MOREHEAD CITY, N.C., Feb. 12 /PRNewswire-FirstCall/ -- Sound Banking Company (OTC:SNBN) (BULLETIN BOARD: SNBN) reported today that 2007 was a successful year in accomplishing strategic objectives. President and CEO Phil Collins stated that, "Despite the economic challenges experienced by many businesses in our market area as well as a general slowdown in businesses activity throughout the region, Sound Bank continued its record of solid growth in market share and earning assets. In July we opened our Beaufort branch, which has been very favorably received by the citizens of that area and has exceeded our expectations thus far. In August, we rewarded our shareholders with a 6- for-5 stock split. Our net income, though not as high as in 2006, was favorable when taking into consideration the lower net interest margin, general market conditions and increased expenses associated with our branch expansion. The greatest challenge to Sound Bank, and the banking industry in general, will be to manage its net interest margin as the Federal Reserve continues to cut interest rates into 2008. Through a combination of deposit pricing and utilizing other low cost funding sources, we will seek to minimize margin compression until our deposit liabilities reprice to lower levels. Fortunately, Sound Bank has no exposure in the sub-prime mortgage market, an issue that is now adversely affecting many financial institutions." Net income for the year ended December 31, 2007, was $659,000 or $0.79 per diluted share compared with $917,000 or $1.12 per diluted share for the year ended December 31, 2006. Results for the current year were impacted by a lower net interest margin, a higher provision for loan losses and increases in operating expenses primarily as a result of branch expansion. All earnings per share figures for 2006 have been adjusted to reflect the 6-for-5 stock split paid in August 2007. Sound Bank reported total assets of $113.5 million on December 31, 2007, reflecting a 12% increase over total assets of $101.4 million on December 31, 2006. Total loans increased by 11% from $81.3 million to $90.3 million, total deposits increased 10% from $89.9 million to $99.3 million and total stockholders' equity grew by 10% from $8.4 million to $9.2 million. Unaudited net income for the three-month period ended December 31, 2007, was $82,000 or $0.10 per diluted share compared with $257,000 or $0.31 per diluted share for the same three-month period of 2006. In comparing results for the two quarterly periods, net interest income decreased by 2% to $1.0 million due to interest margin compression, non-interest income increased by 50% and non-interest expenses increased by 37% in part due to branch expansion costs. In anticipation of continued slowdown in the real estate market, which could lead to deterioration in loan credit quality, the loan loss provision was $140,000 for the current three-month period compared to $59,000 for the prior year period. Sound Banking Company is a state chartered bank and offers a full range of financial services. Sound Bank, headquartered in Morehead City, operates full service offices in Morehead City, Beaufort and Cape Carteret and a loan production office in New Bern, North Carolina. Information about Sound Banking Company and its products and services is available on its web site at: http://www.soundbanking.com/ The information as of and for the quarter ended December 31, 2007 as presented is unaudited. This news release contains forward-looking statements. The actual results might differ materially from those projected in the forward-looking statements for various reasons, including our limited operating history, substantial changes in financial markets, regulatory changes, changes in interest rates, loss of deposits and loan demand to other savings and financial institutions, and changes in real estate values and the real estate market. DATASOURCE: Sound Banking Company CONTACT: Phil Collins of Sound Banking Company, +1-252-727-5558 Web site: http://www.soundbanking.com/

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