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Intermountain Community Bancorp Reports Third Quarter Earnings

Intermountain Community Bancorp Reports Third Quarter Earnings

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   6/30/2013 % of   9/30/2012 % of
                                      total            total            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    86              —               235       
costs
Loans receivable, net       $ 520,239       $ 522,740       $ 502,852 
                                                                  



LOAN PORTFOLIO BY LOCATION
September 30, 2013
               North Idaho                  E. Oregon,                 % of
(Dollars in    -           Magic   Greater  SW                         Loan
thousands)     Eastern     Valley  Boise    Idaho,     Other   Total   type to
               Washington  Idaho   Area     excluding                  total
                                            Boise                      loans
Commercial     $ 80,249    $ 4,880 $ 9,741  $ 15,111   $ 1,257 $       21.1%
loans                                                          111,238
Commercial     126,447     10,191  9,401    17,943     21,134  185,116 35.1
real estate
Commercial     5,124       —       145      —          1,036   6,305   1.2
construction
Land and land  25,120      1,412   5,652    1,327      661     34,172  6.5
development
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    43,910      3,435   4,564    6,809      2,467   61,185  11.6
real estate
Residential    1,608       —       —        113        —       1,721   0.3
construction
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   $       $ 59,264 $ 105,644  $       $       100.0%
                           27,004                      31,881  528,183
Percent of
total loans in 57.7%       5.1%    11.2%    20.0%      6.0%    100.0%  
geographic
area
                                                                

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   9/30/2012 % of
                                                       total            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           4,415     62.3       4,626     49.6   6,204     55.0
development
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
showeddecreases 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   6/30/2013 % of   9/30/2012 % of
                                      total            total            total
Non-interest bearing demand $ 240,116 33.8%  $ 224,472 32.0%  $ 214,524 29.7%
accounts
Interest bearing demand     100,572   14.1   100,490   14.4   89,941    12.5
accounts
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     35,827    5.0    37,495    5.4    47,509    6.6
(CDs)
Jumbo CDs                   50,613    7.1    50,362    7.2    59,433    8.2
Brokered CDs                —         —      —         —      18,994    2.6
CDARS CDs to local          151       0.1    151       —      601       0.1
customers
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  6/30/2013 % of  9/30/2012 % of
                                         Total           Total           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     (8)       —     2         —     (7)       —
other assets
Other-than-temporary credit
impairment on investment       —         —     (21)      (1)   (34)      (1)
securities
BOLI income                    83        3     85        3     86        3
Hedge fair value adjustment    89        4     80        3     (6)       —
Unexercised warrant liability  (179)     (7)   (54)      (2)   (49)      (2)
fair value adjustment
Other income                   (4)       —     40        1     174       7
Total                          $ 2,525   100%  $ 2,886   100%  $ 2,552   100%
                                                                   
                                                                   
Nine Months Ended                            9/30/2013 % of  9/30/2012 % of
                                                         Total           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                    (2)       —     15        —
assets
Other-than-temporary credit
impairment on investment                     (63)      (1)   (357)     (5)
securities
BOLI income                                  252       3     260       3
Hedge fair value adjustment                  235       3     (300)     (4)
Unexercised warrant liability                (177)     (2)   108       1
fair value
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      6/30/13   % of      9/30/12   % of
                             Total               Total               Total
                    (Dollars in thousands)
Salaries and         $ 4,133 51%       $ 4,283   53%       $ 4,103   50%
employee benefits
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     88      1         85        1         141       2
charges
Printing, postage    176     2         173       2         178       2
and supplies
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      9/30/2012 % of
                                                 Total               Total
                                    (Dollars in thousands)
Salaries and                         $ 12,591  52%       $ 12,110  49%
employee benefits
Occupancy expense                    3,479     14        3,688     15%
Technology                           2,783     11        2,688     11%
Advertising                          488       2         459       2%
Fees and service                     267       1         466       2%
charges
Printing, postage                    566       2         779       3%
and supplies
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 265,000         256,616        290,311
fair value
Held-to-maturity securities, at   26,241          22,991         14,843
amortized cost
Federal Home Loan Bank of Seattle 2,228           2,228          2,290
stock, at cost
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,  35,420          35,408         36,031
net
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        64,409          85,605         56,989
repurchase agreements
Advances from Federal Home Loan   4,000           4,000          29,000
Bank
Unexercised stock warrant         1,004           826            899
liability
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        8,321           8,440          11,819
liabilities
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   (331)           (641)          3,724
income (1)
Accumulated deficit               (39,912)        (41,383)       (44,841)
Total stockholders' equity        114,950         113,045        113,584
Total liabilities and             $ 923,764       $ 930,558      $ 953,292
stockholders' equity
                                                              
Book value per common share,      $ 13.67         $ 13.39        $ 13.53
excluding preferred stock
Tangible book value per common
share, excluding preferred stock  $ 13.66         $ 13.38        $ 13.51
(2)
Shares outstanding at end of      6,443,294       6,443,294      6,441,986
period (3)
Stockholders' Equity to Total     12.44%          12.15%         11.91%
Assets
Tangible Common Equity to         9.53%           9.27%          9.13%
Tangible Assets
                                                              
(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 82             (247)        (1,154)
loans
Net interest income after provision   7,500          7,275        6,515
for losses on loans
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      (8)            2            (7)
assets
Other-than-temporary impairment       —              (21)         (34)
("OTTI") losses on investments (1)
Bank-owned life insurance             83             85           86
Fair value adjustment on cash flow    89             80           (6)
hedge
Unexercised warrant liability fair    (179)          (54)         (49)
value adjustment
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       $ 1,471        $ 1,481      $ 343
stockholders
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        6,443,294      6,443,294    6,441,986
outstanding — basic (1)
Weighted average common shares        6,497,886      6,484,762    6,458,227
outstanding — diluted (1)
                                                               
(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  (344)               (3,688)
loans
Net interest income after provision    21,914              19,414
for losses on loans
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     (63)                (357)
investments
Bank-owned life insurance              252                 260
Fair value adjustment on cash flow     235                 (300)
hedge
Unexercised warrant liability fair     (177)               108
value adjustment
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        $ 4,019             $ 978
stockholders
Income per share- basic (1)           $ 0.62              $ 0.17
Income per share- diluted (1)         0.62                0.17
Weighted-average common shares         6,443,193           5,593,487
outstanding- basic (1)
Weighted-average common shares         6,488,094           5,610,026
outstanding- diluted (1)
                                                         
(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          5.02%       5.29%      5.38%      5.18%      5.48%
Portfolio
Yield on Investments & 1.92%       1.99%      2.10%      1.93%      2.30%
Cash
Yield on
Interest-Earning       3.88%       4.04%      4.04%      3.94%      4.19%
Assets
                                                               
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       0.44%       0.48%      0.60%      0.47%      0.65%
Liabilities
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      0.83%       0.84%      0.34%      0.77%      0.34%
Assets
Return on Average
Common Stockholders'   6.70%       6.77%      1.58%      6.11%      2.04%
Equity
Return on Average
Common Tangible Equity 6.70%       6.77%      1.58%      6.12%      2.05%
(1)
Operating Efficiency   81.39%      78.98%     80.64%     81.00%     80.24%
Noninterest Expense to 3.46%       3.54%      3.41%      3.48%      3.46%
Average Assets
                                                               
(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        (0.05)%   (0.09)%   1.79%
Annualized)
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

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