RWCB Redwood Capital Bancorp (QX)

On July 21, 2010, REDWOOD CAPITAL BANCORP (OTCBB:RWCB), the only locally owned and operated community bank holding company in Humboldt County, announced unaudited financial results for the three month periods ended June 30, 2009 and 2010, respectively. The Company again reported strong core deposit and net interest income growth while aggressively increasing loan loss reserves as a hedge against future loan deteriorations.

John Dalby, President & CEO of the Company, commented, “Clearly, the severe economic downturn continues to have a profound impact on Humboldt County while creating unique challenges for us all. We continually review all our loan relationships to determine how best to support our borrowers while protecting our franchise with prudent loan loss reserves. The contribution to the bank’s allowance for loan losses for the second quarter of 2010, as well as for the four trailing quarters, has been predominantly driven by impairment charges on a few loans and is not indicative of systemic issues within the bank’s overall credit portfolio. The management team and the Board of Directors remain united in our focus on enhancing shareholder value through the relentless pursuit of credit quality as well as continual improvement in our core earnings and overall operating efficiencies.”

The Company again posted robust double-digit growth in the major balance sheet categories of assets, and deposits while loan growth was more modest. Total assets as of June 30, 2010 were $200.9 million, an increase of 14% from the same period last year. Likewise, total deposits grew to $182.1 million as of June 30, 2010, an increase of 13% over the June 30, 2009 figures. Total loans as of June 30, 2010, net of unearned income, stood at $140.1 million, a slight increase of 2% over the quarter ended June 30, 2009.

Net interest income for the quarter ended June 30, 2010 totaled $1,864,000, up 14% from the $1,638,000 for the three months ended June 30, 2009. Also during the second quarter of 2010, the Company continued its thorough proactive review of all borrowing relationships. During the review, several credits were identified that required the Company to take a conservative position and increase loan loss reserves. Accordingly, the Company reported provisions for loan losses for the quarter ended June 30, 2010 of $1,200,000, up $402,000, or 50% from the $798,000 reported for the three months ended June 30, 2009. The increase to provision expense for the quarter resulted in the Company posting a net loss of $496,000 for the quarter, an improvement from the $688,000 net loss reported for the three months ended June 30, 2009.

CEO Dalby commented further that, “As a community bank, our business is local, our deposits come from local depositors and these deposits are reinvested in loans to borrowers within in our community. As such, there is a big difference between community banks, banks too big to fail, and investment banks. Community banks were not the cause of this economic crisis, though we believe that community banks across the country are a big part of the solution. Notwithstanding the challenges facing our economy and the prospects that the overall recovery will be slow in taking hold, we continue to believe in Humboldt County. In my meetings with individuals, businesses, and community groups over the past few months, I am often asked if banks are lending these days. I’m happy to respond that Redwood Capital Bank has the capital strength and liquidity to make new loans to qualified borrowers and thereby support the people and the economy of Humboldt County.”

Since the formation of the bank in 2004, the Company has exceeded regulatory guidelines for “well capitalized” status. For more information regarding Redwood Capital Bancorp, please visit our website at www.redwoodcapitalbank.com, contact Fred Moore, CFO, at (707) 444-9840, or stop by our headquarters and main office at 402 “G” Street, Eureka, CA 95501.

This press release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, government regulations and general economic conditions, and competition within the business areas in which the bank is conducting its operations, including the real estate market in California and other factors beyond the bank’s control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management’s view only as of the date hereof. The bank undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

  Redwood Capital Bancorp Selected Consolidated Financial Results - Unaudited (In Thousands)                         Period Ended % 6/30/2010     3/31/2010     Change   Balance Sheet Data (at period end) Total assets $ 200,947 $ 193,681 4 % Total deposits 182,077 177,779 2 % Total loans (net) 140,108 139,413 0.5 %   Summary of Operations (Current Quarter) Interest income 2,298 2,278 1 % Interest expense 434 471 -8 % Net Interest Income 1,864 1,807 3 % Non-interest income 221 205 8 % Non-interest expense 1,381 1,386 -0.4 % Net Income (Loss) before provision 704 626 13 % Provision for loan losses 1,200 300 300 % Income before taxes (496 ) 326 252 %     Period Ended % 6/30/2010     6/30/2009     Change   Balance Sheet Data (at period end) Total assets $ 200,947 $ 176,320 14 % Total deposits 182,077 161,545 13 % Total loans (net) 140,108 137,991 2 %   Summary of Operations (Current Quarter) Interest income 2,298 2,189 5 % Interest expense 434 551 -21 % Net Interest Income 1,864 1,638 14 % Non-interest income 221 227 -3 % Non-interest expense 1,381 1,755 -21 % Net Income (Loss) before provision 704 110 540 % Provision for loan losses 1,200 798 50 % Income before taxes (496 ) (688 ) 28 %