Premier Service Bank Announces Earnings for the Quarter and Year Ended December 31, 2012

Premier Service Bank Announces Earnings for the Quarter and Year Ended December 31, 2012

RIVERSIDE, Calif.--(BUSINESS WIRE)-- Premier Service Bank, Riverside, California (OTCBB:PSBK), today announced its unaudited financial results for the quarter and year ended December 31, 2012.

For the year ended December 31, 2012, the Bank reported a net income of $152 thousand, or $0.09 per diluted share, compared to a net loss of $2.19 million, or ($1.77) per diluted share for the year ended December 31, 2011. The net income for the fourth quarter of 2012 was $347 thousand, or $0.27 per diluted share, compared to a net loss of $820 thousand, or ($0.66) per diluted share for the fourth quarter of 2011. The variance in earnings between the respective periods is primarily attributed to the provisions to the Bank's allowance for loan losses, which, for the year ended December 31, 2012, totaled $225 thousand, compared to $2.79 million for the year ended December 31, 2011. No provision to the allowance for loan losses was provided for the fourth quarter of 2012, compared to $910 thousand for the same period in 2011.


At December 31, 2012, the Bank had $3.49 million of non-performing loans, representing 4.20% of the Bank's total loans, compared to $8.93 million of non-performing loans, or 8.61% of total loans, at December 31, 2011. Impairment analyses are performed on the Bank's non-performing loans and impairment adjustments, if any, are written off and/or fully reserved when appropriate as a part of this process. The Bank had foreclosed real estate of $2.60 million at December 31, 2012, compared to foreclosed real estate of $2.93 million at December 31, 2011. All non-performing loans were on non-accrual at December 31, 2012 and 2011. The allowance for loan losses totaled $2.73 million at December 31, 2012, or 3.29% of total loans as of that date, compared to $2.36 million at December 31, 2011, or 2.28% of total loans as of that date.

At December 31, 2012, the Bank had total assets of $132 million, representing a decrease of $9.2 million or 6.54% compared to total assets of $141 million at December 31, 2011. Total deposits at December 31, 2012 were $109.3 million, representing a 2.22% reduction compared to total deposits of $111.8 million at December 31, 2011. Non-interest bearing demand deposits totaled $38.7 million at December 31, 2012, representing 35.4% of total deposits at that date, compared to $41.1 million of non-interest bearing demand deposits at December 31, 2011, which represented 36.8% of total deposits at that date.

The Bank's gross loan portfolio totaled $82.9 million at December 31, 2012, representing a 20.0% decrease compared to gross loans of $103.7 million at December 31, 2011. Unfunded credit commitments stood at $7.7 million at December 31, 2012, representing a 1.3% increase when compared to unfunded commitments of $7.6 million at December 31, 2011.

The Bank's net interest margin for the year ended December 31, 2012 was 4.63%, a decrease of 0.19% compared to the net interest margin of 4.82% for the year ended December 31, 2011. The Bank's net interest margin for the quarter ended December 31, 2012 was 4.33%, a decrease of 0.33% compared to the net interest margin of 4.64% for the fourth quarter of 2011.

Total shareholders' equity at December 31, 2012 was $10.8 million, representing an increase of $115 thousand, or 1.08%, compared to total shareholders' equity of $10.7 million at December 31, 2011. On December 1, 2010, the Bank entered into a Consent Order with the Federal Deposit Insurance Corporation and the California Department of Financial Institutions. Among the provisions of the Consent Order is the requirement that within 90 days from the effective date of the Order (by February 28, 2011), the Bank shall increase and thereafter maintain its Tier I capital in such an amount to ensure that the Bank's leverage ratio equals or exceeds 9.50 percent and its total risk-based capital ratio equals or exceeds 12 percent. The Bank was not in compliance with this requirement as of February 28, 2011 as required by the Consent Order. As of December 31, 2012, these capital ratios were 7.69% and 13.42%, respectively. As a result, the Bank was not in compliance, as of December 31, 2012, with the leverage capital ratio, but was in compliance with the total risk based capital ratio requirement as of that date. Although not in full compliance with the capital ratios required by the Consent Order as of December 31, 2012, the Bank was adequately capitalized as of that date under applicable regulatory guidelines.

The Bank attempted to comply with the capital requirements of the Order during 2011 with a capital offering that was not successful. During 2012, the Bank directed its efforts to a merger transaction to satisfy its capital requirements. On February 27, 2012, the Bank entered into an Agreement and Plan of Merger (the "Merger Agreement") with First California Bank, a state chartered commercial bank ("FCB"), and its holding company, First California Financial Group, Inc. ("FCAL") (NAS: FCAL) , pursuant to which the Bank was to merge into FCB (the "Merger"). On January 30, 2013, FCB, FCAL and the Bank issued a joint press release announcing that they have jointly agreed to terminate the Merger Agreement and the proposed Merger, effective January 30, 2013.

Now that it has been determined that the Merger is not going forward, in order to comply with the capital requirements of the Consent Order, the Bank will need to complete a new capital offering or find another solution which improves its capital ratios, such as finding a new merger partner, arranging for the possible sale of the Bank or a transfer of control of the Bank, or taking steps to decrease the asset size of the Bank until the ratios are in compliance with the Consent Order. The Bank presently intends to commence a common stock offering, subject to regulatory approval, by the end of the first quarter of 2013 to effect compliance with the capital ratios. The Bank believes that its improved condition in 2012 compared to 2011 will allow the Bank to raise sufficient capital to resolve the requirements of the Consent Order.

The Bank's President and Chief Executive Officer, Kerry L. Pendergast, stated, "We continue to be encouraged with the progress the Bank has made throughout the 2012 calendar year, which has included posting strong fourth quarter earnings, as well as reporting our first year-end profit since December 2007. As we have previously reported, improving delinquency trends, along with a continuing decline in the level of non-performing loans, have allowed the Bank to significantly decrease its provisions to its loan loss reserve over the last four quarters. For the quarter ended December 31, 2012 the Bank made no provision to the reserve, as compared to provision expense of $910 thousand for the same period in 2011. Year to date provision expenses totaled $225 thousand, as compared to provision expenses totaling $2.79 million for the same 12-month period ended December 31, 2011. I would like to note that despite the reduction in the Bank's provision to its reserve in 2012, the amount of the reserve increased 1.01%, from 2.28% to 3.29% of total loans, from December 31, 2011 to December 31, 2012. It is also important to note that the Bank believes the reserve amount reported at December 31, 2012 reflects a surplus of $941 thousand based on the Bank's analysis of its reserve requirements of that date."

Pendergast went on to say, "The Bank has made steady progress in reducing the level of non-performing loans and believes that an improving local economy has been central to those efforts. For the fourth quarter and year ended December 31, 2012, non-performing loans represented 4.20% of the Bank's total loans, as compared to 8.61% as of December 31, 2011. Clearly, further improvement in the current level of non-performing loans is needed, but the Bank's success in reducing these problem credits throughout 2012 reflects the hard work and extraordinary commitment of our team!"

Pendergast said in closing, "I'm very encouraged with our year-end results, which not only include a return to profitability, but also reflect improvement in all of the Bank's key operating ratios. While recognizing that more improvement is necessary, the Bank is encouraged by the signs of improvement in the local economy, which will result in improved collection efforts by the Bank. The improving local economy is welcome news for our clients who are dependent upon and part of the local economy. The improving conditions in their businesses, professional practices and investments mean increased profitability and further strengthening of the Bank."

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 manage other risks presented from time to time for all banks. 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.

See the unaudited Financial Data:

Financial Data - Premier Service Bank

(Unaudited)

Quarter Ended

(In Thousands)

Dec. 31, 2012

Sept 30, 2012

June 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Interest income (not taxable equivalent)

$

1,531

$

1,622

$

1,675

$

1,768

$

1,750

Interest expense

142

185

197

208

222

Net interest income

1,389

1,437

1,478

1,560

1,528

Provision for loan losses

-

-

-

225

910

Net interest income after provision for loan losses

1,389

1,437

1,478

1,335

618

Non-interest income

178

163

154

174

129

Non-interest expense

1,220

1,439

1,797

1,699

1,566

Income before income taxes

347

161

(165

)

(190

)

(819

)

(Benefit)/Provision for income taxes

-

-

1

-

1

Net income

$

347

$

161

$

(166

)

$

(190

)

$

(820

)

Quarter Ended

(In Thousands)

Dec. 31, 2012

Sept 30, 2012

June 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Per share:

Net income - basic

$

0.27

$

0.12

$

(0.14

)

$

(0.16

)

$

(0.66

)

Weighted average shares used in basic

1,261

1,261

1,261

1,261

1,261

Net income - diluted

$

0.27

$

0.12

$

(0.14

)

$

(0.16

)

$

(0.66

)

Weighted average shares used in diluted

1,261

1,261

1,261

1,261

1,261

Book value at period end

$

5.27

$

5.01

$

4.90

$

5.05

$

5.22

Ending shares

1,261

1,261

1,261

1,261

1,261

Balance Sheet - At Period-End

Cash and due from banks

$

40,023

$

37,414

$

28,600

$

25,021

$

22,867

Investments and Fed fund sold

4,046

6,727

6,935

9,272

8,446

Gross Loans

82,945

89,669

96,082

99,041

103,668

Deferred fees

(134

)

(144

)

(181

)

(195

)

(198

)

Allowance for loan losses

(2,733

)

(2,891

)

(2,907

)

(2,748

)

(2,359

)

Net Loans

80,078

86,634

92,994

96,098

101,111

Other assets

7,874

7,627

8,640

8,592

8,832

Total Assets

$

132,021

$

138,402

$

137,169

$

138,983

$

141,256

Non-interest-bearing deposits

$

38,702

$

44,711

$

42,382

$

44,245

$

41,130

Interest-bearing deposits

70,576

71,214

67,589

67,420

70,629

Other liabilities

11,943

12,013

16,890

16,827

18,812

Shareholders' equity

10,800

10,464

10,308

10,491

10,685

Total Liabilities and Shareholders' equity

$

132,021

$

138,402

$

137,169

$

138,983

$

141,256

Asset Quality & Capital - At Period-End

Non-accrual loans

$

3,485

$

5,314

$

5,472

$

5,476

$

8,926

Loans past due 90 days or more

-

-

-

-

-

Other real estate owned

2,595

2,223

3,189

2,974

2,927

Other bank owned assets

-

-

-

-

-

Total non-performing assets

$

6,080

$

7,537

$

8,661

$

8,450

$

11,853

Allowance for losses to loans, gross

3.29

%

3.22

%

3.03

%

2.77

%

2.28

%

Non-accrual loans to total loans, gross

4.20

%

5.93

%

5.70

%

5.53

%

8.61

%

Non-performing loans to total loans, gross

4.20

%

5.93

%

5.70

%

5.53

%

8.61

%

Non-performing asset to total assets

4.61

%

5.45

%

6.31

%

6.08

%

8.39

%

Allowance for losses to non-performing loans

78.42

%

54.40

%

53.13

%

50.18

%

26.43

%

Total risk-based capital ratio

13.42

%

12.15

%

11.27

%

11.09

%

10.78

%

Tier 1 risk-based capital ratio

12.15

%

10.88

%

10.00

%

9.82

%

9.52

%

Tier 1 leverage ratio

7.69

%

7.48

%

7.39

%

7.42

%

7.21

%



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

KEYWORDS: United States North America California

INDUSTRY KEYWORDS:

The article Premier Service Bank Announces Earnings for the Quarter and Year Ended December 31, 2012 originally appeared on Fool.com.

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