Parkway Bank Announces Second Quarter and Six Month Results

Share Name	Share Symbol	Market	Type
Parkway Bank (CE)	USOTC:PKWY	OTCMarkets	Common Stock

Parkway Bank (CE) (USOTC:PKWY)
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LENOIR, N.C., Aug. 12 /PRNewswire-FirstCall/ -- Parkway Bank (OTC Bulletin Board: PKWY - News) today reported results for the three- and six-month periods ended June 30, 2008. For the second quarter ended June 30, 2008, the Company reported a net loss of $207,154, or $0.15 per diluted share, versus net income of $252,081, or $0.18 per diluted share, for the second quarter of 2007. For the six months ended June 30, 2008, the net loss was $86,176, or $0.06 per share, versus net income of $513,578, or $0.36 per diluted share, for the year-ago period. The Company and its banking subsidiary remain well capitalized based on regulatory capital measures. The net loss for the quarter primarily resulted from lower revenues, a higher provision for loan losses and an increase in noninterest expense. The lower revenues were due to ongoing compression in the Bank's net interest margin, as well as from a slowdown in mortgage operations. The provision for loan losses, which was $503,989 in the second quarter of 2008 versus $75,000 in the year-ago quarter, increased as a result of higher delinquencies and greater uncertainties as to collateral valuations given the weakening economic environment. Finally, noninterest expenses increased 31%, largely due to expansion related costs, higher professional fees and other charges. The net loss for 2008's year-to-date period was generally from the same factors that led to the quarterly loss. The Company's nonperforming assets, including nonaccrual loans and other real estate owned, was $1,106,000, or 0.97% of assets, at June 30, 2008, versus $779,000, or 0.76% of assets, at June 30, 2007. Nonperforming assets at March 31, 2008 were $1,010,000, or 0.90% of assets. The allowance for loan losses was $1,520,993, or 1.70% of gross loans, as of June 30, 2008, versus $949,000, or 1.29% of gross loans, at the year-ago date. The loan loss allowance increased as a result of higher delinquencies and greater uncertainties as to collateral valuations given the weakening economic environment. Parkway's total assets grew 12% from $102.3 million at June 30, 2007 to $114.3 million at June 30, 2008. Net loans outstanding rose 21% to $88.1 million from $72.6 million, while deposits increased 13% to $98.4 million at June 30, 2008 from $87.2 million at June 30, 2007. At June 30, 2008, shareholders' equity was $14.2 million, representing an equity-to-assets ratio of 12.5%, while the Company's book value per share was $10.08. As of June 30, 2008, the Bank had a total capital ratio of 15.36%, versus a minimum regulatory requirement of 10.00% for "well capitalized" banks. In commenting on the results, Parkway Bank President and CEO, Jim Sponenberg, noted, "Although we are disappointed with the loss in the quarter and year-to-date period, the majority of those losses were due to the significant increases in the provisions for loan losses and the increases in expenses due to our expansion activities. The Company continues to be well capitalized and in a strong position to weather this current economic downturn. We will continue to work towards improving asset quality and to invest in our franchise, with the objective of building long-term earnings and shareholder value. Parkway Bank is a community bank operating three 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 SHEETS June 30, December 31, 2008 2007 * (Unaudited) ASSETS Cash and due from banks $1,585,241 $1,478,012 Federal funds sold - 2,064,000 Investment securities available for sale, at fair value 15,948,271 18,092,776 Loans 89,572,869 81,555,403 Allowance for loan losses (1,520,993) (936,426) NET LOANS 88,051,876 80,618,977 Accrued interest receivable 577,563 603,613 Bank premises and equipment 3,429,811 2,860,039 Stock in Federal Home Loan Bank of Atlanta, at cost 197,900 185,200 Bank owned life insurance 3,392,716 3,332,906 Foreclosed real estate 360,000 - Other assets 745,492 742,595 TOTAL ASSETS $114,288,870 $109,978,118 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Noninterest-bearing $7,907,247 $7,087,958 Savings 1,481,195 1,305,567 Money market and NOW 19,023,802 20,177,514 Time 70,013,529 65,476,844 TOTAL DEPOSITS 98,425,773 94,047,883 Repurchase agreements 825,957 850,691 Federal funds purchased 388,000 - Litigation expense accrual 229,600 229,600 Accrued expenses and other liabilities 191,011 473,134 TOTAL LIABILITIES 100,060,341 95,601,308 Stockholders' equity Common stock, $5 par value, 20,000,000 shares authorized; 1,411,940 issued and outstanding 7,059,700 7,059,700 Additional paid-in capital 5,432,196 5,432,196 Accumulated earnings 1,785,034 1,871,210 Accumulated other comprehensive (loss) (48,401) 13,704 TOTAL STOCKHOLDERS' EQUITY 14,228,529 14,376,810 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $114,288,870 $109,978,118 PARKWAY BANK AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS For The Three For The Three For The Six For The Six Months Months Months Months June 30, 2008 June 30, 2007 June 30, 2008 June 30, 2007 (Unaudited) (Unaudited) (Unaudited) (Unaudited) INTEREST INCOME Loans $1,503,483 $1,543,104 $3,051,755 $2,995,641 Investments 175,791 227,587 370,696 461,041 Federal funds sold 4,990 29,167 12,314 92,629 Interest bearing deposits with other financial institutions 3,304 3,123 7,056 20,892 TOTAL INTEREST INCOME 1,687,568 1,802,981 3,441,821 3,570,203 INTEREST EXPENSE Money Market, NOW and savings deposits 104,731 147,880 244,264 301,399 Time deposits 731,096 735,792 1,492,676 1,469,680 Interest on federal funds purchased 1,549 7,754 2,794 7,754 Repurchase agreements 2,349 1,977 4,681 3,993 TOTAL INTEREST EXPENSE 839,725 893,403 1,744,415 1,782,826 NET INTEREST INCOME 847,843 909,578 1,697,406 1,787,377 PROVISION FOR LOAN LOSSES 503,989 75,000 606,152 112,500 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 343,854 834,578 1,091,254 1,674,877 NON INTEREST INCOME Insurance commissions 110,584 108,518 218,728 240,061 Mortgage operations 35,043 57,869 68,523 90,629 Return check charges 74,054 73,825 144,329 127,360 Earnings from bank owned life insurance 31,923 31,638 59,790 58,826 Other fees and charges 29,622 29,065 59,574 54,851 TOTAL NON INTEREST INCOME 281,226 300,915 550,944 571,727 NON INTEREST EXPENSE Salaries and employee benefits 554,882 427,062 1,014,004 862,753 Occupancy and equipment 80,825 91,227 162,326 169,158 Advertising and promotion 59,140 26,418 64,797 35,967 Data processing and outside service fees 125,419 108,290 239,954 215,842 Professional fees 49,006 39,317 166,283 62,269 Supplies, telephone and postage 48,487 22,330 78,304 55,271 Other 91,752 57,768 165,983 104,766 TOTAL NON-INTEREST EXPENSE 1,009,511 772,412 1,891,651 1,506,026 INCOME BEFORE INCOME TAXES (384,431) 363,081 (249,453) 740,578 INCOME TAXES (177,277) 111,000 (163,277) 227,000 NET INCOME (LOSS) $(207,154) $252,081 $(86,176) $513,578 NET INCOME (LOSS) PER COMMON SHARE BASIC $(0.15) $0.18 $(0.06) $0.37 DILUTED $(0.15) $0.18 $(0.06) $0.36 WEIGHTED AVERAGE COMMON SHARES BASIC 1,411,940 1,398,694 1,411,940 1,398,694 DILUTED 1,417,209 1,435,410 1,417,811 1,436,701 DATASOURCE: Parkway Bank CONTACT: James E. Sponenberg, President and CEO of Parkway Bank, +1-828-758-1414 Web site: http://www.parkwaybanknc.com/

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PKWY Parkway Bank (CE)