SOURCE: California Oaks State Bank

California Oaks State Bank

February 22, 2009 22:55 ET

California Oaks State Bank Reports Year End Results

THOUSAND OAKS, CA--(Marketwire - February 22, 2009) - California Oaks State Bank (OTCBB: COSB), a community business bank with assets of $121.4 million, today reported a net loss for 2008 of $1,088,212 or $0.73 per diluted share, compared to income of $262,482 or $0.17 per diluted share in 2007.

Total assets ended 2008 at $121.4 million with loans and deposits at $107.6 million and $90.3 million respectively. Total assets by comparison from 2007 were $106.5 million with loans and deposits of $87.8 million and $76.8 million respectively. The growth totaled $19.8 million in loan growth and $13.5 million in deposit growth. During the fourth quarter of 2008, the Bank grew its loan portfolio from $105.1 million to $107.6 million. The growth in loans can be attributed to the increase in the commercial loan portfolio while we continue to see shrinking in the real estate and construction loan portfolios. There has been a concerted effort to reposition the portfolio from riskier construction lending to more typical commercial lending.

The Bank saw its net deposit base increase $13.5 million primarily in certificates of deposits while demand and other interest bearing deposits decreased over the last year. FHLB borrowings increased $2 million in 2008.

The Bank's net interest margin, as a percentage of total average assets for 2008, decreased 178 basis points to 4.89% versus 6.67% in 2007. The Bank's net interest income fell by $1,170,000 in 2008 as a result of a decrease in the prime lending rate of 400 basis points during the year.

The Bank allocated $1,648,000 to its loan loss reserves to accommodate the increased stress in the loan portfolio. During the fourth quarter the Bank saw an acceleration of past due loans based on continuing economic problems in the U.S. economy. One of the sectors facing increased stress is the construction industry. COSB has three construction loans remaining in its construction portfolio totaling $2.6 million. All three loans are on nonaccrual and are receiving extra management attention. John Nerland, COSB President & CEO, noted, "We are diligent about problem loan reports and making sure we are recognizing collateral values in this ever changing real estate market."

The Bank's capital ratios remain strong with Tier 1 risk based capital at 11.9%. The Bank remains highly capitalized as far as regulatory entities are concerned, with total risk based capital of 13.2%. In December 2007, the Board of Directors authorized a stock buyback of $500,000 of the Company's shares for the period of one year at the Bank's discretion. Due to the current economic situation, the Board has decided to conserve capital and not buyback shares. In December 2008, the Bank received preliminary approval for $3.3 million in TARP funding from the U.S. Treasury Capital Program and on January 23, 2009, the Bank received the TARP capital funding.

Nerland noted, "Over the past year the Bank has made numerous improvements and changes in the way we do business. We have downsized the number of employees of the Bank in an effort to become more efficient while increasing the asset size of the Bank. These two initiatives were not enough to counteract the dropping in rates and the deterioration of credit quality caused by the down turn in the economy. Overall our financial results for 2008 are below our expectations, but the underlying operations of the Bank and the capital that we maintain provide a solid foundation for which we will continue to grow."

Visit the California Oaks State Bank Web site at www.caloaks.com for more information

About California Oaks State Bank

California Oaks State Bank (OTCBB: COSB) with $122 million in assets is located in Ventura County with offices in Thousand Oaks and Simi Valley and a Loan Production Office located in Walnut Creek, Calif. California Oaks State Bank was founded in 1998 as a locally owned community business bank. The bank provides a full range of products and services including commercial and real estate loans as well as cash management products and deposit services. Its unique capability in diversified lending in addition to its customary community bank credit products help its customers meet their cash management goals.

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to the safe harbors created by the act. These forward-looking statements refer to the Company's current expectations regarding future operating results, and growth in loans, deposits, and assets. These forward looking statements are subject to certain risks and uncertainties that could cause the actual results, performance, or achievements to differ materially from those expressed, suggested, or implied by the forward looking statements. These risks and uncertainties include, but are not limited to (1) the impact of changes in interest rates, a decline in economic conditions, and increased competition by financial service providers on the Company's results of operation, (2) the Company's ability to continue its internal growth rate, (3) the Company's ability to build net interest spread, (4) the quality of the Company's earning assets, and (5) governmental regulations.

                              BALANCE SHEET
                    December 31, 2008   (Audited) (000)

                                          12/31/2008  12/31/2007
                                          ----------- -----------
ASSETS
Cash and Due from Banks                   $     4,517 $     4,833
Federal Funds Sold                              1,280       5,775
Investment Securities                           4,472       6,077
Loans (net)                                   105,251      86,677
Other Assets                                    5,847       3,160
                                          ----------- -----------
  Total Assets                            $   121,366 $   106,522
                                          =========== ===========

LIABILITIES & SHAREHOLDERS EQUITY
Demand Deposits                           $    29,983 $    34,155
Money Market and NOW Accounts                  22,876      26,391
Savings Accounts                                3,594       4,056
Time Deposits Under $100,000                   22,585       3,056
Time Deposits $100,000 and Over                11,274       9,170
                                          ----------- -----------
  Total Deposits                               90,312      76,828
FHLB Borrowings                                14,000      14,000
Other Liabilities                                 835         609
                                          ----------- -----------
  Total Liabilities                           107,147      91,437
Total Equity                                   14,219      15,085
                                          ----------- -----------
Total Liabilities and Equity              $   121,366 $   106,522
                                          =========== ===========




                         STATEMENT OF EARNINGS
                      December 31, 2008 (Audited)
                                (000)

                                          12/31/2008   12/31/2007
                                          ----------   ----------
Interest Income                           $    7,883   $    8,804
Interest Expense                               1,849        1,602
                                          ----------   ----------
Net Interest Income                            6,034        7,202

Provision for Loan Loss                        1,648          664
                                          ----------   ----------
Net Interest Income after Provision            4,386        6,538
Non Interest Income                              873          926
                                          ----------   ----------
Total Operating Income                         5,234        7,464

Total Non Interest Expense                     6,347        6,953
                                          ----------   ----------
Income (Loss) Before Income Taxes             (1,088)         511
Income Taxes                                       0          249
                                          ----------   ----------
Net Income (Loss)                         $   (1,088)  $      262
                                          ==========   ==========


RATIOS - Annualized                       12/31/2008   12/31/2007
                                          ----------   ----------
Earnings Per Share                       ($     0.73)  $     0.18
Earnings Per Share - Diluted             ($     0.73)  $     0.17
Book Value Per Share                      $     9.58   $    10.20
Return on Assets                               (0.88%)       0.24%
Return on Equity                               (7.24%)       1.78%

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