BSXT Boe Fin Serv of Virginia (MM)

TAPPAHANNOCK, Va., April 24 /PRNewswire-FirstCall/ -- BOE Financial Services of Virginia, Inc. (NASDAQ:BSXT), parent company of its' wholly-owned subsidiary Bank of Essex, announced results of operations for the first quarter of 2007. Net income for the first quarter of 2007 was $552,000, a 25.2%, or $186,000 decrease from 2006 first quarter income of $738,000. Basic earnings per common share were $0.46 in the first quarter of 2007 compared to $0.62 in the first quarter of 2006. Tangible book value per common share increased from $21.83 at March 31, 2006 to $23.07 per common share at March 31, 2007. The decrease in earnings was primarily attributable to an increase of 43.6%, or $640,000 in interest expense in the first quarter of 2007 compared to the same period in 2006. Interest expense was $2,109,000 in the first quarter of 2007 compared to interest expense of $1,469,000 for the same period in 2006. This increase was the result of strong competition among financial institutions for deposits, higher rates in 2007 and growth in certificates of deposits of 12.3%, or $15.8 million at March 31, 2007 compared to March 31, 2006. Noninterest expenses also contributed to the decline in earnings. Noninterest expenses increased $265,000 to $2,079,000 for the first quarter of 2007 compared to $1,814,000 for the same period of 2006. Also contributing to the change in net income for the first quarter of 2007 compared to the same period in 2006 was a $30,000, or 7.2%, increase in noninterest income. Noninterest income was $444,000 in the first quarter of 2007 compared to $414,000 for the same period in 2006. Additional operational improvements over the previous year were experienced in gains/losses on securities and income tax expense. Securities gains/losses were a $1,000 gain for the first quarter of 2007 compared to a loss of $31,000 for the same period in 2006. Income tax expense decreased from $227,000 in the first quarter 2006 to $147,000 for the first quarter of 2007. This is a decrease of $80,000 or 35.2%. George M. Longest, Jr., President and CEO stated: "As the numbers demonstrate, our first quarter 2007 results were clearly impacted by several factors discussed above as well as operating in a flat to inverted yield curve environment. We will continue to focus on net interest income and loan quality, thereby minimizing pressure on net interest margin and reducing the amount of expense necessary to support reserves." BOE Financial Services of Virginia, Inc. operates six full service Bank of Essex offices and offers a broad range of financial services to consumers and businesses in Tappahannock, Central Garage, Mechanicsville, West Point and Glen Allen, Virginia. The Company has received approvals and intends to open two offices in Northumberland County in 2007. BOE Financial Services of Virginia stock trades on the NASDAQ under the symbol BSXT and closed at a price of $31.03 on April 23, 2007. Certain statements in the document are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in BOE Financial Services of Virginia, Inc.'s filings with the Securities and Exchange Commission. BOE Financial Services of Virginia, Inc. (Dollar amounts in thousands, except per share data) Balance Sheet Percent ASSETS 3/31/2007 3/31/2006 Change Cash and due $ 3,879 $ 4,959 -21.8% Federal funds sold 736 -- 100.0% Securities Held-to-Maturity 3,000 3,000 Securities Available-for-Sale 54,415 51,714 5.2% Equity Securities, restricted, at cost 1,536 1,553 -1.1% Loans held for sale 250 844 -70.4% Loans, net of unearned income 199,125 190,095 4.8% LESS: Allowance for loan losses (2,405) (2,346) 2.5% Loans, net 196,720 187,749 4.8% Bank premises and equipment, net 10,336 6,259 65.1% Accrued interest receivable 1,467 1,352 8.5% Intangible assets 493 619 -20.4% Other assets 8,704 10,685 -18.5% Total assets $281,536 $268,734 4.8% LIABILITIES Deposits Non-interest bearing $27,532 $27,921 -1.4% Interest bearing 206,235 191,969 7.4% Total Deposits 233,767 219,890 6.3% Federal funds purchased -- 4,391 -100.0% Federal Home Loan Bank advances 12,000 12,000 0.0% Acrued interest payable 809 571 41.7% Other liabilities 2,469 960 157.2% Trust preferred capital notes 4,124 4,124 0.0% Total liabilities 253,169 241,936 4.6% Minority interest in consolidated subsidiaries -- -- EQUITY CAPITAL Common stock 6,041 5,996 0.8% Surplus 5,481 5,282 3.8% Retained earnings 17,604 15,798 11.4% Accumulated other comprehensive income (759) (278) 173.0% Total equity capital 28,367 26,798 5.9% Total liabilities, minority interest, and equity capital $281,536 $268,734 4.8% For the For the quarter ended quarter ended Percent Income Statement 3/31/2007 3/31/2006 Change Interest income $ 4,442 $ 3,965 12.0% Interest expense 2,109 1,469 43.6% Net interest income 2,333 2,496 -6.5% Provision for loan losses -- 100 -100.0% Net interest income after provision for loan losses 2,333 2,396 -2.6% Noninterest income 444 414 7.2% Securities (gains)/losses 1 (31) -103.2% Noninterest expense 2,079 1,814 14.6% Income taxes 147 227 -35.2% Net income $552 $738 -25.2% Earnings per share, basic $0.46 $0.62 -25.8% Earnings per share, fully diluted $0.45 $0.61 -26.2% Tangible book value per share $ 23.07 $ 21.83 5.7% DATASOURCE: BOE Financial Services of Virginia, Inc. CONTACT: Bruce E. Thomas, Senior Vice President and Chief Financial Officer of BOE Financial Services of Virginia, Inc., +1-804-443-4343 Web site: http://www.bankofessex.com/

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