PACIFIC STATE BANCORP 
By
The loss on the sale of securities was primarily related to a private
label mortgage backed security which was downgraded to below investment grade
by rating agencies and was subsequently sold at a loss. The other than
temporary impairment ("OTTI") charge was the result of a single issue trust
preferred security deferring interest payments on a
The OTTI charges were partially offset by a non-taxable gain on Bank-owned
life insurance of
The Company has experienced an increase in nonperforming loans from
The Company's management has been proactive in working with borrowers having problems repaying loans that have become delinquent or have the potential to become delinquent. In most cases, collateral values are sufficient to repay outstanding principal and interest. In the cases where collateral values have fallen short of the principle and interest owed on the loans, management has reserved for the estimated potential loss.
Mr. Simas noted that the decreased income performance, other than the
individual items discussed above, compared to 2007 is primarily the result of
the Bank experiencing a contraction in its net interest margin, increased
provision for loan losses and an increase in legal expenses associated with
the collection of loans. The contraction of the net interest margin is the
result of the Bank's interest-earning assets re-pricing downward more quickly,
after the 325 basis points reductions in the Federal Reserve federal funds
rate since
Despite the loss reported for 2008, Pacific State Bancorp remains well
capitalized with a total risk based capital ratio of 11.50% for the Company
and 11.34% for the Bank. To maintain liquidity, the Bank utilizes borrowing
lines from correspondent banks, the Federal Home Loan Bank ("FHLB"), and the
discount window with the Federal Reserve for additional liquidity purposes.
At
The Company's financial performance information for the three month period
ending
Income Statement:
-- Total Interest Income: $5,792,000, a decrease of $1,875,000 or 24%
-- Total Interest Expense: $2,572,000, a decrease of $920,000 or 26%
-- Net Interest Income: $3,220,000, a decrease of $955,000 or 23%
-- Non-Interest Income (Loss): ($3,400,000), a decrease of $3,884,000 or
802%
-- Non-Interest Expense: $4,450,000, an increase of $1,865,000 or 72%
-- Provision for Loan Losses: $5,591,000, an increase of $4,426,000 or
380%
-- Net Loss: $5,654,000, a decrease of $6,167,000 or 1,202%
-- Basic Loss Per Share: $1.52, a decrease of $1.66 per share or 1,187%
-- Diluted Loss Per Share: $1.52, a decrease of $1.65 per share or 1,271%
-- Loss on Average Assets: Annualized loss rate of 5.33%, a decrease of
5.82% from earnings of 0.49%
-- Loss on Average Equity: Annualized loss rate of 67.45%, a decrease of
73.22% from earnings of 5.77%
The Company's financial performance information for the year ending
Income Statement:
-- Total Interest Income: $27,275,000, a decrease of $3,967,000 or 13%
-- Total Interest Expense: $12,240,000, a decrease of $1,602,000 or 12%
-- Net Interest Income: $15,035,000, a decrease of $2,365,000 or 14%
-- Non-Interest Income (Loss): ($5,268,000), a decrease of $7,733,000 or
314%
-- Non-Interest Expense: $13,328,000, an increase of $2,331,000 or 21%
-- Provision for Loan Losses: $7,001,000, an increase of $5,576,000 or
391%
-- Net Loss: $5,190,000, a decrease of $9,739,000 or 214%
-- Basic Loss Per Share: $1.40, a decrease of $2.63 per share or 214%
-- Diluted Loss Per Share: $1.40, a decrease of $2.54 per share or 223%
-- Loss on Average Assets: 1.20%, a decrease of 2.33% from earnings of
1.13%
-- Loss on Average Equity: 14.95%, a decrease of 29.17% from earnings of
14.22%
The Company's balance sheet information as of
-- Total Federal Funds and Investment Securities: $61,549,000, a decrease
of $11,683,000 or 16%
-- Net Loans: $301,945,000, a decrease of $6,513,000 or 2%
-- Total Assets: $421,453,000, a decrease of $9,621,000 or 2%
-- Non-Interest Bearing Deposits: $69,874,000, an increase of $2,803,000
or 4%
-- Total Deposits: $340,980,000, a decrease of $841,000 or 0.25%
-- Total Borrowings: $40,000,000, remained unchanged
-- Total Shareholders' Equity: $27,284,000, a decrease of $6,752,000 or
20%
-- Total Tier 1 Risk Based Capital Ratio of 10.25%
-- Total Tier 1 Leverage Capital Ratio of 8.63%
-- Total Risk Based Capital Ratio of 11.50%
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,
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 December 31, December 31,
(Dollars in thousands) 2008 2007
ASSETS
Cash and due from banks $16,700 $13,794
Federal funds sold 21,811 31,880
Total cash and cash equivalents 38,511 45,674
Interest-bearing deposits at other banks - 3,000
Investment securities 39,738 41,352
Loans, less allowance for loan losses
of $6,019 in 2008 and $3,948 in 2007 301,945 308,458
Premises and equipment, net 16,811 14,269
Other real estate owned 2,029 -
Company owned life insurance 6,751 8,025
Accrued interest receivable and other assets 15,668 10,296
Total assets $421,453 $431,074
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $69,874 $67,071
Interest bearing 271,106 274,750
Total deposits 340,980 341,821
Other borrowings 40,000 40,000
Subordinated debentures 8,764 8,764
Accrued interest payable and other liabilities 4,425 6,453
Total liabilities 394,169 397,038
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 -3,715,598 shares in 2008
and 3,704,698 shares in 2007 10,767 10,418
Retained earnings 18,814 24,004
Accumulated other comprehensive loss,
net of taxes (2,297) (386)
Total shareholders' equity 27,284 34,036
Total liabilities and shareholders' equity $421,453 $431,074
PACIFIC STATE BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Year Ended
Unaudited December 31, December 31,
(Dollars in thousands) 2008 2007 2008 2007
Interest income:
Interest and fees on loans 5,567 $6,754 $24,565 $27,902
Interest on Federal funds
sold 35 220 376 1,285
Interest on investment
securities 190 693 2,334 2,055
Total interest income 5,792 7,667 27,275 31,242
Interest expense:
Interest on deposits 2,180 3,221 10,425 12,844
Interest on borrowings 287 85 1,351 296
Interest on subordinated
debentures 105 186 464 702
Total interest expense 2,572 3,492 12,240 13,842
Net interest income before
provision for loan losses 3,220 4,175 15,035 17,400
Provision for loan losses 5,591 1,165 7,001 1,425
Net interest income (loss)
after provision for loan
losses (2,371) 3,010 8,034 15,975
Non-interest income:
Service charges 167 243 823 889
Gain on sale of loans - 3 188 150
Gain on sale of assets - - 471 -
Gain on bank owned life
insurance - - 2,574 -
Other income 149 238 890 1,426
Other than temporary
impairment charge (2,425) - (8,923) -
Loss on sale of securities (1,291) - (1,291) -
Total non-interest
income (loss) (3,400) 484 (5,268) 2,465
Non-interest expenses:
Salaries and employee
benefits 1,598 1,084 5,546 5,336
Occupancy 370 325 1,251 1,180
Furniture and equipment 399 184 1,032 708
Other expenses 2,083 992 5,499 3,773
Total non-interest expenses 4,450 2,585 13,328 10,997
(Loss) income before
(benefit) provision for
income taxes (10,221) 909 (10,562) 7,443
(Benefit) provision for
income taxes (4,567) 396 (5,372) 2,894
Net (loss) income $(5,654) $513 $(5,190) $ 4,549
Basic (loss) earnings
per share $(1.52) $0.14 $(1.40) $1.23
Diluted (loss) earnings
per share $ (1.52) $0.13 $(1.40) $1.14
PACIFIC STATE BANCORP
Yield Analysis
For Three Months Ended December 31,
(Dollars in thousands) 2008 2007
Interest Average Interest Average
Average Income or Yield or Average Income or Yield or
Assets: Balance Expense Cost Balance Expense Cost
Interest-earning
assets:
Loans $315,026 $5,567 7.03% $308,776 $6,754 8.68%
Investment
securities 43,410 190 1.74% 44,413 685 6.12%
Federal funds
sold 20,434 35 0.68% 17,011 220 5.13%
Interest Bearing
Deposits in
Banks 2 - 0.00% 3,000 8 1.06%
Total average
earning assets $378,872 $5,792 6.08% $373,200 $7,667 8.15%
Non-earning
assets:
Cash and due
from banks 13,780 14,653
Bank premises
and equipment 16,714 13,964
Other assets 17,920 20,114
Allowance for
loan loss (4,918) (2,707)
Total average
assets $422,368 $419,224
Liabilities and
Shareholders'
Equity:
Interest-bearing
liabilities:
Deposits
Interest-
bearing
Demand $ 76,428 $403 2.10% $79,034 $463 2.32%
Savings 7,603 20 1.05% 5,189 8 0.61%
Time Deposits 187,862 1,757 3.72% 208,783 2,750 5.23%
Other
borrowing 44,728 392 3.49% 12,795 271 8.40%
Total average
interest-
bearing
liabilities $316,621 $2,572 3.23% $305,801 $3,492 4.53%
Noninterest-
bearing
liabilities:
Demand
deposits 67,628 63,153
Other
liabilities 4,773 14,972
Total average
liabilities 389,022 383,926
Shareholders'
equity 33,346 35,298
Total average
liabilities and
shareholders'
equity $422,368 $419,224
Net interest
income $3,220 $4,175
Net interest
margin 3.38% 4.44%
PACIFIC STATE BANCORP
Yield Analysis
For Year Ended December 31,
(Dollars in thousands) 2008 2007
Interest Average Interest Average
Average Income or Yield or Average Income or Yield or
Assets: Balance Expense Cost Balance Expense Cost
Interest-earning
assets:
Loans $322,489 $24,565 7.62% $300,239 $27,902 9.29%
Investment
securities 48,306 2,290 4.74% 37,089 2,033 5.48%
Federal funds
sold 20,057 376 1.87% 25,115 1,285 5.12%
Interest-Bearing
Deposits in
Banks 1,041 44 4.23% 1,077 22 2.04%
Total average
earning assets $391,893 $27,275 6.96% $363,520 $31,242 8.59%
Non-earning
assets:
Cash and due
from banks 13,522 15,398
Bank premises
and equipment 15,399 12,940
Other assets 16,629 13,322
Allowance for
loan loss (3,939) (2,665)
Total average
assets $433,504 $402,515
Liabilities and
Shareholders'
Equity:
Interest-bearing
liabilities:
Deposits
Interest-
bearing
Demand $71,935 $1,618 2.25% $81,898 $2,231 2.72%
Savings 6,122 42 0.69% 5,352 46 0.86%
Time Deposits 207,848 8,765 4.22% 200,154 10,567 5.28%
Other
borrowing 44,265 1,815 4.10% 14,359 998 6.95%
Total average
interest-
bearing
liabilities $330,170 $12,240 3.71% $301,763 $13,842 4.59%
Noninterest-
bearing
liabilities:
Demand
deposits 64,242 64,242
Other
liabilities 4,378 4,524
Total average
liabilities 398,790 370,529
Shareholders'
equity: 34,714 31,986
Total average
liabilities and
shareholders'
equity $433,504 $402,515
Net interest
income $15,035 $17,400
Net interest
margin 3.84% 4.79%
SOURCE Pacific State Bancorp
