River City Bank Reports Asset Growth

MECHANICSVIILE, Va., Sept. 1  /PRNewswire-FirstCall/ -- River City Bank (NASDAQ:RCBK), a Virginia state-chartered bank headquartered in Mechanicsville, VA, today reported significant asset growth.

William D. Stegeman, President & CEO, reported June 30, 2005 unaudited operating results, and stated that the Bank continues to experience solid growth and is moving towards profitability.

Total assets of the Bank at June 30, 2005 amounted to $37,887,467, compared with $23,585,462 at December 31, 2004.  Asset growth was concentrated in net loans that amounted to $24,597,935 at June 30, 2005, representing an increase of 76.3% since December 31, 2004.  At June 30, 2005, net loans held for investment were $24,597,935 compared to $13,954,859 at December 31, 2004. The Bank had no loans classified as available for sale.  Loans held for investment as a percentage of assets and deposits were 59.8% and 79.1%, respectively, as of June 30, 2005.

Total deposits at June 30, 2005 amounted to $29,012,296, compared to total deposits of $15,415,757 recorded as of December 31, 2004.  Total deposits grew $13,596,539 or 88.2% from December 31, 2004 to June 30, 2005.  Growth occurred in each of the bank's deposit categories, including saving deposits which increased $6,089,568 or 189.5%, demand deposits which increased $3,204,391 or 152.9%, time deposits which increased $3,412,713 or 53.7% and NOW and money market deposits which grew $889,867 or 24.5%.  The increase in deposits is attributed to the Bank's marketing initiatives implemented during the quarter.

The Bank reported a net loss of $(433,021) for the six month period ended June 30, 2005.  The Bank commenced operations July 1, 2004 and is still in its early stages of development.  Due to the starting date of operations there is not an applicable similar period of operations for which to make annual financial comparisons.  The Bank reported a net loss of $(198,471) for the three month period ended June 30, 2005, compared to a net loss of $(234,550) for the three month period ended March 31, 2005.

On July 5, 2005, the Bank issued 869,180 shares of its common stock, par value $5.00 per share ("Common Stock").  Of that amount, 767,318 shares of Common Stock were issued in a public offering at $10.50 per share, and 101,862 shares of Common Stock were issued in a rights offering to shareholders at $10.50 per share.  Proceeds from the offering amounted to $9,126,390.  After deducting expenses related to the offering of $605,660, the Bank increased shareholders' equity by $8,520,731 in the third quarter of 2005.  The Bank will use the proceeds of the offering for general corporate purposes, including but not limited to possible branch expansion, support future balance sheet growth, and other purposes to potentially expand the Bank's products and services.

Effective August 1, 2005, the Bank hired Scott Olsen, a securities broker and Certified Financial Planner, to develop its investment services division. This division, entitled River City Financial, will offer basic to complex investment products and services to include financial and estate planning, wealth management and traditional securities brokerage services. With the Bank's mortgage division fully operational under the successful leadership of Christine Mills, the implementation of River City Financial should continue to generate new sources of fee income to the Bank while expanding its ability to be a one-stop financial services provider.

During September, 2005, the Bank's second office will open, and will be located at 8051 Mechanicsville Turnpike, Mechanicsville, Virginia.

Mr. Stegeman commented:

"From the approximately $8.5 million in net capital successfully generated from our recently closed secondary stock offering, and the resulting increase to earnings by deploying such capital, we believe that overall profitability will be achieved by maintaining structured balanced sheet growth and effectively managing future growth in non-interest expense."

This press release contains forward- looking statements as defined by federal securities laws. These statements may address certain results that are expected or anticipated to occur or otherwise state the company's predictions for the future. These particular forward-looking statements and all other statements that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. Such factors include but are not limited to: general economic conditions, significant fluctuations in interest rates that could reduce the net interest margin; difficulties in execution integration plans; reduction of fee income from existing products due to market conditions; and the amount of growth in the company's general administrative expenses. Consequently, these cautionary statements qualify all forward-looking statements made herein. 

DATASOURCE: River City Bank



CONTACT:  Zirkle Blakey, III, EVP, CFO of River City Bank,

[phone], 



Web site:  http://www.rivercitybank.org/

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