Security California Bancorp (OTCQB: SCAF), the parent company of Security Bank of California, today reported financial results for the fourth quarter and full year ended December 31, 2014.

For the fourth quarter of 2014, net income was $1.2 million, or 22 cents per share, an increase of 44% from net income of $865 thousand, or 15 cents per share, for the fourth quarter of 2013.

For the full year 2014, net income was $4.1 million, or 72 cents per share, an increase of 31% from net income of $3.2 million, or 55 cents per share, for the full year 2013.

Fourth Quarter 2014 Highlights

  • Total loans were $422 million at December 31, 2014, an increase of 16% year-over-year
  • Total deposits were $526 million at December 31, 2014, an increase of 18% year-over-year
  • Total assets were $618 million at December 31, 2014, an increase of 11% year-over-year
  • Total revenue of $6.3 million, an increase of 11% over fourth quarter of 2013

“We had another strong quarter of balance sheet growth and increasing profitability, which capped a record year for the Company,” said James A. Robinson, Chairman and CEO of Security California Bancorp. “For the full year, we generated double-digit increases in total assets, total loans, total deposits and book value per share. Our increasing scale helped drive greater efficiencies, resulting in a 31% increase in net income for the full year.

“Looking ahead to 2015, we anticipate another year of solid growth, as economic conditions in Inland Southern California continue to improve and we are seeing healthy loan demand among small- and middle-market companies. We also have a number of initiatives planned for 2015 to further expand our franchise, including increasing our presence in the Palm Desert, San Gabriel Valley and Temecula markets, and expanding our offerings in asset-based lending and healthcare banking. We look forward to bringing our high-touch, highly personalized approach to commercial banking to new markets throughout Southern California, continuing to grow our customer base, and further increasing the value for our franchise,” said Mr. Robinson.

Fourth Quarter 2014 Summary Results

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2014 was $5.6 million, an increase of 17% from $4.8 million in the fourth quarter of 2013. The increase in net interest income was primarily driven by growth in interest-earning assets and an increase in net interest margin.

Net interest margin was 3.75% in the fourth quarter of 2014, an increase of 8 basis points from the prior quarter. The increase was primarily due to higher average loan yields.

Non-interest Income

Non-interest income for the fourth quarter of 2014 was $754 thousand, a decrease of 13% from $864 thousand in the year-earlier period. The decrease in non-interest income was primarily due to lower SBA servicing income and gains on sales of securities.

Non-interest Expense

Non-interest expense was $4.1 million for the fourth quarter of 2014, an increase of 5% from $3.9 million in the same period a year ago. 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 $618 million at December 31, 2014, an increase of 11% from $557 million at December 31, 2013.

Total Loans

Total loans were $422 million at December 31, 2014, an increase of 16% from $364 million at December 31, 2013. 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 $526 million at December 31, 2014, an increase of 18% from $445 million at December 31, 2013. The increase in total deposits was primarily driven by growth in non-interest bearing and savings and money market accounts.

Asset Quality

Total non-performing assets were $5.2 million, or 0.84% of total assets, at December 31, 2014, compared with $5.3 million, or 0.87% of total assets, at September 30, 2014.

At December 31, 2014, total non-accrual loans were $5.2 million, or 1.23% of total loans, compared with $5.3 million, or 1.28% of total loans, at September 30, 2014.

During the fourth quarter of 2014, the Company had no charge-offs, consistent with the third quarter of 2014.

The Company recorded a provision for loan losses of $99,000 for the fourth quarter of 2014, primarily related to growth in the loan portfolio. As a result of the provision, the allowance for loan losses as a percentage of gross loans was 1.58% at December 31, 2014.

Capital

Security California Bancorp remained well capitalized as of December 31, 2014. All of the company’s capital ratios exceeded minimum regulatory standards for “well capitalized” institutions. As of December 31, 2014, the Company’s Tier 1 leverage ratio was 11.84%, the Tier 1 risk-based ratio was 14.77% and the Total risk-based ratio was 16.02%, 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 a 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       Twelve months ended
12/31/14       09/30/14       12/31/13 12/31/14       12/31/13
INTEREST INCOME
Loans, with fees $ 5,197 $ 4,900 $ 4,208 $ 19,238 $ 16,068
Deposit with banks 32 23 23 99 89
Investment securities   748     766     917     3,223     3,000  
Total interest income   5,977     5,688     5,149     22,560     19,157  
 
INTEREST EXPENSE
Deposits 397 392 339 1,481 1,329
Other   9     9     11     47     37  
Total interest expense   406     401     349     1,528     1,366  
 
Net interest income 5,571 5,287 4,799 21,032 17,791
Provision for loan losses   99     164     405     940     1,128  
Net income after provision for
loan losses   5,472     5,123     4,394     20,092     16,663  
 
NON INTEREST INCOME
Service charges on deposits 250 228 242 965 996
Gain on sale of securities 33 3 103 87 261
SBA gains on sales and fees 341 331 368 1,503 1,514
Other   131     182     152     667     649  
Total non interest income   754     745     864     3,221     3,419  
 
NON INTEREST EXPENSE
Salaries & benefits 2,636 2,541 2,420 10,321 9,021
Premises & equipment 427 427 499 1,783 1,919
Other   1,069     1,068     1,014     4,101     3,872  
Total non interest expense   4,132     4,036     3,933     16,205     14,812  
 
Net income before taxes 2,095 1,832 1,326 7,108 5,270
Provision for income tax   851     782     461     2,958     2,105  
 
NET INCOME $ 1,244   $ 1,049   $ 865   $ 4,150   $ 3,165  
 
EARNINGS PER SHARE
Diluted earnings per share $ 0.22 $ 0.18 $ 0.15 $ 0.72 $ 0.55
Average outstanding common shares 5,670,361 5,670,174 5,669,416 5,670,361 5,668,558
 
PERFORMANCE INDICATORS
Return on average assets 0.81 % 0.71 % 0.63 % 0.71 % 0.62 %
Return on average equity 7.05 % 6.12 % 5.42 % 6.19 % 4.92 %
Efficiency ratio 65.66 % 66.94 % 70.73 % 67.06 % 70.70 %
 
 
Security California Bancorp & Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
 
      As of
12/31/14       09/30/14       06/30/14       03/31/14       12/31/13
ASSETS
Cash & due from banks $ 13,730 $ 12,097 $ 16,158 $ 14,327 $ 11,690
Interest bearing deposits with banks 37,012 35,523 26,783 18,465 20,701
Investment Securities 137,323 138,272 144,468 142,946 143,653
Loans:
Commercial & Industrial 157,447 157,448 138,713 140,273 129,204
Real Estate - Commercial 220,757 213,281 213,264 210,513 197,770
Real Estate - Construction 14,509 12,350 8,040 6,088 4,272
Real Estate - Consumer 23,747 22,579 25,940 28,644 27,467
Other   5,051     5,087     5,292     4,179     5,673  

Total

421,512 410,745 391,249 389,696 364,387
Allowance for loan losses   (6,680 )   (6,454 )   (6,160 )   (6,064 )   (5,742 )

Loans, net

414,832 404,291 385,089 383,632 358,644
Premises & equipment 4,075 3,821 3,831 3,937 4,028
Accrued interest 1,716 1,721 1,713 1,725 1,775
Other assets   9,554     11,175     13,230     15,213     16,257  
 
TOTAL ASSETS $ 618,242   $ 606,900   $ 591,273   $ 580,245   $ 556,748  
 
LIABILITIES
Deposits:
Demand non interest bearing $ 232,189 $ 217,237 $ 194,079 $ 198,862 $ 190,868
Demand interest bearing 29,737 21,427 21,092 15,244 22,680
Money market & savings 171,322 180,813 158,667 155,000 148,370
Time certificate   92,534     94,925     91,381     90,916     82,992  

Total deposits

525,782 514,402 465,219 460,022 444,909
Other borrowings 19,000 22,000 57,750 53,826 48,050
Accrued interest & other liabilities   2,494     2,199     1,425     1,521     1,454  
 
Total Liabilities   547,275     538,601     524,394     515,369     494,413  
 
SHAREHOLDERS' EQUITY
Preferred stock 7,133 7,133 7,133 7,133 7,133
Common stock 56,607 56,596 56,569 56,528 56,501
Retained earnings 8,326 7,082 6,033 5,175 4,176
Accumulated other comprehensive income   (1,098 )   (2,513 )   (2,857 )   (3,960 )   (5,475 )
 
Total Shareholders' Equity   70,967     68,299     66,878     64,876     62,335  
 
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 618,242   $ 606,900   $ 591,273   $ 580,245   $ 556,748  
 
CAPITAL ADEQUACY
Tier 1 leverage ratio 11.84 % 11.95 % 12.09 % 12.25 % 12.38 %
Tier 1 risk-based capital ratio 14.77 % 14.89 % 15.24 % 15.02 % 15.77 %
Total risk-based capital ratio 16.02 % 16.15 % 16.49 % 16.28 % 17.02 %
Tangible Equity / Tangible Total Assets 11.44 % 11.21 % 11.27 % 11.14 % 11.15 %
Outstanding common shares 5,670,916 5,670,916 5,670,916 5,669,416 5,669,416
Book value (total equity) per common share $ 12.51 $ 12.04 $ 11.79 $ 11.44 $ 10.99
 
 
Security California Bancorp & Subsidiaries
Consolidated Average Balance Sheets and Yield Data (Unaudited)
(Dollars in thousands)
 
      Three months ended - 2014
December 31       September 30
      Yields       Interest       Yields       Interest
Average or Income/ Average or Income/
Balance Rates Expense Balance Rates Expense
ASSETS
Interest earning assets
Loans, with fees $ 410,679 5.02 % $ 5,197 $ 402,385 4.83 % $ 4,900
Interest bearing with banks 39,008 0.32 % 32 25,227 0.36 % 23
Investment securities   140,204 2.13 %   748   144,694 2.12 %   766

Total interest earning assets

   589,891 4.02 % $ 5,977   572,307 3.95 % $ 5,688
 
Non interest earning assets
Cash & due from banks 10,413 10,783
All other assets   5,737   6,824

Total non interest earning assets

   16,150   17,607
 
TOTAL ASSETS $ 606,041 $ 589,914
 
LIABILITIES & SHAREHOLDERS' EQUITY
Interest bearing liabilities
Deposits

Demand interest bearing

$ 25,681 0.15 % $ 10 $ 21,835 0.14 % $ 8

Money market & savings

174,235 0.54 % 237 166,958 0.54 % 228

Time certificate

94,215 0.64 % 150 93,727 0.67 % 156
Other borrowings   18,746 0.19 %   9   27,180 0.13 %   9

Total interest bearing liabilities

   312,876 0.51 % $ 406   309,700 0.51 % $ 401
 
Non interest bearing liabilities
Demand deposits 220,655 210,248
Accrued interest & other liabilities   2,552   1,984

Total non interest bearing liabilities

 223,207 212,232

Shareholders' equity

   69,958   67,982
 
TOTAL LIABILITIES & SHAREHOLDERS'S EQUITY $ 606,041 $ 589,914
 
NIM and NET INTEREST INCOME 3.75 % $ 5,571 3.67 % $ 5,287
 
 
Security California Bancorp & Subsidiaries
Consolidated Average Balance Sheets and Yield Data (Unaudited)
(Dollars in thousands)
 
      Three months ended December 31,
2014       2013
      Yields       Interest       Yields       Interest
Average or Income/ Average or Income/
Balance Rates Expense Balance Rates Expense
ASSETS
Interest earning assets

Loans, with fees

$ 410,679 5.02 % $ 5,197 $ 349,149 4.78 % $ 4,208

Interest bearing with banks

39,008 0.32 % 32 21,277 0.44 % 23

Investment securities

  140,204 2.13 %   748   156,499 2.34 %   917

Total interest earning assets

   589,891 4.02 %   5,977   526,924 3.88 % $ 5,149
 
Non interest earning assets

Cash & due from banks

10,413 10,154

All other assets

  5,737   7,897

Total non interest earning assets

   16,150   18,051
 
TOTAL ASSETS $ 606,041 $ 544,976
 
LIABILITIES & SHAREHOLDERS' EQUITY
Interest bearing liabilities

Deposits

Demand interest bearing

$ 25,681 0.15 % $ 10 $ 20,297 0.14 % $ 7

Money market & savings

174,235 0.54 % $ 237 147,147 0.55 % 197

Time certificate

94,215 0.64 % $ 150 87,270 0.63 % 135

Other borrowings

  18,746 0.19 % $ 9   30,069 0.14 %   11

Total interest bearing liabilities

   312,876 0.51 %   406   284,783 0.49 % $ 349
 
Non interest bearing liabilities

Demand deposits

220,655 194,938

Accrued interest & other liabilities

  2,552   1,963

Total non interest bearing liabilities

 223,207 196,901
Shareholders' equity   69,958   63,291
 
TOTAL LIABILITIES & SHAREHOLDERS'S EQUITY $ 606,041 $ 544,976
 
NIM and NET INTEREST INCOME 3.75 % $ 5,571 3.62 % $ 4,799
 
 

Security California Bancorp & Subsidiaries

Consolidated Average Balance Sheets and Yield Data (Unaudited)

(Dollars in thousands)

 
      Twelve months ended December 31,
2014       2013
      Yields       Interest       Yields       Interest
Average or Income/ Average or Income/
Balance Rates Expense Balance Rates Expense
ASSETS
Interest earning assets

Loans, with fees

$ 393,401 4.89 % $ 19,238 $ 333,129 4.82 % $ 16,068

Interest bearing with banks

26,494 0.37 % 99 19,944 0.45 % 89

Investment securities

  144,615 2.23 %   3,223   140,305 2.14 %   3,000

Total interest earning assets

   564,510 4.00 % $ 22,560   493,379 3.88 % $ 19,157
 
Non interest earning assets

Cash & due from banks

10,493 9,848

All other assets

  7,280   8,673

Total non interest earning assets

   17,773   18,521
 
TOTAL ASSETS $ 582,283 $ 511,900
 
LIABILITIES & SHAREHOLDERS' EQUITY
Interest bearing liabilities

Deposits

Demand interest bearing

$ 20,880 0.14 % $ 30 $ 17,394 0.14 % $ 25

Money market & savings

162,395 0.53 % 855 132,748 0.55 % 734

Time certificate

92,093 0.65 % 596 88,293 0.65 % 571

Other borrowings

  33,669 0.14 %   47   23,746 0.15 %   37

Total interest bearing liabilities

   309,037 0.49 % $ 1,528   262,181 0.52 % $ 1,366

 

Non interest bearing liabilities

Demand deposits

204,421 184,532

Accrued interest & other liabilities

  1,806   884

Total non interest bearing liabilities

 206,227 185,415
Shareholders' equity   67,018   64,303
 
TOTAL LIABILITIES & SHAREHOLDERS'S EQUITY $ 582,283 $ 511,900
 
NIM and NET INTEREST INCOME 3.73 % $ 21,032 3.61 % $ 17,791
 
 
Security California Bancorp & Subsidiaries
Consolidated Asset Quality and Credit Data (Unaudited)
(Dollars in thousands)
 
      As of
12/31/14       09/30/14       06/30/14       03/31/14       12/31/13
 
TOTAL ASSETS 618,242 606,900 591,273 580,245 556,748
GROSS LOANS 421,512 410,745 391,249 389,696 364,387
 
ALLOWANCE FOR LOAN LOSSES
Beginning of period $ 6,454 $ 6,160 $ 6,064 $ 5,742 $ 5,567
Quarterly movement:
Provision for loan losses 99 164 429 248 432
Charge-offs - - (390 ) - (295 )
Recoveries   127     130     58     73     38  
End of period $ 6,680   $ 6,454   $ 6,160   $ 6,064   $ 5,742  
 
NON PERFORMING ASSETS
Loans accounted for on a non-accrual basis $ 5,169 $ 5,261 $ 5,390 5,661 5,694
Loans with principal and/or interest
contractually past due 90 days and still
accruing interest   -     -     -     -     -  
 
Non performing loans 5,169 5,261 5,390 5,661 5,694
Other real estate owned   -     -     916     -     -  
 
Non performing assets 5,169 5,261 6,306 5,661 5,694
 
Loans restructured and in compliance with
modified terms   1,111     659     -     916     572  
 
Non performing assets and restructured loans $ 6,280   $ 5,920   $ 6,306   $ 6,577   $ 6,266  
 
Non Performing Loans by Asset Type
Commercial & Industrial $ 4,093 $ 4,162 $ 4,265 $ 3,761 $ 3,779
SBA 185 193 201 209 218
Consumer 891 906 924 1,691 1,697
Other   -     -     -     -     -  
 
Total non performing loans by asset type $ 5,169   $ 5,261   $ 5,390   $ 5,661   $ 5,694  
 
ASSET QUALITY
Allowance for loan losses / gross loans 1.58 % 1.57 % 1.57 % 1.56 % 1.58 %
Allowance for loan losses / non performing loans 129.24 % 122.67 % 114.29 % 107.10 % 100.85 %
Non performing assets / total assets 0.84 % 0.87 % 1.07 % 0.98 % 1.02 %
Non performing loans /gross loans 1.23 % 1.28 % 1.38 % 1.45 % 1.56 %
Net quarterly charge-offs / gross loans 0.00 % 0.00 % -0.10 % 0.00 % -0.08 %