Officials at Mission Valley Bank are optimistic that, despite a perceived second-quarter loss in 2010, working with customers in this tough economy will be more beneficial in the long run than writing off any potential losses. Acknowledging that businesses continue to struggle with tight cash flow that severely impacts their ability to meet their obligations, President and CEO Tamara Gurney of Mission Valley Bancorp, the parent company of Mission Valley Bank, addressed the situation.

“We are a community based business bank dedicated to doing all we can to work with our clients and assist them through the difficulties associated with the current economy,” she said. “As such, Mission Valley is a direct reflection of the companies and communities we serve. As 2010 progresses and many of our customers continue to struggle with the economy, it is clear that our Bank must continue to increase reserves to cover potential losses in our loan portfolio.

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“During the second quarter of 2010, we increased our provision for possible loan losses by more than $1.4 million – this is in addition to the $752,000 that was placed into reserves during the first quarter of the year – bringing our current reserve total to more than $5.8 million. Our ability to continue to shore up reserves to these levels is made possible solely due to the fact that the bank’s Net Operating Income (before taxes and provision for possible loan losses) remains strong, reaching $1.4 million year to date.”

Gurney continued, “We remain committed to our decision to assist our clients through these difficult days – though it is a decision that unfortunately comes at a significant (though we believe temporary) cost – our continuing need to increase reserves. Each dollar put toward reserves comes directly off of our bottom line – so, despite our solid performance through the first six months of the year, Mission Valley Bancorp is reporting a loss of $329,000 through the second quarter of 2010.”

“While disappointed to report this loss, we remain committed to doing all we can to work through this period side by side with our clients. As testament to our philosophy, the majority of our portfolio is ‘paying as agreed’ and Mission Valley continues to experience marked decreases in both classified and delinquent loan ratios. In fact, during the past 6 months classified loans are down by nearly 12% and delinquencies by more than 17%.

Additionally, we are beginning to hear much more positive news from the local business community. Although we remain cautious, these are positive indicators. As we continue to work through these issues with our clients, we anticipate the need for additional provisions for possible loan losses may be reduced, thereby resulting in increases to (or positive) net income through the remainder of 2010.”

Mission Valley continues to exceed all requirements as a well-capitalized institution with Tier 1 Capital to Assets of 13.2% with strong reserves of 2.98% of total loans and solid core revenue generation.

About Mission Valley Bank

Mission Valley Bank is a full-service, independent, commercial bank specializing in the banking needs of small to medium businesses in the San Fernando & Santa Clarita Valleys. The Bank was chartered in July 2001, with a vision of local ownership and a commitment to providing financial solutions to meet the needs of its clients.

Certain matters discussed in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current management expectations and, therefore, are subject to certain risks and uncertainties that could cause actual results, performance, or achievements to differ materially from those expressed, suggested, or implied by the forward-looking statements. Forward-looking statements are effective only as of the date that they are made and Mission Valley Bank assumes no obligation to update this information.