Weststar Financial Services Corporation News

Weststar Financial Services Corporation Reports Exceptional Growth and Second Quarter Earnings

ASHEVILLE, N.C., July 25 PRNewswire-FirstCall — Weststar Financial Services Corporation (OTC Bulletin Board: WFSC) reported June 30, 2008 consolidated assets of $182.9 million — an 11% increase over June 30, 2007. Asset growth was primarily realized in loans, which increased 20% to $148.3 million. At June 30, 2008, the Company's allowance for loan losses represented 1.52% of outstanding loans. Deposits reflected 10.2% growth to $155.2 million at June 30, 2008 compared to the prior year. Shareholders' equity increased 15% over June 30, 2007 to $15.8 million at June 30, 2008.

Consolidated net income totaled $282 thousand for the three months ended June 30, 2008 compared to $525 thousand for the comparable period in 2007 — a decrease of 46%. On a diluted per share basis, earnings for the three-month periods of 2008 and 2007 were $.12 vs. $.23 — a decrease of 48%. For the six-month periods ended June 30, 2008, net income totaled $671 thousand compared to $1,025 thousand for the comparable period in 2007 — a decrease of 35%. On a diluted per share basis, earnings for the six-month periods ended June 20, 2008 and 2007, respectively, were $.29 and $.45 — a decrease of 36%. The decrease in earnings was primarily attributable to an increase in the provision for loan losses to accommodate loan growth and decreased net interest income resulting from Federal Open Market Committee interest rate cut initiatives and not to any subprime lending. As a result of exceptional loan growth during the latter part of the second quarter, the Company added $150,680 to the loan loss reserve during the quarter and $188,125 during the six-month period — an increase of 116% and 115%, respectively, compared to comparable periods during 2007. The increased provision negatively impacts net income during the short-term; however, the benefits result in long-term streams of cash flows. Asset quality remained strong and demonstrated continued improvement with nonperforming loans to total assets of .10%, .11% and .20% at June 30, 2008, December 31, 2007 and June 30, 2007, respectively.

Return on assets was .64% compared to 1.28%, and return on equity was 7.14% compared to 15.30% for the three-month periods ended June 30, 2008 and 2007, respectively. For the six-month periods ended June 30, 2008 and 2007, respectively, return on assets was .76% compared to 1.27%, and return on equity was 8.59% compared to 15.30%.

G. Gordon Greenwood, President and Chief Executive Officer, stated, "Given our current economic environment, we are pleased with our performance. Our loan portfolio continues to perform well, and our earnings exceed peers in all market statistics. In a recent market analysis by Silverton Capital Corporation for banks with assets between $150 million and $250 million, Weststar's return on assets was 218% better than the median, and return on equity was 122% above the median for the quarter ended March 31, 2008. As in past periods of economic slowing, our market has performed better than the national average, and we continue to feel that this will be what happens during the remainder of the year. We will continue to manage the Bank with sound and cautious policies that have served us well for the past 11 years."

Weststar Financial Services Corporation is the parent company of The Bank of Asheville. Weststar Financial Services Corporation owns 100% interest in Weststar Financial Services Corporation I, a statutory trust. The Bank operates five full-service banking offices in Buncombe County, North Carolina — Downtown Asheville, Candler, Leicester, South Asheville and Reynolds.

This news release contains forward-looking statements. Such statements are subject to certain factors that may cause the company's results to vary from those expected. These factors include changing economic and financial market conditions, competition, ability to execute our business plan, items already mentioned in this press release, and other factors described in our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's judgment only as of the date hereof. The company undertakes no obligation to publicly revise these forward-looking statements to reflect events and circumstances that arise after the date hereof.

Weststar Financial Services Corporation & Subsidiary Selected Financial Data Three Months Ended June 30, June 30, 2008 2007 % change Consolidated earning summary: Interest income $2,895,378 $3,206,796 -9.7% Interest expense 1,185,292 1,315,067 -9.9% Net interest income 1,710,086 1,891,729 -9.6% Provision for loan losses 150,680 69,720 116.1% Net interest income after provision for loan losses 1,559,406 1,822,009 -14.4% Other income 415,849 394,114 5.5% Other expenses 1,563,388 1,398,247 11.8% Income before taxes 411,867 817,876 -49.6% Income taxes 129,384 293,304 -55.9% Net income $282,483 $524,572 -46.2% Earnings per share - Basic $0.13 $0.25 -48.0% Earnings per share - Diluted 0.12 0.23 -47.8% Average Shares - Basic 2,119,461 2,104,131 0.7% Average Shares - Diluted 2,279,884 2,282,642 -0.1% Consolidated average balance sheet data: Total Assets $178,016,532 $163,905,840 8.6% Total Deposits 151,838,703 137,448,436 10.5% Loans (gross) 141,392,197 127,164,672 11.2% Investments 26,011,589 26,733,213 -2.7% Shareholders' Equity 15,920,103 13,752,135 15.8% Consolidated performance ratios: Return on average assets* 0.64% 1.28% Return on average equity* 7.14% 15.30% Capital to Assets 8.94% 8.39% Six Months Ended June 30, June 30, 2008 2007 % change Consolidated earning summary: Interest income $5,975,791 $6,300,595 -5.2% Interest expense 2,532,424 2,576,811 -1.7% Net interest income 3,443,367 3,723,784 -7.5% Provision for loan losses 188,125 87,575 114.8% Net interest income after provision for loan losses 3,255,242 3,636,209 -10.5% Other income 790,883 744,483 6.2% Other expenses 3,032,980 2,773,517 9.4% Income before taxes 1,013,145 1,607,175 -37.0% Income taxes 342,525 582,572 -41.2% Net income $670,620 $1,024,603 -34.6% Earnings per share - Basic $0.32 $0.49 -34.7% Earnings per share - Diluted 0.29 0.45 -35.6% Average Shares - Basic 2,119,208 2,107,427 0.6% Average Shares - Diluted 2,279,723 2,288,086 -0.4% Consolidated balance sheet data: Total Assets $182,923,687 $164,412,455 11.3% Total Deposits 155,212,188 140,915,216 10.2% Loans (gross) 148,338,170 123,199,519 20.4% Investments 25,076,449 25,777,376 -2.7% Shareholders' Equity 15,782,299 13,681,118 15.4% Consolidated average balance sheet data: Total Assets $176,669,664 $162,273,246 8.9% Total Deposits 150,721,313 137,521,725 9.6% Loans (gross) 139,234,303 125,395,267 11.0% Investments 26,190,687 26,484,051 -1.1% Shareholders' Equity 15,698,508 13,504,117 16.3% Consolidated performance ratios: Return on average assets* 0.76% 1.27% Return on average equity* 8.59% 15.30% Capital to Assets 8.89% 8.32% Consolidated asset quality data and ratios: Nonaccruing loans $187,157 $326,865 -42.7% Accruing loans 90 days past due - 1,000 -100.0% Nonperforming loans 187,157 327,865 -42.9% Foreclosed properties 51,006 574,633 -91.1% Nonperforming assets 238,163 902,498 -73.6% Allowance for loan losses 2,252,385 1,929,498 16.7% Loans charged off 46,812 59,018 -20.7% Recoveries of loans charged off 20,946 16,862 24.2% Net loan charge-offs 25,866 42,156 -38.6% Net charge-offs to average loans* 0.04% 0.07% -42.9% Nonperforming loans to total assets 0.10% 0.20% -50.0% Allowance coverage of nonperforming loans 1203.47% 588.50% 104.5% Allowance for loan losses to gross loans 1.52% 1.57% -3.2% *Annualized based on number of days in the period. Weststar Financial Services Corporation & Subsidiary Supplemental Quarterly Financial Data Quarters Ended Jun 30, Mar 31, Dec 31, 2008 2008 2007 Consolidated earning summary: Interest income $2,895,378 $3,080,413 $3,285,876 Interest expense 1,185,292 1,347,132 1,355,650 Net interest income 1,710,086 1,733,281 1,930,226 Provision for loan losses 150,680 37,445 181,755 Net interest income after provision for loan losses 1,559,406 1,695,836 1,748,471 Other income 415,849 375,034 397,499 Other expenses 1,563,388 1,469,592 1,411,526 Income before taxes 411,867 601,278 734,444 Income taxes 129,384 213,141 245,969 Net income $282,483 $388,137 $488,475 Earnings per share - Basic $0.13 $0.18 $0.23 Earnings per share - Diluted 0.12 0.17 0.21 Average Shares - Basic 2,119,461 2,118,956 2,117,973 Average Shares - Diluted 2,279,884 2,279,551 2,283,290 Consolidated balance sheet data: Total Assets $182,923,687 $180,968,119 $174,257,998 Total Deposits 155,212,188 155,155,491 149,191,016 Loans (gross) 148,338,170 137,192,577 135,734,224 Investments 25,076,449 26,494,464 26,113,294 Shareholders' Equity 15,782,299 15,793,519 15,179,239 Consolidated average balance sheet data: Total Assets $178,016,532 $175,340,851 $171,465,008 Total Deposits 151,838,703 149,617,026 146,633,893 Loans (gross) 141,392,197 137,076,409 133,456,205 Investments 26,011,589 26,369,785 26,579,297 Shareholders' Equity 15,920,103 15,476,307 14,893,132 Consolidated performance ratios: Return on average assets* 0.64% 0.89% 1.13% Return on average equity* 7.14% 10.09% 13.01% Capital to Assets 8.94% 8.83% 8.69% Consolidated asset quality data and ratios: Nonaccruing loans $187,157 $189,126 $195,683 Accruing loans 90 days past due - - - Nonperforming loans 187,157 189,126 195,683 Foreclosed properties 51,006 87,787 87,787 Nonperforming assets 238,163 276,913 283,470 Allowance for loan losses 2,252,385 2,110,658 2,090,125 Loans charged off 16,910 29,902 89,549 Recoveries of loans charged off 7,956 12,990 29,464 Net loan charge-offs 8,954 16,912 60,085 Net charge-offs to average loans* 0.03% 0.05% 0.18% Nonperforming loans to total assets 0.10% 0.10% 0.11% Allowance coverage of nonperforming loans 1203.47% 1116.01% 1068.12% Allowance for loan losses to gross loans 1.52% 1.54% 1.54% Quarters Ended Sept 30, Jun 30, 2007 2007 Consolidated earning summary: Interest income $3,314,963 $3,206,796 Interest expense 1,363,045 1,315,067 Net interest income 1,951,918 1,891,729 Provision for loan losses 137,395 69,720 Net interest income after provision for loan losses 1,814,523 1,822,009 Other income 386,784 394,114 Other expenses 1,368,193 1,398,247 Income before taxes 833,114 817,876 Income taxes 300,186 293,304 Net income $532,928 $524,572 Earnings per share - Basic $0.25 $0.25 Earnings per share - Diluted 0.23 0.23 Average Shares - Basic 2,113,485 2,104,131 Average Shares - Diluted 2,287,007 2,282,642 Consolidated balance sheet data: Total Assets $170,393,834 $164,412,455 Total Deposits 145,911,704 140,915,216 Loans (gross) 129,952,653 123,199,519 Investments 27,050,604 25,777,376 Shareholders' Equity 14,519,658 13,681,118 Consolidated average balance sheet data: Total Assets $166,531,452 $163,905,840 Total Deposits 142,455,579 137,448,436 Loans (gross) 125,301,745 127,164,672 Investments 26,531,300 26,733,213 Shareholders' Equity 14,071,165 13,752,135 Consolidated performance ratios: Return on average assets* 1.27% 1.28% Return on average equity* 15.03% 15.30% Capital to Assets 8.45% 8.39% Consolidated asset quality data and ratios: Nonaccruing loans $96,968 $326,865 Accruing loans 90 days past due - 1,000 Nonperforming loans 96,968 327,865 Foreclosed properties 87,787 574,633 Nonperforming assets 184,755 902,498 Allowance for loan losses 1,968,455 1,929,498 Loans charged off 108,174 38,846 Recoveries of loans charged off 9,735 10,567 Net loan charge-offs 98,439 28,279 Net charge-offs to average loans* 0.31% 0.09% Nonperforming loans to total assets 0.06% 0.20% Allowance coverage of nonperforming loans 2030.00% 588.50% Allowance for loan losses to gross loans 1.51% 1.57% * Annualized based on number of days in the period.

SOURCE Weststar Financial Services Corporation

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