Exhibit 99.1
Pacific State Bancorp Reports Earnings For 2007
Stockton, California - February 21, 2008
Steven A. Rosso, President and C.E.O. of Pacific State Bancorp (NASDAQ Global
Market/PSBC), the parent company of Pacific State Bank, today reported 2007 and
4th quarter profits and asset growth for the Stockton, California based
financial institution:
o Net income for the year ended December 31, 2007 decreased 18%
to $4,549,000 and decreased by 66% to $513,000 for the fourth
quarter of 2007.
o Total Assets as of December 31, 2007 increased 11% to
$431,074,000.
Mr. Rosso noted that the decreased income performance is the result of the Bank
recording an increase of $1,065,000 in the provision for loan losses in 2007
compared to 2006. The Bank recorded an increase of $1,075,000 in the provision
for loan losses in the fourth quarter of 2007 over 2006 levels. The increase in
the provision for loan losses in the fourth quarter represented probable losses
from specific customers and not degradation of overall credit quality in the
loan portfolio. However, the Bank is actively monitoring the weakening economic
outlook, in the California Central Valley, which may indicate the need to record
additional provision in the future. At present, Management believes that the
level of allowance for loan losses currently recorded is sufficient for probable
losses.
In addition to the increased provision for loan losses, PSBC has seen an erosion
of its net interest margin. Mr. Rosso noted that market rates paid on deposits
grew more robustly than market rates received on loans and other interest
bearing assets in 2007. In addition to the increasing rate environment in
deposits, the Bank has also experienced deposit migration from lower cost
deposits such as checking accounts to higher cost deposits such as certificates
of deposit. Despite the net interest margin erosion of 97 basis points, PSBC was
able to increase net interest income by $93,000 by growing its average earning
assets by $63,105,000 or 21% in 2007.
PSBC financial performance information for the three month period ending
December 31, 2007 compared to the same quarter in the prior year is as follows:
Income Statement:
o Total Interest Income: $7,667,000, an increase of $235,000 or
3.2%.
o Total Interest Expense: $3,492,000, an increase of $625,000 or
21.8%.
o Net Interest Income: $4,175,000, a decrease of $390,000 or
8.5%.
o Non-Interest Income: $484,000, a decrease of $290,000 or
37.5%.
o Non-Interest Expense: $2,585,000, a decrease of $134,000 or
4.9%.
o Net Income: $513,000, a decrease of $1,004,000 or 66.2%.
o Efficiency Ratio: 55.5% deteriorating from 50.9%.
o Basic Earnings Per Share: $0.14 a decrease of $0.29 per share
or 67.4%.
o Diluted Earnings Per Share: $0.13, a decrease of $0.26 per
share or 66.7%.
PSBC December 31, 2007 compared to December 31, 2006 annual financial
performance information was as follows:
Balance Sheet:
o Total Federal Funds and Investment Securities: $76,232,000, an
increase of $21,495,000 or 39.3%.
o Net Loans: $308,458,000, an increase of $21,140,000 or 7.4%.
o Total Assets: $431,074,000, an increase of $44,322,000 or
11.5%.
o Non-Interest Bearing Deposits: $67,071,000, a decrease of
$6,126,000 or 8.4%.
o Total Deposits: $341,821,000, an increase of $825,000 or 0.2%.
o Total Borrowings: $40,000,000 an increase of $35,100,000 or
716.3%. The increase in other borrowings was primarily the
result of the Bank utilizing relatively low cost borrowings to
fund asset growth.
o Total Shareholders Equity: $34,036,000, an increase of
$4,976,000 or 17.1%. In addition to the retention of earnings,
the increase in shareholders equity includes the proceeds of
stock option exercises by directors and employees.
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Income Statement:
o Total Interest Income: $31,242,000 an increase of $4,747,000
or 17.9%.
o Total Interest Expense: $13,842,000, an increase of $4,654,000
or 50.7%.
o Net Interest Income: $17,400,000, an increase of $93,000 or
0.5%.
o Non-Interest Income: $2,465,000, a decrease of $118,000 or
4.6%. The decrease in noninterest income was primarily the
result of decreased loan sales in 2007.
o Non-Interest Expense: $10,997,000, an increase of $637,000 or
6.2%. The increase in non-interest expense was due in part to
the cost of facilities and operations associated with the
growth of the Bank. 2007 was the first full year of expenses
associated with the opening of the Bank's eighth branch office
in Lodi, California in 2006. In addition, the company opened
its ninth branch office in Hayward California during the first
quarter of 2007.
o Net Income: $4,549,000, a decrease of $994,000 or 17.9%.
o Net Interest Margin: 4.79%, down 97 basis points.
o Annualized Return on Average Assets: 1.13% down from 1.67%.
o Annualized Return on Average Equity: 14.22% down from 22.91%.
o Efficiency Ratio: 55.36% deteriorating from 52.09%.
o Basic Earnings Per Share: $1.23, a decrease of $0.34 per share
or 21.7%.
o Diluted Earnings Per Share: $1.14, a decrease of $0.27 per
share or 19.2%.
Attached are certain unaudited financial statements supporting the financial
information summarized above. Further inquiries should be directed to Mr. Rosso
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
- -www.pacificstatebank.com.
SAFE HARBOR: Except for historical information contained herein, the statements
contained in this press release are 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 and quarterly reports on Form 10-Q.
Pacific State Bancorp disclaims any intent or obligation to update these
forward-looking statements.
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PACIFIC STATE BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share amounts) December December
31, 31,
2007 2006
------------ ------------
Assets
- ------
Cash and due from banks $ 13,794 $ 18,985
Federal funds sold 34,880 31,630
Investment securities - available for sale (amortized cost of $41,996 in
2007 and $23,186 in 2006) 41,352 23,107
Loans, less allowance for loan losses of $3,948 in 2007 and $2,478 in 2006 308,458 287,318
Bank premises and equipment, net 14,269 11,957
Company owned life insurance 8,025 6,079
Accrued interest receivable and other assets 10,296 7,676
------------ ------------
Total assets $ 431,074 $ 386,752
============ ============
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Non-interest bearing $ 67,071 $ 73,197
Interest bearing 274,750 267,799
------------ ------------
Total deposits 341,821 340,996
Other borrowings 40,000 4,900
Subordinated debentures 8,764 8,764
Accrued interest payable and other liabilities 6,452 3,033
------------ ------------
Total liabilities 397,037 357,693
Shareholders' equity:
Preferred stock - no par value; 2,000,000 shares authorized; none
outstanding
Common stock - no par value; 24,000,000 shares authorized;
shares issued and outstanding 3,703,207 in 2007 and 3,661,477 in 2006 10,419 9,652
Retained earnings 24,004 19,455
Accumulated other comprehensive loss, net of tax (386) (47)
Total shareholders' equity 34,037 29,059
------------ ------------
Total liabilities and shareholders' equity $ 431,074 $ 386,752
============ ============
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PACIFIC STATE BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Year ended
December 31, December 31,
--------------------------- ---------------------------
(in thousands, except share amounts) 2007 2006 2007 2006
------------ ------------ ------------ ------------
Interest income:
Interest and fees on loans $ 6,754 $ 6,815 $ 27,902 $ 24,901
Interest on federal funds sold 220 235 1,285 273
Interest on investment securities 693 382 2,055 1,321
------------ ------------ ------------ ------------
Total interest income 7,667 7,432 31,242 26,495
Interest expense:
Interest on deposits 3,221 2,618 12,844 8,102
Trust preferred securities 186 179 702 710
Interest on borrowings 85 70 296 376
------------ ------------ ------------ ------------
Total interest expense 3,492 2,867 13,842 9,188
------------ ------------ ------------ ------------
Net interest income 4,175 4,565 17,400 17,307
Provision for loan losses 1,165 90 1,425 360
------------ ------------ ------------ ------------
Net interest income after
provision for loan losses 3,010 4,475 15,975 16,947
------------ ------------ ------------ ------------
Non-interest income:
Service charges 243 211 889 864
Other fee income 238 497 1,426 1,425
Gain from sale of loans 3 66 150 294
------------ ------------ ------------ ------------
Total non-interest income 484 774 2,465 2,583
Non-interest expenses:
Salaries and employee benefits 1,084 1,435 5,336 5,479
Occupancy 325 315 1,180 980
Furniture and equipment 184 136 708 672
Other 992 833 3,773 3,229
------------ ------------ ------------ ------------
Total other expenses 2,585 2,719 10,997 10,360
------------ ------------ ------------ ------------
Income before provision for income taxes 909 2,530 7,443 9,170
Provision for income tax expense 396 1,013 2,894 3,627
------------ ------------ ------------ ------------
Net income $ 513 $ 1,517 $ 4,549 $ 5,543
============ ============ ============ ============
Basic earnings per share $ 0.14 $ 0.43 $ 1.23 $ 1.57
============ ============ ============ ============
Diluted earnings per share $ 0.13 $ 0.39 $ 1.14 $ 1.41
============ ============ ============ ============
Weighted average common shares outstanding 3,701,751 3,540,344 3,687,197 3,537,314
Weighted average common and common equivalent
shares outstanding 3,949,471 3,922,745 4,003,876 3,923,497
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PACIFIC STATE BANCORP
Yield Analysis
For Year Ended December 31,
- -------------------------------------------------------------------------------------------------------------------
(Dollars in thousands) 2007 2006
------------------------------------ ------------------------------------
Interest Average Interest Average
Income Yield Income Yield
Average or or Average or or
Balance Expense Cost Balance Expense Cost
---------- ---------- ---------- ---------- ---------- ----------
Assets:
- -------
Interest-earning assets:
Loans $ 300,239 $ 27,902 9.29% $ 269,395 $ 24,901 9.24%
Investment securities 37,089 2,033 5.48% 25,418 1,321 5.20%
Federal funds sold 25,115 1,285 5.12% 5,602 273 4.87%
Interest Bearing Deposits in Banks 1,077 22 2.04% -- -- 0.00%
---------- ---------- ---------- ----------
Total average earning assets 363,520 $ 31,242 8.59% 300,415 $ 26,495 8.82%
Non-earning assets:
Cash and due from banks 15,398 13,655
Bank premises and equipment 12,940 10,609
Other assets 13,323 9,058
Allowance for loan loss (2,665) (2,536)
---------- ----------
Total average assets $ 402,516 $ 331,201
========== ==========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits
Interest-bearing Demand $ 81,898 $ 2,231 2.72% $ 92,280 $ 2,438 2.64%
Savings 5,352 46 0.86% 6,359 56 0.88%
Time Deposits 200,154 10,567 5.28% 125,994 5,608 4.45%
Other borrowing 14,359 998 6.95% 16,379 1,086 6.63%
---------- ---------- ---------- ----------
Total average interest-bearing
liabilities 301,763 13,842 4.59% 241,012 9,188 3.81%
Noninterest-bearing liabilities:
Demand deposits 64,242 64,593
Other liabilities 4,525 1,405
---------- ----------
Total average liabilities 370,530 307,010
Shareholders' equity: 31,986 24,191
---------- ----------
Total average liabilities and
shareholders' equity $ 402,516 $ 331,201
========== ==========
---------- ----------
Net interest income $ 17,400 $ 17,307
========== ==========
Net interest margin 4.79% 5.76%
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