SOURCE: Pacific Valley Bank

March 03, 2009 12:45 ET

Pacific Valley Bank Announces an Increase in Capital and Reports Its Unaudited Financial Results for the Year Ended December 31, 2008

SALINAS, CA--(Marketwire - March 3, 2009) - Pacific Valley Bank (OTCBB: PVBK) announced today the completion of a private placement of common stock that has raised $3,954,000 in new capital. The new shares have been purchased by directors and management of the Bank. "When the private placement was initially announced in November 2008, the goal was to raise $2,350,000. We are extremely pleased that the Bank has been able to exceed the original target for supplementing the capital of the Bank," said Ben Tinkey, President. "And we are delighted that our Board has demonstrated its commitment to our success through their increased investment in the Bank." With the initial tranche of the private placement completed in the fourth quarter of 2008, the Bank had total capital at December 31, 2008 of $18,203,000, which resulted in a Tier 1 Capital to Average Assets Ratio of 9.17% and Total Risk Based Capital to Risk Weighted Assets Ratio of 12.06%.

Pacific Valley Bank also released its unaudited financial results for the year ended December 31, 2008. The Bank reported total assets of $192,725,000 at December 31, 2008, an increase of $31,940,000 (19.9%) from year end 2007. Loans totaled $153,510,000 at December 31, 2008, an increase of $45,745,000 (42.4%) from year end 2007. The loan growth occurred primarily in the first half of the year as management chose to limit loan growth in the second half of the year in light of the broad economic slowdown. Deposits totaled $155,189,000 at December 31, 2008, an increase of $15,987,000 (11.5%) from year end 2007.

"We are grateful for the strong community support of Pacific Valley Bank which allowed us to achieve our target level of loans and continue to steadily build our deposit base through this challenging and difficult period for our local communities and the nation's economy," said Ben Tinkey.

The Bank incurred a net loss of $2,352,000 in 2008 as compared to a net loss of $2,499,000 for 2007. The per share loss for each of the two years was $1.21 and $1.30, respectively. The Bank made significant strides in 2008 to increase net interest income which increased $1,859,000 (39.6%) to total $6,554,000 for the year. Interest income increased $1,905,000 (21.6%) while interest expense only increased $47,000 (1.1%). Major contributors to the improvement in net interest income included the significant loan growth and the decrease in interest rates paid on deposits and other borrowings. The Bank allocated $1,847,000 for the provision for loan losses in 2008 versus $436,000 in 2007. The higher provision was necessary due to the loan growth, an increase in nonperforming loans from $241,000 at December 31, 2007 to $1,014,000 at December 31, 2008 and by the overall weakness in the economy. Noninterest expenses for 2008 totaled $7,282,000 compared to $6,829,000 for 2007, an increase of $453,000 (18.1%). Approximately, 79% of this increase was due to costs associated with the closing of the Hollister Branch and professional fees incurred in response to the issues identified by management and the Bank's regulators as outlined in the Order entered into last year with the California Department of Financial Institutions and the FDIC.

The Bank had a net loss of $1,254,000 in the fourth quarter of 2008 as compared to a loss of $495,000 in fourth quarter of 2007, an increase of $759,000. The loss per share for the respective periods was $0.64 and $0.26. The significant increase in the net loss for the fourth quarter 2008 was mostly due to recording a $900,000 allocation to the provision for loan losses, as compared to $150,000 in fourth quarter of 2007, and costs associated with the closing of the Hollister branch and professional fees incurred for the matters described above.

President Ben Tinkey added: "The Bank has made great strides in addressing the issues raised in the Order and we believe that we are in compliance with the Order. We have taken this opportunity to add to our management team, increase our Tier 1 capital, increase our allowances for future probable loan losses, craft a new three year strategic plan and improve our risk management processes among other initiatives."

About Pacific Valley Bank

Pacific Valley Bank is a California banking corporation that commenced operations on September 14, 2004. We offer our services from four locations: our headquarters office and Main Street office which are both located in Salinas, California, our office located in King City and our office located in Monterey. We provide a broad range of banking products and services, including credit and deposit services to our targeted client base of small and medium sized businesses, agriculture related businesses, non-profit organizations, professionals and individuals in Monterey County. For more information, visit www.pacificvalleybank.com.

Forward-Looking Statements

Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, loan production, competitive pressure in the banking industry, balance sheet management, net interest margin variations, the ability to control costs and expenses, changes in the interest rate environment and financial policies of the United States government and general economic conditions. The Bank disclaims any obligation to update any such factors.

Contact Information

  • David Warner
    CEO
    831-771-4323

    Ben Tinkey
    President
    831-771-4308