Desert Community Bank (DCBK) Announces Second Quarter 2004 Earnings

Ronald L. Wilson, Chairman, President and CEO of Desert Community Bank in Victorville, announced second quarter consolidated 2004 financial results.

The news from the High Desert Region of Southern California is that our real estate market remains strong and commerce is steadily increasing. Established businesses are expanding and new businesses are coming to the area. New jobs are being provided by small entrepreneurs and large national corporations. Our corner of the world is no longer a secret.

The second quarter of 2004 compared to the second quarter of 2003 reflected lower earnings growth. However, the year-to-date result is 5% better than last year. The Board and Management project that the end of the year result will reflect an 8% to 10% improvement.

In the second quarter of this year compared to the second quarter of last year, the Bank incurred legal expenses of $130,000 related to operations and loan matters that will not be reoccurring. The quarter comparison also reflects an increase in loan loss reserve contribution of $150,000, although the $875,000 contributed for the year is consistent with the first half of 2003. Finally, in the second quarter of 2004 compared to the same period in 2003, interest from lease loans declined $240,000. The increase in the Bank's loan to deposit ratio, with loans of approximately $300 million at June 30, 2004, should help overcome the decline in income that resulted from driving down the lease portfolio.

As we enter the third quarter of 2004, there are several positive financial facts to report that will contribute to a favorable trend. The loan loss reserve contribution for the year should not significantly exceed the amount contributed the past three years, which was $1.8 million on average. Therefore, the quarterly contribution the second half of 2004 should be $462 thousand, although loan growth may prompt the Board and Management to contribute approximately $600 thousand per quarter.

In the third quarter, we anticipate receiving a legal reimbursement of $110 thousand. We also anticipate a gain on sale of SBA loans in the sum of $250 thousand.

The Bank's net interest margin should improve the remainder of this year. We have raised loan rates tied to Prime and have benefited from an increase in interest paid on Federal Funds sold. The Bank's cost of funds will not evidence a corresponding increase.

The High Desert is the place to be. Thank you for your continued confidence in the Board and Management of Desert Community Bank.

You can direct questions to Ronald L. Wilson, President/Chairman/CEO, at (760) 243-2140 ext. 1001 or e-mail at rwilson@dcbk.org.

                  Desert Community Bank & Subsidiaries
              Consolidated Income Statement with Subsidiaries
                               (Unaudited)

                                    (Amounts in 000's)   (Amounts in 000's)

                                      Six Months           Three Months
                                     Ended June 30,        Ended June 30,
                                     2004       2003       2004       2003
Interest income and fees
  Interest/fees on loans/leases    $11,144    $11,308     $5,669     $5,722
  Interest on securities               981        694        546        359
  Interest on Federal Funds Sold       237        146        105         99
                                    ------     ------     ------     ------
    Total interest income           12,362     12,148      6,320      6,180
Interest expense                     1,471      1,941        736        949
                                    ------     ------     ------     ------
    Net interest income             10,891     10,207      5,584      5,231
Provision for loan & lease losses      875        725        650        500
Noninterest income
  Service fee income                 1,888      1,551        920        638
  Gain on sale of loans                  0         63          0          0
  Gain/Loss on sale of securities        0         43          0          1
  Other noninterest income             745        763        356        514
                                    ------     ------     ------     ------
    Total noninterest income         2,633      2,420      1,276      1,153
Noninterest expense
  Salaries and employee benefits     4,801      4,078      2,393      2,069
  Occupancy expense                  1,139      1,279        570        694
  Other noninterest expense          3,180      3,217      1,683      1,498
                                    ------     ------     ------     ------
    Total noninterest expense        9,120      8,574      4,646      4,261
                                    ------     ------     ------     ------
Earnings before income taxes         3,529      3,328      1,564      1,623
Income Taxes                         1,342      1,282        595        619
                                    ------     ------     ------     ------
    Net income                      $2,187     $2,046       $969     $1,004
                                    ======     ======     ======     ======

Per Share Data:
  Net income per share Basic         $0.74      $0.70      $0.33      $0.34
  Average number of shares of
  common stock oustanding
year to date / during quarter    2,941,272  2,941,272  2,941,272  2,941,272
Net income per share
 Fully Diluted                       $0.74      $0.70      $0.33      $0.34
Average number of shares of
  common stock and common
  stock equivalents (options)
  outstanding during quarter     2,941,272  2,941,272  2,941,272  2,941,272


(Unaudited)           (Amount in 000's)             June 30,
ASSETS                                       2004             2003
                                          ---------        ---------

Securities- Available for sale            $  63,434        $  34,589
Federal Funds Sold                           30,848           34,868
Loans                                       299,746          260,066
Allowance for loan and lease losses          (2,934)          (3,881)
                                          ---------        ---------
Net Loans                                   296,812          256,185
Total Earning Assets                        391,094          325,642

Cash & Noninterest earning                   30,649           20,958
Deposits
Premises and equipment, net of
 accumulated depriciation and amortization   12,372           12,614

Other real estate owned                       2,375                -
Other assets                                 16,638           14,302
                                          ---------        ---------
Total Assets                              $ 453,128        $ 373,516
                                          =========        =========

LIABILITIES
Noninterest-bearing demand                $ 130,583        $ 106,267
Interest-bearing demand                     201,088          150,911
Savings                                      34,007           27,686
Time deposits under $100,000                 20,505           24,307
Time deposits $100,000 and over              21,848           24,698
                                          ---------        ---------
Total Deposits                              408,031          333,869
Other Liabilities                             4,427            2,209
                                          ---------        ---------
Total Liabilities                           412,458          336,078

Shareholders' Equity:
Common stock, authorized 9,375,000
 shares in 2004 and 2003: Issued
 and Outstanding: 2,941,272 in 2004
 and 2003                                    14,810           14,810
Undivided profits                            25,660           21,634
Accumulated other
 comprehensive income                           200              994
                                          ---------        ---------
Total shareholders' equity                   40,670           37,438

Total liabilities and
 shareholders' equity                     $ 453,128        $ 373,516
                                          =========        =========