RIVERSIDE, Calif.--(BUSINESS WIRE)--Premier Service Bank, Riverside, California (OTCBB:PSBK - News) today announced its financial results for the second quarter of 2009.

 

For the quarter ended June 30, 2009, the bank reported a net loss of $282 thousand, or ($0.23) per diluted share, compared to net earnings of $9 thousand, or $0.01 per diluted share for the quarter ended June 30, 2008. The decline in earnings between the respective periods is primarily due to three factors: the increased provisions to the bank’s allowance for loan losses, which for the second quarter of 2009 totaled $485 thousand, compared to $347 thousand for the same period in 2008; the increase in FDIC insurance premiums and assessments in 2009 compared to 2008; and the increase in expenses associated with managing nonperforming loans, foreclosed real estate and other foreclosed assets.

 

At June 30, 2009, 4.20% of the Bank’s loans were nonperforming, compared to 4.04% at June 30, 2008. The Bank had foreclosed real estate of $572 thousand and other foreclosed assets of $149 thousand at June 30, 2009, and none at June 30, 2008. At June 30, 2009, non-accrual loans totaled $5.4 million, compared to $4.7 million at June 30, 2008. All loans delinquent 90 days or more were on non-accrual at June 30, 2009; however, approximately $700 thousand of the $5.4 million of non-accrual loans at June 30, 2009 are now paying according to terms, but each will remain on non-accrual status until a satisfactory payment history has been established. The allowance for loan losses totaled $2.16 million at June 30, 2009, or 1.68% of total loans as of that date, compared to $1.63 million at June 30, 2008, or 1.32% of total loans as of that date.

 

At June 30, 2009, the Bank had total assets of $164.4 million, representing an increase of $7.8 million or 4.98% growth over total assets of $156.6 million at June 30, 2008. Total deposits at June 30, 2009 were $123.5 million, representing a 5.9% increase over total deposits of $116.6 million at June 30, 2008. Non-interest bearing demand deposits totaled $41.3 million at June 30, 2009, representing 33.4% of total deposits at that date, compared to $44.0 million in non-interest bearing demand deposits at June 30, 2008, which represented 37.7% of total deposits at that date.

 

The Bank’s gross loan portfolio grew to $128.0 million at June 30, 2009, representing a 3.3% increase over gross loans of $124.0 million at June 30, 2008. Unfunded credit commitments stood at $16.9 million at June 30, 2009, representing a 6.3% decrease, compared to unfunded commitments of $18.1 million at June 30, 2008. The decrease in unfunded commitments was due to an overall lack of demand in the marketplace for credit line financing.

 

The Bank’s net interest margin for the quarter ended June 30, 2009 was 4.84%, a decrease of 0.26% compared to the net interest margin of 5.10% for the second quarter of 2008, a fairly modest decline during a period of historically low interest rates.

 

At June 30, 2009, the Bank remained well capitalized under applicable regulatory guidelines, and continued to have no sub-prime residential loans in its portfolio. Total shareholders’ equity at June 30, 2009 was $16.9 million, representing an increase of $3.7 million, or 28% over total shareholders’ equity of $13.2 million at June 30, 2008. The increase is the result of the sale on February 20, 2009 of $4 million of Preferred Stock to the United States Department of the Treasury under its Capital Purchase Program.

 

President and Chief Executive Officer Kerry Pendergast stated, “For the second quarter the bank enjoyed excellent growth in the balance sheet, increasing total assets by 4.98%; this growth was fueled by an increase of approximately 6% in overall deposits and an increase in account holders at both of the bank’s full service offices. Our deposit growth indicates that customers are moving their deposits from larger banks, especially those receiving negative comments in the press, to smaller banks where they are able to develop personal relationships with their bank and banker. We believe this presents a strong opportunity for Premier Service Bank to increase its market share. To take advantage of this opportunity, we are developing marketing strategies that are focused on developing the personal relationships our customers want and need.”

 

Pendergast went on to say, “Clearly the severe economic downturn has had a profound impact on the Inland Region and it has created unique challenges for us all. We have taken a proactive approach in identifying and managing those credit relationships which may require special attention. We continually review all our credit relationships to be sure that we are adequately reserving for any potential losses that may occur. The contribution to the bank’s allowance for loan losses for the second quarter of 2009, as well as for the two trailing quarters, has been predominantly driven by impairment charges the bank has taken on two loan participations the bank purchased in the 2006 and 2007 calendar years. These impairment charges are not indicative of systemic issues within the bank’s credit portfolio. They are representative of the continuing softening in values predominantly related to these two particular projects. The bank is actively and aggressively working with the other partners in these two transactions to reach a satisfactory and orderly resolution of these credit facilities.”

 

Pendergast said in closing, “Notwithstanding the challenges facing the region and the prospects that the overall recovery will be slow in taking hold, the bank continues to believe that there is an excellent opportunity to continue to grow our base. We intend to take advantage of the consolidation that has taken place and will continue within our primary marketplace, while at the same time proactively managing and servicing our strong base of existing customers, who have been critical to the bank’s success to date.”

 

Premier Service Bank is a California state-chartered bank with two offices, its headquarters office in Riverside and a full-service banking office in Corona. The Bank provides commercial banking services, including a wide variety of checking accounts, investment services with competitive deposit rates, on-line banking products, and real estate, construction, commercial and consumer loans, to small and medium-sized businesses, professionals and individuals. Additional information about Premier Service Bank is available at its website at www.premierservicebank.com.

 

Forward-looking Statements

This news release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about Premier Service Bank’s business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and in the following: Premier Service Bank’s ability to increase its assets, deposits and total loans, control expenses, retain critical personnel, manage interest rate risk, manage technological changes, address regulatory requirements, and other risks discussed from time to time in Premier Service Bank’s filings and reports with the Federal Deposit Insurance Corporation. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and Premier Service Bank does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

 

For a more complete discussion of risks and uncertainties, investors and security holders are urged to read Premier Service Bank’s annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by Premier Service Bank with the FDIC.

 

Financial Data - Premier Service Bank
(Unaudited)
		Quarter Ended
(In Thousands)		June 30, 2009				Mar. 31, 2009				Dec. 31, 2008				Sept. 30, 2008				June 30, 2008
Interest income(not taxable equivalent)		$	2,303			$	2,269			$	2,447			$	2,451			$	2,321
Interest expense			605				626				650				667				632
Net interest income			1,698				1,643				1,797				1,784				1,689
Provision for loan losses			485				110				595				470				347
Net interest income after provision for loan losses			1,213				1,533				1,202				1,314				1,342
Non-interest income			188				177				197				206				203
Non-interest expense			1,705				1,687				1,813				1,605				1,557
Income before income taxes			(304	)			23				(414	)			(85	)			(12	)
(Benefit)/Provision for income taxes			(22	)			(9	)			(187	)			(52	)			(21	)
Net income		$	(282	)		$	32			$	(227	)		$	(33	)		$	9
		Quarter Ended
(In Thousands)		June 30, 2009				Mar. 31, 2009				Dec. 31, 2008				Sept. 30, 2008				June 30, 2008
Per share:
Net income - basic		$	(0.23	)		$	0.02			$	(0.18	)		$	(0.03	)		$	0.01
Weighted average shares used in basic			1,261				1,261				1,261				1,259				1,257
Net income - diluted		$	(0.23	)		$	0.02			$	(0.18	)		$	(0.03	)		$	0.01
Weighted average shares used in diluted			1,261				1,261				1,261				1,259				1,270
Book value at period end		$	10.26			$	10.51			$	10.48			$	10.58			$	10.53
Ending shares			1,261				1,261				1,261				1,261				1,257
Balance Sheet - At Period-End
Cash and due from banks		$	15,773			$	12,835			$	4,315			$	4,847			$	5,572
Investments and Fed fund sold			15,468				18,531				15,843				20,655				22,812
Gross Loans			128,039				123,609				125,684				124,457				123,980
Deferred fees			(345	)			(335	)			(334	)			(353	)			(363	)
Allowance for loan losses			(2,155	)			(1,670	)			(1,596	)			(1,725	)			(1,634	)
Net Loans			125,539				121,604				123,754				122,379				121,983
Other assets			7,565				7,534				7,590				7,281				6,186
Total Assets		$	164,345			$	160,504			$	151,502			$	155,162			$	156,553
Non-interest-bearing deposits		$	41,281			$	39,683			$	38,040			$	41,834			$	43,989
Interest-bearing deposits			82,225				76,789				72,522				73,269				72,625
Other liabilities			23,901				26,792				27,731				26,722				26,703
Shareholders' equity			16,938				17,240				13,209				13,337				13,236
Total Liabilities and Shareholders' equity		$	164,345			$	160,504			$	151,502			$	155,162			$	156,553
Asset Quality & Capital - At Period-End
Non-accrual loans		$	5,380			$	4,699			$	2,833			$	3,738			$	4,707
Loans past due 90 days or more			-				-				-				290				302
Other real estate owned			572				572				572				672				-
Other bank owned assets			149				166				166				183				-
Total non-performing assets		$	6,101			$	5,437			$	3,571			$	4,883			$	5,009
Allowance for losses to loans, gross			1.68	%			1.35	%			1.27	%			1.39	%			1.32	%
Non-accrual loans to total loans, gross			4.20	%			3.80	%			2.25	%			3.00	%			3.80	%
Non-performing loans to total loans, gross			4.20	%			3.80	%			2.25	%			3.24	%			4.04	%
Non-performing asset to total assets			3.71	%			3.39	%			2.36	%			3.15	%			3.20	%
Allowance for losses to non-performing loans			40.06	%			35.54	%			56.34	%			42.83	%			32.62	%
Total capital to risk-adjusted assets			13.48	%			14.13	%			10.94	%			11.16	%			11.19	%
Tier one capital to risk-adjusted assets			12.22	%			12.88	%			9.71	%			9.91	%			9.94	%
Equity to average assets (leverage ratio)			10.53	%			10.98	%			8.50	%			8.66	%			9.07	%