Greater Sacramento Bancorp Reports Second Quarter Earnings up 8%; Six Months Earnings up 33%

SACRAMENTO, Calif., July 16, 2012 /PRNewswire/ -- For the Second Quarter ended June 30, 2012, Greater Sacramento Bancorp (GSB) (OTC: GSCB.OB), parent company of Bank of Sacramento (BOS), reported Net Income of $675,000 ($.25 per share diluted) representing an 8% increase over the $624,000 ($.23 per share diluted) reported for the Second Quarter 2011.

For the first six months of 2012, GSB reported Net Income of $1,403,000 ($.53 per share diluted), representing a 33% increase over the $1,057,000 ($.40 per share diluted) reported for the first six months of 2011.

The prime driver of increased Net Income over 2011 continues to be improvement in asset quality and the resultant decrease in loan loss provision and OREO expenses.  For the first six months of 2012, loan loss provision plus OREO expenses were $353,000, which was 71% lower than the $1,224,000 incurred for the same period of 2011.  Also positively affecting Net Income for the six months was a 30% increase in Non-Interest Income; $1,396,000 for six month of 2012 compared to $1,074,000 for six months of 2011.  Non-Interest Income has been buoyed by gains on the sale of securities and recoveries of prior problem loan related expenses.

Somewhat offsetting these positive factors was a 13% decrease in Second Quarter 2012 Net Interest Income to $3,204,000 from $3,687,000 for Second Quarter 2011.  For the comparative six months the decrease was 12% from $7,322,000 for 2011 to $6,424,000 for 2012.

Net Interest Margin for the first half of 2012 was 3.52% compared to the same period 2011 figure of 4.25%.  This 73 basis point reduction in the revenue generated from our earnings assets (loans outstanding plus securities) resulted in the reduction of our Net Interest Income.

Regarding GSB's performance during the first half of 2012, CEO and Chairman, William J. Martin, commented: "Management and the Board are most pleased with the continued improvement in our asset quality and with our earnings performance.  Reduced loan volume, however, has negatively impacted our Net Interest Margin.  As loans have paid off and deposits have continued to grow, more and more of our earning assets (approximately 40%) are now invested in low yielding securities.  It is our intent to work this securities percentage down closer to our long term goal of 25% by expanding our loan portfolio and partially funding that growth by liquidating securities."

"Fortunately we are beginning to see a return of loan demand and our pending loan pipeline indicates that the second half of 2012 will afford us the opportunity to pursue this strategy."

Regarding asset quality, two key asset quality indicators for BOS over the past five quarters witness the improvement in quality:

• Ratio of Non-Performing Loans plus OREO to Total Assets:

• Ratio of Non-Performing Assets to Equity Capital plus Loan Loss Reserve ("Texas Ratio"):

Further to the general quality of the Bank, BOS was awarded in June by Bauer Financial Inc., one of the major bank rating agencies in the United States, with their Five Star (highest) quality rating.  This was hard earned and we are most proud of the recognition!

GSB's profit over the past five quarters has been most consistent:

• Net Income and Dollar Per Share Diluted:

As of June 30, 2012 the Bank's Tier One Capital stood at $39,772,000 and GSB's Tier One Capital was $40,656,000.  The Leverage Capital Ratio for the Bank and GSB were 9.70% and 9.91%, respectively.  By all regulatory measures the Bank and GSB are considered well capitalized.

Comparing balance sheets for the Quarters ending June 30, 2012 and June 30, 2011, the following highlights are noted:

• Total Deposits at June 30, 2012 stood at $360,275,000, a 15% increase over the June 30, 2011 figure of $313,284,000.
• Total Loans at June 30, 2012 were $220,768,000, down 8% from Total Loans at June 30, 2011 of $239,270,000.  Since January 1, 2012, the Bank has had over $20 million in loans pay off with $10 million of that occurring in June.
• Total Assets at June 30, 2012 were $411,117,000, a 9% increase over the June 30, 2011 total Asset figure of $376,204,000.  The June 30, 2012 Total Asset number is a record high quarter ending figure for GSB.

A copy of the company's information and disclosure statement pursuant to Securities and Exchange Commission Rule 15c2-11 can be found on the home page of the company's website at www.bankofsacramento.com under the title Investor Relations.

Contact:               William J. Martin, CEO and Chairman, 916-648-2100

This report 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 Company is conducting its operations, including the real estate market in California and other factors beyond the Company'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 Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

SOURCE Greater Sacramento Bancorp