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 Pacific Valley Bank Announces Strong Momentum and its Third Quarter 2018 Financial Results

Salinas, CA – November 5, 2018 – Pacific Valley Bank (OTCQB: PVBK) announced its unaudited third quarter 2018 net income of $926,087 or $0.23 basic earnings per share (adjusted for 2018 stock dividend).   Net income for the first nine months of 2018 was $1,953,304 or $0.49 basic earnings per share, as compared to the first nine months of 2017 with a reported $1,352,944 or $0.34 basic earnings per share.

Third Quarter 2018 Financial Highlights (annualized)
Return on Average Assets (ROAA): 1.34%
Net Interest Margin (NIM): 4.08%
Efficiency Ratio: 60.90%

Year-to-date 2018 Financial Highlights (annualized)
Return on Average Assets (ROAA): 0.97%
Net Interest Margin (NIM): 4.18%
Efficiency Ratio: 69.31%

Anker Fanoe, President and Chief Executive Officer stated, “The third quarter results further enhance the momentum the Bank has been experiencing throughout 2018.  Our strategic goals this year have focused on market expansion while supporting the local industries which have been the Bank’s core business since our inception.”  He continued, “We have worked to strengthen and expand our customer relationships, adhering to the principles of community banking by offering personal, incomparable service.   The successful financial performance of the Bank supports that strategy of measured business development with a commitment towards sustainability.”

“Thus far, the loan portfolio has demonstrated robust loan growth, advancing $46.2 million since September 30, 2017,” Mr. Fanoe continued. “Growth has been centered primarily in real estate secured loans, located within the Bank’s local market area of Monterey, Santa Cruz and San Benito Counties.  Loan quality remains strong with non-performing assets accounting for less than 1% of the Bank’s total assets.  The Board of Directors wishes to express its appreciation for the Bank’s steadfast shareholders, loyal customers and dedicated employees for contributing to the Bank’s ongoing success as a leader in local community banking.”

Total Assets were $281.4 million at September 30, 2018, representing a net growth of $25.5 million or 10% growth over total assets of $256.0 million at September 30, 2017.  Outstanding loan balances grew to $230.2 million, an increase of $19.7 million since December 31, 2017, and $46.2 million since September 30, 2017.  Bank management has concentrated much of its effort in growing deposits to support the rapid growth of the loan portfolio in 2018, as many banks contend with increased competition for funding.  At September 30, 2018, total deposit balances were $247.5 million, an increase of $22.9 million or 10%, over the same month last year.

Pacific Valley Bank Select Financial Data-Unaudited In Dollars

Assets 09/30/2017 09/30/2018 Y-O-Y Change
Cash and Due From Banks $6,032,173 $7,575,329 $1,543,155
Interest Bearing Deposits 60,578,763 38,569,208 ($22,009,555)
Investment Securities 70,781 0 (70,781)
Loans Outstanding 184,003,503 230,246,671 46,243,168
Loan Loss Reserve (4,343,902) (4,319,668) 24,234
Other Assets 9,623,849 9,344,287 (279,562)
Total Assets $255,965,166 $281,415,826 $25,450,659
Liabilities and Capital 09/30/2017 09/30/2018 Y-O-Y Change
Non-Interest Bearing Deposits $86,457,429 $83,503,456 ($2,953,973)
Interest Bearing Deposits 138,148,125 163,973,196 25,825,071
Borrowings $0 $0 $0
Other Liabilities 1,074,682 1,484,174 409,492
Equity 30,284,929 32,455,000 2,170,071
Total Liabilities and Capital $255,965,166 $281,415,826 $25,450,660
Three Months Ended
Income Statement 09/30/2017 09/30/2018 Q-O-Q Change
Interest Income $2,995,796 $3,019,643 $23,847
Interest Expense 77,574 311,781 234,207
Net Interest Income 2,918,222 2,707,862 (210,360)
Provision for Loan Losses (600,000) 0 600,000
Other Income 130,182 627,466 497,284
Operating Expense 2,113,629 2,031,240 (82,389)
Tax 618,000 378,000 (240,000)
Net Income $916,775 $926,087 $9,312
Nine Months Ended
Income Statement 09/30/2017 09/30/2018 Y-O-Y Change
Interest Income $7,702,490 $8,682,188 $979,697
Interest Expense 210,774 647,864 437,091
Net Interest Income 7,491,717 8,034,323 542,607
Provision for Loan Losses (600,000) 0 600,000
Other Income 385,935 905,035 519,100
Operating Expense 6,243,707 6,196,054 (47,653)
Tax 881,000 790,000 (91,000)
Net Income $1,352,944 $1,953,304 $600,360
Ratios – YTD (Annualized) 09/30/2017 09/30/2018
Leverage Ratio 11.21% 11.56%
Return on Average Assets 0.74% 0.97%
Return on Average Equity 5.68% 8.20%
Earnings Per Share (Basic) 0.34 0.49
Book Value Per Share $7.65 $8.20
Efficiency Ratio 79.26% 69.31%
Shares have been retroactively adjusted for the effect of the July 2018 dividend.

ABOUT PACIFIC VALLEY BANK:  
Pacific Valley Bank is a full service business bank that commenced operations in September 2004 to provide exceptional service to customers in Monterey County. Pacific Valley Bank operates business at 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. For more information, visit www.pacificvalleybank.com.

FORWARD LOOKING STATEMENTS
This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance and/or achievements to differ materially from those projected. Accordingly, readers should not place undue reliance on these forward-looking statement. These risks and uncertainties include, but are not limited to, economic conditions in all areas in which the Bank conducts business, including the competitive environment for attracting loans and deposits; supply and demand for real estate and periodic deterioration in real estate prices and/or values in California or other states where we lend; changes in the financial performance and/or condition of our borrowers, depositors, key vendors or counterparties; changes in our levels of delinquent loans, nonperforming assets, allowance for loan losses and charge-offs; the effect of changes in laws and regulations, including accounting practices; changes in estimates of future reserve requirements and minimum capital requirements based upon periodic review thereof under relevant regulatory and accounting requirements; fluctuations in the interest rate and market environment; cyber-security threats, including the loss of system functionality, theft, loss of customer data or money; technological changes and he expanding use of technology in banking; the costs and effects of legal, compliance and regulatory actions; acts of war or terrorism, or natural disasters; and other factors beyond the Bank’s control. These

forward-looking statements, which reflect management’s views, are as of the date of this release. Pacific Valley Bank has no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

FDIC
Equal Housing Lender