PVBK Pacific Valley Bancorp (PK)

Pacific Valley Bank (OTCBB: PVBK) announced the third quarter 2011 net income of $257,000 or $0.08 basic income per share as compared to the same quarter last year when we reported a net loss of ($1.17) million or ($0.36) basic loss per share.

Third Quarter 2011 Financial Highlights:

• Return on Average Assets (ROA): 0.60%
• Net Interest Margin (NIM): 4.16%
• Efficiency Ratio: 81.85%

"We have achieved an important milestone in our company's history; this quarter marks our fourth sequential quarterly profit," stated David B. Warner, President and Chief Executive Officer. "In addition, we experienced new loan production during this quarter. Our lending team has been working with new borrowers making investments in their businesses which has resulted in new relationships for Pacific Valley Bank."

Balance Sheet and Loan Quality Review:

Total assets were $173.80 million as of September 30, 2011, which is an increase of $1.63 million from the same period last year when assets were $172.17 million. Our gross loans as of September 30, 2011 were $127.17 million, which is an increase of $6.51 million as compared to $120.66 million as of September 30, 2010. Our loan totals are higher this quarter as compared to past quarters due to increased lending in the areas of agriculture and commercial and industrial loans.

The allowance for loan losses as of September 30, 2011 was $3.72 million, which is a decrease from the same quarter last year when it was $4.50 million. The percentage of allowance for loan losses to gross loans outstanding as of September 30, 2011 was 2.92% as compared to 3.73% in the same quarter last year.

The allowance for loan losses is measured using such factors that take into account historical loss migration within the portfolio, qualitative factors for the remaining loans based on various analytics including the trends in non-accruing loans, delinquent loans and net charge-offs as well as current market valuations of our problem loans. Some of the key qualitative factors credit administration monitors include; 1) non-accruing loans, which were $5.62 million as of September 30, 2011 as compared to $5.02 million as of September 30, 2010; 2) there were no loans past due 30 days or greater as of September 30, 2011 and September 30, 2010; 3) net charge-offs, which were $56,000 for the period ending September 30, 2011 as compared to $563,000 for the period ending September 30, 2010; and 4) non-performing assets ratio, which was 3.50% as of September 30, 2011 as compared to 3.22% at September 30, 2010. These qualitative factors continue to support stability of our loan quality metrics with no significant deterioration.

A significant component of our current liquidity position is reflected in our Federal funds sold balance, which totals $30.29 million as of September 30, 2011 as compared to $37.39 million as of September 30, 2010. The Bank's liquidity continues to be well positioned to support future loan growth. Deposits remain stable at $151.79 million as of September 30, 2011 as compared to $151.45 million in the same quarter a year ago.

Shareholders' equity as of September 30, 2011 was $19.08 million as compared to $17.88 million from the quarter ending September 30, 2010. At September 30, 2011 our Tier 1 capital to average assets (leverage) ratio was 10.93% and our total risk-based capital ratio was 14.50% as compared to 10.04% and 14.58% as of September 30, 2010, respectively.

Review of Operations:

The interest income for the quarter ending September 30, 2011 was $2.05 million as compared to $2.32 million in the same quarter a year ago. Interest expense during the current quarter was $317,000 as compared to $447,000 in the same quarter a year ago. The net interest margin for the third quarter of this year was 4.16%. This is a decline from the same period a year ago when the net interest margin was 4.54%.

The provision for loan losses was $115,000 for the current quarter as compared to $1.60 million for the same quarter last year. The provision for loan losses was deemed appropriate based on our analysis of our portfolio.

Non-interest expenses during the current quarter totaled $1.46 million, which compares favorably to $1.49 million in the same quarter a year ago. The efficiency ratio, which measures the amount of overhead expense per net interest income plus noninterest income, was 81.85% for the third quarter of this year, which is slightly higher as compared to 77.86% for the same quarter last year.

About Pacific Valley Bank

Pacific Valley Bank is a California State chartered bank that commenced operations in September 2004. Pacific Valley Bank serves three locations; administrative headquarters and branch offices in Salinas, King City and Monterey, California. The Bank offers a broad range of banking products and services, including credit and deposit services to small and medium sized businesses, agriculture related businesses, non-profit organizations, professional service providers and individuals. The Bank serves customers primarily in Monterey County. For more information, visit www.pacificvalleybank.com.

Safe Harbor Statement:

Except for the historical information in this news release, the matters described herein are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and charge-offs, results of examinations by our banking regulators, our ability to maintain adequate levels of capital and liquidity, our ability to manage loan delinquency rates, our ability to price deposits to retain existing customers and achieve low-cost deposit growth, manage expenses and lower the efficiency ratio, expand or maintain the net interest margin, mitigate interest rate risk for changes in the interest rate environment, competitive pressures in the banking industry, access to available sources of credit to manage liquidity, the local and national economic environment, and other risks and uncertainties as discussed in Pacific Valley Bank's filings with the FDIC. Accordingly, undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this release. Pacific Valley Bank undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Investors are encouraged to read the FDIC filing reports of Pacific Valley Bank which are available on our website; including the most recent filing of the Form 10-K for fiscal year ended December 31, 2010. They contain meaningful cautionary language and discussion why actual results may vary from those anticipated by management.

Contacts: David B. Warner CEO (831) 771-4323 Greg B. Spear CFO (831) 771-4317