Idaho Banking Company Reports Mid-Year Results

BOISE, July 21 /PR Newswire-First Call/ -- Idaho Banking Company (OTC Bulletin Board: IBCB) today reported net income for the first half of 2003 of $153,000, an increase of 446% over the $28,000 reported in the first half of last year. Net income per share was $.18 for the first half of 2003, compared to only $.03 in the first half of 2002. The large increase in net income was due to a lower provision for loan losses, which fell from $400,000 to $100,000. Mortgage banking income increased 48% from the first half of 2002. Also, net securities gains of $56,000 contributed to earnings during the first half of the year. On the negative side, net interest margin was 3.30% in the first half of the year compared to 4.14% in the first half of 2002.

Net income of $83,000 for the second quarter of 2003 represents the best quarterly earnings since the third quarter of 1999. Net income per share of $.10 in the second quarter of 2003 was an improvement of 25% form the $.08 reported in the first quarter of 2003.

Nonperforming loans increased from one year ago. However, the allowance for loan losses was at 2.06% of loans at June 30, 2003, compared to 1.50% at June 30, 2002, which significantly increased the ratio of allowance to nonperforming loans. Loan recoveries exceeded loan charge-offs during the first half of 2003 by $76,000.

Net interest margin in the second quarter of 2003 fell to 3.21% compared to 4.08% in the second quarter of last year. This decline was primarily caused by the quarterly loan to deposit ratio falling from 86% in the second quarter of 2002 to 72% in the second quarter of 2003. In addition to the impact of the low loan-to-deposit ratio, net interest margin continued to be negatively impacted by the low interest rate environment. Also, high prepayment rates negatively impacted the yields on mortgage pool securities in the investment portfolio.

Loans at June 30, 2003 were at $77 million, 7% higher than one year ago. All of that 7% loan growth came in the first half of 2003, as loan totals were flat in the last half of 2002. Loan growth in the first half of 2003 was 16%, on an annualized basis.

The Bank also received approval from the Idaho Department of Finance and the Federal Reserve Bank to charter its new Meridian Branch. Construction of the new facility, located at the intersection of Eagle Road and Overland Road, is slated to commence in September with an opening target of May 31, 2004.

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

Source: Idaho Banking Company
Contacts: Michael K. Johnston, President & CEO at 208-472-4702, Mary E. Brimson, SVP Shareholder Relations at 208-472-4705, or Don D. Madsen, CFO at 208-947-1880

Idaho Banking Company
Financial Highlights (unaudited)
($ in thousands)

								Change
For the six months ended June 30:			2003		2002		$		%
	Net interest income		$1,860		$1,874		$ (14)		-1%
	Provision for loan losses		100		400		(300)		-75%
	Mortgage banking income		757		512		245		48%
	Securities gains		56		0		56
	Other noninterest income		149		163		(14)		-9%
	Noninterest expense		2,481		2,118		363		17%
	Net income before taxes		241		31		210		677%
	Income taxes		88		3		85		2833%
	Net income		153		28		125		446%

	Net income per share
		Basic	0.18		0.03		0.15		500%
		Diluted	0.18		0.03		0.15		500%

								Change
At June 30:			2003		2002		$		%
	Loans		$ 76,958		$71,637		$ 5,321		7%
	Allowance for loan losses		1,586		1,078		508		47%
	Assets		125,668		104,418		21,250		20%
	Deposits		106,119		84,127		21,992		26%
	Shareholders' equity		11,316		10,908		408		4%
	Nonperforming loans		348		313		35		11%
	Other real estate owned		0		0		0

	Book value per share		13.44		12.96		0.48		4%
	Shares of common stock outstanding		841,846		841,846		0		0%

	Allowance to loan ratio		2.06%		1.50%
	Allowance to nonperforming loans		4.6	X	3.4	X
	Nonperforming loans to total loans		0.45%		0.44%
								Change
Averages for the six months ended June 30:			2003		2002		$		%
	Loans		$ 73,389		$68,737		$ 4,652		7%
	Earning assets		116,193		93,340		22,853		24%
	Assets		121,543		98,390		23,153		24%
	Deposits		102,414		76,733		25,681		33%
	Shareholders' equity		10,969		10,694		275		3%

For the six months ended June 30:
	Return on average assets		0.25%		0.06%
	Return on average equity		2.81%		0.53%
	Average loans to deposits		71.66%		89.58%
	Net interest margin - tax equivalent		3.30%		4.14%
	Net loan charge-offs (recoveries)		(76)		581
	Net charge-offs to loans		-0.21%		1.70%

Quarterly Trends (Unaudited)			2003 Q2		2003 Q1		2002 Q4		2002 Q3		2002 Q2
	Net interest income		$925		$935		$970		$963		$925
	Provision for loan losses		20		80		170		230		220
	Mortgage banking income		378		379		371		401		232
	Securities gains		56						3
	Other noninterest income		77		72		77		83		79
	Noninterest expense		1,295		1,186		1,145		1,166		1,022
	Net income before taxes		121		120		103		54		(6)
	Income taxes		38		50		63		14		(7)
	Net income		83		70		40		40		1

	Net income per share
		Basic	0.10		0.08		0.05		0.05		0.00
		Diluted	0.10		0.08		0.05		0.05		0.00

	Average loans		75,030		71,730		72,319		71,473		67,784
	Average earning assets		118,301		114,061		112,090		103,075		92,784
	Average assets		123,547		119,516		117,771		108,336		98,023
	Average deposits		104,594		100,211		97,273		89,420		78,496
	Average shareholders' equity		11,009		10,930		10,865		10,832		10,799

	Return on average assets		0.27%		0.24%		0.13%		0.15%		0.00%
	Return on average equity		3.02%		2.60%		1.46%		1.47%		0.04%
	Average loans to deposits		71.73%		71.58%		74.35%		79.93%		86.35%
	Net interest margin - tax equivalent		3.21%		3.40%		3.51%		3.79%		4.08%

	Nonperforming loans - period end		$348		$261		$333		$386		$313
	Other real estate owned - period end		0		0		0		0		0
	Loans - period end		76,958		74,210		71,340		71,142		71,637
	Allowance for loan losses - period end		1,586		1,575		1,410		1,309		1,078
	Net charge-offs (recoveries) - quarterly		9		(85)		69		(1)		336

	Allowance to loans		2.06%		2.12%		1.98%		1.84%		1.50%
	Allowance to nonperforming loans		4.6	X	6.0	X	4.2	X	3.4	X	3.4	X
	Nonperforming loans to total loans		0.45%		0.35%		0.47%		0.54%		0.44%
	Net charge-offs to loans - annualized		0.05%		-0.48%		0.38%		-0.01%		1.99%