SANTA ROSA, Calif., July 28, 2011 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended June 30, 2011 of $790,000 or $0.14 per common share.
Net Income and Results of Operations
The Bank had net income of $790,000 and net income available for common stockholders, which deducts the preferred dividends, of $652,000, or $0.14 per diluted share, for the quarter ended June 30, 2011. This represented a 56% increase compared to net income of $506,000 and net income available for common stockholders of $368,000, or $0.08 per diluted share, for the quarter ended June 30, 2010.
Net income for the six months ended June 30, 2011 was $1,267,000, net income available for common stockholders was $991,000 or $0.21 per diluted share compared to net income of $1,046,000, net income available for common stockholders of $770,000 or $0.16 per diluted share for six months ending June 30, 2010.
The increase in net income between the quarters was driven by a 14% or $520,000 increase in net interest income. The increase in net interest income resulted from increased interest revenue from additional bond investments, resolution of a nonaccrual loan relationship and the continued decline in the Bank's cost of funds. The net interest margin for the quarter ended June 30, 2011 was 4.82% compared to 4.56% for the quarter ended June 30, 2010.
Net interest income was $4,315,000 for the second quarter of 2011 compared to $3,795,000 for the same quarter in 2010. A 7.5% increase in average earning assets between the quarters was predominantly due to an increase in the investment portfolio.
"Our continuing success in attracting key full banking relationships, including core deposits, has allowed us to further improve the Bank's cost of funds, which is the key to the Bank's long term top line performance. In addition, starting in the first quarter of this year, we increased our investment portfolio to better utilize our excess liquidity, further strengthening performance," stated Thomas Duryea, President and CEO.
The provision for loan losses was $600,000 for the second quarter of 2011 compared to $700,000 in 2010. Allowance for loan losses increased to $7,319,000 at June 30, 2011 from $6,058,000 at December 31, 2010, increasing the coverage of allowance for loan losses to gross loans to 2.61% from 2.11%. Nonperforming assets at June 30, 2011 included $10,145,000 in loans on non-accrual and $1,317,000 in foreclosed real estate. This compares to nonperforming assets of $14,294,000 at March 31, 2010 and $13,472,000 at December 31, 2010. "Nonperforming loans are primarily secured by real estate. Credit Quality remains a key focus especially during this uneven economic recovery," said Guy Dana, Chief Credit Officer.
The Bank's efficiency ratio, which expresses operating costs as a percentage of revenues, was 57% for the second quarter of 2011 compared to 60% for the same quarter in 2010. "In addition to revenue growth, we remain committed to gaining greater efficiencies in the Bank's operating cost structure," stated Mr. Duryea.
Total assets increased to $383,524,000 at June 30, 2011, a 10.2% increase compared to $347,933,000 at December 31, 2010.
Total deposits increased 11.9% for the quarter over December 31, 2010 to $313,412,000, with demand, money market and savings deposits increasing 12.9% to $115,039,000.
The Bank's regulatory capital remains well above the required capital ratios with a Tier 1 capital leverage ratio of 13.9%, a Tier 1 risk-based capital ratio of 17.5% and a Total risk-based capital ratio of 18.8% at June 30, 2011."The capital ratios were further enhanced after the quarter end as the Bank exchanged its $8,500,000 in TARP preferred capital for $13,750,000 in preferred capital issued under the Small Business Lending Initiative," said Dennis Kelley, Chief Financial Officer.
About Summit State Bank
Summit State Bank has total assets of $384 million and total equity of $56 million at June 30, 2011. Headquartered in Sonoma County, the Bank provides diverse financial products and services throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit State Bank is a Premier Performing Bank, earning the highest Findley Reports designation of all Sonoma County-based banks. Summit State Bank received the Gold Medal award for Best Business Bank from the Northbay Biz Magazine and has also been recognized as one of the North Bay's Best Places to Work by the North Bay Business Journal. 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 for earnings per share data) | ||||
| Three Months Ended | Six Months Ended | |||
| June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Interest income: | ||||
| Interest and fees on loans | $ 4,386 | $ 4,371 | $ 8,631 | $ 8,844 |
| Interest on Federal funds sold | -- | 6 | 5 | 8 |
| Interest on investment securities and deposits in banks | 680 | 339 | 1,116 | 698 |
| Dividends on FHLB stock | 2 | 2 | 4 | 4 |
| Total interest income | 5,068 | 4,718 | 9,756 | 9,554 |
| Interest expense: | ||||
| Deposits | 668 | 787 | 1,326 | 1,607 |
| FHLB advances | 85 | 136 | 172 | 272 |
| Total interest expense | 753 | 923 | 1,498 | 1,879 |
| Net interest income before provision for loan losses | 4,315 | 3,795 | 8,258 | 7,675 |
| Provision for loan losses | 600 | 700 | 1,400 | 1,710 |
| Net interest income after provision for loan losses | 3,715 | 3,095 | 6,858 | 5,965 |
| Non-interest income: | ||||
| Service charges on deposit accounts | 131 | 96 | 248 | 189 |
| Office leases | 141 | 134 | 279 | 260 |
| Net securities gains | -- | -- | -- | 150 |
| Loan servicing, net | 7 | 10 | 14 | 22 |
| Other income | 2 | 11 | 2 | 57 |
| Total non-interest income | 281 | 251 | 543 | 678 |
| Non-interest expense: | ||||
| Salaries and employee benefits | 1,308 | 1,177 | 2,630 | 2,419 |
| Occupancy and equipment | 450 | 402 | 840 | 791 |
| Other expenses | 880 | 853 | 1,760 | 1,601 |
| Total non-interest expense | 2,638 | 2,432 | 5,230 | 4,811 |
| Income before provision for income taxes | 1,358 | 914 | 2,171 | 1,832 |
| Provision for income taxes | 568 | 408 | 904 | 786 |
| Net income | $ 790 | $ 506 | $ 1,267 | $ 1,046 |
| Less: preferred dividends | 138 | 138 | 276 | 276 |
| Net income available for common stockholders | $ 652 | $ 368 | $ 991 | $ 770 |
| Basic earnings per common share | $ 0.14 | $ 0.08 | $ 0.21 | $ 0.16 |
| Diluted earnings per common share | $ 0.14 | $ 0.08 | $ 0.21 | $ 0.16 |
| Basic weighted average shares of common stock outstanding | 4,745 | 4,745 | 4,745 | 4,745 |
| Diluted weighted average shares of common stock outstanding | 4,794 | 4,785 | 4,794 | 4,774 |
| SUMMIT STATE BANK AND SUBSIDIARY | |||
| CONSOLIDATED BALANCE SHEETS | |||
| (In thousands except share and per share data) | |||
| June 30, | December 31, | June 30, | |
| 2011 | 2010 | 2010 | |
| (Unaudited) | (Unaudited) | ||
| ASSETS | |||
| Cash and due from banks | $ 20,702 | $ 4,542 | $ 4,610 |
| Federal funds sold | -- | 7,940 | 13,200 |
| Total cash and cash equivalents | 20,702 | 12,482 | 17,810 |
| Available-for-sale investment securities - amortized cost of | |||
| $66,463 in 2011 and $33,472 in 2010 | 68,004 | 33,642 | 36,177 |
| Loans, less allowance for loan losses of $7,319 | |||
| in 2011 and $6,058 in 2010 | 272,581 | 280,398 | 284,711 |
| Bank premises and equipment, net | 7,028 | 7,304 | 7,493 |
| Investment in Federal Home Loan Bank stock, at cost | 2,403 | 2,614 | 2,832 |
| Goodwill | 4,119 | 4,119 | 4,119 |
| Accrued interest receivable and other assets | 8,687 | 7,374 | 7,832 |
| Total assets | $ 383,524 | $ 347,933 | $ 360,974 |
| LIABILITIES AND | |||
| SHAREHOLDERS' EQUITY | |||
| Deposits: | |||
| Demand - non interest-bearing | $ 30,553 | $ 23,594 | $ 22,928 |
| Demand - interest-bearing | 24,609 | 24,421 | 24,588 |
| Savings | 20,839 | 15,849 | 11,743 |
| Money market | 39,038 | 38,063 | 39,432 |
| Time deposits, $100 thousand and over | 143,226 | 113,187 | 95,860 |
| Other time deposits | 55,147 | 64,863 | 90,525 |
| Total deposits | 313,412 | 279,977 | 285,076 |
| Federal Home Loan Bank (FHLB) advances | 12,000 | 12,000 | 19,000 |
| Accrued interest payable and other liabilities | 1,787 | 647 | 797 |
| Total liabilities | 327,199 | 292,624 | 304,873 |
| Shareholders' equity | |||
| Preferred stock, no par value; 20,000,000 shares authorized; | |||
| shares issued and outstanding - 8,500 in 2011 and 2010; per share redemption of | |||
| $1,000 for total liquidation preference of $8,500 | 8,181 | 8,117 | 8,053 |
| Common stock, no par value; shares authorized - 30,000,000 shares; issued | |||
| and outstanding 4,744,720 at June 30, 2011 and December 31, 2010 | 36,332 | 36,311 | 36,289 |
| Common stock warrant | 622 | 622 | 622 |
| Retained earnings | 10,297 | 10,161 | 10,531 |
| Accumulated other comprehensive income, net of taxes | 893 | 98 | 606 |
| Total shareholders' equity | 56,325 | 55,309 | 56,101 |
| Total liabilities and shareholders' equity | $ 383,524 | $ 347,933 | $ 360,974 |
| Earnings Summary | ||||
| (In Thousands) | ||||
| Three Months Ended | Six Months Ended | |||
| June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Statement of Income Data: | ||||
| Net interest income | $ 4,315 | $ 3,795 | $ 8,258 | $ 7,675 |
| Provision for loan losses | 600 | 700 | 1,400 | 1,710 |
| Non-interest income | 281 | 251 | 543 | 678 |
| Non-interest expense | 2,638 | 2,432 | 5,230 | 4,811 |
| Provision for income taxes | 568 | 408 | 904 | 786 |
| Net income | $ 790 | $ 506 | $ 1,267 | $ 1,046 |
| Less: preferred dividends | 138 | 138 | 276 | 276 |
| Net income available for common stockholders | $ 652 | $ 368 | $ 991 | $ 770 |
| Selected per Common Share Data: | ||||
| Basic earnings per common share | $ 0.14 | $ 0.08 | $ 0.21 | $ 0.16 |
| Diluted earnings per common share | $ 0.14 | $ 0.08 | $ 0.21 | $ 0.16 |
| Book value per common share (2)(3) | $ 10.15 | $ 10.13 | $ 10.15 | $ 10.13 |
| Selected Balance Sheet Data: | ||||
| Assets | $ 383,524 | $ 360,974 | $ 383,524 | $ 360,974 |
| Loans, net | 272,581 | 284,711 | 272,581 | 284,711 |
| Deposits | 313,412 | 285,076 | 313,412 | 285,076 |
| Average assets | 373,058 | 352,380 | 365,158 | 348,591 |
| Average earnings assets | 359,206 | 334,098 | 351,151 | 330,949 |
| Average shareholders' equity | 55,915 | 55,989 | 55,709 | 55,927 |
| Average common shareholders' equity | 47,133 | 47,343 | 46,948 | 47,298 |
| Nonperforming loans | 10,145 | 10,683 | 10,145 | 10,683 |
| Total nonperforming assets | 11,462 | 10,706 | 11,462 | 10,706 |
| Selected Ratios: | ||||
| Return on average assets (1) | 0.85% | 0.58% | 0.70% | 0.61% |
| Return on average common equity (1) | 5.55% | 3.12% | 4.26% | 3.28% |
| Return on average common tangible equity (1) | 6.08% | 3.41% | 4.67% | 3.60% |
| Efficiency ratio | 57.40% | 60.11% | 59.43% | 57.60% |
| Net interest margin (1) | 4.82% | 4.56% | 4.74% | 4.68% |
| Tier 1 leverage capital ratio | 13.9% | 14.70% | 13.9% | 14.7% |
| Tier 1 risk-based capital ratio | 17.5% | 18.10% | 17.5% | 18.1% |
| Total risk-based capital ratio | 18.8% | 19.40% | 18.8% | 19.4% |
| Common dividend payout ratio (4) | 65.5% | 116.03% | 86.18% | 110.91% |
| Average equity to average assets | 14.99% | 15.89% | 15.26% | 16.04% |
| Nonperforming loans to total loans (2) | 3.62% | 3.68% | 3.62% | 3.68% |
| Nonperforming assets to total assets (2) | 2.99% | 2.97% | 2.99% | 2.97% |
| Allowance for loan losses to total loans (2) | 2.61% | 1.98% | 2.61% | 1.98% |
| Allowance for loan losses to nonperforming loans (2) | 72.14% | 53.74% | 72.14% | 53.74% |
| (1) Annualized. | ||||
| (2) As of period end | ||||
| (3) Total shareholders' equity less, preferred stock, divided by total common shares outstanding | ||||
| (4) common dividends divided by net income available for common stockholders | ||||