COMMUNITY NEWS
Forgiven PPP Loans Help SCCB To Record Earnings S anta Cruz County Bank, which has expanded into Monterey and Salinas, reports profit for the nine-month period ending Sept. 30 was a record $16.6 million, up from $13.5 million in that period in 2020 during the pandemic. President and CEO Krista Snelling said bank assets reached $1.70 billion, a new milestone. She reported “solid” demand and more loans outside the federally funded Payroll Protection Program. Gross non-PPP loans were up 26% compared to Sept. 30, 2020. “Our ability to respond to and support businesses through the PPP loan process and grow new relationships … is a key indicator that our bank remains focused on and in tune with the needs of the communities we serve,” she said. Total gross loans (excluding PPP): $1.05 billion, up $216 million compared to Sept. 30, 2020. Deposits: $1.50 billion, up 27%, compared to September 30, 2020. Basic earnings per share: $1.42 for the quarter ending Sept. 30 and $4.29 for nine months ending Sept. 30. Provision for loan losses was $2.1 million for the third quarter of 2021 compared to $2.1 million for the prior quarter and $360,000 for the third quarter in 2020. The increase was driven by growth in the non-PPP sector of the loan portfolio and a specific reserve for one classified yet still performing loan of $1.3 million. Pretax profit prior to set-asides for potential bad debt was $9.9 million for the quarter ending Sept. 30, compared to $9.5 million for the quarter ending June 30 and $7.9 million for the quarter ending Sept. 30, 2020. This was primarily interest income. Net interest margin, a measure of investment, was 4.04% for the third quarter of 2021, compared to 3.80% in the third quarter of 2020. This is because funds invested in forgiven PPP loans have been reallocated to higher-yielding non-PPP loans and a lower cost of funds. A positive net interest margin indicates the bank is efficiently investing; in 2019, the average for U.S. banks was 3.35%. All capital ratios were above regulatory requirements for a well-capitalized institution with a total risk-based capital ratio of 15.12%.
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Only one unsecured loan of $384,000 was 90 days or more overdue with a single performing loan — payments historically made — contributing to the loan loss provision. A 10% stock dividend was declared Oct. 26 and payable Nov. 8 when chairman William J. Hansen noted the bank’s “exceptional financial performance.” Third Quarter or the third quarter, profit was $5.5 million, compared to $5.3 million in the second quarter. Noninterest income was $835,00 compared to $1.3 million a year ago due to gains of $340,000 on SBA loans sold vs. none sold in the third quarter of 2021. Management opted to curtail SBA loan sales, increase loan balances and “deploy liquidity,” according to the earnings report. Noninterest expense was $7.3 million for the third quarter, up $1.07 million from a year ago, as the bank hired to fully staff and equip a new branch in Monterey, and hire staff to expand into Salinas. Net interest income, the bank’s major earnings component, was $16.4 million, up $3.5 million over the 2020 third quarter. Assets grew 18% compared to third quarter 2020, due primarily to growth through PPP loan origination but also by expansion into Monterey County. PPP Loans s of Sept. 30, PPP loans accounted for $148 million of the loan portfolio, the majority of which was originated during 2021 while most PPP loans originated in 2020 have been forgiven. The bank’s cost of funds was 0.12% for the third quarter 2021 compared to 0.21% in the third quarter 2020. The bank reports $933,000 in PPP loans past due 30-89 days. More than half of the 2020 PPP loans were made to new customers, expanding business relationships, with the bank looking to capitalize on opportunities afforded by the PPP program into the current quarter. n ••• For more info: www.sccountybank.com.
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www.tpgonlinedaily.com Capitola Soquel Times / November 2021 / 13
