River City Bank Reports Strong Asset Growth for Year Ended December 31, 2005

MECHANICSVILLE, Va., Feb. 15  /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 December 31, 2005 operating results, stating that the Bank continues to experience strong deposit and loan growth.

Total assets of the Bank (results unaudited) at December 31, 2005 amounted to $61,036,546, compared with $23,585,462 at December 31, 2004 representing an increase of 158.8%.  Asset growth was concentrated in net loans originated and securities purchased.  As of year-end 2005, net loans outstanding amounted to $38,351,866 compared to $13,954,859 as of December 31, 2004, an increase of 174.8%.  Securities available-for-sale increased to $11,916,979 as of December 31, 2005 compared to $3,470,550 as of December 31, 2004, an increase of 243.4%.  The Bank had no loans classified as available for sale for either reporting periods.  Loans held for investment as a percentage of assets and deposits were 62.8% and 85.4% respectively as of December 31, 2005, compared to 59.2% and 90.5% as of December 31, 2004.

The Bank recorded total deposits at December 31, 2005 of $44,931,704, compared to total deposits of $15,415,757 at December 31, 2004, an increase of 191.5%.  Growth occurred in each of the bank's deposit categories, including demand deposits which increased $3,108,618 or 148.3%, Now and money market savings which increased $2,170,496 or 59.8%, savings deposits which increased $9,212,834 or 287.2%, and certificate of deposits which increased $15,023,999 or 231.9%.  The increase in deposits is attributed to the Bank's continuing marketing initiatives implemented during the year, as well as the opening of the Bank's second full-service depository branch which opened for business on September 5, 2005.

For the year ended December 31, 2005, the Bank recorded a comprehensive net operating loss of $(769,298).  For the period from July 1, 2004 (inception) to December 31, 2004 the Bank recorded a comprehensive operating loss of $(846,309).  Excluding net unrealized losses of $(176,287) for securities available-for-sale, the Bank recorded a net operating loss of $(593,011) for the year ended December 31, 2005, compared to a six month operating loss $(842,991) realized in 2004.  The Bank's net unrealized losses for securities available-for-sale at December 31, 2004 amounted to $(3,318). The Bank commenced operations on July 1, 2004.

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 $608,003, the Bank increased stockholders' equity by $8,520,731 in the third quarter of 2005.  At December 31, 2005, the Bank's total stockholders' equity amounted to $15,862,252, compared to $8,113,163 at December 31, 2004, an increase of 95.5%.

Mr. Stegeman commented:

"We are pleased to report that River City Bank experienced continued growth across all business lines in 2005.  During our first full year of operations, we successfully implemented a strong secondary stock offering at mid-year and opened our second branch banking facility in September.  As we continue to decrease our operating losses and strengthen our organization with key employee hires in 2006, we look forward to achieving profitability in 2006.  Our third branch banking location has been identified, and regulatory applications have been filed to open the facility by early to mid-2006 in Highland Springs, Virginia."

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. 

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DATASOURCE: River City Bank



CONTACT:  Investor Relations: Zirkle Blakey, III, EVP & CFO of River City

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

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