Security California Bancorp's Growth in Assets in Double Digit over Same Period Last Year

Security California Bancorp's Growth in Assets in Double Digit over Same Period Last Year

RIVERSIDE, Calif.--(BUSINESS WIRE)-- Security California Bancorp ("Company") (OTCBB: SCAF) reported today that as of September 30, 2012 its Total Assets grew by 23% or $90 million to $488 million compared to the same period a year ago. In the third quarter, the Company has recognized an additional provision for loan and lease losses ("PLLL") of $1.8 million specifically related to an impaired loan account that affected its year to date net earnings through the end of September, which is $305 thousand or 4 cents per share.

The growth in Total Assets was driven by an increase in Total Deposits that grew from a year ago by $89 million or 27% to $423 million at September 30. This increase, as previously reported, is directly related to the combination of the acquisition of $28 million in early 2012 of a branch operation in Orange County, and the "organic" growth of $61 million, which represents 69% of the total increase. The Company has not accessed the brokered deposit market and has not permanently borrowed from its wholesale funding credit lines.

"Despite the additional third quarter provision, related to previously identified credits, we are very pleased with the bank's core earnings," commented James A. Robinson, Chairman and CEO of Security California Bancorp and Security Bank of California. "We are confident that our consistent organic growth in earning assets will enable the Company to generate sustainable earnings that will meet our shareholder's expectations."

Regarding the Company's growth in our earning assets, the following are the changes in major balance sheet accounts that have contributed to the improving risk based earning assets base, sustaining core earnings and providing stable liquidity:

Total Short Term Investments with correspondent banks moved up by $24 million or 73% to $58 million.

Total Investments in Securities grew to $104 million or 141% from $43 million. The securities portfolio consists of government agency and agency sponsored debenture bonds and mortgage backed securities.

Total Loans organically grew by $12 million or 4% to $310 million, concentrated in the C & I segment of the loan portfolio in line with the business strategy of the Company.

Total Deposits grew to an impressive level of $423 million or growth of $91 million, of which $187 million were Non Interest Bearing DDAs, which grew by $48 million or 35% from a level of $139 million.

Loan Portfolio Profile: The Company's performing loans amounted to $301 million or 98% of the total loan portfolio. The Allowance for Loan and Lease Losses ("ALLL") of $5.8 million was 1.91% of the total loans. The Company's Texas Ratio continues to be exceptional at 13.19%. A Texas Ratio of 100% or greater indicates a higher probability of problems in the future. (Texas Ratio is calculated as follows: Non-performing assets + 90 day past due loans divided by Tangible Equity + ALLL)

Operating Performance: The Company's net income for the nine months ended September 30, 2012 is $305 thousand. The following are the changes in major components of the net earnings in addition to the elevated year to date PLLL of $4.3 million, which management believes is a pro active action to recognize the fair value of the remaining impaired loan accounts.

Net Interest Income is $11.951 million, 11% or $$1.196 million higher than the same period last year, which is driven by volume growth.

Non-Interest Income is $1.981 million, lower by $169 thousand or 7.9% compared to last year, primarily due to the timing of boarding SBA gain and referral premium fees.

Non-Interest Expense is $9.070 million, higher by $914 thousand or 11% than last year, principally due to restructuring costs related to the acquisition in early 2012 of our branch operation in Orange County and the full expense effect of the Irwindale Loan Production Office that was established in the last quarter of 2011.

Capital Adequacy: The Company with a capital of $64 million is well capitalized with satisfactory cushions over regulatory requirements. The Tier 1 leverage ratio is 13.23%; Tier 1 risk based ratio is 17.49% and Total risk based ratio is 18.75% compared to regulatory minimum benchmarks of 5.00%, 6.00% and 10.00%, respectively.

Security California Bancorp, which is traded on the Over the Counter Bulletin Board under the symbol SCAF.OB. It offers, through its wholly owned subsidiary, Security Bank of California, personalized banking services to businesses and individuals through its full service offices in Riverside, San Bernardino, Redlands and Orange. It also has a Loan production Office in Irwindale.

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Security California Bancorp
Security Bank of California

Forward Looking Statement Disclaimer -
General Form

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.

Security California Bancorp & Subsidiaries
Statements of Condition (Unaudited)
(In thousands)
As ofGrowth / Change
September 30September 30
 2012  2011  $  % 
Cash and due from banks$9,707$20,894$(11,188)-54%
Interest bearing balances with banks57,92633,53624,38973%
Investment securities available-for-sale102,95542,76060,195141%
Loans, net of unearned income309,783298,00911,7744%
Less: Allowance for loan and lease losses (ALLL) (5,826) (5,828) 2  0%
Net Loans303,957292,18111,7764%
Premises and equipment, net1,2141,406(192)-14%
Accrued interest receivable1,4001,2931078%
Other assets 10,886  5,532  5,354  97%
Total Assets$488,045 $397,604 $90,441  23%
Noninterest-bearing deposits$186,932$138,511$48,42135%
Interest-bearing deposits 235,736  195,305  40,431  21%
Total deposits422,668333,81688,85227%
Brokered deposits--
Other borrowings - FHLB---0%
Accrued interest and other liabilities 1,398  1,219  180  15%
Total Liabilities424,067335,03589,03227%
Shareholders' Equity 63,978  62,569  1,409  2%
Total Liabilities and Shareholders' Equity$488,045 $397,604 $90,441  23%
Security California Bancorp & Subsidiaries
Statements of Income (Unaudited)
(In thousands)
3 Months Quarter to Date9 Months Year to Date
September 30September 30September 30September 30
 2012  2011  2012  2011 
Net interest income4,0503,70711,951


Provision for loan & lease losses (PLLL) 1,830  692  4,299  1,272 
Net interest income
after PLLL2,2203,0157,6529,483
Non interest income5939681,9812,150
Non interest expense 2,981  2,700  9,070  8,166 
Net income (loss) before taxes(168)1,2835623,467
Provision for income taxes (64) 567  258  1,539 
Net income (loss) after taxes$(104)$715 $305 $1,928 
% of Change from Previous Period-114%-84%
Security California Bancorp & Subsidiaries
Regulatory Capital Ratios (Unaudited)
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