IMCB records 3Q net income drop

SANDPOINT - Intermountain Community Bancorp recently announced a severe drop in its net income, but CEO Curt Hecker maintains the company will weather the economic storm.

Panhandle State Bank's holding company saw its third quarter net income plummet 90 percent from the previous quarter and 90.7 percent from the third quarter of 2007.

The drop in earnings can be blamed, in part, on a decline in net margins due to decreasing interest rates and a dramatic slowdown in the economy, said CEO Curt Hecker.

"The prime rate of interest right now, which is the rate banks give to their larger corporate borrowers, is 4.5 percent. And the market for deposits has been very, very high. Banks make money on the difference between what they take in on loans and what they pay out on deposits. So that's the net interest margin, and that margin has shrunk with the reduction of interest rates," Hecker said.

Hecker said as rates begin to normalize, the margin will expand to healthier levels, but he expects the difficult economic atmosphere to continue for another three to four quarters until money from the federal recovery plan begins to move more fluidly through the economy.

The disheartening numbers will not hinder the bank's daily operations, nor will it effect its loaning process, said Hecker, who likens the bank's loans to an inventory that needs to be turned over in order to succeed.

"We're going to be business as usual with our customers here within the markets we operate in. We're a short commercial-lending bank … I think we have a little under $800 million in loans," Hecker said. "In order for us to maintain our current asset base, we need to make that many loans every year to replace the ones that go off."

Hecker said Panhandle customers should continue to feel secure about the bank's future as the nation moves through its economic troubles.

"Our health is really directly dependent upon the health of our customers and our community," Hecker said. "Unlike the big banks that loan globally, we just loan locally, so all those deposit dollars that we have go right back to our customers here."

While net income took a substantial hit, the company's total assets remained steady at $1.5 billion, an increase of .71 percent from the same period last year.