MECHANICSVILLE, Va., May 6, 2008 (PRIME NEWSWIRE) -- River City Bank (Nasdaq:RCBK) (the "Bank") (results unaudited) announced first quarter 2008 earnings of $47,426, compared to a loss of $(90,966) for the first quarter of 2007. The Bank continued to experience strong balance sheet growth, realizing an increase in assets of approximately $16.8 million, or 13.2% over total assets of $121.9 million recorded as of December 31, 2007.
The Bank's President and Chief Executive Officer William D. Stegeman commented, "Management is very pleased to report profitability in the first quarter of 2008. Despite declining short-term interest rates that have had a negative effect on our net interest margin, as well as an environment of high economic uncertainty concerning real estate and financial service sector markets, our Bank continues to make strong strides. With the closing of the quarter, River City has managed to keep past due loans to a minimum, while reporting that non-performing loans amounted to less than $40,000 as of March 31, 2008. We are very pleased with our first-quarter results and believe that projected deposit and loan growth will be realized in 2008 that will lead us to sustainable quarterly profit for the remainder of the year."
The Bank's total assets increased 13.2% to $138,714,402 at March 31, 2008 over recorded assets of $121,893,719 at December 31, 2007. Net loans at March 31, 2008 amounted to $102,328,580, representing an increase of $7,526,476 or 7.9% over net loans at December 31, 2007. To better utilize available funds, the Bank increased its securities (available-for-sale) by $9,488,476, or 44.5%, to $30,831,667 at March 31, 2008 compared to $21,343,191 at December 31, 2007.
During the quarter, the Bank also experienced strong deposit growth. Total deposits at March 31, 2008 amounted to $118,411,001, an increase of 13.3% over total deposits of $104,535,491 recorded at December 31, 2007.
The Bank reported net income of $47,426 or $.03 (per share basic and diluted), for the first three months of 2008, compared to a loss of $(90,966), or $(0.05) (per share basic and diluted), for the three months ended March 31, 2007. Despite the pressures of a lower interest rate environment, through effective balance sheet management, the Bank was able to increase its net interest income by $165,310, or 20.6%, for the first quarter of 2008 compared to the first quarter of 2007.
Management has continued to focus its efforts on expense control as total non-interest expense for the first three months of 2008 increased only $65,745, or 7.6%, compared to the same three-month period in 2007.
On March 9, 2008, the Bank entered into a definitive merger agreement with Village Bank and Trust Financial Corp. and Village Bank whereby the Bank will merge with and into Village Bank in a transaction valued at approximately $20.2 million, payable in cash and common stock. Under terms of the merger agreement, which was approved by the Board of Directors of both companies, shareholders of River City Bank will be entitled to receive for each share of its common stock owned $11.00 in cash or one share of Village Bank and Trust Financial Corporation common stock, subject to proration of 20% cash and 80% common stock, if either cash or common stock is oversubscribed.
Mr. Stegeman further commented, "With the pending merger of our institution with Village Bank announced in March, and currently projected for completion in the third quarter of 2008, our Board is encouraged by our first-quarter results and excited about our future prospects as a combined entity with Village. We believe the merger will be accretive to future earnings, creating a strongly capitalized company operating fifteen branch offices in the greater Richmond metropolitan area, with total assets under management greater than $550 million and a staff of approximately 200 employees. We anticipate the merger, subject to regulatory and shareholder approvals, will create the largest Richmond-area based commercial bank, providing us the ability to compete more aggressively and return greater value to our respective shareholder groups both near and long term as one enterprise."
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.