Santa Cruz County Bank Reports Record Earnings for the Quarter Ending September 30, 2022

SANTA CRUZ, CA – October 20, 2022: Santa Cruz County Bank (OTCQX: SCZC), with assets of $1.86 billion, is a top-rated community bank headquartered in Santa Cruz County. Today, the Bank announced unaudited earnings for the third quarter ended September 30, 2022. Net income for the quarter was $9.2 million, 44% over prior quarter, and 67% or $3.7 million more than the same quarter in 2021. Year-to-date earnings for the nine-month period ended September 30, 2022 were a record $20.9 million, $4.3 million or 26% over 2021. All share data for prior periods have been adjusted to reflect stock dividends and stock splits.

Santa Cruz County Bank President and CEO, Krista Snelling commented, “We had an excellent quarter, in which we set new records for the Bank’s assets, gross loans (excluding PPP), deposits and quarterly net income. In addition to these milestones, we are pleased to report return on average assets over 2% and a record efficiency ratio under 37%. These results reflect the impact of the higher rate environment on earning assets and our focus on the implementation of cost-saving, digital transformation solutions designed to minimize resources while enhancing the client experience.

For the quarter, gross loans (excluding PPP) were up by $40.5 million. New loan originations surpassed $101.4 million and were offset by over $62.1 million in non-PPP payoffs, primarily in construction loans, as expected, due to the easing of supply chain constraints which has allowed for the completion of backlogged projects.

We are pleased to report new production by the Bank’s new Asset-Based Lending Division within our record quarterly non-PPP gross loan totals for the first time. We enter the fourth quarter looking forward to celebrating the opening of our new Salinas branch and welcoming the community to our 8th full-service banking office.”

Financial Highlights

Performance highlights as of and for the quarter ended September 30, 2022 included the following:

Record assets of $1.86 billion as of September 30, 2022, an increase of $101.1 million or 6%, compared to June 30, 2022, and an increase of $162.4 million or 10%, compared to September 30, 2021.
Record gross loans (excluding PPP) of $1.23 billion, an increase of $40.5 million or 3%, compared to June 30, 2022, and an increase of $183.4 million or 17%, compared to September 30, 2021.
Record deposits of $1.66 billion, an increase of $101.0 million or 6%, compared to June 30, 2022, and an increase of $157.5 million or 11%, compared to September 30, 2021.
Record quarterly net income of $9.2 million, an increase of $2.8 million or 44%, compared to June 30, 2022, and an increase of $3.7 million or 67% compared to the quarter ended September 30, 2021.
Basic earnings per share of $1.08 for the quarter ended September 30, 2022.
Provision for loan losses was a reversal of $317 thousand for the third quarter of 2022 compared to contributions of $622 thousand for the trailing quarter and $2.1 million for the same period in 2021. Based on quantitative factors alone the provision would have increased for the quarter; however, this was offset by a decrease in construction loans and elimination of a qualitative factor related to the pandemic.
Pretax, pre-provision net earnings were $12.7 million for the quarter ended September 30, 2022, compared to $9.7 million and $9.9 million for the quarters ended June 30, 2022 and September 30, 2021, respectively.
Net interest margin was 4.22% for the third quarter of 2022, as compared to 3.90% in the trailing quarter and 4.04% in the same quarter of 2021.
For the quarters ended September 30, 2022 and June 30, 2022, return on average assets was 2.01% and 1.49%, respectively, and the return on average tangible equity was 22.38% and 16.23%, respectively.
Efficiency ratio was 36.17% for the third quarter of 2022, as compared to 44.48% in the trailing quarter and 42.63% in the same quarter of 2021.
All capital ratios were above regulatory requirements for a well-capitalized institution with a total risk-based capital ratio of 14.46%, as compared to 14.48% in the trailing quarter and 15.12% in the same quarter of 2021.
Nonaccrual loans totaled $2.4 million, or 0.19% of total loans as compared to $35 thousand in the trailing quarter, and $384 thousand in the same quarter of 2021.
Book value per share after cash dividends increased to $22.06 at September 30, 2022 compared to $21.73 at June 30, 2022.

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