Mission Oaks Reports Record $404,000 Earnings in Second Quarter


TEMECULA, Calif., July 9, 2004 (PRIMEZONE) -- Mission Oaks National Bank (OTCBB:MKNB) reported record earnings of $404,000, or 21 cents a share, in the second quarter ended June 30.

That was up 46.4 percent from $276,000, or 18 cents a share, the Temecula-based community bank earned in the same period a year ago. Results from the second quarter of 2003 included 393,250 fewer average outstanding shares of common stock and $101,000 in tax credits resulting from a net operating loss carryforward.

Earnings before taxes in the quarter were $666,000, up 122.7 percent from $299,000 from the same period a year earlier.

Annualized return on average assets (ROA), a ratio of profit to assets, reached 1.65 percent in the second quarter. Annualized return on average shareholders' equity (ROE), a ratio of profit to equity, reached nearly 16 percent.

More than 400 similarly sized U.S. banks reported an average ROA and ROE of 1.01 percent and 9.93 percent, respectively, according to a Federal Deposit Insurance Corp. survey as of March 31, 2004.

"Our strong financial performance in the quarter can be attributed to a strong volume of SBA related and commercial real estate mortgage business," said Gary Votapka, Mission Oaks president and chief executive. "Better than expected results in the first six months of 2004 should set the stage for a strong second half of the year and allow us to build for the future."

Other key financial highlights in the 2004 quarter compared to the same 2003 quarter include:

Total assets increased $25 million, or 33.4 percent, to a record $100 million.

Net loans increased $16.4 million, or 32.1 percent, to a record $67.4 million.

Total deposits increased by $17.8 million, or 26.5 percent, to an all-time high of $84.6 million.

Interest income increased $332,000, or 32.8 percent, to $1.3 million.

Non-interest income from the sale of loans, fees and mortgage originations grew $279,000, or 61.6 percent, to $732,000.

For the six months ended June 30, Mission Oaks earned a record $690,000, or 36 cents a share, compared with earnings of $502,000, or 33 cents a share, in the same period a year ago. Results from a year ago were based on 392,803 fewer outstanding shares of common stock.

Mission Oaks National Bank is an award-winning, community-based, federally chartered bank that is committed to serving consumers and businesses in Southern California. The bank offers personalized services and products through two full-service branch offices and loan production offices in San Diego and Phoenix. Mission Oaks plans to open a third branch in the Ontario/Rancho Cucamonga area early next year.

The bank was recently named a Super Premier Performing Bank for 2003 by Findley Reports, a leading California banking industry analyst and consulting firm.

Super Premier is the highest rating a bank can receive from Findley. It is based on growth, income, loan quality and return on equity among other criteria. Mission Oaks was the youngest of six banks headquartered in Riverside County to receive the designation from Findley Reports.

For more on Mission Oaks National Bank visit its Web site at www.missionoaksbank.com.

Safe Harbor

Certain statements in this press release, including statements regarding the anticipated development and expansion of the Bank's business, and the intent, belief or current expectations of the Bank, its directors or its officers, are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to the local and national economy, the Bank's performance, regulatory matters and those discussed in filings by the Bank with the Office of the Comptroller of the Currency.



 MISSION OAKS NATIONAL BANK
 SECOND QUARTER REPORT / JUNE 30, 2004

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 BALANCE SHEET                                                       
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 (all amounts in whole dollars except share and per share information)
                                                                     

                     June 30,   June 30,      Increase    Increase  
                       2004       2003       (Decrease)  (Decrease)
                   ----------- -----------  ----------- -----------
 ASSETS

 Cash and due from
  banks            $ 1,900,000 $ 2,489,000    ($589,000)   -23.7%
 Due from banks --
  time                 693,000     496,000      197,000     39.7%
 Federal funds
  sold               5,915,000   3,370,000    2,545,000     75.5%
 Securities --
  available for
  sale              18,261,000  15,620,000    2,641,000     16.9%


 Loans              68,331,000  51,665,000   16,666,000     32.3%
 Less allowance
  for loan losses     (941,000)   (640,000)    (301,000)    47.0%
                   ----------- -----------  -----------
 Loans, net         67,390,000  51,025,000   16,365,000     32.1%

 Premises and
  equipment, net       564,000     649,000      (85,000)   -13.1%
 SBA -- Loan
  servicing asset/
  Interest only
  strips               860,000     147,000      713,000    485.0%
 Cash surrender of
  life insurance     2,568,000           0    2,568,000
 Other assets        1,832,000   1,166,000      666,000     57.1%
                   ----------- -----------  -----------
                   $99,983,000 $74,962,000  $25,021,000     33.4%
                   =========== ===========  ===========

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Demand deposits   $23,150,000 $16,150,000  $ 7,000,000     43.3%
 Interest bearing
  deposits          61,498,000  50,746,000   10,752,000     21.2%
 Federal funds
  purchased and
  other borrowings   4,000,000           0    4,000,000
 Other liabilities     950,000     596,000      354,000     59.4%
                   ----------- -----------  -----------
   Total 
    liabilities     89,598,000  67,492,000   22,106,000     32.8%


 Total stockholders'
  equity            10,385,000   7,323,000    3,062,000     41.8%
                   ----------- -----------  -----------
                   $99,983,000 $74,815,000  $25,168,000     33.6%
                   =========== ===========  ===========

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 STATEMENT OF INCOME
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                      3 Mos ended 3 Mos ended 6 Mos ended 6 Mos ended
                        June 30,    June 30,    June 30,    June 30,
                         2004        2003        2004        2003
                      ----------- ----------- ----------- -----------
 Interest income      $ 1,345,000 $ 1,013,000 $ 2,604,000 $ 1,923,000
 Interest expense         240,000     228,000     443,000     435,000
                      ----------- ----------- ----------- -----------
 Net interest income    1,105,000     785,000   2,161,000   1,488,000
 Provision for loan
  losses                   40,000      75,000     100,000     145,000
                      ----------- ----------- ----------- -----------
 Net interest income
  after provision for
  loan losses           1,065,000     710,000   2,061,000   1,343,000
 Other income             732,000     453,000   1,319,000     788,000
 Other expense          1,131,000     864,000   2,248,000   1,642,000
                      ----------- ----------- ----------- -----------
 Earnings before
  income taxes            666,000     299,000   1,132,000     489,000
 Income taxes
  (benefit)               262,000      23,000     442,000     (13,000)
                      ----------- ----------- ----------- -----------
   Net earnings       $   404,000 $   276,000 $   690,000 $   502,000
                      =========== =========== =========== ===========


 Average common
  shares outstanding    1,920,192   1,526,942   1,919,745   1,526,942
 Basic earnings per
  share               $      0.21 $      0.18 $      0.36 $      0.33
 Return on average
  assets (annualized)        1.65%       1.53%       1.45%       1.49%
 Return on average
  equity (annualized)       15.96%      15.42%      13.84%      14.40%

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 SELECTED RATIOS                                                      
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                                         June 30,     June 30, 
                                           2004         2003
                                        ---------    ---------
 Leveraged capital ratio                  10.62%       10.09%
 Total risk based capital ratio           15.11%       15.05%
 Allowance for loan losses as a percent
  of total loans                           1.36%        1.23%
 Nonperforming assets as a percent of
  total assets                             0.00%        0.00%
 Loan to deposit ratio                    81.81%       77.62%


            

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