Coeur d'Alene-based Idaho Independent Bank has reported a much smaller net loss of $1.2 million, or 22 cents a share, for the third quarter, down sharply from a loss of $2.2 million, or 35 cents a share, in the year-earlier period.

Bank Chairman and CEO Jack W. Gustavel says Idaho Independent improved a key capital ratio, and the bank is well above the threshold for being considered "well capitalized" by federal regulators.

"We are continuing to execute on our strategy of reducing land, land development, and lot loans," Gustavel says. "The strategy is working because of our strong capital and the careful management of our balance sheet."

IIB's total loans as of Sept. 30 were $313.8 million, down 24 percent from a year earlier, while deposits fell 5.8 percent, to $403.7 million over that period. The bank's total assets decreased 5.8 percent in the 12 months ended Sept. 30, to $479.3 million.

The key capital ratio Gustavel speaks of is total risk-based capital to risk-weighted assets. As of Sept. 30, that ratio was 16.65, an improvement over 15.02 percent a year earlier, the bank says.

"Our capital gives IIB the flexibility it needs to systematically work through problem credits and not be forced into ill-conceived, short-term solutions," Gustavel says.

He adds, "We are also working very hard to be ready to take advantage of the many opportunities that will present themselves when the economy stabilizes and turns the corner."

As of Sept. 30, IIB's allowance for loan losses totaled $10.3 million, compared with $18.2 million, a year earlier. Nonperforming assets at the end of the third quarter totaled $47.1 million, up markedly from $22.8 million a year earlier.