PVBK Pacific Valley Bancorp (PK)

Pacific Valley Bank (OTCBB: PVBK) announced first quarter 2011 net income of $366,900 or $0.11 basic earnings per share as compared to the same quarter last year when we reported a net income of $331,800 or $0.11 basic earnings per share.

First Quarter 2011 Financial Highlights: Return on Average Assets (ROA): 0.88% Net Interest Margin (NIM): 4.43% Efficiency Ratio: 77.21%

"We are pleased with the results achieved in the first quarter of this year, building on the momentum of the profitable performance in our fourth quarter of 2010. This was a profitable quarter with no need for any additional provision to our allowance for loan losses," stated David B. Warner, President and Chief Executive Officer. "The recent lifting of the Consent Order by our regulatory agencies in January has been another positive development for the Bank this quarter. The support we continue to receive from our customers, shareholders, employees and the community is impressive."

Balance Sheet and Loan Quality Review:

Total assets were $167.76 million at March 31, 2011, which is a decrease of $6.66 million from the same period last year when assets were $174.42 million. Our gross loans at March 31, 2011 were $125.31 million, which is a decrease of $4.99 million as compared to $130.30 million at March 31, 2010.

The allowance for loan losses as of March 31, 2011 was $4.34 million, which is an increase from the same quarter last year when it was $3.27 million. The percentage of allowance for loan losses to gross loans outstanding at March 31, 2011 was 3.46% as compared to 2.51% 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, current market valuations of our problem loans and qualitative factors for the remaining loans based on various analytics including the trends in non-accruing loans, delinquent loans and net charge-offs. Some of the key qualitative factors credit administration monitors include: 1) non-accruing loans, which were $5.54 million as of March 31, 2011 as compared to $8.27 million as of March 31, 2010; 2) loans past due from 30 - 89 days, which were $881,000 as of March 31, 2011 as compared to $886,700 at March 31, 2010; 3) net charge-offs, which were $94,800 for the quarter ending March 31, 2011 as compared to $644,300 for the quarter ending March 31, 2010; and 4) non-performing assets ratio, which was 4.17% as of March 31, 2011 as compared to 4.78% at March 31, 2010. These qualitative factors indicate a level of improvement in loan quality.

A significant component of our current liquidity position is reflected in our Fed Funds Sold balance, which totals $25.71 million as of March 31, 2011 as compared to $25.94 million as of March 31, 2010. The Bank's liquidity is in a good position to support future loan growth. Deposits remain stable at $146.41 million as of March 31, 2011 as compared to $143.32 million in the same quarter a year ago.

Stockholders' equity at March 31, 2011 was $18.52 million as compared to $19.84 million from the quarter ending March 31, 2010. At March 31, 2011 our Tier 1 capital to average assets ratio was 10.91% and our total risk-based capital ratio was 14.64% as compared to 11.20% and 15.14% as of March 31, 2010, respectively.

Review of Operations:

The core earnings of the Bank are measured by the interest income plus non-interest income less interest expense. During the current first quarter, core earnings of the Bank were $1.83 million, which is lower by comparison to $2.13 million for the same quarter a year ago. "The decline in the Bank's core earnings was due to the gradual shrinking of the balance sheet and the one-time gains in the prior year quarter," stated Mr. Warner.

Interest income for quarter ending March 31, 2011 was $2.11 million as compared to $2.49 million in the same quarter a year ago. Interest expense during the current quarter was $331,700 as compared to $503,700 in the same quarter a year ago. Our interest costs continue to benefit from a low rate environment that allows us to gradually re-price maturing deposits into current lower market rates. The Bank achieved net interest margins of 4.43% and 4.76% for the quarter-ending periods March 31, 2011 and March 31, 2010, respectively.

There were no provisions for loan losses in the current quarter, which compares to $250,000 for the quarter ending March 31, 2010. The Bank's methodology did not identify the need for a provision for loan loss due to the improvement in the credit quality and management's judgment regarding adequate reserves to cover measured probable losses in our loan portfolio.

Non-interest expenses during the current quarter totaled $1.41 million for the quarter ending March 31, 2011. This compares to $1.55 million for the same period ending in 2010. The lower expenses in the first quarter of 2011 were from reductions in compensation expenses, professional fees and FDIC insurance premiums. The efficiency ratio, which measures the amount of overhead expense per net interest income plus noninterest income, was 77.21% for the first quarter of this year as compared to 72.65% for the same period ending in 2010. The efficiency ratio moved higher due to lower revenues from interest income caused by a drop in the overall loan yield of the outstanding loan portfolio.

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