Stockton , California – February 21, 2008
Steve n A. Rosso, President and C.E.O. of Pacific State Bancorp (NASDAQ Global Market/PSBC), the parent company of Pacific State Bank, today reported 2007 and 4 th quarter profits and asset growth for the Stockton, California based financial institution:

• Net income for the year ended December 31, 2007 decreased 18% to $4,549,000 and decreased by 66% to $513,000 for the fourth quarter of 2007.
• Total Assets as of December 31, 2007 increased 11% to $431,074,000.

Mr. Rosso noted that the decreased income performance is the result of the Bank recording an increase of $1,065,000 in the provision for loan losses in 2007 compared to 2006. The Bank recorded an increase of $1,075,000 in the provision for loan losses in the fourth quarter of 2007 over 2006 levels. The increase in the provision for loan losses in the fourth quarter represented probable losses from specific customers and not degradation of overall credit quality in the loan portfolio. However, the Bank is actively monitoring the weakening economic outlook, in the California Central Valley, which may indicate the need to record additional provision in the future. At present, Management believes that the level of allowance for loan losses currently recorded is sufficient for probable losses.

In addition to the increased provision for loan losses, PSBC has seen an erosion of its net interest margin. Mr. Rosso noted that market rates paid on deposits grew more robustly than market rates received on loans and other interest bearing assets in 2007. In addition to the increasing rate environment in deposits, the Bank has also experienced deposit migration from lower cost deposits such as checking accounts to higher cost deposits such as certificates of deposit. Despite the net interest margin erosion of 97 basis points, PSBC was able to increase net interest income by $93,000 by growing its average earning assets by $63,105,000 or 21% in 2007.

PSBC financial performance information for the three month period ending December 31, 2007 compared to the same quarter in the prior year is as follows:

Income Statement:

• Total Interest Income: $7,667,000, an increase of $235,000 or 3.2%.
• Total Interest Expense: $3,492,000, an increase of $625,000 or 21.8%.
• Net Interest Income: $4,175,000, a decrease of $390,000 or 8.5%.
• Non-Interest Income: $484,000, a decrease of $290,000 or 37.5%. 
• Non-Interest Expense: $2,585,000, a decrease of $134,000 or 4.9%. 
• Net Income: $513,000, a decrease of $1,004,000 or 66.2%.
• Efficiency Ratio: 55.5% deteriorating from 50.9%.
• Basic Earnings Per Share: $0.14 a decrease of $0.29 per share or 67.4%.
• Diluted Earnings Per Share: $0.13, a decrease of $0.26 per share or 66.7%.

PSBC December 31, 2007 compared to December 31, 2006 annual financial performance information was as follows: 

Balance Sheet:

• Total Federal Funds and Investment Securities: $76,232,000 , an increase of $21,495,000 or 39.3%.
• Net Loans: $308,458,000 , an increase of $21,140,000 or 7.4%.
• Total Assets: $431,074,000 , an increase of $44,322,000 or 11.5%.
• Non-Interest Bearing Deposits: $67,071,000 , a decrease of $6,126,000 or 8.4%.
• Total Deposits: $341,821,000 , an increase of $825,000 or 0.2%.
• Total Borrowings: $40,000,000 an increase of $35,100,000 or 716.3%. The increase in other borrowings was primarily the result of the Bank utilizing relatively low cost borrowings to fund asset growth.
• Total Share holders Equity: $34,036,000 , an increase of $4,976,000 or 17.1%. In addition to the retention of earnings, the increase in shareholders equity includes the proceeds of stock option exercises by directors and employees.
  

Income Statement:

• Total Interest Income: $31,242,000 an increase of $4,747,000 or 17.9%.
• Total Interest Expense: $13,842,000, an increase of $4,654,000 or 50.7%.
• Net Interest Income: $17,400,000, an increase of $93,000 or 0.5%.
• Non-Interest Income: $2,465,000, a decrease of $118,000 or 4.6%. The decrease in noninterest income was primarily the result of decreased loan sales in 2007.
• Non-Interest Expense: $10,997,000, an increase of $637,000 or 6.2%.  The increase in non-interest expense was due in part to the cost of facilities and operations associated with the growth of the Bank. 2007 was the first full year of expenses associated with the opening of the Bank’s eighth branch office in Lodi, California in 2006. In addition, the company opened its ninth branch office in Hayward California during the first quarter of 2007.
• Net Income: $4,549,000, a decrease of $994,000 or 17.9%.
• Net Interest Margin: 4.79%, down 97 basis points.
• Annualized Return on Average Assets: 1.13% down from 1.67%.
• Annualized Return on Average Equity: 14.22% down from 22.91%.
• Efficiency Ratio: 55.36% deteriorating from 52.09%.
• Basic Earnings Per Share: $1.23, a decrease of $0.34 per share or 21.7%.
• Diluted Earnings Per Share: $1.14, a decrease of $0.27 per share or 19.2%.

Attached are certain unaudited financial statements supporting the financial information summarized above.  Further inquiries should be directed to Mr. Rosso at 209-870-3214, or by mail to P.O. Box 1649, Stockton, California 95201.  Additional information also can be obtained by visiting the Company website –www.pacificstatebank.com.

SAFE HARBOR : Except for historical information contained herein, the statements contained in this press release are forward-looking statements within the meaning of the "safe harbor" provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those set forth in or implied by forward-looking statements. These risks are described from time to time in Pacific State Bancorp's Securities and Exchange Commission filings, including its Annual Reports on Form 10-K and quarterly reports on Form 10-Q. Pacific State Bancorp disclaims any intent or obligation to update these forward-looking statements.