EXHIBIT 99.1 PNB FINANCIAL GROUP FOR ADDITIONAL INFORMATION CALL: 4665 MacArthur Court Doug Heller, Executive Vice President and Newport Beach, CA 92660 Chief Financial Officer (949-851-1033) P R E S S R E L E A S E PACIFIC NATIONAL BANK REPORTS RECORD THIRD QUARTER EARNINGS, UP 64%. NEWPORT BEACH, California, October 12, 1998 - Pacific National Bank's ("PNB") parent Company, PNB Financial Group (Nasdaq - PNBF), reported a 64% increase in third quarter 1998 net income over third quarter 1997. The Company reported Record net income of $2,025,000 for the three months ended September 30, 1998, an increase over the net income of $1,235,000 for the three months ended September 30, 1997. These earnings bring the Company's net income for the nine months ended September 30, 1998 to a record $5,536,000, a 66% increase over the net income of $3,329,000 for the same period in 1997. Annualized, the first nine month earnings equate to a 26% return on average shareholder's equity (ROAE) and 3.0% return on average assets. This compares to annualized ROAE for the nine months ended September 30, 1997 and for the year ended December 31, 1997 of 21.4% and 23.5%, respectively. The Company's fully diluted earnings per share were $0.70 and $1.93 for the three and nine months ended September 30, 1998 compared to $0.44 and $1.25 for the same period in 1997. As of September 30, 1998, the Company's diluted book value per share was $11.70. 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, the Company's total assets increased 20% from $229.5 million at September 30, 1997 to $275.0 million at September 30, 1998. Total commercial loans increased 20.8% from 113.6 million at September 30, 1997 to 137.1 million at September 30, 1998, while core deposits increased 5% during the same period. 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 50% from 1.0% of total assets as of September 30, 1997 to 0.5% of total assets as of September 30, 1998. At September 30, 1998, the Company's tier I and total risk weighted capital ratios were 16.7% and 17.8% respectively, while its leverage capital ratio was 12.3%. PNB's residential mortgage loan department funded $380 million in residential mortgage loans during the three months ended September 30, 1998, a 23.5% increase over the same period in 1997. For the nine months ended September 30, 1998 PNB funded $1.12 billion in residential mortgage loans, a 41.1% increase over the $792 million in the same period in 1997. The increase in mortgage lending was in part due to the lower interest rate environment and an increase in loan refinancing. Over 95% of loans funded were "A" quality loans. PNB sells substantially all of its mortgage loans on a service released basis and holds no volatile servicing assets. Further, PNB does not securitize its mortgage assets and therefore retains no residual or other liability interest in the loans. Finally, PNB sells its mortgage loan on a non recourse basis except in the event the mortgage loan documents contain fraudulent information. The residential mortgage division accounted for approximately 47% of the Company's profits during the nine months ended September 30, 1998 compared to approximately 52% during the nine months ended September 30, 1997. On October 7, 1998 the Company announced the signing of a definitive agreement to merge with Western Bancorp ("Western") (Nasdaq - WEBC). The Company's shareholders will receive one share of Western for each outstanding share of the Company in a transaction expected to qualify as a tax free exchange. The acquisition is expected to close in the first quarter of 1999. Both companies have completed their due diligence. Completion of the transaction is conditional upon the receipt of shareholder and applicable regulatory approvals. It is the intention of Western to merge PNB into Southern California Bank, a wholly owned subsidiary of Western, following the consummation of the acquisition This merger allows the Company to align itself with a larger, more diversified and fast growing banking institution which the Company believes is better positioned to take advantage of the current Southern California economy. The Company believes that PNB's customers should enjoy numerous new services while continuing to work with many of the same lending officers and staff. Pro forma with the pending acquisitions of the Company, Peninsula Bank of San Diego and Bank of Los Angeles, Western will have approximately $3.0 billion in assets and three banking subsidiaries: Peninsula Bank operating in San Diego, Southern California Bank operating primarily in Orange County and Santa Monica Bank operating in Los Angeles County. PNB operates three commercial business offices located in Newport Beach, Orange, and Beverly Hills. PNB 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, Santa Ana and Dublin, California with several other smaller satellite offices in Arizona. Forward-Looking Statements This Press release includes forward-looking statements that involve inherent risks and uncertainties. The Company caution readers that a number of important factors could cause actual results to differ materially from those in the forward-looking statements. These factors include economic conditions and competition in the geographic and business areas which the Company and Western operate, inflation, fluctuations in interest rates, legislation and governmental regulation and the consummation of the merger with Western and the integration of PNB with Western's subsidiaries. PNB FINANCIAL GROUP SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNT) AS OF % BALANCE SHEET 9/30/96 9/30/97 CHANGE - ---------------------------------------------------------------- CASH & DUE FROM BANKS $ 29,191 $ 19,369 50.7% INVESTMENT SECURITIES 6,093 7,000 -13.0% FEDERAL FUNDS SOLD 2,500 0 N/A MORTGAGE LOANS HELD FOR SALE 95,137 86,697 9.7% PORTFOLIO LOANS 137,142 113,561 20.8% LOANS LOSS RESERVE (2,061) (2,405) -14.3% -------- -------- NET LOANS 135,061 111,156 21.5% OTHER REAL ESTATE OWNED 759 563 34.8% INVESTMENT IN REIT 2,500 0 N/A OTHER ASSETS 3,756 4,735 -20.7% TOTAL ASSETS $275,017 $229,520 19.8% ======== ======== CUSTOMERS DEPOSITS $200,456 $190,882 5.0% BROKERED DEPOSITS 15,000 7,000 114.3% -------- -------- TOTAL DEPOSITS 215,456 197,882 8.9% SHORT-TERM BORROWING 22,855 6,000 280.9% OTHER LIABILITIES 5,200 3,095 68.0% -------- -------- TOTAL EQUITY 31,506 22,543 39.8% TOTAL LIABILITIES & EQUITY $275,017 $229,520 19.8% ======== ======== FOR THE THREE FOR THE NINE MONTHS ENDED MONTHS ENDED SEPT 30, % SEPT 30, % AVERAGE BALANCE SHEET 1996 1997 CHANGE 1996 1997 CHANGE - ------------------------------------------------------------------ ----------------------------- CASH & DUE FROM BANKS $ 9,368 $ 14,114 -33.6% $ 11,747 $ 12,923 -9.1% INVESTMENT SECURITIES 8,560 7,092 20.7% 7,793 7,240 7.6% FEDERAL FUNDS SOLD 8,854 3,883 128.0% 7,303 5,227 39.7% MORTGAGE LOANS HELD FOR SALE 91,669 72,969 25.6% 90,617 80,535 49.7% PORTFOLIO LOANS 128,592 109,323 17.6% 122,927 105,746 16.2% LOANS LOSS RESERVE (1,904) (1,879) 1.3% (1,709) (1,816) -5.9% -------- -------- -------- -------- NET LOANS 126,688 107,444 17.9% 121,218 103,930 16.6% OTHER REAL ESTATE OWNED 1,006 2,529 -60.2% 1,112 3,422 -67.5% INVESTMENT IN REIT 2,500 0 N/A 2,500 0 N/A OTHER ASSETS 5,257 3,388 55.2% 4,748 3,433 38.3% TOTAL ASSETS $253,902 $211,419 20.1% $247,038 $196,710 25.6% ======== ======== ======== ======== CUSTOMER DEPOSITS $195,368 $176,454 10.7% $186,521 $164,932 13.1% BROKERED DEPOSITS 15,004 7,166 109.4% 22,509 6,122 267.7% -------- -------- -------- -------- TOTAL DEPOSITS 210,392 183,620 14.6% 209,030 171,054 22.2% SHORT-TERM BORROWING 7,427 2,742 170.9% 6,014 2,413 149.2% OTHER LIABILITIES 5,042 2,886 74.7% 3,641 2,524 44.3% -------- -------- -------- -------- TOTAL LIABILITIES 222,861 189,248 17.8% 218,685 175,991 24.3% TOTAL EQUITY 31,041 22,171 40.0% 28,353 20,719 36.8% TOTAL LIABILITIES & EQUITY $253,902 $211,419 20.1% $247,O38 $196,710 25.6% ======== ======== ======== ======== PNB FINANCIAL GROUP SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNT) FOR THE THREE FOR THE NINE MONTHS ENDED MONTHS ENDED SEPT 30, % SEPT 30, % INCOME STATEMENT 1998 1997 CHANGE 1998 1997 CHANGE ---------------- --------- --------- ------ --------- --------- ------ TOTAL INTEREST & FEE INCOME $5,234 $4,276 22.4% $15,014 $11,824 27.0% TOTAL INTEREST EXPENSE 1,384 1,082 27.9% 4,111 2,915 41.0% PROVISION FOR LOAN LOSSES 225 570 -60.5% 575 765 -24.8% ------ ------ ------- ------- NET INTEREST INCOME AFTER PROVISION 3,625 2,624 38.1% 10,328 8,144 26.8% OTHER INCOME: SBA SALES PREMIUM 108 129 -16.3% 312 415 -24.8% SERVICE CHARGES, FEE & OTHER 243 402 -39.6% 898 963 -6.7% ------ ------ ------- ------- TOTAL OTHER INCOME 351 531 -33.9% 1,210 1,378 -12.2% OTHER EXPENSES: SALARIES AND BENEFITS 969 1,006 -3.7% 2,962 3,246 -8.7% OCCUPANCY 303 327 -7.3% 903 1,043 -13.4% OTHER EXPENSES 935 830 12.7% 2,662 2,539 4.8% ------ ------ ------- ------- TOTAL NONINTEREST EXPENSES 2,207 2,163 2.0% 6,527 6,828 -4.4% INCOME FROM BANK OPERATIONS 1,769 992 78.3% 5,011 2,694 86.0% RESIDENTIAL MORTGAGE LENDING: INCOME 6,114 3,779 61.8% 16,627 10,437 59.3% EXPENSES 4,393 2,678 64.0% 12,095 7,461 62.1% ------ ------ ------- ------- INCOME FROM MORTGAGE OPERATION 1,721 1,101 56.3% 4,532 2,976 52.3% INCOME BEFORE INCOME TAXES 3,490 2,093 66.7% 9,543 5,670 68.3% INCOME TAXES 1,465 858 70.7% 4,007 2,341 71.2% ------ ------ ------- ------- NET INCOME $2,025 $1,235 64.0% $ 5,536 $ 3,329 66.3% ====== ====== ======= ======= PER SHARE DATA - -------------- NET INCOME (BASIC) $ 0.73 $ 0.48 52.1% $2.04 $1.33 53.4% NET INCOME (DILUTED) 0.70 0.44 59.1% 1.93 1.25 54.4% BOOK VALUE 11.70 8.75 33.7% MARKET VALUE, NASDAQ-PNBF 30.00 14.35 109.1% COMMON SHARES OUTSTANDING (END OF PERIOD) 2,779,733 2,611,118 2,779,733 2,611,118 FULLY DILUTED AVERAGE SHARES OUTSTANDING 2,909,520 2,780,857 2,865,098 2,672,996 KEY RATIOS & OTHER INFORMATION - ------------------------------ RETURN ON AVERAGE ASSETS 3.19% 2.34% 36.5% 2.99% 2.26% 32.4% RETURN ON AVERAGE EQUITY 26.09% 22.28% 17.1% 26.03% 21.42% 21.5% MORTGAGE VOLUME 379,686 307,354 23.5% 1,117,142 791,664 41.1% MORTGAGE INCOME/VOLUME 0.45% 0.36% 26.5% 0.41% 0.38% 7.9% NONPERFORMING ASSETS 1,273 2,399 -46.9% NONPERFORMING ASSETS/TOTAL ASSETS 0.46% 1.05% -55.7% LOAN LOSS RESERVE/TOTAL LOANS 1.50% 2.12% -29.0% EQUITY CAPITAL TO ASSETS 11.46% 9.82% 16.6%