PSBC Pacific State Bancorp (CE)

STOCKTON, Calif., May 1 /PRNewswire-FirstCall/ -- Rick D. Simas, Chief Executive Officer of Pacific State Bancorp (the "Company") (NASDAQ:PSBC), today reported an after tax net loss of $294,000 for the first quarter of 2009 for the Stockton, California based bank holding company. The first quarter net loss of $294,000 reflects a provision for loan losses of $971,000, other real estate expense of $431,000 and increased professional costs of $225,000. The increased level of provision for loan losses is attributable to lower real estate values and the general economic environment of the region where the Company operates. Other real estate expense is primarily the result of decreasing prices experienced in the market for the type of other real estate the Bank currently owns, and the costs associated with marketing and selling those properties. Increased professional costs are primarily the result of increased legal fees associated with the collection of loans. In the first quarter of 2009 compared to the fourth quarter of 2008, the Company experienced an improvement in net interest margin. The improvement quarter over quarter was primarily a result of decreased funding costs. The net interest margin improved from 3.38% in the fourth quarter of 2008 to 3.70% in the first quarter of 2009. Funding costs decreased from 3.23% in the fourth quarter of 2008 to 2.84% in the first quarter of 2009. The Company has experienced a slight decrease in nonperforming loans from $23,560,000 or 7.7% of gross loans at December 31, 2008 to $21,067,000 or 6.9% of gross loans at March 31, 2009. The decrease in nonperforming loans was primarily the result of charge-off and foreclosure activity. The Company recorded $554,000 in charge-offs related to nonaccrual loans and $2,075,000 was reclassified to other real estate owned subsequent to foreclosure of the properties. One loan in the amount of $140,000 was added to nonaccrual in the first quarter of 2009. The Company has been successful at liquidating $914,000 of other real estate properties from its balance sheet in the first quarter of 2009. As the Company receives title to foreclosed properties, it markets the properties at prices to facilitate liquidation. If the market prices for the property further decline before liquidation, the Company reduces the other real estate balance through a charge to noninterest expense. The Company also incurs other expenses related to other real estate including, real estate taxes, insurance, maintenance and security. Total expense related to all of the above factors totaled $431,000 for 2009. Despite the loss reported for the first quarter of 2009, Pacific State Bancorp has increased loan loss reserves from 1.95% of gross loans at December 31, 2008 to 2.11% of gross loans at March 31, 2009. In addition, the Company's risk based capital levels have increased from total risk based capital ratio of 11.50% for the Company and 11.34% for the Bank at December 31, 2008 to 11.74% for the Company and 11.60% for the Bank at March 31, 2009. The minimum total risk based capital level required to be considered "well capitalized" by regulatory standards is 10%. The Company's financial performance information for the three month period ending March 31, 2009 compared to the same quarter in the prior year is as follows: Income Statement: -- Total Interest Income: $5,552,000, a decrease of $1,749,000 or 24% -- Total Interest Expense: $2,227,000, a decrease of $1,155,000 or 34% -- Net Interest Income: $3,325,000, a decrease of $594,000 or 15% -- Non-Interest Income : $379,000, a decrease of $93,000 or 20% -- Non-Interest Expense: $3,297,000, an increase of $802,000 or 32% -- Provision for Loan Losses: $972,000, an increase of $762,000 or 363% -- Net Loss: $294,000, a decrease of $1,388,000 from net income of $1,094,000 -- Basic Loss Per Share: $0.08, a decrease of $0.38 per share from earnings of $0.30 -- Diluted Loss Per Share: $0.08, a decrease of $0.35 per share from earnings of $0.27 -- Loss on Average Assets: Annualized loss rate of 0.29%, a decrease of 1.32% from earnings of 1.03% -- Loss on Average Equity: Annualized loss rate of 4.30%, a decrease of 17.01% from earnings of 12.71% The Company's balance sheet information as of March 31, 2009 compared to December 31, 2008 was as follows: -- Total Federal Funds and Investment Securities: $48,875,000, a decrease of $12,674,000 or 21% -- Net Loans: $297,784,000, a decrease of $4,161,000 or 1% -- Total Assets: $400,710,000, a decrease of $20,743,000 or 5% -- Non-Interest Bearing Deposits: $58,005,000, a decrease of $11,869,000 or 17% -- Total Deposits: $320,783,000, a decrease of $20,197,000 or 6% -- Total Borrowings: $48,764,000, remained unchanged -- Total Shareholders' Equity: $26,950,000, a decrease of $334,000 or 1% -- Total Tier 1 Risk Based Capital Ratio of 10.48% -- Total Tier 1 Leverage Capital Ratio of 9.08% -- Total Risk Based Capital Ratio of 11.74% Attached are certain unaudited financial statements supporting the financial information summarized above. Further inquiries should be directed to Mr. Simas at 209-870-3214, or by mail to P.O. Box 1649, Stockton, California 95201. Additional information also can be obtained by visiting the Company website http://www.pacificstatebank.com/. SAFE HARBOR: Except for historical information contained herein, the statements contained in this press release include forward-looking statements within the meaning of the "safe harbor" provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those set forth in or implied by forward-looking statements. These risks are described from time to time in Pacific State Bancorp's Securities and Exchange Commission filings, including its Annual Reports on Form 10-K, quarterly reports on Form 10-Q and Current Reports on Form 8-K. Pacific State Bancorp disclaims any intent or obligation to update these forward-looking statements. PACIFIC STATE BANCORP AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited March 31, December 31, (Dollars in thousands) 2009 2008 -------- ------------ ASSETS Cash and due from banks $11,308 $16,700 Federal funds sold 9,455 21,811 ------- ------- Total cash and cash equivalents 20,763 38,511 Interest bearing deposits at other banks - - Investment securities 39,420 39,738 Loans, less allowance for loan losses of $6,406 in 2009 and $6,019 in 2008 297,784 301,945 Premises and equipment, net 16,974 16,811 Other real estate owned 2,878 2,029 Company owned life insurance 6,820 6,751 Accrued interest receivable and other assets 16,071 15,668 ------- ------- Total assets $400,710 $421,453 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Non-interest bearing $58,005 $69,874 Interest bearing 262,778 271,106 ------- ------- Total deposits 320,783 340,980 Other borrowings 40,000 40,000 Subordinated debentures 8,764 8,764 Accrued interest payable and other liabilities 4,213 4,425 ------- ------- Total liabilities 373,760 394,169 ------- ------- Shareholders' equity: Preferred stock - 2,000,000 shares authorized; none issued or outstanding - - Common stock - no par value; 24,000,000 shares authorized; issued and outstanding -3,719,198 shares in 2009 and 3,715,598 shares in 2008 10,781 10,767 Retained earnings 18,520 18,814 Accumulated other comprehensive loss, net of taxes (2,351) (2,297) ------- ------- Total shareholders' equity 26,950 27,284 ------- ------- Total liabilities and shareholders' equity $400,710 $421,453 ======== ======== PACIFIC STATE BANCORP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ----------------------------------------------- Unaudited Three Months Ended March 31, ------------------ (Dollars in thousands) 2009 2008 ---- ---- Interest income: Interest and fees on loans $5,024 $6,476 Interest on Federal funds sold 16 115 Interest on investment securities 512 710 ----- ----- Total interest income 5,552 7,301 ----- ----- Interest expense: Interest on deposits 1,837 2,798 Interest on borrowings 306 430 Interest on subordinated debentures 84 154 ----- ----- Total interest expense 2,227 3,382 ----- ----- Net interest income before provision for loan losses 3,325 3,919 Provision for loan losses 972 210 ----- ----- Net interest income after provision for loan losses 2,353 3,709 ----- ----- Non-interest income: Service charges 164 237 Gain on sale of loans 12 19 Other income 203 216 ----- ----- Total non-interest income 379 472 ----- ----- Non-interest expenses: Salaries and employee benefits 1,154 1,268 Occupancy 279 263 Furniture and equipment 268 179 Other real estate 431 - Other expenses 1,165 785 ----- ----- Total non-interest expenses 3,297 2,495 ----- ----- (Loss) income before (benefit) provision for income taxes (565) 1,686 (Benefit) provision for income taxes (271) 592 ----- ----- Net (loss) income $(294) $1,094 ===== ====== Basic (loss) earnings per share $(0.08) $0.30 ===== ====== Diluted (loss) earnings per share $(0.08) $0.27 ===== ====== PACIFIC STATE BANCORP Yield Analysis --------------------- For Three Months Ended March 31, -------------------------------- (Dollars in thousands) 2009 2008 ---------------------------- --------------------------- Interest Interest Average Income Average Average Income or Yield or Average or Yield or Balance Expense Cost Balance Expense Cost Assets: ------- ------- -------- ------- ------- -------- Interest -earning assets: Loans $306,195 $5,024 6.65% $321,423 $6,476 8.10% Investment securities 41,444 512 5.01% 48,044 704 5.89% Federal funds sold 16,518 16 0.39% 13,167 115 3.51% Interest Bearing Deposits in Banks - - - 3,000 6 0.80% ------- ------ ------ ----- Total average earning assets $364,157 $5,552 6.18% $385,634 $7,301 7.61% Non-earning assets: Cash and due from banks 12,136 12,944 Bank premises and equipment 19,257 14,458 Other assets 20,017 16,104 Allowance for loan loss (6,243) (4,009) ------ ------ Total average assets $409,324 $425,131 ======== ======== Liabilities and Shareholders' Equity: Interest-bearing liabilities: Deposits Interest -bearing Demand $70,837 $211 1.21% $69,081 $389 2.26% Savings 9,537 21 0.89% 5,359 7 0.53% Time Deposits 188,494 1,605 3.45% 200,610 2,402 4.82% Other borrowing 48,775 390 3.24% 49,116 584 4.78% ------- ------ ------ ----- Total average interest -bearing liabilities $317,643 $2,227 2.84% $324,166 $3,382 4.20% Noninterest -bearing liabilities: Demand deposits 59,424 61,640 Other liabilities 4,500 4,708 ------ ------ Total average liabilities 381,567 390,514 Shareholders' equity 27,757 34,617 ------ ------ Total average liabilities and shareholders' equity $409,324 $425,131 ======== ======== Net interest income $3,325 $3,919 ====== ====== Net interest margin 3.70% 4.09% PACIFIC STATE BANCORP Yield Analysis --------------------- For Three Months Ended (Dollars in thousands) December 31, 2008 ---------------------- Interest Average Average Income or Yield or Assets: Balance Expense Cost ------- ------- ------- Interest-earning assets: Loans $315,026 $5,567 7.03% Investment securities 43,410 190 1.74% Federal funds sold 20,434 35 0.68% Interest Bearing Deposits in Banks 2 - 0.00% -------- ------ Total average earning assets $378,872 $5,792 6.08% Non-earning assets: Cash and due from banks 13,780 Bank premises and equipment 16,714 Other assets 17,920 Allowance for loan loss (4,918) -------- Total average assets $422,368 ======== Liabilities and Shareholders' Equity: Interest-bearing liabilities: Deposits Interest-bearing Demand $76,428 $403 2.10% Savings 7,603 20 1.05% Time Deposits 187,862 1,757 3.72% Other borrowing 44,728 392 3.49% ------- ----- Total average interest-bearing liabilities $316,621 $2,572 3.23% Noninterest-bearing liabilities: Demand deposits 67,628 Other liabilities 4,773 ------ Total average liabilities 389,022 Shareholders' equity 33,346 ------ Total average liabilities and shareholders' equity $422,368 ======== Net interest income $3,220 ====== Net interest margin 3.38% DATASOURCE: Pacific State Bank CONTACT: Mr. Simas of Pacific State Bancorp, +1-209-870-3214 Web Site: http://www.pacificstatebank.com/

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