Parkway Bank Announces Second Quarter Earnings

LENOIR, N.C., Aug. 3  /PRNewswire-FirstCall/ -- Parkway Bank (OTC:PKWY) (BULLETIN BOARD: PKWY)  today reported earnings for the three and six month periods ending June 30, 2007. Net income for the second quarter of 2007 was $252,081 or $.18 per diluted share, compared to $262,272 or $.18 per diluted share in the second quarter of 2006. Net income for the six months ended June 30, 2007 was $513,578 or $.36 per diluted share, compared to $489,436 or $.34 per diluted share for the six months ended June 30, 2006.

While Parkway's total assets of $102.3 million at June 30, 2007 remained relatively flat compared to total assets at December 31, 2006, net loans outstanding rose to $72.6 million at June 30, 2007 from $66.2 million at December 31, 2006. At June 30, 2007, shareholders' equity was $13.9 million and the bank's book value per share was $9.92.

Parkway Bank President and CEO, Gary Clawson, in commenting on the results, noted, "We are pleased with our earnings performance through the first six months of 2007; net income is up 5% compared to the same period in 2006.  Non-interest income continues to be strong, driven primarily by our insurance and mortgage operations.  Loans outstanding have consistently grown, up nearly 10% during this same period.  With all the recent news about the troubles in the 'sub-prime' mortgage market, I am pleased to say that Parkway has minimal exposure to this segment of the market.  High yielding, high risk credits have not been part of our strategy.  As to our expansion strategy, construction of our Granite Falls branch is scheduled to begin within the next 30 days.  Customers, existing and future, shareholders and employees are all looking forward to this addition to our franchise."

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 SHEETS

                                                 June 30       December 31,
                                                  2007             2006*
                                               (Unaudited)
  ASSETS
  Cash and due from banks                        $592,693         $344,702
  Federal funds sold                            2,275,000        3,899,000
  Interest bearing deposits with other
   financial institutions                               -        5,000,000
  Investment securities available for
   sale, at fair value                         19,369,244       20,205,928

  Loans                                        73,510,195       67,093,826
  Allowance for loan losses                      (948,692)        (885,198)
                               NET LOANS       72,561,503       66,208,628

  Accrued interest receivable                     571,289          579,428
  Bank premises and equipment                   2,720,747        2,718,714
  Stock in Federal Home Loan Bank of
   Atlanta, at cost                               185,200          180,000
  Bank owned life insurance                     3,272,688        3,213,862
  Foreclosed real estate                                -           35,000
  Other assets                                    794,363          499,985

                            TOTAL ASSETS     $102,342,727     $102,885,247

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Deposits
   Noninterest-bearing                         $8,584,918       $7,976,621
   Savings                                      1,318,763        1,182,713
   Money market and NOW                        17,068,766       18,295,582
   Time                                        60,185,142       60,239,876

                          TOTAL DEPOSITS       87,157,589       87,694,792

  Repurchase agreements                           919,496        1,296,416
  Accrued expenses and other liabilities          393,003          407,282

                       TOTAL LIABILITIES       88,470,088       89,398,490
  Stockholders' equity
   Common stock,$5 par value, 20,000,000
    shares authorized; 1,398,694
    issued and outstanding, respectively        6,993,470        6,993,470
   Additional paid-in capital                   5,377,282        5,361,564
   Accumulated earnings                         1,683,130        1,169,552
   Accumulated other comprehensive loss          (181,243)         (37,829)

              TOTAL STOCKHOLDERS' EQUITY       13,872,639       13,486,757

                   TOTAL LIABILITIES AND
                    STOCKHOLDERS' EQUITY     $102,342,727     $102,885,247

  *Derived for audited financial statements



                       PARKWAY BANK AND SUBSIDIARY
                  CONSOLIDATED STATEMENTS OF OPERATIONS

                              For The     For The
                               Three       Three    For The Six For The Six
                               Months      Months      Months      Months
                              June 30,    June 30,    June 30,    June 30,
                                2007        2006        2007        2006
                            (Unaudited) (Unaudited) (Unaudited) (Unaudited)
  INTEREST INCOME
     Loans                   $1,543,104  $1,289,639  $2,995,641  $2,507,153
     Investment securities
      available for sale        227,587     154,112     461,041     290,437
     Federal funds sold          29,167      44,662      92,629     102,224
     Interest bearing
      deposits with other
      financial institutions      3,123      43,782      20,892      85,452
       TOTAL INTEREST INCOME  1,802,981   1,532,195   3,570,203   2,985,266
  INTEREST EXPENSE
     Money market, Now and
      savings deposits          147,880     116,741     301,399     230,390
     Time deposits              735,792     537,747   1,469,680   1,024,822
     Interest on federal
      funds purchased             7,754           -       7,754           -
     Repurchase agreements        1,977       3,104       3,993       6,023
      TOTAL INTEREST EXPENSE    893,403     657,592   1,782,826   1,261,235

         NET INTEREST INCOME    909,578     874,603   1,787,377   1,724,031

  PROVISION FOR LOAN LOSSES      75,000      45,000     112,500      95,000
   NET INTEREST INCOME AFTER
   PROVISION FOR LOAN LOSSES    834,578     829,603   1,674,877   1,629,031
  NON INTEREST INCOME
     Insurance commissions      108,518     138,514     240,061     271,466
     Mortgage operations         57,869      24,921      90,629      34,607
     Return check charges        73,825      82,199     127,360     152,545
    Earnings from bank-owned
     life insurance              31,638      29,055      58,826      59,256
     Other fees and charges      29,065      28,129      54,851      51,472
   TOTAL NON INTEREST INCOME    300,915     302,818     571,727     569,346
  NON INTEREST EXPENSE
     Salaries and employee
      benefits                  427,062     392,334     862,753     787,054
     Occupancy and equipment     91,227      89,757     169,158     170,459
     Advertising and
      promotion                  26,418      23,333      35,967      30,792
     Data processing and
      outside service fees      108,290     136,924     215,842     258,950
     Professional fees           39,317       7,452      62,269      32,442
     Supplies, telephone,
      and postage                22,330      30,429      55,271      63,846
     Other                       57,768      39,320     104,766     103,798
          TOTAL NON INTEREST
                     EXPENSE    772,412     719,549   1,506,026   1,447,341

        INCOME BEFORE INCOME
                       TAXES    363,081     412,872     740,578     751,036

  INCOME TAXES                  111,000     150,600     227,000     261,600

                  NET INCOME   $252,081    $262,272    $513,578    $489,436
       NET INCOME PER COMMON
                       SHARE
                       BASIC      $0.18       $0.19       $0.37       $0.35
                     DILUTED      $0.18       $0.18       $0.36       $0.34
     WEIGHTED AVERAGE COMMON
                      SHARES
                       BASIC  1,398,694   1,398,441   1,398,694   1,396,660
                     DILUTED  1,435,410   1,451,137   1,436,701   1,449,356




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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