Premier Service Bank PSBK today announced its financial results for the second quarter of 2008.

For the quarter ended June 30, 2008, the bank reported net earnings of $9 thousand, or $0.01 per diluted share, compared to net earnings of $108 thousand, or $0.08 per diluted share for the second quarter of 2007. The $99 thousand decrease in net earnings for the quarter ended June 30, 2008, compared to the second quarter of 2007, was primarily the result of the $347 thousand provision to the bank's allowance for loan losses in the second quarter of 2008, compared to the $10,000 provision to the allowance made in the second quarter of 2007. The increased provision in the second quarter of 2008 was required to accommodate the growth within the loan portfolio and the increase in non-performing loans.

President and Chief Executive Officer Kerry Pendergast stated, “Our second quarter financial results, while clearly disappointing, reflect a continuation of the challenging economic conditions that presently exist in the marketplace and for the financial services sector in particular. Identifying credit issues when they first become known to the bank is an important part of the bank's credit management system and serves to reinforce the strength and integrity of the bank's balance sheet. It also provides the bank with the continuing opportunity to effectively manage the credit relationship. Notwithstanding the litany of issues presently weighing heavily on the economy, the bank continued to experience growth within the loan portfolio, with an 11% increase between the first and second quarter of 2008,” Pendergast said in closing.

At June 30, 2008, the Bank had total assets of $156.6 million, representing an increase of $17.9 million, or 12.9% growth over total assets of $138.7 million at June 30, 2007. Total deposits at June 30, 2008 were $116.6 million, or 7.2% less than total deposits of $125.6 million at June 30, 2007. Non-interest bearing demand deposits totaled $44.0 million at June 30, 2008, representing 37.7% of total deposits at that date, compared to $47.7 million of non-interest bearing demand deposits at June 30, 2007, which represented 38.0% of total deposits at that date.

The Bank's gross loan portfolio grew to $124.0 million at June 30, 2008, representing a 27.5% increase over gross loans of $97.3 million at June 30, 2007. Unfunded credit commitments stood at $18.1 million at June 30, 2008, representing a 36.7% decrease compared to unfunded commitments of $28.6 million at June 30, 2007. The decrease in unfunded commitments was due to the lack of demand in the marketplace for credit line financing.

At June 30, 2008, 4.04% of the Bank's loans were nonperforming, compared to 0.46% in nonperforming loans at June 30, 2007. The Bank had no foreclosed real estate at June 30, 2008, and none at June 30, 2007. At June 30, 2008, non-accrual loans represented 3.80% of total loans, compared to no non-accrual loans at June 30, 2007. The allowance for loan losses totaled $1.63 million at June 30, 2008, or 1.32% of total loans as of that date, compared to $1.08 million at June 30, 2007, or 1.11% of total loans as of that date.

The Bank's net interest margin for the quarter ended June 30, 2008 was 5.03%, a decrease of 0.13% compared to the second quarter of 2007.

The Bank remained well capitalized at June 30, 2008 and continued to have no sub-prime residential loans in its portfolio. Total shareholders equity at June 30, 2008 was $13.2 million, representing an increase of $0.77 million, or 6.2% over total shareholders’ equity of $12.5 million at June 30, 2007.

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
Jessica Lee, Executive Vice President and CFO
951-274-2400

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