Premiere Service Bank (fka PSBK)

[Enterprising Investor]

PSBK Announces Financial Results for the Third Quarter of 2012 (10/29/12)

RIVERSIDE, Calif.--(BUSINESS WIRE)--

Premier Service Bank, Riverside, California (PSBK) today announced its unaudited financial results for the third quarter of 2012.

For the quarter ended September 30, 2012, the bank reported net income of $161 thousand, or 0.12 per diluted share, compared to a net loss of $141 thousand, or <$0.12> per diluted share for the quarter ended September 30, 2011. The improvement in earnings between the respective periods is primarily attributed to the decrease in the provision for loan losses, partially offset by the decrease in net interest income as a result of the lower amount of total loans. There was no provision to the allowance for loan losses for the third quarter of 2012, due to the recovery of prior charge-offs and the decrease in the loan portfolio, compared to a provision of $275 thousand for the same period in 2011.

At September 30, 2012, the Bank had $5.3 million of non-performing loans, representing 5.93% of the Bank’s total loans, compared to $9.6 million of non-performing loans, or 8.76% of total loans, at September 30, 2011. The Bank had foreclosed real estate of $2.2 million at September 30, 2012, compared to foreclosed real estate of $3.2 million at September 30, 2011. At September 30, 2012, non-accrual loans totaled $5.3 million, representing 5.93% of total loans at that date, compared to non-accrual loans of $9.6 million at September 30, 2011, representing 8.76% of total loans at that date. The allowance for loan losses totaled $2.9 million at September 30, 2012, or 3.22% of total loans as of that date, compared to $3.1 million at September 30, 2011, or 2.86% of total loans as of that date.

At September 30, 2012, the Bank had total assets of $138 million, representing a decrease of $6.7 million or 4.61% compared to total assets of $145.1 million at September 30, 2011. The Bank had $11 million in FHLB borrowings at September 30, 2012, representing a decrease of $9 million or 45% from FHLB borrowings of $20 million at September 30, 2011. Total deposits at September 30, 2012 were $115.9 million, representing an increase of 2.82% compared to total deposits of $112.7 million at September 30, 2011. Non-interest bearing demand deposits totaled $44.7 million at September 30, 2012, representing 38.57% of total deposits at that date, compared to $43.2 million of non-interest bearing demand deposits at September 30, 2011, which represented 38.36% of total deposits at that date.

The Bank’s gross loan portfolio decreased to $89.7 million at September 30, 2012, representing an 18.06% decrease compared to gross loans of $109.4 million at September 30, 2011. Unfunded credit commitments stood at $7.8 million at September 30, 2012, representing a 25% decrease compared to unfunded commitments of $10.4 million at September 30, 2011.

The Bank’s net interest margin for the quarter ended September 30, 2012 was 4.56%, a decrease of 38 basis points as compared to the net interest margin of 4.94% for the third quarter of 2011.

Total shareholders’ equity at September 30, 2012 was $10.5 million, representing a decrease of $1 million, or 9.18% compared to total shareholders’ equity of $11.5 million at September 30, 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. The Consent Order requires the Bank, within 90 days from the effective date of the Order (by February 28, 2011), to 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% and its total risk-based capital ratio equals or exceeds 12%. As of September 30, 2012, these capital ratios were 7.48% and 12.15%, respectively. As a result, the Bank was not in compliance, as of September 30, 2012, with the leverage capital ratio required by the Consent Order. Although the Bank was not in compliance with the leverage capital requirement of the Consent Order as of September 30, 2012, the Bank was in compliance with the total risk-based capital ratio as of that date and was adequately capitalized as of that date under applicable regulatory guidelines.

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. Nasdaq: (FCAL) (“FCAL”), pursuant to which the Bank will merge into FCB (the “Merger”). The transaction is subject to regulatory and shareholder approvals and customary closing conditions. If the Merger closes as anticipated, the Bank’s capital issues will be resolved. If the Merger does not proceed for any reason, 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’s President and Chief Executive Officer, Kerry L. Pendergast, stated, “We are encouraged with the financial results for the third quarter of this year, which included a return to profitability, with net income of $161 thousand reported for the quarter. This is a continuation of the improving trends that the Bank has been reporting for the first and second quarters of 2012 and is largely driven by improving delinquency trends, a decline in non-performing loans, and a significant decline in provisions to the loan loss reserve. For the quarter ended September 30, 2012 the Bank made no provision to the reserve, as compared to provision expense of $275 thousand for the same period in 2011. Year to date provision expenses totaled $225 thousand, as compared to provision expenses totaling $1.88 million for the same nine-month period ended September 30, 2011.

Pendergast went on to say, “The Bank believes its allowance for loan losses as of September 30, 2012 provides more than adequate protection for any future losses, with a reserve totaling $2.9 million or 3.22% of total loans as of that date. The reserve amount as of September 30, 2012 reflects a surplus of $902 thousand based on the Bank’s analysis of its reserve requirements as of that date. Our surplus is a reflection of the Bank’s success in reducing the overall level of non-performing credits and is also a reflection of the Bank’s collection efforts, which have produced $481 thousand in recoveries during the nine-month period ended September 30, 2012.

Pendergast said in closing, “In addition to the Bank’s strong collection efforts, Management is actively engaged in the oversight and disposition of foreclosed real estate. Within the third quarter the Bank was able to dispose of $938 thousand in bank-owned property and executed sales contracts for the disposition of another $329 thousand of bank-owned property which we expect to close during the fourth quarter of 2012. Investor interest in the Inland Empire real estate market has improved and we have stepped up our marketing activities to take advantage of the renewed interest in both raw land and commercial real estate. We are clearly focused on disposing of bank-owned properties as efficiently and effectively as possible.”

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 the following: Premier Service Bank cannot predict with any degree of certainty its ability to increase its assets, deposits and total loans, control expenses, retain critical personnel, manage interest rate risk, manage technological changes, and address regulatory requirements. The Bank is also unable to predict whether or when the pending Merger described above will close. In addition, such forward-looking 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 for the year ended December 31, 2011 and its quarterly report on Form 10-Q for the quarter ended March 31, 2012, as filed by Premier Service Bank with the FDIC. On May 7, 2012, the Bank filed a Form 15, Certification and Notice of Termination of Registration under Section 12(g) of the Securities Exchange Act of 1934, with the FDIC. As a result of that filing, the Bank's reporting obligations under Section 12(a) of the Exchange Act were immediately suspended, making it no longer necessary to file forms such as Forms 10-K, 10-Q, or 8-K after May 7, 2012. The last form filed by the Bank with the FDIC was its quarterly report on Form 10-Q for the quarter ended March 31, 2012.

http://www.premierservicebank.com/corp/press/press_release_102912.html