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

For the quarter ended September 30, 2009, the bank reported net earnings of $100 thousand, or $0.07 per diluted share, compared to a net loss of $33 thousand, or ($0.03) per diluted share for the quarter ended September 30, 2008. The improvement in earnings between the respective periods is primarily due to the decreased provisions to the bank’s allowance for loan losses, which for the third quarter of 2009 totaled $255 thousand, compared to $470 thousand for the same period in 2008; and the decrease in non-interest expenses, which is the result of controlling operating expenses, despite the increase in the FDIC insurance assessment. The non-interest expenses for the third quarter of 2009 totaled $1.5 million, compared to $1.6 million for the same period in 2008.

At September 30, 2009, 4.02% of the Bank’s loans were nonperforming, compared to 3.24% at September 30, 2008. The Bank had foreclosed real estate of $1.2 million at September 30, 2009, compared to foreclosed real estate of $672 thousand and other bank owned assets of $183 thousand at September 30, 2008. At September 30, 2009, non-accrual loans totaled $5.0 million, compared to $3.7 million at September 30, 2008. However, $2.0 million of the $5.0 million of non-accrual loans at September 30, 2009 are paying according to the contractual terms, but each will remain on non-accrual status until a satisfactory payment history has been established. The allowance for loan losses totaled $1.2 million at September 30, 2009, or 0.97% of total loans as of that date, compared to $1.73 million at September 30, 2008, or 1.39% of total loans as of that date. This reduction in the allowance was due in part to the charge-off associated with taking ownership of property upon completion of the foreclosure process during the quarter. Although the bank believes its allowance as of September 30, 2009 is adequate, the bank intends to make monthly provisions of approximately $50,000 until the allowance has been restored to approximately 1.5% of total loans.

At September 30, 2009, the Bank had total assets of $161.8 million, representing an increase of $6.6 million or 4.26% growth over total assets of $155.2 million at September 30, 2008. Total deposits at September 30, 2009 were $123.7 million, representing a 7.5% increase over total deposits of $115.1 million at September 30, 2008. Non-interest bearing demand deposits totaled $38.9 million at September 30, 2009, representing 31.5% of total deposits at that date, compared to $41.8 million in non-interest bearing demand deposits at September 30, 2008, which represented 36.3% of total deposits at that date.

The Bank’s gross loan portfolio grew to $125.9 million at September 30, 2009, representing a 1.2% increase over gross loans of $124.5 million at September 30, 2008. Unfunded credit commitments stood at $16.8 million at September 30, 2009, representing an 8.7% decrease, compared to unfunded commitments of $18.4 million at September 30, 2008.

The Bank’s net interest margin for the quarter ended September 30, 2009 was 4.76%, a decrease of 0.18% compared to the net interest margin of 4.94% for the third quarter of 2008, a fairly modest decline during a period of historically low interest rates.

At September 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 September 30, 2009 was $17.1 million, representing an increase of $3.8 million, or 28% over total shareholders’ equity of $13.3 million at September 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, “Through the first 3 quarters of the year Executive Management has focused on strategies that will reduce non-interest expense and improve the core earnings of the bank. This has been accomplished by evaluating and, where practical, renegotiating key vendor contracts and relationships, as well as closely monitoring general and administrative expenses and making adjustments where practical. This strategy has enabled the bank to a record a 6.1% decrease in non-interest expense, when compared to the third quarter of 2008, despite experiencing a 260% increase in the bank’s FDIC assessment for the same comparable period.”

Pendergast went on to say, “During the period we continued to focus on attracting new business relationships to the bank by actively soliciting referrals from our existing clients, along with aligning the bank’s business development efforts to the bank’s marketing calendar. These activities enabled the bank to increase its deposits 7.5%, when compared to the same period in 2008 and comes at a time of extreme competition in the marketplace for new deposits and relationships.”

Pendergast said in closing, “As reported in earlier releases, the bank continues to take a proactive approach in identifying and managing those credit relationships which may require special attention, in a market that continues to be one of the hardest hit in the nation. Notwithstanding these challenges, the bank continues to position itself to take advantage of the opportunities that presently exist in its immediate marketplace, while at the same time looking ahead to the opportunities that will be presented as the regional economy stabilizes.”

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.

Premier Service Bank
Kerry L. Pendergast, President and CEO
or
Jessica Lee, Executive Vice President and CFO
951-274-2400