River City Bank Announces 2007 Third Quarter Operating Results


MECHANICSVILLE, Va., Oct. 22, 2007 (PRIME NEWSWIRE) -- River City Bank (Nasdaq:RCBK) (the "Bank") (quarterly results unaudited) reported today net losses of $(60,926) or $(.03) per share (basic and diluted) for the quarter ended September 30, 2007, and $(287,285) or $(.16) per share (basic and diluted) year-to-date, compared to net losses of $(130,769) or $(.07) per share (basic and diluted) for the quarter ended September 30, 2006, and $(174,758) or $(.10) per share (basic and diluted) for the nine month period ended September 30, 2006.

The decrease in quarterly net losses as compared to the same period a year ago is primarily attributable to the Bank's increased net interest income. For the quarter ended September 20, 2007, net interest income amounted to $972,243, representing an increase of $184,708 or 23.5% over net interest income for the quarter ended September 30, 2006.

The increase in 2007 year-to-date net losses as compared to the same nine month period in 2006 is attributable to increased reserves expensed to the Bank's allowance for possible loan losses. The increased provisions were due to a significant increase in loans outstanding, as well as the need to replenish the reserve for one charge-off fully absorbed by the Bank in the third quarter of 2007. For the quarter ended September 30, 2007, the Bank's provision expense for possible loan losses amounted to $145,000, compared to $65,000 expensed in the third quarter of 2006. The provision expense for possible loan losses for the nine month period ended September 30, 2007 amounted to $435,000, compared to $140,000 for the nine month period ended September 30, 2006.

The Bank continues to experience strong balance sheet growth, with net loans increasing $25,840,162 or 43.6% from December 31, 2006 to September 30, 2007. Net loans at September 30, 2007 amounted to $85,097,498. To fund the increase in loans, the Bank increased deposits by $27,906,306 from December 31, 2006 to September 30, 2007, an increase of 39.6%. Overall, the Bank has realized balance sheet growth of $27,935,367, or 32.3% in 2007, with total assets equaling $114,277,258 at September 30, 2007.

Year-to-date net interest income amounted to $2,672,802 for the period ended September 30, 2007, compared to $2,107,435 for the nine month period ended September 30, 2006, an increase of 26.8%. Non-interest income for the quarter ended September 30, 2007 amounted to $94,121, and for the nine months ended September 30, 2007 was $274,398, compared to $73,161 and $200,421 for the respective periods one year ago. Revenue from mortgage origination fees, a major component of the Bank's non-interest income, continues to show strong growth, increasing over 33% for the nine month period ended September 30, 2007 compared to the nine months ended September 30, 2006.

Non-interest expense amounted to $982,290 for the three month period ended September 30, 2007, compared to 926,465 for the three month period ended September 30, 2006, an increase of 6.0%. Management continues to emphasize cost controls on discretionary spending. 2007 year-to-date non-interest expense amounted to $2,799,485, compared to $2,342,614 for the nine month period ended September 30, 2006, an increase of 19.5%.

William D. Stegeman, the Bank's President and Chief Executive Officer commented: "Management is pleased to report that deposit and net loan growth continue well ahead of budget projections. As a result, net interest income continues to grow at an accelerated pace. We also continue to realize a steady increase in non-interest income, while restraining growth of non-interest expense. Due to the workout of the Bank's only non-performing asset, as well as exceptional loan growth generated in the third quarter and prior nine months of the year, the Bank has increased its provision for possible loan loss significantly. Management will prudently increase the Bank's reserve position should strong credit demand continue, and with no non-performing assets on the Bank's ledger as of September 30th, believe we are positioned for a strong fourth quarter." River City Bank currently operates three banking locations, two located in Mechanicsville, Virginia and the third office in Highland Springs, Virginia. The Bank's mortgage division operates within the Bank's administrative office also located in Mechanicsville. Shares of the Bank's Common Stock trade on the Nasdaq Capital Market listing under the symbol "RCBK".

This press release contains forward-looking statements as defined by federal securities laws. These statements may address certain results that are expected or anticipated to occur or otherwise state the company's predictions for the future. These particular forward-looking statements and all other statements that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. Such factors include but are not limited to: general economic conditions; significant fluctuations in interest rates that could reduce the net interest margin; difficulties in executing integration plans; reduction of fee income from existing products due to market conditions; and the amount of growth in the company's general administrative expenses. Consequently, these cautionary statements qualify all forward-looking statements made herein.

The River City Bank logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4049



            

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