RWCB Redwood Capital Bancorp (QX)

On May 4, 2011, REDWOOD CAPITAL BANCORP (RWCB.OB), the only locally owned and operated community bank holding company in Humboldt County (the “Company”), announced unaudited financial results for the three month period ended March 31, 2011. Redwood Capital Bank (the “Bank”), the Company’s wholly owned subsidiary, celebrated its seven year anniversary by reporting strong profits as well as solid growth in both loans and deposits.

John Dalby, President and CEO of the Company, pointed to relationship oriented loan and deposit growth and the efforts of his entire team as the key profitability drivers for the franchise. Dalby stated that, “The Company began 2011 just like we ended 2010 – with strong financial performance. Redwood Capital Bancorp remains focused on providing sustained value to our shareholders and exceptional service to our loyal and growing customer base. We continue to seek out new opportunities to accomplish these goals in spite of the sluggish economy and increasing regulatory demands being placed on financial institutions. I couldn’t be more proud of our entire team.”

The Company again posted solid growth in the major balance sheet categories of assets, loans and deposits. Total assets as of March 31, 2011 were $219.7 million, an increase of 13% from the same period last year. Total loans as of March 31, 2011, net of unearned income, increased to $145.4 million, an increase of 4% over the quarter ended March 31, 2010. Total deposits grew to $200.0 million as of March 31, 2011, an increase of 13% over the March 31, 2010 figure. To date, the Company has not held any “brokered deposits” and has funded its entire loan portfolio on locally-generated deposits.

Net interest income for the quarter ended March 31, 2011 totaled $1,993,000, up 3% and 10% from the $1,942,000 and $1,807,000 for the three months ended December 31, 2010 and March 31, 2010, respectively. Furthermore, the Company reported net income before taxes of $572,000, down 11% from the $646,000 reported for the three months ended December 31, 2010 and up a sharp 76% from the $326,000 reported in the first quarter of 2010. The slight decrease from the prior quarter was attributed to a decline in mortgage origination volume and increased costs associated with banking regulatory compliance.

The Bank’s strong financial performance has not gone unnoticed. This past month, The Findley Reports, one of the most respected and well known California bank research and rating firms, designated the Bank a Super Premier Performing Bank based on its 2010 operating performance and management effectiveness. The rating of Super Premier Performance is the highest designation possible for California community banks to receive and places the Bank in the top 10% of all banks in the Western United States. The designation is based upon a number of performance metrics, including: profitability, capital resources, liquidity, loan quality, consistency of performance and management stability.

“High performance and well managed banks like Redwood Capital Bank are the cornerstones of the financial services industry,” stated Gary Steven Findley, President of The Findley Reports. “In spite of very challenging economic and industry constraints, Redwood Capital Bank outperformed the substantial majority of its peers. Only 19 banks in the state were designated as Super Premier Performance in 2010. Likewise, we commend the Board of Directors, management, and staff of Redwood Capital Bank for their outstanding financial performance in 2010 and encourage them to continue their strong performance for many years to come,” added Mr. Findley.

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, California 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 % 3/31/2011     12/31/2010     Change   Balance Sheet Data (at period end) Total assets $ 219,710 213,672 3 % Total deposits 200,021 193,449 3 % Total loans (net) 145,350 143,967 1 %   Summary of Operations (Current Quarter) Interest income 2,450 2,399 2 % Interest expense 457 457 0 % Net Interest Income 1,993 1,942 3 % Non-interest income 206 318 -35 % Non-interest expense 1,627 1,464 11 % Net Income (Loss) before provision 572 796 -28 % Provision for loan losses 0 150 -100 % Income before taxes 572 646 -11 % Income taxes/(credit) 125 (264 ) 147 % Net Income 447 910 -51 %   Period Ended % 3/31/2011     3/31/2010     Change   Balance Sheet Data (at period end) Total assets $ 219,710 $ 193,681 13 % Total deposits 200,021 177,779 13 % Total loans (net) 145,350 139,413 4 %   Summary of Operations (Current Quarter) Interest income 2,450 2,278 8 % Interest expense 457 471 -3 % Net Interest Income 1,993 1,807 10 % Non-interest income 206 205 0 % Non-interest expense 1,627 1,386 17 % Net Income (Loss) before provision 572 626 -9 % Provision for loan losses 0 300 -100 % Income before taxes 572 326 76 % Income taxes/(credit) 125 0 100 % Net Income 447 326 37 %