Bank of Santa Clarita Reports Third Quarter 2009 Results

Bank of Santa Clarita, the only commercial bank headquartered in the Santa Clarita Valley, reported that its earnings have continued to improve over 2008, as net earnings for the third quarter of 2009 totaled $218,000 compared to third quarter 2008 earnings of $50,000; similarly, earnings for the nine months ended September 30, 2009 totaled $348,000 as compared to the $201,000 reported for the first nine months of 2008. The Bank reported year over year increases in net interest income of $187,000 and $494,000 for the three- and nine-month periods ended September 30, 2009, as compared to those periods of 2008, representing growth in net interest income of 14% and 13%, respectively.

During the first nine months of 2009 the Bank experienced a 21% growth in its deposits and a 5% growth in its loan portfolio. Consistent with the loan growth and the ongoing evaluation of prevailing economic conditions, during the first quarter of 2009 the Bank increased its allowance for loan losses as a percentage of total loans to approximately 1.35% from approximately 1.21% at December 31, 2008. The year-to-date results also include the recognition of $396,000 of the income tax benefits resulting from the Bank's net operating losses recorded during its initial years of operations.

As previously reported, during the first quarter of 2009 the Bank opened its third full-service branch office, located in Eastern Santa Clarita Valley. This office is intended to serve retail consumers as well as small businesses, and is the first Bank branch office to focus on that retail consumer banking segment. The third quarter and year-to-date results include more than $140,000 and $350,000, respectively, of operating expenses directly related to this new branch, which the Bank considers to be an investment in the development of this market segment. Additionally, during the first nine months of 2008, the Bank recorded $74,000 of FDIC deposit insurance premiums, whereas this amount more than doubled for the first nine months of 2009, to $198,000; moreover, during the first nine months of 2008, the Bank recorded $45,000 of dividends on FHLB of San Francisco stock, whereas this amount was reduced to $3,000 during the same period of 2009, largely the result of a requirement that the FHLB bolster its retained earnings due to factors generally emanating from the economic situation. The combination of the increased FDIC premiums and the reduced FHLB dividends had the effect of reducing the Bank's earnings reported for the first nine months of 2009 by $166,000 as compared to the first nine months of 2008.

"We are very pleased with our continued positive performance through the third quarter of 2009," said James D. Hicken, President and Chief Executive Officer. "During the third quarter our net interest margin continued to improve based on management's efforts to position the Bank for today's interest rate environment. The growth in both loans and deposits primarily reflects an expanding market opportunity and the benefit the Bank has in being the Santa Clarita Valley's only locally headquartered commercial bank."

At September 30, 2009, shareholders' equity was $19.6 million and the Bank's total risk-based regulatory capital ratio was 15.91%, significantly exceeding the "well-capitalized" level of 10% prescribed under regulatory requirements. Moreover, the Bank continues to maintain substantial liquidity positions, retaining significant balances of liquidity as well as available collateralized borrowings and other potential sources of liquidity.

Bank of Santa Clarita, founded in 2004, is the only independent, full service commercial bank headquartered in Santa Clarita and generally serves the needs of retail consumers, small to mid-sized businesses, professionals, entrepreneurs, and high-net worth individuals. The Bank provides local, experienced decision-making and the personalized service that growing businesses need on a daily basis. Bank clients have direct access to executive management and professional staff members to address their SBA and other credit requirements, and also technology-based services that include online bill-paying, remote capture depositing, check imaging and initiating online wire transfers, among other cash management facilities, which services enable local businesses to effectively and efficiently manage their cash and credit needs.

    Bank of Santa Clarita, Corporate Headquarters
    27433 Tourney Road, Suite 150
    Santa Clarita, California 91355
    661-362-6004
    www.bankofsantaclarita.com

FORWARD LOOKING STATEMENTS

Certain matters discussed in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to the Bank's current expectations regarding deposit and loan growth, operating results and the strength of the local economy. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results, performance or achievements to differ materially from those expressed, suggested or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to: the impact of changes in interest rates, a decline in economic conditions and increased competition among financial service providers as these factors may impact the Bank's operating results, its ability to attract deposit and loan customers, the quality of the Bank's earning assets and government regulation. The Bank does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

BANK OF SANTA CLARITA
BALANCE SHEETS
Unaudited
                                                                September 30,     December 31,     September 30,
                                                                2009              2008             2008
                                                              (In thousands)
ASSETS
Cash and Due From Banks                                       $ 1,841           $ 1,723          $ 2,987
Interest Bearing Deposits with Other Financial Institutions     7,867             5,278            519
Federal Funds Sold                                              286               9,639            9,327
Investment Securities                                           13,771            12,564           2,000
Loans (Net)                                                     125,066           119,238          116,570
Other Assets                                                    5,173             4,224            3,258
Total Assets                                                  $ 154,004         $ 152,666        $ 134,661
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest Bearing Demand Deposits                           $ 26,906          $ 25,140         $ 27,775
Interest Bearing Demand Deposits                                5,327             4,928            6,068
Money Market and Savings Deposits                               22,682            15,840           22,894
Time Deposits                                                   64,356            52,542           44,015
Total Deposits                                                  119,271           98,450           100,752
Borrowings                                                      14,300            34,286           14,299
Other Liabilities                                               845               713              755
Total Liabilities                                               134,416           133,449          115,806
Stockholders' Equity                                            19,588            19,217           18,855
Total Liabilities & Stockholders' Equity                      $ 154,004         $ 152,666        $ 134,661

STATEMENTS OF OPERATIONS
Unaudited
                                                             For the Three Months Ended    For the Nine Months Ended
                                                             September 30,                 September 30,
                                                             2009             2008         2009             2008
Interest Income                                              (In thousands except per share amounts)
Loans                                                        $    1,892       $    1,862   $    5,454       $    5,714
Interest Bearing Deposits with Other Financial Institutions       73               10           143              10
Investment Securities                                             119              17           349              57
Federal Funds Sold                                                2                28           11               143
Total Interest Income                                             2,086            1,917        5,957            5,924
Interest Expense
Interest Bearing Demand Deposits                                  7                13           22               65
Money Market and Savings Accounts                                 33               80           89               299
Time Deposits                                                     376              341          1,036            1,318
Borrowings                                                        140              140          420              346
Total Interest Expense                                            556              574          1,567            2,028
Net Interest Income                                               1,530            1,343        4,390            3,896
Provision for Loan Losses                                         28               13           302              39
Net Interest Income after
Provision for Loan Losses                                         1,502            1,330        4,088            3,857
Noninterest Income                                                114              120          284              289
Noninterest Expense                                               1,547            1,400        4,500            3,944
Net Earnings (Loss) Before Income Taxes                           69               50           (128  )          202
Income Taxes                                                      (149  )          -            (476  )          1
Net Earnings                                                 $    218         $    50      $    348         $    201
Basic and Diluted Earnings Per Share                         $    0.10        $    0.02    $    0.16        $    0.09

SOURCE: Bank of Santa Clarita

Bank of Santa Clarita 
James D. Hicken 
President 
Chief Executive Officer 
661-362-6001