income as loan balances increased. The decrease from the June quarter last year reflects lower loan and investment interest income, as lower yields on these portfolios more than offset lower funding costs. The net interest margin was 3.59% for the second quarter, compared to 3.44% in the first quarter of 2013 and 3.67% in the second quarter of 2012. The yield on interest earning assets improved over first quarter results while funding costs remained stable. Both the yield on earning assets and funding costs were down from the same period in 2012.

Intermountain recorded a $247,000 provision for loan losses in the second quarter, up modestly from the $179,000 provision recorded in the first quarter, but down from the $1.6 million expense recorded in the second quarter of 2012. The Company experienced net recoveries of $117,000 during the second quarter, compared to net charge-offs of $444,000 and $2.7 million in the periods ending March 31, 2013 and June 30, 2012 respectively. For the six-month period end June 30, 2013, net charge-offs were $327,000 versus $5.0 million for the same period in 2012.

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

Three Months Ended 6/30/2013 % of Total 3/31/2013 % of Total 6/30/2012 % of Total
(Dollars in thousands)
Fees and service charges $ 1,895 66% $ 1,675 66% $ 1,592 58%
Loan related fee income 696 24% 567 22% 686 24%
Net gain on sale of securities 163 6% 40 2% —%
Net gain on sale of other assets 2 —% 4 —% 18 1%
Other-than-temporary credit impairment on investment securities (21) (1)% (42) (2)% (52) (2)%
BOLI income 85 3% 84 3% 87 3%
Hedge fair value adjustment 80 3% 67 3% 90 3%
Unexercised warrant liability fair value (54) (2)% 56 2% 158 6%
Other income 40 1% 113 4% 189 7%
Total $ 2,886 100% $ 2,564 100% $ 2,768 100%
Six Months Ended 6/30/2013 % of Total 6/30/2012 % of Total
(Dollars in thousands)
Fees and service charges 3,570 66% 3,185 62%
Loan related fee income 1,263 23% 1,299 25%
Net gain on sale of securities 203 3% 585 11%
Net gain on sale of other assets 6 —% 22 —%
Other-than-temporary credit impairment on investment securities (63) (1)% (323) (6)%
BOLI income 170 3% 174 3%
Hedge fair value adjustment 146 3% (294) (6)%
Unexercised warrant liability fair value 2 —% 158 3%
Other income 153 3% 398 8%
Total 5,450 100% 5,204 100%

Other income in the second quarter of 2013 was $2.9 million, up from $2.6 million and $2.8 million in the first quarter of 2013 and second quarter of 2012, respectively. Higher investment services income and net gains on sales of securities offset lower secured savings contract income for both periods. "We're seeing a strong expansion of client demand for trust and investment services, which is offsetting continued pressure on some of our traditional deposit fees," said Hecker.

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

Three Months Ended 6/30/2013 % of Total 3/31/2013 % of Total 6/30/2012 % of Total
(Dollars in thousands)
Salaries and employee benefits $ 4,283 52% $ 4,175 51% $ 3,871 46%
Occupancy expense 1,521 19% 1,524 19% 1,623 20%
Advertising 180 2% 114 1% 168 2%
Fees and service charges 656 8% 617 8% 629 8%
Printing, postage and supplies 173 2% 217 3% 300 4%
Legal and accounting 471 6% 340 4% 396 5%
FDIC assessment 165 2% 186 2% 308 4%
OREO operations 32 —% 111 1% 120 1%
Other expense 739 9% 894 11% 807 10%
Total $ 8,220 100% $ 8,178 100% $ 8,222 100%
Six Months Ended 6/30/2013 % of Total 6/30/2012 % of Total
(Dollars in thousands)
Salaries and employee benefits $ 8,458 51% $ 8,006 48%
Occupancy expense 3,045 19% 3,307 20%
Advertising 294 2% 280 2%
Fees and service charges 1,273 8% 1,250 8%
Printing, postage and supplies 390 2% 601 4%
Legal and accounting 812 5% 746 5%
FDIC assessment 351 2% 621 3%
OREO operations 143 1% 224 1%
Other expense 1,632 10% 1,485 9%
Total $ 16,398 100% $ 16,520 100%

Operating expenses were stable at $8.2 million in the second quarter of 2013, compared to $8.2 in both prior periods, as increases in salary, legal and professional expenses were offset by decreases in printing, supplies, FDIC assessment and OREO operations expenses. Salary, professional and occupancy expenses included one-time costs related to system upgrades that are expected to result in cost savings in future periods.

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 $7.5 million tax valuation allowance, resulting in a net deferred tax asset of $15.1 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)
6/30/2013 3/31/2013 6/30/2012
(Dollars in thousands, except per share amounts)
ASSETS
Cash and cash equivalents:
Interest-bearing $ 33,474 $ 45,897 $ 39,871
Non-interest bearing and vault 7,003 4,074 9,434
Restricted cash 12,464 12,279 12,464
Available-for-sale securities, at fair value 256,616 282,769 285,095
Held-to-maturity securities, at amortized cost 22,991 14,795 14,990
Federal Home Loan Bank of Seattle stock, at cost 2,228 2,249 2,310
Loans held for sale 1,081 2,023 4,083
Loans receivable, net 522,740 498,754 510,684
Accrued interest receivable 4,463 4,051 4,522
Office properties and equipment, net 35,408 35,231 36,530
Bank-owned life insurance 9,642 9,556 9,301
Other real estate owned ("OREO") 4,512 4,664 5,267
Prepaid expenses and other assets 17,936 17,538 19,033
Total assets $ 930,558 $ 933,880 $ 953,584
LIABILITIES
Deposits $ 699,521 $ 719,467 $ 716,509
Securities sold subject to repurchase agreements 85,605 66,157 65,458
Advances from Federal Home Loan Bank 4,000 4,000 29,000
Unexercised stock warrant liability 826 772 850
Cashier checks issued and payable 2,278 2,767 282
Accrued interest payable 316 337 1,979
Other borrowings 16,527 16,527 16,527
Accrued expenses and other liabilities 8,440 7,942 11,326
Total liabilities 817,513 817,969 841,931
STOCKHOLDERS' EQUITY
Common stock - voting shares 96,358 96,358 96,290
Common stock - non-voting shares 31,941 31,941 31,941
Preferred stock, Series A 26,770 26,648 26,335
Preferred stock, Series B
Accumulated other comprehensive income (1) (641) 3,829 2,272
Accumulated deficit (41,383) (42,865) (45,185)
Total stockholders' equity 113,045 115,911 111,653
Total liabilities and stockholders' equity $ 930,558 $ 933,880 $ 953,584
Book value per common share, excluding preferred stock $ 13.39 $ 13.85 $ 13.24
Tangible book value per common share, excluding preferred stock (2) $ 13.38 $ 13.85 $ 13.22
Shares outstanding at end of period (3) 6,443,294 6,443,294 6,441,986
Stockholders' Equity to Total Assets 12.15% 12.41% 11.71%
Tangible Common Equity to Tangible Assets 9.27% 9.55% 8.93%
(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 June 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
6/30/2013 3/31/2013 6/30/2012
(Dollars in thousands, except per share amounts)
Interest income:
Loans $ 6,893 $ 6,710 $ 7,054
Investments 1,580 1,593 2,072
Total interest income 8,473 8,303 9,126
Interest expense:
Deposits 510 561 744
Borrowings 441 424 571
Total interest expense 951 985 1,315
Net interest income 7,522 7,318 7,811
Provision for losses on loans (247) (179) (1,575)
Net interest income after provision for losses on loans 7,275 7,139 6,236
Other income (expense):
Fees and service charges 1,895 1,675 1,592
Loan related fee income 696 567 686
Net gain on sale of securities 163 40
Net gain on sale of other assets 2 4 18
Other-than-temporary impairment on investments (21) (42) (52)
Bank-owned life insurance 85 84 87
Fair value adjustment on cash flow hedge 80 67 90
Unexercised warrant liability fair value adjustment (54) 56 158
Other income 40 113 189
Total other income, net 2,886 2,564 2,768
Operating expenses:
Salaries and employee benefits 4,283 4,175 3,871
Occupancy expense 1,521 1,524 1,623
Advertising 180 114 168
Fees an service charges 656 617 629
Printing, postage and supplies 173 217 300
Legal and accounting 471 340 396
FDIC assessment 165 186 308
OREO operations 32 111 120
Other expenses 739 894 807
Total operating expenses 8,220 8,178 8,222
Income before income tax benefit 1,941 1,525 782
Income tax benefit
Net income 1,941 1,525 782
Preferred stock dividend 460 458 481
Net Income applicable to common stockholders $ 1,481 $ 1,067 $ 301
Income per share - basic (1) 0.23 0.17 0.05
Income per share - diluted (1) 0.23 0.16 0.05
Weighted-average common shares outstanding - basic (1) 6,443,294 6,442,988 5,901,321
Weighted-average common shares outstanding - diluted (1) 6,484,762 6,480,024 5,919,188
(1) Share numbers for June 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)
Six Months Ended
6/30/2013 6/30/2012
(Dollars in thousands, except per share amounts)
Interest income:
Loans $ 13,604 $ 14,126
Investments 3,172 4,120
Total interest income 16,776 18,246
Interest expense:
Deposits 1,070 1,566
Borrowings 866 1,247
Total interest expense 1,936 2,813
Net interest income 14,840 15,433
Provision for losses on loans (426) (2,534)
Net interest income after provision for losses on loans 14,414 12,899
Other income (expense):
Fees and service charges 3,570 3,185
Loan related fee income 1,263 1,299
Net gain on sale of securities 203 585
Net gain on sale of other assets 6 22
Other-than-temporary impairment on investments (63) (323)
Bank-owned life insurance 170 174
Fair value adjustment on cash flow hedge 146 (294)
Unexercised warrant liability fair value adjustment 2 158
Other income 153 398
Total other income, net 5,450 5,204
Operating expenses:
Salaries and employee benefits 8,458 8,006
Occupancy expense 3,045 3,307
Advertising 294 280
Fees an service charges 1,273 1,250
Printing, postage and supplies 390 601
Legal and accounting 812 746
FDIC assessment 351 621
OREO operations 143 224
Other expenses 1,632 1,485
Total operating expenses 16,398 16,520
Income before income tax benefit 3,466 1,583
Income tax benefit
Net income 3,466 1,583
Preferred stock dividend 918 947
Net Income applicable to common stockholders $ 2,548 $ 636
Income per share - basic (1) $ 0.40 $ 0.12
Income per share - diluted (1) 0.39 0.12
Weighted-average common shares outstanding - basic (1) 6,443,142 5,164,576
Weighted-average common shares outstanding - diluted (1) 6,482,376 5,181,109
(1) Share numbers for June 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 Six Months Ended
6/30/2013 3/31/2013 6/30/2012 6/30/2013 6/30/2012
Net Interest Spread:
Yield on Loan Portfolio 5.29% 5.25% 5.48% 5.27% 5.52%
Yield on Investments & Cash 1.99% 1.87% 2.46% 1.93% 2.40%
Yield on Interest-Earning Assets 4.04% 3.90% 4.28% 3.97% 4.27%
Cost of Deposits 0.29% 0.32% 0.41% 0.30% 0.43%
Cost of Advances 1.99% 3.14% 2.21% 2.42% 2.21%
Cost of Borrowings 1.89% 1.70% 2.17% 1.79% 2.29%
Cost of Interest-Bearing Liabilities 0.48% 0.49% 0.64% 0.48% 0.68%
Net Interest Spread 3.56% 3.41% 3.65% 3.48% 3.60%
Net Interest Margin 3.59% 3.44% 3.67% 3.51% 3.61%
Performance Ratios:
Return on Average Assets 0.84% 0.65% 0.33% 0.74% 0.33%
Return on Average Common Stockholders' Equity 6.77% 4.88% 1.82% 5.85% 2.27%
Return on Average Common Tangible Equity (1) 6.77% 4.89% 1.82% 5.85% 2.28%
Operating Efficiency 78.98% 82.76% 77.72% 80.82% 80.05%
Noninterest Expense to Average Assets 3.54% 3.48% 3.44% 3.50% 3.49%
(1) Average common tangible equity is average common stockholders' equity less average other intangible assets.
INTERMOUNTAIN COMMUNITY BANCORP
LOAN AND REGULATORY CAPITAL DATA
6/30/2013 3/31/2013 6/30/2012
(Dollars in thousands)
Loan Data
Net Charge-Offs to Average Net Loans (QTD Annualized) -0.09% 0.35% 2.16%
Loan Loss Allowance to Total Loans 1.52% 1.52% 1.96%
Nonperforming Assets:
Accruing Loans-90 Days Past Due $ — $ — $ —
Nonaccrual Loans 4,799 5,137 6,595
Total Nonperforming Loans 4,799 5,137 6,595
OREO 4,512 4,664 5,267
Total Nonperforming Assets ("NPA") $ 9,311 $ 9,801 $ 11,862
Outstanding Troubled Debt Restructured Loans 11,791 7,827 5,237
NPA to Total Assets 1.00% 1.05% 1.23%
NPA to Net Loans Receivable 1.78% 1.97% 2.32%
NPA to Estimated Risk Based Capital 7.47% 7.83% 9.72%
NPA to Tangible Equity + Allowance for Loan Loss 7.69% 7.93% 9.74%
Loan Delinquency Ratio (30 days and over) 0.22% 0.14% 0.25%
6/30/2013 3/31/2013 6/30/2012
Allowance for Loan Loss by Loan Type (Dollars in thousands)
Commercial loans $ 1,900 $ 1,763 $ 2,429
Commercial real estate loans 2,736 2,814 4,032
Commercial construction loans 231 217 94
Land and land development loans 956 1,210 1,565
Agriculture loans 692 241 207
Multifamily loans 54 55 57
Residential real estate loans 1,195 1,103 1,601
Residential construction loans 44 35 4
Consumer loans 203 206 201
Municipal loans 31 34 43
Totals $ 8,042 $ 7,678 $ 10,233
Regulatory Capital Estimated Actual Actual
Total capital (to risk-weighted assets): 6/30/2013 3/31/2013 6/30/2012
The Company 21.24% 21.85% 20.14%
Panhandle State Bank 20.01% 20.47% 18.43%
Tier 1 capital (to risk-weighted assets):
The Company 19.99% 20.60% 18.88%
Panhandle State Bank 18.76% 19.22% 17.19%
Tier 1 capital (to average assets):
The Company 12.88% 12.69% 12.13%
Panhandle State Bank 12.09% 11.77% 11.17%

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