Idaho Banking Company Reports Record Income

Today Idaho Banking Company (OTC BB: IBCB) reported net income of $552,000 for the first nine months of 2004, compared to $254,000 in the same period last year. Diluted net income per share was $.63 for the first nine months of the year compared to diluted net income of $.30 per share for the first nine months of 2003.

Net income for the third quarter of 2004 was $275,000, or $.31 per share, diluted. Third quarter earnings established another record for the Bank. Net interest margin for the third quarter of 2004 was 3.90%, the third consecutive quarter of improvement. Also, return on average equity for the third quarter of 2004 was 9.20%, compared to 3.60% in the third quarter of 2003.

The most significant factor driving the earnings improvement was a 41% growth in the loan portfolio in the past twelve months. The growth of the loan portfolio, combined with the improved mix in the balance sheet, resulted in a 37% increase in year-to-date net interest income.

Credit quality continues to be excellent, as the Bank reported no nonperforming assets, for the third consecutive quarter. The allowance for loan losses was 1.49% of total loans on September 30, 2004. This ratio has dropped from 1.89% one year ago, because of rapid loan growth. However, even though the allowance ratio has declined, the allowance has increased 11% from $1,550,000 one year ago to $1,724,000 on September 30, 2004.

Compared to one year ago on September 30, 2003, total assets increased 24% to end the quarter at $168 million. Total deposits increased 28% to finish at $147 million. On a per share basis, the Company's book value was $14.11, up 7% from one year ago. The Bank remains well capitalized according to standards established by the Federal Reserve Bank and the State of Idaho.

As previously announced, the Board of Directors intends to form a bank holding company to be named Idaho Bancorp. Shareholders will be asked to approve this plan later this year in a special shareholder meeting. The holding company structure is critical in ensuring that capital is available to continue the Bank's growth, without interruption. If the formation of the holding company is approved by shareholders, each shareholder will receive one share of Idaho Bancorp stock in exchange for each share of Idaho Banking Company stock. Contingent upon the formation of the holding company, the Board of Directors also intends to declare a 2 for 1 stock split, in the form of a 100% stock dividend, of the holding company stock, as soon as possible after the formation of Idaho Bancorp. The Bank's authorized shares are currently insufficient to declare stock splits or dividends.

Idaho Banking Company, a state-chartered commercial bank and member of the Federal Reserve, was organized in 1996. The bank operates four branch offices and one mortgage office in Ada County.