Pacific State Bank - Stockton, California

Stockton , California – October 19, 2006 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 record 3rd quarter profits and asset growth for the Stockton, California based financial institution:

Net income for the third quarter of 2006 of $1,512,000 and net income for the nine months ended September 30, 2006 of $4,026,000.
Total Assets as of September 30, 2006 of $342,808,000.

Rosso noted that the record financial performance reflected strong year to date and quarter over quarter improvement. PSBC quarter over quarter September 30, 2006 compared to September 30, 2005 financial performance information is as follows:

Balance Sheet:

Total Federal Funds, Interest Bearing Deposits in Banks and Investment Securities: $22,835,000 , a decrease of $15,016,000 or 39.67%.
Net Loans: $280,501,000 , an increase of $61,499,000 or 28.08%.
Total Assets: $342,808,000 , an increase of $49,158,000 or 16.74%.
Non-Interest Bearing Deposits: $63,150,000 , an increase of $1,641,000 or 2.67%.
Total Deposits: $299,849,000 , an increase of $40,899,000 or 15.79%.
Total Share holders Equity: $26,398,000 , an increase of $6,267,000 or 31.13%. In addition to the retention of earnings, the increase in shareholders equity includes the proceeds of the sale of common stock to a new member of the Board of Directors and stock issued subsequent to the exercise of options by directors and employees.

Income Statement:

Total Interest Income: $6,942,000, an increase of $1,825,000 or 35.67%.
Total Interest Expense: $2,479,000, an increase of $1,114,000 or 82.61%.
Net Interest Income: $4,463,000, an increase of $711,000 or 18.96%.
Non-Interest Income: $718,000, an increase of $141,000 or 24.40%.
Non-Interest Expense: $2,602,000, an increase of $241,000 or 10.21%. The increase in non-interest expense was due in part to the cost of additional staff to support the growth of the Bank and the expense of opening the Bank’s ninth branch office in Lodi, California. As of September 30, 2006, the Company had 80 full-time employees as compared to 71 as of September 30, 2005. In addition, the company has purchased a building in Hayward, California in preparation for the expected opening of a tenth office there during the first quarter of 2007.
Net Income: $1,512,000, an increase of $314,000 or 26.21%.
Net Interest Margin: 5.79%, down 14 basis points. The decrease is due primarily to increases in the volume and rates paid on time deposits offset by the increases in the volume of loans and the overall increases in the yields on earning assets.
Annualized Return on Average Assets: 1.77% up slightly from 1.69%.
Annualized Return on Average Equity: 23.93% down slightly from 24.76%.
Efficiency Ratio: 51.11% improving from 55.70%.
Basic Earnings Per Share: $0.44, an increase of $0.09 per share or 22.86%.
Diluted Earnings Per Share: $0.39, an increase of $0.08 per share or 25.81%.

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

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

Total Fed Funds, Interest Bearing Deposits in Banks and Investment Securities: $22,835,000 , a decrease of $10,371,000 or 31.23%.
Net Loans: $280,501,000 , an increase of $38,945,000 or 16.12%.
Total Assets: $342,808,000 , an increase of $33,197,000 or 10.72% from year end 2005.
Non-Interest Bearing Deposits: $63,150,000 a decrease of $5,507,000 or 8.02%.
Total Deposits: $299,849,000 , an increase of $26,775,000 or 9.81%.
Total Share holders Equity: $26,398,000 , an increase of $5,025,000 or 23.51%.

Income Statement – Nine months ended September 30, 2006 compared to September 30, 2005

Total Interest Income: $19,063,000, an increase of $5,489,000 or 40.44%.
Total Interest Expense: $6,321,000, an increase of $2,677,000 or 73.46%.
Net Interest Income: $12,742,000, an increase of $2,812,000 or 28.32%.
Non-Interest Income: $1,809,000, a decrease of $134,000 or 6.90%.
Non-Interest Expense: $7,641,000, an increase of $1,053,000 or 15.98%.
Net Income: $4,026,000, an increase of $823,000 or 25.69%.
Net Interest Margin: 5.84% up 38 basis points. The net interest margin increased on a year to date basis due to the increases in the volume and rates of earning assets outpacing increase in the volume and rates paid on interest bearing liabilities.
Annualized Return on Average Assets: 1.68% up from 1.57%.
Annualized Return on Average Equity: 23.11% down slightly from 23.65%
Efficiency Ratio: 53.50% improving from 56.49%.
Basic Earnings Per Share: $1.16, an increase of $0.23 per share or 23.66%.
Diluted Earnings Per Share: $1.04 , an increase of $0.22 per share or 25.61%.

During the third quarter of 2006 we opened our ninth branch located in Lodi, California. We also purchased a former bank building in Hayward California in preparation for the first quarter 2007 opening of our tenth office.

Attached are certain unaudited financial statements supporting the financial information summarized above. 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)	September 30	September 30
Assets	2006	2005
Assets	2006
Cash and due from banks	$12,919	16,580
Federal funds sold	213	16,763
Interest –bearing deposits in banks	0	100
Investment securities – available for sale (carrying
value of $23,112 in 2006 and $22,215 in 2005)	22,622	20,988
Loans, less allowance for loan losses of $2,604 in 2006 and $2,414 in 2005	280,501	219,002
Bank premises and equipment, net	12,019	9,479
Company owned life insurance	6,012	4,806
Accrued interest receivable and other assets	8,522	5,932
Total assets	$342,808	293,650

Liabilities and Shareholders’ Equity

Deposits:
Non-interest bearing	$63,150	61,509
Interest bearing	236,699	197,441
Total deposits	299,849	258,950
Other borrowings	4,900	4,000
Subordinated debentures	8,764	8,764
Accrued interest payable and other liabilities	2,897	1,805
Total liabilities	316,410	273,519
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
3,616,418 in 2006 and 3,489,982 in 2005	8,538	7,291
Retained earnings	17,937	12,829
Accumulated other comprehensive loss, net of tax	(77)	11
Total shareholders’ equity	26,398	20,131
Total liabilities and shareholders’ equity	$342,808	293,650

PACIFIC STATE BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
	Three months ended		Nine months ended
	September 30		September 30
(in thousands, except per share amounts)	2006	2005	2006	2005
Interest income:
Interest and fees on loans	$6,627	$4,836	$18,086	$12,716
Interest on federal funds sold	21	84	38	209
Interest on investment securities	294	197	939	649
Total interest income	6,942	5,117	19,063	13,574
Interest expense:
Interest on deposits	2,207	1,199	5,484	3,205
Interest on subordinated debentures	187	145	531	372
Interest on borrowings	85	21	306	67
Total interest expense	2,479	1,365	6,321	3,644
Net interest income	4,463	3,752	12,742	9,930
Provision for loan losses	90	90	270	210
Net interest income after
provision for loan losses	4,373	3,662	12,472	9,720
Non-interest income:
Service charges	195	197	653	567
Other fee income	475	238	928	648
Gain from sale of loans	48	142	228	728
Total non-interest income	718	577	1,809	1,943
Non-interest expenses:
Salaries and employee benefits	1,359	1,255	4,044	3,563
Occupancy	258	224	665	618
Furniture and equipment	174	156	535	436
Other	811	726	2,397	1,971
Total non-interest expenses	2,602	2,361	7,641	6,588
Income before provision for income taxes	2,489	1,878	6,640	5,075
Provision for income taxes	977	680	2,614	1,872
Net income	$1,512	$1,198	$4,026	$3,203
Basic earnings per share	$0.44	$0.35	$1.16	$0.93
Diluted earnings per share	$0.39	$0.31	$1.04	$0.82
Weighted average common shares outstanding	3,467,819	3,467,819	3,475,663	3,459,428
Weighted average common and common equivalent shares outstanding
	3,841,522	3,926,957	3,867,431	3,890,905

PACIFIC STATE BANCORP
Yield Analysis


			For the Three Months Ended			For the Three Months Ended
			Ended September 30, 2006			Ended September 30, 2005
				Interest	Average		Interest	Average
			Average	Income or	Yield or	Average	Income or	Yield or
Assets:			Balance	Expense	Cost	Balance	Expense	Cost
Interest-earning assets:
Loans			$280,097	$6,627	9.39%	$220,066	$4,836	8.72%
Investment securities			24,310	294	4.80%	18,835	192	4.04%
Federal funds sold			1,651	21	5.05%	11,531	84	2.89%
Interest bearing deposits in banks			-	-	0.00%	546	5	3.63%
		Total average earning assets	306,058	6,942	9.00%	250,978	5,117	8.09%

Non-earning assets:
Cash and due from banks			13,833			14,281
Other assets			18,371			15,918
		Total average assets	$338,262			$281,177


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

	Interest-bearing demand		$89,429	632	2.80%	$103,358	595	2.28%
	Savings		6,526	17	1.03%	6,691	9	0.53%
	Time deposits		133,455	1,558	4.63%	77,217	595	3.06%
	Other borrowings		15,555	272	6.94%	12,981	166	5.07%

		Total average interest-bearing liabilities	244,964	2,479	4.01%	200,247	1,365	2.70%

Noninterest-bearing liabilities:
	Demand deposits		67,163			61,156
	Other liabilities		1,069			559
		Total liabilities	313,197			261,962
Shareholders' Equity:			25,065			19,215
Total average liabilities and shareholders' equity			$338,262			$281,177

Net interest income				$4,463			$3,752

Yield on interest-earning assets					9.00%			8.09%
Cost of funding interest-earning assets					3.21%			2.16%
Net interest margin					5.79%			5.93%

PACIFIC STATE BANCORP
Yield Analysis


			For the Nine Months Ended			For the Nine Months Ended
			Ended September 30, 2006			Ended September 30, 2005
				Interest	Average		Interest	Average
			Average	Income or	Yield or	Average	Income or	Yield or
Assets:			Balance	Expense	Cost	Balance	Expense	Cost
Interest-earning assets:
Loans			$264,800	$18,086	9.13%	$210,847	$12,716	8.06%
Investment securities			25,629	939	4.90%	17,977	482	3.58%
Federal funds sold			1,052	38	4.83%	9,946	209	2.81%
Interest bearing deposits in banks			-	-	0.00%	4,392	167	5.08%
		Total average earning assets	291,481	19,063	8.74%	243,162	13,574	7.46%

Non-earning assets:
Cash and due from banks			13,210			14,044
Other assets			16,552			15,571
		Total average assets	$321,243			$272,777


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

	Interest-bearing demand		$93,571	1,814	2.59%	$103,122	1,733	2.25%
	Savings		6,452	42	0.87%	6,968	27	0.52%
	Time deposits		115,750	3,628	4.19%	74,139	1,445	2.61%
	Other borrowings		17,294	837	6.47%	12,873	439	4.56%

		Total average interest-bearing liabilities	233,067	6,321	3.63%	197,102	3,644	2.47%

Noninterest-bearing liabilities:
	Demand deposits		63,534			54,022
	Other liabilities		1,347			3,547
		Total liabilities	297,948			254,671
Shareholders' Equity:			23,295			18,106
Total average liabilities and shareholders' equity			$321,243			$272,777

Net interest income				$12,742			$9,930