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Central Valley Community BancorpLetter to Shareholders Continued growth and enhanced performance of First PacTrust Bancorp, Inc. is the primary focus of management and the Board of Directors. During 2004, total assets grew by $50.5 million or 8.1%, from $624.0 million at year-end 2003 to $674.5 million at December 31, 2004. This increase primarily reflected growth in loans receivable of $41.5 million funded by an increase in deposits of $63.7 million. In an environment of high loan prepayments and refinancing activity the Company originated $273.6 million in new loans during 2004 resulting in the increase in loans receivable. The Company continues to develop strong account relationships with customers by providing high quality service while offering a variety of innovative and competitive deposit products. Staff training and management oversight continue to be emphasized. New products introduced during 2004 included an adjustable rate certificate of deposit, a high yield savings account, and an improved home equity line of credit. To entice new customers to our facilities and as an additional service to existing customers, free self-service coin counting is now offered at all branches. Service quality is guaranteed to each new account holder, and they also are provided the president’s phone number should any problems be encountered that the Bank’s staff cannot resolve. The Company also has a formal program where we pay customers for suggestions. We believe our customers are the Bank’s most important asset, and proactively solicit their recommendations for service improvements. Growth, good customer relations and improved performance resulted in increased earnings. For the year ended December 31, 2004, the Company reported net income of $5.1 million, an increase of $1.0 million or 23.8%, compared to net income of $4.1 million for the prior year. The Company reported basic and diluted earnings per share of $1.18 and $1.16 for the year ended December 31, 2004, as compared to $.86 and $.85 for the prior year. This success was achieved through effective interest rate risk management practices, even though the Company was challenged with a flatting yield curve during 2004, as the Federal Reserve increased federal funds rates while mid- to long-term interest rates remained relatively low, by historical standards. This interest rate environment continued to cause significant prepayments and refinancing of higher yielding loans, and resulted in our re-investment of the proceeds in lower yielding assets, as rates paid on deposits and shorter-term borrowed funds increased. During 2004, the Company continued to increase the dividend payout on a quarterly basis. Dividends paid during 2004 aggregated $0.42 per share compared to $0.26 per share paid in the prior year. Stock repurchases continued with 448,300 shares repurchased in 2004, up from the 398,600 acquired during 2003. The board of directors has currently authorized the Company to repurchase up to an additional 126,800 common shares (as of March 11, 2005), and will consider additional repurchases when that authorization is completed, subject to market conditions, our capital level, and other available alternatives. The Company continues to evaluate alternatives relative to improving future earnings which are inherently tied to changes in interest rate levels, credit quality and economic trends. If the Federal Reserve continues to increase short-term interest rates, the Company’s interest expense on deposits is expected to increase at a faster pace than the interest income received on earning assets. This is due to the relatively short maturity of the Company’s deposits verses the longer term maturity of the loan portfolio. In this environment, considering the Company’s current high capital ratios, the plan is for continued leveraging of assets through loan portfolio growth funded with deposit growth and borrowed funds with terms that provide an acceptable net interest spread. The Company recently took action based on its evaluation of opportunities to improve the Company’s investment portfolio results through tax-advantaged investments. In December, to advance the Bank’s “Community Reinvestment Act” position as well as to enhance future after-tax net income, the Bank invested in federal low-income housing tax credits (related to properties located in the Bank’s CRA assessment areas) through an equity investment in a California Affordable Housing Fund. The investment will result in low income housing project tax credits over several years. Based upon research, analysis and negotiations performed through much of 2004, in January 2005 the Company also completed a $15.0 million bank-owned life insurance (BOLI) investment. The market rewarded the combined effects of the Company’s improved operating results, stock buy-backs and increased dividends rate with a year-end 2004 closing price of $27.35, up 22.5% from the closing price of $22.35 on December 31, 2003. As a local community bank with a growing regional and internet presence, our customer base is strong and improving. Looking ahead, we expect to continue to build upon our strengths and translate them into value for our shareholders. We would also like to thank the Bank’s management team and employees for their dedicated efforts to make 2004 a very successful year for the Company. (This page has been left blank intentionally.) (This page has been left blank intentionally.) (This page has been left blank intentionally.) Shareholder Information Annual Meeting April 20, 2005. 9:00 a.m. PDT The Bonita Golf Club 5540 Sweetwater Road Bonita, California 91902 Investor Relations To obtain information about the Company, including a copy of our Annual Report on Form 10K, please contact: The Secretary First PacTrust Bancorp, Inc. 610 Bay Boulevard Chula Vista, California 91910 (619) 691-1519 E-mail: FPTB@pacifictrustbank.com Listing of Common Stock First PacTrust Bancorp, Inc.’s common stock is traded on the Nasdaq National Market. Its symbol is “FPTB” Transfer Agent and Registrar for Common Stock Register and Transfer Company 10 Commerce Drive Cranford, NJ 07016-3572 Stockholder Customer Service: (800) 368-5948 Auditors Crowe Chizek and Company LLP 354 Eisenhower Parkway, Plaza I Livingston, NJ 07039 Corporate Counsel Silver, Freedman & Taff, LLP 1700 Wisconsin Ave. N.W. Washington, D.C. 20007 First PacTrust Bancorp, Inc. Directors and Officers Board of Directors: Alvin L. Majors - Chairman of the Board Hans R. Ganz Francis P. Burke Donald M. Purdy Kenneth W. Scholz Donald A. Whitacre Executive Officers Hans R. Ganz – President and Chief Executive Officer James P. Sheehy – Executive Vice President, Secretary and Treasurer Regan J. Gallagher – Senior Vice President - Controller Pacific Trust Bank Executive Officers Hans R. Ganz – President and Chief Executive Officer James P. Sheehy – Executive Vice President, Secretary and Treasurer Melanie M. Stewart – Executive Vice President - Lending Regan J. Gallagher – Senior Vice President - Controller Rachel M. Carrillo – Senior Vice President - Branch Operations Lisa R. Goodwin – Senior Vice President - Information Services
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