Premier Service Bank Announces Financial Results for the
Quarter and Year Ended December 31, 2006
Premier Service Bank PSBK, a California state-chartered bank headquartered in Riverside, California, announced today the un-audited results of its operations for the quarter and year ended December 31, 2006.
At December 31, 2006, the bank reported total assets of $137 million, representing a 16% increase over December 31, 2005. Deposits closed at $124.5 million, representing an increase of 16% over the prior year-end. The bank's gross loan portfolio grew to $95.8 million, representing a 42% increase over year-end 2005. Unfunded credit commitments stood at $27.8 million at December 31, 2006, representing a decline of 14% over the prior year-end, which was due in part to a modest decline in forward commitments associated with residential and commercial real estate construction.
For the fourth quarter of 2006, the bank reported net income of $219 thousand, representing a 65% decrease, when compared to the $632 thousand of net income reported for the quarter ended December 31, 2005. This variance was due largely to the bank's income becoming fully taxable in the fourth quarter of 2006. During the fourth quarter of 2005, the bank enjoyed a tax benefit of $180,000 from pre-opening expenses and initial period losses. Those tax benefits were fully utilized by the end of the third quarter of 2006. As a result, the tax benefit of $180,000 reported in the fourth quarter of 2005 was replaced by a tax expense of $180,000 for the fourth quarter of 2006, a $360,000 difference between periods. This variance accounts for 87% of the $413,000 decline between periods. The bank also recognized stock option expense of $28,100 during the fourth quarter of 2006, compared to no stock option expense in the fourth quarter of 2005.
For the year ended December 31, 2006, the bank reported net income of $1.539 million, which represented a modest 6% decrease from the $1.638 million of net income reported for the year ended December 31, 2005. This modest decrease was achieved even with the bank becoming fully taxable in the fourth quarter of 2006, and notwithstanding the recognition of stock option expense of $113,000 in 2006, pursuant to the requirements of SFAS 123(r), Share-Based Payments, which became effective in 2006, compared to no stock option expense in 2005. Prior to 2006, the bank followed the intrinsic method of valuing stock options, which did not require the recording of stock option expense.
For the year ended December 31, 2006, net interest income totaled $6.8 million, representing an increase of $1.5 million, or 29%, over the year ended December 31, 2005. Interest income increased for 2006 by $2.8 million, or 48% over 2005, and was partially offset by an increase in interest expense of $1.3 million in 2006. Interest income increased primarily as a result of the growth in loans and an increase in interest rates. Interest expense increased due to the growth in deposits (predominantly interest-bearing) and the increase in interest rates on those deposits.
Earnings per basic share for the year ended December 31, 2006 were $1.26, compared to earnings per basic share of $1.35 reported for the year ended December 31, 2005.
"The bank enjoyed strong loan demand throughout 2006, as evidenced by the 42% increase in gross loans over year-end 2005," said Kerry Pendergast, President and CEO of the bank. "Further, our funding stream was represented by new relationships coming into the bank and was not purely transactional, which is consistent with the bank's long-term strategy and focus. Our bank is committed to developing and nurturing long-term relationships with our clients, which then provides the opportunity for further building our base through client referrals," Pendergast said in closing.
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 continue 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.
Financial Data - Premier Service Bank (Unaudited)
Quarter Ended
-------------------------------------------------
(In Thousands) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2006 2006 2006 2006 2005
-------------------- --------- --------- --------- --------- ---------
Interest income (not
taxable equivalent) $2,396 $2,303 $2,115 $1,934 $1,770
Interest expense 613 600 442 280 254
--------- --------- --------- --------- ---------
Net interest income 1,783 1,703 1,673 1,654 1,516
Provision for loan
losses 54 40 36 166 60
--------- --------- --------- --------- ---------
Net interest income
after provision for
loan losses 1,729 1,663 1,637 1,488 1,456
Non-interest income 153 167 137 135 123
Non-interest expense 1,483 1,457 1,365 1,375 1,127
--------- --------- --------- --------- ---------
Income before income
taxes 399 373 409 248 452
(Benefit)/Provision
for income taxes 180 (126) (75) (89) (180)
--------- --------- --------- --------- ---------
Net income $219 $499 $484 $337 $632
--------- --------- --------- --------- ---------
Quarter Ended
-------------------------------------------------
(In Thousands) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2006 2006 2006 2006 2005
-------------------- --------- --------- --------- --------- ---------
Per share:
Net income - basic $0.18 $0.41 $0.40 $0.28 $0.52
Weighted average
shares used in
basic 1,220 1,220 1,218 1,218 1,218
Book value at period
end $9.69 $9.48 $8.89 $8.53 $8.27
Ending shares 1,220 1,220 1,220 1,218 1,218
Balance Sheet - At
Period-End
Cash and due from
banks $7,998 $8,897 $9,534 $8,244 $8,074
Investments and Fed
fund sold 29,188 31,338 32,201 31,430 41,375
Gross Loans 95,785 94,540 86,886 81,971 67,486
Deferred fees (226) (262) (272) (242) (245)
Allowance for loan
losses (1,105) (1,051) (1,010) (975) (810)
Net Loans 94,454 93,227 85,604 80,754 66,431
Other assets 5,313 5,480 5,234 2,561 2,249
--------- --------- --------- --------- ---------
Total Assets $136,953 $138,942 $132,573 $122,989 $118,129
--------- --------- --------- --------- ---------
Non-interest-bearing
deposits $45,835 $48,132 $47,057 $47,065 $50,276
Interest-bearing
deposits 78,663 78,587 74,137 65,173 57,459
Other liabilities 635 660 535 363 328
Shareholders' equity 11,820 11,563 10,844 10,388 10,066
--------- --------- --------- --------- ---------
Total
Liabilities
and
Shareholders' $136,953 $138,942 $132,573 $122,989 $118,129
--------- --------- --------- --------- ---------
Asset Quality & Capital - At Period-End
Non-accrual loans $- $- $- $- $-
Loans past due 90
days or more 41 437 - - -
Other real estate
owned - - - - -
--------- --------- --------- --------- ---------
Total non-performing
assets $41 $437 $- $- $-
--------- --------- --------- --------- ---------
Allowance for losses
to loans, gross 1.2% 1.1% 1.2% 1.2% 1.2%
Non-accrual loans to
total loans, gross N/A N/A N/A N/A N/A
Non-performing asset
to total assets 0.0% 0.0% N/A N/A N/A
Total capital to
risk-adjusted
assets 12.2% 11.9% 12.2% 13.0% 14.3%
Tier one capital to
risk-adjusted
assets 11.1% 10.9% 11.1% 11.9% 13.2%
Equity to average
assets (leverage
ratio) 8.6% 8.7% 8.8% 9.0% 8.6%
Contact Information: Premier Service Bank Kerry L. Pendergast, President and CEO or F. Dean Fletcher, Executive Vice President and CFO 951-274-2400
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