Bank of Santa Clarita’s third-quarter net profits slipped to $184,000 from $194,000 a year ago, but officials pointed to their pre-tax profits as a better indicator of the young bank’s strength as it grows.
Profits before taxes totaled $307,000 for the quarter ending Sept. 30, a 91-percent gain over the year-ago total of $161,000.
Pre-tax earnings for the nine months ending Sept. 30 were $232,000 versus $306,000 for the same period a year earlier, largely because the bank took a $250,000 hit in the second quarter for the early termination of its headquarters lease. Last quarter the bank announced plans to build its own headquarters facility in Valencia.
Income taxes significantly impacted net results for the latest quarter and nine-month period versus the same periods in 2010 because the bank posted one-time tax gains in the prior periods that were unavailable this year.
In 2008, 2009 and 2010, the bank realized a series of one-time income tax benefits that were available to offset some of the pre-tax losses the bank posted in its first four years of operation, 2004-2007. The portion received during the first nine months of 2010 totaled $270,000 for a net gain of $159,000 from income taxes. All such benefits were exhausted prior to the bank’s 2011 fiscal year; in fact, through Sept. 30 it paid $74,000 in income taxes during 2011.
The bank reported $4.92 million in interest income for the nine months ending Sept. 30, up from $4.49 million a year earlier as its loan portfolio grew to $140.5 million from $123.6 million. The growth in interest income was attributed to a higher net margin (3.47 percent versus 3.4 percent), largely due to a year-over-year reduction in the amount of interest paid on deposit accounts (an average of 1.1 percent versus 1.51 percent).
Despite the reduction in interest paid, deposit accounts grew 9 percent during the nine-month period to $149.7 million. Of that total, non-interest bearing demand deposit accounts grew by 67 percent to $16.9 million.
Non-interest expenses during the first nine months of 2011 climbed to $5.09 million from $4.66 million, partially due to the $250,000 early termination penalty.
Shareholder equity totaled $20.7 million and the bank’s total risk-based regulatory capital ratio was 14.30 percent, exceeding the regulatory requirement of 10 percent for a “well-capitalized” bank.
“We are very pleased with our operating results,” CEO James D. Hicken said in a statement. “Our facilities-related decisions will have the effects of providing both substantial cost savings over the next three years and also the physical space needed to accommodate our growth for the future.”
He noted that the bank has had not charged off any loans so far in 2011, and nonperforming loans totaled only $18,000 as of Sept. 30.
“The bank continues to be well positioned for the current environment, and remains focused on our traditional core values which have guided us well through these challenging times,” Hicken said.
Chairman Frank D. Di Tomaso said: “Our staff are doing an excellent job providing our customers with a high level of service, winning new business, and focusing on efficiency and earnings.”
Founded in 2004, Bank of Santa Clarita operates branch offices on Magic Mountain Parkway, Soledad Canyon Road and Golden Valley Road. It is the only bank that exclusively serves the Santa Clarita Valley.