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Santa Cruz County Bank reports profitable quarter

July 15, 2011

By Jondi Gumz - Santa Cruz Sentinel

Santa Cruz County Bank posted a profit of $535,000 for the second quarter, up from $369,000 a year ago.

An increase in loans is one of the factors behind the gain.

Loans totaled $172.3 million, up $5.3 million during the quarter, a 3 percent increase.

"We continue to have a high volume of applications from agricultural, professional, and other business sectors from north to south of the entire county," said Senior Vice President Mary Anne Carson, noting the bank's recognition by the U.S. Department of Agriculture and its status as a preferred Small Business Administration lender. "We have a strong pipeline of approved government guaranteed business and industry loans pending."

Net interest margin, the difference between interest income and interest expenses, was at 4.64 percent, up from 4.61 percent a year ago.

Assets grew 7 percent over the quarter to $299.1 million, a record for the 7-year-old bank.

Deposits also reached a new milestone, $270.9 million, up 7 percent from a year ago.

"Historically we have seen a boost in second-quarter deposits," said David Heald, bank president and chief executive officer.

Noninterest-bearing deposits grew 10 percent over the quarter.

Carson attributed this to higher account balances "due to seasonality of certain businesses and our ability to attract new business relationships, which have migrated over from regional and national banks."

The loan loss reserve was increased 7 percent during the quarter to $3.8 million, while the quarterly provision for loan losses dropped from $582,500 to $300,000.

"In the second quarter we had a recovery on a loan that we no longer have to consider in the calculation for this allocation," Carson said.

Shareholders' equity increased 3 percent during the quarter to $25 million.

Income tax liability for the quarter is $344,000.

The bank's capital ratio is 8.75 percent, up from 8.6 percent in the prior quarter.

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