Idaho TARP recipient posts first loss in years

Intermountain Community Bancorp, a December 2008 recipient of $27 million in TARP funding, has posted a loss of $23 million for 2009.

The Sandpoint, Idaho-based holding company for Panhandle State Bank, Intermountain Community Bank and Magic Valley Bank was forced to triple its provisions for loan losses to $36.3 million in 2009, precipitating the deficit.

Intermountain's loan loss provisions for 2008 were $10.4 million. 

Although the company had recently seen its profits shrink, the annual loss was its first in more than a decade. Intermountain thus became part of a growing group of banks and holding companies that were deemed fiscally sound (or "healthy") when they were approved for the Troubled Asset Relief Program, but now are facing mounting losses because of deteriorating loan portfolios.

Intermountain had net income of $1.2 million in 2008 and $9.4 million in 2007.  It has posted losses in four straight quarters since the Treasury Department gave it $27 million in public money in return for preferred stock and warrants.

Curt Hecker, the company's chief executive officer, voiced his disappointment with the company's performance in a press release:  "Like many of our peers, our financial results in 2009 were, frankly, far below anything we would have predicted a year ago."

Doug Wright, chief financial officer, also noted that immediate help might not be on the horizon.  "We anticipate that our assets will be flat or down for the next few quarters," he warned.

Like many financial institutions, Intermountain is actively attempting to reconfigure its loan portfolio, shedding residential construction loans as well as many other commercial real estate assets. Agricultural lending, however, remains a healthy part of its real estate portfolio mix.

Intermountain's first steps toward improvement include avoiding certain types of real estate loans and even specific geographic areas.  The company said it would avoid making non-owner occupied commercial real estate loans in districts it believes were overbuilt during the boon of the early decade.

Even more apparent is the concerted effort to avoid investing in Boise, where delinquency levels and price declines have yet to stabilize.  Intermountain said it has aggressively reduced its exposure to Boise's turbulence over the past year.

It has implemented other cost control efforts in an attempt to stem its losses.  Employee compensation and benefits were cut by 11 percent for 2010, and its workforce has been reduced, "primarily through attrition."

In a welcome gesture for investors and taxpayers financing TARP, the Company eliminated all bonuses for executives and management at the end of 2009.