Premiere Service Bank (fka PSBK)

[Enterprising Investor]

Premier Service Bank Announces Financial Results for the First Quarter of 2013 (4/18/13)

RIVERSIDE, Calif.--(BUSINESS WIRE)--Premier Service Bank, Riverside, California (OTCBB:PSBK), today announced its unaudited financial results for the first quarter of 2013.

For the quarter ended March 31, 2013, the bank reported net income of $347 thousand, or $0.27 per diluted share, compared to net loss of $190 thousand, or <$0.16> per diluted share for the quarter ended March 31, 2012. The improvement in earnings between the respective periods is attributed to the decrease in the provision for loan losses and the non-recurring noninterest income that was received during the first quarter of 2013. There was no additional provision to the allowance for loan losses required for the first quarter of 2013, compared to $225 thousand for the same period in 2012.

At March 31, 2013, the Bank had $3.4 million of non-performing loans, representing 4.58% of the Bank’s total loans, compared to $5.5 million of non-performing loans, or 5.53% of total loans, at March 31, 2012. The Bank had foreclosed real estate of $1.2 million at March 31, 2013, compared to foreclosed real estate of $3.0 million at March 31, 2012. At March 31, 2013, non-accrual loans totaled $3.4 million, representing 4.58% of total loans at that date, compared to non-accrual loans of $5.5 million at March 31, 2012, representing 5.53% of total loans at that date. The allowance for loan losses totaled $2.5 million at March 31, 2013, or 3.38% of total loans as of that date, compared to $2.75 million at March 31, 2012, or 2.77% of total loans as of that date.

At March 31, 2013, the Bank had total assets of $131 million, representing a decrease of $7.6 million or 5.48% compared to total assets of $139 million at March 31, 2012. The Bank had $11 million in FHLB borrowings at March 31, 2013, representing a decrease of $5 million or 31.25% from the FHLB borrowings of $16 million at March 31, 2012. Total deposits at March 31, 2013 were $108.3 million, representing a decrease of 3.02% compared to total deposits of $111.7 million at March 31, 2012. Non-interest bearing demand deposits totaled $40.3 million at March 31, 2013, representing 37.18% of total deposits at that date, compared to $44.2 million of non-interest bearing demand deposits at March 31, 2012, which represented 39.62% of total deposits at that date.

The Bank’s gross loan portfolio decreased to $73.9 million at March 31, 2013, representing a 25.34% decrease compared to gross loans of $99 million at March 31, 2012. Unfunded credit commitments stood at $7 million at March 31, 2013, representing a 6.67% decrease compared to unfunded commitments of $7.5 million at March 31, 2012.

The Bank’s net interest margin for the quarter ended March 31, 2013 was 4.13%, a decrease of 81 basis points as compared to the net interest margin of 4.94% for the first quarter of 2012.

Total shareholders’ equity at March 31, 2013 was $11.1 million, representing an increase of $650 thousand, or 6.2% compared to total shareholders’ equity of $10.5 million at March 31, 2012. 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 March 31, 2013, these capital ratios were 8.4% and 15.35%, respectively. As a result, the Bank was not in compliance, as of March 31, 2013, 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 March 31, 2013, 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”) (Nasdaq: 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 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 second quarter of 2013 to effect compliance with the capital ratios. The Bank believes that its improved condition over the last two quarters of 2012 and the first quarter of 2013, 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, “The positive trends exhibited and commented on in the fourth quarter of 2012 extended into the first quarter of 2013. For the first quarter of 2013, there was no provision expense to the Bank’s allowance for loan losses, as compared to the $225 thousand provision expense required for the same period in 2012; this represented the fourth quarter in a row where there was no required provision expense. Notwithstanding the significant reduction in the provision expense, when compared to the quarter ended March 31, 2012, the Bank’s allowance for loan losses totaled $2.5 million at March 31, 2013 or 3.38% of total loans as of that date, compared to $2.75 million at March 31, 2012 or 2.77% of total loans as of that date.”

Pendergast went on to say, “We have continued to make meaningful progress in disposing of real estate acquired through foreclosure; we closed the quarter ended March 31, 2013 with $1.2 million of OREO, as compared to $2.6 million at the quarter and year-ended December 31, 2012. We are continuing to make incremental progress on reducing the level of non-performing loans, reporting non-performing loans of $3.4 million or 4.58% of total loans at March 31, 2013, as compared to non-performing loans of $5.5 million or 5.53% of total loans at March 31, 2012. We believe that our strategy of working with our borrowers through what has admittedly been a very difficult period in our national, state and regional economies has been the right thing to do. The outlook for an improving regional economy has signaled improving trends for our individual business owners and has served to further strengthen our customer relationships.”

Pendergast said in closing, “We continue to see improvement in the local economy, with the improving business outlook and climate having a direct impact on our business clients and ultimately on the Bank’s overall performance. Working to ensure that the Bank continues to build on the quarter-over-quarter progress that has been reported is our number one objective moving into the second quarter of 2013.”

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.

http://www.businesswire.com/news/home/20130418006498/en/Premier-Service-Bank-Announces-Financial-Results-Quarter