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Santa Cruz County Bank reports profitable year; deposits climb by $3.3 million

January 25, 2012

Santa Cruz County Bank posted a profit of $2.4 million for the year ending Dec. 31, 2011, up 33 percent from the year before.

Loans by the locally owned bank totaled $191 million, up 5 percent from the previous year and up 8 percent from the previous quarter.

"We had a really good year," said David Heald, Santa Cruz County Bank president and chief executive officer. "Loan production for the fourth quarter was exceptional. We wrote $27 million in new loans in the fourth quarter."

Doctors and dentists are taking advantage of low interest rates to buy their own buildings, Heald said, noting one of the loans was for a veterinary hospital. The bank also made $3.3 million in loans for two solar energy projects.

H.A. Rider & Sons invested more than $1 million in a rooftop 342 kilowatt solar system for two bottling warehouses on Freedom Boulevard in Watsonville. The system was completed in December and qualified for rebates, according to Tom Rider, who expects it to pay for itself in five years.

Heald said new loans for the year totaled $81.7 million, up from $51 million the year before, and loan payoffs during the year totaled $34 million.

"We'd like to see more loans," he said, describing interest rates as "the lowest in my lifetime. My parents had (a mortgage with) 5.5 percent interest. Now 30-year fixed loans are below 4 percent."

To borrow funds for a month, the bank paid 52 basis points in 2010, he said, but now, it's paying 17 basis points.

A basis point is a single unit that equals 1/100 of a percentage point.

Year-end earnings were $1.27 per share, up from $1.10 per share the year before.

Fourth-quarter earnings were $674,000, down 12 percent from the prior quarter, which Heald said was due to a drop in non-interest income due to the sale of securities and reinvestment of those funds in tax-exempt municipal bonds.

Deposits grew $3.3 million to $288 million during the quarter, spurred by Bank Transfer Day, a consumer-led revolt against big banks.

"Move Your Money brought money in the door," Heald said. "In all but the South County branch, we had twice the number of new accounts opened."

Deposits grew 14 percent during the year, and grew 1 percent during the fourth quarter, which Heald said was unusual.

"We broke a trend," he said, explaining that fourth-quarter deposits had been flat or down the previous three years due to customers withdrawing $6 million to $8 million in December to pay taxes.

Assets grew to $320 million, up 2 percent for the quarter and 12 percent for the year.

Shareholders equity increased to $26.3 million, up 3 percent during the quarter and 12 percent for the year.

The bank will mark eight years in February.

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