Premier Service Bank, Riverside, California (OTCBB:PSBK) today announced financial results for the quarter and six months ended June 30, 2010. In addition, the Bank announced that it is restating its earnings and results for the quarter and year ended December 31, 2009 and the quarter ended March 31, 2010.

Quarter and Six Months Ended June 30, 2010

For the quarter ended June 30, 2010, the bank reported a net loss of $2.21 million, or <$1.81> per diluted share, compared to a net loss of $282 thousand, or <$0.23> per diluted share for the quarter ended June 30, 2009. The increase in net loss between the respective periods is primarily attributed to the increased provisions for loan losses in the second quarter of 2010. The provision to the allowance for loan losses for the second quarter of 2010 totaled $2.516 million, compared to $485 thousand for the same period in 2009.

At June 30, 2010, the Bank had $6.59 million of non-accrual loans, representing 5.3% of the Bank’s total loans, compared to $5.38 million of non-accrual loans, or 4.2% of total loans, at June 30, 2009. The Bank had foreclosed real estate of $1.24 million at June 30, 2010, compared to foreclosed real estate of $572 thousand and other foreclosed assets of $149 thousand at June 30, 2009. All loans over 90 days past due have been reported as non-accrual loans. The allowance for loan losses totaled $3.06 million at June 30, 2010, or 2.46% of total loans as of that date, compared to $2.16 million at June 30, 2009, or 1.68% of total loans as of that date.

At June 30, 2010, the Bank had total assets of $156 million, representing a decrease of $8.4 million or <5.1%> less than total assets of $164.3 million at June 30, 2009. The Bank had $17 million in FHLB borrowings at June 30, 2010, representing a decrease of $6 million or <26%> from the FHLB borrowings of $23 million at June 30, 2009. Total deposits at June 30, 2010 were $124.1 million, representing 0.48% growth over total deposits of $123.5 million at June 30, 2009. Non-interest bearing demand deposits totaled $37.6 million at June 30, 2010, representing 30.3% of total deposits at that date, compared to $41.3 million of non-interest bearing demand deposits at June 30, 2009, which represented 33.4% of total deposits at that date.

The Bank’s gross loan portfolio was $124.4 million at June 30, 2010, representing a 2.9% decrease over gross loans of $128 million at June 30, 2009. Unfunded credit commitments stood at $16.9 million at June 30, 2010, which was at the same level as compared to unfunded commitments of $16.9 million at June 30, 2009.

The Bank’s net interest margin for the quarter ended June 30, 2010 was 5.07%, an increase of 23 basis points as compared to the net interest margin of 4.84% for the second quarter of 2009.

At June 30, 2010, the Bank remained well capitalized under applicable regulatory guidelines. Total shareholders’ equity at June 30, 2010 was $14 million, representing a decrease of $2.9 million, or <17.26%> compared to total shareholders’ equity of $16.9 million at June 30, 2009.

For the six months ended June 30, 2010, the Bank reported a net loss of $2.19 million, compared to a net loss of $251 thousand for the six months ended June 30, 2009. The increase in net loss between the respective periods is primarily attributed to the increased provisions for loan losses made in the first six months of 2010. The provision to the allowance for loan losses for the first six months of 2010 totaled $2.856 million, compared to $595 thousand for the same periods in 2009.

Restatement of Earnings and Results for the Quarter and Year Ended December 31, 2009

The Bank is restating its results and earnings previously reported in its Reports of Condition and Income (“Call Report”) for the quarter ended December 31, 2009. In addition to showing the restated results and earnings in the Call Report for the quarter ended December 31, 2009, the Form 10-Q for the quarter ended June 30, 2010 will address and reflect the changes. The restated results include the following:

• The Bank’s net loss after tax for the year ended December 31, 2009, will increase from $801,810 to $972,155. The loss per diluted share for 2009, originally reported to be a loss of $0.67 per share, will increase to a loss of $0.80 per share.

• Non-accrual loans will increase from $5.05 million to $7.48 million as of December 31, 2009.

• Loans, net of unearned income and the allowance for loan losses, will decline to $126.2 million from the previously reported level of $126.3 million, and total assets will decline to $163.8 million from the previously reported level of $164.0 million.

The adjustments to be reported in the restated Call Report for the quarter ended December 31, 2009 will result in a decrease of approximately $170 thousand in total shareholders’ equity at December 31, 2009 to approximately $16.25 million from the previously reported amount of $16.42 million. The Bank’s leverage capital ratio, tier 1 risk-based capital ratio and total risk-based capital ratio to be reported in the restated Call Report for the quarter ended December 31, 2009 will decline to 9.69%, 11.63% and 12.88%, respectively, at December 31, 2009. Well capitalized banks are generally required to maintain a leverage ratio of 5%, a tier 1 risk-based capital ratio of 6% and total risk-based capital ratio of 10%.

Restatement of Earnings and Results for the Quarter Ended March 31, 2010

The Bank is also restating its results and earnings as previously reported in its Call Report for the quarter ended March 31, 2010. In addition to restating its results and earnings in its Call Report for the quarter ended March 31, 2010, the Form 10-Q for the quarter ended June 30, 2010 will address and reflect the changes. The restated results include the following:

• The Bank’s net income after tax for the quarter ended March 31, 2010 will decrease from $93,474 to $18,493. Earnings per diluted share for the quarter ended as of March 31, 2010, originally reported to be a gain of $0.07, will decrease to a gain of $0.01.

• Non-accrual loans will increase from the $5.25 million previously reported to $7.63 million as of March 31, 2010.

• Loans, net of unearned income and the allowance for loan losses, will decline to $125.6 million from the previously reported level of $125.8 million, and total assets will decline to $158 million from the previously reported level of $158.3 million.

These adjustments as of March 31, 2010, combined with the adjustments of December 31, 2009, resulted in a decrease in total shareholders’ equity at March 31, 2010 of approximately $245 thousand to approximately $16.28 million from the previously reported amount of $16.52 million. The Bank’s leverage capital ratio, tier 1 risk-based capital ratio and total risk-based capital ratio will decline to 10.05%, 11.91% and 13.17%, respectively, at March 31, 2010. As noted above, well capitalized banks are generally required to maintain a leverage ratio of 5%, a tier 1 risk-based capital ratio of 6% and total risk-based capital ratio of 10%.

Mr. Kerry L. Pendergast, President and CEO of the Bank, noted, “The primary reason for the restatement of earnings and results for the December 31, 2009 quarterly and year-end periods was the increase in non-accrual loans from $5.05 million to $7.48 million. Similarly, the restatement of the March 31 financials is due to the increase in non-accrual loans from $5.25 million to $7.63 million as of March 31, 2010. The increased level of non-accrual loans as of December 31, 2009 and March 31, 2010 resulted from our placement of one loan on non-accrual in the principal amount of approximately $2 million. The change to non-accrual status was made retroactive to February 2009 when the loan was restructured, notwithstanding the borrower’s payment of the loan as agreed through May 2010. We were not aware until June 2010 that a restructured loan, paying as agreed, was required to be placed on non-accrual at the time of the restructuring.”

Mr. Pendergast continued, “Recognition of additional losses in the portfolio and increased provisions to the loan loss reserves also caused an increase in our previously reported level of losses for the affected periods. Fortunately, we believe we are well positioned going forward. We have recognized the potential losses in our portfolio and still remain well capitalized under the restatements as of December 31, 2009 and March 31, 2010, and at June 30, 2010.” Mr. Pendergast concluded, “We continue to move the Bank in the proper direction to improve our operating results.”

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 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 discussed from time to time in Premier Service Bank’s filings and reports with the Federal Deposit Insurance Corporation. 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.

For a more complete discussion of risks and uncertainties, investors and security holders are urged to read Premier Service Bank’s annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by Premier Service Bank with the FDIC.