Ada County has the largest population and includes the City of Boise, the state capitol.

The local economy is primarily urban with the City of Boise, followed by Nampa, the state's second largest city. The regional economy is well diversified with government, healthcare, manufacturing, high technology, call centers and construction providing sources of employment. In addition, agriculture and related industries continue to be key components of the economy in southwestern Idaho. Generally, sources of employment are concentrated in Ada and Canyon Counties and include the headquarters of Micron Technology, Albertsons, Washington Group International, J.R. Simplot Company and Boise Corporation. Other major employers include Hewlett-Packard, two regional medical centers and Idaho state government agencies. The City of Boise is also home to Boise State University, the state's largest and fastest growing university.

serving the financial service needs of consumers and businesses within its

market area.

At March 31, 2004, the maximum amount which the Company could have loaned to any one borrower and the borrower's related entities under applicable regulations was $5.3 million. The Company’s internal policy limits loans to one borrower and the borrower's related entities to the lesser of 80% of the regulatory limit or 1.25% of total loans outstanding, or $5.0 million. At March 31, 2004, the Company had no loans or group of loans to related borrowers with outstanding balances in excess of this amount.

The Company’s largest single borrower relationship was a commercial real estate loan for $4.0 million made to an individual and secured by a franchise hotel property that was made in conjunction with a Small Business Administration lending program. The second largest lending relationship was three commercial real estate loans with an aggregate balance of $3.6 million secured by office/professional space, an office warehouse building and an industrial building. This loan was made to a family trust. The third largest lending relationship was a commercial real estate loan totaling $5.8 million secured by a professional building. This loan was made to a family trust and the Company has sold $2.8 million of a participation interest to two other financial institutions. The fourth largest lending relationship was a commercial real estate loan for $2.9 million secured by a professional office building and made to a partnership. The fifth largest lending relationship was for $2.7 million and secured by a mobile home dealership and made to a limited liability company. All of these loans, including those made to corporations, have personal guarantees in place as an additional source of repayment. All of the properties securing these loans are in the Company’s primary market area. These loans were performing according to their terms at March 31, 2004.

Net interest income increased $161,000 for the three months ended June 30, 2004 compared to the three months ended June 30,

2003.

Provision for loan losses increased $150,000 for the three months ended June 30, 2004 compared to the same period in the prior year.

Total noninterest expense for the three months ended June 30, 2004 was $4.7 million, an increase of $808,000 or 20.6% compared

to the three months ended June 30, 2003.

Income tax expense for the three months ended June 30, 2004 was $770,000, which represented a decrease of $627,000 from the three