Parkway Bank Reports 2008 Financial Results

LENOIR, N.C., April 9  /PRNewswire-FirstCall/ -- Parkway Bank (OTC Bulletin Board: PKWY), a North Carolina state chartered bank headquartered in Lenoir, North Carolina, announced its audited 2008 financial results today.

Net income (loss) for 2008 was ($1,882,000) compared to net income of $702,000 for 2007.  Basic and diluted income (loss) per share were ($1.34) in 2008, compared to $.50 and $.49 for basic and diluted income per share, respectively, in 2007.

Total assets at December 31, 2008 were $125.3 million, compared to $110.0 million at December 31, 2007, an increase of $15.3 million or 13.9%.  Funding the growth in total assets was an increase of $17.8 million or 18.9% in total deposits which increased to $111.8 million at December 31, 2008 from $94.0 million at December 31, 2007.  During the same period, total loans increased to $95.2 million from $81.6 million, an increase of 16.8%.

"We are experiencing unprecedented national and local economic and financial conditions unlike any since the Great Depression of the 1930's," said James E. Sponenberg, III, President and CEO of Parkway Bank.  "Coupled with interest rate cuts by the Federal Reserve, which served to compress our net interest margin, our Bank experienced its first operating loss in several years.  We continue to be 'Well Capitalized' by all regulatory measures."

Sponenberg further commented that "2009 has started out and will continue to be a challenge for all of us.  At this point, it certainly appears that economic conditions will decline further before we see an upturn.  We continue to try to meet this challenge on a daily basis."

Parkway Bank is a full-service community bank.  Founded in 2001, the Bank has offices in Lenoir, Granite Falls and Hudson, NC.

This Press Release may contain, among other things, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements regarding certain of the Bank's goals and expectations with respect to earnings, earnings per share, revenue, expenses and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, and (ii) statements preceded by, followed by or that include the words "may", "could", "should", "would", "believe", "anticipate", "estimate", "expect", "intend", "plan", "projects", "outlook", or similar expressions.  These statements are based upon current beliefs and expectations of the Bank's management and are subject to significant risks and uncertainties.  Actual results may differ from those set forth in the forward-looking statements.  These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond the Bank's control).

                              PARKWAY BANK
                          Financial Highlights

                                      As of or for the Year Ended
                                              December 31
                                   (Amounts in thousands except per
                                          share and share data)
                                    2008                           2007

  Income statement data:
    Net interest income           $3,283                          3,627
    Provision for loan losses      3,544                            308
    Net interest income (loss)
     after provision                (261)                         3,319
    Non interest income              886                          1,051
    Non interest expense           3,886                          3,443
    Income (loss) before
     income taxes                 (3,261)                           927
    Income taxes (benefit)        (1,379)                           225
    Net income (loss)            ($1,882)                           702

  Per share data and shares
   outstanding:
    Basic income (loss) per share ($1.34)                           .50
    Diluted income (loss) per
     share                         (1.34)                           .49
    Book value at period end        8.92                          10.18
    Weighted average common shares
     outstanding:
      Basic                        1,408                          1,404
      Diluted                      1,408                          1,435
    Shares outstanding at
     period end                    1,397                          1,412

  Balance sheet data:
    Total assets                $125,281                        109,978
    Loans                         95,237                         81,555
    Allowance for loan losses      3,142                            936
    Total deposits               111,812                         94,048
    Other borrowings                 447                            851
    Stockholders' equity          12,466                         14,377

  Selected performance ratios:
    Return on average assets (%)   (1.60)                           .66
    Return on average
     stockholders' equity (%)     (13.36)                          5.03
    Net interest margin (%) (1)     3.06                           3.74
    Net interest spread (%) (2)     2.65                           3.11
    Efficiency ratio (%) (3)       93.21                          69.56


  (1) Net interest margin is net interest income divided by average
      interest-earning assets.
  (2) Net interest spread is the difference between the average yield
      on interest-earning assets and the average cost of interest-bearing
      liabilities.
  (3) The efficiency ratio is non-interest expense divided by the
      total of net interest income and non interest income.


DATASOURCE: Parkway Bank



CONTACT:  James E. Sponenberg, III, President and Chief Executive

Officer, Parkway Bank, [phone], 

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