MECHANICSVILLE, Va., July 27 /PRNewswire-FirstCall/ -- River City
Bank (NASDAQ:RCBK), a Virginia state-chartered bank headquartered
in Mechanicsville, VA, today reported quarterly and year-to-date
financial progress for the period ended June 30, 2006. William D.
Stegeman, President & CEO, reported June 30, 2006 operating
results, stating that the Bank experienced strong balance sheet
growth while recording its first quarterly operating profit,
excluding net unrealized losses on securities available-for-sale,
for the second quarter of 2006. From a review of the Bank's
unaudited quarterly financial statements, total assets of the Bank
at June 30, 2006 amounted to $74,883,561, compared with $37,887,467
at June 30, 2005, representing an increase of 97.7%. Asset growth
was concentrated primarily in net loans originated, securities
available-for-sale, and federal funds sold to correspondent banks.
As of June 30, 2006, net loans outstanding amounted to $46,508,040
compared to $24,597,935 as of June 30, 2005, an increase of 89.1%.
Net securities available-for-sale and federal funds sold increased
to $22,254,732 as of June 30, 2006 compared to $8,716,202 as of
June 30, 2005, an increase of 155.3%. The Bank carried no loans
classified as available-for-sale for either reporting periods.
Loans held-for-investment as a percentage of assets and deposits
were 62.0% and 78.8% respectively as of June 30, 2006 compared to
64.9% and 84.8% as of June 30, 2005. The Bank recorded total
deposits at June 30, 2006 of $58,991,322 compared to total deposits
of $29,012,296 at June 30, 2005, an increase of 103.3%. Growth was
realized across all categories of deposit products and can be
attributed primarily to the Bank's effective focus on consumer and
commercial non-interest bearing deposits, as well as the use of
aggressive interest rates paid on time certificate of deposits. At
June 30, 2006, non-interest bearing deposits and fixed-term
certificates represented 12.6% and 53.9% respectively of total
deposits managed. For the six months ended June 30, 2006, the Bank
recorded a comprehensive net operating loss of $(287,416), compared
to $(430,986) for the six months ended June 30, 2005. Excluding net
unrealized losses of $(243,333) for securities available-for-sale,
the Bank recorded a year-to-date net operating loss of $(44,083)
for the period ended June 30, 2006, compared to a six month net
operating loss $(433,021) for the period ended June 30, 2005. The
noted 2005 six month net operating loss excludes unrealized gains
for securities available-for-sale of $2,035. For the second quarter
ended June 30, 2006, excluding unrealized losses on securities
available-for-sale of $(170,198), the Bank recorded its first net
operating profit of $16,031. This compares favorably to a six month
net operating loss of $(198,471), exclusive of net unrealized gains
from securities available-for-sale that amounted to $57,832 for the
quarter ended June 30, 2005. At June 30, 2006, the Bank's quarterly
and year-to-date basic and diluted loss per share of common stock
outstanding amounted to $(.09) and $(.16) respectively, compared to
$(.16) and $(.46) respectively at June 30, 2005. On July 5, 2005,
the Bank issued 869,180 shares of its common stock, par value $5.00
per share ("Common Stock"). Of that amount, 767,318 shares of
Common Stock were issued in a public offering at $10.50 per share,
and 101,862 shares of Common Stock were issued in a rights offering
to shareholders at $10.50 per share. Proceeds from the offering
amounted to $9,126,390. After deducting expenses related to the
offering of $608,003, the Bank increased stockholders' equity by
$8,518,387 in the third quarter of 2005. At June 30, 2006, the
Bank's total stockholders' equity amounted to $15,574,930 compared
to $7,682,177 at June 30, 2005, an increase of 102.7%. For the six
months ended June 30, 2006, net interest income increased to
$1,319,900 from $586,046 for the comparable period in 2005, an
increase of 125.2%. On a comparative quarterly basis, net interest
income amounted to $706,876 at June 30, 2006 compared to $350,060
at June 30, 2005, an increase of 101.9%. The significant growth in
quarterly and year-to-date net interest income was due to an
increase in average earning assets, which resulted from growth in
the Bank's loan portfolio, investment securities, and federal funds
sold to correspondent banks. These were effectively funded by a
strong increase in deposits and additional equity capital raised in
mid-2005. Total non-interest income for the six month period ended
June 30, 2006 amounted to $127,260, compared to $42,278 for the
same period in 2005, an increase of 201.0%. For the quarter ended
June 30, 2006, non-interest income amounted to $74,923 compared to
$8,561 for the quarter ended June 30, 2005, an increase of 775.2%.
The noted quarterly and year-to-date increase in non- interest
income resulted primarily from a strong boost in residential
mortgage origination fees and deposit transaction activity fees
realized from increased transaction deposits managed. Total
non-interest expense for the six month period ended June 30, 2006
amounted to $1,416,243 compared to $991,345 in 2005, an increase of
42.9%. For the quarter ended June 30, 2006, non-interest expense
amounted to $745,768 compared to $517,092 for the second quarter of
2005, an increase of 44.2%. It should be noted that the Bank opened
its second and third branch offices in August 2005 and June 2006
respectively that materially increased non-interest expense in 2006
from 2005. Mr. Stegeman commented: "We are pleased to report that
River City Bank continues to experience strong growth in loans and
deposits under management, and has significantly reduced
year-to-date net operating losses from 2005. Excluding unrealized
losses from securities available-for-sale, Bank management is very
enthused to report its first quarterly operating profit realized
after only twenty-four months in operation. We continue to
experience a strong net interest margin and spread, with quarterly
and year-to-date net interest income increasing by nearly 102% and
125% respectively from the prior year. The Bank has continued to
generate a strong increase in non-interest income, while
effectively managing growth of the Bank's overhead. Furthermore,
the Bank continues to prudently grow its allowance for loan loss,
and has yet to realize a loss from lending activities since the
Bank began operations on July 1, 2004. While the opening of our
third branch office late in the second quarter of 2006 will
slightly impede our advancement to sustained quarterly and annual
profitability, we believe that growing our retail branch footprint
will only enhance the value of our institution for both our
customers and shareholders." 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. DATASOURCE: River City Bank CONTACT: Zirkle Blakey, III,
EVP & CFO of River City Bank, +1-804-730-4100 Web site:
http://www.rivercitybank.org/
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