Stockton, California – July 13, 2007
Steven A. Rosso, President and C.E.O. of Pacific State Bancorp (NASDAQ Global Market/PSBC), the parent company of Pacific State Bank, announced that Pacific State Bancorp was one of the 24 banks (one of only two financial institutions headquartered in California) and thrifts that comprise the 2007 Sandler O’Neill Sm-All Stars. The class of 2007 welcomes back 9 alumni from their Class of 2006 and admits 15 new members to this exclusive fraternity. The objective of the Sm-All Stars remains unchanged: to identify the top performing small-cap banks and thrifts in the nation. By identifying this group, they hope to provide investors with a narrow list from which to uncover the next crop of leading mid-cap banks and thrifts and, most importantly, expose them before they are discovered by the rest of the world. They note that 38% of their Class of 2007 Sm-All Stars are currently covered by one or fewer Wall Street firms. Additionally, institutional ownership for this group is fairly low at 27%.

All 610 publicly traded banks and thrifts with a market cap of less than $2 billion were included in Sandler O’Neill’s evaluation to identify the small-cap depository institutions that stand out from the pack. In separating the wheat from the chaff, they applied numerous screens before awarding Sm-All Star status. Their analysis focuses on growth, profitability, credit quality, and capital strength. In all, their screening methodology eliminated 586 institutions, or 96% of the institutions being evaluated. The performance metrics of the remaining 24 institutions are outstanding, with the Class of 2007 delivering bottom line results that are markedly better than the industry as a whole, as shown below.

 Performance Metrics: 2007 Sm-All Stars vs. Industry Medians

source: SNL DataSource and Sandler O’Neill calculations .

Since Sandler O’Neill first released the Sandler O’Neill Sm-All Stars in July of 2004, the groups have performed extremely well. In fact, the Classes of 2004 and 2005 outperformed their benchmarks by nearly three times, appreciating 30.9% and 9.7% versus 10.9% and 3.2% for the NASDAQ Bank Index (down 1%), they suspect this is a short-term phenomenon. In recent months, investors have consciously sold shares in companies that have experienced rapid growth (as all of the Sm-All Stars did), due to credit concerns. Over time, they suspect these concerns will abate and these high performing companies will further differentiate themselves from the pack While other factors not evaluated in the Sm-All Star screening process, such as valuation and risk, should also used in making investment decisions, the relative performance by their first two vintages of Sm-All Stars suggests to them that the Sm-All Stars represent a valid starting point in identifying high quality small-cap companies before they are discovered by Wall Street.

Class of 2007 Sm-All Stars

Source: SNL DataSource and Sandler O’Neill