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Premier Service Bank Announces Financial Results for the Third Quarter of 2010

 

 

 


Press Release

Source: Premier Service Bank

Friday October 29, 2010, 9:13 pm EDT

 

RIVERSIDE, Calif.--(BUSINESS WIRE)-- Premier Service Bank, Riverside, California (OTCBB:PSBK.ob - News) today announced its financial results for the third quarter and nine months ended September 30, 2010.

 

For the quarter ended September 30, 2010, the Bank reported a net loss of $357 thousand, or <$0.29> per diluted share, compared to net income of $100 thousand, or $0.07 per diluted share for the quarter ended September 30, 2009. The decrease in earnings between the respective periods is principally due to the increase in the Bank’s deferred tax expense of approximately $502,000 to increase the valuation allowance for the quarter ended September 30, 2010. The increase in the Bank’s reported losses resulted in the increase of the valuation allowance on the deferred tax asset to 100% of the related deferred tax asset because the benefit of the deferred tax asset is dependent on future taxable income. When the Bank returns to profitability, future operating earnings will benefit from a significant net operating loss carry-forward. The provision to the allowance for loan losses for the third quarter of 2010 totaled $195 thousand, compared to $255 thousand for the same period in 2009. The provision for the nine months ended September 30, 2010 was $3,051,000 compared to $850,000 for the nine months ended September 30, 2009.

 

At September 30, 2010, the Bank had $9.64 million of non-performing loans, representing 7.89% of the Bank’s total loans, compared to $5.1 million of non-performing loans, or 4.02% of total loans, at September 30, 2009. Impairment analyses are performed on the Bank’s non-performing loans and impairment adjustments, if any, are written off as a part of this process. The Bank had foreclosed real estate of $1.16 million at September 30, 2010, compared to foreclosed real estate of $1.18 million at September 30, 2009. At September 30, 2010, all non-performing loans were in non-accrual status; at September 30, 2009, non-accrual loans totaled $5 million, representing 3.96% of total loans at that date. The allowance for loan losses totaled $2.95 million at September 30, 2010, or 2.42% of total loans as of that date, compared to $1.22 million at September 30, 2009, or 0.97% of total loans as of that date.

 

At September 30, 2010, the Bank had total assets of $157.5 million, representing a decrease of $4.3 million or <2.65%> from the total assets of $161.8 million reported at September 30, 2009. The Bank had $19 million in FHLB borrowings at September 30, 2010, a decrease of $1 million or <5%> from the FHLB borrowings of $20 million at September 30, 2009. Total deposits at September 30, 2010 were $124.1 million, representing 0.3% growth over total deposits of $123.7 million at September 30, 2009. Non-interest bearing demand deposits totaled $38.9 million at September 30, 2010, representing 31.3% of total deposits at that date, compared to $38.9 million of non-interest bearing demand deposits at September 30, 2009, which represented 31.5% of total deposits at that date. The Bank had no brokered deposits at September 30, 2010 or September 30, 2009.

 

The Bank’s gross loan portfolio was $118.8 million at September 30, 2010, representing a 4.4% decrease compared to gross loans of $124.3 million at September 30, 2009. Unfunded credit commitments stood at $14.3 million at September 30, 2010, representing a 14.9% decrease when compared to unfunded commitments of $16.8 million at September 30, 2009.

 

The Bank’s net interest margin for the quarter ended September 30, 2010 was 4.85%, an increase of nine basis points, when compared to the net interest margin of 4.76% for the third quarter of 2009.

 

At September 30, 2010, the Bank remained well capitalized under applicable regulatory guidelines. Total shareholders’ equity at September 30, 2010 was $13.6 million, representing a decrease of $3.46 million, or <20.24%> compared to total shareholders’ equity of $17.1 million at September 30, 2009. The reduction in shareholders’ equity is attributed to approximately $4.1 million in additional provisions to the Bank’s allowance for loan loss reserves from September 30, 2009 to September 30, 2010, and the $502 thousand reversal of the deferred tax asset valuation in the third quarter of 2010, which was discussed earlier in this release.

 

The Bank’s President and Chief Executive Officer, Kerry Pendergast, stated, “In earlier releases I have commented on our ongoing commitment to improve overall asset quality and to reduce our level of non-performing loans; to that end we have hired a Special Assets Manager, who is working with Executive Management to develop well articulated work out and liquidation strategies, with a focus on significantly reducing the level of non-performing loans within the institution.”

 

Pendergast went on to say, “At the same time we continue to focus our efforts on improving the Bank’s overall operating efficiency and in monitoring our performance/progress in these areas against certain ‘key’ industry benchmarks. Our focus in this area has resulted in a significant improvement in the Bank’s core earnings and has been done without sacrificing on the service component, which is the hallmark of the Bank.

 

“While the region continues to be faced with challenges that are not characteristic with the modest recovery that is being reported in other regions of the United States, we are beginning to see anecdotal signs of an improving business climate. We are continuing to work closely with our longtime customers, in hopes that the long awaited recovery will find its way to their individual businesses.”

 

Pendergast said in closing, “We will continue to focus and in some cases intensify our efforts to reduce the overall number of non-performing loans, while, at the same time, managing overhead to position ourselves to produce results that are more consistent with our shareholders’ expectations.”

 

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.

 

See the unaudited Financial Data:

                             
Financial Data - Premier Service Bank
(Unaudited)
 
Quarter Ended
(In Thousands)       Sept. 30, 2010 June 30, 2010 Mar. 31, 2010 Dec. 31, 2009 Sept. 30, 2009
 
Interest income(not taxable equivalent) $ 2,057 $ 2,192 $ 2,194 $ 2,167 $ 2,305
Interest expense   351     391     425     522     596  
Net interest income 1,706 1,801 1,769 1,645 1,709
Provision for loan losses   195     2,516     340     1,020     255  
Net interest income after provision for loan losses
1,511 (715 ) 1,429 625 1,454
Non-interest income 167 175 195 203 200
Non-interest expense   1,533     1,704     1,573     1,664     1,507  
Income before income taxes 145 (2,244 ) 51 (836 ) 147
(Benefit)/Provision for income taxes   502     (32 )   33     (15 )   47  
Net income $ (357 ) $ (2,212 ) $ 18   $ (821 ) $ 100  
 
 
Quarter Ended
(In Thousands)       Sept. 30, 2010 June 30, 2010 Mar. 31, 2010 Dec. 31, 2009 Sept. 30, 2009
Per share:
Net income - basic $ (0.29 ) $ (1.81 ) $ 0.01 $ (0.80 ) $ 0.07
Weighted average shares used in basic 1,261 1,261 1,261 1,261 1,261
Net income - diluted $ (0.29 ) $ (1.81 ) $ 0.01 $ (0.80 ) $ 0.07
Weighted average shares used in diluted 1,261 1,261 1,261 1,261 1,261
Book value at period end $ 7.60 $ 7.91 $ 9.71 $ 9.70 $ 10.36
Ending shares 1,261 1,261 1,261 1,261 1,261
 
 
Balance Sheet - At Period-End
Cash and due from banks $ 22,041 $ 16,372 $ 12,486 $ 17,707 $ 15,847
Investments and Fed fund sold 8,491 9,709 11,050 11,495 13,562
Gross Loans 122,064 124,362 128,140 128,471 125,888
Deferred fees (281 ) (297 ) (321 ) (348 ) (336 )
Allowance for loan losses (2,952 ) (3,060 ) (2,188 ) (1,900 ) (1,221 )
Net Loans 118,831 121,005 125,631 126,223 124,331
Other assets   8,125     8,870     8,855     8,384     8,034  
Total Assets $ 157,488   $ 155,956   $ 158,022   $ 163,809   $ 161,774  
 
Non-interest-bearing deposits $ 38,881 $ 37,598 $ 36,258 $ 39,034 $ 38,945
Interest-bearing deposits 85,225 86,495 89,765 87,760 84,802
Other liabilities 19,761 17,849 15,721 20,764 20,950
Shareholders' equity   13,621     14,014     16,278     16,251     17,077  
 
Total Liabilities and Shareholders' equity $ 157,488   $ 155,956   $ 158,022   $ 163,809   $ 161,774  
 
Asset Quality & Capital - At Period-End
Non-accrual loans $ 9,635 $ 6,590 $ 7,626 $ 7,480 $ 4,990
Loans past due 90 days or more 757 - 76
Other real estate owned 1,162 1,242 1,436 823 1,178
Other bank owned assets   -     -     -     -     -  
Total non-performing assets $ 10,797   $ 7,832   $ 9,819   $ 8,303   $ 6,244  
 
Allowance for losses to loans, gross 2.42 % 2.46 % 1.71 % 1.48 % 0.97 %
Non-accrual loans to total loans, gross 7.89 % 5.30 % 5.95 % 5.82 % 3.96 %
Non-performing loans to total loans, gross 7.89 % 5.30 % 6.54 % 5.82 % 4.02 %
Non-performing asset to total assets 6.86 % 5.02 % 6.21 % 5.07 % 3.86 %
Allowance for losses to non-performing loans 30.64 % 46.43 % 26.10 % 25.40 % 24.10 %
 
Total risk-based capital ratio 11.90 % 11.86 % 13.17 % 12.88 % 13.39 %
Tier 1 risk-based capital ratio 10.63 % 10.60 % 11.91 % 11.63 % 12.46 %
Tier 1 leverage ratio 8.57 % 8.61 % 10.05 % 9.69 % 10.24 %

 

 

Contact:

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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