SOURCE: Christiana Bank & Trust Company

January 25, 2007 16:00 ET

Christiana Bank Reports Record High Income in 2006

GREENVILLE, DE -- (MARKET WIRE) -- January 25, 2007 -- Christiana Bank and Trust Company (OTCBB: CBTD) (the "Bank") reported net income of $2.5 million for 2006, an increase of $1.0 million, or 65%, from $1.5 million in 2005. This is the highest level of net income in the history of the Bank. Net income for the fourth quarter of 2006 was $724 thousand, an increase of $212 thousand, or 41%, from $512 thousand for the same period in 2005. Net income for the third quarter of 2006 was $713 thousand.

Zissimos A. Frangopoulos, President and CEO, stated, "Both our community banking business and national trust presence contributed to Christiana's impressive performance and earnings growth in 2006. We are confident that our distinctive business model can continue to produce welcome results for shareholders."

Net income per diluted share was $1.56 for 2006. This was an increase of 53% from $1.02 reported for 2005. For the fourth quarter of 2006, net income per diluted share was $0.44, an increase of $0.11, or 33%, from the same period in 2005. The Bank also reported $0.44 in net income per diluted share for the third quarter of 2006. All references to per share earnings and other data have been adjusted, as appropriate, to reflect the stock dividend of 5% distributed November 30, 2006 and the special stock dividend of 5% distributed on August 31, 2006.

The Bank's return on average assets for 2006 was 1.55% compared to 1.06% for 2005. For the fourth quarter of 2006, return on average assets was 1.74% compared to 1.36% for the same period in 2005. Return on average equity for 2006 amounted to 14.55% compared to 10.16% in 2005. For the fourth quarter of 2006, the return on average equity was 15.45% compared to 12.97% for the same period last year.

FINANCIAL CONDITION

The Bank ended 2006 with total assets of $168.4 million as compared to $166.1 million on December 31, 2005. Total assets at September 30, 2006, were $166.2 million. While total assets increased only marginally, the mix of assets and loans grew meaningfully, as noted below. During the calendar year, cash and due from banks declined and deposits remained basically static as excess liquidity was redeployed into loans.

Loans, net of allowance for loan losses, were $129.5 million at December 31, 2006, as compared to $116.0 million at December 31, 2005 -- a growth of 12%. Net loans were $127.5 million at September 30, 2006.

Total deposits at December 31, 2006, were $145.1 million, a slight decline from $148.3 million at December 31, 2005. Total deposits were $132.6 million at September 30, 2006. The slight decline in deposits is due in part to the transfer during the third quarter of certain customer balances from deposit accounts to actively managed accounts.

EARNINGS

Relative to 2005, earnings in 2006 reflect growth in total revenues (consisting of net interest income after provision for loan losses plus other income) at a faster rate than expenses -- 28% and 15%, respectively. The growth in revenues was primarily due to strength in trust revenues as well as increased net interest income. The growth in 2006 expenses is largely related to the growth in trust and banking activities. Separately, 2005 non-interest expense included prepayment fees of $417 thousand incurred for the early repayment of $10 million in fixed-rate, long-term debt. There were no prepayment fees in 2006 and no long-term debt remained outstanding at December 31, 2006.

Growth in revenues during the fourth quarter of 2006, relative to the same period last year, was 26%, while expenses grew by 20%. During the fourth quarter of 2006 revenues increased by 4% compared to the third quarter of 2006 and non-interest expense increased by 7%. The higher rate of growth in non-interest expense during the fourth quarter reflects accruals for variable compensation along with a one-time adjustment to facilitate the settlement of a claim.

Net interest income

Net interest income for 2006 was $7.1 million as compared to $6.0 million in 2005, an increase of 18%. The increase in the net interest income primarily reflects the growth in loans and a continued increase in the net interest margin. During 2006, average gross loans were $126.2 million compared to $109.0 million in 2005, a growth of 16%. The net interest margin for 2006 was 4.57%, compared to 4.40% for 2005.

For the fourth quarter of 2006, net interest income was $1.8 million, compared to $1.7 million in the fourth quarter 2005 -- a growth of 5%. For the third quarter 2006, net interest income was $1.8 million. The net interest margin for the fourth quarter 2006 was 4.50%, compared to 4.73% in the same period in 2005. In the third quarter 2006, the net interest margin was 4.63%. Average gross loans in the fourth quarter 2006 were $130.0 million, compared to $114.3 million in the same period a year earlier -- a growth of 14%. In the third quarter 2006, average loans were $128.9 million.

As noted above, the net interest margin for the full year 2006 improved to 4.57% from 4.40% in the prior year. However, during the latter part of 2006 the net interest margin came under some pressure as the funding mix shifted to include a larger volume of higher-cost funding sources resulting in the fourth quarter 2006 margin of 4.50% compared to 4.63% in the third quarter as already mentioned.

The improvement in the net interest margin for the full year reflects the benefit of having a larger amount of assets than liabilities re-pricing in an environment of rising interest rates during the first six months of 2006. Starting with the August 2006 meeting, the Federal Reserve Board has adopted a "wait and see" attitude and has not changed rates during its subsequent meetings to date. In response to the potentially changing environment, the bank has taken steps to reduce the amount of the excess of rate-sensitive assets over rate-sensitive liabilities. In a declining rate environment, an excess of rate-sensitive assets over rate-sensitive liabilities would cause the net interest margin to contract. Similarly a shift in the composition of funding sources resulting in a lower proportion of interest free funds and/or an increase in higher cost liabilities would cause the interest margin to contract even if rate-sensitive assets and liabilities are evenly matched.

When compared to 2005, changes in interest income from increased volume of earning assets amounted to $1.3 million, while changes in interest income due to rate increases amounted to $1.6 million of the overall increase in interest income. Looking at interest expense, increased volume of interest-bearing liabilities resulted in higher interest expense of $0.6 million, while higher rates accounted for an increase of $1.3 million in interest expense.

Provision for loan losses

The provision to the allowance for loan losses for 2006 totaled $303 thousand, compared to $118 thousand provided in 2005.

During the fourth quarter of 2006, the Bank provided $60 thousand to the allowance for possible loan losses, compared to $85 thousand in the third quarter of 2006 and $17 thousand in the fourth quarter of 2005.

Other income

For 2006, trust revenues were $5.1 million compared to $3.3 million in 2005, an increase of 55%. Fourth quarter trust revenues were $1.5 million compared to $912 thousand in the same period last year and $1.4 million in the third quarter 2006.

Assets under administration totaled $1.8 billion at December 31, 2006, $1.7 billion at September 30, 2006, and $1.8 billion at December 31, 2005. Assets under management were $349.6 million at December 31, 2006, as compared to $411.7 million at September 30, 2006, and $511.8 million at December 31, 2005. During the period, several trusts reached scheduled termination and this resulted in distributions approximately equal to the reduction in assets under management.

The Bank considers revenue growth to be a better indicator of success in our trust business as compared to other volume statistics. Assets under administration or assets under management are not always particularly good indicators as client asset levels may be affected by trust distributions, trust terminations as well as the timing of new business and changes in market valuation. In addition, assets related to certain trust transactions may fluctuate significantly from one reporting period to the next depending on the particular transaction. Finally, investment management is only one of many services the Bank provides to its trust clients and is not necessarily indicative of the overall trust business. During 2006, transactions and fees associated with certain personal and corporate trust businesses increased while these transactions did not add significantly to assets under administration.

There were no gains or losses on the sale of securities in 2006 or in 2005.

The remaining other income for 2006 was $381 thousand, compared to $350 thousand in 2005. For the fourth quarter of 2006, it totaled $95 thousand, compared to $83 thousand in the fourth quarter 2005. Other income was $90 thousand in the third quarter 2006. This income largely reflects fees charged for various banking services and earnings on bank-owned life insurance.

Total revenues in 2006 amounted to $12.2 million, an increase of $2.7 million or 28% over the $9.5 million recorded in 2005. Total revenues for the fourth quarter of 2006 amounted to $3.4 million compared to $2.7 million in the fourth quarter 2005 -- an increase of 26%. Total revenues for the third quarter 2006 were $3.2 million.

Non-interest expense

Personnel expense for 2006 was $4.9 million compared to $3.9 million in 2005, an increase of 26%. In the fourth quarter of 2006, personnel expense was $1.3 million as compared to $1.1 million for the fourth quarter 2005. In the third quarter 2006, personnel expense totaled $1.3 million. The Bank's staff consisted of 53 full-time-equivalent employees at December 31, 2006, as compared to 41 at December 31, 2005. The total at September 30, 2006 was 47.

Occupancy expense for 2006 amounted to $392 thousand, unchanged from 2005. In the fourth quarter of 2006, occupancy expense was $109 thousand compared to $93 thousand for the fourth quarter 2005. In the third quarter of 2006, occupancy expense totaled $96 thousand.

Trust operating expense for 2006 was $512 thousand, compared to $383 thousand in 2005. The increase reflects higher volumes of activity. Trust operating expense totaled $161 thousand in the fourth quarter of 2006, compared to $49 thousand in the fourth quarter of 2005 and $120 thousand in the third quarter of 2006. The 2005 expense includes the benefit of a $67 thousand refund received in the fourth quarter for certain charges that had been erroneously assessed to and paid by the Bank.

Other expense totaled $2.4 million for 2006 compared to $2.5 million in 2005. For the fourth quarter 2006, other expense totaled $631 thousand, compared to $620 thousand for the fourth quarter 2005 and $606 thousand for the third quarter of 2006. For the full year 2005, and the fourth quarter of 2005 other expense includes $417 thousand and $42 thousand respectively in prepayment fees for the early redemption of certain fixed-rate long-term borrowings. There were no prepayment fees in 2006.

Total non-interest expense for 2006 was $8.2 million, compared to $7.1 million in 2005. During 2006, total non-interest expense grew by 15% as compared to a growth of 18% in 2005. In the fourth quarter 2006, total non-interest expense amounted to $2.2 million, compared to $1.9 million in the fourth quarter of 2005 and $2.1 million in the third quarter of 2006. As previously mentioned, the fourth quarter reflects accruals for variable compensation along with a one-time adjustment to facilitate the settlement of a claim.

ASSET QUALITY

The allowance for loan losses was $1.24 million, or 0.95% of total loans at December 31, 2006; $1.18 million, or 0.92% of total loans at September 30, 2006 and $937 thousand, or 0.80% of total loans at December 31, 2005. The increase in the allowance reflects management's judgment as to the uncertainties in the current economic environment and an unsettled real estate market, combined with the increased proportion of the Bank's portfolio represented by small business and commercial loans.

At December 31, 2006, there were non-performing assets in the Bank's portfolio totaling $87 thousand, or 0.07% of loans. The Bank had no non-performing assets at December 31, 2005. No loans were charged off during 2006 or during 2005. The complete absence or minimal levels of non-performing assets and charge-offs are not typical of the industry and may not be sustainable in the future.

CAPITAL

Stockholders' equity totaled $19.1 million at December 31, 2006, compared to $18.3 million at September 30, 2006, and $16.0 million at December 31, 2005. The increase in stockholders' equity during 2006 primarily reflects the earnings during the period, plus the issuance of shares to cover the Bank's contribution of $130 thousand to its 401(k) plan, additional capital of $370 thousand from the exercise of options, and a decrease in unrealized losses on securities classified as available-for-sale of $104 thousand net of applicable federal tax.

All the regulatory capital ratios of the Bank are in excess of the "well-capitalized" threshold.

THE COMPANY

Christiana Bank and Trust Company, headquartered in Greenville, Delaware, is listed on the OTC Bulletin Board under the symbol "CBTD." The Bank provides personal and commercial banking as well as trust and asset management services from locations in Greenville and Wilmington, Delaware. In addition, Christiana Corporate Services, Inc., a wholly owned subsidiary, provides commercial domicile and agency services in Delaware. Monarch Management Services LLC, wholly owned by Christiana Corporate Services, Inc., provides commercial domicile services in Delaware. Christiana Trust Company LLC, a non-depository trust company, wholly owned by the Bank, provides commercial domicile and trust services in Nevada.

Forward-looking Statements

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

                       CHRISTIANA BANK AND TRUST CO
                   SELECTED CONSOLIDATED BALANCE SHEETS
                                (unaudited)
                                  (000)

Dollar amounts in
 thousands                 Dec-06    Sep-06    Jun-06    Mar-06    Dec-05


Cash and due from banks   $   5,368 $   7,854 $  26,107 $   6,092 $  20,776
Investment securities        23,172    20,985    20,952    21,137    21,260

Loans (net of unearned
 income)                    130,766   128,687   128,667   122,832   116,974
     Allowance for loan
      losses                  1,240     1,180     1,095     1,000       937
                          --------- --------- --------- --------- ---------
Net loans                   129,526   127,507   127,572   121,832   116,037

Bank premises and
 equipment - net              3,061     3,102     3,107     3,044     3,095
Other assets                  7,281     6,775     5,563     5,385     4,918
                          --------- --------- --------- --------- ---------

Total assets              $ 168,408 $ 166,223 $ 183,301 $ 157,490 $ 166,086
                          ========= ========= ========= ========= =========


Non-interest bearing
 deposits                 $  42,228 $  46,278 $  53,140 $  39,062 $  40,968
Savings and interest
 bearing demand              57,545    56,047    84,689    75,047    80,805
Time deposits                45,352    30,283    26,251    25,120    26,530
                          --------- --------- --------- --------- ---------
     Total deposits         145,125   132,608   164,080   139,229   148,303

Borrowings                    1,000    12,800         -         -         -
Other liabilities             3,170     2,555     1,959     1,691     1,799
                          --------- --------- --------- --------- ---------

Total liabilities           149,295   147,963   166,039   140,920   150,102

Total stockholders'
 equity                      19,113    18,260    17,262    16,570    15,984
                          --------- --------- --------- --------- ---------

Total liabilities and
 stockholders' equity     $ 168,408 $ 166,223 $ 183,301 $ 157,490 $ 166,086
                          ========= ========= ========= ========= =========


Certain reclasses have been made to conform prior periods to current period
presentation.


                       CHRISTIANA BANK AND TRUST CO
                     SELECTED CONSOLIDATED FINANCIAL DATA
                              (unaudited)
                                 (000)


Income Statement         For the three months ended           Year to
 (unaudited)                                                   Date
Dollar amounts in
 thousands         Dec-06  Sep-06  Jun-06  Mar-06  Dec-05  Dec-06  Dec-05


Total interest
 income            $ 2,959 $ 2,945 $ 2,867 $ 2,519 $ 2,394 $11,290 $ 8,350
Total interest
 expense             1,189   1,130   1,024     871     710   4,214   2,336
                   ------- ------- ------- ------- ------- ------- -------
     Net interest
      income         1,770   1,815   1,843   1,648   1,684   7,076   6,014
Provision for loan
 losses                 60      85      95      63      17     303     118
                   ------- ------- ------- ------- ------- ------- -------

Net interest
 income after
 provision           1,710   1,730   1,748   1,585   1,667   6,773   5,896

Trust fees           1,548   1,399   1,193     916     912   5,056   3,271
Service fees and
 other income           95      90      94     102      83     381     350
Gain on sale of
 securities              -       -       -       -       -       -       -
                   ------- ------- ------- ------- ------- ------- -------
     Total
      non-interest
      income         1,643   1,489   1,287   1,018     995   5,437   3,621

Total revenues       3,353   3,219   3,035   2,603   2,662  12,210   9,517
                   ------- ------- ------- ------- ------- ------- -------

Personnel expenses   1,319   1,262   1,248   1,054   1,090   4,883   3,885
Occupancy expense      109      96      93      94      93     392     392
Trust operating
 expense               161     120     103     128      49     512     383
Other expense          631     606     540     668     620   2,445   2,477
                   ------- ------- ------- ------- ------- ------- -------
     Total
      non-interest
      expense        2,220   2,084   1,984   1,944   1,852   8,232   7,137

Income before
 taxes               1,133   1,135   1,051     659     810   3,978   2,380
Federal and state
 income taxes          409     422     372     243     298   1,446     848
                   ------- ------- ------- ------- ------- ------- -------

Net income         $   724 $   713 $   679 $   416 $   512 $ 2,532 $ 1,532
                   ======= ======= ======= ======= ======= ======= =======



Certain reclasses have been made to conform prior periods to current period
presentation.

                                CHRISTIANA BANK AND TRUST CO

SELECTED CONSOLIDATED FINANCIAL DATA (unaudited)
Dollar amounts in thousands
 share and per share data     For and at the Three Months Ended
                  Dec-06      Sep-06      Jun-06      Mar-06      Dec-05
Share Data  *
Book value per
 share (period
 end)           $    12.89  $    12.37  $    11.76  $    11.32  $    11.04
Earnings per
 share (basic)  $     0.49  $     0.48  $     0.46  $     0.29  $     0.35
Earnings per
 share
 (diluted)      $     0.44  $     0.44  $     0.42  $     0.26  $     0.33
Basic shares     1,480,227   1,489,763   1,466,624   1,457,094   1,444,751
Diluted shares   1,643,598   1,638,862   1,607,636   1,606,468   1,547,667


Selected
 Averages
Average Gross
 Loans          $  129,903  $  128,851  $  126,563  $  119,368  $  114,343
Average total
 deposits       $  128,147  $  131,766  $  145,738  $  130,809  $  123,990
Average earning
 assets (1)     $  156,125  $  155,418  $  162,615  $  144,542  $  141,307

Selected
 Performance
 Ratios
Return on
 average assets       1.74%       1.73%       1.60%       1.11%       1.36%
Return on
 average equity      15.45%      15.95%      16.08%      10.33%      12.97%
Net interest
 margin               4.50%       4.63%       4.55%       4.62%       4.73%
Non-interest
 income as % of
 revenue             49.01%      46.26%      42.41%      39.11%      37.38%
Non-interest
 income as % of
 average assets       3.97%       3.63%       3.02%       2.67%       2.67%
Non-interest
 expense as %
 of average
 assets               5.36%       5.09%       4.65%       5.10%       4.97%

Asset Quality
Net chargeoffs  $        -  $        -  $        -  $        -  $        -
Non-performing
 loans          $       87  $        -  $        -  $        -  $        -
Allowance for
 loan losses to
 total loans
 (period end)         0.95%       0.92%       0.85%       0.81%       0.80%
Non-performing
 loans to total
 loans (period
 end)                 0.07%       0.00%       0.00%       0.00%       0.00%

Capital
Stockholders'
 equity to
 total assets
 (period end)        11.35%      10.99%       9.42%      10.52%       9.62%
Tier 1 leverage
 ratio               11.64%      11.28%      10.34%      11.07%      10.91%
Tier 1 capital
 to risk-
 weighted assets     12.81%      12.48%      11.63%      11.76%      11.73%
Total capital
 to risk-
 weighted assets     13.63%      13.27%      12.36%      12.46%      12.40%



Dollar amounts in thousands
 except share and per share
 data                Year to Date
                  Dec-06      Dec-05
Share Data  *
Book value per
 share (period
 end)           $    12.89  $    11.04
Earnings per
 share (basic)  $     1.72  $     1.07
Earnings per
 share
 (diluted)      $     1.56  $     1.02
Basic shares     1,470,187   1,436,042
Diluted shares   1,618,749   1,495,437


Selected
 Averages
Average Gross
 Loans          $  126,207  $  108,970
Average total
 deposits       $  134,101  $  119,242
Average earning
 assets (1)     $  154,709  $  136,661

Selected
 Performance
 Ratios
Return on
 average assets       1.55%       1.06%
Return on
 average equity      14.55%      10.16%
Net interest
 margin               4.57%       4.40%
Non-interest
 income as % of
 revenue             44.53%      38.05%
Non-interest
 income as % of
 average assets       4.44%       3.34%
Non-interest
 expense as %
 of average
 assets               6.73%       6.58%

Asset Quality
Net chargeoffs  $        -  $        -
Non-performing
 loans          $       87  $        -
Allowance for
 loan losses to
 total loans
 (period end)         0.95%       0.80%
Non-performing
 loans to total
 loans (period
 end)                 0.07%       0.00%
Capital
Stockholders'
 equity to
 total assets
 (period end)        11.35%       9.62%
Tier 1 leverage
 ratio               11.64%      10.91%
Tier 1 capital
 to risk-weighted
 assets              12.81%      11.73%
Total capital
 to risk-weighted
 assets              13.63%      12.40%

(1) Earning assets include loan balances before loan loss reserve and AFS
    investments before unrealized holding gains or losses.
Certain reclasses have been made to conform prior periods to current period
presentation.

* Adjusted, where appropriate,for 5% stock Dividend distributed November
  30, 2006 and the special stock dividend distributed August 31, 2006.

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