BSXT Boe Fin Serv of Virginia (MM)

-- Net Income Increases 7.0% in 2nd Quarter of 2007 TAPPAHANNOCK, Va., July 19 /PRNewswire-FirstCall/ -- BOE Financial Services of Virginia, Inc. (NASDAQ:BSXT), parent company of Bank of Essex, announced the results of operations for the second quarter of 2007. Net income for the second quarter of 2007 was $820,000, a 7.0% increase from 2006 second quarter income of $766,000. Fully diluted earnings per common share were $0.67 in the second quarter of 2007 compared to $0.63 in the second quarter of 2006. Tangible book value increased $1.17 to $23.15 per common share on June 30, 2007 compared to $21.98 on June 30, 2006. Total loans grew $17.9 million, or 9.5%, from $188.5 million on June 30, 2006 to $206.4 million on June 30, 2007. This increase in quarterly earnings was primarily attributable to a $133,000 increase in noninterest income and a $58,000 reduction in income tax expenses. Additionally, as a result of continued intensive asset quality management, provision for loan losses was $0 in the second quarter of 2007 compared to $25,000 for the same period in 2006. Noninterest income was $583,000 in the second quarter of 2007 compared to $450,000 in the same period in 2006. Of this increase $115,000 was the result of additional income generated through Bank Owned Life Insurance, which has contributed to lowering the 2007 income tax expense. Offsetting these increases to net income was a $134,000, or 6.6%, increase in noninterest expenses, a $23,000 reduction in net interest income and a $5,000 decrease in securities gains/(losses). For the six month period ended June 30, 2007, BOE Financial Services of Virginia Inc. reported an 8.8 %, or $132,000, decrease in net income over the same period in 2006. Net income for the six months ended June 30, 2007 was $1,372,000 compared to six month earnings of $1,504,000 in 2006. This decrease was primarily the result of a $400,000, or 10.4%, increase in noninterest expenses and a 3.7%, or $185,000, decrease in net interest income. Noninterest expenses were $4.231 million for the first six months of 2007 compared to $3.831 million for the same period in 2006. Of this increase to noninterest expenses $226,000 is related to increases in salaries and employee benefits. Bank of Essex filled staffing needs in the second quarter of 2007 for two new offices that will open in Northumberland County, Virginia. Additionally, occupancy expenses have increased $70,000, or 36.8%, primarily as a result of the Company's Corporate Headquarters and branch banking facility that opened in June 2006. George M. Longest, Jr, President and Chief Executive Officer stated: "We were pleased to see signs during the second quarter that the impact on our net interest margin, caused by the current rate cycle, has stabilized. We are also eagerly anticipating our two new offices that will soon open in Northumberland County. Like our new Corporate Headquarters facility, our customers will enjoy state of the art facilities in a customer friendly atmosphere and service provided by well trained employees." BOE Financial Services of Virginia, Inc. operates six full service Bank of Essex offices in Essex, King William, Hanover and Henrico counties. The Company has $285 million in total assets and offers a broad range of financial services to consumers and businesses. BOE Financial Services of Virginia, Inc. stock trades on the NASDAQ under the symbol BSXT and closed at a price of $27.23 on July 18, 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 (Unaudited) Percent Dollar ASSETS 6/30/2007 6/30/2006 Change Change Cash and due $3,249 $8,306 -60.9% $(5,057) Federal funds sold 258 - - 258 Securities Held-to-Maturity 3,000 3,000 - Securities Available-for-Sale 50,681 51,127 -0.9% (446) Equity Securities, restricted, at cost 1,761 1,552 13.5% 209 Loans held for sale 644 - 644 Loans, net of unearned income 206,438 188,526 9.5% 17,912 LESS: Allowance for loan losses (2,362) (2,388) -1.1% 26 Loans, net 204,076 186,138 9.6% 17,938 Bank premises and equipment, net 10,226 10,601 -3.5% (375) Accrued interest receivable 1,435 1,234 16.3% 201 Intangible assets 461 587 -21.5% (126) Other assets 8,913 8,087 10.2% 826 Total assets $284,704 $270,632 5.2% $14,072 LIABILITIES Deposits Non-interest bearing $29,536 $27,338 8.0% $2,198 Interest bearing 202,720 196,259 3.3% 6,461 Total Deposits 232,256 223,597 3.9% 8,659 Federal funds purchased - 2,708 -100.0% (2,708) Federal Home Loan Bank advances 17,000 12,000 41.7% 5,000 Accrued interest payable 985 691 42.5% 294 Other liabilities 1,867 516 261.8% 1,351 Trust preferred capital notes 4,124 4,124 0.0% - Total liabilities 256,232 243,636 5.2% $12,596 EQUITY CAPITAL Common stock 6,051 6,007 0.7% 44 Surplus 5,529 5,340 3.5% 189 Retained earnings 18,157 16,107 12.7% 2,050 Accumulated other comprehensive income (1,265) (458) 176.2% (807) Total equity capital 28,472 26,996 5.5% 1,476 Total liabilities, minority interest, and equity capital $284,704 $270,632 5.2% $14,072 For the For the quarter quarter ended ended Percent Dollar Income Statement (Unaudited) 6/30/2007 6/30/2006 Change Change Interest income $4,676 $4,240 10.3% $436 Interest expense 2,132 1,673 27.4% 459 Net interest income 2,544 2,567 -0.9% (23) Provision for loan losses - 25 -100.0% (25) Net interest income after provision for loan losses 2,544 2,542 0.1% 2 Noninterest income 583 450 29.6% 133 Securities gains/(losses) (3) 2 -250.0% (5) Noninterest expense 2,151 2,017 6.6% 134 Income taxes 153 211 -27.5% (58) Net income $820 $766 7.0% $54 Earnings per share, fully diluted $0.67 $0.63 6.3% $0.04 For the For the six months six months ended ended Percent Dollar Income Statement (Unaudited) 6/30/2007 6/30/2006 Change Change Interest income $9,119 $8,205 11.1% $914 Interest expense 4,241 3,142 35.0% 1,099 Net interest income 4,878 5,063 -3.7% (185) Provision for loan losses - 125 -100.0% (125) Net interest income after provision for loan losses 4,878 4,938 -1.2% (60) Noninterest income 1,027 864 18.9% 163 Securities gains/(losses) (2) (29) -93.1% 27 Noninterest expense 4,231 3,831 10.4% 400 Income taxes 300 438 -31.5% (138) Net income $1,372 $1,504 -8.8% $(132) Earnings per share, fully diluted $1.13 $1.24 -8.9% $(0.11) Tangible book value per share $23.15 $21.98 5.3% $1.17 http://www.bankofessex.com/ DATASOURCE: BOE Financial Services of Virginia, Inc. CONTACT: Bruce E. Thomas, Sr. Vice President-Chief Financial Officer of BOE Financial Services of Virginia, Inc., +1-804-443-4343 Web site: http://www.bankofessex.com/

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