PNB FINANCIAL GROUP FOR ADDITIONAL INFORMATION CALL: 4665 MacArthur Court Doug Heller, Executive Vice President and Newport Beach, CA 92660 Chief Financial Officer PRESS RELEASE PACIFIC NATIONAL BANK REPORTS RECORD SECOND QUARTER EARNINGS, UP 59%. NEWPORT BEACH, California, July 13, 1998 - PACIFIC NATIONAL BANK'S (PNB) parent Company, PNB Financial Group (Nasdaq - PNBF), one of the industry's top performing banks, reported a 59% increase in second quarter 1998 net income over second quarter 1997. The Company reported Record net income of $1,836,000 for the three months ended June 30, 1998, an increase over the net income of $1,155,000 for the three months ended June 30, 1997. These earnings bring the Company's net income for the six months ended June 30, 1998 to a record $3,511,000 a 68% increase over the net income of $2,094,000 for the same period in 1997. Annualized, the first six month earnings equate to 25.9% return on average shareholder's equity (ROAE) and 2.9% return on average assets (ROAA). This compares to annualized ROAE for the six months ended June 30, 1997 and for the year ended December 31, 1997 of 21.0% and 23.5%, respectively. "We are very proud of the hard work contributed by all of our employees which made this performance possible. We are seeing strong growth in all areas of the institution", stated Allen C. Barbieri, Pacific National's President and CEO. "It is easy to see why both Alex Sheshunoff Information Services, and SNL Securities, the industries top independent research firms, both rank PNBF as one of the top performing banking institutions in the country". The Company's fully diluted earnings per share were $.63 and $1.23 for the three and six months ended June 30, 1998 compared to $.44 and $.79 cents for the same period in 1997. As of June 30, 1998, the Company's diluted book value was $10.81 per share. Per share and book value figures are based on shares outstanding after a fifteen percent (15%) stock dividend which was paid on April 15, 1998. In addition, to the strong earnings, the Company's total assets increased 30% from $205.2 million at June 30, 1997 to $267.4 million at June 30, 1998. The increase in assets was primarily the result of increases in commercial loans, residential mortgage loans and deposits, as well as a significant decrease in nonperforming assets. Total commercial loans increased 17.9% from 107.4 million at June 30, 1997 to 126.5 million at June 30, 1998. The increase in loans and deposits is due in part to the strong economic growth in the Southern California market place. The Company's nonperforming assets dropped 64% from $4.5 million or 2.2% of total assets as of June 30, 1997, to $1.7 million or .6% of total assets as of June 30, 1998. At June 30, 1998, the Company's tier I and total risk weighted capital ratios were a solid 16.1% and 17.1% respectively, while its leverage capital ratio was a strong 11.7%. PNB's residential mortgage loan department funded a record $391 million in residential mortgage loans during the three months ended June 30, 1998, a 48% increase over the same period in 1997. For the six months ended June 30, 1998 the bank funded $737 million in residential mortgage loans compared to $485 million in the same period in 1997. The residential mortgage division accounted for approximately 46% of the Company's profits during the six months ended June 30, 1998 compared to approximately 52% during the six months ended June 30, 1997. Pacific National Bank operates three commercial business offices located in Newport Beach, Orange, and Beverly Hills. The Bank also operates an SBA Loan Department, a Financial Services Department, a Commercial Real Estate Lending Department, and a Construction Loan Department, all in Newport Beach, along with Residential Mortgage Loan Operations in Irvine, San Diego, and Walnut Creek with several other smaller satellite offices. On June 24, 1998, PNB Financial Group's stock was approved for listing and commenced trading on the Nasdaq National Market System under the symbol PNBF. PNB FINANCIAL GROUP SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNT) AS OF BALANCE SHEET 6/30/98 6/30/97 - ------------------------------------- --------- --------- CASH & DUE FROM BANKS................ $ 15,074 $ 13,406 12.4% INVESTMENT SECURITIES................ 12,326 7,216 70.8% FEDERAL FUNDS SOLD................... 0 8,000 N/A MORTGAGE LOANS HELD FOR SALE......... 107,784 63,988 68.4% PORTFOLIO LOANS...................... 126,540 107,359 17.9% LOAN LOSS RESERVE.................... (1,793) (1,751) 2.4% --------- --------- ------- NET LOANS............................ 124,747 105,608 18.1% OTHER REAL ESTATE OWNED.............. 1,093 3,184 -65.7% INVESTMENT IN REIT................... 2,500 0 N/A OTHER ASSETS......................... 3,884 3,763 3.2% TOTAL ASSETS......................... $ 267,408 $ 205,165 30.3% ========= ========= CUSTOMER DEPOSITS.................... $ 208,326 $ 171,538 21.4% BROKERED DEPOSITS.................... 22,000 9,481 132.0% --------- --------- TOTAL DEPOSITS....................... 230,326 181,019 27.2% SHORT-TERM BORROWING................. 4,250 328 1195.7% OTHER LIABILITIES.................... 3,543 2,729 29.8% --------- --------- TOTAL LIABILITIES.................... 238,119 184,076 29.4% TOTAL EQUITY......................... 29,289 21,089 38.9% TOTAL LIABILITIES & EQUITY........... $ 267,408 $ 205,165 30.3% ========= ========= FOR THE THREE FOR THE SIX MONTHS ENDED MONTHS ENDED JUNE 30, % JUNE 30, % AVERAGE BALANCE SHEET 1998 1997 CHANGE 1998 1997 CHANGE - ------------------------------------- --------- --------- ------ --------- --------- ------ CASH & DUE FROM BANKS................ $ 10,940 $ 12,798 -14.5% $ 12,861 $ 12,277 4.8% INVESTMENT SECURITIES................ 7,504 7,279 3.1% 7,444 7,314 1.8% FEDERAL FUNDS SOLD................... 11,288 3,922 187.8% 6,554 5,909 10.9% MORTGAGE LOANS HELD FOR SALE......... 90,041 59,419 51.5% 90,209 54,235 66.3% PORTFOLIO LOANS...................... 122,801 104,664 17.3% 120,120 103,941 15.6% LOAN LOSS RESERVE.................... (1,611) (1,721) -6.4% (1,612) (1,785) -9.7% --------- --------- ------ --------- --------- ----- NET LOANS............................ 121,190 102,943 17.7% 118,508 102,156 16.0% OTHER REAL ESTATE OWNED.............. 1,428 3,791 -62.3% 1,163 3,896 -70.1% INVESTMENT IN REIT................... 2,500 0 N/A 2,500 0 N/A OTHER ASSETS......................... 4,776 3,600 32.7% 4,158 3,494 19.0% TOTAL ASSETS......................... $ 249,667 $ 193,752 28.9% $ 243,397 $ 189,281 28.6% ========= ========= ========= ========= CUSTOMER DEPOSITS.................... $ 183,211 $ 161,989 13.1% $ 182,102 $ 159,049 14.5% BROKERED DEPOSITS.................... 32,472 6,167 426.5% 26,296 5,640 366.2% --------- --------- --------- --------- TOTAL DEPOSITS....................... 215,683 168,156 28.3% 208,398 164,689 26.5% SHORT-TERM BORROWING................. 1,718 2,513 -31.6% 5,318 2,243 137.1% OTHER LIABILITIES.................... 3,438 2,492 38.0% 2,527 2,361 7.0% --------- --------- --------- --------- TOTAL LIABILITIES.................... 220,839 173,161 27.5% 216,243 169,293 27.7% TOTAL EQUITY......................... 28,828 20,591 40.0% 27,154 19,988 35.9% TOTAL LIABILITIES & EQUITY........... $ 249,667 $ 193,752 28.9% $ 243,397 $ 189,281 28.6% ========= ========= ========= ========= PNB FINANCIAL GROUP SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNT) FOR THE THREE FOR THE SIX MONTHS ENDED MONTHS ENDED JUNE 30, % JUNE 30, % INCOME STATEMENT 1998 1997 CHANGE 1998 1997 CHANGE - -------------------------------------------------------------------------- ------------------------------ TOTAL INTEREST & FEE INCOME............... $ 5,047 $ 3,926 28.6% $ 9,780 $ 7,548 29.6% TOTAL INTEREST EXPENSE.................... 1,408 919 53.2% 2,727 1,833 48.8% PROVISION FOR LOAN LOSSES................. 200 120 66.7% 350 195 79.5% --------- --------- --------- --------- NET INTEREST INCOME AFTER PROVISION....... 3,439 2,887 19.1% 6,703 5,520 21.4% OTHER INCOME: SBA SALES PREMIUM....................... 56 117 -52.1% 204 237 -13.9% SERVICE CHARGES, FEE & OTHER............ 446 359 24.2% 655 610 7.4% --------- --------- --------- --------- TOTAL OTHER INCOME........................ 502 476 5.5% 859 847 1.4% OTHER EXPENSES: SALARIES AND BENEFITS................... 1,036 1,129 -8.2% 1,993 2,240 -11.0% OCCUPANCY............................... 312 342 -8.8% 600 716 -16.2% OTHER EXPENSES.......................... 943 912 3.4% 1,727 1,709 1.1% --------- --------- --------- --------- TOTAL NONINTEREST EXPENSES............ 2,291 2,383 -3.9% 4,320 4,665 -7.4% INCOME FROM BANK OPERATIONS............... 1,650 980 68.4% 3,242 1,702 90.5% RESIDENTIAL MORTGAGE LENDING: INCOME.................................. 5,811 3,523 64.9% 10,513 6,658 57.9% EXPENSES................................ 4,296 2,545 68.8% 7,702 4,783 61.0% --------- --------- --------- --------- INCOME FROM MORTGAGE OPERATION............ 1,515 978 54.9% 2,811 1,875 49.9% INCOME BEFORE INCOME TAXES................ 3,165 1,958 61.6% 6,053 3,577 69.2% INCOME TAXES.............................. 1,329 803 65.5% 2,542 1,483 71.4% --------- --------- --------- --------- NET INCOME.............................. $ 1,836 $ 1,155 59.0% $ 3,511 $ 2,094 67.7% ========= ========= ========= ========= PER SHARE DATA - ------------------------------------------ NET INCOME (BASIC)........................ $ 0.67 $ 0.46 45.7% $ 1.31 $ 0.83 57.8% NET INCOME (DILUTED)...................... 0.63 0.44 43.2% 1.23 0.79 55.7% BOOK VALUE................................ 10.81 8.34 29.6% MARKET VALUE, NASDAQ-PNBF................. 32.00 12.61 153.8% COMMON SHARES OUTSTANDING (END OF PERIOD). 2,760,618 2,556,621 2,760,618 2,556,621 FULLY DILUTED AVERAGE SHARES OUTSTANDING.. 2,906,796 2,657,604 2,860,494 2,655,556 KEY RATIOS & OTHER INFORMATION - ------------------------------------------ RETURN ON AVERAGE ASSETS.................. 2.94% 2.38% 23.4% 2.88% 2.21% 30.3% RETURN ON AVERAGE EQUITY.................. 25.66% 22.44% 14.4% 25.86% 20.95% 23.4% MORTGAGE VOLUME........................... 390,939 264,801 47.6% 737,456 484,310 52.3% MORTGAGE INCOME/VOLUME.................... 0.39% 0.37% 4.9% 0.38% 0.39% -1.5% NONPERFORMING ASSETS...................... 1,654 4,497 -63.2% NONPERFORMING ASSETS/TOTAL ASSETS......... 0.62% 2.19% -71.8% LOAN LOSS RESERVE/TOTAL LOANS............. 1.42% 1.63% -13.1% EQUITY CAPITAL TO ASSETS.................. 10.95% 10.28% 6.6%