Mission Oaks Bancorp Reports Results for 2011

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Mission Oaks reported substantial reductions in its operating expenses and progress in reducing problem assets.

Mission Oaks Bancorp, Inc. (OTC BB: MOKB.OB – News), whose principal subsidiary is Mission Oaks National Bank, announced unaudited results for the fourth quarter and all of 2011.

The Company reported a net loss of $3,435,000, or $0.30 per share, for the year ended Dec. 31, 2011. That compares to a net loss of $7,976,000, or $1.11 per share for the year ended Dec. 31, 2010.

The 2011 losses were largely attributed to two factors: the continuing need to build the company’s Allowance for Loan Losses (ALLL) and ongoing expenses related to its portfolio of Other Real Estate Owned (OREO) properties.

For 2011, the provision for loan losses was $2,432,000 and OREO expenses totaled $1,610,000. The total of the two categories was $4,042,000, or $607,000 more than the Company’s total losses for the year.

“Although we continued to experience losses related to loans originated prior to the recession, we made significant progress toward resolving our problem assets, reducing our operating expenses and shrinking the size of our losses,” said Gary Deems, president and chief executive.

“We also strengthened our credit management team by adding a new chief credit officer and credit administrator, and by more than doubling the size of our Special Assets Department,” he said. “In 2012, we will focus on substantially reducing the size of our problem asset portfolio, continuing to reduce our operating expenses, and moving the Company back toward profitability.”

Mission Oaks reported substantial reductions in its operating expenses and progress in reducing problem assets. The Company:

  •     Reduced the provision for loan losses from $3.3 million in 2010 to $2.4 million in 2011, a decline of $900,000, or 27 percent while boosting the ALLL at year end from 3.86 percent of gross loans to 4.25 percent.
  •     Reduced OREO related expenses from $3.8 million to $1.6 million, a savings of $2.2 million, or 58 percent.
  •     Reduced salaries and benefits by $609,000, or 16.4 percent.
  •     Reduced occupancy expenses by $167,000, or 21.9 percent.
  •     Reduced other operating expenses by $437,000, or 15.6 percent.

Between Dec. 31, 2010 and the same date in 2011, the Company also reduced problem assets:

  •     OREO fell from $11.4 million to $3.6 million.
  •     Classified loans dropped from $33.7 million to $27.4 million.
  •     Criticized loans fell from $37.5 million to $33.2 million.
  •     Non-accruals declined slightly from $11.5 million to $11.4 million.
  •     Net loan charge offs dropped from $3.5 million to $2.6 million.

In the fourth quarter of 2011, the Company lost $993,000, or $0.09 per share. This compares to a loss of $740,000, or $0.06, in the prior quarter. During the fourth quarter of 2010, the Company lost $2,937,000, or $0.25 per share.

The ALLL stood at $4.0 million, or 4.25 percent of gross loans, as of Dec. 31, 2011. This compares to $4.18 million, or 3.86 percent of loans, at the end of 2010.

The Company has been deliberately shrinking in size in recent years as a way to preserve its capital ratios. At the end of 2011, the Company had total assets of $138 million, down 13.4 percent from the same date in 2010. Total deposits at yearend were $124 million, down 9.4 percent from a year ago. The Company’s gross loans fell 13.1 percent to $94.1 million at the end of 2011.

Mission Oaks Bancorp’s only subsidiary is Mission Oaks National Bank, a federally chartered community bank that currently operates branch offices in Temecula, Fallbrook and Lake Elsinore. The bank closed its Ontario office in 2010 and its Highway 79 South/Temecula Parkway branch in Temecula in 2011. It has announced plans to close the Lake Elsinore office on April 19, 2012.

Mission Oaks Bancorp common stock is traded over the counter under the stock symbol MOKB.OB.

For more information about Mission Oaks National Bank visit its website at missionoaksbank.com.

Forward Looking Statements: This press release may contain statements concerning future performance, developments or events concerning expectations for growth and market forecasts, and other guidance on future periods that constitute forward looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, the effect of interest rate changes, the ability to control costs and expenses, financial policies of the United States government, and general economic conditions.

Contact:
         Mission Oaks National Bank
         Gary Deems, president and chief executive officer
         (951) 506-8891

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Don McAuliffe
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