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Golden State Business Bank News

Golden State Business Bank Announces 4th Quarter Earnings

UPLAND, Calif., Feb. 14 PRNewswire-FirstCall — Golden State Business Bank (OTC Bulletin Board: GSBB), a California state-chartered bank, announced today its financial results for 2007. Included are double-digit increases in total assets, loans, and deposits.

At December 31, 2007, Golden State Business Bank reported total assets at $151.3 million, a 32% increase from the previous year; net loans of $138.1 million, a 44% increase from the previous year; and total deposits of $128.3 million, a 38% increase from the previous year. The Bank realized net income of $609.466 or $.33 per share outstanding, compared with $1,001,282 and $.54 per share outstanding for the year ended December 31, 2006. Operating income before provision expense and income taxes in 2007 was $2.5 million compared to $1.7 million in 2006, an increase of 47%.

As anticipated, net income for 2007 was impacted by a large loan loss provision expense of $840,000 for the 4th quarter and a loan loss provision of $1,347,000 for the entire year compared to a loan loss provision expense of $367,000 in 2006. As of December 31, 2007, the allowance for loan and lease losses (ALLL) was 1.56% of total loans. Management's assessment of the ALLL took into consideration the increase in the Bank's loan volumes, uncertainty in the economy and residential real estate markets and recognition of specific reserves related to certain weaknesses in the Bank's loan portfolio. The Bank remains well-capitalized for regulatory capital purposes, with approximately 50% more capital than is required to be classified in the "well-capitalized" category.

"In a year in which the financial industry was challenged by weakness in the economy and real estate mortgage industry, we were able to show strong 2007 operating results in loans, deposits and net assets," said Ralph Wiita, President and CEO. "We have both the liquidity and capital to continue meeting the borrowing needs of our customers. Our disciplined, fiscally responsible approach and strong asset quality means we are continuing to make loans to credit-worthy customers. In addition, we do not originate or hold sub-prime mortgages as part of our loan portfolio."

Additional achievements in 2007 included: — Strategically increased the Bank's commercial construction lending activities by 27% from the previous year — Enhanced and expanded two specialty business lending programs: a Franchise Lending Program that helps franchisees capitalize on opportunities in the franchise business, and a Medical Profession Loan Program that targets the unique opportunities and challenges facing medical professionals

"Our growth rate in our first four years compares very favorably in relation to our peer group banks," Wiita added. "In 2008, we look forward to taking advantage of market opportunities that complement our commitment to making quality loans and forming long-term banking relationships."

About Golden State Business Bank

Golden State Business Bank is a full-service, community oriented bank established in December 2003. The Bank serves small-to-medium size businesses, professionals, and residents within its primary service areas of San Bernardino County and portions of Riverside, Orange, and Los Angeles counties.

The main branch and headquarters are located at 1060 W. Foothill Boulevard in Upland. The Bank also has separate Loan Department offices in Upland and a second full-service branch in Brea. For more information, call (909) 981-8000 or visit the Bank's website at http://www.goldenstatebusinessbank.com.

Forward-looking statements

Certain statements in this news release constitute forward-looking statements that are based upon current management expectations and, therefore, are subject to certain risks and uncertainties that could cause actual results, performance, or achievements to differ materially from those expressed, suggested, or implied. Forward-looking statements are effective only as of the date that they are made, and Golden State Business Bank assumes no obligation to update any forward-looking statements contained in this press release.

For additional information, contact Ralph Wiita, (909) 981-8000 or (909) 608-1851. Golden State Business Bank Upland, CA Balance Sheet Income Statement December 31, 2007 December 31, 2007 Year ended (in thousands) (unaudited) 12/31/07 Cash & Due From Banks $3,900 (dollars) (unaudited) Fed Funds Sold 5,805 Investments - Interest on Investments $618,894 Loans, net 138,117 Interest on Loans 12,010,573 Other Assets 3,511 Total Interest Income 12,629,467 Total Assets $151,333 Interest Expense 4,550,759 Net Interest Income 8,078,708 Demand Deposits $22,395 Loan Loss Provision 1,347,000 Other Interest Bearing Net Interest Income Deposits 105,913 after Provision 6,731,708 Total Deposits 128,308 Non Interest Income 82,258 Other Liabilities 669 Non Interest Expense 5,709,749 Total Liabilities 128,977 Income before Taxes 1,104,217 Equity 22,356 Provision for Taxes 494,771 Total Liabilities & Equity $151,333 Net Income $609,446 Return on Assets 0.41% Return on Equity 2.72%

SOURCE Golden State Business Bank

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