SANDPOINT - Intermountain Community Bancorp announced Friday it has been approved for participation in a federal program designed to increase the flow of financing to businesses and consumers despite the flagging economy.

As a participant in the U.S. Department of Treasury program, Intermountain may issue up to $27 million in preferred stock with warrants to purchase up to approximately $4 million in common stock.

Preferred stock is usually a higher ranking stock than voting shares and its terms are negotiated between the corporation and the investor. By contrast, common stock may have voting, dividends and other rights.

As a condition of the approval, Intermountain, the holding company for Panhandle State Bank, will convene a special meeting of its shareholders to approve amending its articles of incorporation to allow the issuance of preferred stock. It's also filing the attendant proxy materials with the federal Securities and Exchange Commission.

Curt Hecker, president and CEO, said in a prepared statement that IMCB is pleased the company was one of the first community banks deemed strong enough to receive preliminary approval in the treasury's Capital Purchase Program, which is intended to promote confidence in the banking system and revitalize lending.

"While our capital position is already strong, this new equity will increase our capacity to lend and enhance our competitive position. The capital is offered at favorable terms. As such, it will serve as relatively low-cost insurance against uncertain economic times we face, and gives us an advantage with respect to future opportunities," Hecker said in the statement.

Hecker added that shareholders, customers and employees can consider it an opportunity to "acquire capital as a compliment to the company's ability to successfully operate under difficult economic conditions."

A call to Hecker was routed to a bank official in Sandpoint who said the company had no further comment. She said the date of the shareholder's meeting was not being released and referred inquiries to Executive Vice President and Chief Financial Officer Doug Wright, who could not be reached on Friday.

The treasury department announced the Capital Purchase Program on Oct. 14. Under the program, the treasury plans to purchase $250 billion of senior preferred shares on standardized terms. Participating companies must adopt the Treasury Department's standards for executive compensation and corporate governance for the period in which the treasury holds equity issued under the program.