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RIVERSIDE, Calif.--([ BUSINESS WIRE ])--Security California Bancorp (aCompanya) (OTCBB: SCAF) and its wholly owned subsidiary, Security Bank of California (aBanka), announced its earnings for 2011. In summary, Security Bank of California nearly doubled its profits in 2011, which is the direct result of increasing its total assets, loans and deposits, all to new highs.

"Not only does it help our clients grow their businesses, which improves our regionas economy, it also reflects growing confidence in our Bank."

aWith our new Loan Production Office in Irwindale and our new branch in Orange and with Californiaas improving economy starting to outpace the countryas, we expect to do even better this year,a said Bank CEO and chairman James A. Robinson, who also is chairman and chief executive officer of the holding company.

Net income for last year was nearly $2.4 million, up from about $1.2 million in 2010. Loans grew by 7.8 percent to $302 million, deposits grew by nearly 25 percent to $347 million and assets grew by more than 22 percent to $413 million.

aWe are especially proud of our loan growth,a Robinson said. aNot only does it help our clients grow their businesses, which improves our regionas economy, it also reflects growing confidence in our Bank.a

GROWTH: Total Assets of the Company grew by $74 million (22%) to $413 million at December 31, 2011 compared to $339 million at December 31, 2010. The following are the movements in balance sheet accounts that are keys for increasing core earnings from December 31, 2010 to December 31, 2011.

• Total Short-Term Investments with other financial institutions changed by $11 million (94%) to $23 million from $11 million.
• Total Investments in Securities moved up to $55 million, a growth of $25 million (83%) from $30 million. The securities portfolio consists of government agency and agency sponsored debenture bonds, and mortgage-backed securities.
• Total Loans organically increased by $22 million (8%) to $302 million from $280 million. The most significant change was in the C&I segment of the loan portfolio.
• Total (internally or organically generated) Deposits surged from $277 million to $348 million, a growth of $71 million (25%). Of the Total Deposits, $149 million were Non Interest Bearing DDAs, the growth of which was $42 million (40%) from $107 million.

The Allowance for Loan and Lease Losses (aALLLa) at the end of the year was estimated at $5.759 million or 1.90% of the loan reservable balance (compared to $5.612 million or 2.00%, in 2010)

The Companyas strong capital structure resulted in well-capitalized levels of capital ratios with satisfactory cushions over and above the regulatory minimum requirements, which are: Tier 1 Leverage Ratio at 15.35%; Tier 1 Risk-Based Ratio at 18.58%; and Total Risk-Based Ratio at 19.84%.

OPERATING PERFORMANCE: The Company generated a solid net income for the year ended December 31, 2011 of $2.4 million (42 cents a share and 33 cents a share, before and after preferred stock dividend, respectively) that doubled the net results of $1.2 million for the year ended December 31, 2010. Drivers of operating performance were:

• Net Interest income (aNIIa) in 2011 was $14.6 million vs. $12.2 million in 2010 or a healthy variance of $2.4 million or 19.3%, which was a combined impact of better gross interest income variance of $2.1 million and lower gross interest expense of $0.311 million.
• Average gross yield on Total Earning Assets was 4.53%, and the average cost of IB Liabilities was 0.71%, and the difference is the net spread of 3.82%, which when compared to 2010 was favorably higher by 4 bps, favorably lower by 22 bps, and positively better by 26 bps, respectively.
• The average cost of funds of 0.71% was effectively reduced to 0.41% by the favorable impact of the average Non IB deposits of $138.6 million or 30 bps. (In 2010 the average cost of funds of IB liabilities was 0.93% and the effective cost of funds was 0.58%, a substantial reduction of 22 bps in IB liabilities and 17 bps in the effective cost of funds, respectively.)
• Net Interest Margin (NIM) was 4.15% better by 20 bps when compared to 3.95% in 2010.
• The Provision for Loan Losses for 2011 was $2.2 million that included provision for the organic growth in the loan portfolio, and the necessary provision to write down non performing loan accounts to their appropriate fair value levels that should allow for their future favorable resolutions without incurring additional significant losses.
• Non Interest Income was $2.978 million favorably higher by $0.862 million or 40.7% than last year, and the following influenced the favorable results:
  • Service charges and fees, net: Generated $958k favorably higher by $45k or 4.9% than 2010.
  • Securities realized gains (losses): Have taken the opportunity to crystallize gain from sale of AFS investment securities of $312k compared to a gain in 2010 of $147k, an increase of 112%.
  • SBA loan and related fees: Gains on sale of SBA loans of $1.342 million better by $0.551 million than 2010. Premium referral fee income of $0.224 million better by $0.91 million than 2010. Servicing fee income (net of servicing cost) of $0.70 million lower by $0.31 million than 2010.

• Total Non Interest Expenses (NIE) for the year was $11.042 million an increase of $0.458 million or 4.3% compared to 2010. This was due to:
  • Salaries and employee benefits: Incurred a net of $6.642 million higher by $0.550 million or 9% compared to 2010.
  • Occupancy: Total for the year was $1.492 million lower by $40.8k or 2.7% than 2010.
  • Other noninterest expenses: Incurred a total of $2.907 million, $51k or 1.7 % lower than 2010.
• Efficiency ratio for the year was 63.98% favorably better than 2010 by 10.62%.

Security Bank of California opened for business on June 20, 2005. It offers personalized banking services and products to businesses and individuals through full-service offices in Riverside, San Bernardino and Redlands and in November opened a loan production office in Irwindale. It will open a new full-service branch in Orange on Feb. 6 at the site of a former Universal Bank branch.

Security California Bancorp is traded on the Over the Counter Bulletin Board under the symbol: SCAF.OB.

Visit us at [ www.securitybankca.com ]

Security California Bancorp
Security Bank of California

Forward Looking Statement Disclaimer -
General Form

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 Bankas 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 managementas 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.