Pacific State Bank - Stockton, California

Stockton , California – July 20, 2006 Steven A. Rosso, President and C.E.O. of Pacific State Bancorp (NASDAQ Global Market/PSBC), the parent company of Pacific State Bank, today reported record 2nd quarter profits and asset growth for the Stockton, California based financial institution:

Net income for the second quarter of 2006 of $1,307,000 and net income for the six months ended June 30, 2006 of $2,514,000.
Total Assets as of June 30, 2006 of $327,902,000.

Rosso noted that the financial performance increases reflected strong annual and quarter over quarter improvement.
PSBC quarter over quarter June 30, 2006 compared to June 30, 2005 financial performance information is as follows:

Balance Sheet:

Total Federal Funds, Interest Bearing Deposits in Banks and Investment Securities: $37,031,000 , an increase of $6,017,000 or 19.40%.
Net Loans: $270,107,000 , an increase of $57,561,000 or 27.08%.
Total Assets: $327,902,000 , an increase of $64,417,000 or 24.45%.
Non-Interest Bearing Deposits: $64,127,000 , an increase of $6,093,000 or 10.50%.
Total Deposits: $287,310,000 , an increase of $57,285,000 or 24.90%.
Total Share holders Equity: $24,578,000 , an increase of $5,734,000 or 30.43%.

Income Statement:

Total Interest Income: $6,321,000, an increase of $1,792,000 or 39.57%.
Total Interest Expense: $2,122,000, an increase of $919,000 or 76.39%.
Net Interest Income: $4,199,000, an increase of $873,000 or 26.25%.
Non-Interest Income: $500,000, a decrease of $97,000 or (16.25%). The decline in non-interest income was primarily due to a reduction in Gain on Sale of Loan Income as compared to the 2nd quarter of 2005.
Non-Interest Expense: $2,452,000, an increase of $266,000 or 12.17%. The primary reason for the increase in non-interest expense was company-wide salary expense increases as compared to the 2nd quarter of 2005 to support the growth of the bank. As of June 30, 2006, the Company had 75 full-time employees as compared to 69 as of June 30, 2005.
Net Income: $1,307,000, an increase of $250,000 or 23.65%.
Net Interest Margin: 5.74%, up 44 basis points.
Annualized Return on Average Assets: 1.65% up from 1.57%.
Annualized Return on Average Equity: 22.60% down slightly from 23.00%.
Efficiency Ratio: 53.20% improving from 56.59%.
Basic Earnings Per Share: $0.37, an increase of $0.06 per share or 19.35%.
Diluted Earnings Per Share: $0.34, an increase of $0.07 per share or 25.93%.

PSBC Year-to-date financial performance information for the six month period ending June 30, 2006 is as follows:

Balance Sheet – June 30, 2006 as compared to December 31, 2005

Total Fed Funds, Interest Bearing Deposits in Banks and Investment Securities: $37,031,000 , a decrease of $10,628,000 or 22.30% from year end 2005.
Net Loans: $270,107,000 , an increase of $28,551,000 or 11.82% from year end 2005.
Total Assets: $327,902,000 , an increase of $18,291,000 or 5.91% from year end 2005.
Non-Interest Bearing Deposits: $64,127,000 a decrease of $4,530,000 or 6.60% from year end 2005.
Total Deposits: $287,310,000 , an increase of $14,236,000 or 5.21% from year end 2005.
Total Share holders Equity: $24,578,000 , an increase of $3,205,000 or 14.99% from year end 2005.

Income Statement – Six months ended June 30, 2006 compared to June 30, 2005

Total Interest Income: $12,113,000, an increase of $3,656,000 or 43.23%.
Total Interest Expense: $3,841,000, an increase of $1,563,000 or 68.61%.
Net Interest Income: $8,272,000, an increase of $2,093,000 or 33.87%.
Non-Interest Income: $1,099,000, a decrease of $267,000 or 19.55%.
Non-Interest Expense: $5,039,000, an increase of $821,000 or 19.46%.
Net Income: $2,514,000, an increase of $509,000 or 25.39%.
Net Interest Margin: 5.85% up 65 basis points.
Annualized Return on Average Assets: 1.62% up from 1.50%.
Annualized Return on Average Equity: 22.64% up from 22.58%
Efficiency Ratio: 54.83% improving from 56.81%.
Basic Earnings Per Share: $0.72, an increase of $0.14 per share or 22.41%.
Diluted Earnings Per Share: $0.65 , an increase of $0.13 per share or 25.00%.

Attached are certain additional unaudited financial statements supporting the above financial information. Further inquiries should be directed to Mr. Steven 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.

PACIFIC STATE BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share amounts)	June 30	June 30
Assets	2006	2005
Assets	2006
Cash and due from banks	$13,702	$7,124
Federal funds sold	-	-
Interest –bearing deposits in banks	-	5,000
Investment securities – available for sale (carrying value of $23,546 in 2006 and $18,938 in 2005)	23,329	18,890

Loans, less allowance for loan losses of $2,516 in 2006 and $2,332 in 2005	270,107	212,546
Bank premises and equipment, net	9,564	9,563
Company owned life insurance	4,499	4,329
Accrued interest receivable and other assets	6,701	6,033
Total assets	$327,902	$263,485

Liabilities and Shareholders’ Equity

Deposits:
Non-interest bearing	$64,127	$58,034
Interest bearing	223,183	171,991
Total deposits	287,310	230,025
Other borrowings	4,900	4,000
Subordinated debentures	8,764	8,764
Accrued interest payable and other liabilities	2,350	1,852
Total liabilities	303,324	244,641
Shareholders’ equity:
Preferred stock – no par value; 2,000,000 shares authorized; none outstanding
Common stock – no par value; 24,000,000 shares authorized; issued and outstanding
3,589,458 in 2006 and 3,481,152 in 2005	8,280	7,261
Retained earnings	16,426	11,631
Accumulated other comprehensive loss , net of tax	(128)	(48)
Total shareholders’ equity	24,578	18,844
Total liabilities and shareholders’ equity	$327,902	$263,485

PACIFIC STATE BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share amounts)	June 30	December 31
Assets	2006	2005
Assets	2006	2005
Cash and due from banks	$13,702	$14,453
Federal funds sold	-	4,667
Interest –bearing deposits in banks	-	-
Investment securities – available for sale (carrying value of $23,546 in 2006 and $28,696 in 2005)	23,329	28,539
Loans, less allowance for loan losses of $2,516 in 2006 and $2,356 in 2005	270,107	241,556
Bank premises and equipment, net	9,564	9,511
Company owned life insurance	4,499	4,411
Accrued interest receivable and other assets	6,701	6,474
Total assets	$327,902	$309,611

Liabilities and Shareholders’ Equity

Deposits:
Non-interest bearing	$64,127	$68,657
Interest bearing	223,183	204,417
Total deposits	287,310	273,074
Other borrowings	4,900	4,000
Subordinated debentures	8,764	8,764
Accrued interest payable and other liabilities	2,350	2,400
Total liabilities	303,324	288,238
Shareholders’ equity:
Preferred stock – no par value; 2,000,000 shares authorized; none outstanding
Common stock – no par value; 24,000,000 shares authorized; issued and outstanding
3,589,458 in 2006 and 3,512,622 in 2005	8,280	7,556
Retained earnings	16,426	13,912
Accumulate other comprehensive loss, net of tax	(128)	(95)
Total shareholders’ equity	24,578	21,373
Total liabilities and shareholders’ equity	$327,902	$309,611

PACIFIC STATE BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
	Three months ended June 30		Six months ended June 30
(in thousands, except share amounts)	2006	2005	2006	2005
Interest income:
Interest and fees on loans	$5,998	$4,234	$11,459	$7,881
Interest on federal funds sold	6	67	17	125
Interest on investment securities	317	228	637	451
Total interest income	6,321	4,529	12,113	8,457
Interest expense:
Interest on deposits	1,792	1,070	3,276	2,005
Interest on subordinated debentures	180	105	344	226
Interest on borrowings	150	28	221	47
Total interest expense	2,122	1,203	3,841	2,278
Net interest income	4,199	3,326	8,272	6,179
Provision for loan losses	90	60	180	120
Net interest income after
provision for loan losses	4,109	3,266	8,092	6,059
Non-interest income:
Service charges	250	189	458	370
Other fee income	230	192	461	410
Gain from sale of loans	20	216	180	586
Total non-interest income	500	597	1,099	1,366
Non-interest expenses:
Salaries and employee benefits	1,335	1,192	2,685	2,309
Occupancy	208	196	407	393
Furniture and equipment	183	147	361	279
Other	726	651	1,586	1,237
Total other expenses	2,452	2,186	5,039	4,218
Income before income taxes	2,157	1,677	4,152	3,207
Income tax expense	850	620	1,638	1,202
Net income	$1,307	$1,057	$2,514	$2,005
Basic earnings per share	$0.37	$0.31	$0.72	$0.58
Diluted earnings per share	$0.34	$0.27	$0.65	$0.52
Weighted average common shares outstanding	3,510,801	3,466,017	3,493,964	3,458,115
Weighted average common and common equivalent shares outstanding
	3,900,010	3,845,993	3,894,748	3,869,135

PACIFIC STATE BANCORP
Yield Analysis



			For the Three Months Ended			For the Three Months Ended
			Ended June 30, 2006			Ended June 30, 2005
				Interest			Interest
			Average	Income or	Average Yield or	Average	Income or	Average Yield or
Assets:			Balance	Expense	Cost	Balance	Expense	Cost
Interest-earning assets:
Loans			$265,333	$5,998	9.06%	$208,585	$4,234	8.14%
Investment securities			27,095	317	4.66%	28,628	174	2.44%
Federal funds sold			861	6	2.80%	9,571	67	2.81%
Interest Bearing Deposits in Banks			-	-	-%	5,000	54	4.33%
		Total average earning assets	293,289	6,321	8.64%	251,784	4,529	7.21%

Non-earning assets:
Cash and due from banks			13,498			14,184
Other assets			11,215			4,849
		Total average assets	$318,002			$270,817


Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits

	Interest-bearing Demand		$89,412	573	2.57%	$105,049	595	2.27%
	Savings		6,298	15	0.96%	6,935	9	0.52%
	Time Deposits		116,062	1,204	4.16%	72,901	466	2.56%
	Other borrowings		19,592	330	6.76%	12,869	133	4.15%

		Total average interest-bearing liabilities	231,364	2,122	3.68%	197,754	1,203	2.44%

Non-interest bearing liabilities:
	Demand deposits		62,558			54,721
	Other liabilities		881			170
		Total liabilities	294,803			252,645
Shareholders' equity:			23,199			18,172
Total average liabilities and shareholders' equity			$318,002			$270,817

Net interest income				$4,199			$3,326

Yield on interest-earning assets					8.64%			7.21%
Cost of funding interest-earning assets					2.90%			1.92%
Net interest margin					5.74%			5.30%

PACIFIC STATE BANCORP
Yield Analysis



			For the Six Months Ended			For the Six Months Ended
			Ended June 30, 2006			Ended June 30, 2005
				Interest			Interest
			Average	Income or	Average Yield or	Average	Income or	Average Yield or
Assets:			Balance	Expense	Cost	Balance	Expense	Cost
Interest-earning assets:
Loans			$257,036	$11,459	8.99%	$206,150	$7,881	7.71%
Investment securities			27,408	637	4.67%	18,587	366	3.97%
Federal funds sold			845	17	4.06%	10,011	125	2.52%
Interest Bearing Deposits in Banks			-	---	-%	5,450	85	3.15%
		Total average earning assets	285,289	12,113	8.56%	240,198	8,457	7.10%

Non-earning assets:
Cash and due from banks			12,896			13,930
Other assets			14,431			14,462
		Total average assets	$312,616			$268,590


Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits

	Interest-bearing Demand		$95,679	1,182	2.49%	$103,045	1,137