Parkway Bank Announces Second Quarter 2005 Earnings

Parkway Bank Announces Second Quarter 2005 Earnings 


LENOIR, N.C., July 18  /PRNewswire-FirstCall/ -- Parkway Bank (OTC:PKWY)
(BULLETIN BOARD: PKWY)  today announced record earnings for the three and six
month periods ended June 30, 2005.

Net income for the second quarter of 2005 was $293,421 or $.23 per basic and
diluted share, an increase of $283,527 or 2,865.65% over net income of $9,894
or $.01 per basic and diluted share in the second quarter of 2004. Net income
for the first six months of 2005 was $513,641 or $.41 per basic share and $.40
per diluted share, up $483,329, or 1,594.51% over net income of $30,312 or $.04
per basic and diluted share for the first six months of 2004.

Parkway's total assets grew by 6.24%, from $73.9 million at December 31, 2004
to $78.5 million at June 30, 2005. Net loans outstanding rose 10.63% during the
same period from $51.1 million to $56.5 million, while deposits totaled $65.3
million at June 30, 2005 which represents a 7.43% increase over deposits of
$60.8 million at December 31, 2004. At June 30, 2005, shareholders' equity was
$11.9 million and the bank's book value per share of the Bank's common stock
was $9.38.

Parkway Bank President and CEO, Gary Clawson, in commenting on the results,
noted, "Improved financial performance is evident as the Bank matures and
growth continues.  Sustained focus on expense control, non-interest income and
net-interest margin all factor into our performance.  Notwithstanding our
positive trend, shareholders can feel confident that we continue to push
forward with finding new ideas for generating revenue and controlling
expenses."

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

                                                 June 30,     December 31,
                                                   2005           2004*
                                               (Unaudited)
  ASSETS

  Cash and due from banks                       $1,392,383     $1,112,971
  Federal funds sold                             2,580,000      6,507,000
  Investment securities available for
   sale, at fair value                          10,859,477     11,337,962

  Loans                                         57,328,361     51,832,308
  Allowance for loan losses                      (822,921)      (758,328)
                         NET LOANS              56,505,440     51,073,980

  Accrued interest receivable                      303,880        277,211
  Bank premises and equipment                    2,915,345      2,928,724
  Stock in Federal Home Loan Bank of
   Atlanta, at cost                                147,800        113,800
  Bank owned life insurance                      3,000,000              -
  Other assets                                     772,987        518,465

                      TOTAL ASSETS             $78,477,312    $73,870,113

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Deposits
    Non-interest-bearing                        $5,663,727     $4,939,465
    Savings                                      1,243,638      1,055,679
    Money market and NOW                        16,912,577     15,705,470
    Time                                        41,520,628     39,119,200

                    TOTAL DEPOSITS              65,340,570     60,819,814

  Repurchase agreements                            912,855      1,440,369
  Accrued expenses and other Liabilities           331,678        217,325

                 TOTAL LIABILITIES              66,585,103     62,477,508

  Stockholders' equity
    Common stock,$5 par value, 20,000,000
     shares authorized; 1,267,895 and
     1,152,720 shares issued and
     outstanding, respectively                   6,339,475      5,763,600
    Additional paid-in capital                   5,341,040      5,916,915
    Accumulated deficit                            271,391       (242,250)
    Accumulated other comprehensive loss           (59,697)       (45,660)

        TOTAL STOCKHOLDERS' EQUITY              11,892,209     11,392,605

             TOTAL LIABILITIES AND
              STOCKHOLDERS' EQUITY             $78,477,312    $73,870,113



                       PARKWAY BANK AND SUBSIDIARY
                   CONSOLIDATED STATEMENT OF OPERATIONS

                     For The Three For The Three  For The Six   For The Six
                         Months       Months         Months        Months
                     June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
  INTEREST INCOME     (Unaudited)   (Unaudited)   (Unaudited)    (Unaudited)

    Loans               $1,007,651     $663,006   $1,934,004   $1,312,996
    Investments             79,976       67,952      163,340      114,439
    Federal funds sold
     and deposits in
     other banks            24,575       15,630       51,131       29,508
          TOTAL INTEREST
           INCOME        1,112,202      746,588    2,148,475    1,456,943

  INTEREST EXPENSE
  Money market, Now
   and savings deposits     61,013       34,343      104,431       72,224
  Time deposits            298,407      292,329      572,173      550,751
  Securities sold under
   repurchase agreements     3,689        2,429        7,800        5,207
          TOTAL INTEREST
           EXPENSE         363,109      329,101      684,404      628,182

            NET INTEREST
             INCOME        749,093      417,487    1,464,071      828,761

  PROVISION FOR LOAN
   LOSSES                   82,000       11,000      132,000       32,750

     NET INTEREST INCOME
      AFTER PROVISION FOR
      LOAN LOSSES          667,093      406,487    1,332,071      796,011

  NON INTEREST INCOME
    Insurance commissions  171,322      112,858      293,099      239,117
    Mortgage operations     36,532       63,719       80,967       96,947
    Other fees and charges 130,930       75,235      224,219      127,780
      TOTAL NON INTEREST
       INCOME              338,784      251,812      598,285      463,844

  NON INTEREST EXPENSE
    Salaries and employee
     benefits              368,201      362,664      744,747      692,693
    Occupancy and equipment 84,155       79,254      166,257      145,670
    Advertising and
     promotion              15,502       28,712       42,111       48,907
    Data processing and
     outside service fees  108,236       95,551      227,706      181,760
    Professional fees       23,648       16,363       47,934       34,428
    Supplies, telephone,
     and postage            26,134       25,954       55,976       65,799
    Other                   86,580       39,907      131,984       60,286
      TOTAL NON INTEREST
       EXPENSE             712,456      648,405    1,416,715    1,229,543

    INCOME BEFORE INCOME
     TAXES                 293,421        9,894      513,641       30,312

  INCOME TAXES                 -            -            -            -

              NET INCOME  $293,421       $9,894     $513,641     $ 30,312

   NET INCOME PER COMMON
    SHARE
                   BASIC     $0.23        $0.01        $0.41        $0.04
                 DILUTED     $0.23        $0.01        $0.40        $0.04

 WEIGHTED AVERAGE COMMON
  SHARES

                   BASIC 1,267,895      778,187    1,267,895      778,187
                 DILUTED 1,295,080      805,479    1,295,080      805,479


DATASOURCE: Parkway Bank



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

[phone]



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

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