Parkway Bank Announces 2007 Year End Results

LENOIR, N.C., Feb. 7  /PRNewswire-FirstCall/ -- Parkway Bank (OTC:PKWY) (BULLETIN BOARD: PKWY)  announced today that its net income for the year ended December 31, 2007, was $816,258 or $.57 per diluted share, compared to $1,013,146 or $.70 per diluted share for the year ended December 31, 2006. Net income for the fourth quarter of 2007 was $92,073 or $.06 per diluted share compared to net income of $259,823 or $.18 per diluted share in the fourth quarter of 2006.

Total assets were $109.9 million at December 31, 2007, compared to $102.9 million at December 31, 2006, an increase of $7 million or 6.8%. Deposits and loans increased to $94.0 million and $81.6 million, from $87.7 million and $67.1 million in 2006, respectively.  At December 31, 2007, shareholders' equity was $14.5 million and the book value per share was $10.26.

The increase in the Bank's loan portfolio of over 21% during the year 2007 was a continuation of the Bank's strategy to maximize yield by reallocating a larger portion of its earning assets in the loan portfolio. This increase required a greater provision for loan loss than in 2006.

Parkway Bank is a community bank operating two branches in Caldwell County, North Carolina.  For more information about the Bank and our products and services, contact Parkway Bank at 828-758-1414, or visit http://www.parkwaybanknc.com/.

This release contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Bank. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management of the Bank and on the information available to management at the time that these disclosures were prepared. These statements can be identified by the use of words like "expect," "anticipate," "estimate" and "believe," variations of these words and other similar expressions.  Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. The Bank undertakes no obligation to update any forward-looking statements.

                       PARKWAY BANK AND SUBSIDIARY
                        CONSOLIDATED BALANCE SHEET
                               December 31,
                                                  2007             2006
  ASSETS

  Cash and due from banks                      $1,478,012         $344,702
  Federal funds sold                            2,064,000        3,899,000
  Interest bearing deposits with other
   financial institutions                               -        5,000,000
  Investment securities available for
   sale, at fair value                         18,092,776       20,205,928

  Loans                                        81,555,403       67,093,826
  Allowance for loan losses                      (936,426)        (885,198)
                               NET LOANS       80,618,977       66,208,628

  Accrued interest receivable                     603,613          579,428
  Bank premises and equipment                   2,860,039        2,718,714
  Stock in Federal Home Loan Bank of
   Atlanta, at cost                               185,200          180,000
  Bank owned life insurance                     3,332,906        3,213,862
  Foreclosed real estate                                -           35,000
  Other assets                                    702,595          499,985

                            TOTAL ASSETS     $109,938,118     $102,885,247

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Deposits
   Noninterest-bearing                         $7,087,958       $7,976,621
   Savings                                      1,305,567        1,182,713
   Money market and NOW                        20,177,514       18,295,582
   Time                                        65,476,844       60,239,876

                          TOTAL DEPOSITS       94,047,883       87,694,792

  Repurchase agreements                           850,691        1,296,416
  Accrued expenses and other liabilities          548,134          407,282

                       TOTAL LIABILITIES       95,446,708       89,398,490
  Stockholders' equity
   Common stock,$5 par value, 20,000,000
    shares authorized; 1,411,940 and
    1,398,694 issued and outstanding,
    respectively                                7,059,700        6,993,470
   Additional paid-in capital                   5,432,196        5,361,564
   Accumulated earnings                         1,985,810        1,169,552
   Accumulated other comprehensive loss            13,704          (37,829)

              TOTAL STOCKHOLDERS' EQUITY       14,491,410       13,486,757

                   TOTAL LIABILITIES AND
                    STOCKHOLDERS' EQUITY     $109,938,118     $102,885,247



                       PARKWAY BANK AND SUBSIDIARY
                   CONSOLIDATED STATEMENT OF OPERATIONS
                         Years Ended December 31,

                                                    2007            2006
  INTEREST INCOME
    Loans                                       $6,264,329      $5,225,182
    Investments                                    904,727         720,789
    Federal Funds sold                             157,796         205,314
    Interest bearing deposits with other
     financial institutions                         27,463         179,287

                    TOTAL INTEREST INCOME        7,354,315       6,330,572
  INTEREST EXPENSE
    Money Market, NOW and savings deposits         651,827         493,503
    Time deposits                                3,058,029       2,394,706
    Interest on federal funds purchased              7,851
    Repurchase agreements                            9,084          11,284

                   TOTAL INTEREST EXPENSE        3,726,791       2,899,493

                      NET INTEREST INCOME        3,627,524       3,431,079

  PROVISION FOR LOAN LOSSES                        307,900         140,000
                NET INTEREST INCOME AFTER
                PROVISION FOR LOAN LOSSES        3,319,624       3,291,079
  NON-INTEREST INCOME
    Insurance Commissions                          415,475         469,272
    Mortgage operations                            144,382         103,057
    Return Check charges                           262,185         295,984
    Earnings from bank owned life insurance        119,064         118,834
    Other fees and charges                         109,475          96,642
                TOTAL NON-INTEREST INCOME        1,050,581       1,083,789

  NON-INTEREST EXPENSE
    Salaries and employee benefits               1,735,978       1,610,362
    Occupancy and equipment                        344,077         321,276
    Advertising and promotion                       61,507          76,170
    Data processing and outside service fees       432,113         484,536
    Professional fees                              333,818          58,727
    Supplies, telephone and postage                116,556         128,754
    Other                                          229,698         213,897

               TOTAL NON-INTEREST EXPENSE        3,253,747       2,893,722

               INCOME BEFORE INCOME TAXES        1,116,458       1,481,146

  INCOME TAXES                                     300,200         468,000

                               NET INCOME         $816,258      $1,013,146

  NET INCOME PER COMMON SHARE
                                   BASIC            $0.58           $0.72
                                 DILUTED            $0.57           $0.70

  WEIGHTED AVERAGE COMMON SHARES
                                    BASIC        1,404,065       1,398,694
                                  DILUTED        1,435,281       1,451,091


DATASOURCE: Parkway Bank



CONTACT: Robert Kirkman of Parkway Bank, [phone]



Web site:  http://www.parkwaybanknc.com/ 

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