SANTA ROSA, Calif., Oct. 28, 2014 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended September 30, 2014 of $1,183,000, a 6% increase over the quarter ended September 30, 2013. A quarterly dividend of $0.11 per share was declared for common shareholders.
Dividend
The Board of Directors declared an $0.11 quarterly dividend to be paid on November 25, 2014 to shareholders of record on November 17, 2014.
Net Income and Results of Operations
The Bank had net income of $1,183,000 and net income available for common stockholders of $1,149,000, or $0.24 per diluted share, for the quarter ended September 30, 2014 compared to net income of $1,121,000 and net income available for common stockholders of $1,087,000, or $0.23 per diluted share, for the quarter ended September 30, 2013. For the nine months ended September 30, 2014 and 2013 the net income available for common stockholders and diluted earnings per common share were $3,572,000 or $0.74 and $2,934,000 or $0.61.
"Our performance continues to be driven by our strong community banking team and its deep sense of care for our growing customer base of local small businesses, their owners, individuals, and nonprofits who are increasingly attracted to our high Summit Way customer service standards," said Tom Duryea, President and CEO.
Return on average assets for the quarter and first nine months of 2014 were 1.01% and 1.07% compared to 1.01% and 0.96% for the same periods in 2013. Return on average common equity for the nine months ended September 30, 2014 was 9.5% compared to 8.0% in the first nine months of 2013.
The net interest margin remained relatively unchanged at 3.81% compared to 3.82% between the third quarters of 2014 and 2013 and the nine month periods of 3.83% compared to 3.87% in 2013. However, net interest income increased 6% and 4% for the 2014 periods as loan and investment volumes increased 1.4% between September 30, 2014 and 2013.
"Net interest income increase is tied to the continuing growth in our lower cost Relationship or Core deposits – Demand, Savings, and Money Market deposits – from approximately $60,000,000 at the beginning of 2009 to nearly $210,000,000 at quarter end, reducing our cost of funds to approximately the 15th percentile of Peer banks. This strong improvement has been primarily due to the increase in Demand Deposits from $24,000,000 in 2009 to $125,000,000 at quarter end, which now represents 34% of our total deposits, reflecting the many new quality relationships that our strong Summit team continues to attract," said Linda Bertauche, Chief Operating Officer.
Non-interest operating expenses increased in the third quarter of 2014 compared to the same quarter of 2013 by 8.9% primarily attributable to less deferred costs from loan originations. The efficiency ratios for the third quarters of 2014 and 2013 were 59.4% and 58.0%. For the nine month periods the ratios were 59.2% and 60.0% in 2014 compared to 2013.
Total assets were $463,376,000 at September 30, 2014 compared to $459,272,000 at September 30, 2013. The increase in assets was predominantly investments with a 4.4% or $5,643,000 increase. The asset growth was funded by a $14,780,000 or 13.4% increase in demand deposits between the quarters.
The coverage of allowance for loan losses to gross loans was 1.71% at September 30, 2014 compared to 2.06% at September 30, 2013. Nonperforming assets declined to $7,385,000 from $12,120,000 for September 30, 2014 compared to September 30, 2013. This represents a decline in the ratio of nonperforming assets to total assets to 1.59% compared to 2.64%. Nonperforming assets at September 30, 2014 included $3,334,000 in loans on non-accrual, primarily secured by commercial real estate, and $4,051,000 of income generating foreclosed property.
Summit State Bank continues to concentrate on its location in the heart of Sonoma Wine Country, which has provided a diverse economic base for its banking activities. Strategic plans have focused on supporting the net interest margin by lowering the Bank's cost of funds through increased funding of core or relationship based deposit accounts. The increased earning asset base has offset the decline in net interest margin that is being experienced in the industry. Continued focus on gaining greater operating efficiencies has resulted in period over period favorable comparisons and is aided with the ability to offer bank customers industry leading mobile and internet banking access.
"Summit has been able to control costs while increasing our assets despite the competition in the banking community and the challenges of a slowly improving local economy. We continue to attract commercial customer relationships based on our responsive and customer centric culture," said Dennis Kelley, Chief Financial Officer.
About Summit State Bank
Summit State Bank has total assets of $463 million and total equity of $66 million at September 30, 2014. Headquartered in Sonoma County, the Bank provides diverse financial products and services throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit has been recognized as one of the Top 75 Corporate Philanthropists in the Bay Area by the San Francisco Business Times and Top Corporate Philanthropist by the North Bay Business Journal. In addition, Summit State Bank received the 2013 Rising Star Award from the California Independent Bankers, the 2012 Community Bank Award from the American Bankers Association for its nonprofit work, and has been recognized as one of the North Bay's Best Places to Work by the North Bay Business Journal. Summit has also been consistently recognized as a high performing bank by Findley Reports. Summit State Bank's stock is traded on the Nasdaq Global Market under the symbol SSBI. Further information can be found at www.summitstatebank.com.
Forward-looking Statements
Except for historical information contained herein, the statements contained in this news release, are forward-looking statements within the meaning of the "safe harbor" provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 will be 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. You 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.
| SUMMIT STATE BANK AND SUBSIDIARY | ||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||
| (In thousands except earnings per share data) | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Interest income: | ||||
| Interest and fees on loans | $ 3,612 | $ 3,476 | $ 10,614 | $ 10,597 |
| Interest on Federal funds sold | 1 | -- | $ 2 | -- |
| Interest on investment securities and deposits in banks | 926 | 870 | 2,778 | 2,612 |
| Dividends on FHLB stock | 49 | 32 | 135 | 64 |
| Total interest income | 4,588 | 4,378 | 13,529 | 13,273 |
| Interest expense: | ||||
| Deposits | 215 | 270 | 655 | 933 |
| FHLB advances | 43 | 30 | 124 | 77 |
| Total interest expense | 258 | 300 | 779 | 1,010 |
| Net interest income before provision for loan losses | 4,330 | 4,078 | 12,750 | 12,263 |
| Provision for loan losses | -- | -- | (400) | 50 |
| Net interest income after provision for loan losses | 4,330 | 4,078 | 13,150 | 12,213 |
| Non-interest income: | ||||
| Service charges on deposit accounts | 159 | 149 | 445 | 426 |
| Rental income | 130 | 130 | 392 | 386 |
| Net securities gains | 60 | (7) | 73 | 74 |
| Net gain (loss) on other real estate owned | -- | 17 | 73 | (31) |
| Loan servicing, net | 3 | 3 | 9 | 10 |
| Other income | 188 | 158 | 403 | 340 |
| Total non-interest income | 540 | 450 | 1,395 | 1,205 |
| Non-interest expense: | ||||
| Salaries and employee benefits | 1,412 | 1,248 | 4,152 | 3,939 |
| Occupancy and equipment | 383 | 371 | 996 | 1,127 |
| Other expenses | 1,060 | 1,003 | 3,144 | 2,987 |
| Total non-interest expense | 2,855 | 2,622 | 8,292 | 8,053 |
| Income before provision for income taxes | 2,015 | 1,906 | 6,253 | 5,365 |
| Provision for income taxes | 832 | 785 | 2,578 | 2,212 |
| Net income | $ 1,183 | $ 1,121 | $ 3,675 | $ 3,153 |
| Less: preferred dividends | 34 | 34 | 103 | 219 |
| Net income available for common stockholders | $ 1,149 | $ 1,087 | $ 3,572 | $ 2,934 |
| Basic earnings per common share | $ 0.24 | $ 0.23 | $ 0.75 | $ 0.62 |
| Diluted earnings per common share | $ 0.24 | $ 0.23 | $ 0.74 | $ 0.61 |
| Basic weighted average shares of common stock outstanding | 4,778 | 4,754 | 4,778 | 4,751 |
| Diluted weighted average shares of common stock outstanding | 4,834 | 4,791 | 4,827 | 4,781 |
| SUMMIT STATE BANK AND SUBSIDIARY | |||
| CONSOLIDATED BALANCE SHEETS | |||
| (In thousands except share and per share data) | |||
| September 30, 2014 | December 31, 2013 | September 30, 2013 | |
| (Unaudited) | (Unaudited) | ||
| ASSETS | |||
| Cash and due from banks | $ 20,004 | $ 16,128 | $ 20,429 |
| Federal funds sold | 1,900 | -- | -- |
| Total cash and cash equivalents | 21,904 | 16,128 | 20,429 |
| Time deposits with banks | 1,240 | 1,985 | 1,985 |
| Investment securities: | |||
| Held-to-maturity, at amortized cost | 13,951 | 15,558 | 15,558 |
| Available-for-sale (at fair market value; amortized cost of $118,969, $116,947 and $114,844) | 119,208 | 113,568 | 111,958 |
| Total investment securities | 133,159 | 129,126 | 127,516 |
| Loans, less allowance for loan losses of $4,973, $5,412 and $5,991 | 285,809 | 282,667 | 284,598 |
| Bank premises and equipment, net | 5,880 | 5,505 | 5,209 |
| Investment in Federal Home Loan Bank stock, at cost | 2,701 | 2,578 | 2,578 |
| Goodwill | 4,119 | 4,119 | 4,119 |
| Other Real Estate Owned | 4,051 | 4,771 | 5,564 |
| Accrued interest receivable and other assets | 4,513 | 7,195 | 7,274 |
| Total assets | $ 463,376 | $ 454,074 | $ 459,272 |
| LIABILITIES AND | |||
| SHAREHOLDERS' EQUITY | |||
| Deposits: | |||
| Demand - non interest-bearing | $ 73,224 | $ 62,865 | $ 66,937 |
| Demand - interest-bearing | 51,562 | 43,879 | 43,069 |
| Savings | 25,313 | 25,740 | 26,760 |
| Money market | 58,877 | 55,971 | 55,675 |
| Time deposits, $100,000 and over | 112,879 | 114,435 | 120,625 |
| Other time deposits | 43,041 | 38,378 | 38,978 |
| Total deposits | 364,896 | 341,268 | 352,044 |
| Federal Home Loan Bank advances | 31,000 | 48,500 | 43,200 |
| Accrued interest payable and other liabilities | 1,724 | 2,676 | 2,756 |
| Total liabilities | 397,620 | 392,444 | 398,000 |
| Shareholders' equity | |||
| Preferred stock, no par value; 20,000,000 shares authorized; shares issued and outstanding - 13,750 Series B; per share redemption of $1,000 for total liquidation preference of $13,750 | 13,666 | 13,666 | 13,666 |
| Common stock, no par value; shares authorized - 30,000,000 shares; issued and outstanding 4,778,370, 4,777,670 and 4,775,270 | 36,640 | 36,608 | 36,571 |
| Retained earnings | 15,311 | 13,316 | 12,710 |
| Accumulated other comprehensive income (loss) | 139 | (1,960) | (1,675) |
| Total shareholders' equity | 65,756 | 61,630 | 61,272 |
| Total liabilities and shareholders' equity | $ 463,376 | $ 454,074 | $ 459,272 |
| Earnings Summary | ||||
| (In Thousands) | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Statement of Income Data: | ||||
| Net interest income | $ 4,330 | $ 4,078 | $ 12,750 | $ 12,263 |
| Provision for loan losses | -- | -- | (400) | 50 |
| Non-interest income | 540 | 450 | 1,395 | 1,205 |
| Non-interest expense | 2,855 | 2,622 | 8,292 | 8,053 |
| Provision for income taxes | 832 | 785 | 2,578 | 2,212 |
| Net income | $ 1,183 | $ 1,121 | $ 3,675 | $ 3,153 |
| Less: preferred dividends | 34 | 34 | 103 | 219 |
| Net income available for common stockholders | $ 1,149 | $ 1,087 | $ 3,572 | $ 2,934 |
| Selected per Common Share Data: | ||||
| Basic earnings per common share | $ 0.24 | $ 0.23 | $ 0.75 | $ 0.62 |
| Diluted earnings per common share | $ 0.24 | $ 0.23 | $ 0.74 | $ 0.61 |
| Dividend per share | $ 0.11 | $ 0.11 | $ 0.33 | $ 0.31 |
| Book value per common share (2)(3) | $ 10.90 | $ 9.97 | $ 10.90 | $ 9.97 |
| Selected Balance Sheet Data: | ||||
| Assets | $ 463,376 | $ 459,272 | $ 463,376 | $ 459,272 |
| Loans, net | 285,809 | 284,598 | 285,809 | 284,598 |
| Deposits | 364,896 | 352,044 | 364,896 | 352,044 |
| Average assets | 466,107 | 439,417 | 460,523 | 437,466 |
| Average earning assets | 451,062 | 423,564 | 445,373 | 423,123 |
| Average shareholders' equity | 65,711 | 61,160 | 64,223 | 62,662 |
| Average common shareholders' equity | 52,044 | 47,494 | 50,557 | 48,996 |
| Nonperforming loans | 3,334 | 6,556 | 3,334 | 6,556 |
| Other real estate owned | 4,051 | 5,564 | 4,051 | 5,564 |
| Total nonperforming assets | 7,385 | 12,120 | 7,385 | 12,120 |
| Troubled debt restructures (accruing) | 4,960 | 4,742 | 4,960 | 4,742 |
| Selected Ratios: | ||||
| Return on average assets (1) | 1.01% | 1.01% | 1.07% | 0.96% |
| Return on average common equity (1) | 8.76% | 9.08% | 9.45% | 8.01% |
| Efficiency ratio (4)(5) | 59.36% | 58.03% | 59.23% | 59.99% |
| Net interest margin (1) | 3.81% | 3.82% | 3.83% | 3.87% |
| Tier 1 leverage capital ratio | 13.3% | 13.5% | 13.3% | 13.5% |
| Tier 1 risk-based capital ratio | 17.7% | 17.1% | 17.7% | 17.1% |
| Total risk-based capital ratio | 19.0% | 18.3% | 19.0% | 18.3% |
| Common dividend payout ratio (6) | 45.78% | 48.30% | 0.00% | 50.27% |
| Average equity to average assets | 14.10% | 13.92% | 13.95% | 14.32% |
| Nonperforming loans to total loans (2) | 1.15% | 2.26% | 1.15% | 2.26% |
| Nonperforming assets to total assets (2) | 1.59% | 2.64% | 1.59% | 2.64% |
| Allowance for loan losses to total loans (2) | 1.71% | 2.06% | 1.71% | 2.06% |
| Allowance for loan losses to nonperforming loans (2) | 149.17% | 91.38% | 149.17% | 91.38% |
| (1) Annualized | ||||
| (2) As of period end | ||||
| (3) Total shareholders' equity, less preferred stock, divided by total common shares outstanding | ||||
| (4) Non-interest expenses to net interest and non-interest income | ||||
| (5) Excludes net gains on securities and other real estate owned | ||||
| (6) Common dividends divided by net income available for common stockholders | ||||