Idaho Banking Company Reports Record Income

Market Wire, October, 2004

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.

                                      Idaho Banking Company
                                 Financial Highlights (unaudited)
                             (Dollars in thousands, except per share)

                                                               Change
                                                         -----------------
For the nine months ended September 30:   2004     2003       $          %
                                       -------- -------- --------  -------
        Net interest income            $  4,002 $  2,930 $  1,072     37%
        Provision for loan losses           100      100        0      0%
        Mortgage banking income             658      986     (328)   -33%
        Securities gains                     16       56      (40)   -71%
        Other noninterest income            268      210       58     28%
        Noninterest expense               4,032    3,697      335      9%
        Net income before taxes             812      385      427    111%
        Income taxes                        260      131      129     98%
        Net income                          552      254      298    117%

        Net income per share
           Basic                           0.65     0.30     0.35    117%
           Diluted                         0.63     0.30     0.33    110%

                                                               Change
                                                         -----------------
At September 30:                          2004     2003       $          %
                                       -------- -------- --------  -------
        Loans                          $115,930 $ 82,079 $ 33,851     41%
        Allowance for loan losses         1,724    1,550      174     11%
        Assets                          167,955  135,738   32,217     24%
        Deposits                        147,253  115,445   31,808     28%
        Shareholders' equity             12,073   11,118      955      9%
        Nonperforming loans                   0      289     (289)  -100%
        Other real estate owned               0        0        0

        Book value per share              14.11    13.21     0.90      7%
        Shares of common stock
         outstanding                    855,700  841,926   13,774      2%

        Allowance to loan ratio            1.49%    1.89%
        Allowance to nonperforming
         loans                              N/A      5.4 X
        Nonperforming loans to total
         loans                             0.00%    0.35%

                                                               Change
                                                         -----------------
Averages for the nine months ended
 September 30:                            2004     2003       $          %
                                       -------- -------- --------  -------
        Loans                          $107,073 $ 75,284 $ 31,789     42%
        Earning assets                  144,808  117,986   26,822     23%
        Assets                          152,694  123,665   29,029     23%
        Deposits                        130,113  103,136   26,977     26%
        Shareholders' equity             11,674   11,024      650      6%

For the nine months ended September 30:
        Return on average assets           0.48%    0.27%
        Return on average equity           6.32%    3.08%
        Average loans to deposits         82.29%   72.99%
        Net interest margin - tax
         equivalent                        3.77%    3.40%
        Net loan charge-offs
         (recoveries)                       (83)     (41)
        Net charge-offs to loans          -0.10%   -0.07%


                                      Idaho Banking Company
                                 Financial Highlights (unaudited)
                            (Dollars in thousands, except per share)

Quarterly Trends (Unaudited)   2004 Q3  2004 Q2  2004 Q1  2003 Q4  2003 Q3
                              -------- -------- -------- -------- --------
  Net interest income         $ 1,504  $ 1,323  $ 1,175  $ 1,118  $ 1,070
  Provision for loan losses        40       30       30        0        0
  Mortgage banking income         229      250      179      175      229
  Securities gains                 16        0        0        0        0
  Other noninterest income        107       83       78       67       61
  Noninterest expense           1,409    1,410    1,213    1,173    1,216
  Net income before taxes         407      216      189      187      144
  Income taxes                    132       59       69       79       43
  Net income                      275      157      120      108      101

  Net income per share
      Basic                      0.32     0.18     0.14     0.13     0.12
      Diluted                    0.31     0.18     0.14     0.12     0.12

  Average loans               116,470  108,474   96,170   85,528   79,012
  Average earning assets      156,182  144,942  133,175  127,554  121,515
  Average assets              166,503  152,234  139,194  134,031  127,840
  Average deposits            143,346  129,932  116,916  111,943  104,555
  Average shareholders'
   equity                      11,896   11,637   11,485   11,279   11,132

  Return on average assets       0.66%    0.41%    0.35%    0.32%    0.31%
  Return on average equity       9.20%    5.43%    4.20%    3.80%    3.60%
  Average loans to deposits     81.25%   83.49%   82.26%   76.40%   75.57%
  Net interest margin -
   tax equivalent                3.90%    3.75%    3.62%    3.55%    3.57%

  Nonperforming loans -
   period end                 $     -  $     -  $     -  $    64  $   289
  Other real estate owned
   - period end                     0        0        0        0        0
  Loans - period end          115,930  111,407  104,217   88,612   82,079
  Allowance for loan losses
   - period end                 1,724    1,653    1,605    1,541    1,550
  Net charge-offs
   (recoveries) - quarterly       (31)     (19)     (33)      10       35

  Allowance to loans             1.49%    1.48%    1.54%    1.74%    1.89%
  Allowance to nonperforming
   loans                          N/A      N/A      N/A     24.1 X    5.4 X
  Nonperforming loans to
   total loans                   0.00%    0.00%    0.00%    0.07%    0.35%
  Net charge-offs to loans -
   annualized                   -0.11%   -0.07%   -0.14%    0.05%    0.18%