Parkway Bank Announces First Quarter Earnings LENOIR, N.C., April 14 /PRNewswire-FirstCall/ -- Parkway Bank (OTC:PKWY) (BULLETIN BOARD: PKWY) today reported record earnings for the three month period ending March 31, 2005. Net income for the first quarter of 2005 was $220,220, an increase of 978.56% over net income of $20,418 for the first quarter of 2004. Parkway's total assets grew by 2.76%, from $73.9 million at December 31, 2004 to $75.9 million at March 31, 2005. Net loans outstanding rose 7.68% during the same period from $51.1 million to $55 million, while deposits totaled $62.5 million at March 31, 2005 which represents a 2.78% increase over deposits of $60.8 million at December 31, 2004. At March 31, 2005, shareholders' equity was $11.5 million and the bank's book value per share was $10.02. Parkway Bank President and CEO, Gary Clawson, in commenting on the results, noted, "We are very excited that first quarter profits increased nearly ten fold over the same period last year. A large portion of our earning assets are intentionally tied to variable rates and recent actions by the Federal Open Market Committee have directly influenced our earnings capacity. Upward movements in the short-term rate market coupled with continued focus on cost containment are primarily responsible for the positive results." Parkway Bank is a community bank operating two 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/ . PARKWAY BANK AND SUBSIDIARY CONSOLIDATED BALANCE SHEET March 31, December 31, 2005 2004 (Unaudited) ASSETS Cash and due from banks $1,291,297 $1,112,971 Federal funds sold 1,665,000 6,507,000 Investment securities available for sale, at fair value 11,025,594 11,337,962 Loans 55,792,282 51,832,308 Allowance for loan losses (797,643) (758,328) NET LOANS 54,994,639 51,073,980 Accrued interest receivable 310,152 277,211 Bank premises and equipment 2,882,665 2,928,724 Stock in Federal Home Loan Bank of Atlanta, at cost 147,800 113,800 Other assets 3,588,806 518,465 TOTAL ASSETS $75,905,953 $73,870,113 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Non-interest-bearing $5,959,756 $4,939,465 Savings 1,198,511 1,055,679 Money market and NOW 16,594,862 15,705,470 Time 38,762,473 39,119,200 TOTAL DEPOSITS 62,515,602 60,819,814 Repurchase agreements 1,614,480 1,440,369 Accrued expenses and other Liabilities 228,089 217,325 TOTAL LIABILITIES 64,358,171 62,477,508 Stockholders' equity Common stock, $5 par value, 20,000,000 shares authorized; 1,152,720 and 663,012 shares issued and outstanding, respectively 5,763,600 5,763,600 Additional paid-in capital 5,916,915 5,916,915 Accumulated deficit (22,030) (242,250) Accumulated other comprehensive loss (110,703) (45,660) TOTAL STOCKHOLDERS' EQUITY 11,547,782 11,392,605 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $75,905,953 $73,870,113 PARKWAY BANK AND SUBSIDIARY CONSOLIDATED STATEMENT OF OPERATIONS For The Three For The Three Months Months March 31, 2005 March 31, 2004 INTEREST INCOME (Unaudited) (Unaudited) Loans $926,353 $649,990 Investments 83,364 46,487 Federal funds sold and deposits in other banks 26,556 13,878 TOTAL INTEREST INCOME 1,036,273 710,355 INTEREST EXPENSE Money market, Now and savings deposits 43,418 37,881 Time deposits 273,766 258,422 Securities sold under repurchase agreements 4,111 2,778 TOTAL INTEREST EXPENSE 321,295 299,081 NET INTEREST INCOME 714,978 411,274 PROVISION FOR LOAN LOSSES 50,000 21,750 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 664,978 389,524 NON INTEREST INCOME Insurance commissions 121,777 126,259 Mortgage operations 44,435 33,228 Other fees and charges 93,289 52,545 TOTAL NON INTEREST INCOME 259,501 212,032 NON INTEREST EXPENSE Salaries and employee benefits 376,546 330,029 Occupancy and equipment 82,102 66,416 Advertising and promotion 26,609 20,195 Data processing and outside service fees 119,470 86,209 Professional fees 24,286 18,065 Supplies, telephone, and postage 29,842 39,845 Other 45,384 20,379 TOTAL NON INTEREST EXPENSE 704,239 581,138 PROFIT BEFORE INCOME TAXES 220,240 20,418 INCOME TAXES 20 - NET INCOME $220,220 $20,418 NET INCOME PER COMMON SHARE BASIC $0.19 $0.03 DILUTED $0.19 $0.03 WEIGHTED AVERAGE COMMON SHARES BASIC 1,152,720 663,012 DILUTED 1,178,273 690,304 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. DATASOURCE: Parkway Bank CONTACT: Gary T. Clawson, President and CEO of Parkway Bank, +1-828-758-1414 Web site: http://www.parkwaybanknc.com/

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