Greater Sacramento Bancorp Reports Second Quarter 2010 Net Income of $573,000

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Jul 26, 2010, 02:44 ET

SACRAMENTO, Calif., July 26 /PRNewswire-FirstCall/ -- GREATER SACRAMENTO BANCORP (OTC Bulletin Board: GSCB) – For the three months of the Second Quarter ended June 30, 2010 Greater Sacramento Bancorp (GSB), parent company of Bank of Sacramento (Bank), reported net income of $573,000 ($.22 per share diluted) compared to Net Income of $173,000 ($.07 per share diluted) for the Second Quarter 2009, representing a 231% increase over Second Quarter 2009.

The Second Quarter 2010 Net Income represents a significant turnaround from the First Quarter 2010 Net Loss of $1,129,000 and reduces the year-to-date Net Loss to $556,006 (-$.22 per share diluted). The primary reason for the Second Quarter's improvement over the First Quarter was a reduction of expenses related to the Loan Loss Provision and OREO expenses and Valuation Allowance. These expenses went from $3,999,000 in the First Quarter to $1,031,000 in the Second Quarter and were the result of improved overall asset quality.

Key asset quality indicators for Bank of Sacramento over the past five quarters follow:

Ratio of Non-Performing Loans plus OREO to Total Assets:

6-30-10	3-31-10	12-31-09	9-30-09	6-30-09
2.57%	3.49%	3.30%	3.54%	3.02%


Ratio of Non-Performing Assets to Equity Capital plus Loan Loss Reserve ("Texas Ratio"):

6-30-10	3-31-10	12-31-09	9-30-09	6-30-09
23.25%	32.26%	29.63%	32.42%	28.02%

OREO Balance:

6-30-10	3-31-10	12-31-09	9-30-09	6-30-09
$5,706	$7,389	$5,316	$5,837	$6,689


Allowance for Loan Loss to Total Loans:

6-30-10	3-31-10	12-31-09	9-30-09	6-30-09
1.94%	1.90%	1.82%	1.53%	1.52%

Regarding the return to profit in the Second Quarter 2010 and the status of the quality of the Bank's loan portfolio, CEO and Chairman William J. Martin, commented: "In the First Quarter we charged off $3.9 million in loans while in the Second Quarter we wrote off $80,000. This is certainly evidence that many of the steps we have taken to address our problem loans are starting to have a positive impact. During the Second Quarter we successfully sold an industrial property from our OREO portfolio, reducing those holdings by over $800,000. In addition, the Bank reduced the carrying amount of the remaining properties by $900,000 based upon current estimated values."

In conclusion Martin stated: "The condition of the Sacramento market remains difficult and warrants Management's continued vigilance in order to identify and resolve problem loans. Over the past three years this process has definitely been well honed! Going forward I must reiterate the two key positive strengths of the Bank: (1) Our core earnings remain very sound and are improving. Our "Income from Operations" (Earnings before Provision and OREO Expenses) for the six months ending June 30, 2010 was 3,558,000, a 12% increase over Income from Operations for the six months ending June 30, 2009 of $3,184,000; (2) Likewise, our Capital position and enhanced Loan Loss Reserve insure that we will successfully manage through this difficult market."

As of June 30, 2010 the Bank's Tier One Capital stood at $34,123,000 and GSB's Tier One Capital was $35,318,000. The Leverage Capital Ratios for the Bank and GSB were 9.30% and 9.61%, respectively. By all regulatory measures the Bank and GSB are considered well capitalized.

In reviewing the Second Quarter income statement and balance sheet performance the following highlights are noted:

Net Interest Income for the Second Quarter 2010 at $3,891,000 was down slightly (1%) from the Second Quarter 2009 figure of $3,931,000 as a result of reduced loan levels. For the six months of 2010 Net Interest Income is up 3% from 2009; $7,840,000 compared to $7,607,000.
Non-Interest Income in the Second Quarter 2010 at $749,000 was 51% greater than the Second Quarter 2009 figure of $495,000. For the six months of 2010 Non-Interest Income of $1,168,000 was 13% greater than the $1,034,000 posted in the six months of 2009. This increase is virtually all attributable to profits earned from securities transactions.
Net Interest Margin for the six months of 2010 was 4.69% compared to 4.78% for the six months of 2009.
For the six months of 2010 $4,005,000 was added to the loan loss reserve compared to $2,200,000 for the six months of 2009.
Non-Interest Expense for the six months of 2010 and 2009 are nearly the same: $5,450,000 for 2010 and $5,457,000 for 2009.
Total Deposits at June 30, 2010 were $316,294,000, essentially unchanged from the June 30, 2009 figure of $317,613,000.
Total Net Loans of $241,281,000 at June 30, 2010 were 4% lower than the June 30, 2009 total of $251,766,000. This reduction is reflective of the culling of the problem loans and the increase of the loan loss reserve.

A copy of the company's information and disclosure statement pursuant to Securities and Exchange Commission Rule 15c2-11 can be found on the home page of the company's website at www.bankofsacramento.com under the title Investor Relations.

Contact:	William J. Martin, CEO and Chairman, 916-648-2100

This report may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, government regulations and general economic conditions, and competition within the business areas in which the Company is conducting its operations, including the real estate market in California and other factors beyond the Company's control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

Greater Sacramento Bancorp
Consolidated Financial Highlights
(IN THOUSANDS)
Unaudited

CONDENSED STATEMENT OF CONDITION			DOLLAR	PERCENT
	6/30/2010	6/30/2009	CHANGE	CHANGE
ASSETS
Cash and due from banks	$ 6,107	$ 23,087	$ (16,980)	-74%
Federal funds sold	-	-	-	N.A.
Securities, available-for sale and held-to-maturity	84,893	64,156	20,737	32%
Total Loans outstanding	246,048	255,663	(9,615)	-4%
Less: Allowance for Loan Losses	4,767	3,897	870	22%
Loans, net	241,281	251,766	(10,485)	-4%

Bank premises and equipment, net	854	1,082	(228)	-21%
FHLB and FRB restricted stock	2,301	2,142	159	7%
Other Real Estate Owned	5,706	6,689	(983)	-15%
Accrued interest and other assets	17,601	12,379	5,222	42%
TOTAL ASSETS	$358,743	$ 361,301	$ (2,558)	-1%

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits
Noninterest bearing	$ 90,014	$ 85,126	$ 4,888	6%
Interest bearing	226,280	232,487	(6,207)	-3%
Total Deposits	316,294	317,613	(1,319)	0%

FHLB borrowings	3,000	5,094	(2,094)	-41%
Accrued interest and other liabilities	2,969	1,928	1,041	54%
Junior subordinated debentures	8,248	8,248	-	0%
TOTAL LIABILITIES	330,511	332,883	(2,371)	-1%

SHAREHOLDERS' EQUITY
Preferred convertible stock; Issued and outstanding,
23,175 in 2010 and 23,175 in 2009	515	515	-	0%
Common stock; Issued and outstanding,
2,567,893 in 2010 and 2,559,781 in 2009	21,983	21,895	88	0%
Paid in Capital	106	76	30	39%
Retained earnings	5,485	6,035	(550)	-9%
Accumulated other comprehensive income (loss), net of tax	143	(103)	246	-239%
TOTAL SHAREHOLDERS' EQUITY	28,232	28,418	(186)	-1%
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	$358,743	$ 361,301	$ (2,558)	-1%
Allowance for Loan Losses Coverage ratio	1.94%	1.52%
Tier 1 Leverage ratio	9.61%	10.34%

CONDENSED STATEMENT OF INCOME	Results of Operation			Results of Operation
	Three Months Ending		PERCENT	Year to Date		PERCENT
	6/30/2010	6/30/2009	CHANGE	6/30/2010	6/30/2009	CHANGE
Interest Income	$ 4,447	$ 4,738	-6%	$ 8,967	$ 9,368	-4%
Interest Expense	556	807	-31%	1,127	1,761	-36%
Net Interest Income	3,891	3,931	-1%	7,840	7,607	3%
Noninterest Income	749	495	51%	1,168	1,034	13%
Total Revenue	4,640	4,426	5%	9,008	8,641	4%

Noninterest Expense	2,784	2,664	5%	5,450	5,457	0%
Income from Operations	1,856	1,762	5%	3,558	3,184	12%

Provision for possible loan losses	100	1,555	-94%	4,005	2,200	82%
OREO Expense and Valuation Allowance	931	102	813%	1,025	186	451%
Total Provision/OREO Expense	1,031	1,657	-38%	5,030	2,386	111%

Income before taxes	825	105	686%	(1,472)	798	NM
Income taxes	252	(68)	NM	(916)	165	NM
NET INCOME	$ 573	$ 173	231%	$ (556)	$ 633	NM

Earnings per share: basic	$0.22	$0.07	NM	-$0.22	$0.24	NM
Earnings per share: diluted	$0.22	$0.07	NM	-$0.22	$0.24	NM
Book Value per common share	$10.79	$10.90	-1%	$10.79	$10.90	-1%
Net Interest Margin (tax equivalent)	4.60%	4.91%		4.69%	4.78%
Return on Average Assets	0.63%	0.20%		-0.31%	0.36%
Return on Average Equity	8.30%	2.42%		-4.05%	4.47%