Forgiven PPP Loans Help SCCB To Record Earnings

COMMUNITY NEWS Forgiven PPP Loans Help SCCB To Record Earnings

Santa 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%.

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

For 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

As 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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Youth Action Network

Capitola partners with the Youth Action Network and I have the privilege to sit on as a committee member. Their work is crucial to supporting youth in our community and we need your help.

Santa Cruz County Friday Night Live Partnership will offer training Dec. 13 from 3-5 pm via Zoom with one goal to identify strategies to make a youth-adult partnership more effective in your agency or program.

Take a moment to sign up today. Register at: https://forms.gle/ kaZtFkLBvmz4KkaU6

Questions? Email semmert@united waysc.org

Holiday Jobs at Capitola Mall

Looking for extra funds for the holidays? Retailers at the Capitola Mall are looking for part-time and full-time employees.

Visit https://www.shopcapitolamall. com/jobs/ or stop at your favorite store to fill out an application.

Capitola Plein Air Art

Capitola Plein Air is back – 40 professional artists Nov. 1-7. The exhibition (free) and art sale is Sunday, Nov. 7, from 11 am to 4 pm at New Brighton Middle School Performing Arts Center, 250 Washburn Ave. The public votes for the People’s Choice Award! https://www.capitolapleinair.com/

Code Red

With inconsistent weather and unforeseen events, it is more important than ever to be prepared. Please take a moment to sign up for our County’s Code Red program.

You enroll yourself and receive alerts based on your home or business address. Visit https://public.coderedweb.com/ CNE/en-US/218A80E36F49 today and stay informed!

Community Grants

The City Council unanimously approved $174,000 to community grants applicants and the Parks and Recreation Department.

These general fund dollars will support programs such as rental assistance, child care, senior care, and the Monterey Bay.

Capitola Sip and Stroll

Capitola Village Sip and Stroll is back! Stroll through local shops and boutiques and sip on locally featured wines and beers in our charming historic Capitola Village. Registration will be at the Mercantile at 115 San Jose Road at 10 a.m. Nov. 13.

Please bring identification and your purchase receipt from Eventbrite. We suggest that only vaccinated people attend. Wine/beer will not be allowed outside on the sidewalks or streets.

City Council Meetings

The Governor signed AB 361 allowing cities to continue virtual meetings during any emergency proclaimed by the governor. Every 30 days, the City must make findings that meeting in person would present imminent risks to the health or safety of attendees, or recommend social distancing measures.

AB 361 sunsets on Jan. 1, 2024. Capitola City Council meetings will remain virtual until we see a significant decrease of new cases of COVID-19 in our community.

Redistricting Input

Every 10 years, after the Census, political districts must be redrawn so each district is substantially equal in population. This process, called redistricting, is important to ensure each board member represents about the same number of constituents. Next public meetings:

Public Hearing #3 and #4, in-person and virtual meeting/teleconferences, Tuesday, Nov. 9, at 10:45 a.m. and Tuesday, Nov. 16, at 10:45 a.m. In person at Supervisors Chambers, 701 Ocean St., Santa Cruz.

Zoom: https://us02web.zoom.us/j/840783 27816#success

Conference call: 1 (669) 900-6833 Webinar ID: 840 7832 7816) n •••

As always should you have any questions feel free to email me at brooksforcitycouncil@ gmail.com. You can also email citycouncil@ ci.capitola.ca.us and your note will automatically be sent to all five Councilmembers, the City Clerk, and the City Manager.