Santa Cruz County Bank Reports Unaudited Results for Third Quarter Ended September 30, 2011

Bank reports 43% increase in net income over prior quarter, 69% increase for the nine months ended September 30, 2011 compared to prior year

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Santa Cruz County Bank

Oct 18, 2011, 07:12 ET

SANTA CRUZ, Calif., Oct. 18, 2011 /PRNewswire/ -- Santa Cruz County Bank, (SCZC.OB), a locally owned and operated full-service community bank headquartered in Santa Cruz County, today announced earnings for the third quarter ended September 30, 2011. For the period, the bank reported net income of $766,614 after taxes compared to $452,881 for the same period ended September 30, 2010, an improvement of 69%. Pretax income increased by 76% to $1.3 million. Net interest income for the period ended September 30, 2011 increased by $129,305 over the same period of the prior year.

Shareholders' equity for the quarter ended September 30, 2011 increased by $542,977 over the prior quarter ended June 30, 2011 and increased by $4.6 million comparing September 30, 2011 to September 30, 2010 which includes the issuance of 241,600 new shares and the addition of $2.5 million in equity in the quarter ending December 31, 2010. Basic earnings per share for the quarter ended September 30, 2011 were $0.40, which includes the aforementioned new shares, compared to $0.27 for the third quarter of the prior year. Net interest margin for the third quarter ended September 30, 2011 was 4.14% as compared to 4.30% for the third quarter of 2010.

David Heald, President and CEO, commented, "We are very pleased with our 5-Star rating by Bauer Financial in recognition of our financial performance in the second quarter. This rating combined with our reputation for superior customer service, and the community's strong sentiment for 'locally owned' continues to drive new business through our doors. This quarter we reached the milestone of over $300 million in assets. We continue to focus on operating efficiencies and loan growth to further improve earnings and shareholder value."

QUARTER TO QUARTER: SEPTEMBER 30, 2011 COMPARED TO JUNE 30, 2011

Total deposits increased $14.0 million, 5% to $284.9 million
Gross loans increased $4.9 million, 3% to $177.2 million
Total assets increased $14.7 million, 5%, to $313.9 million
Net income increased $232 thousand, 43%, to $767 thousand

NINE-MONTHS ENDED: SEPTEMBER 30, 2011 COMPARED TO SEPTEMBER 30, 2010

Total deposits increased $19.7 million, 7% to $284.9 million
Gross loans increased $10.4 million, 6% to $177.2 million
Total assets increased $20.7 million, 7%, to $313.9 million
Net income increased $655 thousand, 61%, to $1.8 million

The bank's non-interest income increased $313,280 to $1.1 million as of September 30, 2011 compared to the third quarter of the prior year.

Non-interest bearing deposits represented 39% of total deposits as of September 30, 2011, one of the strongest ratios in the industry.

Santa Cruz County Bank has been rated a 5-Star "superior" bank by Bauer Financial, Inc. for its financial performance for the second quarter ended June 30, 2011. Previous to this rating Santa Cruz County Bank was rated 4-Star "excellent" for eleven consecutive quarters.

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, all of which have 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 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, 2011

			Change			Change				Change
	Quarter ended 9/30/11	Quarter ended 6/30/11	$	%	Quarter ended 9/30/10	$	%	Year ended 12/31/10		$	%

Balance Sheet

Total assets	$ 313,850,937	$ 299,105,147	$ 14,745,790	5%	$ 293,135,211	$ 20,715,726	7%	$ 284,906,203		$ 28,944,734	10%
Gross loans	177,249,886	172,349,451	4,900,435	3%	166,812,652	10,437,234	6%	181,450,788		(4,200,902)	-2%
Allowance for loan losses	4,013,614	3,815,266	198,348	5%	3,515,415	498,199	14%	3,558,521		455,093	13%
Non interest-bearing deposits	109,682,502	97,628,052	12,054,450	12%	95,912,626	13,769,876	14%	94,326,653		15,355,849	16%
Total deposits	284,906,192	270,885,162	14,021,030	5%	265,159,044	19,747,148	7%	253,416,044		31,490,148	12%
Shareholders' equity	25,554,038	25,011,061	542,977	2%	20,968,366	4,585,672	22%	23,570,352		1,983,686	8%

Income Statement										Change
								Nine-months ended 9/30/11	Nine-months ended 9/30/10	$	%
Interest income	3,222,547	3,227,189	(4,642)	-0.1%	3,167,389	55,158	2%	$ 9,622,073	$ 9,409,050	$ 213,023	2%
Interest expense	145,094	147,329	(2,235)	-2%	219,241	(74,147)	-34%	447,109	778,341	(331,232)	-43%
Net interest income	3,077,453	3,079,860	(2,407)	-0.1%	2,948,148	129,305	4%	9,174,964	8,630,709	544,255	6%

Provision for loan losses	230,000	300,000	(70,000)	-23%	300,000	(70,000)	-23%	1,112,500	851,099	261,401	31%
Non-interest income	1,079,556	766,276	313,280	41%	628,662	450,894	72%	2,728,057	1,709,225	1,018,832	60%
Non-interest expense	2,602,802	2,666,764	(63,962)	-2%	2,523,988	78,814	3%	7,859,622	7,636,075	223,547	3%
Net income before taxes	1,324,207	879,372	444,835	51%	752,822	571,385	76%	2,930,899	1,852,760	1,078,139	58%
Income tax expense/(credit)	557,593	344,406	213,187	62%	299,941	257,652	86%	1,175,782	762,750	413,032	54%
Net income after taxes	$ 766,614	$ 534,966	231,648	43%	$ 452,881	313,733	69%	$ 1,755,117	$ 1,090,010	665,107	61%

BASIC EARNINGS PER SHARE	$ 0.40	$ 0.28			$ 0.27			$ 0.92	$ 0.65
Book value per share	$ 13.29	$ 13.10			$ 12.58

Ratios
Net interest margin	4.14%	4.64%			4.30%			4.48%	4.48%
Equity capital-to-total assets	8.1%	8.4%			7.2%			8.3%	7.2%