Pacific State Bancorp (Bancorp) is a bank holding company with one bank subsidiary, Pacific State Bank (the Bank), and two unconsolidated subsidiary grantor trusts, Pacific State Statutory Trusts II and III. The Bank conducts a general commercial banking business. The Bank offers the general banking services at all of its branches, which include commercial, construction, agricultural and real estate loans and personal credit lines, interest on checking, United States Savings bond services, domestic and foreign drafts, banking by appointment, automatic transfer of funds between savings and checking accounts, business courier services, checking and savings accounts for personal and business purposes, domestic letters of credit, a depository for MasterCard and Visa drafts, federal depository services, cash management assistance, wire and telephone transfers, Individual Retirement Accounts, time certificates of deposit, courier service for non-cash deposits and Visa and MasterCard.
1889 W. March Lane
Stockton, CA 95207
United States - Map
Highlight of Business Operations:
The 2009 first quarter net loss of $294,000 compares to net income of $1,094,000 for the first quarter of 2008. The decrease in income compared to the first quarter of 2008 reflects a provision for loan losses of $972,000, other real estate expense of $431,000, increased professional costs of $225,000 and a contraction in net interest margin.
The Company recorded a net loss of $294,000 for the three months ended March 31, 2009 compared to net income of $1,094,000 for the same period in 2008. The primary contributors to the decrease in net income for the three months ended March 31, 2009 were the (1) $594,000 decrease in net interest income, (2) increase in provision for loan losses of $762,000, (3) increase of other real estate expense of $431,000 and (4) increase in other expenses of $380,000 primarily related to legal costs of loan collection. These changes were partially offset by a decreased provision for income taxes of $863,000. The decrease in the provision for income taxes is primarily a result of decrease in taxable income. The Company recorded a basic loss per share of $0.08 for the three months ended March 31, 2009 from basic earnings per share of $0.30 for the same period in 2008. The Company recorded a diluted loss per share of $0.08 for the three months ended March 31, 2009 from diluted earnings per share of $0.27 for the same period in 2008.Total assets at March 31, 2009 were $400,710,000, a decrease of $20,743,000 or 5%, from the $421,453,000 at December 31, 2008. The contraction in assets was primarily in the Company s federal funds sold. Federal funds sold and cash and due from banks decreased $17,748,000 or 47% to $20,763,000 at March 31, 2009 from $38,511,000 at December 31, 2008. The decrease in federal funds sold and cash and due from banks was used to fund decreasing deposits of $20,197,000. The remainder of the balance sheet continued on a flat trend.The decreased net interest income performance is primarily the result of the Bank experiencing a contraction in its net interest margin. The contraction of the net interest margin is the result of an increased level of nonaccrual loans. Increased levels of nonaccrual loans have the effect of reducing loan yields over the time period. Increased levels of nonaccrual loans coupled with decreasing market rates charged on loan balances have caused the yields earned on the loan portfolio to decrease from 8.10% for the first three months of 2008 to 6.65% for the first three months of 2009. The yield earned on all interest earning assets in the first quarter of 2009 totaled 6.18% compared to 7.61% for the same time period in 2008. In addition to the decrease in yields earned on assets, total average earning assets decreased $21,477,000 to $364,157,000 for the first three months and 2009 from $385,634,000 for the same time period in 2008. The decrease in average earning assets occurred primarily in the loan portfolio where average balances decreased $15,228,000 or 4.7% to $306,195,000 in the first quarter of 2009 from $321,423,000 for the same time period in 2008.The decrease in interest income described above was offset by a decrease in the level of funding and rate paid for the funding of assets during the first quarter of 2009 compared to the same time period in 2008. The cost of funding in the first quarter of 2009 totaled 2.84% compared to 4.20% in the first quarter of 2008. The cost of funding decreased primarily because of decreased market rates paid for deposits and borrowings during the first quarter of 2009 compared to the same time period in 2008. In addition to decreased rates paid on deposits, the average balance on which interest was paid decreased by $6,523,000 to $317,643,000 for the first quarter of 2009 from $324,166,000 for the same period in 2008. The decrease was primarily attributable to a decrease of $12,116,000 in time deposits to $188,494,000 for the first quarter of 2009 from $200,610,000 for the same time period in 2008.
"STOCKTON - Pacific State Bank reported a fourth-quarter loss of $5.6 million, or $1.52 per diluted share, compared with net income of $513,000, or 13 cents per diluted share, in the last three months of 2007.
For all of 2008, the bank reported a loss of $5.2 million, or $1.40 per diluted share, compared with income of $4.5 million, or $1.14 a share, the year before. Diluted shares include all outstanding common stock as well as stock options and warrants, and convertible bonds and preferred shares.
Despite the losses, Pacific State officials said the bank remains well-capitalized with a total risk-based capital ratio of 11.5 percent for its parent, Pacific State Bancorp. In addition, the bank can tap nearly $81 million in borrowing lines from its correspondent banks, the Federal Home Loan Bank and the Federal Reserve discount window to maintain a strong liquidity position.
Several factors contributed to the bank's fourth-quarter loss, including a loan-loss provision of nearly $5.6 million, a $1.3 million loss of the sale of securities and the $2.4 million write-down of a trust preferred security. Those pretax losses were somewhat offset by $3.9 million in tax benefits related.
Bank officials said the securities loss involved a "private label mortgage-backed security" that fell below investment grade and was subsequently sold. The single-issue trust preferred security, originally booked at $2.5 million, was written down to $75,000 after the issuer stopped making interest payments. Terms allow payments to be deferred for up to five years.
Also affecting full-year results was the third-quarter charge against Fannie Mae and Freddie Mac preferred stock originally valued at approximately $7 million. The stock tumbled in value after the U.S. Treasury Department canceled dividends and the bank took a charge of nearly $6.5 million. It sold off those in the fourth quarter at an additional loss of $345,000.
The continuing economic downturn has affected the bank's asset base with it holding nonperforming loans totaling nearly $23.6 million, or 7.7 percent of gross loans, as of Dec. 31, compared with $432,000, or 0.14 percent of gross loans, one year earlier.
Bank managers believe that the loan-loss allowance of 1.96 percent of gross loans as of Dec. 31 is sufficient to provide for probable losses.
Total loans at year end, minus the loss allowance, totaled nearly $302 million, down from $308 million as of Dec. 31, 2007.
Shares of Pacific State Bancorp - its ticker symbol is PSBC - closed at $1.82 a share Friday on the Nasdaq market. That's well off the stock's 52-week high of $13.53 recorded March 31 and 10 cents above the year's low of $1.72, seen Thursday after the bank announced its fourth quarter and year-end results." The Stockton Record; Feb. 2009
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