SANTA ROSA, Calif., July 30, 2007 (PRIME NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income of $400,000 or $0.08 per diluted share for the quarter ended June 30, 2007 compared to net income of $683,000 or $0.20 per diluted share for the second quarter of 2006. Net income for the six months ended June 30, 2007 was $992,000 or $0.20 per diluted share compared to net income of $1,433,000 or $0.42 per diluted share in 2006. Also the Board of Directors declared a dividend of nine cents per share on the Company's common stock. Earnings and dividends per share information for all periods presented give effect to the 2-for-1 stock split issued in June 2006.
Dividend
On July 30, 2007, the Board of Directors declared a quarterly cash dividend of $.09 per share on the Company's common Stock. The dividend is payable August 21, 2007 to shareholders of record as of the close of business on August 10, 2007.
Net Income
The Bank had net income of $400,000 or $0.08 per diluted share for the quarter ended June 30, 2007. This compares to net income of $683,000 or $0.20 per diluted share for the second quarter of 2006. Net income for the six months ended June 30, 2007 was $992,000 or $0.20 per diluted share compared to net income of $1,433,000 or $0.42 per diluted share in 2006.
On August 16, 2006, SSB completed an underwritten public offering of 1,432,700 shares of common stock. These shares increased the weighted average shares outstanding for the second quarter and six months ending June 30, 2007 over the second quarter and six month period in 2006 by 43%. The diluted earnings per share decline in the second quarter of 2007 of $0.12 per share as compared to the prior year second quarter was comprised of a decline of $0.08 per share attributable to the decline in net income and $0.04 per share decline attributable to the increase in weighted average shares outstanding. The diluted earnings per share decline for the first six months of 2007 of $0.22 per share as compared to the same period in the prior year was comprised of a decline of $0.13 per share attributable to the decline in net income and $0.09 per share decline attributable to the increase in weighted average shares outstanding.
Total shareholder equity was $47,868,000 at June 30, 2007 compared to $27,670,000 at June 30, 2006. At June 30, 2007 there were 4,844,720 common shares outstanding with a per share book value of $9.88 compared to 3,362,020 shares outstanding at June 30, 2006 with a per share book value of $8.23.
Annualized return on average assets and annualized return on average equity was 0.49% and 3.32% for the three months ended June 30, 2007, as compared to 0.94% and 9.93% for the same period one year ago. Annualized return on average assets and return on equity for the six months period was 0.62% and 4.15% for 2007, as compared to 0.96% and 10.50% for 2006. Annualized return on average tangible equity was 3.63% for the three months ended June 30, 2007, as compared to 11.67% for the same quarter one year ago. Annualized return on average tangible equity was 4.54% for the six months ended June 30, 2007 compared to 12.35% for the six months ended June 30, 2006.
The Bank experienced a decline in net income during the second quarter of 2007 as compared to the second quarter of 2006, primarily due to an increased provision for loan losses, and increased operating expenses, and to a lesser extent, a reduction in revenue.
Net Interest Income
Net interest income declined $57,000 or 2% to $2,635,000 during the second quarter of 2007 compared to $2,692,000 for the same quarter of 2006. The annualized net interest margin declined to 3.43% for the three months ended June 30, 2007, compared to 3.94% for the three months ended June 30, 2006. The net interest margin continues to be negatively impacted as rates on deposits continue to reprice upward while the change in yields on earning assets have slowed as the Federal Reserve stopped increasing short-term rates, and the growth in loans has been funded through time deposits or FHLB advances.
Average earning assets were $307,893,000 for the second quarter of 2007, as compared to $273,804,000 for the second quarter of 2006. The annualized yield on average earning assets was 7.30% and the annualized cost of average interest-bearing liabilities was 4.48% for the second quarter of 2007, as compared to the annualized yield on average earning assets of 7.21% and annualized cost of interest-bearing liabilities of 3.57% for the second quarter of 2006.
Net interest income declined $95,000 or 2% to $5,399,000 during the first six months of 2007 compared to $5,494,000 for the same period in 2006. The net interest margin declined to 3.59% for the six months ended June 30, 2007, compared to 3.92% for the six months ended June 30, 2006.
Non-interest Income
For the second quarter 2007, total non-interest income was $313,000, as compared to $334,000 for the second quarter of 2006. Non-interest income in 2006 included the recovery of $34,000 in loan collection legal expenses included in other income in the second quarter of 2006. For the six month periods, non-interest income was $607,000 at June 30, 2007 and $656,000 at June 30, 2006.
Non-interest Expense
For the second quarter 2007, non-interest expense increased $277,000 or 16% to $2,002,000, compared to the same quarter in 2006. Salaries and employee benefits expense increased $67,000 or 7.5% to $957,000. Occupancy and equipment expenses increased $51,000 or 15% and other operating expenses increased $159,000 or 32% for the second quarter of 2007 as compared to the second quarter of 2006. Part of the increase in salaries and employee benefits expense and occupancy and equipment expense were attributable to personnel hired and space leased in the first quarter of 2007 for the new regional office in Petaluma which was opened in July 2007. The increase in other operating expense was partially due to increased loan collection expenses.
Loan and Deposit Activity
Total loans as of June 30, 2007 were $266,219,000, an increase of $15,870,000 or 6%, compared to total loans of $250,349,000 at June 30, 2006.
Total deposits were $245,270,000 at June 30, 2007, compared to $236,394,000 at June 30, 2006, a 4% increase.
Total assets were $330,732,000 at June 30, 2007, an increase of $31,386,000 or 10%, compared to $299,346,000 at June 30, 2006.
Nonperforming Assets, Allowance and Provision For Loan Losses
Nonperforming assets at June 30, 2007 include loans on nonaccrual of $341,000 or 0.13% of gross loans and other real estate owned ("OREO") of $921,000. This is a decline as compared to the non performing asset total at March 31, 2007 which was $2,110,000. The nonaccrual amount at June 30, 2007 consists of one loan restructured in 2006 and this loan is current with the restructured terms. The OREO at June 30, 2007 consists of one commercial property from a loan foreclosure recorded at estimated market value, net of estimated sales commission.
The provision for loan losses was $260,000 for the second quarter ended June 30, 2007 as compared to $111,000 in the second quarter of 2006. The increase reflects the growth in loan totals and loan charge-offs. Loans charged-off for the second quarter of 2007 were $642,000. At June 30, 2007, the allowance for loan losses was $3,175,000 and represented a ratio to gross loans of 1.19% and to nonaccrual loans of 931%. These ratios compare to 1.48% and 387% at June 30, 2006.
About Summit State Bank
Summit State Bank has total assets of $331 million and total equity of $48 million at June 30, 2007. It provides diverse financial products and services which are marketed through Sonoma County, California with offices located in Santa Rosa, Rohnert Park, Petaluma and Windsor. Summit State Bank stock is traded on the Nasdaq Global Market under the symbol SSBI.
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. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those set forth in or implied by forward-looking statements. These risks are described from time to time in Summit State Bank's filings with the Federal Deposit Insurance Corporation, including its Registration Statement on Form 10, Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Summit State Bank disclaims any intent or obligation to update these forward-looking statements.
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, June 30, June 30, June 30,
2007 2006 2007 2006
---------- ---------- ---------- ----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest income:
Interest and fees on
loans $ 4,986 $ 4,554 $ 9,948 $ 8,824
Interest on Federal
funds sold 2 4 2 244
Interest on
investment securities
and deposits in
banks 589 337 1,132 677
Dividends on FHLB
stock 30 25 58 46
---------- ---------- ---------- ----------
Total interest income 5,607 4,920 11,140 9,791
---------- ---------- ---------- ----------
Interest expense:
Deposits 2,426 1,759 4,771 3,625
Securities sold under
repurchase agreements 1 6 2 6
FHLB Advances 545 463 968 666
---------- ---------- ---------- ----------
Total interest
expense 2,972 2,228 5,741 4,297
---------- ---------- ---------- ----------
Net interest income
before provision for
loan losses 2,635 2,692 5,399 5,494
Provision for loan
losses 260 111 331 222
---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses 2,375 2,581 5,068 5,272
---------- ---------- ---------- ----------
Non-interest income:
Service charges 95 78 181 162
Office leases 166 167 332 318
Gains on sales of loans 27 5 41 22
Real estate exchange
fees 2 7 7 23
Loan servicing, net 19 13 29 31
Other income 4 64 17 100
---------- ---------- ---------- ----------
Total non-interest
income 313 334 607 656
---------- ---------- ---------- ----------
Non-interest expense:
Salaries and employee
benefits 957 890 1,956 1,767
Occupancy and
equipment 390 339 757 661
Other expenses 655 496 1,269 1,030
---------- ---------- ---------- ----------
Total non-interest
expense 2,002 1,725 3,982 3,458
---------- ---------- ---------- ----------
Income before
provision for
income taxes 686 1,190 1,693 2,470
Provision for Income
taxes 286 507 701 1,037
---------- ---------- ---------- ----------
Net income $ 400 $ 683 $ 992 $ 1,433
========== ========== ========== ==========
Basic earnings per
share $ 0.08 $ 0.20 $ 0.21 $ 0.43
========== ========== ========== ==========
Diluted earnings per
share $ 0.08 $ 0.20 $ 0.20 $ 0.42
========== ========== ========== ==========
Basic weighted average
shares of common
stock outstanding 4,844,720 3,361,579 4,836,985 3,361,505
========== ========== ========== ==========
Diluted weighted
average shares of
common stock
outstanding 4,856,609 3,393,798 4,848,874 3,377,530
========== ========== ========== ==========
SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, June 30,
2007 2006
--------- ---------
(Unaudited) (Unaudited)
ASSETS
Cash and due from banks $ 5,932 $ 5,950
Federal funds sold 690 --
--------- ---------
Total cash and cash equivalents 6,622 5,950
Time deposits in banks 160 652
Available-for-sale investment securities -
amortized cost of $35,317 in 2007 and
$26,104 in 2006 34,502 21,671
Held-to-maturity investment securities -
market value of $4,820 in 2007 and $4,868
in 2006 5,000 5,000
Loans, less allowance for loan losses of
$3,175 in 2007 and $3,704 in 2006 263,044 246,645
Bank premises and equipment, net 8,482 8,406
Other real estate owned 921 --
Investment in Federal Home Loan Bank stock,
at cost 3,305 2,609
Goodwill 4,119 4,119
Accrued interest receivable and other
assets 4,577 4,294
--------- ---------
Total assets $ 330,732 $ 299,346
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non interest-bearing $ 11,701 $ 10,490
Demand - interest-bearing 11,724 13,168
Savings 12,296 42,666
Money market 37,624 37,855
Time deposits, $100 thousand and over 85,396 76,305
Other time deposits 86,529 55,910
--------- ---------
Total deposits 245,270 236,394
Securities sold under repurchase agreements 101 911
Federal Home Loan Bank (FHLB) advances 36,620 33,755
Accrued interest payable and other
liabilities 873 616
--------- ---------
Total liabilities 282,864 271,676
--------- ---------
Shareholders' equity
Preferred stock, no par value; 20,000
shares authorized; none issued
Common stock, no par value; shares
authorized - 30,000; shares issued and
outstanding 4,845 at June 30, 2007
and 3,362 outstanding at June 30, 2006 36,956 17,402
Retained earnings 11,376 10,743
Accumulated other comprehensive loss, net
of taxes (464) (475)
--------- ---------
Total shareholders' equity 47,868 27,670
--------- ---------
Total liabilities and shareholders'
equity $ 330,732 $ 299,346
========= =========
Earnings Summary
(In Thousands)
Three Months Ended Six Months Ended
--------------------- ---------------------
June 30, June 30, June 30, June 30,
2007 2007 2006 2006
--------- --------- --------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Statement of Income
Data:
Net interest income $ 2,635 $ 2,692 $ 5,399 $ 5,494
Provision for loan
losses 260 111 331 222
Noninterest income 313 334 607 656
Noninterest expense 2,002 1,725 3,982 3,458
Provision for income
taxes 286 507 701 1,037
--------- --------- --------- ---------
Net income $ 400 $ 683 $ 992 $ 1,433
========= ========= ========= =========
Selected per Share Data:
Basic earnings per
share $ 0.08 $ 0.20 $ 0.21 $ 0.43
Diluted earnings per
share $ 0.08 $ 0.20 $ 0.20 $ 0.42
Book value per share
(b) $ 9.88 $ 8.23 $ 9.88 $ 8.23
Selected Ratios:
Return on average
assets (a) 0.49% 0.94% 0.62% 0.96%
Return on average
equity (a) 3.32% 9.93% 4.15% 10.50%
Return on average
tangible equity (a) 3.63% 11.67% 4.54% 12.35%
Efficiency ratio 67.91% 57.01% 66.30% 56.23%
Net interest margin (a) 3.43% 3.94% 3.59% 3.92%
Dividend payout ratio 109.25% 44.22% 87.90% 42.22%
Average equity to average
assets 14.75% 9.48% 14.93% 9.14%
Nonperforming loans to
total loans (b) 0.13% 0.38% 0.13% 0.38%
Nonperforming assets to
total assets (b) 0.38% 0.32% 0.38% 0.32%
Allowance for loan losses
to total loans (b) 1.19% 1.48% 1.19% 1.48%
Allowance for loan losses
to nonperforming
loans (b) 931.09% 386.64% 931.09% 386.64%
(a) Annualized
(b) As of period end