Santa Cruz County Bank Reports Continued Growth in Profitability, Deposits and Loans For the Third Quarter Ended September 30, 2012

Total Assets Surpass $350 Million

Bank expands SBA Lending Team

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Oct 19, 2012, 12:35 ET

SANTA CRUZ, Calif., Oct. 19, 2012 /PRNewswire/ -- Santa Cruz County Bank, (SCZC), a locally owned and operated full-service community bank headquartered in Santa Cruz County, today announced earnings for the third quarter ended September 30, 2012. The Bank reported net income of $784,659, which represents a 24% increase after taxes compared to the quarter ended June 30, 2012 and a 2% increase compared to the quarter ended September 30, 2011. Comparing nine-months ended September 30, 2012 to nine-months ended September 20, 2011, net income increased by $236,229, 13%, to $2.0 million.

Shareholders' equity for the period ended September 30, 2012 increased by $3.6 million, 14%, over the prior period ended September 30, 2011. Basic earnings per share for the nine-months ended September 30, 2012 were $1.04 as compared to $0.92 for the nine-months ended September 30, 2011.

SEPTEMBER 30, 2012 COMPARED TO SEPTEMBER 30, 2011
Total deposits increased $34.4 million, 12% to $319.3 million
Gross loans increased $29.5 million, 17% to $206.7 million
Total assets increased $38.2 million, 12% to $352.0 million
Quarterly net income increased $18 thousand, 2% to $784.7 thousand

Non-interest bearing deposits represented 44% of total deposits as of September 30, 2012.

David Heald, President and CEO commented, "Customer referrals and expansion of existing relationships has bolstered deposits, resulting in our total assets surpassing $350 million. The Bank's record earnings is a result of management and the Board of Directors' commitment to growing a quality loan portfolio while maintaining efficiencies in all operating areas of the Bank. We expect continued growth in our loan portfolio through targeted marketing efforts by our team of experienced bankers and the recent expansion of our SBA lending team."

THIRD QUARTER HIGHLIGHTS:

Santa Cruz County Bank received a 4-Star "Excellent" rating from Bauer Financial Reports, Inc. for its second quarter 2012 performance.

The Bank announced Sati Kanwar joined the Bank as Senior Vice President, SBA Business Development Officer. Mr. Kanwar is an experienced and well known veteran SBA lender in the Bank's market place.

Loans grew by $3.3 million in the third quarter on $16 million in new production ($25 million in commitments) through the focused efforts of our Relationship Officers.

ABOUT SANTA CRUZ COUNTY BANK

Headquartered in Santa Cruz, Santa Cruz County Bank is a full-service bank serving the banking needs of individuals and businesses throughout Santa Cruz County. The Bank operates five full-service banking offices and two self-serve banking centers. The Bank's full-service banking offices are located in Aptos, Capitola, Santa Cruz, Scotts Valley and Watsonville. The Bank commenced operations on February 3, 2004 in Santa Cruz.

Santa Cruz County Bank's common stock is listed on the Over the Counter (OTC) Bulletin Board under the stock symbol SCZC. More information on the Bank may be obtained through its website: www.sccountybank.com or by calling 831.457.5000.

This release 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 Bank is conducting its operations, including the real estate market in California and other factors beyond the Bank'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 Bank undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

Selected Financial Data (unaudited)
September 30, 2012

			Change				Change
	Quarter ended 9/30/12	Quarter ended 9/30/11	$	%	Year ended 12/31/11		$	%

Balance Sheet

Total assets	$ 352,000,974	$ 313,850,937	$ 38,150,037	12%	$ 320,230,204		$ 31,770,770	10%
Gross loans	206,707,859	177,249,886	29,457,973	17%	191,369,556		15,338,303	8%
Allowance for loan losses	4,846,966	4,013,614	833,352	21%	4,305,290		541,676	13%
Non interest-bearing deposits	141,955,724	109,682,502	32,273,222	29%	113,014,682		28,941,042	26%
Total deposits	319,347,043	284,906,192	34,440,851	12%	288,206,914		31,140,129	11%
Shareholders' equity	29,119,860	25,554,038	3,565,822	14%	26,285,044		2,834,816	11%

Income Statement							Change
					Nine-months ended 9/30/12	Nine-months ended 9/30/11	$	%
Interest income	3,448,191	3,222,547	225,644	7%	10,225,169	$ 9,622,073	$ 603,096	6%
Interest expense	110,482	145,094	(34,612)	-24%	351,681	447,109	(95,428)	-21%
Net interest income	3,337,709	3,077,453	260,256	8%	9,873,488	9,174,964	698,524	8%

Provision for loan losses	194,000	230,000	(36,000)	-16%	794,000	1,112,500	(318,500)	-29%
Non-interest income	784,767	1,079,556	(294,789)	-27%	1,884,290	2,728,057	(843,767)	-31%
Non-interest expense	2,720,724	2,602,802	117,922	5%	7,848,574	7,859,622	(11,048)	0%
Net income before taxes	1,207,752	1,324,207	(116,455)	-9%	3,115,204	2,930,899	184,305	6%
Income tax expense	423,093	557,593	(134,500)	-24%	1,123,858	1,175,782	(51,924)	-4%
Net income after taxes	$ 784,659	$ 766,614	18,045	2%	$ 1,991,346	$ 1,755,117	236,229	13%

BASIC EARNINGS PER SHARE	$ 0.40	$ 0.40			$ 1.04	$ 0.92
BOOK VALUE PER SHARE	$ 14.81	$ 13.10			$ 14.81	$ 13.10

Ratios
Net interest margin	4.11%	4.14%			4.24%	4.48%
Equity capital-to-total assets	8.3%	8.1%			8.2%	NA


% of non interest bearing to total deposits	44%	38%			39%	NA