SANDPOINT - Intermountain Community Bancorp, the holding company for Panhandle State Bank, didn't see second quarter profit but still found some silver linings.

Last Friday, the company reported a $1.1 million second quarter net loss applicable to common shareholders, or 13 cents per share. Those numbers are a downturn from the first quarter net loss of $442,000, or 5 cents per share. However, ICB officials took heart at improved net interest margins, increased interest income and reduced operation expenses.

"We continue to improve our credit quality metrics and focus on our strategic objectives of completing our announced capital raise, improving asset quality, reducing expenses, and remaining flexible in this changing economic environment," ICB Chief Executive Officer Curt Hecker said.

ICB officials attribute the increase in second quarter net losses to an increase in the loan loss provision. Comparable to a manufacturing company's allowance for returned products, loan loss provision is an expense that covers customer defaults, renegotiated terms and bad loans. The bolstered loan loss provision was partially offset by a boost in net interest income and declining operating expenses.

Altogether, ICB has seen a $1.5 million net loss this year, or 18 cents per share. Despite the second quarter tumble, the first six months of 2011 look rosy compared to last year. The same period in 2010 yielded a net loss applicable to common shareholders of $7.7 million, or 91 cents per share.

"Virtually every aspect of the income statement has improved significantly over the prior year," Hecker said. "However, we are not yet satisfied with our position and our team continues to be very focused on returning the company to strong levels of profitability."

Although the past few years have presented a tough environment for financial circles, ICB officials hope to weather the storm and promote local prosperity.

"Amidst continuing economic challenges, we continue to work closely with our customers and communities to boost local growth, improve our customers' profitability, and add value to these relationships," Hecker said.