Idaho Banking Company Reports Mid-Year Results BOISE, Idaho, July 20 /PRNewswire-FirstCall/ -- Today Idaho Banking Company (OTC:IBCB) (BULLETIN BOARD: IBCB) reported net income of $277,000 for the first half of 2004, 81% higher than the same period last year. On a per share basis, diluted net income increased to $.32 for the first half of the year which compares very favorably to the $.18 per share reported for the first half of 2003. Also, quarterly net income increased 89% from the same period in 2003 and the second quarter of 2004 established another quarterly earnings record for the Bank. The most significant factor driving the earnings improvement was a 45% growth in the loan portfolio in the past twelve months. The Bank finished the first half of the year with total loans exceeding $111 million which resulted in an improvement of the Bank's loan to deposit ratio to 87% as of June 30, 2004. The growth of the loan portfolio, combined with the improved mix in the balance sheet, yielded a 34% increase in net interest income over the first half of the prior year. Net interest margin for the first six months of the year also demonstrated significant improvement from 3.30% last year to 3.69% this year. Also, net interest margin for the second quarter was 3.75%, the highest quarterly net interest margin since the third quarter of 2002. The .25% increase in the Federal Funds rate and the Prime rate on loans in late June, along with the continued increase in the loan-to-deposit ratio, is expected to have a positive impact on net interest margin in the second half of 2004. Credit quality remains very strong with the Bank finishing the quarter with no nonperforming assets. The allowance for loan losses decreased to 1.48% of total loans because of the rapid growth in the loan portfolio. However, given the absence of nonperforming loans, and the fact that loan recoveries exceeded loan charge-offs by $52,000 in the first half, Management deems the allowance to be adequate. Compared to one year ago on June 30, 2003, total assets increased 27% to end the quarter at $159 million. Similarly, total deposits increased 21% to finish at $128 million. On a per share basis, the Company's book value was $13.60. The Bank remains well capitalized according to standards established by the Federal Reserve Bank and the State of Idaho. "With the strengthening economy throughout the Treasure Valley, loan growth in 2004 has been extremely robust," said Mike Johnston, President and CEO. "We've been successful at attracting a number of new high quality borrowers while adhering to time proven underwriting criteria. For the remainder of this year, it will be capital constraints rather than market opportunities that restrict further balance sheet expansion. The Board of Directors is currently examining this together with a number of other issues of strategic importance." Idaho Banking Company, a state-chartered commercial bank and member of the Federal Reserve Bank, was organized in 1996. The bank operates four branch offices and one mortgage office in Ada County. Idaho Banking Company Financial Highlights (unaudited) ($ in thousands) For the six months Change ended June 30: 2004 2003 $ % Net interest income $2,498 $1,860 $638 34% Provision for loan losses 60 100 (40) -40% Mortgage banking income 429 757 (328) -43% Securities gains 0 56 (56) -100% Other noninterest income 161 149 12 8% Noninterest expense 2,623 2,481 142 6% Net income before taxes 405 241 164 68% Income taxes 128 88 40 45% Net income 277 153 124 81% Net income per share Basic 0.33 0.18 0.15 83% Diluted 0.32 0.18 0.14 78% Change At June 30: 2004 2003 $ % Loans $111,407 $76,958 $34,449 45% Allowance for loan losses 1,653 1,586 67 4% Assets 159,273 125,668 33,605 27% Deposits 128,167 106,119 22,048 21% Shareholders' equity 11,590 11,316 274 2% Nonperforming loans 0 348 (348) -100% Other real estate owned 0 0 0 Book value per share 13.60 13.44 0.16 1% Shares of common stock outstanding 852,100 841,846 10,254 1% Allowance to loan ratio 1.48% 2.06% Allowance to nonperforming loans N/A 4.6 X Nonperforming loans to total loans 0.00% 0.45% Averages for the six months Change ended June 30: 2004 2003 $ % Loans $102,322 $73,389 $28,933 39% Earning assets 139,059 116,193 22,866 20% Assets 145,714 121,543 24,171 20% Deposits 123,424 102,414 21,010 21% Shareholders' equity 11,561 10,969 592 5% For the six months ended June 30: Return on average assets 0.38% 0.25% Return on average equity 4.82% 2.81% Average loans to deposits 82.90% 71.66% Net interest margin - tax equivalent 3.69% 3.30% Net loan charge-offs (recoveries) (52) (76) Net charge-offs to loans -0.10% -0.21% Idaho Banking Company Financial Highlights (unaudited) (Dollars in thousands, except per share) Quarterly Trends (Unaudited) 2004 Q2 2004 Q1 2003 Q4 2003 Q3 2003 Q2 Net interest income $1,323 $1,175 $1,118 $1,070 $925 Provision for loan losses 30 30 0 0 20 Mortgage banking income 250 179 175 229 378 Securities gains 0 0 0 0 56 Other noninterest income 83 78 67 61 77 Noninterest expense 1,410 1,213 1,173 1,216 1,295 Net income before taxes 216 189 187 144 121 Income taxes 59 69 79 43 38 Net income 157 120 108 101 83 Net income per share Basic 0.18 0.14 0.13 0.12 0.10 Diluted 0.18 0.14 0.12 0.12 0.10 Average loans 108,474 96,170 85,528 79,012 75,030 Average earning assets 144,942 133,175 127,554 121,515 118,301 Average assets 152,234 139,194 134,031 127,840 123,547 Average deposits 129,932 116,916 111,943 104,555 104,594 Average shareholders' equity 11,637 11,485 11,279 11,132 11,009 Return on average assets 0.41% 0.35% 0.32% 0.31% 0.27% Return on average equity 5.43% 4.20% 3.80% 3.60% 3.02% Average loans to deposits 83.49% 82.26% 76.40% 75.57% 71.73% Net interest margin - tax equivalent 3.75% 3.62% 3.55% 3.57% 3.21% Nonperforming loans - period end $-- $-- $64 $289 $348 Other real estate owned - period end 0 0 0 0 0 Loans - period end 111,407 104,217 88,612 82,079 76,958 Allowance for loan losses - period end 1,653 1,605 1,541 1,550 1,586 Net charge-offs (recoveries) - quarterly (19) (33) 10 35 9 Allowance to loans 1.48% 1.54% 1.74% 1.89% 2.06% Allowance to nonperforming loans N/A N/A 24.1 X 5.4 X 4.6 X Nonperforming loans to total loans 0.00% 0.00% 0.07% 0.35% 0.45% Net charge-offs to loans - annualized -0.07% -0.14% 0.05% 0.18% 0.05% DATASOURCE: Idaho Banking Company CONTACT: Michael K. Johnston, President and CEO, +1-208-472-4702, or Mary E. Brimson, SVP Shareholder Relations, +1-208-472-4705, or Don D. Madsen, EVP and CFO, +1-208-947-1880, all of Idaho Banking Company

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