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Santa Cruz County Bank sees opportunity despite economic turmoil

May 21, 2009

By Jondi Gumz - Santa Cruz Sentinel

About 70 shareholders of Santa Cruz County Bank gathered for the annual meeting Wednesday at Peachwood's to hear how the five-year-old locally owned bank is faring.

David Heald, president and chief executive officer, presented some reassuring statistics:

Deposits topped $214 million in the first quarter.

The bank ended 2008 in the black by $17,000, earning recognition from the independent Findley Reports as the best bank of its size.

Lending hasn't exceeded local deposits; deposits from outside the area have been kept to a minimum.

Deposits at the new bank headquarters have grown $7 million since moving downtown in July.

More than 250 health savings accounts were opened in four months when that new product was offered.

The bank's market share in the county has expanded to 4.15 percent in June, when the figures were last calculated, up from 2.97 percent the previous year.

In Aptos, where the bank opened a branch this year, Wachovia now Wells Fargo had 21 percent of the deposits, followed by Bank of America with 19 percent, Wells Fargo and Chase formerly Washington Mutual each with 15 percent, and Comerica with 10 percent.

One shareholder asked about future investments.

Growth likely will be more modest, with Heald calling 8 percent growth in deposits "good growth."

Heald said he's constantly evaluating the loan portfolio but doesn't anticipate more branches opening this year. He's watching the area near Dominican Hospital and the Santa Cruz Westside and noted a house built on a speculative basis near West Cliff Drive with a bank loan has sold.

Bank chairman George Gallucci said there's room to grow, noting the old County Bank had more than 30 percent of the market.

He said Santa Cruz County Bank is the only one with stock trading above the offering price out of a group of 11 California banks launched in 2004.

Another stockholder asked if "green" certification of bank offices is cost-effective.

Heald said the number of people opening accounts because of "green" certification was worth the 5 percent extra cost to go green. He expects e-statements, starting June 1, will save postage and paper, although he did not have exact figures. The bank also is digitizing records so it won't need to buy so many reams of paper or require space for file cabinets.

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