Santa Cruz County Bank Reports Third Quarter 2010 Results

Quarterly Net Income Increases by 23%

Year to Date Net Income Exceeds $1 Million

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Oct 12, 2010, 03:10 ET

SANTA CRUZ, Calif., Oct. 12 /PRNewswire-FirstCall/ -- Santa Cruz County Bank, (OTC Bulletin Board: SCZC), a locally owned and operated full-service community bank headquartered in Santa Cruz County, today announced earnings for the third quarter of 2010. For the quarter ended September 30, 2010 the Bank reported net income of $452,881 compared to net income of $42,872 for the comparable period in 2009 and $369,149 for the prior quarter ended June 30, 2010. Year to date net income through September 30, 2010 was $1.1 million as compared to $131.6 thousand for the comparable period ended September 30, 2009.

Shareholders' equity for the quarter ended September 30, 2010 increased by $504,101 over the prior quarter to $21.0 million and increased $1.5 million when compared to the period ended September 30, 2009.

SEPTEMBER 30, 2010 COMPARED TO JUNE 30, 2010

Total deposits increased $11.8 million, 5%, to $265.2 million

Gross loans increased $136.7 thousand, <1%, to $166.8 million

Total assets increased $12.8 million, 5% to $293.1 million

Net income increased $83.7 thousand, 23% to $452.9 thousand

NINE-MONTHS ENDED SEPTEMBER 30, 2010 COMPARED TO NINE-MONTHS ENDED SEPTEMBER 30, 2009

Total deposits increased $26.0 million, 11%, to $265.2 million

Gross loans increased $16.6 million, 11% to $166.8 million

Total assets increased $31.1 million, 12% to $293.1 million

Net income increased $958 thousand, 728% to $1.1 million

Total deposits increased 11% or $26.0 million when comparing the quarter ended September 30, 2010 to September 30, 2009 and the Bank's non interest-bearing deposits increased by $20.2 million or 27%. The bank's non interest-bearing deposits to total deposits as of September 30, 2010 were 36%.

The Bank remains highly liquid due to strong deposit growth. The Bank's provision for loan loss reserves grew by $218.9 thousand during the third quarter and its percentage of loan loss provisions to total loans also increased.

"Our continued focus on improving earnings and building a strong local Bank for our community has resulted in a record year to date net income of over one million dollars. This accomplishment highlights the keen focus of our board and management on earnings achievement through strategic measures," stated David V. Heald, President and CEO.

RECENT HIGHLIGHTS

Santa Cruz County Bank received a 4-Star, Excellent rating from Bauer Financial Inc. for its financial results for the quarter ended June 30, 2010.

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. Each of the Bank's offices has received a Green Business Certification Award by the Monterey Bay Area Green Business Program. 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 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 under- takes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

Selected Financial Data (unaudited)

September 30, 2010


			Change			Change				Change
	Quarter ended 9/30/10	Quarter ended 6/30/10	$	%	Quarter ended 9/30/09	$	%	Quarter ended 12/31/09		$	%

Balance Sheet

Total assets	$ 293,135,211	$ 280,305,318	$ 12,829,893	5%	$ 262,035,379	$ 31,099,832	12%	$ 265,105,193		$ 28,030,018	11%
Gross loans	166,812,652	166,675,976	136,676	0%	150,210,505	16,602,147	11%	156,525,733		10,286,919	7%
Allowance for loan losses	3,515,415	3,296,516	218,899	7%	2,545,379	970,036	38%	2,898,478		616,937	21%
Non interest-bearing deposits	95,912,626	85,476,928	10,435,698	12%	75,715,764	20,196,862	27%	75,895,196		20,017,430	26%
Total deposits	265,159,044	253,314,190	11,844,854	5%	239,203,613	25,955,431	11%	239,303,637		25,855,407	11%
Shareholders' equity	20,968,366	20,464,265	504,101	2%	19,452,637	1,515,729	8%	19,592,977		1,375,389	7%

Income Statement										Change
								Nine-months ended 9/30/10	Nine-months ended 9/30/09	$	%
Interest income	3,167,389	3,200,952	(33,563)	-1%	$ 2,948,926	218,463	7%	$ 9,409,050	$ 8,586,365	$ 822,685	10%
Interest expense	219,241	259,269	(40,028)	-15%	376,941	(157,700)	-42%	778,341	1,228,107	(449,766)	-37%
Net interest income	2,948,148	2,941,683	6,465	0%	2,571,985	376,163	15%	8,630,709	7,358,258	1,272,451	17%

Provision for loan losses	300,000	305,000	(5,000)	-2%	401,908	(101,908)	-25%	851,099	700,050	151,049	22%
Non-interest income	628,662	604,881	23,781	4%	537,675	90,987	17%	1,709,225	1,390,165	319,060	23%
Non-interest expense	2,523,988	2,605,050	(81,062)	-3%	2,622,623	(98,635)	-4%	7,636,075	7,816,840	(180,765)	-2%
Net income before taxes	752,822	636,514	116,308	18%	85,129	667,693	784%	1,852,760	231,533	1,621,227	700%
Income tax expense/(credit)	299,941	267,365	32,576	12%	42,257	257,684	610%	762,750	99,909	662,841	663%
Net income after taxes	$ 452,881	$ 369,149	83,732	23%	$ 42,872	410,009	956%	$ 1,090,010	$ 131,624	958,386	728%


Ratios
Net interest margin	4.30%	4.61%			4.25%			4.48%	4.38%
Equity capital-to-total assets	7.2%	7.3%			7.4%			7.4%	7.4%