UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM~~ SCHEDULE ~~10-K~~14A INFORMATION

X Proxy ~~ANNUAL~~Statement ~~REPORT~~Pursuant ~~PURSUANT~~to TOSection ~~SECTION 13 OR 15~~14(da) OFof ~~THE SECURITIES EXCHANGE ACT OF 1934. For~~ the ~~fiscal year ended December 31, 2009~~

~~___TRANSITION~~ Securities ~~REPORT~~Exchange ~~PURSUANT~~Act TOof ~~SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF~~ 1934~~. For the transition period from __________ to __________~~

~~Commission~~ Filed ~~file~~by ~~number:~~the ~~000-49892~~Registrant [X]

Files by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement

[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Section 240.14a-12

PACIFIC STATE BANCORP

~~(Exact name of Registrant as specified in its charter)~~ _____________________________________________________________________________________________

California (State or other jurisdiction of incorporation or organization)	61-1407606 (I.R.S. Employer Identification No.)
1899 W. March Lane Stockton, CA (Address of principal executive offices)	95207 (Zip Code)

(Name of Registrant as Specified In Its Charter)

~~Registrant’s telephone number, including area code: (209) 870-3214~~ _____________________________________________________________________________________________

~~Securities~~ (Name ~~registered~~of ~~pursuant~~Person(s) toFiling ~~Section~~Proxy ~~12(b)~~Statement, ofif other than the ~~Act:~~Registrant

~~Title~~ Payment of ~~each~~Filing ~~class: Name of~~Fee ~~each~~(Check ~~exchange~~the onappropriate ~~which registered~~box):

~~Common Stock, no par value The~~ ~~NASDAQ~~[X] No ~~Stock~~fee ~~Market, LLC~~Required.

~~Securities~~ [ ] Fee ~~registered~~computed ~~pursuant~~on tothe table ~~Section~~below 12per Exchange Act Rules 14a-6(gi)(1) ofand ~~the Act:~~0-11.

~~Common~~1) ~~Stock,~~Title noof ~~par~~each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price of other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid:

~~Indicate~~ [ ] Fee bypaid ~~check~~previously with ~~mark~~preliminary ~~if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act~~materials.~~Yes [ ]No [X]~~

~~Indicate~~ [ ] Check bybox ~~check~~if ~~mark~~any ifpart of the ~~Registrant~~fee is ~~not~~offset ~~required~~as toprovided ~~file~~by ~~reports~~Exchange ~~pursuant~~Act toRule ~~Section~~0-11(a)(2) 13and oridentify the ~~15(d)~~filing offor which the ~~Securities~~offsetting ~~Exchange~~fee ~~Act~~was ofpaid ~~1934~~previously.~~Yes~~ []Identify Nothe previous ~~[X]~~filing by registration statement number, or the Form or Schedule and the date of its filing.

~~Indicate by check mark whether the Registrant (~~1) ~~has~~Amount ~~filed~~Previously ~~all~~Paid: ~~reports required to be filed by Section 13 or 15(d~~2) ofForm, ~~the~~Schedule ~~Securities Exchange Act of 1934 during the preceding 12 months (~~or ~~for~~Registration ~~such~~Statement ~~shorter~~No.: ~~period~~3) ~~that~~Filing ~~the~~Party: ~~Registrant was required to file such reports~~4), ~~and~~Date ~~(2) has been subject to such filing requirements for the past 90 days. Yes [X] No []~~Filed:

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference to Part III of this Form 10-K or any amendment to this Form 10-K. []

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer (Do not check if a smaller reporting company.) [] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).Yes [ ] No [X]

The aggregate market value of voting and non-voting stock held by non-affiliates of the Registrant was approximately $4,615,525 as of June 30, 2009 which was calculated based on the last reported sale of the Company's Common Stock on June 30, 2009. This calculation does not reflect a determination that certain persons are affiliates of the Registrant for any other purpose.

Common stock, no par value 3,722,198 shares outstanding as of March 31, 2010.

DOCUMENTS INCORPORATED BY REFERENCE

Annual Report to Shareholders for Fiscal Year Ended December 31, 2009 (Part II)

TABLE OF CONTENTS

PART 1.		Page
Item 1.	Business	3
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	25
Item 2.	Properties	25
Item 3.	Legal Proceedings	25
Item 4.	Submission of Matters to a Vote of Security Holders	25
PART II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	26
Item 6.	Selected Financial Data	26
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	26
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	26
Item 8.	Financial Statements and Supplementary Data	26
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	26
Item 9A	Controls and Procedures	27
Item 9 B	Other Information	27
PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	28
Item 11.	Executive Compensation	28
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	28
Item 13.	Certain Relationships and Related Transactions and Director Independence	28
Item 14.	Principal Accountant Fees and Services	28
PART IV.
Item 15.	Exhibits, Financial Statement Schedules	28
	Signatures	29
	Index of Exhibits	30

PACIFIC STATE BANCORP

~~STOCKTON~~May 20, ~~CALIFORNIA~~2010

~~FORM~~Dear ~~10-K~~Fellow Shareholder:

~~FISCAL~~ The ~~YEAR~~Board ~~ENDED~~of ~~DECEMBER~~Directors 31and I would like to extend a cordial invitation for you to attend our Annual Meeting of Shareholders of Pacific State Bancorp ("Bancorp"). The Meeting will be held June 10, ~~2009~~2010, at the main branch of Pacific State Bank, 1547 E. March Lane, Stockton, California, at 4:30 p.m. for the following purposes.

~~PART~~ A INotice of Annual Meeting and a Proxy Statement are enclosed with this letter describing in detail the matters to be acted upon at the meeting. Your participation in Bancorp's activities is important, and we hope you will attend.

~~ITEM~~ Whether 1or not you plan to attend the meeting, please be sure to complete, sign, date and return the enclosed proxy card in the enclosed business reply envelope or vote via telephone or the Internet. ~~BUSINESS~~Returning the enclosed proxy or voting by telephone or the Internet will not prevent you from voting in person if you choose to attend the Annual Meeting.

~~FORWARD~~Voting ~~LOOKING~~your proxy ~~STATEMENTS~~helps Bancorp to reach its quorum requirements for the Annual Meeting and avoids the added expense of postponing the meeting until a quorum can be organized.

~~Certain statements discussed or incorporated by reference in this Annual Report including~~Sincerely, but not limited to, information concerning possible or assumed future results of operations of the Company set forth in the Management's Discussion and Analysis of Financial Condition and Results of Operation, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements include statements in which words such as "expect," "anticipate," "intend," "plan," "believe," "estimate," "consider" or similar expressions are used. The Company’s actual future results and shareholder values may differ materially from those anticipated and expressed in these forward-looking statements, which are based on management's beliefs and assumptions and on information currently available to management, and are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, among others, (1) competitive pressures in the banking industry; (2) changes in the interest rate environment; (3) general economic conditions, either nationally or regionally; (4) changes in the regulatory environment; (5) changes in business conditions and inflation; and (6) changes in securities markets. Many of these factors are beyond the Company’s ability to control or predict. Investors are cautioned not to put undue reliance on any forward-looking statements. In addition, the Company does not have any intention or obligation to update forward-looking statements contained in this Annual Report, even if new information, future events or other circumstances have made them incorrect or misleading. Except as specifically noted herein all references to the "Company" refer to Pacific State Bancorp, a California corporation

~~GENERAL~~Rick ~~DESCRIPTION OF BUSINESS~~D. Simas

~~Pacific~~President ~~State Bancorp (the “Company”) is a holding company with one bank subsidiary, Pacific State Bank, (the “Bank”),~~ and two unconsolidated subsidiary grantor trusts, Pacific State Statutory Trusts II and III. Pacific State Bancorp commenced operations on June 24, 2002 after acquiring all of the outstanding shares of Pacific State Bank. The Bank is a California state chartered bank formed November 2, 1987. The Bank is a member of the Federal Reserve System. The Bank’s primary source of revenue is interest on loans to customers who are predominantly small to middle-market businesses and middle-income individuals. Pacific State Statutory Trusts II and III are unconsolidated, wholly owned statutory business trusts formed in March 2004 and June 2007, respectively for the exclusive purpose of issuing trust preferred securities.CEO

The Bank conducts a general commercial banking business, primarily in the five county regions that comprises Alameda, Calaveras, San Joaquin, Stanislaus and Tuolumne counties. The Bank offers commercial banking services to residents and employers of businesses in the Bank’s service area, including professional firms and small to medium sized retail and wholesale businesses and manufacturers. The Company as of March 31, 2010 had 89 employees, including 41 officers. The Bank does not engage in any non-bank lines of business. The business of the Bank is not to any significant degree seasonal in nature. The Bank has no operations outside California and has no material amount of loans or deposits concentrated among any one or few persons, groups or industries. The Bank operates nine branches with its Administrative Office and one branch located at 1899 W. March Lane, in Stockton, California; 95207 ~~additional~~(209) ~~branches are located in Stockton and in the communities of Angels Camp, Arnold, Groveland, Lodi, Modesto, Tracy and Hayward, California.~~870-3214

~~Pacific~~PACIFIC ~~State~~STATE ~~Bancorp~~BANCORP ~~common stock trades on the NASDAQ Capital Market under the symbol of “PSBC”.~~

~~-3-~~1899 W. March Lane

~~RECENT~~Stockton, ~~DEVELOPMENTS~~California 95207

~~The~~NOTICE ~~Company~~OF ~~has~~ANNUAL ~~been~~MEETING ~~adversely~~OF impacted by the continuing deterioration in the California real estate market. The Company incurred a net loss of $22.4 million for the year ended December 31, 2009 and $5.2 million for the year ended December 31, 2008. Shareholders’ equity has decreased from $27.3 million or 6.47% of total assets at December 31, 2008 to $5.7 million or 1.54% of total assets at December 31, 2009. The net losses in 2009 were due primarily to a provision for loan losses of $15.4 million, a valuation allowance for deferred taxes of $8.4 million for the year ended December 31, 2009 and an increase in nonperforming assets which has reduced the Company’s net interest income.SHAREHOLDERS

Further, the Company’s financial condition has adversely affected funding sources during the past quarter and caused withdrawals of deposits and reductions in borrowing arrangements. As a result of the losses, the Company is deemed to be “under capitalized” as of December 31, 2009. These conditions create an uncertainty about the Company’s ability to continue as a going concern. The consolidated financial statements set forth in the Annual Report have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result from the outcome of the Company’s inability to repay the outstanding principal balance of its debt or from any regulatory action, either of which would affect its ability to continue as a going concern.


Date and Time	4:30 p.m., local time, on June 10, 2010,

Place	Pacific State Bank 1547 E. March Lane Stockton, California 95210

Items of Business	(1) To elect the following seven nominees to the Board of Directors, each for a one-year term and until their successors are elected and have qualified:


		Michael L. Dalton, C.P.A.		Gary A. Stewart
		Maxwell M. Freeman		Yoshikazu Mataga
		Rick D. Simas		Patricia A. Hatton, M.D.
		Harold Hand, M.D.






	(2) To transact such other business as may properly come before the Meeting.

Annual Report	Our 2009 Form 10-K, which is not a part of the proxy soliciting material, is enclosed.

Record Date	You can vote if you are a shareholder of record as of April 20, 2010.

Quorum	A majority of the shares of common stock entitled to vote must be represented at the meeting. If there are insufficient shares, the meeting may be adjourned.

Important Notice Regarding the Internet Availability of Proxy Materials:	The 2009 Form 10-K, Proxy Card and Proxy Statement to shareholders are available at www.proxyvote.com

			By Order of the Board of Directors



May 20 , 2010			Dr. Harold Hand
			Chairman of the Board

OnPACIFIC ~~November~~STATE 10, 2009, the Company received a notice from the Nasdaq Global Market stating that the Company no longer met the $1.00 per share requirement for continued listing on the Nasdaq Global Select Market under Listing Rule 5450 (a)(1). This notice did not result in an immediate delisting of the Company’s common stock from the Nasdaq Global Select Market, as a grace period of 180 calendar days or until May 10, 2010, is provided under the listing rules. However, we elected to apply to transfer listing to the NASDAQ Capital Market as set forth in Listing Rule 5505. As a result of such transfer, the Company became eligible for an additional 180 calendar day grace period. The requirements for initial listing on the Nasdaq Capital Market include a minimum market value of publicly held shares of $15 million, which the Company does not currently meet. We are working diligently to attempt to retain listing of the Company’s common stock on Nasdaq. We believe that improved financial performance that results in an increased stock price, much closer to the Company’s tangible book value, is the best potential solution for regaining compliance with the minimum bid requirement. However, there can be no assurance that our financial performance will improve during the 180 day grace period. If at any time during this grace period the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide us written confirmation of compliance. Also, see “Risk Factors” below.BANCORP

On1899 ~~February~~W. ~~18,~~March ~~2010,~~Lane the Company and the Bank consented to enter into a written agreement with the Federal Reserve Bank of San Francisco (the “FRBSF”) and the State of California Department of Financial Institutions (the “CDFI”) as follow-up to an examination of the Bank (the “Written Agreement”).

~~A copy of the Written Agreement is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated February 22~~Stockton, 2010, and is incorporated herein by this reference. The description provided below of the Written Agreement is a summary and does not purport to be a complete description of all of the terms of such ~~Written~~ ~~Agreement~~California ~~and is qualified in its entirety by reference to the Written Agreement filed with this Current Report.~~95207

~~Among~~NOTICE ~~other~~OF ~~things,~~2010 ~~the~~ANNUAL ~~Written~~MEETING ~~Agreement~~OF provides that the Company and the Bank shall submit to the FRBSF and the CDFI their continuing plans to enhance lending and credit administration functions, to maintain policies and procedures for the maintenance of an adequate allocation for loan and lease losses, to improve the Bank’s earnings and overall condition, improve management of the Bank’s liquidity position and funds management practices and update its capital plan in order to maintain sufficient capital at the Company and the Bank. The Written Agreement also restricts the Company and the Bank from making the payment of dividends, any payments on trust preferred securities, any reduction in capital or the purchase or redemption of stock without the prior approval of the FRBSF. Progress reports detailing the form and manner of all actions taken to secure compliance with the Written Agreement must be submitted to the FRBSF at least quarterly. SHAREHOLDERS

~~The~~NOTICE ~~Directors~~IS ofHEREBY ~~the~~GIVEN ~~Company~~TO ~~and~~SHAREHOLDERS that the ~~Bank~~2010 ~~have~~Annual ~~recognized~~Meeting ~~and~~of ~~agree~~Shareholders ~~with the goal~~ of ~~financial~~Pacific ~~soundness~~State ~~represented~~Bancorp ("Bancorp") bywill ~~the~~be ~~Written~~held ~~Agreement~~June ~~and~~10, ~~have~~2010, ~~confirmed~~at the ~~intent~~main ofbranch ~~the Directors and senior management~~ of ~~the~~Pacific State ~~Company and the~~ Bank, to1547 ~~diligently~~E. ~~seek~~March toLane, ~~comply~~Stockton, ~~with~~California, ~~all~~at ~~requirements~~4:30 ~~(including~~p.m. ~~timelines)~~for ~~specified in~~ the ~~Written Agreement.~~following purposes:

WeTo ~~believe that making~~ elect the ~~improvements~~following inseven ~~our~~(7) ~~operations~~persons ~~required by the Written Agreement will enhance our financial performance. However, there can be no assurance that these results will follow~~ as adirectors ~~result~~ of ~~our~~Bancorp ~~actions,~~for ~~or that we will be able to make~~ the ~~changes~~ensuing year: ~~required~~Michael byL. ~~the~~Dalton, ~~Written~~Maxwell ~~Agreement~~M. ~~Among~~ ~~other things~~Freeman, ~~compliance with~~Harold ~~the~~Hand, ~~Written~~Patricia ~~Agreement~~Ann Hatton, ~~may~~Yoshikazu ~~be more time consuming or expensive than anticipated~~Mataga, ~~the~~Rick ~~objectives~~D. Simas ~~set forth in the Written Agreement may take longer to achieve than we would hope or expect~~ and weGary ~~may not be able to increase our capital consistent with the revised capital plan to be submitted~~A. ~~Our~~ ~~efforts to comply with the Written Agreement may have adverse effects on our operations and financial condition for reasons we cannot currently anticipate~~Stewart. ~~Also,~~ See ~~the conditions of the economy nationally~~"PROPOSAL ~~and~~ ONE: inELECTION ~~California,~~OF ~~the capital markets and the real estate markets may impair the likelihood of success of the remedial actions we are attempting to take~~DIRECTORS."
AsTo transact aany ~~result~~other ofbusiness ~~being~~which ~~undercapitalized under the prompt corrective action rules, the Bank is subject to certain regulatory restrictions. These include, among others, that the Bank~~ may ~~not~~properly ~~make~~come ~~any~~before ~~capital distributions, must submit an acceptable capital restoration plan to~~ the ~~FDIC, may not increase its average total assets during a calendar~~Annual ~~quarter~~ Meeting ~~to exceed its average total assets during the preceding calendar quarter~~ and ~~may~~any ~~not~~postponement ~~acquire a business, establish~~ or ~~acquire~~adjournment ~~a branch office or engage in a new line of business~~thereof.

As Section a16 ~~result~~ of the ~~Written~~By-Laws ~~Agreement, we are actively seeking additional capital either directly through the sale~~ of securities or indirectly through the merger with another bank or financial institution (which could be accompanied by a financing). We expect that any sale of securities would most likely be through a private placement to institutionalBancorp ~~investors. While~~provides wefor ~~have had discussions with various financing sources and potential merger partners, at~~ the ~~date~~nomination of ~~this~~Directors ~~Report~~in ~~we have no agreements for any such transaction. Any merger or financing could involve a change of control of~~ the ~~Company.~~following manner:

~~Management~~ "Nomination for election of members of the ~~Company~~Board ~~has~~of ~~taken~~Directors ~~certain~~may ~~steps~~be inmade anby ~~effort~~the Board of Directors or by any stockholder of any outstanding class of capital stock of the corporation entitled to ~~continue~~vote ~~with~~for ~~safe~~the election of directors. Notice of intention to make any nominations shall be made in writing and ~~sound~~shall ~~banking~~be ~~practices~~delivered ~~exercising~~or mailed to the President ~~contractual~~of ~~right~~the corporation not less than 21 days nor more than 60 days prior to ~~defer~~any meeting of stockholders called for the ~~interest~~election of directors; provided however, that if less than 21 days notice of the meeting is given to shareholders, such notice of intention to nominate shall be mailed or delivered to the President of the corporation not later than the close of business on the tenth ~~junior~~day ~~subordinated~~following ~~debentures~~the day on which the notice of meeting was mailed; provided further, ~~taking~~that aif ~~number~~notice of ~~actions~~such meeting is sent by third-class mail as permitted by Section 6 of these By-Laws, no notice of intention to make nominations shall be required. Such notification shall contain ~~costs,~~the ~~continuing~~following information to ~~reduce~~the ~~its~~extent ~~lending~~known ~~exposure,~~to the notifying shareholder: (a) the name and address ~~increasing~~of each proposed nominee; (b) the ~~borrowing~~principal ~~line~~occupation atof each proposed nominee; (c) the ~~Federal~~number of shares of capital stock of the corporation owned by ~~Reserve~~each ~~Bank’s~~proposed ~~discount~~nominee; ~~window~~(d) the name and residence address of the notifying shareholder; and (e) the number of shares of capital stock of the corporation owned by the notifying shareholder. Nominations not made in anaccordance ~~amount~~herewith may, upin tothe ~~approximately~~discretion ~~$38~~of ~~million~~the Chairman of the meeting, be disregarded and upon the Chairman's instructions, the inspector of elections can disregard all votes cast for each such nominee."

If Only ~~the~~those ~~Bank~~shareholders isof ~~not~~record ~~successful~~at ~~in raising additional capital, it will not be able to become fully compliant with~~ the close ~~provisions~~ of ~~the~~business ~~Written~~on ~~Agreement~~April ~~discussed above. As a result~~20, ~~the FRBSF~~2010, ~~CDFI~~will ~~or the FDIC may take further enforcement action, including placing the Bank into receivership. If the Bank is placed into FDIC receivership, it is likely that the Bank would~~ be ~~required~~entitled to ~~cease~~notice ~~operations~~of and ~~liquidate. If the Bank were~~ to ~~liquidate~~vote at ~~it is unlikely that there would be any assets available to~~ the ~~holders~~Annual ~~of the common shareholders of the Company~~Meeting. ~~See Risk Factors below.~~

~~-4-~~Dated: May 20, 2010; By Order of the Board of Directors

~~BUSINESS~~ George ~~PLAN~~M. Schofield, Corporate Secretary

~~The~~WHETHER ~~focus~~OR ofNOT ~~the~~YOU ~~Company’s~~PLAN ~~business~~TO ~~plan~~ATTEND isTHIS ~~to attract “Business Relationship” small~~MEETING, medium and large accounts, but not to the exclusion of any other business which the Company can reasonably and profitably attract. In order to provide a level of service to attract such customers, the Company has structuredPLEASE ~~its~~SIGN ~~specific~~AND ~~services~~RETURN ~~and~~THE ~~charges~~ENCLOSED onPROXY aAS ~~basis~~PROMPTLY ~~which~~AS ~~management~~POSSIBLE ~~believes~~IN toTHE be profitable, taking into consideration other aspects of the account relationship. The Company offers a full range of banking services to its customers intended to attract the following specific types of accounts: relatively large consumer accounts; professional group and association accounts, including the accounts of groups or firms of physicians, dentists, attorneys and accountants; and accounts of small to mediumENCLOSED POST-~~sized~~PAID ~~businesses engaged in retail~~ENVELOPE, ~~wholesale,~~OR ~~light~~VISIT ~~industrial,~~THE ~~manufacturing, agricultural and service activities~~WEBSITE http://www.proxyvote.com.

In1899 ~~order to realize our objectives, we have taken and will continue to take steps to improve our capital accounts~~W. ~~Since~~March ~~mid-2009~~Lane, ~~we have taken actions to bolster our capital ratios~~Stockton, inCalifornia an95207 effort to protect the Bank and the Company. The actions taken include, among others, the exercise of our right to defer payment of interest on our junior subordinated debentures in September, 2009, a significant reduction in loan growth and cost cutting to the extent possible as we seek to achieve compliance with regulatory requirements (~~see “Recent Developments” below~~209). In addition, we are focused on reductions in certain non-interest expenses and improvement in non-interest income, in an effort to increase profitability. Although we do not believe we currently have the ability to raise new capital through a public offering at an acceptable price, we continue to evaluate alternative capital strengthening strategies, and are currently working on initiatives to strengthen our capital position including the possibility of entering into a business combination with a strategic partner, significantly reducing asset size through loan sales or entering into a transaction with a private equity group. However, there can be no assurance that our pursuit of such strategic alternatives will result in the Company pursuing any particular transaction or strategy, or if it pursues any such transaction or strategy, that it will be completed or be successful.870-3214

~~TRUST~~PACIFIC ~~SUBSIDIARIES~~STATE BANCORP

~~The~~1899 ~~Company during 2004 and 2007 established two subsidiary grantor trusts~~W. ~~Pacific~~ ~~State~~March Statutory Trusts II and III (the “Trusts”). The Trusts were established for the sole purpose of issuing capital securities (“Capital Securities”) pursuant to declarations of trust (the “Declarations”). TheLane ~~proceeds~~ from the sale of the Capital Securities were loaned to the Company as subordinated debentures (the “Debentures”) issued to the Trusts pursuant to indentures (the “Indentures”). Interest payments on the Debentures will flow through the Trusts to the Pooling Vehicles, which are the holders of the Capital Securities and similar securities issued by other financial institutions. Payments of distributions by the Trusts to the Pooling Vehicle are guaranteed by the Company. See Note 8 to the Company’s consolidated financial statements included with this report.

~~Proceeds~~Stockton, ~~from~~California the issuance of the 2004 subordinated debentures were used to provide the Bank with an additional $3.5 million in capital in order to support the continued growth of the Bank. Proceeds from the issuance of the 2007 subordinated debentures were used to retire subordinated debenture issued in 2002 at a more favorable rate of interest.95207

~~-5-~~_____________________

~~PRODUCT~~PROXY ~~LINES AND SERVICES~~STATEMENT

The Bank currently offers the following general banking services at all of its branches: commercial, construction, agricultural and real estate loans and personal credit lines, interest on checking, U.S. Savings bond services, domestic and foreign drafts, banking by appointment, automatic transfer of funds between savings and checking accounts, business courier services, checking and savings accounts for personal and business purposes, domestic letters of credit, a depository for MasterCard and Visa drafts, federal depository services, cash management assistance, wire and telephone transfers, Individual Retirement Accounts, time certificates of deposit, courier service for non-cash deposits, Visa and MasterCard, revolving lines of credit to consumers secured by deeds of trust on private residences, unsecured overdraft protection credit lines attached to checking accounts, ATM cards and MasterMoney debit cards via the Star, Cirrus, Plus, MasterCard and Visa networks.____________________

~~The~~ANNUAL ~~Bank~~MEETING isOF not authorized to offer trust services. The Federal Reserve Bank of San Francisco is the Company’s primary correspondent relationship. The Bank currently also has correspondent relationships with City National Bank in Beverly Hills, California, First Tennessee Bank in Memphis, Tennessee, Wells Fargo Bank, San Francisco, California and Pacific Coast Bankers Bank, San Francisco, California.SHAREHOLDERS

~~The~~To ~~Bank~~Be ~~recognizes~~Held ~~that,~~June ~~in order to be competitive~~10, it must attract a certain number of consumer accounts. Individual Retirement Accounts, Visa and MasterCard, revolving lines of credit to consumers secured by deeds of trust on private residences, and unsecured overdraft protection credit lines attached to checking accounts currently offered by the Bank are designed to appeal particularly to consumers. Moreover, participation in large-scale ATM networks assists the Company in competing for consumer accounts.2010

The Bank is an approved Small Business Administration and 504 lender, FSA, USDA Business and Industry, USDA Part-time Farmer Program and FHA and VA lender. The Bank is a national leader in the underwriting of U.S. Department of Agriculture business and industry loans, as well as a Preferred Lender for this program.____________________

~~MARKETING~~INTRODUCTION

~~The~~ This ~~basic~~Proxy ~~marketing~~Statement ~~strategy~~is offurnished ~~the~~to ~~Bank~~you isin toconnection ~~retain~~with the ~~Bank’s~~solicitation ~~initial~~of proxies ~~market~~by ~~share~~the ~~and~~Board toof ~~increase~~Directors ~~the~~of ~~Bank’s~~Pacific ~~penetration~~State ofBancorp ~~the~~("Bancorp") ~~market~~for ~~over~~use at the ~~long~~2010 ~~term~~Annual ~~via~~Meeting ~~expansion~~of ~~east~~Shareholders ~~and~~to ~~west~~be ofheld ~~Stockton~~on Thursday, ~~California~~June in10, 2010, ~~small~~at to1547 ~~medium~~E. ~~sized~~March ~~communities. The~~Lane, ~~Bank~~Stockton, ~~attempts~~California, toat ~~accomplish~~4:30 ~~this~~p.m., byand ~~providing~~at aany adjournment ~~full~~or ~~range~~postponement ofthereof ~~personalized banking~~(the ~~services~~"Annual toMeeting"). This ~~small~~Proxy Statement and ~~medium~~the ~~size~~accompanying ~~businesses,~~proxy ~~professionals~~card ~~and~~are ~~individuals~~first ~~within~~being ~~Alameda,~~mailed ~~Calaveras,~~to ~~San~~shareholders on ~~Joaquin,~~or ~~Stanislaus~~about ~~and~~May ~~Tuolumne~~20, ~~Counties~~2010.

~~The~~Please ~~Bank’s~~vote ~~marketing~~as ~~plan~~soon ~~aims~~as topossible ~~provide~~by ~~for~~completing ~~strong continuity in banker-customer relationships, a high degree of convenience for customers, prompt response in the handling of loan requests,~~ and ~~personal attention to needs of individual customers. The marketing plan also includes a commitment to lend the Bank’s~~ ~~deposits~~signing ~~back into~~ the ~~areas~~enclosed ~~from~~proxy ~~which they are derived, thereby assisting in the building activity, population growth and other changes, which are occurring in the market area~~card. By A ~~focusing~~business ~~the~~reply ~~Bank’s~~envelope ~~relationship~~is ~~toward~~enclosed for ~~its community~~ the ~~Bank~~return ~~attempts~~of toyour ~~establish strong continuity with its customers~~proxy.

~~The~~Your ~~Directors~~vote ofis ~~the~~necessary ~~Company~~for ~~are~~Bancorp ~~active~~to inmeet ~~business~~quorum requirements ~~development~~for ~~through personal contacts and personal participation in local activities. The Directors of~~ the ~~Company~~Annual ~~have a strong commitment to community banking~~Meeting. ~~They believe in business development by actively participating in community events.~~

~~Local~~Failure ~~advertising~~to ~~and~~meet ~~publicity~~quorum inrequirements ~~local~~would ~~papers~~require Bancorp ~~also are used~~ to ~~attract~~reschedule ~~business and to acquaint potential customers with~~ the ~~Bank’s~~Annual ~~services~~Meeting.

~~-6-~~Voting early saves Bancorp time and money.

~~COMPETITION~~Who May Vote?

~~The~~ If you ~~Bank’s~~were ~~service~~a ~~area~~shareholder ~~consists~~on ofthe ~~Alameda,~~records ~~Calaveras,~~of ~~San~~Bancorp ~~Joaquin,~~at ~~Stanislaus~~the ~~and~~close ~~Tuolumne~~of ~~Counties. The banking~~ business inon ~~California~~April 20, ~~generally~~2010, ~~and~~you ~~specifically~~may invote at the ~~Bank’s~~2010 ~~primary~~Annual ~~market area~~Meeting, iseither ~~highly~~in ~~competitive~~person, ~~with respect to both loans and deposits. The banking business is dominated~~ by ~~a relatively~~mail, ~~small~~by ~~number of major banks~~telephone, ~~which~~or ~~have~~via ~~many~~the ~~offices operating over wide geographic areas~~Internet. ~~Many~~ On ofthat ~~the major commercial banks offer certain services (such as international~~day, ~~trust~~there ~~and~~were ~~securities brokerage services)~~3,722,198 shares ~~which are not offered directly by the Bank. By virtue~~ of ~~their~~our ~~greater~~common ~~total~~stock ~~capitalization,~~outstanding ~~such banks have substantially higher lending limits than the bank~~ and ~~substantial~~entitled ~~advertising~~to ~~and promotional budgets~~vote.

In the past, an independent bank’s principal competitors for deposits and loans have been other banks (particularly major banks), savings and loan associations and credit unions. To a lesser extent, competition was also provided by thrift and loans, mortgage brokerage companies and insurance companies. OtherWhy ~~institutions,~~Is ~~such~~My asVote ~~brokerage~~Important? houses, credit card companies, and even retail establishments have offered new investment vehicles, such as money-market funds, which also compete with banks. The direction of federal legislation in recent years seems to favor competition between different types of financial institutions and to foster new entrants into the financial services market, and it is anticipated that this trend will continue.

To It is ~~compete with major financial institutions in its service area,~~ the ~~Bank~~right ~~relies upon specialized services, responsive handling~~ of ~~customer~~every ~~needs,~~investor ~~local~~to ~~promotional~~vote ~~activity,~~on ~~and~~certain ~~personal~~important ~~contacts~~matters bythat ~~its~~affect Bancorp. In ~~officers~~addition, ~~directors~~if ~~and~~you ~~staff,~~do asnot ~~opposed~~submit toa ~~large~~proxy ~~multi-branch~~or ~~banks,~~vote ~~which~~in ~~compete~~person ~~primarily by interest rates and multiple branch~~at ~~locations. For customers whose loan demands exceed~~ the ~~Bank’s lending limits~~meeting, ~~the~~it ~~Bank~~will ~~seeks~~be tomore ~~arrange~~difficult ~~funding~~ for ~~such~~us ~~loans~~to onobtain athe ~~participation~~necessary ~~basis~~quorum ~~with~~to hold ~~its~~the ~~correspondent banks or other independent commercial banks~~meeting.

~~SUPERVISION~~How ~~AND~~Many ~~REGULATION~~Votes Do I Have?

~~The~~ Each ~~Company~~share is ~~principally~~entitled ~~regulated~~to byone ~~the~~vote, ~~Federal~~except that ~~Reserve~~in ~~Board (“FRB”). The Bank is principally regulated by~~ the ~~California~~election ~~Commissioner~~ of ~~Financial Institutions (“Commissioner”)~~directors, ~~but~~shareholders isshall ~~also~~be ~~subject~~entitled to ~~regulation~~cumulate their ~~by the Federal Deposit Insurance Corporation (“FDIC”) and by its primary federal regulator~~votes, ~~the~~ ~~FRB~~if requested. In ~~These~~an ~~agencies~~election ~~govern most~~ of ~~the~~directors ~~Company’s~~using ~~and the Bank’s business~~cumulative voting, ~~including~~each ~~capital~~shareholder ~~requirements,~~is ~~loans,~~entitled ~~investments,~~to ~~mergers~~a ~~and~~number ~~acquisitions,~~of ~~borrowings,~~votes ~~dividends,~~that ~~branch~~is ~~locations~~equal ~~and~~to ~~other~~the number ~~similar~~of ~~matters. In~~directors ~~addition,~~to ~~the~~be ~~Bank’s~~elected ~~business~~(which isat ~~affected~~this byAnnual ~~general~~Meeting ~~economic~~will ~~conditions~~be ~~and~~seven), multiplied by the ~~monetary~~number ~~and fiscal policies~~ of ~~the~~shares ~~United~~which ~~States government. These policies influence, for example,~~ the ~~Federal~~shareholder ~~Reserve’s~~is ~~open~~entitled ~~market~~to ~~operations~~vote ~~in U.S. Government~~at ~~securities,~~ the ~~reserve~~Meeting. Each ~~requirements~~shareholder ~~imposed~~may ~~upon~~cast ~~commercial~~all ~~banks,~~of ~~the~~those ~~discount~~votes ~~rates~~for ~~applicable~~a tosingle nominee ~~borrowings~~or ~~from~~divide ~~the~~his ~~Federal~~or ~~Reserve~~her byvotes ~~banks,~~among ~~and~~any ~~other~~number ~~similar~~or ~~matters~~all ~~which impact the growth~~ of the ~~Bank’s~~nominees ~~loans,~~in such ~~investments~~proportions ~~and~~as ~~deposits and~~ the ~~interest~~shareholder ~~rates~~may ~~which the Bank charges and pays~~choose.

~~Proposals~~How toWill ~~change~~The ~~the~~Board ~~laws~~Vote ~~and~~My regulations governing the operations and taxation of financial institutions are frequently made in Congress, in the California legislature and before various regulatory and professional agencies. Major changes and the impact such changes might have are difficult to predict with accuracy. CertainProxy? ~~significant recently proposed or enacted laws and regulations are discussed below.~~

~~The~~ A ~~Company~~properly ~~may~~signed ~~make~~proxy ~~capital~~received ~~distributions~~by ~~(dividends~~us prior into ~~cash~~the ~~or property~~meeting, orand ~~repurchases~~not ofrevoked, ~~capital~~will ~~stock)~~be ~~subject~~voted toas ~~the~~marked ~~California~~on ~~General Corporation Law and~~ the ~~policies,~~proxy ~~rules and regulations of~~ by the ~~FRB~~shareholder. If ~~Under~~you ~~the~~do ~~California~~not ~~General~~mark ~~Corporation~~your ~~Law,~~proxy ~~the~~to ~~Company~~indicate ~~may~~how ~~not~~you ~~pay~~want your ~~dividends~~shares voted in ~~cash~~the orElection ~~property except (i) out~~ of ~~positive retained earnings or (ii) if~~Directors, ~~after~~which ~~giving~~is ~~effect to~~ the ~~distribution,~~only ~~the~~proposal ~~Company’s~~that is ~~assets~~scheduled ~~would~~to be atacted ~~least 1.25 times its liabilities and its current assets would exceed its current liabilities (determined~~ on aat ~~consolidated~~the ~~basis~~meeting, ~~under~~your ~~generally~~shares ~~accepted~~will ~~accounting~~be ~~principles).~~voted ~~The~~FOR the ~~FRB~~candidates ~~has~~nominated ~~stated~~by ~~that,~~the ~~as a matter of prudent banking~~Board, awho ~~bank~~are ~~holding~~named ~~company~~on ~~generally should not pay cash dividends unless its net income available to common shareholders has been sufficient to fully fund~~ the ~~dividends, and~~Notice ~~that the prospective rate~~ of ~~earnings~~Annual Meeting ~~retention~~and ~~appears~~in ~~consistent~~this ~~with~~Proxy ~~its~~Statement ~~capital~~(Proposal ~~needs, asset quality and overall financial condition~~1).

~~-7-~~ If any other matter should be presented at the Annual Meeting upon which a vote may properly be taken, your proxy will be voted in accordance with the judgment of the holders of the proxy. However, if your shares of Bancorp stock are held in a brokerage account or by a nominee holder, please read the information below under captions "Voting Shares Held by Brokers, Banks and Other Nominees" and "Required Vote" regarding what action you must take to assure that your shares are voted.

~~The~~How ~~ability~~May ofI ~~the~~Vote? Company to pay dividends will depend upon its cash resources. The Company’s principal source of income consists of dividends and cash distributions from the Bank. As a California-chartered bank, without the approval of the California DFI, the Bank may pay dividends in an amount that does not exceed the lesser of its retained earnings or its net income for the last three fiscal years. Under regulations of the FDIC, the Bank may not make a capital distribution without prior approval of the FDIC if it would be undercapitalized, significantly undercapitalized or critically undercapitalized under the Prompt Corrective Action Rules. Additionally, as a result of entering into the Written Agreement, the Company may not make a capital distribution without the prior approval of the FRBSF and the CDFI. See “Recent Developments” below.

~~INTERSTATE~~ You ~~BANKING~~may vote using any of the following methods:

~~Since~~By 1995, initial entry into California by merger or acquisition involving an out-of state institution must be accomplished by acquisition of or merger with an existing whole bank which has been in existence for at least five years.Mail

~~CAPITAL~~ Be ~~REQUIREMENTS~~sure to complete, sign and date the proxy card/voting instruction card and return it in the prepaid envelope. If you are a shareholder of record and you return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by that proxy as recommended by the Board of Directors.

~~The~~By ~~Company~~Telephone ~~and~~or the Bank are subject to certain regulatory capital requirements administered by the FRB and the FDIC. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilitiesInternet and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about the components, risk weightings and other factors.

The ~~Uniform~~telephone ~~Financial~~and Internet ~~Institutions~~voting ~~Rating~~procedures ~~System~~established ~~classifies~~by ~~and~~Bancorp ~~evaluates~~for ~~the~~shareholders ~~soundness~~ of ~~financial~~record are ~~institutions~~designed ~~according~~ to ~~the~~authenticate ~~so-called~~your ~~“CAMELS” criteria~~identity, anto ~~acronym~~allow ~~for~~you ~~capital~~to ~~adequacy,~~give ~~asset~~your ~~quality,~~voting ~~management~~instructions, and ~~earnings,~~to ~~liquidity~~confirm ~~and~~that ~~sensitivity~~those toinstructions ~~market~~have ~~risk,~~been ~~(including~~properly ~~changes~~recorded. If you invote ~~interest~~by ~~rates,~~telephone ~~foreign~~or ~~exchange rates,~~on ~~commodity~~the ~~prices~~Internet, oryou ~~equity~~do ~~prices~~not ~~which~~have ~~may~~to ~~adversely~~return ~~affect~~your anproxy card ~~institution’s~~or ~~earnings~~voting ~~and~~instruction ~~capital)~~card.

~~Prompt~~ You ~~Corrective~~can ~~Action~~vote ~~regulations~~by calling (the ~~“PCA~~toll-free ~~Regulations”)~~telephone ofnumber ~~the~~on ~~federal~~your ~~bank~~proxy ~~regulatory~~card. Please ~~agencies~~have your ~~establish~~proxy ~~five~~card ~~capital categories~~ in ~~descending~~hand ~~order~~when ~~(well~~you ~~capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized), assignment~~ call. Easy-to-follow ~~which~~voice ~~depends~~prompts ~~upon the institution’s~~allow ~~total~~you ~~risk-based capital ratio, Tier 1 risk-based capital ratio, and leverage ratio. Institutions classified in one of the three undercapitalized categories are subject~~ to ~~certain~~vote ~~mandatory~~your ~~and~~shares ~~discretionary supervisory actions, which include increased monitoring~~ and ~~review,~~confirm ~~implementation~~that ofyour ~~capital~~instructions ~~restoration~~have ~~plans,~~been ~~asset growth restrictions, limitations upon expansion and new business activities, requirements to augment capital, restrictions upon deposit gathering and interest rates, replacement~~properly ~~of senior executive officers and directors, and requiring divestiture or sale of the institution~~recorded. The Bank is currently classified as an “under capitalized” bank pursuant to the PCA regulations. As of December 31, 2009, the Bank’s total risk-based capital ratio (approximately 6.7%) and its leverage ratio (approximately 4.1%) are considered undercapitalized by PCA Regulations.

~~Holding~~ You ~~Company~~can ~~Liability~~vote by accessing the Internet website address on your proxy card. Please have your proxy card handy when you go online to ensure that you have the information you'll need to complete the voting process and that your instructions have been properly recorded.

~~Under~~ Beneficial Holders. The ~~Federal~~availability ~~Reserve Board policy, a bank holding company is expected to act as a source~~ of ~~financial~~telephone ~~strength to its banking subsidiaries~~ and ~~commit~~Internet ~~resources~~voting ~~to their support. This support may be required by the Federal Reserve Board at times when, absent this Federal Reserve policy, we may not be inclined to provide it. As discussed above,~~for ~~under~~beneficial ~~the~~owners ~~“Prompt~~depends ~~Corrective~~on ~~Action” rules, a bank holding company in certain circumstances also could be required to guarantee~~ the ~~capital~~voting ~~plan~~processes of anyour ~~undercapitalized banking subsidiary. In addition~~broker, ~~any capital loans by a~~ bank ~~holding~~or ~~company to any of its depository institution subsidiaries are subordinate in right of payment to deposits and to certain~~ other holder ~~indebtedness~~ of ~~the banks~~record. Therefore, Inwe ~~the~~recommend ~~event~~that ofyou afollow ~~bank holding company’s bankruptcy under Chapter 11 of~~ the ~~U.S. Bankruptcy Code,~~voting ~~the~~instructions ~~trustee~~in ~~will be deemed to have assumed and is required to cure immediately any deficit under any commitment by~~ the ~~debtor~~materials ~~holding~~you company to any of the federal banking agencies to maintain the capital of an insured depository institution, and any claim for breach of such obligation will generally have priority over most other unsecured claimsreceive.

~~FEDERAL~~In ~~DEPOSIT~~Person ~~INSURANCE~~at the Annual Meeting

~~The~~ Direct ~~deposits~~shareholders may ofvote ~~the~~in ~~Bank~~person ~~have~~at ~~historically been insured by~~ the ~~FDIC~~Annual ~~up to $100,000 per insured depositor, except certain types of retirement accounts, which are insured up to $250,000 per insured depositor~~Meeting. You Onmay ~~October 3,~~also ~~2008,~~be ~~the~~represented ~~maximum amount insured under FDIC deposit insurance was temporarily increased from $100,000 to $250,000 per~~by ~~insured~~another ~~depositor~~person ~~through~~at ~~December 31, 2013. Additionally,~~ the ~~Bank~~Meeting ~~has~~by ~~elected~~executing toa ~~participate~~proper inproxy ~~those~~designating ~~provisions of the FDIC’s Transaction Account Guarantee Program~~ that ~~provide additional insurance coverage on non-interest bearing deposit transaction accounts~~ person. ~~Under~~ Beneficial ~~this program~~shareholders, ~~through~~with ~~December~~shares ~~31,~~held ~~2010, all noninterest-bearing transaction accounts are fully guaranteed~~ by ~~the~~your ~~FDIC~~broker, ~~for~~bank ~~the entire amount in the account and the Bank is assessed an annual fee of 25 basis points~~or ~~for~~other ~~all~~holder ~~deposit amounts exceeding the existing deposit insurance limit~~ of ~~$250~~record,~~000. Coverage~~ ~~under~~must ~~the~~obtain ~~Transaction~~a ~~Account~~legal ~~Guarantee~~proxy ~~Program is in addition to and separate~~ from ~~the~~your ~~coverage~~broker, ~~available~~bank ~~under~~or other ~~the~~holder ~~FDIC's~~of ~~general~~record ~~deposit~~and ~~insurance~~present ~~rules. See~~it ~~information~~to ~~under~~ the ~~caption~~inspector ~~“Liquidity~~of ~~and~~elections ~~Market”~~with inyour ballot ~~the~~to ~~Company’s~~be ~~2009~~able ~~Annual Report~~ to ~~Shareholders,~~vote ~~which~~at ~~information~~the ~~is incorporated herein by this reference~~Meeting.

~~-8-~~Voting Shares Held by Brokers, Banks and Other Nominees

On If ~~February~~you ~~27,~~hold ~~2009,~~your ~~the~~shares ~~FDIC~~of ~~issued~~Bancorp acommon stock ~~press~~in ~~release~~a ~~with~~broker, ~~attached~~bank ~~final~~or ~~rule~~nominee ~~dated February 26~~account, ~~2009,~~you ~~which~~are ~~established~~the ~~increased~~"beneficial owner" ~~assessment rates effective as~~ of ~~April~~those 1shares, ~~2009~~holding ~~and~~them ~~included adjustments to improve differentiation of risk profiles among institutions. Based upon the announced increase~~ in ~~assessments~~"street ~~for insured~~name." In ~~financial~~order ~~institutions~~to invote ~~2009~~your asshares, ~~described~~you ~~above~~must ~~and~~give ~~the~~voting ~~continuing~~instructions ~~adverse~~to ~~economic~~your ~~conditions~~broker, bank, ~~impacting~~or ~~financial~~other ~~institutions~~intermediary ~~generally~~who ~~which~~is ~~may necessitate further increases in assessments,~~ the ~~Bank~~"nominee ~~anticipates~~holder" ~~that~~of ~~such assessments will have a significantly greater impact upon operating expenses in 2010 compared to 2009~~your shares.

~~COMMUNITY~~ We ~~REINVESTMENT~~ask ~~ACT~~brokers, banks and other nominee holders to obtain voting instructions from each of you who hold your shares in "street name." Proxies that are transmitted by brokers or other nominee holders on your behalf will count toward a quorum and will be voted as instructed by you as beneficial holder of the shares.

~~Community~~ If ~~Reinvestment~~you ~~Act~~fail ~~(“CRA”)~~to ~~regulations~~provide ~~evaluate~~voting ~~the Bank’s lending~~ instructions to ~~low~~your ~~and~~broker ~~moderate~~or ~~income~~other ~~individuals~~nominee, ~~and~~your ~~businesses across a four-point scale from “outstanding” to “substantial noncompliance~~broker,” ~~and~~bank ~~are~~or aother ~~factor~~nominee inwill ~~regulatory~~have discretion ~~review of applications~~ to ~~merge,~~vote oryour ~~establish~~shares ~~new~~at ~~branches. In~~the ~~addition,~~Annual ~~any~~Meeting ~~Bank~~for ~~rated~~the inelection ~~“substantial~~of ~~noncompliance” with~~ the Board's ~~CRA~~Director ~~regulations~~nominees ~~may~~(Proposal ~~be subject to enforcement proceedings~~1). ~~The Bank has a current rating of “satisfactory” CRA compliance.~~

~~SAFETY~~Required ~~AND~~Vote ~~SOUNDNESS STANDARDS~~

~~Federal~~ Quorum ~~bank~~Requirement ~~regulations~~. Our bylaws ~~for~~require ~~insured~~that ~~financial~~a ~~institutions~~quorum ~~establish~~- ~~safety~~which ~~and~~is ~~soundness~~the ~~standards~~holders ~~for~~of ~~(1)~~at ~~internal~~least ~~controls,~~a ~~information~~majority ~~systems~~of all ~~and~~of ~~internal~~the ~~audit~~shares ~~systems;~~of ~~(2)~~our ~~loan~~common ~~documentation;~~stock ~~(3)~~entitled ~~credit~~to ~~underwriting;~~vote ~~(4)~~at ~~interest~~the ~~rate~~Annual ~~exposure;~~Meeting ~~(5)~~- be ~~asset~~present ~~growth;~~at ~~(6)~~the ~~compensation~~Meeting, ~~fees~~either ~~and~~in ~~benefits;~~person ~~and~~or ~~(7) excessive compensation. If an agency determines that an institution fails to meet any standard established~~ by ~~the guidelines~~proxy, ~~the~~before ~~agency~~any business may ~~require~~be ~~the~~transacted ~~financial~~at ~~institution to submit to~~ the ~~agency~~Meeting an(other ~~acceptable~~than ~~plan~~adjourning ~~to achieve compliance with~~ the ~~standard. Agencies~~Meeting ~~may elect~~ to ~~initiate~~a ~~enforcement~~later date ~~action~~to inallow ~~certain~~time ~~cases where failure~~ to ~~meet~~obtain ~~one~~additional orproxies ~~more~~to ofsatisfy the ~~standards could threaten the safe and sound operation of the institution~~quorum requirement).

Voting on the Election of Directors . The seven nominees who receive the highest number of votes cast will be elected. Any shares voted to "Withhold Authority" are not counted as votes cast in the election of directors. Broker non-9votes, which relate to shares for which "street" or "nominee" holders do not obtain voting instructions from the beneficial holders and for that reason choose not to vote those shares on a discretionary basis, also are not counted as votes cast. However, shares voted to Withhold Authority and broker non-votes are considered present at the meeting for purposes of determining whether a quorum is present.

~~SARBANES-OXLEY~~Can ~~ACT~~I OFChange ~~2002~~my Vote?

~~The~~ If you ~~Sarbanes-Oxley~~are ~~Act~~a ofregistered ~~2002~~owner ~~(the~~and ~~“SOA”)~~have ~~was~~sent ~~enacted~~in toyour ~~increase corporate responsibility~~proxy, toyou ~~provide~~may ~~for~~change ~~enhanced~~your vote ~~penalties~~by ~~for~~revoking ~~accounting~~your ~~and~~proxy ~~auditing improprieties~~ at ~~publicly~~any ~~traded~~time ~~companies~~before ~~and~~your toproxy ~~protect~~is ~~investors~~voted byat ~~improving~~ the Annual ~~accuracy~~Meeting ~~and~~by ~~reliability~~taking ofany ~~corporate~~one ~~disclosures~~of ~~pursuant to~~ the ~~securities~~following ~~laws.~~actions:

~~The~~Sending ~~SOA~~a iswritten ~~the~~notice ~~most~~to ~~far-reaching~~revoke ~~U.S.~~your ~~securities~~proxy ~~legislation enacted in many years. The SOA generally applies~~ to ~~all~~the ~~companies~~Corporate Secretary, ~~both~~Pacific ~~U.S.~~State ~~and non-U.S.~~Bancorp, ~~that~~1899 ~~file~~W. orMarch ~~are required to file periodic reports with the Securities and Exchange Commission~~Lane, ~~(“the SEC”)~~Stockton, ~~under the Securities Exchange Act of 1934~~California 95207. To ~~Since~~be ~~the enactment of the SOA~~effective, the ~~SEC~~notice ~~has~~of ~~issued~~revocation ~~numerous~~must ~~new~~be ~~and~~received ~~proposed~~by Bancorp ~~regulations~~before tothe ~~implement~~Annual ~~SOA~~Meeting ~~requirements~~commences.
~~The~~Transmitting ~~SOA~~a ~~represents~~proxy ~~significant~~by ~~federal~~mail ~~involvement~~at ina ~~matters~~later ~~traditionally~~date ~~left~~than toyour ~~state~~prior ~~regulatory~~proxy. To ~~systems~~be effective, ~~such~~that aslater ~~the~~dated ~~regulation~~proxy ofmust ~~the~~be ~~accounting~~received ~~profession,~~by ~~and~~Bancorp tobefore ~~state corporate law, such as~~ the ~~relationship~~Annual Meeting ~~between a board of directors and management and between a board of directors and its committees~~commences.

~~The~~Attending ~~SOA~~the ~~addresses~~Annual Meeting and voting in person or by proxy in a manner different than the ~~following,~~instructions ~~among~~contained ~~other~~in ~~matters:~~your earlier proxy.

· However, ~~Duties~~if your shares are held by a broker, ~~responsibilities~~bank ~~and~~or ~~qualifications~~other nominee ofholder, you will need to contact your broker, bank or the ~~audit~~nominee holder ~~committee;~~if you wish to revoke your proxy.

·Can ~~Certification~~I ofaccess ~~financial statements by~~ the ~~Principal~~Proxy ~~Executive~~Statement ~~Officer~~ and ~~the~~Annual ~~Chief~~Report ~~Financial~~on the ~~Officer;~~Internet?

· The ~~forfeiture~~Notice of ~~bonuses~~Annual orMeeting, ~~other~~Proxy Statement, ~~incentive-based compensation~~ and ~~profits from~~ the ~~sale~~2009 ofForm an10-K ~~issuer’s securities by directors and senior officers in~~ (the ~~twelve~~"Proxy ~~month~~Materials") ~~period~~are available ~~following~~at ~~initial~~http://www.proxyvote.com. ~~publication of any financial statements that later require restatement;~~

·INFORMATION ACONCERNING ~~prohibition~~THE onSOLICITATION ~~insider trading during pension plan black out periods;~~

· This ~~Disclosure~~Proxy Statement is furnished to solicit proxies for use at the 2010 Annual Meeting of ~~off-balance~~Shareholders ~~sheet~~(the ~~transactions;~~"Meeting") of Pacific State Bancorp ("Bancorp"), to be held June 10, 2010, at 4:30 p.m. at 1547 E. March Lane, Stockton, California, and at any and all adjournments thereof.

·Revocability Aof ~~prohibition~~Proxies ~~on certain personal loans to directors and officers;~~

· A ~~Expedited~~form ~~filing~~of ~~requirements~~proxy for ~~forms~~voting ~~which~~your ~~disclose~~shares ~~transactions~~at bythe ~~officers~~Meeting is enclosed. If you execute and ~~directors~~deliver inthis ~~Company~~proxy, ~~stock~~you ;will still have the right to and may revoke it at any time before it is exercised by filing with the Corporate Secretary of Bancorp a written revocation or a duly executed proxy bearing a later date. In addition, you may revoke your proxy by attending the Meeting and voting in person.

· Subject ~~Disclosure~~to ofyour arevocation, ~~code~~all ofshares ~~ethics~~represented ~~and~~by ofyour ~~any~~properly executed ~~change~~proxy orreceived ~~waiver~~in oftime ~~such~~for ~~code;~~the Meeting will be voted by the proxy holders in accordance with your instructions specified on the proxy. UNLESS YOU OTHERWISE DIRECT IN THE ACCOMPANYING PROXY, THE SHARES REPRESENTED BY YOUR EXECUTED PROXY WILL BE VOTED "FOR" THE NOMINEES FOR ELECTION OF DIRECTORS NAMED HEREIN. IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT THE MEETING, THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT.

·Persons ~~New~~Making ~~requirements~~the ~~for~~Solicitation ~~auditing and reporting on Company internal controls;~~

· The ~~“Real~~Board ~~time”~~of ~~filing~~Directors of ~~periodic~~Bancorp ~~reports;~~is making this solicitation. All associated expenses will be borne by Bancorp. Proxies will be solicited principally by mail, but officers, directors, and employees of Bancorp may solicit proxies personally or by telephone, without receiving special compensation for such activities. Bancorp will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding these proxy materials to shareholders whose stock in Bancorp is held of record by such entities. In addition, Bancorp may employ others to solicit proxies if management deems it advisable.

·Voting ~~The~~Securities formation of a public company accounting oversight board (the “PCAOB”) with authority to set auditing, quality control and independence standards and investigate and discipline public accounting firms;

· Bancorp ~~Auditor~~is ~~independence;~~authorized to issue 24,000,000 shares of Common Stock, no par value, of which 3,722,198 shares were issued and outstanding as of April 20, 2010 (the "Record Date"). All common shares are voting shares, but only shareholders of record as of the Record Date are entitled to notice of and to vote at the Meeting and at any and all postponements or adjournments of it. The presence in person or by proxy of the holders of a majority of the outstanding shares entitled to vote at the Meeting will constitute a quorum for the purpose of transacting business.

· Each ~~Various~~common ~~increased~~share ~~criminal~~is ~~penalties~~entitled to one vote at the Meeting, except in the election of directors, in which case California law permits a shareholder or the shareholder's proxy holder to cumulate votes. Cumulative voting means that each shareholder has a number of votes equal to the number of shares owned by the shareholder, multiplied by the number of directors to be elected, and that a shareholder may cumulate such votes for ~~violations~~a single candidate or distribute them among as many candidates as the shareholder deems appropriate. However, a shareholder may cumulate votes only for a candidate or candidates whose names have been placed in nomination prior to the voting, and only if the shareholder (or another shareholder) has given notice at the Meeting, prior to the voting, of ~~securities~~the ~~laws~~shareholder's intention to cumulate votes. Prior to voting, an opportunity will be given for shareholders or their proxies at the Meeting to announce their intention to cumulate their votes. The proxy holders are given discretionary authority to cumulate votes represented by shares for which they are named in the proxy.

~~Although~~ In wean ~~have~~election ~~incurred~~of ~~additional~~directors, ~~expense~~California inlaw ~~complying~~ordinarily ~~with~~provides that the ~~provisions~~nominees receiving the highest number of affirmative votes of the ~~SOA~~shares entitled to vote for them, ~~such~~up ~~compliance~~to ~~did~~the ~~not~~number ~~have~~of adirectors ~~material~~to ~~impact~~be onelected ~~our~~by ~~results~~such shares, ofare ~~operation~~elected; orvotes ~~financial~~against ~~condition~~the director and votes withheld have no effect.

~~FINANCIAL~~PRINCIPAL ~~SERVICES~~SHAREHOLDERS ~~MODERNIZATION LEGISLATION~~

On Except ~~November~~as ~~12,~~listed ~~1999,~~in the ~~Gramm-~~table ~~Leach-Bliley~~below, management ~~Act~~ of ~~1999~~Bancorp ~~(the~~does ~~"Financial~~not ~~Services~~know ~~Modernization~~of ~~Act")~~any ~~was~~person ~~signed~~who ~~into law. The Financial Services Modernization Act is intended to modernize the banking industry by removing barriers to affiliation among banks~~owned, ~~insurance~~as ~~companies,~~of the ~~securities industry and other financial service providers.~~Record ItDate, ~~provides~~beneficially ~~financial~~or ~~organizations with the flexibility~~ of ~~structuring~~record, ~~such~~either ~~affiliations~~individually ~~through a holding company structure~~ or ~~through~~together ~~a financial subsidiary of a bank~~with associates, ~~subject~~five topercent ~~certain~~(5%) ~~limitations.~~or ~~The~~more ~~Financial Services Modernization Act establishes a new type~~ of ~~bank~~the ~~holding~~outstanding ~~company,~~shares ~~known as a financial holding company, which may engage in an expanded list~~ of ~~activities~~the ~~that are "financial in nature," which include securities and insurance brokerage, securities underwriting, insurance underwriting and~~Common ~~merchant~~Stock ~~banking.~~of ~~The Company has not sought “financial holding company” status and has no present plans to do so~~Bancorp.

The Financial Services Modernization Act also sets forth a system of functional regulation that makes the Federal Reserve Board the "umbrella supervisor" for holding companies, while providing for the supervision of the holding company's subsidiaries by other federal and state agencies.

Name

Amount and Nature of Beneficial Ownership⁽¹⁾

Percent of Shares

Maxwell M. Freeman

1818 Grand Canal Boulevard

Stockton , CA 95207

366,800

9.72%

Steven A. Rosso

4868 Saint Andrews

Stockton , CA 95219

339,315

9.12%

The Banc Funds Company, L.L.C.

20 North WackerDrive, Suite 3300

Chicago , IL 60606

358,168

9.62%

Harold Hand, M.D.

36 W. Yokuts, Suite 2

Stockton , CA 95207

335,188

8.89%

Michael L. Dalton, C.P.A.

5345 El Dorado Suite 4

Stockton , CA 95207

202,306

5.38%

Kathleen M. Verner

5685 Black Oak Dr

Stockton , CA 95212

5,000⁽²⁾

.13%

In(1) A ~~addition~~person is considered to own, ~~the~~beneficially, ~~Bank~~shares isof ~~subject~~Bancorp if he or she is able to ~~other~~direct ~~provisions~~how ofthose ~~the~~shares ~~Financial~~are ~~Services~~voted ~~Modernization~~("voting ~~Act,~~power") ~~including~~or whether or not those ~~relating~~shares are to ~~CRA,~~be ~~privacy~~held ~~and~~or ~~safe-guarding~~disposed ~~confidential~~of ~~customer~~("dispositive power"). Any ~~information~~person named in this table is also deemed to own, beneficially, ~~regardless~~any shares of ~~whether~~Bancorp ~~the~~stock ~~Company~~that ~~elects~~are subject to options that he or she holds if those options are exercisable or will become aexercisable ~~financial~~at ~~holding~~any time ~~company~~on or tobefore ~~conduct~~the ~~activities~~date ~~through~~which ais ~~financial~~60 ~~subsidiary~~days ofafter the ~~Bank.~~Record Date, or the date ~~The~~of ~~Company~~the ~~does~~Annual ~~not~~Meeting which is June 10, ~~however~~2010, ~~currently~~and ~~intend~~those tooption ~~file~~shares ~~notice~~are deemed ~~with~~outstanding for computing the ~~Federal~~shares ~~Reserve~~and ~~Board~~percentage toownership ~~become~~of athat person, ~~financial~~but ~~holding~~not ~~company~~for orcomputing tothe ~~engage~~percentage inownership ~~expanded~~of ~~financial~~any ~~activities~~other shareholder. Except ~~through~~as aotherwise ~~financial~~indicated ~~subsidiary~~and except for the effect of community property laws, the ~~Bank~~persons listed in this table have sole voting and dispositive power with respect to all shares shown as beneficially owned by them.

~~The~~(2) Based ~~Financial~~upon ~~Services~~oral ~~Modernization~~communication ~~Act~~from ~~did not have a material adverse effect on their operations in the near-term~~Ms. ~~However,~~Verneras to the extent that it permits banks, securities firms, and insurance companies to affiliate, the financial services industry may experience further consolidation. The Financial Services Modernization Act is intended ~~to grant to community banks certain powers as a matter of right that larger institutions have accumulated on an ad hoc basis~~ownership. Nevertheless, this act may have the result of increasing the amount of competition that the Company faces from larger institutions and other types of companies offering financial products, many of which may have substantially more financial resources than the Company.

~~-10-~~PROPOSAL ONE:

~~USA~~ELECTION ~~PATRIOT ACT~~ OF ~~2001~~DIRECTORS

~~On October 26, 2001, President Bush signed the USA Patriot Act~~ (~~the "Patriot~~Item ~~Act"),~~1 which includes provisions pertaining to domestic security, surveillance procedures, border protection, and terrorism laws to be administered by the Secretary of the Treasury. Title III of the Patriot Act entitled, "International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001" includes amendments to the Bank Secrecy Act which expand the responsibilities of financial institutions in regard to anti-money laundering activities with particular emphasis upon international money laundering and terrorism financing activities through designated correspondent and private banking accounts. Certain surveillance provisions of the Patriot Act were scheduled to expire on ~~December~~ ~~31, 2005, but~~ the ~~deadline was~~Proxy ~~postponed~~Card) to allow time for evaluation of such provisions, and on March 9, 2006, President Bush signed legislation to reauthorize the Patriot Act, incorporating certain civil liberty protections approved by Congress.

~~Section~~ At ~~313(a)~~the ofAnnual ~~the~~Meeting, ~~Patriot~~seven ~~Act~~directors ~~prohibits~~will ~~any~~be elected ~~insured~~to ~~financial~~hold ~~institution such~~office asuntil ~~Pacific~~the ~~State~~next ~~Bancorp~~Annual ~~from~~Shareholders ~~providing~~Meeting ~~correspondent~~is ~~accounts~~held toor until ~~foreign~~their ~~banks which~~successors doare ~~not~~elected and have aqualified ~~physical~~to ~~presence~~serve. The inBoard of ~~any~~Directors ~~country~~has ~~(designated~~nominated asthe ~~"shell banks"),~~persons ~~subject~~named below for election to ~~certain~~the ~~exceptions~~Board. All ~~for~~of ~~regulated~~these ~~affiliates~~nominees ofare ~~foreign banks.~~an incumbent ~~Section~~director ~~313(a)~~who ~~also~~was ~~requires~~elected ~~financial~~to ~~institutions~~his toor ~~take~~her ~~reasonable steps~~position toon ~~ensure~~the ~~that~~Board ~~foreign~~by ~~bank~~Bancorp's shareholders ~~correspondent~~at ~~accounts~~the ~~are~~2009 ~~not~~Annual ~~being~~Meeting ~~used~~and each has consented to ~~indirectly~~ ~~provide~~serve ~~banking~~as ~~services~~a director, toif ~~foreign~~re-elected. Unless ~~shell~~otherwise ~~banks~~instructed, ~~and~~the ~~Section~~proxy ~~319(b) requires~~holders named ~~financial~~in ~~institutions~~the toenclosed ~~maintain~~proxy ~~records~~intend ofto vote the ~~owners~~proxies ~~and~~received ~~agent~~by them for ~~service~~ the election of ~~process~~all seven of these nominees. If, prior to the Meeting, any Board ~~such~~nominee ~~foreign~~becomes ~~banks~~unable ~~with~~to ~~whom~~serve ~~correspondent~~as ~~accounts have~~a ~~been~~director, ~~established~~the proxy holders will vote the proxies received by them for the election of a substitute nominee selected by the Board of Directors.

~~Section~~ The ~~312~~Bylaws of ~~the~~Bancorp ~~Patriot~~fix ~~Act~~the ~~creates~~number aof ~~requirement~~directors of ~~for~~Bancorp ~~special~~within ~~due~~the ~~diligence for~~range ~~correspondent~~of ~~accounts~~nine and ~~private~~seventeen; ~~banking~~the ~~accounts.~~exact ~~Under~~number ~~Section~~is ~~312,~~set ~~each financial~~at nine ~~institution~~until ~~that~~changed ~~establishes,~~by ~~maintains,~~resolution ~~administers,~~of orthe ~~manages~~Board ~~a private~~of ~~banking~~Directors ~~account~~ or aBylaw ~~correspondent account in the United States for a non-United~~amendment ~~States~~duly ~~person,~~adopted ~~including~~by aBancorp's ~~foreign~~shareholders ~~individual~~or ~~visiting~~ the ~~United States,~~Board ~~or a representative~~ of a non-United States person, shall establish appropriate, specific, and, where necessary, enhanced, due diligence policies, procedures, and controls that are reasonably designed to detect and record instances of money laundering through those accountsDirectors.

~~The~~Information Company and its subsidiaries are not currently aware of any account relationships between the Company and its banking subsidiaries and any foreign bank or other person or entity as described above under Sections 313(a) or 312 of the Patriot Act. The terrorist attacks on September 11, 2001 have realigned nationalConcerning security priorities of the United States and it is reasonable to anticipate that the United States Congress may enact additional legislation in the future to combat terrorism including modifications to existing laws such as the Patriot Act to expand powers as deemed necessary. The effects which the Patriot Act and any additional legislation enacted by Congress may have upon financial institutions is uncertain; however, such legislation would likely increase compliance costs and thereby potentially have an adverse effect upon the Company's results of operations.Directors

~~-11-~~ The table below provides information concerning the nominees of the Board of Directors for election as directors of Bancorp. The persons named are all current members of the Board of Directors, and will be nominated for election as directors at the Meeting, to serve until the 2011 Annual Meeting of shareholders and until their successors are elected and have qualified.

~~RECENT~~ Unless ~~REGULATORY~~otherwise ~~DEVELOPMENTS~~directed, the proxy holders will cast votes so as to effect, if possible, the election of the seven nominees. The seven nominees receiving the most votes will be elected. If any nominee is unable to serve as a director, the proxy will be voted to elect a substitute nominee designated by the Board of Directors. The Board of Directors has no reason to believe that any of the nominees will be unable to serve if elected. Additional nominations may only be made by complying with the nomination procedures that are included in the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement.

InVote responseRequired to global credit and liquidityRecommendation issues involving a number of financial institutions, the UnitedBoard States government, particularly the United States Department of the Treasury (the “U.S. Treasury”) and the Federal financial institution regulatory agencies, have taken a variety of extraordinary measures designed to restore confidence in the financial markets and to strengthen financial institutions, including capital injections, guarantees of bank liabilities and the acquisition of illiquid assets from banks.Directors

~~Emergency~~ The ~~Economic~~seven nominees ~~Stabilization~~receiving ~~Act.~~the Onmost ~~October 3,~~votes ~~2008,~~from ~~the~~holders ~~Emergency~~of ~~Economic~~shares ~~Stabilization Act~~ of ~~2008~~common ~~(the~~stock present ~~“EESA”)~~or ~~was~~represented ~~signed~~by ~~into~~proxy ~~law.~~and ~~Pursuant~~entitled to ~~the~~vote ~~EESA,~~at the ~~U.S.~~Meeting ~~Treasury~~will ~~was~~be elected ~~granted the authority~~ to ~~take~~serve aas ~~range~~directors of ~~actions~~Bancorp for the ~~purpose~~ensuing ofyear. As ~~stabilizing~~a ~~and~~result, ~~providing~~shares ~~liquidity~~as to which the ~~U.S.~~authority ~~financial~~to ~~markets~~vote ~~and~~is ~~has~~withheld, ~~implemented~~which ~~several~~will ~~programs~~be counted, ~~including~~and ~~the~~broker ~~purchase~~non-votes, bywhich ~~the~~will ~~U.S.~~not ~~Treasury~~be ofcounted, ~~certain~~will ~~troubled~~have ~~assets~~no ~~from~~effect on ~~financial institutions under~~ the ~~Troubled~~outcome ~~Asset~~of ~~Relief Program” (~~the ~~“TARP”)~~election ~~and the direct purchase by the U.S. Treasury~~ of ~~equity securities of financial institutions under the Capital Purchase Program (the “CPP”)~~directors.

~~Capital~~ If ~~Purchase~~any ~~Program.~~person Onother ~~October~~than ~~24,~~the ~~2008,~~Board's ~~the~~nominee ~~U.S.~~is ~~Treasury~~nominated ~~announced~~for ~~plans~~election to ~~direct~~the Board, ~~$250~~the ~~billion~~proxy ofholders will have the ~~TARP~~discretion ~~funding~~to ~~into~~allocate ~~the~~and ~~CPP~~cast tothe ~~acquire~~votes represented ~~preferred~~by ~~stock~~the ~~investments~~proxies inthey ~~bank~~hold ~~holding~~among ~~companies~~the ~~and~~nominees ~~banks. Requirements~~named below for ~~bank~~which authority ~~holding~~has ~~companies~~not ~~and~~been ~~banks~~withheld ~~eligible~~in ~~to participate~~any assuch aproxies ~~Qualifying~~in ~~Financial~~such ~~Institution~~proportions ~~(“QFI”)~~as they deem appropriate in order to elect as many of the ~~CPP~~Board's ~~include:~~nominees as is possible.

·Record ~~Submission of an application prior to November 14, 2008 to the QFI’s Federal banking regulator to obtain preliminary approval to participate in the CPP~~date; Vote required

·Only IfBancorp shareholders of record at the ~~QFI~~close ~~receives~~of ~~preliminary~~business on ~~approval~~April 20, it2010 ~~will~~are ~~have~~entitled 30to ~~days~~notice ~~within~~of ~~which~~and to ~~submit~~vote ~~final~~at ~~documentation~~the ~~and~~Annual ~~fulfill~~Meeting. On ~~any~~April 20, 2010, there were 3,722,198 shares of our common stock outstanding and ~~requirements;~~entitled to vote at the Annual Meeting, held of record by approximately 261 persons, excluding those shares held by brokers in "street-name."

·Each ~~The~~shareholder ~~minimum~~of ~~amount~~record ofis ~~capital~~entitled ~~eligible~~to one vote for each ~~purchase~~share byheld on all matters to come before the UAnnual Meeting.S You may vote in person, by submitting a properly executed proxy, by calling a toll free telephone number or by accessing an Internet website listed on your proxy card. The ~~Treasury~~presence, ~~under~~in person or by properly executed proxy, of the ~~CPP~~holders isof 1at least fifty-percent of all the ~~Total~~outstanding ~~Risk~~shares of our common stock will constitute a quorum. Abstentions and broker non-~~Weighted~~votes ~~Assets~~will ofbe treated as shares present at the ~~QFI~~annual ~~and~~meeting for purposes of determining the ~~maximum~~presence of a quorum. A broker non-vote is an unvotedproxy submitted by a broker. Under applicable rules, brokers or other nominees who hold shares in street name for customers who are the ~~lesser~~beneficial owners of ~~(i)~~such shares anmay ~~amount~~not ~~equal~~vote tothose 3shares ~~percent~~with ofrespect to the ~~Total~~election ~~Risk-Weighted~~of ~~Assets~~directors unless ofthey ~~the~~have ~~QFI~~received orspecific ~~(ii)~~instructions ~~$25~~from ~~billion;~~their customers.

·To ~~Capital~~elect ~~acquired~~the bydirectors, the holders of a ~~QFI~~majority ~~under~~of the outstanding ~~CPP~~shares of our common stock entitled to vote must vote in favor of the individual nominees. Consequently, a failure to vote, an abstention or a broker non-vote will behave ~~accorded~~the ~~Tier~~same 1effect ~~capital~~as ~~treatment;~~voting against the individual nominees. Adoption of any proposal to adjourn the Annual Meeting to a later date requires that a majority of the votes cast at the Annual Meeting must vote in favor of the proposal to adjourn the Annual Meeting. Accordingly, abstentions will have the same effect as voting against the proposal to adjourn the Annual Meeting. Broker non-votes will have no effect on this proposal.

· The preferred stock issued to the U.S. Treasury will be non-voting (except in the case of class votes), senior perpetual preferred stock that ranks senior to common stock and pari passu with existing preferred stock (except junior preferred stock);_____________________

·THE InBOARD ~~addition~~OF toDIRECTORS ~~the~~RECOMMENDS A ~~preferred~~VOTE ~~stock,~~"FOR" ~~the~~THE ~~U.S.~~ELECTION OF ~~Treasury~~EACH ~~will~~OF beTHE ~~issued~~NOMINEES ~~warrants~~NAMED ~~to acquire shares of the QFI’s common stock equal in value to 15 percent of the amount of capital purchased by the QFI;~~BELOW.

~~· Dividends are payable to the U.S. Treasury at the rate of 5% per annum for the first 5 years and 9% per annum thereafter;~~_____________________

·Director Subject to certain exceptions and other requirements, no redemption of the preferred stock is permitted during the first 3 years;Nominees

· Set ~~Certain~~forth below ~~restrictions~~are onthe names and a brief description of the ~~payment~~nominees of ~~dividends~~the toBoard ~~shareholders~~of Directors for election as directors of Bancorp. The persons named are all current members of the ~~QFI~~Board ~~shall~~of ~~remain~~Directors, inand ~~effect~~will ~~while~~be nominated for election as directors at the ~~preferred~~Meeting, ~~stock~~to ~~purchased~~serve byuntil the ~~U.S.~~2011 ~~Treasury~~Annual isMeeting ~~outstanding;~~of shareholders and until their successors are elected and have qualified.

· Unless otherwise ~~Repurchase~~directed, of the ~~QFI’s~~proxy ~~stock~~holders ~~requires~~will ~~consent~~cast votes so as to effect, if possible, the election of the Useven nominees.S The seven nominees receiving the most votes will be elected. If ~~Treasury~~any nominee is unable to serve as a director, ~~subject~~the proxy will be voted to ~~certain~~elect ~~exceptions;~~a substitute nominee designated by the Board of Directors. The Board of Directors has no reason to believe that any of the nominees will be unable to serve if elected. Additional nominations may only be made by complying with the nomination procedures that are included in the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement.

·Michael L. ~~The~~Dalton, ~~preferred~~C.P.A., ~~shares~~age ~~are~~63, ~~not~~has ~~subject~~served toas ~~any~~a ~~contractual~~Director ~~restrictions~~of onBancorp ~~transfer~~since 1987. Mr. byDalton ~~the~~is ~~U.S.~~a ~~Treasury;~~Certified Public Accountant, Certified Financial Planner and Registered Investment Adviser.

·Maxwell ~~The~~M. ~~QFI~~Freeman, ~~must~~age ~~agree~~72, tohas beserved ~~bound~~as bya ~~certain~~Director ~~executive~~of ~~compensation~~Bancorp since ~~and~~2000. Mr. ~~corporate~~Freeman ~~governance~~is ~~requirements~~an ~~and~~Attorney ~~senior~~at ~~executive~~the ~~officers~~law ~~must~~firm ~~agree~~Freeman, D'Aiuto, toPierce, ~~certain~~Gurev, ~~compensation~~Keeling & ~~restrictions~~Wolf , in Stockton, California.

~~Temporary~~Harold ~~Liquidity~~Hand, ~~Guarantee Program~~M. ~~Among other programs and actions taken by the U~~D.S., ~~Treasury~~age ~~and other regulatory agencies~~72, ~~the~~has ~~FDIC~~served ~~implemented~~as ~~the~~a ~~Temporary~~Director ~~Liquidity~~of ~~Guarantee Program (the “TLGP”) to strengthen confidence and encourage liquidity in the financial~~Bancorp ~~system.~~since ~~The TLGP is comprised of the Debt Guarantee Program (the “DGP”) and the Transaction Account Guarantee Program (the “TAGP”)~~1987. ~~The DGP guarantees all newly issued senior unsecured debt (e~~ Dr.~~g., promissory~~ ~~notes,~~Hand ~~unsubordinated~~is ~~unsecured~~a ~~notes~~physician ~~and~~practicing ~~commercial paper) up to prescribed limits issued by participating entities beginning on October 14, 2008 and continuing through October 31, 2009~~ophthalmology. ~~For~~ ~~eligible~~He ~~debt~~is ~~issued by that date,~~ the ~~FDIC will provide the guarantee coverage~~ ~~until~~owner ~~the~~and ~~earlier~~operator of the ~~maturity~~Advanced ~~date~~Vision ~~of the debt or June 30~~Institute, ~~2012~~Inc. ~~The TAGP offers full guarantee for noninterest-bearing transaction accounts held at FDIC-insured depository institutions. The unlimited deposit coverage was voluntary for eligible institutions~~ and ~~was~~Staff inmember ~~addition to the $250,000 FDIC deposit insurance per account that was included as part~~ of ~~the EESA. The insured deposit limits are currently scheduled to return to $100,000 on January 1, 2014, except for certain retirement accounts.~~ ~~The~~Dameron ~~TAGP coverage became effective on October 14, 2008 and is scheduled to continue for participating institutions until December 31, 2010~~Hospital. ~~The Bank opted to participate in the TAGP.~~

~~Initially,~~Patricia ~~the~~A. ~~TLGP programs~~Hatton, ~~the DGP and TAGP, were provided at no cost for the first 30 days~~M. ~~On November 3~~D, ~~2008,~~age ~~the FDIC extended the opt-out period to December 5~~60, ~~2008~~has toserved ~~provide~~as ~~eligible institutions additional time to consider the terms before making~~ a ~~final~~Director ~~decision regarding participation in the program. Participants~~of inBancorp ~~the~~since DGP are charged an annualized fee ranging from 50 basis points to 100 basis points (depending on the maturity of the debt issued) multiplied by the amount of debt issued, and calculated for the maturity period of that debt, or through June 30, 2012, whichever is earlier1988. ~~The Bank is authorized to participate in the DGP and can apply to issue approximately $ 1,700,000 of qualifying senior debt securities covered by the DGP~~ Dr. AsHatton ofis ~~December 31,~~a ~~2009,~~physician ~~the~~practicing ~~Bank has no senior unsecured debt outstanding.~~obstetrics Inand addition to the existing risk-based deposit insurance premium paid on such deposits, TAGP participants will be assessed, on a quarterly basis, an annualized 10 basis points fee on balances in noninterest-bearing transaction accounts that exceed the existing deposit insurance limit of $250,000gynecology.

~~-12-~~Yoshikazu Mataga, age 67, has served as a Director of Bancorp since 1987. Mr. Mataga is the owner and operator of Matagaof Stockton.

~~Financial~~Rick ~~Stability Plan~~D. OnSimas, ~~February~~age 1049, ~~2009,~~has ~~the~~served ~~U.S. Treasury announced a Financial Stability Plan (the “FSP”)~~ as ~~a comprehensive approach to strengthening the financial system and credit crisis. The Plan includes a Capital Assistance Program (the “CAP”)~~ ~~that is intended to serve as~~ a ~~bridge~~Director to raising private capital and to ensure sufficient capital to preserve or increase lending in a worse-than-expected economic deterioration. Eligibility to participate in the CAP will be consistent with the criteria for QFI’s under the CPP. Eligible institutions with consolidated assets in excess of ~~$100~~Bancorp ~~billion~~since will be able to obtain capital under the CAP, subject to a supervisory review process and comprehensive stress test assessment of the losses that could occur over a two year period in the future across a range of economic scenarios, including conditions more severe than anticipated or as typically used in capital planning processes2009. ~~Eligible institutions with consolidated assets below $100 billion will be able to obtain capital under the CAP after a supervisory review.~~ ~~As announced, the CAP includes issuance of a convertible preferred security to the U~~Mr.S. ~~Treasury at a discount to the participating institution’s stock price as of February 9, 2009, subject~~Simasis ~~to a dividend to be determined. The security instrument will be designed to incentivize institutions to replace~~ the ~~CAP~~President ~~capital~~and ~~with~~Chief ~~private~~Executive ~~capital~~Officer ~~or redeem it. Institutions participating in the CPP under TARP may also be permitted to exchange their CPP preferred stock for the convertible preferred CAP security. Among the other elements~~ of ~~the FSP, is a temporary extension by the FDIC of the TLGP for enhancing financial institution liquidity to October 31, 2009~~Bancorp.

~~American~~Gary ~~Recovery and Reinvestment Act~~A. ~~On February 17~~Stewart, ~~2009,~~age the American Recovery and Reinvestment Act of 2009 (the “ARRA”) was signed into law. Section 7001 of the ARRA amended Section 111 of the EESA in its entirety. While the U.S. Treasury must promulgate regulations to implement the restrictions and standards set forth in Section 700160, ~~the ARRA, among other things, significantly expands the executive compensation restrictions previously imposed by the EESA. Such restrictions apply to any entity that~~ has ~~received~~served ~~or will receive financial assistance under the TARP, and shall generally continue to apply for~~ as ~~long~~a asDirector ~~any~~of ~~obligation arising from financial assistance provided under the TARP, including preferred stock issued under the CPP, remains outstanding.~~Bancorp ~~These~~since ARRA restrictions do not apply to any TARP recipient during such time when the Federal government (i) only holds any warrants to purchase common stock of such recipient or (ii) holds no preferred stock or warrants to purchase common stock of such recipient1998. Mr. ~~Since~~Stewart ~~the~~is ~~Bank determined not to participate in~~ the ~~CPP,~~Executive ~~the~~Vice ~~restrictions~~President and ~~standards~~Chief ~~set~~Credit Officer ~~forth in Section 7001~~ of ~~the ARRA are not applicable to the Bank~~Bancorp.

~~Term~~ The following ~~Asset-Backed~~members ~~Securities~~of ~~Loan Facility. On March 3, 2009,~~ the ~~U.S, Treasury and the~~ Board of ~~Governors~~Directors, ~~announced~~comprising ~~the~~more ~~Term~~than ~~Asset-Backed~~a ~~Securities Loan Facility (the “TALF”). The TALF is one of the programs under the Financial Stability Plan announced by the U.S. Treasury~~majority, onhave ~~February~~been ~~10,~~determined ~~2009. The TALF is intended to help stimulate the economy~~ by ~~facilitating securitization activities which allow lenders to increase~~ the ~~availability~~Board ~~of credit~~ to ~~consumers~~be ~~and~~"independent" ~~businesses.~~in ~~Under~~accordance with ~~the~~Marketplace ~~TALF,~~Rule ~~the Federal Reserve Bank of New York~~ 4200(~~“FRBNY”~~A) ~~will lend up to $200 billion to provide financing to investors as support for purchases of certain AAA-rated asset-backed securities~~ (~~“ABS”~~15) ~~initially~~of ~~for~~the ~~newly~~NASD: ~~and~~Michael ~~recently~~L. ~~originated auto loans~~Dalton, ~~credit card loans~~C.P.A., ~~student~~ ~~loans,~~Maxwell ~~and SBA-guaranteed small business loans anticipated to be funded on March 25~~Freeman, ~~2009,~~Harold ~~and rental~~Hand, ~~commercial,~~M.D ~~and~~Patricia ~~government~~A. ~~vehicle fleet leases~~Hatton, ~~small ticket equipment~~M.D., ~~heavy equipment,~~ and ~~agricultural equipment loans and leases proposed to be funded in April~~Yoshikazu Mataga.

~~ABS~~Stock ~~fundings~~Ownership ~~will~~of be held monthly beginning on March 25, 2009 through March 2010, or longer if the TALF is extended. The loan asset classes may be expanded in the future to include commercial mortgages, non-Agency residential mortgages, and/or other asset classes. Credit extensions under the TALF will be non-recourse loans to eligible borrowers secured by eligible collateral for a three-year term with interest paid monthly. Any U.S. company that owns eligible collateral may borrow from the TALF, provided the company maintains an account with a primary dealer who will act as agent for the borrower and deliver eligible collateral to the FRBNY custodian in connection with the loan funding. The FRBYN will create a special purpose vehicle (“SPV”) to purchase and manage any assets received by the FRBYN in connection with the TALF loans.Management

The ~~U.S.~~following ~~Treasury~~table ~~will~~lists, ~~provide~~as ~~$20 billion~~ of ~~credit protection to~~ the Record ~~FRBNY~~Date, ~~in connection with~~ the ~~TALF~~number ~~through~~and ~~the~~percentage ~~Troubled~~of ~~Assets~~shares ~~Relief~~of ~~Program~~Common ~~(the~~Stock ~~“TARP”)~~beneficially owned by ~~purchasing~~each ~~subordinated~~director, ~~debt~~each ~~issued~~nominee, byeach ~~the~~Named ~~SPV~~Executive toOfficer ~~finance~~identified in the ~~first~~compensation ~~$20~~discussion ~~billion~~below ofand ~~asset purchases. If more than $20 billion in assets are purchased~~ by the ~~SPV, the~~directors ~~FRBNY~~and ~~will~~principal officers ~~lend~~of ~~additional~~Bancorp ~~funds~~as toa ~~the~~group. The ~~SPV~~table todoes ~~finance~~not ~~such~~include ~~additional~~125,722 shares ~~purchases.~~held ~~The~~beneficially ~~FRBNY’s~~by ~~loan~~Bancorp toofficers ~~the~~as ~~SPV~~administrators ~~will~~of ~~be senior to~~ the ~~TARP~~Pacific State ~~subordinated~~Bank ~~loan~~401(k) ~~and~~Savings ~~secured~~Plan. None ~~by all~~ of the ~~assets~~shares ofare ~~the~~pledged ~~SPV~~as security.

-13-

Beneficial Owner	Amount and Nature of Beneficial Ownership⁽¹⁾		Percent of Class
Michael L. Dalton, C.P.A.	102,036(34,136)	1,920	2.74%
Maxwell M. Freeman	366,800(50,000)	-	9.85%
Justin R. Garner	1,153	-	*
Harold Hand, M.D.	335,188(50,000)	19,680	9.01%
Patricia A. Hatton, M.D.	183,250(50,000)	28,616	4.92%
Yoshikazu Mataga	146,308 (30,000)	-	3.93%
George M. Schofield, C.P.A	15,679	-	*
Rick D. Simas	30,800(30,800)	-	*
Gary A. Stewart	62,283(62,283)	-	1.67%
Kathleen M. Verner	25,000(20,000)	-	*
All directors, nominees and principal officers as a group (10 in all)⁽²⁾	1,368,497(327,219)	50,216	34.08%

~~TRANSACTIONS~~(*) ~~BETWEEN~~indicates ~~AFFILIATES~~less than 1%

~~Transactions~~(1) The ~~between~~first anumber ~~bank~~in ~~and~~the ~~its~~first subcolumn ~~"affiliates"~~indicates ~~are quantitatively and qualitatively restricted under~~ the ~~Federal~~total ~~Reserve~~number ~~Act.~~of ~~The~~shares ~~Federal Reserve Board issued Regulation W on October 31~~beneficially owned, ~~2002,~~including ~~which~~(as ~~comprehensively~~specified ~~implements~~by ~~Sections~~the ~~23A~~number ~~and~~in ~~23B~~the ofparenthesis) the ~~Federal~~number ~~Reserve~~of shares ~~Act.~~that ~~Sections~~could ~~23A~~be ~~and~~acquired ~~23B~~pursuant ~~and~~to ~~Regulation~~stock Woptions ~~restrict~~exercisable ~~loans~~within by60 adays ~~depository~~of ~~institution~~the toRecord ~~its~~Date. Numbers ~~affiliates,~~in ~~asset~~the ~~purchases~~second bysubcolumn indicate athe ~~depository~~number ~~institution~~of ~~from~~shares ~~its~~(out ~~affiliates,~~of ~~and~~the ~~other~~total ~~transactions~~number ~~between~~of ashares ~~depository~~beneficially owned) ~~institution~~as ~~and~~to ~~its~~which ~~affiliates. Regulation W unifies in one public document~~ the ~~Federal~~person ~~Reserve~~or ~~Board’s~~group ~~interpretations~~shares ofvoting ~~Section 23A~~ and/or ~~23B.~~investment ~~Regulation W had an effective date of April 1, 2003~~power.

~~SUMMARY~~(2) Named OFExecutive ~~SIGNIFICANT~~Officers ~~ACCOUNTING~~included ~~POLICIES~~are the President and Chief Executive Officer, Executive Vice President and Chief Credit Officer, and Vice President and Chief Financial Officer.

~~The~~Options ~~accounting~~Outstanding and ~~reporting~~Available ~~policies~~for ofIssuance Pacific State Bancorp and its subsidiary (collectively, the "Company") conform with accounting principles generally accepted in the United States and prevailing practice within the banking industry. The more significant of these policies applied in the preparation of the accompanying consolidatedat ~~financial statements are discussed below.~~Year-End

~~PRINCIPLES~~The OFfollowing ~~CONSOLIDATION~~table provides information as of December 31, 2009 with respect to compensation plans (including individual compensation arrangements) under which equity securities of Bancorp are authorized for issuance under Bancorp's 1997 Stock Option Plan.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Pacific State Bank. Significant intercompany transactions and balances have been eliminated in consolidation. For financial reporting purposes, the Company's investment in Pacific State Statutory Trusts II and III ("Trusts") are accounted for under the equity method and are included in accrued interest receivable and other assets in the consolidated balance sheet. The subordinated debentures issued and guaranteed by the Company and held by the Trusts are included as subordinated debentures in the consolidated balance sheet.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	501,069	$7.40	0
Equity compensation plans not approved by security holders	None	NA	NA
Total	501,069	$7.40	0

~~SEGMENT~~ THE ~~INFORMATION~~BOARD OF DIRECTORS

~~Management~~Meetings ~~has determined that because all~~ of the ~~banking~~Board ~~products and services offered by the Company are available in each branch~~ of ~~the~~Directors Bank, all branches are located within the same economic environment and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. No customer accounts for more than 10 percent of revenues for the Company or the Bank.

~~USE~~Bancorp's OFBoard ~~ESTIMATES~~of Directors held 12 meetings during 2009. The following members of the Board of Directors, comprising more than a majority, have been determined by the Board to be "independent" in accordance with Marketplace Rule 4200(A)(15) of the NASD: Michael L. Dalton, Maxwell Freeman, Harold Hand, M.D., Patricia A. Hatton, M.D., and Yoshikazu Mataga. The independent members of the Board met together in four regularly scheduled meetings during 2009 at which only independent directors were present. In addition to meeting as a group to review Bancorp's business, members of the Board of Directors served on certain standing committees. During 2009, all members of the Board of Directors, except for Mrs. Vernerand Mr. Freeman, attended more than 75% of the aggregate of the number of meetings held by the Board of Directors and of all committee meetings on which he or she served.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reportedBoard ~~amounts~~Leadership ofStructure ~~revenues and expenses during the reporting period. Actual results could differ from these estimates.~~

~~RECLASSIFICATIONS~~ The Board of Directors is committed to maintaining an independent Board, and for many years a majority of the Board has been comprised of independent directors. It has further been the practice of Bancorp to separate the roles of Chief Executive Officer and Chairman of the Board in recognition of the differences between the two roles. The Chief Executive Officer is responsible for setting the strategic direction for Bancorp and the day-to-day leadership and performance of Bancorp. The Chairman of the Board is responsible for providing guidance to the Chief Executive Officer, setting the agenda for Board meetings, presiding over meetings of the full Board (including executive sessions), and facilitating communication among the independent directors and between the independent directors and the Chief Executive Officer. The Board further believes that the separation of the duties of the Chief Executive Officer and the Chairman of the Board eliminates any inherent conflict of interest that may arise when the roles are combined, and that an independent director who has not served as an executive of Bancorp can best provide the necessary leadership and objectivity required as Chairman of the Board.

~~Certain~~ Board ~~reclassifications~~Authority ~~have~~for ~~been~~Risk ~~made~~Oversight ~~to prior years' balances to conform to classifications used in 2009.~~

~~CASH~~ The ~~AND~~Board ~~CASH~~has ~~EQUIVALENTS~~ultimate authority and responsibility for overseeing risk management of Bancorp. The Board monitors, reviews and reacts to material enterprise risks identified by management. The Board receives specific reports from executive management on financial, credit, liquidity, interest rate, capital, operational, legal compliance and reputation risks and the degree of exposure to those risks. The Board helps ensure that management is properly focused on risk by, among other things, reviewing and discussing the performance of senior management and business line officers.

~~For~~ Board committees have responsibility for risk oversight in specific areas. The Audit Committee oversees financial, accounting and internal control risk management policies. The Audit Committee approves the ~~purpose~~independent auditor and its annual audit plan. The Audit Committee reports periodically to the Board on the effectiveness of risk management processes in place and the ~~statement~~overall risk assessment of ~~cash~~Bancorp's ~~flows,~~activities. ~~cash,~~The ~~due~~Personnel ~~from~~Committee ~~banks~~assesses and monitors ~~Federal~~risks ~~funds~~in ~~sold~~Bancorp's ~~are~~compensation ~~considered~~program. toThe beCorporate ~~cash~~Governance ~~equivalents. Generally,~~and Nominating ~~Federal~~Committee ~~funds~~recommends ~~are~~director ~~sold~~candidates with appropriate experience and skills who will set the proper tone for ~~one-day~~Bancorp's ~~periods~~risk profile and provide competent oversight over our material risks.

~~-14-~~Committees of the Board of Directors

~~INVESTMENT~~ The Board ~~SECURITIES~~has six standing committees: an Audit Committee, a Personnel/Compensation Committee, a Director Loan Committee, Compliance Committee, Asset and Liability Committee and a Nominating Committee. Information regarding the members of each of those Committees and their responsibilities and the number of meetings held by those Committees in 2009 is set forth below.

~~Investment~~Audit ~~securities~~Committee ~~are~~and ~~classified~~Audit ~~into~~Committee ~~the~~Financial ~~following categories:~~Expert

~~· Available-~~ The Audit Committee held 12 meetings during 2009. The Audit Committee consists of the following members of Bancorp's Board of Directors: Patricia Hatton, Michael A. Dalton, Yoshikazu Mataga, and George Schofield. Michael A. Dalton, CPA is the designated audit committee financial expert. This designation is based upon his experience as a certified public accountant. Each of the members of the Committee is independent as defined under Rule 4200(a)(15), meets the criteria for independence set forth in Rule 10A-~~sale~~3(b)(1) ~~securities~~under the Securities Exchange Act (subject to the exemptions provided in Rule 10A-3(c)), ~~reported~~has not participated in the preparation of the financial statements of Bancorp or any of its current subsidiaries at ~~fair~~any ~~value,~~time ~~with~~during ~~unrealized~~the ~~gains~~past three years, and ~~losses~~is ~~excluded~~able ~~from~~to ~~earnings~~read and understand ~~reported~~fundamental financial statements, ~~net~~including ofa ~~taxes~~Bancorp's balance sheet, asincome ~~accumulated~~statement, ~~other~~and ~~comprehensive~~cash ~~income~~flow statement. The Board has adopted a written charter to govern the Committee's operations which complies with the requirements of Marketplace Rule 4350(~~loss~~d)(1). The ~~within~~Audit ~~shareholders~~Committee's Charter ~~equity~~provides that the Committee must pre-approve services to be performed by the Bancorp's independent public accountants. Additionally, the Committee will consider on a case-by-case basis and, if appropriate, approve specific engagements that are not otherwise pre-approved.

~~· Held-~~ The Committee's responsibilities include providing advice with respect to~~-maturity~~ ~~securities,~~Bancorp's financial ~~which~~matters ~~management~~and ~~has~~assisting the ~~positive~~Board ~~intent~~of ~~and~~Directors ~~ability~~in discharging its responsibilities regarding corporate accounting. The Committee's primary responsibilities are to: ~~hold~~(1) serve as an independent and objective party to monitor ~~maturity,~~Bancorp's ~~reported~~financial atreporting ~~amortized~~process ~~cost,~~and ~~adjusted~~internal ~~for~~control system; (2) review and evaluate the ~~accretion~~audit efforts of ~~discounts~~Bancorp's independent accountants and internal ~~amortization~~auditor; (3) evaluate Bancorp's quarterly financial performance as well as its compliance with laws and regulations; (4) oversee management's establishment and enforcement of ~~premiums~~financial policies and business practices; and (5) facilitate communication among the independent accountants, financial and senior management, counsel, the internal auditor and the Board of Directors.

~~Management~~Personnel/Compensation determines the appropriate classification of its investments at the time of purchase and may only change the classification in certain limited circumstances. The Company did not have any investments classified as trading at December 31, 2009 or 2008. All transfers between categories are accounted for at fair value. There were no transfers between categories in 2009 or 2008.Committee

~~Gains~~ The ormembers ~~losses~~of onthe Personnel/Compensation Committee are: Yoshikazu Mataga, Michael A. Dalton, and Harold Hand. The purpose of the ~~sale~~Personnel/Compensation Committee is to discharge the Board's (as hereinafter defined) responsibilities relating to compensation of ~~investment~~Bancorp's ~~securities~~and Pacific ~~are~~State ~~computed~~Bank's onChief Executive Officer ("Chief Executive Officer" or "CEO"), executive officers and members of the ~~specific~~Boards of ~~identification~~Directors ~~method. Interest~~of ~~earned~~Bancorp onand ~~investment~~Pacific ~~securities~~State Bank (together, the "Board"). The Committee is ~~reported~~responsible infor ~~interest~~the ~~income~~development, implementation, ~~net~~approval, evaluation and oversight of ~~applicable~~(1) ~~adjustments~~CEO ~~for~~and ~~accretion~~executive officer compensation plans, (2) all compensation plans involving issuance of Bancorp's ~~discounts~~stock or other securities, and ~~amortization~~(3) director and personnel compensation plans. The term "executive officers", as used herein, shall mean those employees who are "named executive officers" pursuant to Item 402(a) of ~~premiums~~SEC Regulation S-K. The term "director", as used herein, shall mean directors of Bancorp and/or the Bank. The Personnel/Compensation Committee held one meeting during 2009.

~~Investment~~Personnel/Compensation ~~securities~~Committee ~~are~~Interlocks ~~evaluated for impairment on at least a quarterly basis~~ and more frequently when economic or market conditions warrant such an evaluation to determine whether a decline in their value is other than temporary. Management utilizes criteria such as the magnitude and duration of the decline and the intentInsider ~~and~~Participation ability of the Company to retain its investment in the securities for a period of time sufficient to allow for an anticipated recovery in fair value, in addition to the reasons underlying the decline, to determine whether the loss in value is other than temporary. The term "other than temporary" is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value is determined to be other than temporary, the value of the security is reduced and a corresponding charge to earnings is recognized.

AsMr. aSimas ~~member of the Federal Reserve System~~does not, ~~the~~due ~~Federal~~to ~~Home~~his ~~Loan~~membership ~~Bank~~on ~~System and~~ the ~~Farmer Mac Home Administration System~~Committee, ~~the~~hold ~~Bank~~a isposition ~~required~~as toa ~~maintain~~board ~~an investment in restricted capital stock~~ member of ~~each~~or ~~system. These~~with ~~investments~~the ~~are~~responsibility ~~carried~~for atthe ~~cost~~compensation ~~and~~matters ~~are~~of ~~redeemable~~any ~~at par and are included in accrued interest receivable and~~ other ~~assets in the consolidated balance sheet~~entity.

~~LOANS~~Director Loan Committee

~~Loans~~The ~~are~~members ~~stated~~of atthe ~~principal~~Loan ~~balances~~Committee ~~outstanding. Interest~~are: Patricia isHatton, ~~accrued~~Michael ~~daily~~Dalton, ~~based~~Maxwell ~~upon~~Freeman, ~~outstanding~~Yoshikazu ~~loan balances. However~~Mataga, Rick ~~when~~Simas, inGary ~~the~~Stewart, ~~opinion of management~~Kathleen Verner, ~~loans~~and ~~are~~George ~~considered~~Schofield. The toDirector beLoan Committee ~~impaired~~reviews and ~~the~~decides ~~future~~whether ~~collectability~~or ofnot ~~interest~~to ~~and~~approve ~~principal~~any isloan in ~~serious~~an ~~doubt, loans are placed on nonaccrual status and~~amount ~~the~~that ~~accrual~~exceeds ofmanagement's ~~interest~~lending ~~income~~authority isto ~~suspended. Any~~any ~~interest~~single ~~accrued~~borrower, ~~but~~reviews delinquent ~~unpaid~~loans, isand ~~charged~~recommends ~~against~~any ~~income. Payments~~changes ~~received are applied~~ to ~~reduce~~Pacific ~~principal~~State toBank's ~~the~~loan policy ~~extent~~that ~~necessary~~it deems to ~~ensure~~be ~~collection~~appropriate. ~~Subsequent~~ The ~~payments~~Director onLoan ~~these~~Committee ~~loans, or payments received on nonaccrual loans for which~~ of the ~~ultimate~~Board ~~collectability~~held oftwenty-four ~~principal~~meetings isduring ~~not in doubt, are applied first to earned but unpaid interest and then to principal~~2009.

AnCompliance impaired loan is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical matter, at the loan's observable market price or the fair value of collateral if the loan is collateral dependent. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due (including both principal and interest) in accordance with the contractual terms of the loan agreement. Interest income on impaired loans, if appropriate, is recognized on a cash basis.Committee

~~Loan~~The ~~origination~~members ~~fees,~~of ~~commitment~~the ~~fees,~~Compliance ~~direct~~Committee are ~~loan~~Michael ~~origination~~A. ~~costs~~Dalton, ~~and~~Yoshikazu ~~purchase~~Mataga, ~~premiums~~George Schofield and ~~discounts~~Patricia onHatton. The ~~loans~~Compliance ~~are~~Committee ~~deferred~~is ~~and~~charged ~~recognized~~with the asoversight anand ~~adjustment~~compliance ofby ~~yield,~~Bancorp and ~~amortized~~Pacific toState ~~interest~~Bank ~~income~~with ~~over~~ the ~~contractual term~~ terms of the ~~loan. The~~written ~~unamortized~~agreement ~~balance~~dated ofFebruary ~~deferred~~18, ~~fees~~2009. The ~~and~~Compliance Committee ~~costs~~of isthe ~~reported~~Board asheld atwelve ~~component~~meetings ofduring ~~net loans~~2009.

~~The~~Asset ~~Company may purchase loans or acquire loans through a business combination for which differences exist between the contractual cash flows~~ and ~~the~~Liability ~~cash~~Committee flows expected to be collected due, at least in part, to credit quality. When the Company acquires such loans, the yield that may be accreted (accretable yield) is limited to the excess of the Company’s estimate of undiscounted cash flows expected to be collected over the Company’s initial investment in the loan. The excess of contractual cash flows over cash flows expected to be collected may not be recognized as an adjustment to yield, loss, or a valuation allowance. Subsequent increases in cash flows expected to be collected generally should be recognized prospectively through adjustment of the loan’s yield over its remaining life. Decreases in cash flows expected to be collected should be recognized as an impairment. The Company may not "carry over" or create a valuation allowance in the initial accounting for loans acquired under these circumstances. At December 31, 2009 and 2008, there were no such loans being accounted for under this policy.

The members of the Asset and Liability Committee are: Michael A. Dalton, Rick Simas, and Gary Stewart. The purpose of the asset and liability committee is to communicate, coordinate and control asset/liability management consistent with Pacific State Bank's business plan and board-~~15-~~approved policies. The objectives are to manage assets and funding sources to produce results that are consistent with liquidity, capital adequacy, growth, risk and profitability goals. The Asset and Liability Committee of the Board held quarterly meetings during 2009.

~~LOAN~~Nominating ~~SALES~~Procedures ~~AND~~and ~~SERVICING~~Policies

~~The~~Bancorp ~~Company~~has ~~accounts~~a ~~for~~standing Nominating Committee, comprised of at least three independent directors; the ~~transfer~~current members ~~and~~of ~~servicing~~the Nominating Committee include all independent members of ~~financial~~the Board ~~assets~~of ~~based~~Directors. These ondirectors are appointed annually by the independent ~~financial~~members ~~and~~of ~~servicing~~the ~~assets~~board. Director itindependence ~~controls~~is determined ~~and~~in ~~liabilities~~accordance itwith ~~has~~Marketplace ~~incurred~~Rule 4200(A)(15) of the NASD. Under this definition, ~~derecognizes~~an ~~financial~~independent ~~assets~~director ~~when~~is ~~control~~a ~~has~~person other ~~been~~than ~~surrendered~~an officer or employee of Bancorp or its subsidiaries or any other individual having a relationship that, in the opinion of the Bancorp's Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Types of persons deemed not to be independent include (but are not limited to) employees of Bancorp or Pacific State Bank; persons (or their family members or affiliate entities) compensated for services other than as a director; and ~~derecognizes~~persons ~~liabilities~~(or ~~when~~their ~~extinguished~~family members) who are partners or employees of Bancorp's independent auditors. The nominating committee held one meeting during 2009. The nominating committee's activities are governed by a charter adopted by the Board of Directors.

~~Government~~Bancorp's ~~Guaranteed~~bylaws ~~Loans~~prescribe the procedures for direct shareholder nominations of directors. These procedures are reprinted in the Notice of Annual Meeting that accompanies this proxy statement. In his discretion, the chairman of the Annual Meeting may disregard nominations not made in accordance with these procedures and instruct the inspector of elections to disregard all votes cast for such nominees. As a matter of policy, the Board of Directors will consider for inclusion in Bancorp's proxy statement nominees made in accordance with these procedures and submitted to Bancorp on or before the deadline specified by regulation of the Securities and Exchange Commission for mandatory inclusion of shareholder proposals. For purposes of the 2011 Annual Meeting, that date will be December 15, 2010.

~~Included~~Each incandidate ~~the~~considered ~~loan portfolio are loans which are 75% to 90% guaranteed~~ by the Nominating ~~Small~~Committee ~~Business~~is ~~Administration~~required ~~(SBA),~~to ~~Farmer~~complete ~~Mac~~one ~~and~~or ~~USDA~~more ~~Business~~questionnaires and ~~Industry. The guaranteed portion of these loans may be sold~~ to provide aany ~~third~~additional information ~~party,~~which ~~with~~ the ~~Company~~Nominating ~~retaining~~Committee considers ~~the~~necessary, including ~~unguaranteed~~a ~~portion. The~~personal ~~Company~~financial ~~generally~~statement ~~receives~~and a ~~premium~~ inbackground investigation ~~excess~~by ofan ~~the~~outside ~~adjusted carrying value of the loan at the time of sale~~firm. The Company may be required to refund a portion of the sales premium if the borrower defaults or prepays within ninety days of the settlement date. At December 31, 2009, there were no premiums subject to these recourse provisions.

~~The~~Candidates ~~Company's~~are ~~investment~~evaluated ~~in the loan is allocated between the retained portion of the loan, the servicing asset (liability) and the sold portion of the loan~~ based on ~~their relative fair values on~~ the criteria ~~date~~established ~~the~~by ~~loan is sold. The gain on~~ the Nominating ~~sold~~Committee, ~~portion~~which ofmay ~~the~~include ~~loan~~such criteria ~~is recognized~~ as ~~income~~a atsatisfactory ~~the~~background ~~time~~investigation, ofexperience ~~sale. The~~and ~~carrying~~expertise, ~~value~~financial ofresources, time ~~the~~availability ~~retained~~and ~~portion~~community ~~of the loan is discounted based on the estimated value of a comparable non-guaranteed loan~~involvement. ~~The~~ Candidates ~~servicing~~selected ~~asset~~for consideration ~~(liability)~~as isnominees ~~recognized~~must ~~and~~meet ~~amortized~~with ~~over~~ the Nominating ~~estimated~~Committee ~~life~~and ofthereafter with the ~~related~~Board ~~loan. Significant future prepayments~~ of ~~these loans will result in the recognition of additional amortization of related servicing assets (liabilities)~~Directors.

~~The~~Any ~~Company~~candidates ~~serviced~~nominated ~~government-guaranteed~~for ~~loans~~election ~~for~~to the ~~others~~Board ~~totaling~~of ~~$48~~Directors,~~327,000~~ ~~and~~including ~~$53~~existing members,~~112,000~~ asmust be recommended to the Board of ~~December~~Directors ~~31,~~by ~~2009~~the majority vote of approval of the members of the Nominating Committee and ~~2008~~receive ~~respectively~~a majority of votes in favor of nomination from independent members of the Board of Directors.

~~Servicing~~Director ~~Rights~~Independence

~~Servicing~~ The Board ~~rights~~has ~~acquired~~determined ~~through~~that, 1)other athan ~~purchase~~Rick orSimasand Gary 2)Stewart, ~~the~~each ~~origination~~member of ~~loans~~the ~~which~~Board ~~are~~is ~~sold~~independent ~~with~~under ~~servicing~~the ~~rights~~NASDAQ's definition ~~retained~~of ~~are~~independence. ~~recognized~~In asreaching ~~separate~~this ~~assets~~conclusion, orthe ~~liabilities. Servicing~~Board ~~assets~~considered the orrelevant ~~liabilities~~facts ~~are~~and ~~recorded~~circumstances atwith ~~the~~respect ~~difference~~to ~~between~~any ~~the~~direct ~~contractual~~or ~~servicing~~indirect relationships ~~fees~~between Bancorp and ~~adequate~~each ~~compensation~~of ~~for performing~~ the ~~servicing~~non-management directors, ~~and~~including ~~are~~those ~~subsequently~~disclosed ~~amortized~~below inunder ~~proportion~~the tosection ~~and~~entitled ~~over~~"CERTAIN TRANSACTIONS." The ~~the~~Board ~~period~~determined ofthat ~~the~~any ~~related~~relationships ~~net~~that ~~servicing~~now exist, ~~income~~ or ~~expense. Servicing~~may ~~assets~~have ~~are~~existed ~~periodically~~in ~~evaluated~~the ~~for~~past ~~impairment. Servicing~~between ~~rights~~Bancorp ~~were~~and ~~not~~any ~~significant~~of atthe non-management ~~December 31~~directors, ~~2009~~were ~~and 2008~~immaterial.

~~ALLOWANCE~~Term ~~FOR~~of ~~LOAN~~Office ~~LOSSES~~of Directors

~~The~~ All ~~allowance~~of ~~for~~Bancorp's ~~loan~~directors ~~losses~~are iselected ~~maintained~~at toeach ~~provide~~Annual Meeting of Shareholders for ~~losses~~a ~~related~~term toof ~~impaired~~one ~~loans~~year and ~~other~~until ~~losses~~their ~~that~~respective ~~can~~successors beare ~~expected~~elected and qualify to ~~occur~~serve inon the ~~normal~~Board. If ~~course~~a ofvacancy ~~business. The~~occurs ~~determination~~in ofany ~~the~~Board ~~allowance~~position between isAnnual ~~based~~Meetings, onthe ~~estimates~~Board ~~made~~may fill the vacancy by ~~management,~~electing a new director to ~~include~~that ~~consideration~~position. The ofBoard ~~the~~may ~~character~~also ofcreate ~~the~~a ~~loan~~new ~~portfolio,~~director ~~specifically~~position ~~identified~~and ~~problem~~elect ~~loans,~~a ~~potential~~director ~~losses~~to ~~inherent~~hold in the ~~portfolio~~newly ~~taken~~created asposition ~~whole~~for ~~and~~a ~~economic~~term ~~conditions~~ending in at the ~~Company's~~next ~~service~~Annual ~~area~~Meeting of Shareholders.

~~Classified~~Communications ~~loans~~with and loans determined to be impaired are individually evaluated by management for specific risk of loss. In addition, reserve factors are assigned to currently performing loans based on management's assessment of the ~~following~~Board for each identified loan type: (1) inherent credit risk, (2) historical losses and, (3) where the Company has not experienced losses, the loss experience of peer banks. These estimates are particularly susceptible to changes in the economic environment and market conditions.

~~The~~Any ~~Bank's~~shareholder ~~Loan~~who ~~Committee~~wishes ~~reviews~~to communicate with the ~~adequacy~~Board ofor ~~the~~with ~~allowance~~any ~~for~~committee ~~loan~~or ~~losses~~individual atmember ~~least~~may ~~quarterly,~~write to ~~include~~the President ~~consideration~~and ofChief ~~the~~Executive ~~relative~~Officer ~~risks~~at in1899 ~~the~~W. ~~portfolio~~March ~~and~~Lane, ~~current~~Stockton, California ~~economic~~95207, ~~conditions~~Attention: ~~and~~Board ~~other factors~~Administration. The ~~allowance~~letter isshould ~~adjusted~~indicate that ~~based~~the onauthor ~~that~~is ~~review~~a shareholder and, if shares are not held of record, inshould include ~~the~~appropriate ~~judgment~~evidence of ~~the~~stock ~~Loan~~ownership. ~~Committee~~Depending ~~and~~on ~~management,~~the ~~changes~~subject ~~are~~matter, ~~warranted.~~management will:

~~While~~ Forward ~~management uses~~ the ~~best~~communication ~~information available on which~~ to ~~base estimates, future adjustments to~~ the allowance for credit losses may be necessary if the economic conditions, particularly in the Stockton Markets and San Joaquin County, differ substantially from the assumptions used by management. In addition, regulatory agencies, asBoard anor ~~integral part of their examination process, periodically review~~ the ~~Company’s~~director ~~allowance~~or ~~for~~committee ~~loan losses, and may require the Company~~ to ~~make~~whom ~~additions~~it tois ~~the allowance based on their judgment about information available to them at the time of their examination.~~addressed;
~~This~~ Attempt ~~allowance~~to ishandle ~~established~~the ~~through~~inquiry directly, ~~a provision~~ for ~~loan~~example, ~~losses~~if ~~which~~it is ~~charged~~a torequest ~~expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after net charge-offs and loan growth. The allowance~~ for ~~loan~~information ~~losses~~about atBancorp ~~December 31, 2009 and 2008, respectively, reflects management's~~or ~~estimate~~concerns ofa ~~probable~~stock-related ~~losses~~matter; ~~in the portfolio.~~or
~~Allowance~~ Not ~~for~~forward ~~Losses~~the ~~Related~~communication if it is primarily commercial in nature, relates to ~~Undisbursed~~an ~~Loan~~improper or irrelevant topic, is hostile, threatening, illegal or otherwise inappropriate, or is otherwise unrelated to the activities, functions and ~~Lease~~responsibilities ~~Commitments~~of the board.

~~The~~Attendance Bank maintains a separate allowance for losses related to undisbursed loan and lease commitments. Management estimates the amount of probable losses by applying the loss factors used in the allowance for loan and lease loss methodology to an estimate of the expected usage of undisbursed commitments for each loan or lease type. The allowance totaled $67,000 and $222,000 at ~~December 31,~~Annual ~~2009~~Meetings ~~and 2008, respectively, and is included in accrued interest payable and other liabilities on the consolidated balance sheet.~~

~~-16-~~ All of Bancorp's directors are expected and encouraged to attend Annual Meetings to the extent possible consistent with their other obligations. All of the directors, with the exception of Kathleen Verner, attended the 2009 Annual Meeting.

~~OTHER~~Code ~~REAL~~of ~~ESTATE~~Conduct

~~Other~~ The ~~real~~Board ~~estate~~has ~~includes~~also ~~real~~adopted ~~estate~~a ~~acquired~~Code inof Ethics ~~full~~that orapplies ~~partial~~to ~~settlement~~all of ~~loan~~our ~~obligations. When~~employees, ~~property~~officers isand ~~acquired,~~directors. ~~any~~A ~~excess~~copy of the ~~Company's~~Code, ~~recorded~~which ~~investment~~complies inwith the ~~loan~~definition ~~balance~~of ~~and~~a ~~accrued~~"code ~~interest~~of ~~income~~ethics" under ~~over~~section ~~the~~406(c) ~~estimated fair market value~~ of the ~~property~~Sarbanes-Oxley isAct ~~charged~~of ~~against~~2002 ~~the allowance for loan losses. A valuation allowance for selling~~ and ~~administration costs associated with~~ the ~~liquidation~~requirements of Marketplace ~~the~~Rule ~~property~~4350(n), is ~~recorded~~available ~~and~~upon ~~maintained~~request ~~subsequent~~ to ~~foreclosure of the property~~any stockholder. ~~The~~Requests ~~allowance~~should isbe ~~established~~addressed ~~through a provision for losses on other real estate which is included~~ in ~~other~~writing ~~expenses. Subsequent~~to ~~gains~~Rick ~~or losses on sales or permanent impairment charges are recorded in other income or expenses as incurred~~D. At ~~December 31~~Simas, ~~2009~~Chief ~~the~~Executive ~~Company has $10~~Officer,~~934,000~~ inPacific ~~other~~State ~~real~~Bancorp, ~~estate~~1899 ~~and~~W. $2March Lane,~~029~~ Stockton,~~000~~ inCA ~~other real estate at December 31 2008~~95207.

~~PREMISES~~Copy of ~~AND~~Bylaw ~~EQUIPMENT~~Provisions

~~Premises~~ You ~~and~~may ~~equipment~~contact ~~are~~Bancorp's ~~carried~~Corporate atSecretary ~~cost. Depreciation~~for isa ~~determined~~copy ~~using the straight-line method over the estimated useful lives~~ of the ~~related~~relevant ~~assets. The useful lives of premises are estimated to be ten to thirty-nine years. The useful lives of furniture, fixtures and equipment are estimated to be~~Bylaw ~~three~~provisions toregarding ~~fifteen years. Leasehold improvements are amortized over~~ the ~~life~~requirements of the asset or the life of the related lease, whichever is shorter. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts, and any resulting gain or loss is recognized in income for ~~the~~making ~~period. The~~shareholder ~~cost~~proposals ~~of maintenance~~ and nominating ~~repairs~~director ~~is charged to expense as incurred~~candidates.

~~The Company evaluates premises and equipment for financial impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable.~~ DIRECTOR COMPENSATION

~~GOODWILL~~Overview ~~AND INTANGIBLE ASSETS~~

AsOur director acompensation ~~result~~program ofis ~~the~~designed ~~Company's~~to ~~2002~~attract ~~acquisition~~and ofretain ~~the~~qualified, independent ~~Stockton~~Directors ~~branch~~to ofrepresent ~~California~~our ~~Bank~~shareholders &on ~~Trust,~~ the ~~Company~~Board ~~recognized~~and aact ~~core~~in ~~deposit~~their best ~~intangible~~interest. ~~asset~~The ofPersonnel ~~$448~~Committee,~~000~~ ~~and~~which ~~goodwill~~consists solely of ~~$718~~independent Directors,~~000. The~~ ~~core deposit intangible~~ has ~~been~~responsibility ~~fully~~for ~~amortized~~reviewing and ~~will~~recommending noany ~~longer~~changes ~~impact~~to ~~the Company’s financial statements. Goodwill~~our isDirector ~~not~~compensation ~~amortized, but is measured for impairment on an annual basis~~program. At ~~December~~All ~~31,~~recommended ~~2009~~compensation ~~management~~changes ~~has~~require approval ~~determined~~or ~~that~~ratification ~~the~~by ~~goodwill previously recorded can no longer be supported and has recognized an impairment charge of $718,000, or~~ the ~~entire~~full ~~balance~~Board of ~~the goodwill~~Directors. As ofCompensation ~~December~~for ~~31, 2008~~ the members ~~Company~~of ~~had~~our aBoard ~~balance~~is ofreviewed ~~$718,000~~annually ofby ~~goodwill~~the ~~recorded~~Compensation Committee.

~~INCOME~~As Named ~~TAXES~~Executive Officers for fiscal year 2009, compensation information for Mr. Simas, President and Chief Executive Officer, and Mr. Stewart, Executive Vice President and Chief Credit Officer, can be found in the executive compensation disclosure tables provided within this Proxy Statement. Employee Directors do not receive compensation for their service as Directors.

~~The~~Effective ~~Company~~August ~~and its subsidiaries file consolidated tax returns. The Company accounts for income taxes in accordance with FASB ASC 740~~1, ~~Income Taxes~~2009, ~~resulting in two components of income tax expense: current and deferred. Current income tax expense approximates taxes to be paid or refunded for~~ the ~~current period. The Company determines~~non-employee ~~deferred~~directors ~~income~~suspended ~~taxes using~~ the ~~balance~~payment ~~sheet method. Under this method, the net deferred tax asset or liability is based on the tax effects~~ of ~~the~~monthly ~~differences~~fees ~~between~~for ~~the~~service book and tax bases of assets and liabilities, and recognizes enacted changes in tax rates and laws in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized subject to Management’s judgment that realization is more likely than not. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize. The tax position is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon settlement. Interest and penalties are recognized as a ~~component of income tax expense~~ director.

OnBoard ~~the~~of ~~consolidated~~Directors ~~balance~~Compensation ~~sheet,~~Table ~~net~~for ~~deferred~~2009 ~~tax assets are included in accrued interest receivable and other assets.~~

~~Management~~The ~~continually~~following ~~evaluates~~table ~~the~~provides ~~ability~~compensation information offor the ~~Company~~one toyear ~~ultimately~~period ~~realize~~ended ~~deferred~~December ~~tax~~31, ~~assets~~2009 ~~currently~~for ~~recorded. If~~each non-employee ~~management~~member ~~determines~~of ~~that~~Bancorp's itBoard isof ~~more~~Directors ~~likely~~as ~~than~~of ~~not~~ that ~~the deferred tax assets can ultimately be realized, no valuation allowance is recorded~~ date. IfCompensation ~~management~~information ~~determines~~regarding ~~that it is not more likely than not that~~ the ~~deferred tax assets will be realized, a valuation allowance is recorded against the future tax benefits that~~ management ~~believes~~directors (Rick ~~will not be realized~~D. As ofSimasand ~~December~~Gary ~~31, 2009, the Company has recorded a valuation allowance of $8,404,000 against deferred tax assets~~A. As ofStewart) ~~December~~is ~~31,~~included ~~2008 and December 31, 2007~~ in the ~~Company~~Summary ~~did~~Compensation ~~not record a valuation allowance against deferred tax assets~~Table.

-17-

	Fees Earned or
Name	Paid in Cash		Total
Michael L. Dalton, C.P.A.	$	24,500	$	24,500
Maxwell M. Freeman	$	24,500	$	24,500
Harold Hand, M.D.	$	24,500	$	24,500
Patricia A. Hatton, M.D	$	24,500	$	24,500
Steven J. Kikuchi	$	24,500	$	24,500
Yoshikazu Mataga	$	24,500	$	24,500
Russell G. Munson	$	24,500	$	24,500
Kathleen M. Verner	$	24,500	$	24,500
George Schofield	$	14,000	$	14,000

~~EARNINGS~~ (~~LOSS~~1) ~~PER~~In ~~SHARE~~February of 2009 George Schofield became a director of Pacific State Bancorp.

~~Basic~~EXECUTIVE earnings (loss) per share (EPS), which excludes dilution, is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options, result in the issuance of common stock which shares in the earnings of the Company. The Company had a net loss for 2009 and 2008; therefore all stock options are antidilutive. All data with respect to computing earnings per share is retroactively adjusted to reflect stock splits and dividends and the treasury stock method is applied to determine the dilutive effect of stock options in computing diluted EPS.OFFICERS

~~STOCK-BASED~~Rick ~~COMPENSATION~~D. Simas, age 49, has served as a Director of Pacific State Bank and Bancorp since 2009. Mr. Simas is the President and Chief Executive Officer of Bancorp and Pacific State Bank.

AtGary ~~December 31, 2009, the Company had one shareholder approved stock-based compensation plan which is described more fully in Note 11~~A. ~~The~~ ~~Company accounts for its stock based compensation plan in accordance with FASB ASC 718~~Stewart, ~~Stock~~age ~~Compensation~~60, ~~using~~has ~~the~~served ~~modified prospective~~as ~~transition method. Under that transition method, compensation cost recognized in fiscal years 2006, 2007, 2008 and 2009 includes: (~~a) ~~compensation~~Director ~~cost~~of ~~for~~Pacific State ~~all~~Bank ~~share-based payments vesting during 2006, 2007, 2008~~ and ~~2009~~Bancorp ~~that~~since ~~were~~1998. Mr. ~~granted~~Stewart ~~prior~~is ~~to, but not yet vested as of January 1, 2006, based on~~ the ~~grant-date~~Executive ~~fair~~Vice President ~~value estimated in accordance with the original provisions of ASC 718,~~ and ~~(b)~~Chief ~~compensation~~Credit ~~cost~~Officer ~~for all share-based payments vesting during 2006, 2007, 2008 and 2009 that were granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions~~ of ~~ASC~~Pacific ~~718. For~~State ~~further~~Bank ~~information on grants~~ and ~~vesting please refer to Note 11~~Bancorp. ~~Compensation cost is recognized net of estimated forfeitures. Results for prior periods have not been restated.~~

AsDonald aKalkofen, ~~result~~age of46, ~~applying~~has ~~ASC 718~~been hired, ~~the~~effective ~~Company~~April ~~recorded~~28, an2010, ~~expense~~as ofthe ~~$56,000~~Vice ~~in 2009~~President, ~~$270,000~~Director inof ~~2008~~Finance ~~and~~of Pacific ~~$309,000~~State inBank ~~2007~~and Bancorp.

~~Determining~~ EXECUTIVE ~~Fair~~COMPENSATION ~~Value~~AND RELATED MATTERS

The Company bases the fair value of the options previously granted on the date of grant using a Black-Scholes-Merton option pricing model that uses assumptions based on expected option life, the level of expected stock volatility and the risk-free interest rate. Stock volatility is based on the historical volatility of the Company's ~~stock.~~EXECUTIVE The risk-free rate is based on the U.S. Treasury yield curve and the expected term of the options. The expected term of the options represents the period that the Company's share-based awards are expected to be outstanding based on the terms of the optionee’s employment agreement and position within the Company, previous option activity, the number of shares currently owned and the expected time of when those options would be exercised. The Company has not paid cash dividends. The Company estimates the forfeiture rate in calculating the compensation expense to be insignificant. The Company did not grant any stock options in 2009 or 2008. In 2007 the Company granted 30,000 stock options using a risk free rate of 4.98%, volatility rate of 34.79% and forfeiture rate of 2%. This resulted in a fair market value under the Black-Scholes-Merton model of $9.22 per option.COMPENSATION

~~WHERE~~The ~~YOU~~following ~~CAN~~section ~~FIND~~describes ~~MORE~~the compensation ~~INFORMATION~~that Bancorp pays its Chief Executive Officer, Chief Financial Officer and each other named executive officer who in 2009 earned total compensation exceeding $100,000 (the "Named Executive Officers"), consisting of the following persons.

~~Under~~Rick ~~the Securities Exchange Act of 1934 Sections 13 and 15(d)~~Simas, ~~periodic~~Chief and current reports must be filed with the SEC. The Company electronically files the following reports with the SEC: Form 10-K (Annual Report), Form 10-Q (Quarterly Report), Form 8-K (Current Report), insider ownership reports and Form DEF 14A (Proxy Statement). TheExecutive ~~Company may file additional forms. The SEC maintains an Internet site, www.sec.gov, in which all forms filed electronically may be accessed free of charge.~~Officer
~~The~~Justin Garner, ~~Company~~Vice ~~links~~President ~~these~~& ~~reports~~Chief toFinancial its website (www.pacificstatebank.com) as soon as reasonably practicable after filing them with the SEC. None of the information on or hyperlinked from the Company’s website is incorporated into this Annual Report on Form 10-K.Officer
~~-18-~~Gary Stewart, Executive Vice President & Chief Credit Officer

~~ITEM~~This ~~1A.~~section ~~RISK FACTORS~~includes:

~~The Company and its subsidiary, Pacific State Bank, conduct business in an environment that includes certain risks described below which could have a material adverse effect on~~ the Compensation ~~Company's~~Discussion ~~business, results of operations, financial condition, future prospects~~ and ~~stock~~Analysis ~~price. You are also referred to the matters described under the heading~~ ("~~Cautionary Statements Regarding Forward-Looking Statements,~~CD&A") ~~for~~of ~~additional~~management ~~information~~on executive ~~regarding factors that may affect the Company's business.~~compensation;
~~Going~~the Summary ~~Concern~~Compensation ~~Uncertainty~~Table and other tables detailing the compensation of the Named Executive Officers; and
~~The consolidated financial statements contained in~~ the Company’s Annual Report to Shareholders for 2009, which information is incorporated herein by this reference, have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business. As a result, ~~the~~ narrative ~~consolidated~~disclosure ~~financial~~about ~~statements~~various docompensation ~~not~~plans include any adjustments that may result from the outcome of any regulatory action or the Company’s or the Bank’s inability to meet its existing debt obligations. The Bank has recently incurred significant operating losses, experienced a significant deterioration in the quality of its assets and ~~become subject to enhanced regulatory scrutiny. These factors~~arrangements, ~~among others, were deemed to cast significant doubt on the Company’s~~ and ~~the Bank’s~~ ~~ability~~ post toemployment ~~continue~~and astermination ~~a going concern~~benefits. ~~If the Company cannot continue to operate as a going concern, it is likely that shareholders will lose all or substantially all of their investment in the Company.~~

~~The~~Compensation ~~Company~~Discussion is actively pursuing a broad range of strategic alternatives, including a capital infusion or a merger, in order to address any doubt related to the Company’s ability to continue as a going concern. There can be no assurance that the pursuit of strategic alternatives will result in any transaction, or that any such transaction will allow the Company’s shareholders to avoid a loss of all or substantially all of their investment in the Company. The pursuit of strategic alternatives may also involve significant expenses and ~~management time and attention.~~Analysis

~~Additional~~The ~~Capital~~Board has a Compensation Committee ("the Committee") which is responsible for reviewing and approving Bancorp's overall compensation and benefit programs and for reviewing and setting the Chief Executive Officer's compensation package. The objectives of Bancorp's overall compensation programs are to attract, motivate and retain executive officers by structuring appropriate and competitive total compensation, when compared to positions of equivalent responsibility and to similar publicly owned banks.

The Company needs to raise additional capital to meet the higher minimum capital levels that the Bank and Company are obligated to maintain under the Consent with the CDFI. As of December 31, 2009, the Bank was considered “under capitalized” under the prompt corrective action rules of the Federal Deposit Insurance CorporationExecutive ~~(“FDIC”). In~~Compensation addition, should the Company’s current rate of operating losses continue or should the Company’s asset quality erode and require significant additional provision for credit losses, resulting in additional net operating losses, the Company’s capital levels will decline further and it will need to raise more capital to satisfy its regulatory capital requirements. The Company’s ability to raise additional capital depends on conditions in the capital markets, which are outside the Company’s control, and on the Company’s financial performance. Accordingly, the Company cannot be certain of its ability to raise additional capital on acceptable terms, or at all. If the Company cannot raise additional capital, its results of operations and financial condition could be materially and adversely affected, and it may be subject to further supervisory action. See “Regulatory Risk.” In addition, if the Company were to raise additional capital through the issuance of additional shares, its stock price could be adversely affected, depending on the terms of any shares it were to issue.Philosophy

The quality of our Bancorp's officers and employees, including our executive team, is critical to executing our community banking philosophy of emphasizing personalized service, combined with the full resources of a banking organization. To meet our primary goal of attracting, retaining and incentivizing highly-~~19-~~qualified executives, officers and employees within the context of our corporate culture, our compensation programs are designed with the following principles in mind:

~~Regulatory~~We ~~Risk~~are committed to providing effective compensation and benefit programs that are competitive both within our industry and within other relevant organizations with whom Bancorp competes for employees.
~~During~~Our ~~the~~compensation ~~fourth quarter of 2009, the Company~~ and ~~the~~benefit ~~Bank~~programs ~~entered~~are ~~into~~designed the Written Agreement with the FRB and the CDFI. See “Recent Developments” for the discussion of the terms of the Written Agreement. Additionally, on April 15, 2010, the Bank executed a Waiver and Consent to an encourage ~~Order of the CDFI (the “Consent”) requiring the Bank, within 90 days of the effective date of the Order, to increase~~ and toreward ~~maintain~~behaviors ~~tangible capital at a level equal to 10% of assets. The effective date will be the date~~ that ~~the CDFI~~ultimately ~~executes~~contribute ~~the Order per se. As of December 31, 2009, the Bank had a ratio of tangible capital~~ to ~~assets of 3.9%, which was not sufficient to meet~~ the ~~higher level that the Bank would~~achievement ~~be obligated to maintain under the Consent. As a result, if within 90 days~~ of ~~the~~ ~~effective~~organizational date of the Order the Bank cannot comply with the Consent provisions, the Bank may be subject to further supervisory action, which could have a material adverse effect on its results of operations, financial condition and businessgoals.
InOur ~~addition,~~compensation ~~due to the ongoing economic downturn~~ and ~~the~~benefit ~~resultant~~programs ~~deterioration in the Central California commercial real estate~~ and commercial business markets and adverse impact on the Bank’s loan portfolio and financial results, the Company and the Bank’s conduct of their business may be the subject of additional regulatory actions and face further limitations on their business. Bank regulatory authorities have the authority to bring enforcement actions against banks and bank holding companies for unsafe or unsound practices ~~in businesses or for violations of any law, rule or regulation, any condition imposed in writing by the appropriate bank regulatory agency or any written agreement with~~support ~~the authority. Possible enforcement actions against the Company~~ and ~~Bank~~reinforce ~~could~~our ~~include~~commitment ~~the issuance of a cease-and-desist order, the issuance of directives~~ to ~~increase~~provide ~~capital or to enter into~~ a ~~strategic~~work ~~transaction,~~environment ~~whether~~that ~~by merger or otherwise~~promotes respect, ~~with a third party~~teamwork, ~~the appointment of a conservator or receiver for the Bank, the termination of insurance of deposits, the issuance of removal~~ and ~~prohibition~~individual ~~orders~~growth ~~against institution- affiliated parties, and the enforcement of such actions through injunctions or restraining orders~~opportunities. ~~The imposition of any such enforcement actions would likely have an adverse effect on the Company’s and the Bank’s results of operations, financial condition and business.~~

NoConsistent ~~Assurance~~with this overall philosophy, we have designed our executive compensation programs to be relatively straightforward, while providing benefits attractive enough to attract, retain and motivate highly qualified employees. The principal components of ~~Profitability~~our compensation package for executives are:

The Company incurred a net loss of $22.4 million, or $6.02 per diluted common share, for the year ended December 31, 2009, primarily due to a $15.4 million provision for loan losses, a $718 thousand charge for goodwill impairment and the establishment of a $8.4 million net deferred tax asset valuation allowance. Although the CompanyBase has taken a significant number of steps to reduce its credit exposure, the Company likely will continue to incur credit costs throughout 2010, which Management anticipates will continue to adversely impact the Company’s overall financial performance and results of operations. There can be no assurance that the Company will achieve profitability in the future. salary
~~-20-~~Bonus compensation
~~Change~~Long-term incentives-stock ~~in Capital Classification~~options
~~As of December 31~~Retirement, 2009, the Company and the Bank were no longer classified as “well capitalized” under generally applicable regulatory guidelines. In addition, the Company and the Bank do not presently meet this standard and there is a substantial risk ~~that~~ termination ~~the Company~~ and ~~the~~change ~~Bank will fail to meet such requirements~~ in ~~future~~control periods unless the Company is successful in executing on its three-year capital and strategic plan. The Bank’s regulatory capital position has reduced such that it was classified as ”under capitalized,” thereby causing it to be unable to renew the use of brokered deposits as a source of funds. A “well capitalized” institution may accept brokered deposits without restriction. An “adequately capitalized” institution must obtain a waiver from the FDIC in order to accept, renew or roll over brokered deposits. In addition, certain interest-rate limits apply to the financial institution’s brokered and solicited deposits. Although an institution could seek permission from the FDIC to accept brokered deposits if it were no longer considered to be “well capitalized,” the FDIC may deny permission, or may permit the institution to accept fewer brokered deposits than the level considered desirable. Since the Bank’s level of deposits are being reduced, due to the lack of a full brokered deposit waiver and by the interest rate limits on brokered or solicited deposits, Management anticipates that the Bank will reduce its assets and, most likely, curtail its lending activities. Other possible consequences of classification as an “under capitalized” institution include the potential for increases in borrowing costs and terms from the Federal Home Loan Bank (“FHLB”) and other financial institutions and increases in FDIC insurance premiums. Such changes could have a material adverse effect on the Company’s results of operations, financial condition and business.benefits
~~Dividends~~Other general ~~from~~employee ~~the Bank~~benefits

~~The~~ Except ~~principal~~as ~~source~~described ofbelow, ~~funds~~we ~~from~~have ~~which~~not adopted ~~the~~any ~~Company~~specific ~~services~~policies ~~its~~or ~~debt~~guidelines ~~and~~for ~~pays~~allocating ~~its~~compensation ~~obligations~~for ~~and~~our executives ~~dividends~~between isshort-term ~~the~~and ~~receipt~~long-term ofincentives ~~dividends~~or ~~from~~between ~~the~~cash ~~Bank~~and non-cash compensation. ~~The~~ However, ~~availability~~our ofphilosophy ~~dividends~~is ~~from~~to ~~the~~tie ~~Bank~~a issignificant ~~limited~~percentage of byour ~~various~~executives' ~~statutes~~compensation ~~and~~to ~~regulations. As~~the aachievement ~~result~~ of ~~entering~~Bancorp's ~~into~~financial ~~the~~and performance ~~Written Agreement~~goals. Accordingly, itbase issalaries ~~also~~are ~~restricted,~~set ~~without~~at ~~prior~~competitive ~~approval~~levels, ~~from~~with ~~the~~an ~~FRB~~opportunity ~~and~~for ~~the~~each ~~CDFI,~~executive ~~from~~to ~~paying~~be ~~dividends~~rewarded tothrough ~~the~~bonuses and ~~Company~~stock option grants.

~~Deferral~~Process offor ~~Interest~~Determining ~~on Trust Preferred Securities~~Compensation

In The ~~the~~Chief ~~third~~Executive ~~quarter~~Officer ofreviews Bancorp's ~~2009,~~overall ~~the~~executive ~~Company~~compensation ~~elected to defer regularly scheduled interest payments on its outstanding $8.5 million of junior subordinated notes relating to its trust preferred securities. During the deferral period~~program, ~~interest~~and ~~will~~makes ~~continue to accrue on the junior subordinated notes at the stated coupon rate, including the~~recommendations ~~deferred~~regarding ~~interest,~~individual ~~and the Company may not~~compensation, ~~among~~in ~~other things and with limited exceptions, pay cash dividends on or repurchase its common stock nor make any payment on outstanding debt obligations that rank equally with or are junior to~~ the ~~junior~~context ~~subordinated~~of ~~notes. As~~ a ~~result~~"total ofcompensation policy" ~~the Company’s deferral of interest on the junior subordinated notes, it is likely~~ that ~~the~~takes ~~Company~~into ~~will~~account ~~not be able to raise funds through~~ the ~~offering~~overall package of ~~debt securities until the Company~~compensation ~~becomes~~benefits ~~current~~provided ~~on those obligations or those obligations are restructured. This deferral may also adversely affect the Company’s ability~~ to ~~obtain~~each ~~debt financing on commercially reasonable terms~~executive, orother atthan ~~all~~himself. As These recommendations aare ~~result,~~presented ~~the Company will likely have greater difficulty in obtaining financing and, thus, will have fewer sources~~ to ~~enhance~~the ~~its~~Board ~~capital~~ and ~~liquidity~~approved ~~position. In~~through ~~addition, if the Company defers interest payments on the junior subordinated notes for more than 20 consecutive quarters,~~Bancorp's ~~the~~annual ~~Company~~budget ~~would be in default under the indenture agreements governing such notes and the amount due under such agreements would be immediately due and payable~~process.

~~Continued~~ The ~~Listing~~Committee ontypically meets annually to perform a review of our Chief Executive Officer's overall compensation package, including determination of a bonus award for the past fiscal year and adjustment of base salary. The ~~NASDAQ~~Committee ~~Global~~compares executive ~~Select~~compensation ~~Market~~levels against other publicly owned banks when determining the Chief Executive Officer's compensation. This group consists of banks which compete for a similar pool of executive talent.

The Company’s common stock is listed on The NASDAQ National Market. The listing standards of The NASDAQ Capital Market provide, among other things, that a company may be delisted if its market value of its publicly held share do not equal $15 million and the bid price of its stock drops below $1.00 for a period of 30 consecutive business ~~days,~~Discussion ~~the shares may be delisted. The market value~~ of ~~the~~Executive ~~Company’s~~Compensation shares do not equal $15 million and the closing price of the Company’s common stock was $0.37 per share on March 31, 2010 and $0.51 on February 28, 2010. If the Company fails to comply with the listing standards applicable to issuers listed on the NASDAQ Capital Market, the Company’s common stock may be delisted from the NASDAQ Capital Market. The delisting of the Company’s common stock would significantly affect the ability of investors to trade the Company’s securities and would likely reduce the liquidity and market price of the Company’s common stock. In addition, the delisting of the Company’s common stock could also materially adversely affect the Company’s ability to raise capital on terms acceptable to the Company or at all. Delisting from the NASDAQ Capital Market could also have other negative results, including the potential loss of confidence by customers and employees and the loss of institutional investor interest in the Company’s common stock.Components

~~-21-~~Base Salary

~~Liquidity~~ We ~~Risk~~provide executives, officers and other employees with a base salary to compensate them for services rendered during the year. Base salaries for executives are determined for each position based in part on market data. In the review of base salaries for executives, these factors are considered:

~~Liquidity~~Salary ranges isbased ~~essential to the Company’s business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a material adverse effect~~ on ~~the~~available Company’s liquidity. The Company’s access to funding sources in amounts adequate to finance the Company’s activities could be impaired by factors that affect us specifically or the financial services industry in general. Factors that could detrimentally impact the Company’s access to liquidity sources include a decrease in the level of the Bank’s business activity due to a market ~~downturn~~data, ~~adverse~~including ~~regulatory~~market ~~action~~data ~~against~~provided the Company or the Bank, an increase in costs of capital in financial capital markets, or a decrease in depositor or investor confidence in the Bank. The Bank’s ability to acquire deposits or borrow could also be impaired by ~~factors that are not specific to the Company~~ consultants, ~~such~~ as aappropriate severe disruption of the financial markets or negative views and expectations about the prospects for the financial services industry as a whole as the recent turmoil faced by financial institutions in the domestic and worldwide credit markets deteriorates.
~~The~~Internal review ~~expiration~~relative ~~of the FDIC’S TAG program in December may cause depositors~~ to ~~reduce~~others ~~the~~within ~~size of their deposits with us.~~Bancorp
In October 2008, the FDIC announced its TAG Program as part of the TLG Program. The TAG Program guarantees full deposit insurance coverage of non-interest bearing transaction accounts until December 31, 2010, regardless of the dollar amount Individual and ~~in addition to the standard FDIC insurance. The current expiration of the TAG Program is anticipated to be the~~ Bank’s most significant liquidity risk in the near term and mitigating the liquidity impact of such an event remains a priority. As of December 31, 2009, the Company had 49 deposit accounts with balances greater than $250,000 participating in the TAG Program providing unlimited insurance coverage for a total of $26 million in deposits. The TAG Program is due to expire December 31, 2010. If the TAG Program is not extended again by the FDIC, we could experience withdrawals by account holders of any amounts they have on deposit in excess of the amount then insured by the FDIC. Even if the FDIC decides to extend the TAG Program again, it could do so on terms that makes the program unavailable to us or on terms that make the program less attractive for us to participate. Based on current liquidity sources, we anticipate that we will have adequate collateral and other sources of liquidity to meet those potential needs. However, it could require us to utilize the majority of our available liquidity and potentially utilize a portion of our borrowing capacity at the discount window. A significant decline in our deposits and/or an increase in collateral requirements could adversely affect our liquidity and financial position, and could adversely affect our business, results of operations, and prospects.performance
~~FDIC~~Experience and ~~Premiums~~qualifications of each individual

~~FDIC~~ Salary ~~insurance~~levels ~~premiums~~are ~~increased~~reviewed ~~substantially~~annually inas 2009, and the Bank expects to pay significantly higher FDIC premiums in the future. The FDIC has recently been considering different methodologies by which it may increase premium amounts, because the costs associated with bank resolutions or failures have substantially depleted the Depositpart ~~Insurance Fund. In November 2009, the FDIC voted to require insured depository institutions to prepay slightly over three years~~ of ~~estimated~~an ~~insurance~~executive ~~assessments~~performance review. Promotion ~~While~~and ~~the~~other ~~Bank~~changes ~~was exempted from prepaying three years assessments, the increase~~ in ~~premiums~~job responsibility ~~significantly~~are ~~increased~~also ~~the~~reviewed ~~Bank’s~~at ~~non-interest~~that ~~expense in 2009, and may continue to do so for the foreseeable future~~time.

~~-22-~~Bonus Compensation

~~Reputation~~ Performance-based ~~Risk~~bonuses comprise a component of the overall compensation package for each executive officer. The bonus of each executive officer is contingent upon satisfaction of both quantifiable and non-quantifiable performance measures established by the CEO and the Committee. Performance measures include Profitability, Deposit Growth, Asset Quality, Asset Growth, Loan Growth, Performance Compared to Budget and adherence to the Long Term Plan (long-term growth of shareholders' value), and other measures, as needed, based on the performance of Bancorp.

~~Reputation~~ Chief ~~risk,~~Executive orOfficer . The ~~the~~bonus ~~risk~~for to the ~~Company’s~~Chief ~~earnings~~Executive ~~and~~Officer ~~capital from negative publicity or public opinion,~~ is ~~inherent~~a inseparate ~~Company’s~~process ~~business.~~tied ~~Negative publicity or public opinion could adversely affect the Bank’s ability~~ to subjective ~~keep~~as ~~and~~well ~~attract~~as ~~customers~~objective ~~and expose the Company to adverse legal and regulatory consequences~~factors. ~~Negative~~ The ~~public~~Committee ~~opinion~~considers ~~could result from~~ the performance ~~Company’s~~factors ~~actual~~as orset ~~perceived~~forth ~~conduct~~above inas ~~any~~well ~~number~~as ofother ~~activities,~~measures ~~including~~such lending practices, corporate governance, regulatory compliance, mergers and acquisitions, and disclosure, sharing or inadequate protection of customer information, and from actions taken by government regulators and community organizations in response to that conduct.as:

~~Increased~~Overall supervision ~~Likelihood~~ of ~~Class Action Litigation and Additional Regulatory Enforcement~~Bancorp
The market price of the Company’s common stock has declined substantially over the past year. This decline could result in shareholder class action lawsuits, even if the activities subject to complaint are not unlawful, and even if the lawsuits are ultimately unsuccessful. Recent events in financial markets and negative publicity mayCredit ~~result~~ quality ~~in more regulation and legislative scrutiny~~ of the Company’s industry practices and may cause additional exposure to increased shareholder litigation and additional regulatory enforcement actions, which would adversely affect the Company’s business.Bancorp
~~The~~Effective communication ~~Company’s~~of ~~business~~our isoverall ~~subject~~goals ~~to interest rate risk,~~ and ~~variations~~objectives into ~~interest rates may negatively affect its financial performance.~~employees
Changes in the interest rate environment may reduce the Company's net interest income. It is expected that the Company will continue to realize income from the differential or "spread" between the interest earned on loans, securities and other interest-earning assets, and interest paid on deposits, borrowings and otherGrowth ~~interest-bearing liabilities. Net interest spreads are affected by the difference between the maturities and repricing characteristics~~ of interest-earning assets and interest-bearing liabilities. In addition, loan volume and yields are affected by market interest rates on loans, and rising interest rates generally are associated with a lower volume of loan originations. We cannot assure you that we can minimize the Company's interest rate risk. In addition, an increase in the general level of interest rates may adversely affect the ability of certain borrowers to pay the interest on and principal of their obligations. Accordingly, changes in levels of market interest rates could materially and adversely affect the Company's net interest spread, asset quality, loan origination volume and overall profitability.Bancorp
~~The Company faces strong competition from financial service companies and other companies that offer banking services, which can hurt Pacific State Bancorp' business.~~Shareholder relations

~~The~~ Chief ~~Company's~~Financial ~~subsidiary,~~Officer ~~Pacific State Bank, conducts banking~~. ~~operations~~ Our ~~principally~~Chief inExecutive ~~Stockton~~Officer ~~California~~typically ~~and~~determines ~~San Joaquin County. Increased competition in~~ the ~~Bank's~~base ~~market~~salary ~~may result in reduced loans~~ and ~~deposits.~~bonus ~~Ultimately,~~for our itChief ~~may not~~Financial beOfficer ~~able~~at ~~to compete successfully against current and future competitors. Many competitors offer~~ the ~~banking~~same ~~services~~time ~~that~~as ~~are offered by~~ the Bank in its service area. These competitors include national and super-regional banks, finance companies, investment banking and brokerage firms, credit unions, government-assisted farm credit programs, other ~~community~~executive ~~banks and technology-oriented financial institutions offering online services. In particular, the Bank~~officers'~~s competitors include several major financial companies whose greater resources may afford them a marketplace advantage~~ ~~by enabling~~compensation ~~them~~is ~~to maintain numerous banking locations and mount extensive promotional and advertising campaigns~~determined. This ~~Additionally,~~determination ~~banks~~is ~~and~~based ~~other~~on ~~financial institutions~~a ~~with~~variety ~~larger capitalization and financial intermediaries not subject to bank regulatory restrictions have larger lending limits and are thereby able to serve the credit needs~~ of ~~larger customers. Areas of competition include interest rates for loans and deposits, efforts to obtain deposits, and range and quality~~ ofobjective ~~products~~ and ~~services~~subjective ~~provided~~factors, including ~~new~~the ~~technology-driven products~~same ~~and~~Bank ~~services.~~performance ~~Technological~~factors listed ~~innovation~~above ~~continues~~for toNamed ~~contribute~~Executive ~~to greater~~Officers ~~competition in domestic and international financial services markets~~ as ~~technological~~ ~~advances,~~well ~~such~~ as ~~Internet-based~~individual ~~banking services that cross traditional geographic bounds, enable more companies to provide financial services~~performance. If the Bank is unable to attract and retain banking customers, it may be unable to continue its loan growth and level of deposits, which may adversely affect its and the Company's results of operations, financial condition and future prospects.

Long-23Term Incentives-Stock Options

~~Changes~~ The compensation package of executive grantees includes a long-term incentive component in ~~economic~~the ~~conditions~~form ~~could~~of ~~result~~grants of stock options under Bancorp's 1997 Stock Options Plan which expired in 2007. We anbelieve ~~economic~~stock ~~downturn~~ownership more closely aligns executive and Bancorp long-term goals, and in ~~Northern~~ ~~California~~particular ~~which~~provides ~~could~~an ~~adversely~~incentive ~~affect~~for executives to help build shareholders' value. We also believe this program provides a retentive effect by enabling executives to share in the ~~Company’s~~benefits ~~business~~of stock price appreciation.

~~The~~ Under ~~Company~~Bancorp's ~~business~~1997 isStock ~~directly~~Options ~~affected~~Plan, which byexpired ~~factors such~~ as ~~economic~~of 2007, ~~political~~the ~~and~~Board ~~market~~allocates ~~conditions,~~30% ~~broad~~of ~~trends~~the inoutstanding ~~industry~~shares ~~and~~of Bancorp ~~finance, legislative~~to ~~and~~be ~~regulatory~~set ~~changes,~~aside ~~changes~~for inthe ~~government~~grant ~~monetary~~of ~~and~~options ~~fiscal policies~~to ~~and~~Board ~~inflation~~members, ~~all~~the ofCEO, ~~which~~the executive ~~are~~officers, ~~beyond~~and ~~the~~other ~~Company's~~Pacific ~~control.~~State ~~A deterioration~~Bank inofficers ~~economic~~and ~~conditions~~employees. ~~locally,~~Grants ~~regionally~~have orbeen ~~nationally~~made ~~including as~~at the ~~result~~commencement of ~~terrorist~~Bancorp's ~~activities~~business, ~~within~~the commencement ~~and~~of ~~outside~~employment ~~California~~by ~~could~~new ~~result in~~executive anofficers, ~~economic~~the ~~downturn~~commencement inof employment ~~Northern~~by ~~California~~other ~~and~~Pacific ~~trigger~~State ~~the~~Bank ~~following consequences~~officers and employees, ~~any~~and after the sale of ~~which~~shares ~~could~~pursuant ~~adversely~~to ~~affect~~a ~~the~~campaign ~~Company's~~to ~~business:~~raise capital for Bancorp.

·Retirement Benefits ~~loan delinquencies and defaults may increase;~~

· Bancorp ~~problem~~has ~~assets~~two retirement plans. Bancorp's 401(k) Plan (the "401(k) Plan") is a qualified retirement plan under the Internal Revenue Code of 1986 as amended (the "Code") and ~~foreclosures~~is ~~may~~open ~~increase;~~to all employees of Bancorp with at least thirty days of service. In 2009, Bancorp matched 50% of the first 6% of employee salary contributions to the 401(k) Plan, up to a maximum salary contribution of $16,500 per employee.

· Bancorp ~~demand~~also has a Salary Continuation Agreement program which provides retirement benefits for the ~~Company's~~executive ~~products~~officers of ~~and~~Bancorp. See ~~services~~"Salary ~~may~~Continuation ~~decline;~~Agreements" below

~~· low cost or non-interest bearing deposits may decrease; and~~.

·Termination ~~collateral for loans may decline in value, in turn reducing customers' borrowing power,~~ and ~~reducing~~Change ~~the value~~ of ~~assets~~Control ~~and~~Benefits ~~collateral as sources of repayment of existing loans.~~

· Bancorp ~~The~~also ~~Company~~ has entered into employment contracts and change in control agreements with certain executive officers that allow for severance payments upon termination without cause or upon termination following a ~~concentration~~change ~~risk~~in control of Bancorp. These two different terminations provide for payments equal to twelve and twenty four months, respectively, of current base salary and a pro rata bonus. These arrangements are intended to retain our executives that could have other job alternatives that may appear to them to be less risky absent these arrangements, particularly given the significant level of acquisition activity in ~~real~~the ~~estate~~banking ~~related~~sector. All ~~loans~~of Bancorp's change in control arrangements are "double trigger," meaning that benefits are not awarded upon a change of control unless the executive's employment is terminated due to an adverse change in the employment relationship following the transaction. We believe this structure strikes a balance between the incentives and the executive retention effects described above, without actually providing these benefits to executives who continue employment with an acquiring company in the event of a change of control transaction.

At The ~~December~~above ~~31,~~summary ~~2009, approximately 6.5%~~ of ~~the~~terms ~~Company's loan portfolio consisted of real estate related loans. Substantially all of the Company's real property collateral~~ is ~~located in its operating markets in Stockton, California and San Joaquin County. The Company has experienced a substantial decline in real estate~~further ~~values~~described inunder the ~~Company's~~ ~~primary~~heading ~~market~~"Employment ~~areas~~Agreements as a result of an economic downturn. The Company’s management has been proactive in working with borrowers having problems repaying loans that have become delinquent or have the potential to become delinquent. In most cases, collateral values are sufficient to repay outstanding principal and ~~interest. In~~Potential ~~the cases where collateral values have fallen short of the principle and interest owed on the loans, management has reserved~~Payments ~~for~~Upon ~~the~~Termination ~~estimated~~or ~~potential loss. Other events including natural disasters such as earthquakes, fires, and floods could materially effect real estate values~~ Change-in-Control" ~~the Company’s primary market areas~~below. Such a decline in values could have an adverse impact on the Company by limiting repayment of defaulted loans through sale of the real estate collateral and by likely increasing the number of defaulted loans to the extent that the financial condition of its borrowers is adversely affected by such a decline in values. Those events could necessitate a significant increase in the provision for loan and lease losses which could adversely affect the Company's results of operations, financial condition, and future prospects.

~~The~~Executive ~~Company's~~officers ~~allowance~~are ~~for~~eligible ~~loan~~to ~~losses~~participate in ~~may~~all ~~not~~employee bebenefit ~~adequate~~plans that are available to ~~cover~~eligible ~~actual~~employees generally ~~losses~~including, health insurance, life, disability insurance, and 401(k) matching contributions.

Like all financial institutions, the Company maintains an allowance for loan losses to provide for loan defaults and non-performance, but its allowance for loan losses may not be adequate to cover actual loan losses. In addition, future provisions for loan losses could materially and adversely affect the Company's operating ~~results.~~2009 ~~The~~Executive Company’s allowance for loan losses is based on prior experience, as well as an evaluation of the risks in the current portfolio. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates that may be beyond the Company’s control, and these losses may exceed current estimates. Federal regulatory agencies, as an integral part of their examination process, review the Company’s loans and allowance for loan losses. Although we believe that the Company’s allowance for loan losses is adequate to cover current losses, we cannot assure you that it will not further increase the allowance for loan losses or that regulators will not require it to increase this allowance. Either of these occurrences could materially and adversely affect the Company's earnings.Compensation

~~-24-~~2009 Base Salary

~~ITEM~~ Effective 1BJanuary 1, 2009, Rick Simasreceived a base salary increase from $115,000 to $193,000. Effective ~~UNRESOLVED~~July ~~STAFF~~17, ~~COMMENTS~~2009 Rick Simas received a base salary increase from $193,000 to $200,000.

~~Not~~ Effective ~~applicable~~January 1, 2009, Messrs. Justin Garner received base salary increases from $95,000 to $130,000 and Gary Stewart received a base salary increase from $191,625 to $193,000.

~~ITEM~~ 2.2009 ~~PROPERTIES~~Bonus Compensation

~~The~~ No ~~Company~~bonus ~~owns~~compensation its West March Lane and East March Lane facilities in Stockton, and branches located in Modesto, Groveland, Angels Camp, Arnold and Hayward. The Company purchased the West March Lane office for $867,000 in 1992. The Company’s executive officers and support staff were located in the West March Lane building from 1997 to 2004. During 2001 the Company purchased an adjacent building to the West March Lane office, for $747,000, in order to expand its administrative functions. The executive offices, finance department, central operations and data processing were moved into these offices in 2004. The Company repossessed a Modesto building and converted it to a banking branch in 1996. The Modesto land was ~~purchased~~paid in 1999 for $524,000. The Company purchased the Arnold branch for $600,000 as part of its 1997 expansion into branches acquired from Valliwide Bank. During 2000 the Company purchased a lot in Groveland and purchased a lot in Angels Camp in order to ~~build and relocate~~ the current branch offices. These sites offer the Company better visibility and demonstrate commitment to the communities we serve. The Groveland property was purchased for $148,000 and construction was completed in January 2003. The Angels Camp ~~property~~Named ~~was~~Executive ~~purchased~~Officers ~~for $200,000 and was completed~~ in the third quarter of 2003. The Company purchased the building in Hayward for $1,800,000 in July 2006 and purchased land on East March Lane in Stockton for $728,000 in June of 2007 and constructed a branch that was placed into service January 2, 2009 ~~in order to replace the downtown Stockton office, which was closed when its lease expired December 31, 2008~~.

~~The Company holds additional premises under lease which are presented below:~~Long-Term Incentives

· No Ingrants ~~2010,~~of ~~the~~stock ~~Company~~options ~~entered~~were ~~into~~made ato the ~~5-year~~Named ~~lease~~Executive ~~for~~Officers ~~the building~~ in ~~Tracy~~2009.

·Summary InCompensation ~~2005,~~Table ~~the~~(2009) Company entered into a 10-year lease with four options to extend for an additional 5 years each for the building in Lodi. The annual rent commenced in 2006 upon completion of the building and occupation by Pacific State Bank.

~~ITEM~~ The following 3.table ~~LEGAL~~includes ~~PROCEEDINGS~~information concerning compensation for the one year period ended December 31, 2009 in reference to the named executive officers of Bancorp.

There are no material pending legal proceedings, other than ordinary routine litigation incidental to its business, to which the Company is a party or of which any of its property is the subject.

Year

Salary

Bonus (1)

Option Awards

Change in Net Preset Value of Pension Benefits

All Other (2)

Total

Rick D. Simas

2009

2008

2007

$196,483

$112,500

$110,438

$2,000

$19,000

$22,680

$17,674

$15,541

$13,609

$21,632

$51,683

$31,530

$235,789

$198,724

$180,257

President and Chief Executive Officer (3)

Gary A. Stewart

Executive Vice President and Chief Credit Officer

2009

2008

2007

$193,000

$191,625

$186,490

$25,000

$60,000

$68,907

$82,688

$96,780

$85,120

$74,566

$11,195

$21,678

$27,419

$301,475

$392,330

$431,163

Justin R. Garner

Vice President and Chief Financial Officer (4)

2009

2008

$130,000

$95,000

5,000

$10,902(5)

$18,955

$140,902

$113,955

Steven A. Rosso

President and Chief Executive Officer (6)

2009

2008

2007

$302,258

$294,000

$280,500

$100,000

$150,000

$111,467

$133,760

$54,791

$31,566

$33,375

$21,130

$333,824

$538,842

$640,181

JoAnne C. Roberts

Senior Vice President and Chief Financial Officer (7)

2009

2008

2007

$84,149

$109,000

$20,000

$30,000

$14,592

$29,388

$8,040

$17,078

$112,189

$200,058

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

(1)	Bonuses paid in the first quarter based on prior year results.
(2)	Includes calculated value of personal use of bank automobile, personal benefit derived from club memberships, cash incentive programs, 401(k) matching contributions, and premiums paid for life insurance policies.

No matters were submitted to vote of the security holders during the fourth quarter of the period covered by this report.

(3)	Rick D. Simasserved in a different capacity with Bancorp until December 27, 2008 when he was appointed President of Pacific State Bancorp.
(4)	Justin R. Garner served in a different capacity with Bancorp until December 18, 2008, when he was named Chief Financial Officer of Pacific State Bancorp. Effective April 30, 2010, Mr. Garner resigned as CFO and Donald Kalkofenwas hired to replace him as of April 28, 2010.

Item (*) Executive Officers of the Registrant.

(5)	Justin R. Garner received a $5,000 cash payment in lieu of agreed upon grant of equity.
(6)	Steven A. Rossoresigned effective December 27, 2008.
(7)	JoAnne C. Roberts passed away on September 1, 2008.

~~The~~Grants ~~following~~of ~~table~~Plan-Based ~~presents~~Awards ~~certain~~for ~~information regarding the executive officers of the Company:~~2009

NAME	AGE	POSITION(S)	SINCE
Rick Simas	49	Principal Executive Officer	2008
Gary A. Stewart	60	Executive VP/CCO/Director	1996
Justin Garner	28	Vice President/CFO	2008

There were no options granted during or for the calendar year ended December 31, 2009 to any of the executive officers listed in the Summary Compensation Table.

~~(*)~~Outstanding ~~Included~~Equity Awards ~~pursuant~~at toDecember ~~General~~31, ~~Instruction (G)(3).~~2009

~~-25-~~ The following table includes certain information with respect to the value at the calendar year end December 31, 2009 of all unexercised options previously awarded to any of the executive officers named above.

PART II

	Number of	Number of
	Securities	Securities
	Underlying	Underlying
	Unexcercised	Unexercised	Option	Option
	Options	Options	Exercise	Expiration
Name	(Exercisable)	(Unexercisable)	Price ($)	Date
Rick D. Simas	2,800	-	$2.59	08/17/2010
President and	8,000	-	$3.75	01/17/2012
Chief Executive Officer	20,000	-	$7.50	10/13/2013
Gary A. Stewart
Executive Vice President	283	-	$3.73	03/01/2012
Chief Credit Officer	62,000	-	$7.50	10/13/2013
JoAnne C. Roberts		-
Senior Vice President and	8,400		$7.50	10/13/2013
Chief Financial Officer

~~ITEM~~Option 5.Exercises ~~MARKET~~and ~~FOR~~Stock ~~REGISTRANT’S~~Vested ~~COMMON~~in ~~EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~2009

~~See~~ Named ~~information~~executive ~~under~~officers ~~the~~did ~~caption~~not ~~“Market~~exercise ~~Price~~any ~~for~~stock ~~Registrant’s Common Equity, Dividends and Related Stockholder Matters”~~ options in ~~the Company’s~~ 2009 ~~Annual Report to Shareholders, which information is incorporated here by reference~~.

~~ITEM~~Salary ~~6. SELECTED~~Continuation ~~FINANCIAL DATA~~Agreements

~~See~~ In ~~information~~order ~~under~~to ~~the~~provide ~~caption~~long-term ~~“Selected~~incentive ~~Financial~~to selected ~~Data”~~executive inand ~~the~~senior ~~Company’s~~officers, ~~2009~~effective ~~Annual~~September ~~Report~~30, to2003, ~~Shareholders~~Pacific State Bank entered into Executive Salary Continuation Agreements (each an "SCA") with four current officers of Bancorp, ~~which~~and ~~information~~two isof ~~incorporated~~the ~~here~~named executive byofficers ~~reference~~listed on the Summary Compensation Table, Rick D. Simas and Gary A. Stewart.

~~ITEM~~ Benefits payable under the SCAs are intended by Pacific State Bank to be funded by single-premium life insurance policies that were purchased in connection with entering into the SCAs and of which Pacific State Bank is the owner and beneficiary. The cash surrender value of those policies was $7,030,000 at December 31, 2009. Notwithstanding ~~MANAGEMENT’S~~the ~~DISCUSSION~~existence of ~~AND~~such ~~ANALYSIS~~policies OFof ~~FINANCIAL~~insurance, ~~CONDITION~~however, ~~AND~~the ~~RESULTS~~SCAs create OFno ~~OPERATION~~rights or interests in the property or assets of Pacific State Bank; the sole obligation of Pacific State Bank under the SCAs is an unfunded and unsecured promise to pay money in the future, and the status of any person who may assert a claim pursuant to an SCA is that of an unsecured general creditor of Pacific State Bank.

~~See~~ Generally, ~~information~~each ~~under~~SCA provides the ~~caption~~named employee ~~“Management’s~~with ~~Discussion~~a ~~and~~specified ~~Analysis~~annual ofmoney ~~Financial~~benefit ~~Condition~~(the ~~and~~"Annual ~~Results~~Benefit") payable ofto ~~Operation”~~the employee or to his named beneficiary or surviving spouse or estate, in that order, for a period of up to 20 years following the ~~Company’~~employee's retirement ~~2009~~upon ~~Annual~~or ~~Report~~after a specified retirement age. If the employee should die or become disabled prior to ~~Shareholders~~such specified retirement age, a percentage of the Annual Benefit (on a sliding upward scale depending upon the number of years which ~~information~~elapse isbetween ~~incorporated~~execution ~~here~~of bythe ~~reference~~SCA and the employee's early death or disability) would be payable.

~~ITEM~~ No 7AAnnual Benefit is payable if the employee is terminated for cause or the employee voluntarily terminates his employment with Bancorp prior to his specified retirement age, but the full Annual Benefit is payable if the employee is terminated by Bancorp without cause or, in the case of Mr. ~~QUANTITATIVE~~Simasor ~~AND~~Mr. ~~QUALITATIVE~~Stewart, ~~DISLOSURES~~in connection ~~ABOUT~~with ~~MARKET~~a ~~RISK~~change in control of Bancorp.

~~See~~ Subject ~~information~~to ~~under~~such contingencies, the following ~~caption~~table ~~“Liquidity~~sets ~~and~~forth ~~Market~~information ~~Risk”~~regarding ~~and~~benefits ~~“Net~~payable ~~Interest~~under ~~Income~~the SCAs ~~Simulation”~~which inare ~~the~~currently ~~Company’s~~in ~~2009~~effect ~~Annual~~between ~~Report~~Bancorp toand ~~Shareholders~~the named ~~which~~executive ~~information~~officers isin ~~incorporated~~the ~~here~~Summary byCompensation ~~reference~~Table.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Name	Annual Benefit		Present Value of Accumulated Benefit		Payments During Last Fiscal Year		Years Required For Full Benefit		Years of Accredited Service		Year Annual Benefit Commences	Retirement Age

Rick D. Simas	$	77,299	$	106,743		-		10		5	March 2026		65
Gary A. Stewart	$	93,253	$	511,351		-		10		5	September 2015		65

~~See~~Employment ~~Report of Independent Registered Public Accounting Firm~~Contracts, ~~Consolidated Balance Sheet, Consolidated Statement~~ Termination of ~~Operations,~~Employment ~~Consolidated Statement of Changes in Shareholders’ Equity, Consolidated Statement of Cash Flows~~ and ~~Notes to Consolidated Financial Statements, all contained~~ Change-in-Control ~~the~~Arrangements ~~Company’s 2009 Annual Report to Shareholders, which information is incorporated here by reference.~~

~~ITEM~~ The 9table below shows the maximum incremental amounts that could be paid to the named executive officers upon a change in control or for termination without cause. ~~CHANGES~~The INfollowing ~~AND~~information is ~~DISAGREEMENTS~~based ~~WITH~~on ~~ACCOUNTANTS~~(i) ONthe ~~ACCOUNTING~~executive's ~~AND~~salary ~~FINANCIAL~~at ~~DISCLOSURE~~December 31, 2009, and (ii) the assumption that the triggering event occurred on December 31, 2009.

None

Change in Control
	Severance Benefit		Vesting of Options		Salary Continuation		Total
Rick D. Simas	$	-	$	-	$	291,168	$	541,168
Gary A. Stewart	$	-	$	-	$	783,834	$	783,834

-26-

Termination Without Cause
	Salary		Vesting of Options		Salary Continuation		Total
Rick D. Simas	$	-	$	-	$	291,168	$	291,168
Gary A. Stewart	$	-	$	-	$	783,834	$	783,834

~~ITEM~~ PERSONNEL ~~9A.~~COMMITTEE ~~CONTROLS~~REPORT ~~AND~~ON EXECUTIVE ~~PROCEDURES~~COMPENSATION

~~The~~Report ~~management~~ of ~~Pacific~~Personnel State Bancorp, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.Committee

The Personnel ~~Principal~~Committee ~~Executive Officer and Chief Financial Officer of the Company have concluded, based on their evaluation as of the end of the period covered by this Annual~~ Report onis ~~Form~~not ~~10-K,~~deemed ~~that the Company’s disclosure controls and procedures are effective~~ to be ~~ensure~~"soliciting ~~that~~material" ~~information~~or ~~required~~ to be ~~disclosed~~"filed" bywith the ~~Company in~~SEC ~~the reports filed~~ or subject ~~submitted~~to ~~by it under~~ the ~~Securities~~SEC's ~~Exchange~~proxy ~~Act~~rules ofor ~~1934, as amended, is recorded, processed, summarized and reported within~~ the ~~time~~liabilities of ~~periods~~Section 18 ~~specified in the rules and forms~~ of the ~~Securities and~~ Exchange ~~Commission,~~Act and ~~include~~the ~~controls~~report ~~and~~shall ~~procedures~~not ~~designed~~be todeemed ~~ensure that information required~~ to be incorporated ~~disclosed~~ by ~~the~~reference ~~Company~~into inany ~~such~~prior ~~reports~~or issubsequent ~~accumulated~~filing ~~and~~by ~~communicated~~Bancorp to under the ~~Company’s~~Securities ~~management,~~Act ~~including~~or the ~~Company’s~~Exchange ~~Principal Executive Officer and Chief Financial Officer~~Act, asexcept ~~appropriate~~ to ~~allow timely decisions regarding required disclosure. The design of any system of controls is based in part upon certain assumptions about~~ the ~~likelihood~~extent ofBancorp specifically ~~future~~incorporates ~~events,~~this ~~and~~Committee ~~there~~Report ~~can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote~~therein.

~~There~~The ~~were~~Personnel noCommittee ~~significant~~of Bancorp ~~changes~~has inreviewed and discussed the ~~Company’s~~Compensation ~~internal~~Discussion ~~controls~~and orAnalysis ("CD&A") inwith ~~other~~management, ~~factors~~and ~~during~~based on that review and discussion, the ~~last~~Personnel ~~quarter~~Committee ofrecommended ~~2009~~to the Board that ~~have~~the CD&A ~~materially~~be ~~affected,~~included oras ~~are~~part ~~reasonably~~of ~~likely~~this toProxy ~~materially~~Statement ~~affect~~and, ~~the~~by ~~Company’s~~reference, ~~internal~~the 2010 ~~controls~~Annual ~~over~~10-K ~~financial reporting~~Report.

~~Because~~Personnel Committee of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even an effective system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.Members

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of theYoshikazu ~~Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.~~Mataga

~~Management~~Michael has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated FrameworkA. ~~Based~~ ~~on that assessment, management concludes that, as of December 31, 2009, the Company’s internal control over financial reporting is effective.~~Dalton

~~ITEM~~Harold ~~9B. OTHER INFORMATION~~Hand

~~None~~ CERTAIN TRANSACTIONS

Bancorp has had, and in the future may have, banking transactions in the ordinary course of its business with directors, principal shareholders and their associates, including the making of loans to directors and their associates. Such loans and other banking transactions are made on the same terms, including interest rates and collateral securing the loans, as those prevailing at the time for comparable transactions with persons of comparable creditworthiness who have no affiliation with Bancorp. In addition, such loans are made only if they do not involve more than the normal risk of collectability associated with loans made to non-~~27-~~affiliated persons and do not present any other unfavorable features.

~~PART~~ Executive officers ~~III~~are not permitted to borrow from Pacific State Bank except for a de minimus amount to provide over-draft protection on their checking accounts.

Certain information required by Part III, Items 10, 11, 12, 13 and 14 (identified below) will be provided by amendment to this Form 10-K no later than April 30, 2010. The Company’s definitive Proxy Statement is intended to be filed with the Securities and Exchange Commission inREGULATORY ~~May, 2010 in connection with the solicitation of proxies for the Company’s 2010 Annual Meeting of Shareholders (the "Proxy Statement").~~MATTERS

~~ITEM~~ Subsequent 10to an examination by the California Department of Financial Institutions ("CDFI") which began January 11, 2010, we entered into a Waiver and Consent to an Order ("Order")of the CDFI, effective May 3, 2010, in which Pacific State Bank is required to take certain corrective actions with respect to its operations. The ~~DIRECTORS~~Order requires (1) Pacific State Bank, ~~EXECUTIVE~~within ~~OFFICERS~~ninety ~~AND~~days ~~CORPORATE~~from ~~GOVERNANCE~~May 3, 2010, either to increase to and maintain tangible shareholders' equity at 10% of total tangible assets or enter into a definitive agreement to merge Pacific State Bank or sell it to an acquirer acceptable to the CDFI, (2) Pacific State Bank to provide monthly board reports to the CDFI of progress to increase capital or merge, (3) Pacific State Bank to not make any distribution to its shareholder without prior approval of the CDFI, (4) Pacific State Bank to provide a description of the Order to its shareholders in this proxy statement, and (5) Pacific State Bank to notify the CDFI in advance when Pacific State Bank proposes to make any public announcement.

~~ITEM~~Before 11entering into the Order and since entering into it, we took and have taken actions that were designed to satisfy the requirements of the Order. ~~EXECUTIVE~~ ~~COMPENSATION~~However, full compliance has not been achieved as of the date of this proxy statement. Violation of the Order will be deemed by the CDFI to be conducting business in an unsafe or unsound manner and subject Pacific State Bank to further enforcement action.

~~ITEM~~REPORT ~~12. SECURITY OWNERSHIP~~ OF ~~CERTAIN~~THE ~~BENEFICIAL~~AUDIT ~~OWNERS~~COMMITTEE ~~AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.~~

~~ITEM~~ INFORMATION ~~13. CERTAIN~~CONTAINED ~~RELATIONSHIPS~~IN ~~AND~~THE ~~RELATED~~FOLLOWING REPORT ~~TRANSACTIONS~~OF THE AUDIT COMMITTEE SHALL NOT BE DEEMED "SOLICITING MATERIAL" OR TO BE "FILED" WITH THE COMMISSION, ~~AND~~OR ~~DIRECTOR~~SUBJECT ~~INDEPENDENCE~~TO THE SEC'S PROXY RULES OR THE LIABILITIES OF SECTION 18 OF THE EXCHANGE ACT NOR SHALL SUCH INFORMATION BE INCORPORATED BY REFERENCE INTO ANY OF BANCORP'S FILINGS UNDER THE EXCHANGE ACT, NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY SUCH FILING, EXCEPT TO THE EXTENT THAT BANCORP SPECIFICALLY INCORPORATES IT BY REFERENCE INTO SUCH FILING.

~~ITEM~~ The 14Committee has reviewed and discussed the audited financial statements of Bancorp for the fiscal year ended December 31, 2009 with Bancorp's management. ~~PRINCIPAL~~The ~~ACCOUNTING~~Committee ~~FEES~~has ~~AND~~discussed ~~SERVICES~~with Perry-Smith LLP, Bancorp's independent public accountants ("Perry-Smith"), the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees). The Committee has also received the written disclosures and the letter from Perry-Smith required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee concerning independence, and has discussed with the independent accountant the independent accountant's independence.

~~PART~~ Based IVon the Committee's review and discussions noted above, the Committee recommended to the Board of Directors that Bancorp's audited financial statements be included in Bancorp's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 for filing with the Securities and Exchange Commission.

~~ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.~~Submitted by:

~~(a)(1)~~Michael A. Dalton, Chairman

~~The following financial statements of the Company included in the Annual Report to Shareholders for the year ended December 31, 2009, are filed and incorporated by reference in Item 8 of this report~~Yoshikazu Mataga

.Patricia Hatton

~~(i) Report of Independent Registered Public Accounting Firm, dated April 15, 2010~~George M. Schofield

~~(ii)~~TRANSACTIONS ~~Consolidated~~WITH ~~Balance Sheet, December 31, 2009 and 2008.~~MANAGEMENT

~~(iii)~~ Some ~~Consolidated~~of ~~Statement~~the directors and officers of Bancorp ~~Operations:~~and ~~Years~~the ~~ended~~companies ~~December~~with 31which those directors and officers are associated are customers of, ~~2009~~and have had banking transactions with, ~~2008~~Bancorp in the ordinary course of Bancorp's business, and ~~2007~~Bancorp expects to have banking transactions with such persons in the future. In the opinion of Bancorp's management, all loans and commitments to lend in such transactions were made in compliance with applicable laws and on substantially the same terms, including interest rates and collateral, as those prevailing for comparable transactions with other persons of similar creditworthiness and did not involve more than a normal risk of collectability or present other unfavorable features.

~~(iv)~~INDEPENDENT ~~Consolidated~~REGISTERED ~~Statement~~PUBLIC ACCOUNTING ~~of Changes in Shareholders’ Equity: Years ended December 31, 2009, 2008 and 2007.~~FIRM

The accounting firm of Perry-Smith LLP (v"Perry-Smith"), ~~Consolidated~~registered ~~Statement~~public accountants, serves Bancorp as its auditors at the direction of ~~Cash~~the ~~Flows:~~Board ~~Years~~of ~~ended~~Directors ~~December~~and ~~31,~~Audit ~~2009,~~Committee ~~2008~~of Bancorp. It is anticipated that a representative of Perry-Smith will be present at the Annual Meeting with the opportunity to make a statement if he or she desires to do so and ~~2007~~will be available to answer appropriate questions.

~~(vi)~~Audit ~~Notes~~Fees ~~to Consolidated Financial Statements.~~

~~(2)~~ The ~~All~~aggregate ~~Schedules~~fees ~~have~~billed ~~been~~by ~~omitted~~Perry-Smith for ~~because~~professional ~~they~~services ~~are~~rendered ~~not~~for ~~applicable~~the oraudit ~~not~~of ~~required~~Bancorp's orannual ~~because~~financial statements for the ~~information~~fiscal isyear ~~included~~ended inDecember 31, 2009 and for the reviews of the financial statements orincluded in Bancorp's Quarterly Reports on Form 10-Q for that fiscal year were $187,700; related fees for the ~~notes~~year ~~thereto~~ended orDecember 31, is2008 ~~not~~were ~~material~~$124,500. These amounts represented 85% and 82%, respectively, of the total fee paid to Perry-Smith during these years.

~~(3)~~Audit-Related ~~Exhibits filed with this report are listed in the Index to Exhibits below, which is incorporated herein by reference.~~Fees

~~(b)~~ The ~~Exhibits~~aggregate ~~listed~~fees onbilled ~~the~~by ~~Index~~Perry-Smith for ofaudit ~~Exhibits~~related ~~are~~services ~~filed~~rendered for technical accounting, consulting and research ~~incorporated~~were ~~here~~$0 byfor ~~reference~~the year ended December 31, 2009; related fees for the year ended December 31, 2008 were $0.

~~(c)~~Tax ~~All Schedules have been omitted because they are not applicable or not required or because the information is included in the financial statements or the notes thereto or is not material.~~Fees

The aggregate fees billed by Perry-28Smith for all tax services rendered to Bancorp for the fiscal years ended December 31, 2009 and December 31, 2008 were $27,800 and $27,800 respectively. Those amounts represented 18% and 18%, respectively of the total fees paid to Perry-Smith during these years.

~~SIGNATURES~~All Other Fees

~~Pursuant~~ The toaggregate ~~the~~fees ~~requirements~~billed ofby ~~Section~~Perry-Smith for 13all ofother ~~the~~services ~~Securities~~rendered ~~Exchange~~to ~~Act~~Bancorp, ofother ~~1934,~~than the ~~Company~~services ~~has~~described above, ~~duly~~for ~~caused~~the ~~this~~fiscal ~~report~~years toended beDecember ~~signed~~31, on2009 ~~its~~and ~~behalf~~December by31, ~~the~~2008 ~~undersigned thereunto duly authorized~~were $0.

~~Date: April~~Before 15each professional service provided by Perry-Smith was rendered to Bancorp, ~~2010 PACIFIC~~such service was approved by, and its ~~STATE~~effect ~~BANCORP~~upon Perry-Smith's independence was considered by, the Audit Committee.

~~By: /s/~~COMPLIANCE ~~Rick~~WITH ~~Simas~~SECTION 16(a) FILING REQUIREMENTS

~~Rick~~ Section ~~Simas~~16(a) of the Securities Exchange Act of 1934 requires that all of our executive officers and directors and all persons who beneficially own more than 10 percent of Bancorp's common stock file reports with the SEC regarding beneficial ownership of Bancorp's stock. We have adopted procedures to assist our directors and executive officers in complying with the Section 16(a) filings.

~~Chief~~ Based ~~Executive~~solely ~~Officer/President~~on its review of the copies of such forms received by it, or written representations from the Reporting Persons Bancorp believes that, during 2009 the Reporting Persons complied with all filing requirements applicable to them, with the exception of Kathleen M. Verner. Mrs. Verner, through verbal correspondence, has indicated that she has sold approximately 166,540 shares of common stock in 2009 without filing the proper forms with the SEC or with Bancorp

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.SOLICITATION

~~Date: April~~ Bancorp will 15pay the costs of soliciting proxies from our shareholders, ~~2010 By:~~including soliciting ~~/s/~~proxies by mail. In order to ensure adequate representation at ~~Rick~~the ~~Simas~~Annual Meeting, directors, officers and employees (who will not receive any additional compensation) of Bancorp may communicate with shareholders, brokerage houses and others by telephone, email, telegraph or in person, to request that proxies be furnished. Bancorp will reimburse brokerage houses, banks, custodians, nominees and fiduciaries for their reasonable expenses in forwarding proxy materials to the beneficial owners of Bancorp's shares.

~~Rick~~SHAREHOLDER ~~Simas~~PROPOSALS

~~Chief~~ Next year's ~~Executive~~Annual ~~Officer/President~~Meeting of Shareholders of Bancorp is scheduled be held on June 9, 2011. Any shareholder desiring to submit a proposal for action at the 2011 Annual Meeting of Shareholders which is desired to be presented in Bancorp's Proxy Statement with respect to such meeting, should mail such proposal by certified mail, return receipt requested, to Pacific State Bancorp, 1899 W. March Lane, Stockton, California 95207, Attention: Dr. Harold Hand, Chairman of the Board. All such proposals must be received by Bancorp not later than December 15, 2010. Management of Bancorp will have discretionary authority to vote proxies obtained by it in connection with any shareholder proposal not submitted on or before the December 15, 2010 deadline. Matters pertaining to such proposals, including the number and length thereof, eligibility of persons entitled to have such proposals included, and other aspects, are regulated by the Securities Exchange Act of 1934, and regulations adopted there under.

~~Date: April 15, 2010 By:/s/~~ ~~Justin Garner~~OTHER MATTERS

~~Justin~~ Bancorp ~~Garner~~is not aware of any other matters to come before the meeting. If another matter not mentioned in this Proxy Statement is brought before the meeting, the proxy holders named in the enclosed Proxy Card will have discretionary authority to vote all proxies with respect thereto in accordance with their judgment.

~~Vice~~INCORPORATION ~~President/Chief Financial~~BY ~~Officer~~REFERENCE

~~Date: April~~ The 15sections in this Proxy Statement entitled "Report of the Audit Committee" and "Personnel Committee Report" do not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Bancorp filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, ~~2010 By: /s/~~except to the ~~Michael~~extent L.Bancorp ~~Dalton~~specifically incorporates any such Reports or the performance graph by reference therein.

~~Michael~~FORM L.10-K ~~Dalton~~TO SHAREHOLDERS

~~Director~~ The ~~and~~Form ~~Chairman~~10-K to Shareholders of Bancorp for the ~~Audit~~fiscal ~~Committee~~year ended December 31, 2009 is being mailed concurrently with this Proxy Statement to all shareholders of record as of April 20, 2010. The Form 10-K is not to be regarded as proxy soliciting material or as a communication by means of which any solicitation is to be made.

~~Date: April~~ A 15COPY OF BANCORP'S FORM 10-K WILL BE MAILED FREE OF CHARGE TO ANY SHAREHOLDER UPON REQUEST. REQUESTS MAY BE MADE BY TELEPHONE AT (209) 870-3214 OR BY LETTER ADDRESSED TO PACIFIC STATE BANCORP, ~~2010 By:~~1899 ~~/s/~~W. MARCH LANE, ~~Maxwell~~STOCKTON, ~~Freeman~~CALIFORNIA 95207.

~~Maxwell~~ IT ~~Freeman~~IS VERY IMPORTANT THAT EVERY SHAREHOLDER VOTE. WE URGE YOU TO VOTE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. VOTING YOUR PROXY WILL NOT PREVENT YOU FROM ATTENDING THE MEETING AND VOTING IN PERSON. FOR YOUR CONVENIENCE A RETURN ENVELOPE IS ENCLOSED REQUIRING NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES.

~~Director~~By Order of the Board of Directors,

~~Date: April~~George 15M. Schofield, ~~2010 By:~~Corporate ~~/s/ Harold Hand~~ Secretary

~~Harold~~ May ~~Hand~~20, 2010

~~Director and Chairman of the Board~~PROXY

~~Date: April 15, 2010 By: /s/~~PACIFIC ~~Patricia~~STATE ~~A. Hatton~~ BANCORP

~~Patricia~~Annual Meeting A.of ~~Hatton~~Shareholders June 10, 2010

~~Director~~THIS PROXY ~~and~~IS ~~Chairperson~~SOLICITED ofBY ~~the~~THE ~~Director~~BOARD ~~Loan~~OF ~~Committee~~DIRECTORS OF BANCORP

~~Date: April~~The 15undersigned shareholder of Pacific State Bancorp hereby appoints Rick Simas and Russell Munson, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact of the undersigned, and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Pacific State Bancorp common stock which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Shareholders of Bancorp to be held on June 10, 2010 ~~By:~~, ~~/s/ Yoshikazu~~or ~~Mataga~~at any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the Meeting.

~~Yoshikazu~~This ~~Mataga~~proxy/voting instruction card when properly executed will be voted in the manner directed by the undersigned shareholder. If no direction is made, this proxy/voting instruction card will be voted "For" the nominees listed on the reverse side and "For" all other proposals in accordance with the recommendation of the Board of Directors.

~~Director~~(Continued and to be marked, dated and signed, on the other side)

~~Date: April~~a ~~15,~~Address ~~2010 By:~~ Change/~~s/ George~~Comments M.(Mark ~~Schofield~~the corresponding box on the reverse side

~~George~~ FOLD AND M.DETACH ~~Schofield~~HERE

~~Director~~THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO DIRECTION IS INDICATED WILL BE VOTED "FOR" ALL PROPOSALS.

~~Date: April~~Please ~~15,~~mark ~~2010 By:~~your ~~/s/ Gary~~votes A.as ~~Stewart~~indicated in this example

Gary A. Stewart

1. ELECTION OF DIRECTORS

FOR

ALL

WITHHOLD FOR ALL

EXCEPTIONS

1 Michael L. Dalton

2 Maxwell M. Freeman

3 Harold Hand

4 Patricia Ann Hatton

5 Yoshikazu Mataga

6 Rick D. Simas

7 Gary A. Stewart

INSTRUCTIONS: To withhold authority to vote for any individual nominees, mark the "Exceptions" box above and write that nominee's name in the space provided below.)

Exceptions

YES

I will

Attend the

Annual Meeting

~~Executive~~Mark ~~Vice~~Here ~~President/Chief~~for ~~Credit~~Address ~~Officer~~Change or Comments SEE REVERSE

~~Director~~Signature Signature

~~-29-~~NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such

~~LIST~~ FOLD AND OFDETACH ~~EXHIBITS~~HERE

3.1		Articles of Incorporation, as amended. Incorporated by reference from Exhibit 3.1 filed with the Company's Form 10-K for the year ended December 31, 2004.
3.2		Bylaws. Incorporated by reference from Exhibit 3.2 filed with the Company’s Registration Statement No. 333-84908 on Form S-4EF (the “S-4”).
4.1		Agreement to file copy of Indenture for the Company’s $3.5 Million of Floating Rate Junior Subordinated Deferrable Interest Debentures due 2034 issued to Pacific State Statutory Trust II. Incorporated by reference from the Company’s Form 10-K for the year ended December 31, 2003.
4.2		Agreement to file copy of Indenture for the Company’s $5.0 Million of Floating Rate Junior Subordinated Deferrable Interest Debentures due 2037 issued to Pacific State Statutory Trust III. Incorporated by reference from the Company’s Form 10-K for the year ended December 31, 2007
10.1		Lease Agreement for Main Office. Incorporated by reference from Exhibit 10.1 filed with the S-4.
10.2		Lease Agreement for Lodi Office. Incorporated by reference from Exhibit 10.2 to the Company’s Form 10-K for the year ended December 31, 2005 (the “2005 10-K”).
10.3		Lease Agreement, Tracy Branch Office. Incorporated by reference from Exhibit 10.3 filed with the S-4.
104.1	*	Form of Salary Continuation Agreement. Incorporated by reference from Exhibit 10.5.1 to the 2005 10-K .
10.4.2	*	Form of Split Dollar Agreement. Incorporated by reference from Exhibit 10.5.2 to the 2005 10-K .
10.5	*	1997 Stock Option Plan. Incorporated by reference from Exhibit 10.6 filed with the Company’s Quarterly Report on Form 10-Q for the quarterly period ending September 30, 2003.
13		The portions of the Pacific State Bancorp 2009 Annual Report to Shareholders which have been incorporated by reference in Items 5-8 herein are filed with the Commission.
21		List of Subsidiaries
23		Consent of Independent Registered Public Accounting Firm
31.1		Certification of the Principal Executive Officer (section 302 of Sarbanes-Oxley Act).
31.2		Certification of the Chief Financial Officer (section 302 of Sarbanes-Oxley Act).
32.1		Certification of Principal Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act.
32.2		Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act
*		Denotes management contract or compensatory arrangement

WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING

~~-30-~~ BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.

Internet and telephone voting is available through 11:59 P.M. Pacific Time

on June 9, 2010.


PACIFIC STATE BANCORP		INTERNET
		Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
		OR
		TELEPHONE Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
	If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
	Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.

Important notice regarding the Internet availability of proxy materials for the Annual Meeting of shareholders The Proxy Statement and Form 10-K to Stockholders are available at: www.proxyvote.com

PACIFIC STATE BANCORP

1899 W. March Lane

Stockton, California 95207

(209) 870-3214

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