Security California Bancorp Reports 19% Increase in Net Income for First Quarter of 2015

RIVERSIDE, Calif.--()--Security California Bancorp (OTCBB: SCAF), the parent company of Security Bank of California, reported net income of $1.2 million, or 21 cents per share, for the first quarter of 2015, an increase of 19% from net income of $999,000, or 17 cents per share, for the first quarter of 2014.

First Quarter 2015 Year-Over-Year Highlights

  • Total loans were $454 million, an increase of 17%
  • Total deposits were $557 million, an increase of 21%
  • Total assets were $642 million, an increase of 11%
  • Total non-performing assets declined 3% from end of prior quarter

“We delivered another quarter of double-digit earnings growth driven by significant increases in total loans and deposits and exceptional credit quality,” said James A. Robinson, Chairman and CEO of Security California Bancorp. “We are seeing good loan demand throughout our markets and our growing reputation as a flexible, responsive and creative commercial lender continues to attract new customers to Security Bank. We are excited about our recent agreement to purchase a branch that will enable us to enter the Temecula market in a meaningful way. We believe this market is well suited for our unique approach to community banking, and adding customers in the Temecula area will serve as another catalyst for the growth of our franchise.”

First Quarter 2015 Summary Results

Net Interest Income and Net Interest Margin

Net interest income for the first quarter of 2015 was $5.4 million, an increase of 8% from $5.0 million in the first quarter of 2014. The increase in net interest income was primarily driven by growth in total loans outstanding.

Net interest margin was 3.60% in the first quarter of 2015, down 16 basis points from the prior quarter. The decrease in net interest margin was primarily attributable to a decline in loan yields due to two fewer days of interest accruals in the first quarter of 2015.

Non-interest Income

Non-interest income for the first quarter of 2015 was $696,000, a decrease of 19% from $864,000 in the same quarter of the prior year. The decline in non-interest income was primarily attributable to lower gains on sales of SBA loans due to the timing of loan production during the first quarter of 2015.

Non-interest Expense

Non-interest expense was $4.2 million for the first quarter of 2015, an increase of 8% from $3.9 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 $642 million at March 31, 2015, an increase of 11% from $580 million at March 31, 2014, primarily driven by loan growth.

Total Loans

Total loans were $454 million at March 31, 2015, an increase of 17% from $390 million at March 31, 2014. The increase in total loans was primarily driven by growth in the commercial and industrial and commercial real estate portfolios.

Total Deposits

Total deposits were $557 million at March 31, 2015, an increase of 21% from $460 million at March 31, 2014. The increase in total deposits was primarily driven by growth in non-interest bearing and interest bearing demand deposits.

Asset Quality

Total non-performing assets were $5.0 million, or 0.78% of total assets, at March 31, 2015, compared with $5.2 million, or 0.84% of total assets, at December 31, 2014.

At March 31, 2015, total non-accrual loans were $5.0 million, or 1.10% of total loans, compared $5.2 million, or 1.23% of total loans, at December 31, 2014.

During the first quarter of 2015, the Company had $440,000 in net recoveries, compared with net recoveries of $127,000 in the fourth quarter of 2014.

While the Company set aside additional reserves in the first quarter to provide for the growth in the loan portfolio, this amount was offset by the net recoveries in the quarter. As a result, no provision for loan losses was recorded in the first quarter of 2015. The allowance for loan losses as a percentage of gross loans was 1.53% at March 31, 2015.

Capital

Security California Bancorp remained well capitalized as of March 31, 2015. All of the Company’s capital ratios exceeded minimum regulatory standards for “well capitalized” institutions. As of March 31, 2015, the Company’s Tier 1 leverage ratio was 11.72%, the Tier 1 risk-based ratio was 14.16% and the Total risk-based ratio was 15.41%, compared with the regulatory minimum standards of 5%, 6% and 10%, 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
Interim Consolidated Income Statements (Unaudited)
(Dollars in Thousands)
       
Three months ended
  3/31/2015       12/31/2014       3/31/2014  
 
 
INTEREST INCOME
Loans, with fees $ 5,038 $ 5,197 $ 4,421
Deposit with banks 27 32 21
Investment securities   701     748     888  
Total interest income   5,765     5,977     5,331  
 
INTEREST EXPENSE
Deposits 391 397 342
Other   7     9     13  
Total interest expense   398     406     356  
 
Net interest income 5,368 5,571 4,975
Provision for loan losses   (181 )   213     248  
Net income after provision for loan losses
  5,549     5,358     4,727  
 
NON INTEREST INCOME
Service charges on deposits 254 250 233
Gain on sale of securities 24 33 0
SBA gains on sales and fees 292 341 460
Other   126     245     171  
Total non interest income   696     868     864  
 
NON INTEREST EXPENSE
Salaries & benefits 2,681 2,636 2,533
Premises & equipment 451 427 448
Other   1,071     1,069     900  
Total non interest expense   4,203     4,132     3,881  
 
Net income before taxes 2,041 2,095 1,710
Provision for income tax   850     851     711  
 
NET INCOME $ 1,191   $ 1,244   $ 999  
 
 
EARNINGS PER SHARE
Diluted earning per share $ 0.21 $ 0.22 $ 0.17
Average outstanding common shares 5,670,916 5,670,361 5,669,416
 
PERFORMANCE INDICATORS
Return on average assets 0.78 % 0.81 % 0.72 %
Return on average equity 6.70 % 7.05 % 6.33 %
Efficiency ratio 69.60 % 65.66 % 66.47 %
 
Security California Bancorp & Subsidiaries
Interim Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
           
As of
  03/31/15       12/31/14       09/30/14       06/30/14       03/31/14  
 
ASSETS
Cash & due from banks $ 12,554 $ 13,730 $ 12,097 $ 16,158 $ 14,327
Interest bearing deposits with banks 30,285 37,012 35,523 26,783 18,465
Investment Securities 136,486 137,323 138,272 144,468 142,946
Loans:
Commercial & Industrial 168,128 157,447 157,448 138,713 140,273
Real Estate - Commercial 240,923 220,757 213,281 213,264 210,513
Real Estate - Construction 18,439 14,509 12,350 8,040 6,088
Real Estate - Consumer 22,382 23,747 22,579 25,940 28,644
Other   4,578     5,051     5,087     5,292     4,179  
Total 454,450 421,512 410,745 391,249 389,696
Allowance for loan losses   (6,939 )   (6,680 )   (6,454 )   (6,160 )   (6,064 )
Loans, net 447,511 414,832 404,291 385,089 383,632
Premises & equipment 4,003 4,075 3,821 3,831 3,937
Accrued interest 1,784 1,716 1,721 1,713 1,725
Other assets   9,208     9,554     11,175     13,230     15,213  
 
TOTAL ASSETS $ 641,831   $ 618,242   $ 606,900   $ 591,273   $ 580,245  
 
LIABILITES
Deposits:
Demand non interest bearing $ 239,620 $ 232,187 $ 217,237 $ 194,079 $ 198,862
Demand interest bearing 42,519 29,737 21,427 21,092 15,244
Money market & savings 172,673 171,322 180,813 158,667 155,000
Time certificate   101,852     92,534     94,925     91,381     90,916  
Total deposits 556,665 525,780 514,402 465,219 460,022
Other borrowings 11,000 19,000 22,000 57,750 53,826
Accrued interest & other liabilities   1,312     2,495     2,199     1,425     1,521  
 
Total Liabilities   568,976     547,275     538,601     524,394     515,369  
 
SHAREHOLDERS' EQUITY
Preferred stock 7,133 7,133 7,133 7,133 7,133
Common stock 56,616 56,607 56,596 56,569 56,528
Retained earnings 9,516 8,326 7,082 6,033 5,175
Accumulated other comprehensive income   (411 )   (1,098 )   (2,513 )   (2,857 )   (3,960 )
 
Total Shareholders' Equity   72,855     70,967     68,299     66,878     64,876  
 
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 641,831   $ 618,242   $ 606,900   $ 591,273   $ 580,245  
 
 
CAPITAL ADEQUACY
Tier 1 leverage ratio 11.72 % 11.84 % 11.95 % 12.09 % 12.25 %
Tier 1 risk-based capital ratio 14.16 % 14.77 % 14.89 % 15.24 % 15.02 %
Total risk-based capital ratio 15.41 % 16.02 % 16.15 % 16.49 % 16.28 %
Total equity / total assets 11.31 % 11.44 % 11.21 % 11.27 % 11.14 %
Outstanding common shares 5,670,916 5,670,916 5,670,916 5,670,916 5,670,916
Book value per common shares $ 12.85 $ 12.51 $ 12.04 $ 11.79 $ 11.44
 
 
Security California Bancorp & Subsidiaries
Interim Consolidated Average Balance Sheets and Yield Data (Unaudited)
(Dollars in thousands)
                                   
Three months ended
March 31, 2015 December 31, 2014

Average
Balance

Yields
or
Rates

Interest
Income/
Expense

Average
Balance

Yields
or
Rates

Interest
Income/
Expense

 

 

 

 

 

 

ASSETS
Interest earning assets
Loans, with fees $ 434,846 4.70 % $ 5,038 $ 410,679 5.02 % $ 5,197
Interest bearing with banks 33,520 0.32 % 27 39,008 0.32 % 32
Investment securities   135,931 2.06 %   701   140,204 2.13 %   748
Total interest earning assets   604,296 3.86 %   5,765   589,891 4.02 % $ 5,977
 
Non interest earning assets
Cash & due from banks 11,366 10,413
All other assets   6,737   5,771
Total non interest earning assets   18,103   16,184
 
TOTAL ASSETS $ 622,399 $ 606,076
 
LIABILITIES & SHAREHOLDERS' EQUITY
Interest bearing liabilities
Deposits
Demand interest bearing $ 35,804 0.15 % $ 14 $ 25,681 0.15 % $ 10
Money market & savings 172,022 0.51 % 217 174,235 0.54 % 237
Time certificate 99,287 0.66 % 160 94,215 0.64 % 150
Other borrowings   15,905 0.17 %   7   18,746 0.19 %   9
Total interest bearing liabilities   323,018 0.50 % $ 398   312,876 0.51 % $ 406
 
Non interest bearing liabilities
Demand deposits 225,237 220,655
Accrued interest & other liabilities   2,089   2,552
Total non interest bearing liabilities 227,326 223,207
Shareholders' equity   72,055   69,957
 
TOTAL LIABILITIES & SHAREHOLDERS'S EQUITY $ 622,399 $ 606,041
 
NET INTEREST INCOME AND MARGIN 3.60 % $ 5,368 3.75 % $ 5,571
 
 
Security California Bancorp & Subsidiaries
Interim Consolidated Average Balance Sheets and Yield Data (Unaudited)
(Dollars in thousands)
                                     
Three months ended March 31,
2015 2014

Average
Balance

Yields
or
Rates

Interest
Income/
Expense

Average
Balance

Yields
or
Rates

Interest
Income/
Expense

 

 

 

 

 

 

ASSETS
Interest earning assets
Loans, with fees $ 434,846 4.70 % $ 5,038 $ 370,011 4.85 % $ 4,421
Interest bearing with banks 33,520 0.32 % 27 19,689 0.44 % 21
Investment securities   135,931 2.06 %   701   151,457 2.35 %   888
Total interest earning assets   604,296 3.86 % $ 5,765   541,156 3.99 % $ 5,331
 
Non interest earning assets
Cash & due from banks 11,366 10,415
All other assets   6,737   7,602
Total non interest earning assets   18,103   18,017
 
TOTAL ASSETS $ 622,399 $ 559,174
 
LIABILITIES & SHAREHOLDERS' EQUITY
Interest bearing liabilities
Deposits

 

Demand interest bearing $ 35,804 0.15 % $ 14 $ 18,698 0.14 % $ 7
Money market & savings 172,022 0.51 % 217 150,730 0.51 % 189
Time certificate 99,287 0.66 % 160 89,793 0.66 % 147
Other borrowings   15,905 0.17 %   7   44,872 0.12 %   13
Total interest bearing liabilities   323,018 0.50 % $ 398   304,094 0.47 % $ 356
 
Non interest bearing liabilities
Demand deposits 225,237 189,484
Accrued interest & other liabilities   2,089   1,619
Total non interest bearing liabilities 227,326 191,103
Shareholders' equity   72,055   63,976
 
TOTAL LIABILITIES & SHAREHOLDERS'S EQUITY $ 622,399 $ 559,174
 
NET INTEREST INCOME AND MARGIN 3.60 % $ 5,368 3.72 % $ 4,975
 
Security California Bancorp & Subsidiaries
Interim Consolidated Asset Quality and Credit Data (Unaudited)
(Dollars in thousands)
               
As of
  03/31/15     12/31/14     09/30/14     06/30/14     03/31/14  
ALLOWANCE FOR LOAN LOSSES
Beginning of period $ 6,680 $ 6,454 $ 6,160 $ 6,064 $ 5,742
Quarterly movement:
Provision for loan losses (181 ) 99 164 429 248
Charge-offs (176 ) 0 0 (390 ) 0
Recoveries   616     127     130     58     73  
End of period $ 6,939   $ 6,680   $ 6,454   $ 6,160   $ 6,064  
 
 
NON PERFORMING ASSETS
Loans accounted for on a non-accrual basis $ 4,994 $ 5,169 $ 5,261 $ 5,390 $ 5,661

 

Loans with principal and/or interest contractually past due 90 days and still accruing interest

  -     -     -     -     -  
 

Non performing loans

4,994 5,169 5,261 5,390 5,661
Other real estate owned   -     -     -     747     -  
 
Non performing assets 4,994 5,169 5,261 6,137 5,661
 
Loans restructured and in compliance with modified terms
  822     1,111     659     -     916  
 
Non performing assets and restructured loans $ 5,816   $ 6,280   $ 5,920   $ 6,137   $ 6,577  
 
Non Performing Loans by Asset Type
Commercial & Industrial $ 3,935 $ 4,093 $ 4,162 $ 4,265 $ 3,761
SBA 179 185 193 201 209
Consumer 880 891 906 924 1,691
Other   -     -     -     -     -  
Total non performing loans by asset type $ 4,994   $ 5,169   $ 5,261   $ 5,390   $ 5,661  
 
 
ASSET QUALITY
Allowance for loan losses / gross loans 1.53 % 1.58 % 1.57 % 1.57 % 1.56 %
Allowance for loan losses / non performing loans 138.95 % 129.24 % 122.67 % 114.29 % 107.10 %
Non performing assets / total assets 0.78 % 0.84 % 0.87 % 1.07 % 0.98 %
Non performing loans /gross loans 1.10 % 1.23 % 1.28 % 1.38 % 1.45 %
Net quarterly charge-offs / gross loans 0.10 % 0.00 % 0.00 % -0.10 % 0.00 %
 

Contacts

Financial Profiles for Security Bank of California
Matt Andrejczak, 310-622-8241
mandrejczak@finprofiles.com
or
Thomas M. Ferrer, 951-368-2268
EVP & Chief Financial Officer
tferrer@securitybankca.com

Contacts

Financial Profiles for Security Bank of California
Matt Andrejczak, 310-622-8241
mandrejczak@finprofiles.com
or
Thomas M. Ferrer, 951-368-2268
EVP & Chief Financial Officer
tferrer@securitybankca.com