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Deposits increase at County Bank

July 26, 2005

The following is an article from the Santa Cruz Sentinel

July 20, 2005 Deposits increase at County Bank By GWEN MICKELSON Sentinel staff writer SANTA CRUZ — Santa Cruz County Bank reported a 16 percent increase in deposits compared with the previous quarter, but slowed from the first quarter when deposits surged 43 percent. Total deposits were up $8 million in the locally owned bank’s second quarter, ended June 30. The bank has been in operation for more than 16 months. "In terms of dollar increases, an $8 million quarter is really excellent, and if we can keep that going, we’d be really happy," said John Rossell, president and chief executive officer. Financial highlights for the second quarter 2005 compared with the bank’s first quarter 2005, ended March 31, were: Total deposits increased $8 million to $56.3 million. Total loans increased $10 million to $47.7 million. Total assets increased $8 million to $67 million. Advertisement The second-quarter results compared with the same quarter of the previous year were: Total deposits increased $35 million, or 165 percent. Total loans increased $32 million, or 211 percent. Total assets increased $34 million, or 103 percent. The bank’s operating loss for the quarter was $169,597, a 51 percent improvement over the loss of the first quarter of $346,838, and a 68 percent improvement over the loss of the same quarter a year ago of $524,124. The bank opened its second full-service banking office in Scotts Valley in November and another in Watsonville in February, giving it three branches within a year of starting in February 2004. "I think the important thing to keep in mind with these guys is they’ve opened three branches early on," said Dave Bonaccorso, vice president of banking/financial services stock brokerage and investment bank Hoefer & Arnett Inc. in San Francisco. "For a lot of banks, you see them losing a lot of money 18, 36 months in carrying only one branch." Also, said Bonaccorso, the bank’s ratio of noninterest-bearing deposits to deposits stands at 35 percent, which he said is "pretty strong," since "anything over 25 percent is good." The strong percentage is "primarily because we have a good mix of business accounts," said Rossell. "That translates into good interest margins." About 55 percent of the bank’s deposits are business and 45 percent personal, said Rossell. Based on typical patterns, new banks need to be at about $100 million in total assets to break even, said Rossell, which historically has taken most banks about two years. But with the bank’s strong margins, Rossell thinks Santa Cruz County Bank’s break-even point could be closer to $80 million to $90 million. Santa Cruz County Bank’s common stock is listed on the Over the Counter Bulletin Board under the ticker SCZC.OB. Shares closed at $19 on its last trade May 16, no change from the previous close. The 52-week range is $17- $21. Contact Gwen Mickelson at gmickelson@santacruzsentinel.com. Company profile WHAT: Publicly owned community bank based in Santa Cruz with branches in Scotts Valley and Watsonville. EMPLOYEES: 27. STOCK: Shares, trading on Over the Counter Bulletin Board as SCZC.OB, listed at $19. It last traded May 16. The 52-week range is $17-$21. FINANCIALS: After 16 months, deposits were about $56 million with assets of about $67 million. www.sccountybank.com.

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