MECHANICSVILLE, Va., April 26 /PRNewswire-FirstCall/ -- River City
Bank (NASDAQ:RCBK) (the "Bank") (results unaudited) announced today
20% asset and loan growth for the first quarter of 2007. The Bank's
President and Chief Executive Officer William D. Stegeman stated
"The Bank's overall growth for the first quarter of 2007 exceeded
management's projections, primarily due to strong loan demand that
required aggressive funding throughout the first quarter of 2007.
We are very pleased with the progression of the Bank and believe
that continued growth will be realized across all lines of business
in 2007." The Banks assets increased 20.2% to $103,945,343 at March
31, 2007 over recorded assets of $86,451,891 at December 31, 2006.
Net loans at March 31, 2007 amounted to $71,609,032, an increase of
$12,351,696 or 20.8% over net loans of $59,257,336 at December 31,
2006. Mr. Stegeman commented "The increase in loan's outstanding
realized during the 1st quarter of 2007 is beyond expectations, and
management is diligently pursuing opportunities to continue the
growth to increase the Bank's overall net interest income for the
year." To manage loan funding pressures, the Bank also generated
significant deposit growth during the first quarter of 2007. Total
deposits at March 31, 2007 were $88,430,438, an increase of
$17,402,338 or 24.7% over total deposits of $70,505,923 at December
31, 2006. Mr. Stegeman further commented "In particular, the Bank
experienced strong growth in time and savings deposits that in the
short-term will have a negative impact to the Bank's net interest
margin. Management is developing certain initiatives to alleviate
the stress to future margins and we believe that overall balance
sheet growth will improve the Bank's ability to record a profit for
the year." The Bank reported a net loss of $(90,966), or $(0.05)
per share basic and diluted for the three months ended March 31,
2007, compared to a net loss of $(60,209) or $(0.03) per share
basic and diluted for the same period in 2006. Due to strong credit
growth, the Bank's earnings were materially impacted by the Bank's
need to increase its allowance for possible loan loss. The Bank's
provision for loan losses totaled $120,000 for the first quarter of
2007, compared to $55,000 expensed for the same quarter one year
ago. As a percentage of total loans outstanding, the reserve stood
at 1% at March 31, 2007. Mr. Stegeman stated "The Bank's
significant loan growth, and the resulting need to increase loan
loss reserves in excess of quarterly projections, had a negative
impact to the Bank's bottom line. While this is a timing issue,
management's goal is to prudently grow the Bank's loan loss reserve
to manage future credit exposure and risk. Asset quality overall
remains strong, and we have created a strong foundation to build
upon in the coming quarters of 2007." The noted growth in loans and
deposits impacted net interest income favorably. For the quarter
ended March 31, 2007, net interest income amounted to $682,530,
which represents an increase of 22.9% over net interest income of
$555,158 for the three months ended March 31, 2006. The Bank
continues to experience increased earnings from residential
mortgage origination fees. For the first quarter of 2007, the Bank
produced mortgage fee revenue of $50,941. This represents a 111.6%
increase over mortgage fee revenue of $24,076 earned during the
first quarter of 2006. Non-interest expense increased by $197,996
to $861,056 for the first quarter of 2007, compared to non-interest
expense of $663,060 realized in the first quarter of 2006, an
overall increase of 37.7%. Within the category, the Bank
experienced significant increases to salaries and employee benefits
expense, as well as occupancy and equipment expense. Salaries and
benefit expense amounted to $405,979 for the first quarter of 2007
compared to $294,818 for the first quarter of 2006, an increase of
37.7%. Occupancy and equipment expense was $155,348 for the first
quarter of 2007, compared to $114,386 for the first quarter of
2006, an increase of 35.8%. The noted increase in both categories
of expense was primarily due to the opening of our third branch
office in the second quarter of 2006, and the hiring of key officer
and staff positions to both manage our third office and strengthen
our internal support departments long-term. 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 (formerly
known as the Nasdaq SmallCap Market) 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.
RIVER CITY BANK Balance Sheets March 31 December 31 2007 2006
Assets Cash and cash equivalents Cash and due from banks $1,544,072
$1,009,353 Federal funds sold 8,797,781 4,193,998 Total cash and
cash equivalents 10,341,853 5,203,351 Securities
available-for-sale, at fair value 17,824,616 17,824,532
Certificates of deposit 2,082,000 2,082,000 Loans, net of allowance
for loan losses of $725,000 for March 31, 2007 and $605,000 for
December 31, 2006 71,609,032 59,257,336 Bank premises and
equipment, net 962,469 1,038,443 Accrued interest receivable
540,728 486,275 Restricted Federal Reserve Bank stock, at cost
470,650 470,650 Other assets 113,995 89,304 Total assets
$103,945,343 $86,451,891 Liabilities and Stockholders' Equity
Deposits Demand $6,850,793 $8,090,229 NOW and money market
10,062,464 8,445,302 Savings 27,908,491 21,398,358 Time 43,086,513
32,572,034 Total deposits 87,908,261 70,505,923 Accrued interest
payable 349,529 294,557 Other liabilities 172,648 106,036 Total
liabilities 88,430,438 70,906,516 Stockholders' equity Preferred
stock, $5 par value. Authorized 10,000,000 shares; none issued and
outstanding - - Common stock, $5 par value. Authorized 17,000,000
shares; issued and outstanding 1,801,178 shares at March 31, 2007
and 1,800,178 shares at December 31, 2006. 9,005,890 9,000,890
Additional paid-in-capital 8,832,927 8,827,477 Accumulated deficit
(2,164,945) (2,073,979) Accumulated other comprehensive loss
(158,967) (209,013) Total stockholders' equity 15,514,905
15,545,375 Total liabilities and stockholders' equity $103,945,343
$86,451,891 Statements of Operations and Comprehensive Losses Three
months ending March 31, 2007 2006 Interest income Interest and fees
on loans $1,328,624 $780,081 Interest on securities: U.S.
Government agencies 201,470 116,972 Mortgage-backed securities
26,985 24,058 Interest on certificates of deposit 21,181 30,524
Interest on federal funds sold 49,263 51,999 Total interest income
1,628,223 1,003,634 Interest expense Interest on deposits 630,635
283,872 Interest on time certificates of $100,000 and over 167,127
109,604 Interest on federal funds purchased 27,931 - Total interest
expense 825,693 93,476 Net interest income 802,530 610,158
Provision for loan losses 120,000 55,000 Net interest income after
provision for loan losses 682,530 555,158 Noninterest income
Mortgage fee income 50,941 24,076 Other 36,619 23,617 Total
noninterest income 87,560 47,693 Noninterest expense Salaries and
employee benefits 405,978 294,818 Occupancy expense and
depreciation 155,348 114,386 Advertising and shareholder
communications 24,513 35,841 Office supplies and telecommunications
34,689 32,283 Professional fees 99,763 84,331 Data processing fees
84,217 64,965 Credit expense 12,922 14,826 Education and training
expense 6,154 3,445 Other operating expenses 37,472 18,165 Total
noninterest expense 861,056 663,060 Loss before income tax expense
(90,966) (60,209) Income tax expense - - Net loss (90,966) (60,209)
Other comprehensive gain (loss): Net unrealized gain (loss) on
securities available-for-sale 50,046 (57,104) Comprehensive loss
$(40,920) $(117,313) Per share data: Loss per share, basic and
diluted $(0.05) $(0.03) 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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