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Security California Bancorp Reports 54% Increase in Net Income for Second Quarter of 2015

RIVERSIDE, Calif., July 16, 2015 (GLOBE NEWSWIRE) -- Security California Bancorp (OTCBB:SCAF), the parent company of Security Bank of California, reported net income of $1.3 million, or 23 cents per share, for the second quarter of 2015, an increase of 54% from net income of $858,000, or 15 cents per share, for the second quarter of 2014.

For the six months ended June 30, 2015, the Company reported net income of $2.5 million, or 44 cents per share, an increase of 35% from net income of $1.9 million, or 32 cents per share, for the same period in 2014.

Second Quarter 2015 Year-Over-Year Highlights

  • Total loans were $468 million, an increase of 20%
  • Total deposits were $573 million, an increase of 23%
  • Total assets were $665 million, an increase of 13%

"We continue to steadily attract new customers to the Bank, which has helped us increase our net income by 35% over the first half of 2015," said James A. Robinson, Chairman and CEO of Security California Bancorp. "We are seeing healthy economic conditions within our core markets and solid loan demand among the small- and middle-market businesses we serve. We anticipate that our acquisition of a branch in the Temecula/Murrieta market will be completed during the third quarter, which will provide another catalyst for the growth of our franchise. We have a solid pipeline of new business development opportunities, which we expect to result in a continuation of our positive trends during the second half of the year."

Second Quarter 2015 Summary Results

Net Interest Income and Net Interest Margin

Net interest income for the second quarter of 2015 was $5.8 million, an increase of 12% from $5.2 million in the second quarter of 2014. The increase in net interest income was primarily driven by growth in total loans outstanding.

Net interest margin was 3.66% in the second quarter of 2015, an increase of 6 basis points from the prior quarter. The increase in net interest margin was primarily attributable to higher yields on loans.

Non-interest Income

Non-interest income for the second quarter of 2015 was $1.1 million, an increase of 30% from $858,000 in the same quarter of the prior year. The increase in non-interest income was primarily attributable to higher gains on sales of SBA loans.

Non-interest Expense

Non-interest expense was $4.4 million for the second quarter of 2015, an increase of 7% from $4.2 million in the year-ago period. The increase in non-interest expense was primarily due to an increase in personnel to support the Bank's growth.

Balance Sheet

Total Assets

Total assets were $665 million at June 30, 2015, an increase of 13% from $591 million at June 30, 2014, driven by strong growth in both loans and deposits.

Total Loans

Total loans were $468 million at June 30, 2015, an increase of 20% from $391 million at June 30, 2014. The increase in total loans was driven by growth in the commercial and industrial, commercial real estate, and construction portfolios.

Total Deposits

Total deposits were $573 million at June 30, 2015, an increase of 23% from $465 million at June 30, 2014. The increase in total deposits was primarily driven by the addition of new client relationships.

Asset Quality

Total non-performing assets were $5.1 million, or 0.76% of total assets, at June 30, 2015, compared with $5.0 million, or 0.78% of total assets, at March 31, 2015.

At June 30, 2015, total non-accrual loans were $5.1 million, or 1.08% of total loans, compared with $5.0 million, or 1.10% of total loans, at March 31, 2015.

During the second quarter of 2015, the Company had $33,000 in net recoveries, compared with net recoveries of $440,000 in the first quarter of 2015.

The Company recorded a provision for loan losses of $234,000 in the second quarter of 2015 to reflect the growth in the loan portfolio. The allowance for loan losses as a percentage of gross loans increased to 1.54% at June 30, 2015 from 1.53% at March 31, 2015.

Capital

Security California Bancorp remained well capitalized as of June 30, 2015. All of the Company's capital ratios exceeded minimum regulatory standards for "well capitalized" institutions. As of June 30, 2015, the Company's Tier 1 leverage ratio was 11.31%, the Common Equity Tier 1 capital ratio was 13.93%, the Tier 1 risk-based ratio was 13.93% and the Total risk-based ratio was 15.18%, compared with the regulatory minimum standards of 4%, 4.5%, 6% and 8%, respectively.

About Security California Bancorp and Security Bank of California

Security California Bancorp is the parent of Security Bank of California and is traded on the OTC Markets under the symbol SCAF. Through its full service offices in Riverside, San Bernardino, Redlands, Orange and Palm Desert, Security Bank of California is a full service community bank, focusing on providing banking services for businesses, their owners and families, and successful individuals. The bank also has Loan Production Office ("LPO") in Irwindale. To learn more about the bank's products and services, call 951-368-2265 or visit the company's Web site at www.securitybankca.com.

Forward Looking Statements

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 and Subsidiaries
Consolidated Income Statements (Unaudited)
(Dollars in Thousands)
Three months ended Six months ended
6/30/2015 3/31/2015 6/30/2014 6/30/2015 6/30/2014
INTEREST INCOME
Loans, with fees $ 5,525 $ 5,038 $ 4,720 $ 10,563 $ 9,141
Deposit with banks 30 27 23 56 45
Investment securities 683 701 820 1,384 1,709
Total interest income 6,238 5,765 5,564 12,003 10,895
INTEREST EXPENSE
Deposits 420 391 350 811 692
Other 8 7 15 14 29
Total interest expense 428 398 365 826 721
Net interest income 5,810 5,368 5,198 11,178 10,174
Provision for loan losses 234 (181) 429 53 677
Net income after provision for loan losses 5,575 5,549 4,769 11,124 9,497
NON INTEREST INCOME
Service charges on deposits 251 254 254 505 487
Gain on sale of securities 69 24 51 93 51
SBA gains on sales and fees 548 292 371 840 831
Other 245 126 183 371 354
Total non interest income 1,113 696 858 1,809 1,722
NON INTEREST EXPENSE
Salaries & benefits 2,728 2,681 2,612 5,409 5,145
Premises & equipment 469 451 481 920 929
Other 1,240 1,071 1,064 2,311 1,964
Total non interest expense 4,436 4,203 4,157 8,640 8,037
Net income before taxes 2,252 2,041 1,471 4,293 3,181
Provision for income tax 934 850 614 1,784 1,325
NET INCOME $ 1,319 $ 1,191 $ 858 $ 2,510 $ 1,857
EARNINGS PER SHARE
Diluted earning per share $ 0.23 $ 0.21 $ 0.15 $ 0.44 $ 0.32
Average outstanding common shares 5,670,916 5,670,916 5,669,797 5,670,916 5,669,797
PERFORMANCE INDICATORS
Return on average assets 0.81% 0.78% 0.60% 0.79% 0.66%
Return on average equity 7.20% 6.70% 5.20% 6.96% 5.75%
Efficiency ratio 64.73% 69.60% 69.21% 67.01% 67.86%
Security California Bancorp & Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
As of
06/30/15 03/31/15 12/31/14 09/30/14 06/30/14
ASSETS
Cash & due from banks $ 10,227 $ 12,554 $ 13,730 $ 12,097 $ 16,158
Interest bearing deposits with banks 35,628 30,285 37,012 35,523 26,783
Investment Securities 142,367 136,486 137,323 138,272 144,468
Loans:
Commercial & Industrial 177,425 168,128 157,447 157,448 138,713
Real Estate - Commercial 239,830 240,923 220,757 213,281 213,264
Real Estate - Construction 23,662 18,439 14,509 12,350 8,040
Real Estate - Consumer 21,809 22,382 23,747 22,579 25,940
Other 4,964 4,578 5,051 5,087 5,292
Total 467,690 454,450 421,512 410,745 391,249
Allowance for loan losses (7,206) (6,939) (6,680) (6,454) (6,160)
Loans, net 460,484 447,511 414,832 404,291 385,089
Premises & equipment 4,002 4,003 4,075 3,821 3,831
Accrued interest 1,861 1,784 1,716 1,721 1,713
Other assets 10,414 9,208 9,554 11,175 13,230
TOTAL ASSETS $ 664,982 $ 641,831 $ 618,242 $ 606,900 $ 591,273
LIABILITIES
Deposits:
Demand non interest bearing $ 247,984 $ 239,620 $ 232,187 $ 217,237 $ 194,079
Demand interest bearing 25,659 42,519 29,737 21,427 21,092
Money market & savings 198,472 172,673 171,322 180,813 158,667
Time certificate 101,018 101,852 92,534 94,925 91,381
Total deposits 573,133 556,665 525,780 514,402 465,219
Other borrowings 18,300 11,000 19,000 22,000 57,750
Accrued interest & other liabilities 634 1,312 2,495 2,199 1,425
Total Liabilities 592,068 568,976 547,275 538,601 524,394
SHAREHOLDERS' EQUITY
Preferred stock 7,133 7,133 7,133 7,133 7,133
Common stock 56,626 56,616 56,607 56,596 56,569
Retained earnings 10,835 9,516 8,326 7,082 6,033
Accumulated other comprehensive income (1,680) (411) (1,098) (2,513) (2,857)
Total Shareholders' Equity 72,915 72,855 70,967 68,299 66,878
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 664,982 $ 641,831 $ 618,242 $ 606,900 $ 591,273
CAPITAL ADEQUACY
Tier 1 leverage ratio 11.31% 11.69% 11.84% 11.95% 12.09%
Common Equity Tier 1 capital ratio 13.93% 13.93% N/A N/A N/A
Tier 1 risk-based capital ratio 13.93% 13.93% 14.77% 14.89% 15.24%
Total risk-based capital ratio 15.18% 15.18% 16.02% 16.15% 16.49%
Tangible Equity / Tangible Total Assets 10.93% 11.31% 11.44% 11.21% 11.27%
Outstanding common shares 5,670,916 5,670,916 5,670,916 5,670,916 5,670,916
Book value (total equity) per common share $ 12.86 $ 12.85 $ 12.51 $ 12.04 $ 11.79
Security California Bancorp & Subsidiaries
Consolidated Average Balance Sheets and Yield Data (Unaudited)
(Dollars in thousands)
Three months ended - 2015
June 30 March 31
Yields Interest Yields Interest
Average or Income/ Average or Income/
Balance Rates Expense Balance Rates Expense
ASSETS
Interest earning assets
Loans, with fees $ 461,734 4.80% $ 5,525 $ 434,846 4.70% $ 5,038
Interest bearing with banks 35,193 0.34% 30 33,520 0.32% 27
Investment securities 139,150 1.96% 683 135,929 2.06% 701
Total interest earning assets 636,076 3.93% $ 6,238 604,295 3.86% $ 5,765
Non interest earning assets
Cash & due from banks 11,887 11,366
All other assets 6,710 6,663
Total non interest earning assets 18,597 18,029
TOTAL ASSETS $ 654,674 $ 622,324
LIABILITIES & SHAREHOLDERS' EQUITY
Interest bearing liabilities
Deposits
Demand interest bearing $ 29,765 0.14% $ 10 $ 35,804 0.15% $ 14
Money market & savings 186,753 0.52% 242 172,022 0.51% 217
Time certificate 101,087 0.67% 168 99,287 0.66% 160
Other borrowings 15,766 0.19% 8 15,905 0.17% 7
Total interest bearing liabilities 333,371 0.51% $ 428 323,018 0.50% $ 398
Non interest bearing liabilities
Demand deposits 247,360 225,237
Accrued interest & other liabilities 514 2,014
Total non interest bearing liabilities 247,873 227,251
Shareholders' equity 73,429 72,055
TOTAL LIABILITIES & SHAREHOLDERS'S EQUITY $ 654,674 $ 622,324
NIM and NET INTEREST INCOME 3.66% $ 5,810 3.60% $ 5,368
Security California Bancorp & Subsidiaries
Consolidated Average Balance Sheets and Yield Data (Unaudited)
(Dollars in thousands)
Three months ended June 30,
2015 2014
Yields Interest Yields Interest
Average or Income/ Average or Income/
Balance Rates Expense Balance Rates Expense
ASSETS
Interest earning assets
Loans, with fees $ 461,734 4.80% $ 5,525 $ 390,528 4.85% $ 4,720
Interest bearing with banks 35,193 0.34% 30 22,054 0.43% 23
Investment securities 139,150 1.96% 683 142,105 2.31% 820
Total interest earning assets 636,076 3.93% 6,238 554,687 4.02% $ 5,564
Non interest earning assets
Cash & due from banks 11,887 10,361
All other assets 6,710 9,007
Total non interest earning assets 18,597 19,368
TOTAL ASSETS $ 654,674 $ 574,054
LIABILITIES & SHAREHOLDERS' EQUITY
Interest bearing liabilities
Deposits
Demand interest bearing $ 29,765 0.14% $ 10 $ 17,304 0.14% $ 6
Money market & savings 186,753 0.52% $ 242 157,657 0.51% 202
Time certificate 101,087 0.67% $ 168 90,636 0.63% 142
Other borrowings 15,766 0.19% $ 8 43,881 0.14% 15
Total interest bearing liabilities 333,371 0.51% 428 309,477 0.47% $ 365
Non interest bearing liabilities
Demand deposits 247,360 197,297
Accrued interest & other liabilities 514 1,122
Total non interest bearing liabilities 247,873 198,419
Shareholders' equity 73,429 66,158
TOTAL LIABILITIES & SHAREHOLDERS'S EQUITY $ 654,674 $ 574,054
NIM and NET INTEREST INCOME 3.66% $ 5,810 3.76% $ 5,199
Security California Bancorp & Subsidiaries
Consolidated Average Balance Sheets and Yield Data (Unaudited)
(Dollars in thousands)
Six months ended June 30,
2015 2014
Yields Interest Yields Interest
Average or Income/ Average or Income/
Balance Rates Expense Balance Rates Expense
ASSETS
Interest earning assets
Loans, with fees $ 448,290 4.75% $ 10,563 $ 380,269 4.85% $ 9,141
Interest bearing with banks 34,357 0.33% 56 20,871 0.44% 45
Investment securities 137,539 2.01% 1,384 146,781 2.33% 1,709
Total interest earning assets 620,186 3.90% $ 12,003 547,921 4.00% $ 10,895
Non interest earning assets
Cash & due from banks 11,627 10,388
All other assets 6,687 8,279
Total non interest earning assets 18,313 18,667
TOTAL ASSETS $ 638,499 $ 566,588
LIABILITIES & SHAREHOLDERS' EQUITY
Interest bearing liabilities
Deposits
Demand interest bearing $ 32,785 0.15% $ 24 $ 18,001 0.14% $ 13
Money market & savings 179,388 0.52% 459 154,193 0.51% 391
Time certificate 100,187 0.66% 328 90,215 0.65% 289
Other borrowings 15,836 0.18% 14 44,376 0.13% 29
Total interest bearing liabilities 328,195 0.51% $ 826 306,786 0.47% $ 721
Non interest bearing liabilities
Demand deposits 236,298 193,390
Accrued interest & other liabilities 1,264 1,345
Total non interest bearing liabilities 237,562 194,735
Shareholders' equity 72,742 65,067
TOTAL LIABILITIES & SHAREHOLDERS'S EQUITY $ 638,499 $ 566,588
NIM and NET INTEREST INCOME 3.63% $ 11,178 3.74% $ 10,174
Security California Bancorp & Subsidiaries
Consolidated Asset Quality and Credit Data (Unaudited)
(Dollars in thousands)
As of
06/30/15 03/31/15 12/31/14 09/30/14 06/30/14
TOTAL ASSETS 664,982 641,831 618,242 606,900 591,273
GROSS LOANS 467,690 454,450 421,512 410,745 391,249
ALLOWANCE FOR LOAN LOSSES
Beginning of period $ 6,939 $ 6,680 $ 6,454 $ 6,160 $ 6,064
Quarterly movement:
Provision for loan losses 234 (181) 99 164 429
Charge-offs (20) (176) -- -- (390)
Recoveries 53 616 127 130 58
End of period $ 7,206 $ 6,939 $ 6,680 $ 6,454 $ 6,160
NON PERFORMING ASSETS
Loans accounted for on a non-accrual basis $ 5,050 $ 4,994 $ 5,169 5,261 5,390
Loans with principal and/or interest contractually past due 90 days and still accruing interest -- -- -- -- --
Non performing loans 5,050 4,994 5,169 5,261 5,390
Other real estate owned -- -- -- -- 747
Non performing assets 5,050 4,994 5,169 5,261 6,137
Loans restructured and in compliance with modified terms 1,274 1,298 563 659 --
Non performing assets and restructured loans $ 6,324 $ 6,292 $ 5,732 $ 5,920 $ 6,137
Non Performing Loans by Asset Type
Commercial & Industrial $ 3,916 $ 3,935 $ 4,093 $ 4,162 $ 4,265
SBA 272 179 185 193 201
Consumer 862 880 891 906 924
Other -- -- -- -- --
Total non performing loans by asset type $ 5,050 $ 4,994 $ 5,169 $ 5,261 $ 5,390
ASSET QUALITY
Allowance for loan losses / gross loans 1.54% 1.53% 1.58% 1.57% 1.57%
Allowance for loan losses / non performing loans 142.69% 138.95% 129.24% 122.67% 114.29%
Non performing assets / total assets 0.76% 0.78% 0.84% 0.87% 1.07%
Non performing loans /gross loans 1.08% 1.10% 1.23% 1.28% 1.38%
Net quarterly charge-offs / gross loans 0.00% -0.04% 0.00% 0.00% -0.10%

CONTACT: Matt Andrejczak Financial Profiles for Security Bank of California (310) 622-8241 mandrejczak@finprofiles.com Thomas M. Ferrer EVP & Chief Financial Officer (951) 368-2268 tferrer@securitybankca.comSource:Security California Bancorp