LENOIR, N.C., May 8 /PRNewswire-FirstCall/ -- Parkway Bank (OTC:PKWY) (BULLETIN BOARD: PKWY) today reported earnings for the three-month period ending March 31, 2008. Net income for the first quarter of 2008 was $120,978, or $0.08 per diluted share, a decrease of 54% from $261,497, or $0.18 per diluted share, for the first quarter of 2007. Parkway's total assets grew 8% from $104.1 million at March 31, 2007 to $112.1 million at March 31, 2008. Net loans outstanding rose 22% to $85.5 million from $70.3 million, while deposits increased 7% to $95.3 million at March 31, 2008 from $89.0 million at March 31, 2007. At March 31, 2008, shareholders' equity was $14.6 million, representing an equity-to-assets ratio of 13.0%. The Bank's book value per share was $10.36. Parkway Bank President and CEO, Jim Sponenberg, in commenting on the results, noted, "While the current operating environment for banks is quite challenging, we were encouraged by the Bank's solid loan growth, which reflects the resilience of our markets. Although tighter margins and the expenses associated with our new branch in Granite Falls which to opened May 7 will likely keep some pressure on near-term earnings, we are taking the steps to build long-term earnings growth. The Bank remains well capitalized, and we have minimal direct exposure to the subprime market that has recently been so prevalent in the headlines." 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 March 31, December 31, 2008 2007 (Unaudited) ASSETS Cash and due from banks $1,714,151 $1,478,012 Federal funds sold - 2,064,000 Investment securities available for sale, at fair value 16,532,733 18,092,776 Loans 86,531,636 81,555,403 Allowance for loan losses (1,033,550) (936,426) NET LOANS 85,498,086 80,618,977 Accrued interest receivable 643,114 603,613 Bank premises and equipment 3,312,964 2,860,039 Stock in Federal Home Loan Bank of Atlanta, at cost 197,900 185,200 Bank owned life insurance 3,360,793 3,332,906 Foreclosed real estate 130,000 - Other assets 719,906 742,595 TOTAL ASSETS $112,109,647 $109,978,118 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Noninterest-bearing $6,908,624 $7,087,958 Savings 1,437,291 1,305,567 Money market and NOW 19,034,357 20,177,514 Time 67,917,149 65,476,844 TOTAL DEPOSITS 95,297,421 94,047,883 Repurchase agreements 937,926 850,691 Federal funds purchased 474,000 - Litigation expenses 229,600 229,600 Accrued expenses and other liabilities 546,936 473,134 TOTAL LIABILITIES 97,485,883 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 1,992,188 1,871,210 Accumulated other comprehensive income 139,680 13,704 TOTAL STOCKHOLDERS' EQUITY 14,623,764 14,376,810 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $112,109,647 $109,978,118 PARKWAY BANK AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS For The Three For The Three Months Months March 31, 2008 March 31, 2007 (Unaudited) (Unaudited) INTEREST INCOME Loans $1,548,272 $1,452,537 Investments 194,905 233,454 Federal funds sold 7,324 63,462 Interest bearing deposits with other financial institutions 3,752 17,769 TOTAL INTEREST INCOME 1,754,253 1,767,222 INTEREST EXPENSE Money Market, NOW and savings deposits 139,533 153,519 Time deposits 761,580 733,888 Interest on federal funds purchased 1,245 - Repurchase agreements 2,332 2,016 TOTAL INTEREST EXPENSE 904,690 889,423 NET INTEREST INCOME 849,563 877,799 PROVISION FOR LOAN LOSSES 102,163 37,500 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 747,400 840,299 NON INTEREST INCOME Insurance commissions 108,144 131,543 Mortgage operations 33,480 32,760 Return check charges 70,275 53,535 Earnings from bank owned life insurance 27,867 27,188 Other fees and charges 29,952 25,786 TOTAL NON INTEREST INCOME 269,718 270,812 NON INTEREST EXPENSE Salaries and employee benefits 459,122 435,691 Occupancy and equipment 81,501 77,931 Advertising and promotion 5,657 9,549 Data processing and outside service fees 114,535 107,552 Professional fees 117,277 22,952 Supplies, telephone and postage 29,817 32,941 Other 74,231 46,998 TOTAL NON INTEREST EXPENSE 882,140 733,614 INCOME BEFORE INCOME TAXES 134,978 377,497 INCOME TAXES 14,000 116,000 NET INCOME $120,978 $261,497 NET INCOME PER COMMON SHARE BASIC BASIC $0.09 $0.19 DILUTED DILUTED $0.08 $0.18 WEIGHTED AVERAGE COMMON SHARES BASIC BASIC 1,411,940 1,398,694 DILUTED DILUTED 1,424,744 1,438,017 DATASOURCE: Parkway Bank CONTACT: James E. Sponenberg, President and CEO, Parkway Bank, Lenoir, North Carolina, +1-828-758-1414 Web site: http://www.parkwaybanknc.com/

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