Albemarle First Bank Announces Growth in Profits and Assets in the Fourth Quarter of 2002.

Business Editors

CHARLOTTESVILLE, Va.--(BUSINESS WIRE)--Feb. 4, 2003

Albemarle First Bank, Charlottesville, Virginia (NASDAQ: AFBK) reports another profitable quarter with net income of $49,439 for the quarter ending December 31, 2002 and growth in total assets to pass the $100 million mark for the first time in the Bank's history.

Thomas M. Boyd, Jr., President and CEO stated, "We are very pleased to report fourth quarter profits of $.04 per share and to reach $101.1 million in total assets as of year-end. We continue to move in the right direction. The year 2002 was a year of building infrastructure for future growth and profitability. We have added production and support staff, implemented new policies and procedures, worked diligently to correct problem loans, and have increased productivity at our two new offices. Daily, we look at the future of Albemarle First with great optimism as our market continues to prosper, and we continue to grow with it."

Boyd continues, "The year 2003 will be highly focused toward increasing net income. The management team has been looking at various strategies to increase the bottom line through increased loan production, decreased overhead expenses, increased non-interest income and maximizing returns on our investment portfolio. In the fourth quarter of 2002, loan production began to increase and we realized a gain on the sale of investments of $39,062. Our shareholders are entitled to see profits increase. We are committed to see it accomplished."

The net income of $49,439, or $.04 per share for the quarter ending December 31, 2002 shows an increase as compared to the previous year's fourth quarter loss of $411,819, or $.33 per share. Year-to-date, as of December 31, 2002, the Bank incurred a net loss of $279,714, or $.22 per share as compared to a net loss of $224,765, or $.18 per share as of December 31, 2001.

Total assets have grown since year-end 2001 to $101.1 million at December 31, 2002, or an annual rate of 11.81%. Total deposits have grown to $90.1 million from $80.0 million at year-end 2001. Boyd stated, "We experienced growth in total assets in the fourth quarter of $5.3 million, or 5.5%. Deposit levels grew to $90.1 million from $80.0 million at the end of 2001."

Total net loans grew during the fourth quarter to $72.2 million as compared to $71.4 million at year-end 2001. Boyd comments, "Great strides have been made in identifying and correcting problem loans in the portfolio as of the end of 2002. In addition, new loan production has begun to increase as well. Charge-offs remained high in the fourth quarter at $293,769, or .40% of total loans and non-accrual loans increased to $3.2 million as of December 31, 2002 from the third quarter 2002 of $1.6 million. Although these have increased, we believe we have now identified the large majority of problem loans in the portfolio and are pursuing resolution on these as quickly as possible. Unfortunately, these things take time to resolve, but we expect significant improvements in the latter part of 2003. The allowance for loan losses to total loans is 1.58%. During the fourth quarter, we made a provision to the allowance for loan losses of $50,000 bringing the year-to-date provision to $750,000. Based on our analysis of the allowance, no additional provisions were warranted." As economic conditions change in the future, it may be necessary to make additional provisions to the allowance for loan losses.

Albemarle First Bank offers a full range of banking and financial services to individuals, professionals, and small and medium-sized businesses in Charlottesville, Albemarle County, Greene County and adjacent counties.

This press release contains "forward-looking statements" that concern future events that are subject to risks and uncertainties. Any such statements are based on certain assumptions and analyses by the Bank and other factors it believes are appropriate in the circumstances. The Bank's actual results and developments may differ materially from those contemplated by any forward-looking statement. Factors that could have a material adverse effect on the operations and future prospects of the Bank include, but are not limited to, changes in: interest rates, general economic conditions, legislative/ regulatory changes, monetary and fiscal polices of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Bank's market area and accounting principles, policies, and guidelines. Consequently, all forward-looking statements made in this press release are qualified by the cautionary language contained in the Bank's quarterly and annual reports filed pursuant to the Securities Exchange Act of 1934.