Home Valley Bancorp Reports Record Six-Month and Quarterly Earnings.

GRANTS PASS, Ore. -- Home Valley Bancorp (OTCBB:HVYB), the parent company of Home Valley Bank, reported a 26% increase in earnings for the first six months of 2006. Earnings at June 30, 2006, were $770,000, or $.41 per diluted share, compared to $610,000, or $.33, one year ago.

--NET

--6/30/06 QUARTERLY INCOME UP 31% FROM 6/30/05

--NEW QUARTERLY EARNINGS RECORD, SURPASSING DEC. 2005

--NET INTEREST INCOME UP 13% FROM JUNE 2005

--LOANS UP $14.5 MILLION OR 10.6% FROM PREVIOUS YEAR-END

--LOAN QUALITY CONTINUES STRONG

--EPS UP 25% FROM YTD JUNE 2005

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 (Company) today reported record quarterly earnings of $423,000, or $.23 per diluted share, an increase of 31% from $323,000 for the second quarter of 2005. June's quarterly earnings surpassed the previous record set in December 2005, $392,000, by 7.9%. For the first six months of 2006, net income totaled $770,000, or $.42 per diluted share, an increase of 26% from $610,000 for the same period last year. The first six months of 2006 included interest charges on trust preferred securities of $102,000 -- net of tax. Net interest income was up 13% to $3.3 million for 2006 compared to $2.9 million one year ago. Return on Equity (ROE) for the first six months of 2006 ended at 15.41%, up 6% from 14.51% in the same period one year ago. Return on Assets (ROA) increased to .87% at June, 2006, an increase of 11% vs. the corresponding period in 2005. Excluding trust preferred securities ROA and ROE was .99% and 17.45%, respectively.

LOAN GROWTH AND CREDIT QUALITY:

The Company continues to experience strong lending demand in its expanding market area. At June 30, 2006, the loan portfolio grew 19%, or $24 million, from one year ago. The increase from December 2005 was $14.5 million, or 10.6%. The Company's underlying loan credit quality remained sound. At June 30, 2006, the Company had 1 loan totaling $100,000 in non-accrual status. Quality indicators include net loan charge-offs at just 0.016% of average loans year to date. Net loan charge-offs for the first six months of 2006 were $23,000, compared to $21,000 in 2005. The Allowance for Loan Losses at June 30, 2006, is up 16% from one year ago. As a percentage of outstanding loans the allowance at June 30, 2006, stood at .71%, compared to .73% one year ago. 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 continued to fall short of loan demand. At June 30, 2006, deposits were up $7.4 million, or 5%, to $151.4 million, compared to one year ago. The Company's loan growth in the first quarter of 2006 was funded primarily by a combination of deposits and borrowings. Traditional core deposits still account for over 96% of the current deposit portfolio. As of June 30, 2006, the Bank had $5.5 million of CD's over $100,000.

The Company introduced a new CD product in the second quarter of 2006. This product has a one-year maturity, no guaranteed renewal, and is priced based on the 1-Yr CMT. The program generated $4.9 million of new funds and was discontinued in June 2006.

BORROWINGS:

The Company has experienced strong, quality loan growth during the past nine (9) months. To fund this loan growth the Company has used borrowings in addition to deposits. The Company at June 30, 2006, had total borrowings of $17.4 million. These borrowings are a combination of FHLB and Overnight Federal Funds Purchased. The Company's current projections indicate that the new Merlin branch, scheduled to open in late 2006, will decrease the possible dependence on future borrowings.

CAPITAL RATIOS (Bank):

Leverage, Tier-1, and Total Risk Based at June 30, 2006, stood at 8.58%, 11.14%, and 11.91%, respectively, compared to 8.80%, 11.45% and 12.24% for the same period in 2005.

NON-INTEREST INCOME:

Non-Interest Income for the first six months of 2006 was up 25% to $413,000 from a year ago. This increase reflects the impact of the Company's overdraft privilege program introduced in May 2005.

NON-INTEREST EXPENSE:

At June 2006 non-interest expense increased 10% to $2.4 million from one year ago; this increase is consistent with growth and projections. The efficiency ratio for the six-month and quarter-end 2006 was 64.36% and 62.70%, respectively, down 4% and 6% from the corresponding periods in 2005. Salary and benefit expense (annualized) as a percentage of average assets were 1.53% at June 30, 2006, compared to 1.57% one year ago.

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

                    Quarter Ended      %        Year-to-Date      %
                 6/30/2006 6/30/2005 Change 6/30/2006 6/30/2005 Change
                 -------------------------- --------------------------

Summary of Operations
 Interest income     2,992     2,254    33%     5,606     4,370    28%
 Interest expense    1,193       697    71%     2,183     1,329    64%
 Interest expense --
  trust preferred       82        82     0%       163       163     0%
 Net Interest
  Income             1,717     1,475    16%     3,260     2,878    13%
 Provision for
  loan losses           45        53   -15%        80        96   -17%
 Net Interest
  Income after
  provision          1,672     1,422    18%     3,180     2,782    14%
 Non-interest
  income               224       183    22%       413       331    25%
 Non-interest
  expense            1,217     1,102    10%     2,364     2,151    10%
 Income before
  taxes                679       503    35%     1,229       962    28%
 Income taxes          256       180    42%       459       352    30%
 Net Income            423       323    31%       770       610    26%

Share Data
 Basic earnings
  per share           0.23      0.18    31%      0.42      0.34    26%
 Diluted earnings
  per share           0.23      0.17    30%      0.41      0.33    25%
 Book value per
  share               5.73      4.90    17%      5.73      4.90    17%
 Basic shares
  outstanding    1,820,851 1,816,771     0% 1,820,851 1,816,650     0%
 Diluted shares
  outstanding    1,874,533 1,860,650     1% 1,874,533 1,860,587     1%
 Share Price         13.25     11.03    20%     13.25     11.03    20%
 Price Earnings
  Ratio              14.64     15.84    -8%     16.00     16.68    -4%

Balance Sheet Data
(at period end)
 Investment
  securities        17,726    20,145   -12%    17,726    20,145   -12%
 Total loans (net) 151,409   127,301    19%   151,409   127,301    19%
 Total assets      182,568   160,405    14%   182,568   160,405    14%
 Total deposits    149,332   142,806     5%   149,332   142,806     5%
 Fed Funds
  Purchased              0     2,910  -100%         0     2,910  -100%
 Borrowings         17,431       414  4110%    17,431       414  4110%
 Trust Preferred
  Securities         5,000     5,000     0%     5,000     5,000     0%
 Total
  shareholders'
  equity            10,431     8,899    17%    10,431     8,899    17%

Average Balances
 Investment
  securities        18,966    21,234   -11%    18,962    21,958   -14%
 Total loans (net) 150,881   124,049    22%   146,531   121,044    21%
 Total assets      182,789   158,092    16%   178,283   156,240    14%
 Total deposits    149,474   143,808     4%   147,362   142,095     4%
 Total
  shareholders'
  equity            10,248     8,591    19%    10,076     8,475    19%

Selected Ratios
 Return on average
  assets (ROA)        0.93%     0.82%   13%      0.87%     0.79%   11%
 Return on average
  equity (ROE)       16.56%    15.08%   10%     15.41%    14.51%    6%
 Net interest
  margin              4.05%     4.07%    0%      3.97%     4.06%   -2%
 Net interest
  margin (1)          4.25%     4.30%   -1%      4.17%     4.29%   -3%
 Efficiency ratio    62.70%    66.47%   -6%     64.36%    67.03%   -4%
 Total risk
  based capital
  ratio              11.91%    12.24%   -2%     11.91%    12.24%   -2%
 Tier-One risk
  based ratio        11.14%    11.45%   -3%     11.14%    11.45%   -3%
 Tier-One leverage
  ratio               8.58%     8.80%   -3%      8.58%     8.80%   -3%

 (1) Adjusted for trust preferred.

Asset Quality Data
 Allowance for
  loan losses        1,080       934    16%     1,080       934    16%
 Allowance to
  ending loans        0.71%     0.73%   -3%      0.71%     0.73%   -3%
 Net charge offs         1         5   -80%        23        21    10%
 Net charge offs
  to average loans    0.00%     0.00%  -84%      0.02%     0.02%  -10%
 Non performing
  assets                99        20   395%        99        20   395%
 Non performing
  assets to
  total assets        0.05%     0.01%  335%      0.05%     0.01%  335%

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.