Home Valley Bancorp Reports Record Net Income for the Quarter and Six Months Ended June 30, 2005.

GRANTS PASS, Ore. -- Home Valley Bancorp (OTCBB:HVYB), reports record results for the three and six-month periods ended June 30, 2005.

--Net Income up 74% vs. Year Ago 2004.

--Net Interest Income up 26% from Six Months Ended 2004.

--Assets Top $160.4 Million up 10% from 2004.

--Loans up $25 Million or 25% from Year Ago.

--Deposits $142.8 Million up 7% from One Year Ago.

--Loan Quality Continues Strong.

For further information on the Company or to access Internet banking, please visit our web site at http://www.homevalleybank.com.

Financial Performance:

Home Valley Bancorp today reported record second quarter net income of $323,000, or $.18 per diluted share, an increase of 91% from $169,000 from the second quarter of 2004. For the six-month period ended June 30, 2005, net income totaled $610,000, or $.34 per diluted share, an increase of 74% from $350,000 for the same six-month period in 2004. Each of the first two quarters of 2005 included interest charges on trust preferred securities of $ $54,000 - net of tax. Net interest income was up 26% to $2.9 million for the first six-months of 2005 compared to $2.3 million a year ago. Return on Equity (ROE) for the first half of 2005 was 14.51% up 53% from 2004. Return on Assets (ROA) was .79% for the six-months ending June 2005, an increase of 48% from a year earlier. Excluding trust preferred securities ROA and ROE was .93% and 17.08%, respectively.

Loan Growth and Credit Quality:

At June 30, 2005, the loan portfolio had grown to $127.3 million, up 25% compared to a year ago and 19% (annualized) in the first six-months of 2005. The Company's underlying loan credit quality remained sound. Non-performing assets totaled $20,000 or .013% of total assets. Quality indicators include net loan charge-offs at just 0.02% of average loans year to date. Net loan charge-offs in the first six-months of 2005 were $21,000 compared to $36,000 one year ago. The Allowance for Loan Losses at the June quarter-end 2005 was up 27% from one year ago, exceeding loan growth. Based upon Management's analytical and evaluative assessment of loan quality, the Company believes that its Reserve for Loan Losses is at an appropriate level under current circumstances and prevailing economic conditions in our area.

Deposit Growth:

Deposits at June 30, 2005 were up $9.4 million or 7% to $142.8 million, compared to a year ago. The Company's rapid loan growth continues to be funded by growth in core deposits. Traditional core deposits accounted for 100% of the growth in deposits from 1 year ago.

Capital Ratios:

Leverage, Tier-1, and Total risk based at June 2005 stood at 8.80%, 11.45%, and 12.24% respectively, compared to 8.93%, 12.67% and 13.41% for 2004. This drop is due to utilization of excess liquidity from 2004.

Non-Interest Income:

Non-Interest Income in the first six-months of 2005 was up 6% to $331,000 from a year ago. This increase reflects the impact of the overdraft privilege program introduced in May 2005.

Non-Interest Expense:

At June 2005 non-interest expense increased 10% to $2,151,000 from one year ago, consistent with growth and projections. The efficiency ratio for the six-month and quarter-end 2005 was 67.03% and 66.47%, respectively, down 11% and 10% from the corresponding periods in 2004. Annualized salary and benefit expense as a percentage of average assets were 1.56% (annualized) a 13% improvement over the previous year.

Home Valley Bancorp
                Selected Financial Results - Unaudited
                 (in thousands, except per share data)


                    Quarter Ended      %        Year-to-Date      %
                 6/30/2005 6/30/2004 Change 6/30/2005 6/30/2004 Change
                 -------------------------- --------------------------

Summary of Operations
 Interest income     2.254     1,830    23%     4,370     3,509    25%
 Interest expense      690       561    23%     1,315     1,049    25%
 Interest expense
  - trust preferred     89        81    10%       177       173     2%
 Net Interest
  Income             1,475     1,188    24%     2,878     2,287    26%
 Provision for
  loan losses           53        90   -41%        96       100    -4%
 Net Interest
  Income after
  provision          1,422     1,098    30%     2,782     2,187    27%
 Non-interest
  income               183       153    20%       331       311     6%
 Non-interest
  expense            1,102       985    12%     2,151     1,962    10%
 Income before
  taxes                503       266    89%       962       536    79%
 Income taxes          180        97    86%       352       186    89%
 Net Income            323       169    91%       610       350    74%

Share Data
 Basic earnings
  per share           0.19      0.10    88%      0.35      0.21    71%
 Diluted earnings
  per share           0.18      0.10    90%      0.34      0.20    74%
 Book value per
  share               5.14      4.53    14%      5.14      4.53    14%
 Basic shares
  outstanding    1,730,258 1,701,922     2% 1,730,143 1,701,922     2%
 Diluted shares
  outstanding    1,772,048 1,765,754     0% 1,772,048 1,765,754     0%
 Share Price         10.50      7.25    45%     10.50      7.25    45%
 Price Earnings
  Ratio              14.36     18.89   -24%     15.13     18.14   -17%

Balance Sheet
 Data (at period end)
 Investment
  securities        20,145    30,327   -34%    20,145    30,327   -34%
 Total loans (net) 127,301   101,699    25%   127,301   101,699    25%
 Total assets      160,405   146,169    10%   160,405   146,169    10%
 Total deposits    142,806   133,377     7%   142,806   133,377     7%
 Fed Funds
  Purchased          2,910         0   100%     2,910         0   100%
 Borrowings            414         0   100%       414         0   100%
 Trust Preferred
  Securities         5,000     5,000     0%     5,000     5,000     0%
 Total
  shareholders'
  equity             8,899     7,702    16%     8,899     7,702    16%

Average Balances
 Investment
  securities        21,234    24,813   -14%    21,958    18,893    16%
 Total loans (net) 124,049    98,864    25%   121,044    97,003    25%
 Total assets      158,092   139,958    13%   156,240   132,165    18%
 Total deposits    143,808   127,154    13%   142,095   119,501    19%
 Total
  shareholders'
  equity             8,591     7,510    14%     8,475     7,380    15%

Selected Ratios
 Return on
  average assets
  (ROA)               0.82%     0.48%   69%      0.79%     0.53%   48%
 Return on average
  equity (ROE)       15.08%     9.03%   67%     14.51%     9.51%   53%
 Net interest
  margin              4.07%     3.85%    6%      4.06%     3.96%    3%
 Net interest
  margin (1)          4.32%     4.12%    5%      4.31%     4.26%    1%
 Efficiency ratio    66.47%    73.45%  -10%     67.03%    75.52%  -11%
 Total risk based
  capital ratio       8.80%     8.93%   -1%      8.80%     8.93%   -1%
 Tier-One risk
  based ratio        11.45%    12.67%  -10%     11.45%    12.67%  -10%
 Tier-One
  leverage ratio     12.24%    13.41%   -9%     12.24%    13.41%   -9%

 (1) Adjusted for trust preferred.

Asset Quality Data
 Allowance for
  loan losses          934       737    27%       934       737    27%
 Allowance to
  ending loans        0.73%     0.72%    1%      0.73%     0.72%    1%
 Net charge offs         5        13   -62%        21        36   -42%
 Net charge offs
  to average
  loans               0.00%     0.01%  -69%      0.02%     0.04%  -53%
 Non performing
  assets                20        44   -55%        20        44   -55%
 Non performing
  assets to total
  assets              0.01%     0.03%  -59%      0.01%     0.03%  -59%

This Press Release may contain forward-looking statements with respect to the financial condition, results of operations and the business of Home Valley Bancorp and its subsidiary, which are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in such statements. These include, without limitation, the local economic climate, the impact of competition on revenues and margins, and other risks and uncertainties as may be detailed from time to time in public announcements. Forward-looking statements can be identified by the use of forward-looking terminology, such as ``may'', ``will'', ``should'', ``expect'', ``anticipate'', ``estimate'', ``continue'', ``plans'', ``intends'', or other similar terminology. Home Valley Bancorp does not intend to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Press Release, or to reflect the occurrence of unanticipated events.