SENIOR SUBORDINATED NOTES

12 Months Ended

Dec. 31, 2011

Senior Subordinated Notes

SENIOR SUBORDINATED NOTES

NOTE 11 SENIOR SUBORDINATED NOTES

During 2009, PSB issued $7,000 of Senior Subordinated Notes (the “Notes”) on a private placement basis. The Notes carry a fixed interest rate of 8.00% paid quarterly and mature on July 1, 2019. At its option, PSB may prepay the Notes in whole or in part beginning July 1, 2012. Under current banking regulatory capital rules, for the first five years of the issue, PSB may reclassify the Notes as Tier 2 equity capital. Beginning in the sixth year, the amount eligible to be classified as regulatory capital declines 20% per year until the Note’s final maturity. Total interest expense on the Notes was $567 during 2011 and 2010, and $341 during 2009. Notes held by related parties including directors, their families, or significant shareholders totaled $3,250 at December 31, 2011.