Parkway Bank Announces First Quarter Earnings

LENOIR, N.C., May 9  /PRNewswire-FirstCall/ -- Parkway Bank (OTC:PKWY) (BULLETIN BOARD: PKWY)  today reported earnings for the three-month period ending March 31, 2006. Net income for the first quarter of 2006 was $227,164 or $.17 per diluted share, an increase of 3.15% over net income of $220,220 or $.17 per diluted share for the first quarter of 2005.

Parkway's total assets grew by 2.07%, from $90.0 million at December 31, 2005 to $91.8 million at March 31, 2006. Net loans outstanding rose to $60.8 million from $60.2 million, while deposits totaled $77.1 million at March 31, 2006 which represents a 1.51% increase over deposits of $76.0 million at December 31, 2005. At March 31, 2006, shareholders' equity was $12.5 million and the bank's book value per share was $9.89.

Parkway Bank President and CEO, Gary Clawson, in commenting on the results, noted, "We are pleased to announce that first quarter 2006 earnings exceeded first quarter 2005 especially in view of the fact that the bank was fully taxable in the 2006 period.  We are on target with our earnings expectations and feel they are consistent with our long-term performance goals."

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/.

                         PARKWAY BANK AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEET

                                                  March 31,     December 31,
                                                      2006           2005*
                                                (Unaudited)
  ASSETS

  Cash and due from banks                       $1,374,524     $1,734,137
  Federal funds sold                             3,522,000      3,308,000
  Interest bearing deposits with other
   financial institutions                        5,000,000      5,000,000
  Investment securities available for
   sale, at fair value                          14,010,826     12,724,139

  Loans                                         61,683,249     61,044,579
  Allowance for loan losses                       (912,862)      (869,603)
                               NET LOANS        60,770,387     60,174,976

  Accrued interest receivable                      412,411        394,337
  Bank premises and equipment                    2,776,074      2,816,566
  Stock in Federal Home Loan Bank of
   Atlanta, at cost                                179,800        147,800
  Bank owned life insurance                      3,125,229      3,095,028
  Other assets                                     650,501        567,681

                            TOTAL ASSETS       $91,821,752    $89,962,664

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Deposits
    Non-interest-bearing                        $8,046,891     $7,189,889
    Savings                                      1,225,365      1,200,602
    Money market and NOW                        16,536,880     16,935,330
    Time                                        51,277,548     50,613,821

                          TOTAL DEPOSITS        77,086,684     75,939,642

  Repurchase agreements                          1,620,745      1,074,915
  Accrued expenses and other Liabilities           574,701        591,337

                       TOTAL LIABILITIES        79,282,130     77,605,894

  Stockholders' equity
    Common stock, $5 par value, 20,000,000
     shares authorized; 1,267,895 issued
     and outstanding                             6,339,475      6,339,475
    Additional paid-in capital                   5,342,250      5,341,040
    Retained earnings                            1,018,390        791,226
    Accumulated other comprehensive income        (160,493)      (114,971)

              TOTAL STOCKHOLDERS' EQUITY        12,539,622     12,356,770

                   TOTAL LIABILITIES AND
                    STOCKHOLDERS' EQUITY       $91,821,752    $89,962,664



                       PARKWAY BANK AND SUBSIDIARY
                   CONSOLIDATED STATEMENT OF OPERATIONS

                                                   For The        For The
                                              Three Months   Three Months
                                                  March 31,      March 31,
                                                      2006           2005
  INTEREST INCOME                              (Unaudited)    (Unaudited)
    Loans                                       $1,217,514       $926,353
    Investments                                    136,325         83,364
    Federal funds sold and deposits in other banks  57,562         26,556
    Deposits with other financial institutions      41,670              -
                   TOTAL INTEREST INCOME         1,453,071      1,036,273

  INTEREST EXPENSE
    Money market, Now and savings deposits         113,649         43,418
    Time deposits                                  487,075        273,766
    Securities sold under repurchase agreements      2,919          4,111
                  TOTAL INTEREST EXPENSE           603,643        321,295

                     NET INTEREST INCOME           849,428        714,978

  PROVISION FOR LOAN LOSSES                         50,000         50,000

               NET INTEREST INCOME AFTER
               PROVISION FOR LOAN LOSSES           799,428        664,978

  NON INTEREST INCOME
    Insurance commissions                          132,952        121,777
    Mortgage operations                              9,686         44,435
    Return check charges                            70,346         63,218
    Increase cash value bank-owned life insurance   30,201              -
    Other fees and charges                          23,343         30,071
               TOTAL NON INTEREST INCOME           266,528        259,501

  NON INTEREST EXPENSE
    Salaries and employee benefits                 394,720        376,546
    Occupancy and equipment                         80,702         82,102
    Advertising and promotion                        7,459         26,609
    Data processing and outside service fees       122,026        119,470
    Professional fees                               24,990         24,286
    Supplies, telephone, and postage                33,417         29,842
    Other                                           64,478         45,404
              TOTAL NON INTEREST EXPENSE           727,792        704,259

              PROFIT BEFORE INCOME TAXES           338,164        220,220

  INCOME TAXES                                     111,000              -

                              NET INCOME          $227,164       $220,220
             NET INCOME PER COMMON SHARE
                                   BASIC             $0.18          $0.17
                                 DILUTED             $0.17          $0.17

          WEIGHTED AVERAGE COMMON SHARES
                                   BASIC         1,267,895      1,267,895
                                 DILUTED         1,306,257      1,296,595



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. 

DATASOURCE: Parkway Bank



CONTACT:  Gary T. Clawson, President and CEO of Parkway Bank,

[phone]



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

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