Orange County Business Bank Announces Record Year for Operating Income and Growth

Business Wire, Jan 31, 2008

NEWPORT BEACH, Calif. -- Orange County Business Bank (the "Bank") (OTCBB:OCBB) announced financial results for the twelve months ended December 31, 2007, concluding its fifth year of operations.

The Bank's operating income (net interest income plus non-interest income) increased 10.5% from $8.5 million in 2006 to $9.3 million for 2007. This increase in operating income was the result of continued growth of quality assets for the Bank.

For the fifth consecutive year, the Bank has grown more than 20% in total assets from the previous year. At December 31, 2007, the Bank's assets totaled $272.2 million, an increase of $56.9 million, or 26.4% over the previous year at $215.3 million.

Total deposits, primarily in checking and money market accounts, increased from $162.1 million at December 31, 2006 to $191.7 million as of December 31, 2007 as the Bank's client base continued to grow. However, as the economy slowed and caused businesses to need less operating cash, business owners began to move money out of their operating accounts into higher yielding forms of deposits, such as certificates of deposit, which contributed to an increase in interest expense, and therefore to a decline in the Bank's net interest margin, from 4.88% to 4.12%.

Total loans increased from $80.2 million at December 31, 2006 to $115.9 million as of December 31, 2007, an increase of $35.7, or by more than 44%.

As banks experience large growth in their loan portfolios, they must ensure that their "Allowance for Loan and Lease Losses" ("ALLL" or "reserves") keep track in accordance with the growth and general risk of the loan portfolio. OCBB did not have any charged-off loans in 2007. Nonetheless, because of the Bank's large increase in its loan portfolio, the Bank had to increase its reserves significantly in 2007. While in the long term, loan growth is generally beneficial to the Bank, adding to reserves increases expenses at the time the loans are made. In 2007, the Bank increased its ALLL by $305 thousand reflecting the strong loan growth in 2007. In 2006, the Bank's loans outstanding decreased, thereby causing a reversal of the ALLL in the amount of $199 thousand. Therefore, from 2006 to 2007, the net increase in reserves was $504 thousand, which was a major contributing factor to the decrease in net income from 2006 to 2007. The Bank's net income for 2007 was $1.04 million ($0.22 per share) versus $1.19 million ($0.28 per share) for the same period in 2006.

Orange County Business Bank does not make home mortgage loans. As such, the Bank has no subprime mortgages. In addition, the Bank does not invest in any securities secured by subprime mortgage loans.

The Bank's capital ratios continue to demonstrate the financial strength of the Bank by exceeding all regulatory guidelines for 'well-capitalized' institutions at December 31, 2007.

As one of the most well capitalized banks in Southern California, the Bank continues to offer substantial resources to the business banking community in Orange County as it has since its inception. The Bank continues to increase its business banking market share while also continuing to build its reputation as a service-oriented and sound financial institution.

Orange County Business Bank offers complete relationship banking services for locally owned and operated businesses, professional practices and commercial/industrial companies of Orange County and adjacent markets. The Bank provides services that include a broad selection of depository as well as business and commercial real estate financing products uniquely designed for each client. The Bank, which opened for business on December 26, 2002, maintains its administrative offices at 4675 MacArthur Court, Suite 200, Newport Beach. The Bank's website is www.ocbusinessbank.com.

This press release includes 'forward-looking' statements within the meaning of Section 27A of the Securities Act. All of the statements contained in this press release, other than statements of historical fact, should be considered forward-looking statements, including but not limited to, any statements which may concern (i) the Bank's strategies, objectives and plans for expansion of its operations, product and services, and growth of its portfolio of loans, deposits and investments, (ii) the Bank's beliefs and expectations regarding actions that may be taken by regulatory authorities having oversight of the Bank, (iii) the Bank's beliefs as to the adequacy of the allowance for loan losses, and (iv) the Bank's beliefs and expectations of the future operating results. Although the Bank believes the expectation reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. All subsequent written and oral forward-looking statements by or attributable to the Bank or persons acting on its behalf are expressly qualified in their entirety by this qualification. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are not intended to give any assurance as to future results. The Bank undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.