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Santa Cruz County Bank posts record profit in 2014

January 29, 2015

SANTA CRUZ - Santa Cruz County Bank posted a record $4.4 million profit for the year ending Dec. 31, up 32 percent from a year ago, with quarterly earnings of $1.3 million, up 6 percent from the prior quarter.

Gross loans at the 11-year-old bank totaled $315.6 million, up 6 percent from last quarter and up $57.5 million from a year ago, a 22 percent increase, despite $36.6 million in payoffs.

In 2014, the bank made 248 new loans up from 217 the year before.

“People are feeling more comfortable in making investments,” said David Heald, Santa Cruz County Bank’s president and CEO.

Fourth quarter loans included 14 home equity lines, nine for construction, eight in the ag sector and five in the hospitality sector.

John Benedetti, founder of Sante Arcangeli Family Wines, expanded into his own facility in Aromas and increased wine production to meet demand with a line of credit from Santa Cruz County Bank.

“I needed a bigger space, my own space,” he said, recalling how he sold out of his 2012 Split Rail pinot noir — 850 cases — within weeks of a Wine Enthusiast score of 94. “You get a score like that, you better have some wine.”

Benedetti moved out of Beauregard Winery, planted a new vineyard in Corralitos, bought more fruit and raised production to 1,200 cases in 2013 and 1,600 cases in 2014 with a target of 2,000 cases this year. He added a full-time assistant winemaker, one part-time employee and expanded the vineyard manager’s role.

His bet paid off last week when Rusty Gaffney of PinotFile gave the 2013 Split Rail Pinot a score of 94. It is sold at Shopper’s Corner.

Dick Peixoto, owner of Lakeside Organic Gardens in Watsonville, got a loan from Santa Cruz County Bank to buy 200 acres of farmland, tapping the federal “Farmer Mac” program, which reduces the risk for lenders.

It was the first time Peixoto bought land. He ended up taking out a second loan to buy another 20 acres.

On Dec. 27, he called the bank about borrowing money for operations. The deal closed by Dec. 31.

“I was impressed,” Peixoto said. “We definitely have friendly bankers.”

Tom Brown of Ceiba College Preparatory Academy, a charter school, talked to several lenders about borrowing $3.3 million for a $6.3 million project to turn a leased warehouse in Watsonville into a campus for 500 students complete with a performing arts space.

“The issue of collateral was a stumbling block for many banks,” Brown said. “Santa Cruz County Bank took the time to develop an understanding of charter school finance and the impact of our organization on the community. Rather than the standard ‘wow, we’re just not sure how this might work,’ they found a way to make everyone comfortable with the risks.”

One trend Heald cited was companies borrowing to buy new trucks to comply with state regulations in effect Jan. 1 to reduce diesel emissions.

Of the bank’s $134 million in loan production for the year, $33 million were loans backed by the U.S. Small Business Administration.

The bank has grown to 80 employees as of Dec. 31, up from 76 a year ago.

Geoff Loftus, 63, the bank’s chief credit officer, died Jan. 20 of a pulmonary embolism. With the bank for less than two years, his leadership is credited with bringing nonperforming loans down to zero.

 

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