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Santa Cruz County Bank, after record year, names new chairman

May 22, 2017

After a year in which Santa Cruz County Bank was rated in the top 15 percent of community banks in the nation and a quarter in which Santa Cruz County Bank was rated the best community bank in California, chairman George Gallucci stepped down at Monday’s shareholders’ meeting at the Sesnon House.

More than 60 people attended.

Gallucci, 77, the founding board chairman, said it was time. He served for 13 years and will remain on the seven-person board.

“It has been tremendously gratifying to help steer the bank to become one of the most successful and well-respected financial institutions in the industry,” he said.

Succeeding him as chairman is William Hansen, who is moving up from vice-chairman after being in that role since the bank’s inception in 2004.

“I am honored,” said Hansen, 55, president and CEO of Hansen Insurance Agency and owner of Pacific Coast Development, which is building a $21 million apartment building in Watsonville.

David Heald, president and CEO of Santa Cruz County Bank, was chosen vice chairman.

Shareholders re-elected all seven directors, six of whom are founding directors.

Heald reviewed the records set in 2016 and the growth over five years:

• $588 million in assets, up from $356 million in 2012.

• $529 million in deposits, up from $322 million in 2012, partly due to customers leaving Wells Fargo over the scandal involving opening unauthorized customer accounts.

• $415 million in total loans, up from $226 million in 2012, with new loans in 2016 totaling $195 million and no non-performing loans since March 2014.

• $6.5 million in profit, up from $2.8 million in 2012.

“We don’t go after loans — we’ve always been deposit-driven,” said Heald, noting community involvement by employees helped the bank win awards in 2016 from United Way and Second Harvest Food Bank.

The bank has 86 employees, with openings for tellers and in marketing.

Santa Cruz County Bank’s profits have risen as the bank cut its cost of funds from .15 percent in 2012 to .11 percent last year.

Heald said non-interest income has grown by selling SBA loans, collecting gains on the sales and monthly servicing income rather than from customer service charges.

Loan sales have grown from $34 million in 2012 to $66 million last year, boosting servicing income from $289,000 to $701,000.

Bank stock as of Friday was $41.75 per share, which, times the number of shares outstanding, would put the bank’s market value at $91.5 million, Heald said.

A shareholder who bought 1,000 shares for $10 when the bank launched in 2004 now has shares worth $40,000, noted bank counsel Gary Findley.

“I cannot believe how amazing you guys are,” said shareholder Harvey Belsky, a retired dentist with a specialty in oral surgery.

He wondered if Santa Cruz County Bank would consider acquiring a bank to boost its assets to get into Russell 2000 Index to catch the eye of institutional investors.

“These aren’t things we overlook,” Heald said, but he pointed out, “It’s hard to look at a bank that is not performing at your level.”

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