Interest squeeze hits Pacific State Bank’s bottom line

STOCKTON
April 17, 2008 9:29am

A squeeze on its interest margins helped lower profits at Pacific State Bancorp (NASDAQ: PSBC) of Stockton in the first quarter, according to Steven Rosso, president and C.E.O.

Net income for the quarter ended March 31 decreased 17.5 percent to $1,094,000 compared to the first quarter of 2007.

Total assets as of March 31 increased 2.9 percent to nearly $443.7 million from Dec. 31, 2007.

The decreased income performance is primarily the result of the bank caught between its interest earning assets repricing downward after Federal Reserve rate cuts and what it had to pay out on interest bearing liabilities, the bank says.

In addition to a contracting net interest margin, Pacific State Bank says it also experienced a decline in non-interest income of $214,000 from 2007 levels, the result of decreased asset sales, loan sales, and servicing income. These areas of income generation have been affected by the general slowdown in home sales in the region, it says.

The bank has also experienced an increase in nonperforming loans from $432,000 at Dec. 31, 2007 to $2,177,000 or 0.66 percent of gross loans as of March 31, it says.

Current nonperforming loans consisted of two customers whose loans were from the commercial segment of the loan portfolio, it says.

An increase of $45,000 ($210,000 total addition) or 27.3 percent in the provision for loan losses in the first quarter of 2008 over 2007 levels reflects the weakening economic environment within the bank's service areas, which management is actively monitoring and which may indicate the need to record additional provision in the future, it says.

Comments on this story

bankalchemist 8/31/10 5:24 PM
It was only just a short while ago this bank was a Findley Super Premier Performer which we have begun to note that once you receive this designation its not much longer before your bank fails. bankalchemist.