SUFB First Bankshares (MM)

SUFFOLK, Va., July 24 /PRNewswire-FirstCall/ -- Darrell G. Swanigan, President and CEO of SuffolkFirst Bank (NASDAQ:SUFB), a Virginia state-chartered bank headquartered in Suffolk, VA, commented, "SuffolkFirst Bank's after tax income of $339 thousand for six months ended June 30, 2008 represents an increase of $55 thousand or 19% compared to June 30, 2007 net income of $284 thousand. On a per share comparison, net income increased 2 cents per share from 13 cents for the six month period ended June 30, 2007 compared to 15 cents for the same period end June 30, 2008. Net income for the six months ended June 30, 2008 includes an after tax gain on the sale of securities of $174 thousand. The Federal Reserve's policy to reduce interest rates since September 2007 contributed to pressures on the net interest margin as interest rates on rate sensitive assets re-priced faster than rates paid on time deposits. The net interest margin of 3.38% on June 30, 2007 declined to 2.56% as of June 30, 2008 as a result of this rapid drop in rates. Although the Bank continues to experience near term compression in the net interest margin, capital remains strong and has supported our rapid growth over the past five years. According to regulatory standards, SuffolkFirst Bank is considered 'well capitalized' with Tier one risk-based capital to risk-based assets of 13.7% while Tier two risk-based capital to risk-based assets includes the Allowance for Loan Losses and represents a ratio of 14.5% on June 30, 2008. Interest income increased $1.094 million or 29% while interest expense increased 49% or $956 thousand for the six month reporting period comparison June 30, 2007 and June 30, 2008. Non interest income increased 95% or $286 thousand for six months ended June 30, 2008 and includes a $264 thousand pre tax gain on the sale of securities. The increase of $217 thousand or 12.7% in non interest expense for the same period comparison can be attributed to the increased operating expenses of the new Main Office in North Suffolk. Net interest income increased $51 thousand after provision for loan losses of $120 thousand for six months ended June 30, 2008 which represents an increase of 2.85% compared to the same six month period ended June 30, 2007. Assets of $182 million on June 30, 2008 reflect an increase of $35 million or 23.6% compared to total assets on June 30, 2007 of $147 million. Net loans of $112 million on June 30, 2008 compared to net loans of $85 million on June 30, 2007 reflect a solid 32% or $27 million growth which was the primary basis for the growth in assets. Management's assessment of the overall quality of the loan portfolio is favorable considering the present and historical performance of the portfolio and current economic conditions. Total non performing loans on June 30, 2008 were $965 thousand or 0.85% of total loans and rose slightly from $867 thousand or 0.80% of total loans on March 31, 2008. The Allowance for Loan Losses stood at $1.062 million or 0.93% of total loans of $113.6 million on June 30, 2008, and management believes the Allowance for Loan Losses is adequate to support anticipated and unexpected losses in the loan portfolio. Deposits grew $15.8 million or 14.7% and were a source to fund assets and ended June 30, 2008 at $123.6 million compared to total deposits of $107.8 million on June 30, 2007 while borrowed funds were another source to fund asset growth and were $41 million and $22 million respectively for six months ended June 30, 2008 and 2007. On May 8, 2008, shareholders of SuffolkFirst Bank approved the formation of First Bankshares, Inc., a one bank holding company. Swanigan added, 'We are excited about this new corporate structure which we believe will enable us to further explore growth opportunities and position us to be more competitive in the changing financial services industry and to better manage the bank's capital.'" SuffolkFirst Bank opened for business in January 2003 and operates three full service offices in the City of Suffolk. Shares are traded on the NASDAQ stock exchange under the symbol SUFB. This press release contains forward-looking statements. Words such as "anticipates," "believes," "intends," "should," "expects," "will," variations of similar expressions are intended to identify forward-looking statements. These statements are management's beliefs as to the expected outcome of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, and degree of occurrence. Results and outcome may differ from what may be expressed or forecasted in forward-looking statements. Factors that could make a difference include, among others, changes in local and national economies, or market conditions; changes in interest rates; regulations and accounting principles; changes in policies or guidelines; loan demand and asset quality, including real estate values and collateral values; deposit flow; and the impact of competition from traditional or new sources. These and other issues that may emerge could affect decisions and results to differ materially from current expectations. SuffolkFirst Bank assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release. SuffolkFirst Bank Selected Financial Information (Unaudited) (in thousands, except for per share data) SuffolkFirst Bank Summary Balance Sheets (in thousands) June 30, June 30, 2007 2008 Increase/ %Increase/ (unaudited)(unaudited)(Decrease) (Decrease) Cash and due from banks $5,056 $2,849 $(2,207) -43.65% Securities available-for-sale, at fair value 49,671 55,875 6,204 12.49% Loans, net 85,450 112,621 27,171 31.80% Other assets 7,125 10,688 3,563 50.01% Total assets $147,302 $182,033 34,731 23.58% Deposits Demand $20,849 $20,902 53 0.25% Savings 2,231 2,599 368 16.49% Time 84,748 100,130 15,382 18.15% Total deposits 107,828 123,631 15,803 14.66% Federal funds purchased and borrowed funds 22,502 41,232 18,730 83.24% Other liabilities 983 1,040 57 5.80% Total liabilities 131,313 165,903 34,590 26.34% Total stockholders' equity 15,989 16,130 141 0.88% Total liabilities and stockholders' equity $147,302 $182,033 34,731 23.58% Summary Statements of Income (in thousands except for per share data) Six Months Ended June 30, June 30, 2007 2008 Increase/ %Increase/ (unaudited)(unaudited)(Decrease) (Decrease) Interest income $3,777 $4,871 $1,094 28.96% Interest expense 1,952 2,908 $956 48.98% Net interest income 1,825 1,963 $138 7.56% Provision for loan losses 33 120 $87 263.64% Net interest income after provision for loan losses 1,792 1,843 $51 2.85% Non interest income 301 587 $286 95.02% Non interest expense 1,703 1,920 $217 12.74% Net income before income tax 390 510 $120 30.77% Income tax expense 106 171 $65 61.32% Net income $284 $339 $55 19.37% Income per share, basic $0.13 $0.15 $0.02 15.99% Key Ratios June 30, June 30, Increase/ %Increase/ 2007 2008 (Decrease) (Decrease) Return on average assets 0.50% 0.40% -0.10% -20.00% Return on average equity 4.35% 4.01% -0.34% -7.82% Net interest margin 3.38% 2.56% -0.82% -24.26% Average earning assets/ total average assets 93.48% 94.33% 0.85% 0.91% Average loans/average deposits 82.78% 90.17% 7.39% 8.93% Allowance for loan losses/period end loans 1.02% 0.93% -0.09% -8.82% Period end shareholders' equity/period end assets 11.04% 9.32% -1.72% -15.58% Tier two risk-based capital ratio 17.95% 14.51% -3.44% -19.16% Efficiency ratio 80.00% 84.00% 4.00% 5.00% DATASOURCE: SuffolkFirst Bank CONTACT: Darrell G. Swanigan, President & CEO of SuffolkFirst Bank, +1-757-934-8200,

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