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Premier Service Bank Announces Financial Results for the Third Quarter of 2013



  Premier Service Bank Announces Financial Results for the Third Quarter of
  2013

Business Wire

RIVERSIDE, Calif. -- November 13, 2013

Premier Service Bank (OTCBB:PSBK) today announced its unaudited financial
results for the third quarter of 2013.

For the quarter ended September 30, 2013, the Bank reported net loss of $212
thousand, or <$0.18> per diluted share, compared to net income of $161
thousand, or $0.12 per diluted share, for the quarter ended September 30,
2012. The decrease in earnings between the respective periods is attributed to
the decrease in the net interest income due to the decrease in the net loan
portfolio. There was no additional provision to the allowance for loan losses
required for the third quarter of 2013 and for the same period in 2012.

At September 30, 2013, the Bank had $5.5 million of non-performing loans,
representing 8.29% of the Bank’s total loans, compared to $5.3 million of
non-performing loans, or 5.93% of total loans, at September 30, 2012. The Bank
had foreclosed real estate of $539 thousand at September 30, 2013, compared to
foreclosed real estate of $2.2 million at September 30, 2012. At September 30,
2013, non-accrual loans totaled $5.5 million, representing 8.29% of total
loans at that date, compared to non-accrual loans of $5.3 million at September
30, 2012, representing 5.93% of total loans at that date. The allowance for
loan losses totaled $2.4 million at September 30, 2013, or 3.70% of total
loans as of that date, compared to $2.9 million at September 30, 2012, or
3.22% of total loans as of that date.

At September 30, 2013, the Bank had total assets of $128 million, representing
a decrease of $10 million, or 7.20%, compared to total assets of $138 million
at September 30, 2012. The Bank had $2 million in FHLB borrowings at September
30, 2013, representing a decrease of nine million, or 81.8%, from the FHLB
borrowings of $11 million at September 30, 2012. Total deposits at September
30, 2013 were $114.8 million, representing a decrease of 0.99% compared to
total deposits of $115.9 million at September 30, 2012. Non-interest bearing
demand deposits totaled $45.7 million at September 30, 2013, representing
39.81% of total deposits at that date, compared to $44.7 million of
non-interest bearing demand deposits at September 30, 2012, which represented
38.57% of total deposits at that date.

The Bank’s gross loan portfolio decreased to $65.7 million at September 30,
2013, representing a 26.70% decrease compared to gross loans of $89.7 million
at September 30, 2012. Unfunded credit commitments stood at $7.8 million at
September 30, 2013, representing the same level when compared to unfunded
commitments of $7.8 million at September 30, 2012.

The Bank’s net interest margin for the quarter ended September 30, 2013 was
3.50%, a decrease of 111 basis points as compared to the net interest margin
of 4.61% for the third quarter of 2012.

Total shareholders’ equity at September 30, 2013 was $10.7 million,
representing an increase of $261 thousand, or 2.49%, compared to total
shareholders’ equity of $10.5 million at September 30, 2012. On December 1,
2010, the Bank entered into a Consent Order with the Federal Deposit Insurance
Corporation and the predecessor to the Bank’s current California regulator,
the California Department of Business Oversight (the “DBO”). 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, 2013, these capital ratios were 8.35% and 16.15%, respectively.
As a result, the Bank was not in compliance, as of September 30, 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 September 30,
2013, the Bank was adequately capitalized as of that date under applicable
regulatory guidelines.

On November 4, 2013, the Bank entered into a Plan and Agreement of Merger with
Independence Bank (“Independence”), Newport Beach, California (the “Merger
Agreement”), pursuant to which Independence will acquire the Bank. It is
anticipated that the transaction will close during the first or second quarter
of 2014, and assuming it does close at that time, the Bank’s capital
requirements will be resolved under its Consent Order. The transaction has
been approved unanimously by the boards of directors of Independence and the
Bank, and remains subject to approval by the shareholders of Independence and
the Bank, bank regulatory agencies, and other customary conditions of closing.

Under the terms of the Merger Agreement, the Bank’s shareholders will receive
per share consideration of $6.85, or $8.6 million in aggregate. The Bank’s
shareholders will have the option of exchanging each share for either cash or
Independence common stock, subject to an overall consideration mix of 55% cash
and 45% Independence common stock. Independence Bank plans to list its stock
on the Over-the-Counter Bulletin Board after closing of the transaction.

Upon the closing of the transaction, it is presently anticipated that Kerry
Pendergast, Premier’s President and CEO, and Ken Stream, Premier’s Chairman,
will join the Board of Directors of Independence, and Mr. Pendergast will
serve as Regional President of Independence.

The Bank’s President and Chief Executive Officer, Kerry L. Pendergast, stated,
“I am confident that the transaction with Independence will provide the Bank
with the balance sheet strength and product platform that will allow us to
continue to improve service to our customers and to add new customers. Until
the transaction closes, we will continue to operate the Bank to provide the
best possible service to our customers, and will work with Independence to
prepare for the combination of the two banks.”

Mr. Pendergast continued, “While we are excited about the pending merger with
Independence, we are continuing our efforts to strengthen the Bank until the
transaction closes. This was the sixth consecutive quarter during which the
Bank was not required to make any provision expense to its Allowance for loan
losses. Based on management’s analysis as of September 30, 2013, the Bank
concluded not only that a provision to the Allowance was not required, but
that, as of that date, the Bank had a reserve surplus of $1.4 million. As
stated above in this release, the Bank’s Allowance for loan losses, as a
percentage of total loans, was 3.70% as of September 30, 2013, compared to
3.22% of total loans as of September 30, 2012. Trends within the Bank’s
lending portfolio continue to be improving, which is representative of the
improving outlook for the local, regional and State economy.”

Pendergast went on to say, “The reserve surplus not only provides an
additional cushion for unforeseen issues that might surface within the
portfolio, but it is also available to support loan growth as the Bank
intensifies its business development efforts and focuses on building a strong
loan pipeline. Our marketing and business development efforts continue to be
focused on capturing new lending and banking relationships from individuals
and companies who are looking to establish ‘personal banking’ relationships
with a local community bank.”

Pendergast said in closing, “We are continuing to have success in disposing of
real estate that we acquired through foreclosure. We closed the quarter ended
September 30, 2013 with $539 thousand of OREO, as compared to $946 thousand
and $2.2 million at the quarters ended June 30, 2013 and September 30, 2012,
respectively. As of the date of this release, the Bank had entered into escrow
to dispose of the remaining Bank Owned property; it is anticipated that the
escrow will close during the fourth quarter of 2013. While the level of
non-performing loans remained relatively unchanged at the end of the third
quarter of 2013, we expect that this trend will reverse itself and become more
favorable in the fourth quarter of this year as a result of anticipated
payoffs.”

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 in the following: Premier Service
Bank’s ability to close the merger transaction with Independence Bank as
anticipated, the Bank’s ability to increase its assets, deposits and total
loans, control expenses, retain critical personnel, manage interest rate risk,
manage technological changes, address regulatory requirements, and other
risks. In addition, such 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.

                                                                                          
Financial Data - Premier Service Bank
(Unaudited)
                                                                                            
                           Quarter Ended
(In Thousands)             Sept. 30,       June 30,        Mar. 31,        Dec. 31,        Sept. 30,
                           2013            2013            2013            2012            2012
                                                                                            
Interest income(not        $ 1,139         $ 1,167         $ 1,347         $ 1,531         $ 1,622
taxable equivalent)
Interest expense             100             109             126             142             185      
Net interest income          1,039           1,058           1,221           1,389           1,437
Provision for loan           -               -               -               -               -        
losses
Net interest income
after provision for          1,039           1,058           1,221           1,389           1,437
loan losses
Non-interest income          130             126             442             178             163
Non-interest expense         1,381           1,206           1,316           1,220           1,439    
Income before income         (212    )       (22     )       347             347             161
taxes
(Benefit)/Provision          -               1               -               -               -        
for income taxes
Net income                 $ (212    )     $ (23     )     $ 347           $ 347           $ 161      
                                                                                            
                                                                                            
                           Quarter Ended
(In Thousands)             Sept. 30,       June 30,        Mar. 31,        Dec. 31,        Sept. 30,
                           2013            2013            2013            2012            2012
Per share:
Net income - basic         $ (0.18   )     $ (0.03   )     $ 0.27          $ 0.27          $ 0.12
Weighted average             1,261           1,261           1,261           1,261           1,261
shares used in basic
Net income - diluted       $ (0.18   )     $ (0.03   )     $ 0.27          $ 0.27          $ 0.12
Weighted average
shares used in               1,261           1,261           1,261           1,261           1,261
diluted
Book value at period       $ 5.19          $ 5.46          $ 5.53          $ 5.27          $ 5.01
end
Ending shares                1,261           1,261           1,261           1,261           1,261
                                                                                            
Balance Sheet - At
Period-End
Cash and due from          $ 41,893        $ 45,276        $ 47,568        $ 40,023        $ 37,414
banks
Investments and Fed          17,652          12,137          5,884           4,046           6,727
fund sold
Gross Loans                  65,731          68,042          73,940          82,945          89,669
Deferred fees                (131    )       (130    )       (122    )       (134    )       (144    )
Allowance for loan           (2,432  )       (2,525  )       (2,502  )       (2,733  )       (2,891  )
losses
Net Loans                    63,168          65,387          71,316          80,078          86,634
Other assets                 5,725           6,187           6,603           7,874           7,627    
Total Assets               $ 128,438       $ 128,987       $ 131,371       $ 132,021       $ 138,402  
                                                                                            
Non-interest-bearing       $ 45,691        $ 42,560        $ 40,260        $ 38,702        $ 44,711
deposits
Interest-bearing             69,089          68,328          68,038          70,576          71,214
deposits
Other liabilities            2,933           7,044           11,932          11,943          12,013
Shareholders' equity         10,725          11,055          11,141          10,800          10,464   
                                                                                            
Total Liabilities
and Shareholders'          $ 128,438       $ 128,987       $ 131,371       $ 132,021       $ 138,402  
equity
                                                                                            
Asset Quality &
Capital - At
Period-End
Non-accrual loans          $ 5,450         $ 5,476         $ 3,386         $ 3,485         $ 5,314
Loans past due 90            -               -               -               -               -
days or more
Other real estate            539             946             1,233           2,595           2,223
owned
Other bank owned             -               -               -               -               -        
assets
Total non-performing       $ 5,989         $ 6,422         $ 4,619         $ 6,080         $ 7,537    
assets
                                                                                            
Allowance for losses         3.70    %       3.71    %       3.38    %       3.29    %       3.22    %
to loans, gross
Non-accrual loans to         8.29    %       8.05    %       4.58    %       4.20    %       5.93    %
total loans, gross
Non-performing loans
to total loans,              8.29    %       8.05    %       4.58    %       4.20    %       5.93    %
gross
Non-performing asset         4.66    %       4.98    %       3.52    %       4.61    %       5.45    %
to total assets
Allowance for losses
to non-performing            44.62   %       46.11   %       73.89   %       78.42   %       54.40   %
loans
                                                                                            
Total risk-based             16.15   %       16.33   %       15.35   %       13.42   %       12.15   %
capital ratio
Tier 1 risk-based            14.87   %       15.05   %       14.08   %       12.15   %       10.88   %
capital ratio
Tier 1 leverage              8.35    %       8.61    %       8.40    %       7.69    %       7.48    %
ratio
                                                                                            
                                                                                            

Contact:

Premier Service Bank
Kerry L. Pendergast, President and CEO
or
Jessica Lee, Executive Vice President and CFO
951-274-2400
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