Acquisition of Two Southern California Financial Institutions Announced by Orange County Holding Company.

LAGUNA HILLS, Calif.--(BUSINESS WIRE)--July 30, 1998--Pacific Community Banking Group ("PCBG") of Laguna Hills, Thursday announced the signing of definitive agreements to acquire two Riverside County commercial banks -- The Bank of Hemet (Nasdaq Bulletin Board:BHEM) ("Hemet") and Valley Bank in Moreno Valley (VMOY-Electronic Bulletin Board)("Valley").

The acquisitions are structured as cash purchase transactions and PCBG will simultaneously complete an underwritten public offering and a listing on the Nasdaq National Market System to establish a broad market for its stock.

PCBG will pay $58.50 per share for the outstanding common stock of Hemet, and for Valley, PCBG will pay $12.50 per share for its common stock. The agreements also provide for the retirement of stock options granted under both banks' stock option plans and certain other considerations. Both prices are subject to the satisfactory continuation of the banks' operating results prior to the closing date and certain otherprovisions of the agreements. The entire transaction is subject to the approval of the shareholders of Hemet and Valley, Federal and California bank regulatory agencies, and successful completion of the underwritten public offering. It is expected to close in the fourth quarter of this year.

The announcement, made jointly by E. Lynn Caswell, John J. McDonough, and Marion V. Ashley, respective chairmen of PCBG, Hemet and Valley, stated that, "We are all very pleased that this proposed acquisition will result in substantial benefits to all parties. Hemet and Valley shareholders will realize a very favorable return on their investments; PCBG and its founding shareholders will form an organization with approximately $370 million in total assets at the time of closing with its shares listed on a major exchange; and the customers of both banks will continue to receive the same personal level of service they've come to expect, which is so often lost in the acquisition and merger of financial institutions."

They also noted, "The transaction will result in the combining of the two banks under a new name in order to better serve and provide expanded service to their contiguous markets, but at the same time the transaction will provide for substantial continuity of management and personnel at both banks, particularly in customer contact areas."

In making the announcement, Caswell further commented, "These acquisitions will also form the nucleus of a true community bank-oriented holding company which intends to continue to acquire well managed independent banks, principally in Southern California. The banks to be acquired, in most instances, will continue to operate with the same community identity, personal service, and local management that their customers have come to expect, while achieving substantial savings through consolidation of administrative and technical functions. Acquired banks will operate under the umbrella of an investor-owned, nationally traded financial services company."

McDonough will be named Chairman Emeritus and remain as a director of the combined bank, as well as a consultant to the bank. James B. Jaqua, current president and chief executive officer of Hemet, will also remain a director of the combined bank and will serve as a consultant to BankLink, the wholly-owned data processing subsidiary of Hemet, which will become a subsidiary of the bank holding company after the purchase.

Valley President N. Douglas Mills will become an executive vice president of the combined bank, and Ashley and Mills will be named to the combined bank's board. Several currently serving directors and/or officers of Hemet and Valley, as well as additional PCBG representatives will be named to the combined bank's board in the near future.

Harold R. Williams, Jr., chief operating and financial officer of Hemet will remain in that position at the combined bank and will also become chief financial officer of the parent company. Robert I. Robie, executive vice president and chief credit officer of Hemet will remain in that post at the combined bank.

Caswell, PCBG founder, will serve as chairman and CEO of the parent company and will also hold the same position at the combined bank during an interim period of integration and consolidation of the two banks into one organization. Caswell has nearly 30 years of experience in community bank and independent bank holding company management, presently serves as a director of the Federal Reserve Bank of San Francisco, and served for several years as California State Chairman of the American Bankers Association.

The Bank of Hemet has headquarters in Riverside, operates five banking offices in the Hemet and Riverside areas, and has approximately $245 million in assets. Valley Bank operates seven offices in Riverside and San Bernardino Counties, including Moreno Valley where it has headquarters, and approximately $80 million in assets.

Investment banking and financial advisory services to PCBG are provided by Sutro & Co. of Los Angeles and San Francisco. Baxter Fentriss and Co. of Richmond, Va. serves in the same capacity to both Hemet and Valley.

    CONTACT:  Pacific Community Banking Group, Laguna Hills
               E. Lynn Caswell, 949/460-4540
                     or
               The Bank of Hemet, Riverside
               James B. Jaqua, 909/784-5771 Ext. 101
                     or
               Valley Bank, Moreno Valley
               N. Douglas Mills, 909/242-1170