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New county bank opens doors

February 7, 2004

The following is an article from the Santa Cruz Sentinel

By JENNIFER PITTMAN
Sentinel correspondent

SANTA CRUZ — On the first day of banking at Santa Cruz County Bank, Carolyn Hyatt walked into a former pool hall, now a freshly remodeled bank lobby, to open a business account.

Hyatt, one of nearly 500 of the bank’s shareholders, was one of the first accounts at the bank that quietly opened to a casual flow of customers willing to initiate the new system.

"I think every small autonomous group like us in Santa Cruz should have a local bank that understands local issues," Hyatt said Friday.

It was a smooth beginning for bank organizers who worked under a tight budget and fast approaching deadline. Just five months earlier a handful of the bank’s executives had huddled in the unheated, stripped out building at 325 Soquel Ave. with a flashlight shining their PowerPoint presentation against a bare wall to practice before a presentation to potential investors.

The kickoff for the public stock offering in December went well, drawing more than 300 investors.

The offering generated "substantially more than the $11 million we were looking for," said John Rossell, chief executive officer and president. "When the tsunami hit, we were approved to do that much, but then the second tsunami hit. We had to close early, and we had to return a lot of money."

The offering closed Jan. 26.

In the end, the roster of investors had to be cut to bring the total to below 500, a number that triggers additional securities compliance responsibilities.

"That was one of our biggest challenges," said David Heald, executive vice president and chief credit officer, "to be fair and equitable."

The first cut was nearly all of the investors who were neither Santa Cruz County residents nor affiliated with a local business, Heald said.

It took almost until midnight to go through all the names and decide who would stay in as a shareholder and who would not.

"There was a lot of emotion in that room," Heald said.

They left as the sun was coming up the next day.

Rossell said 100 percent of the shareholders have a connection with the community. About 25 percent of the investors are from Watsonville, where the bank intends to open a second branch within the next three to six months.

"The big challenge now is to get some people in here and get some loans on the books," Rossell said. "That’s where we make our money."

George Gallucci, board chairman and a founding bank organizer, said the capital stock drive was the culmination of more than three years of work.

"We were extremely gratified and overwhelmed with the results of the stock drive, which to us confirmed what we were looking for: an indication of support in the community," Gallucci said. "We think we’ve done what we set out to do in terms of our strategy to have the shareholder base be predominantly local people who will become customers of the bank."

Business was a little slow, admitted teller Brittanie King, who said she was excited to be at the new bank.

Lou Bartfield, owner of the Capitola Venetian and Rio Sands motel in Aptos, was another of the first accounts opened.

"I really felt badly that Monterey Bay and Coast Commercial were taken over by large outside companies," Bartfield said. "We had two community banks. Then, we didn’t have any. I think they’re going to do amazingly well because people in this community are really starved for a local bank with the name of the community."

Bartfield said he felt at home in the new bank — perhaps because many faces were familiar. Ten of the 15 employees are former Coast Commercial employees and another three are from Monterey Bay Bank. Two executives, Rossell and Chief Financial Officer Donald Soman, former controller of Santa Clara Bank, are from outside the area.

The bank’s first shareholder meeting is expected to be in May.

Contact Jennifer Pittman atjpitt4@aol.com.

Santa Cruz County Bank
WHAT: Privately owned community bank touting 35 customers on Day 1.

HEADQUARTERS: 325 Soquel Ave., Santa Cruz.

BACKGROUND: The privately funded bank opened Feb. 3 after a successful public stock offering.

EMPLOYEES: 15.

LEADERSHIP: John Rossell, president and chief executive officer.

INFORMATION: 457-5000; www.sccountybank.com.

FINANCIALS: Almost 500 investors purchased a minimum of 1,000 shares at $10 each to finance the bank with $13.2 million. Organizers contributed $150,000 each and directors, $250,000 each.

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