SANTA ROSA, Calif., Oct. 28, 2010 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended September 30, 2010 of $325,000 and declaration of $0.09 quarterly dividend.
Dividend
The Directors declared a $0.09 quarterly cash dividend to shareholders of record on November 11, 2010 and payable on November 23, 2010.
Net Income and Results of Operations
The Bank had net income of $325,000 and net income available for common stockholders, which deducts the preferred dividends, of $187,000, or $0.04 per diluted share, for the quarter ended September 30, 2010 compared to net income of $166,000 and net income available for common stockholders of $28,000, or $0.01 per diluted share, for the quarter ended September 30, 2009. Net income available for common stockholders and diluted earnings per share for the nine months ended September 30, 2010 were $957,000 and $0.20 compared to $1,353,000 and $0.28 for the same period in 2009.
"Our core operating performance continues to strengthen as our key initiative started in 2008, to reshape the Bank into a full relationship Bank is being firmly established. Our strong net interest margin, efficiency ratio, and core deposit growth, best demonstrate our successful transformation. Net earnings have been impacted by loan loss provisions to address former transaction orientation and the weak economy," stated Thomas Duryea, President and CEO.
The Bank's net interest margin was 4.52% for the three months ended September 30, 2010 compared to 4.47% for the three months ended September 30, 2009. Net interest income was stable at $3,840,000 during the third quarter of 2010 compared to $3,770,000 for the same quarter of 2009.
The Bank's efficiency ratio, which expresses operating costs as a percentage of revenues, was 58% for the third quarter in 2010 compared to 57% in the third quarter of 2009. The efficiency ratio includes expenses related to problem loan monitoring and resolution largely from former transaction orientation.
Core deposits, defined as demand, savings and money market deposits, increased 28% to $103,440,000 at September 30, 2010 from $80,532,000 at September 30, 2009, reflecting the Bank's key initiative to build full banking relationships with businesses in the Sonoma County community.
The Bank's regulatory capital remains well above the required capital ratios with a Tier 1 capital leverage ratio of 14.6%, a Tier 1 risk-based capital ratio of 18.3% and a Total risk-based capital ratio of 19.6% at September 30, 2010.
The provision for loan loss decreased with a provision of $1,150,000 for the third quarter of 2010 compared to $1,450,000 for the same quarter in 2009. The provision was $2,860,000 compared to $2,450,000 for the nine months ended September 30, 2010 and 2009. These provisions increased the ratios of the allowance for loan losses to 2.37% of total loans at September 30, 2010 from 1.62% at December 31, 2009.
"The ability for the Bank to increase its allowance for loan loss while still posting positive earnings, demonstrates the strength of the underlying earning power of the core banking operations," said Dennis Kelley, Chief Financial Officer.
Nonperforming loans at September 30, 2010 included $10,583,000 in loans on non-accrual, and $3,521,000 in loans past due more than 90 days but accruing and brought current in October. This compares to nonperforming loans of $10,683,000 at June 30, 2010 and $11,653,000 at December 31, 2009.
"We continue to work through the Bank's previous transaction emphasis and remain cautiously optimistic that a positive trend has been established. Given the historical downturn, however, we are acutely aware of the slow and uneven nature of our national economic recovery: Nonetheless, we continue to replace former transaction credits with full banking relationships strengthening our performance in both the short term, and, more importantly, long term," said Chief Credit Officer, Guy Dana.
Total assets increased to $353,016,000 at September 30, 2010 compared to $340,400,000 at December 31, 2009, as the Bank increased its liquidity position.
"Our strong commitment to the businesses in Sonoma County continues to drive our strong net interest margin, efficiency ratio, and core deposit growth, reflecting our gaining more and more full customer relationships attracted by our commitment to our Sonoma community," said Thomas Duryea.
About Summit State Bank
Summit State Bank has total assets of $353 million and total equity of $56 million at September 30, 2010. Headquartered in Sonoma County, the Bank provides diverse financial products and services throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit State Bank is Sonoma County's top rated bank, with the highest Bauer Financial rating 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.
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SUMMIT STATE BANK AND SUBSIDIARY |
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| CONSOLIDATED STATEMENTS OF INCOME | ||||
| (In thousands, except for earnings per share data) | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30, | September 30, | September 30, | September 30, | |
| 2010 | 2009 | 2010 | 2009 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Interest income: | ||||
| Interest and fees on loans | $ 4,350 | $ 4,726 | $ 13,194 | $ 14,315 |
| Interest on Federal funds sold | 11 | -- | 19 | -- |
| Interest on investment securities and deposits in banks | 343 | 403 | 1,041 | 1,447 |
| Dividends on FHLB stock | 3 | 6 | 7 | 6 |
| Total interest income | 4,707 | 5,135 | 14,261 | 15,768 |
| Interest expense: | ||||
| Deposits | 737 | 1,103 | 2,344 | 3,604 |
| FHLB advances | 130 | 262 | 402 | 820 |
| Total interest expense | 867 | 1,365 | 2,746 | 4,424 |
| Net interest income before provision for loan losses | 3,840 | 3,770 | 11,515 | 11,344 |
| Provision for loan losses | 1,150 | 1,450 | 2,860 | 2,450 |
| Net interest income after provision for loan losses | 2,690 | 2,320 | 8,655 | 8,894 |
| Non-interest income: | ||||
| Service charges on deposit accounts | 100 | 101 | 289 | 300 |
| Office leases | 140 | 124 | 401 | 462 |
| Net securities gains | -- | -- | 150 | 28 |
| Loan servicing, net | 10 | 10 | 31 | 48 |
| Securities impairment | (24) | (17) | (24) | (17) |
| Other income | 74 | 3 | 131 | 30 |
| Total non-interest income | 300 | 221 | 978 | 851 |
| Non-interest expense: | ||||
| Salaries and employee benefits | 1,201 | 1,079 | 3,620 | 3,252 |
| Occupancy and equipment | 410 | 423 | 1,201 | 1,272 |
| Other expenses | 774 | 757 | 2,375 | 2,284 |
| Total non-interest expense | 2,385 | 2,259 | 7,196 | 6,808 |
| Income before provision for income taxes | 605 | 282 | 2,437 | 2,937 |
| Provision for income taxes | 280 | 116 | 1,066 | 1,211 |
| Net income | $ 325 | $ 166 | $ 1,371 | $ 1,726 |
| Less: preferred dividends | 138 | 138 | 414 | 373 |
| Net income available for common stockholders | $ 187 | $ 28 | $ 957 | $ 1,353 |
| Basic earnings per common share | $ 0.04 | $ 0.01 | $ 0.20 | $ 0.29 |
| Diluted earnings per common share | $ 0.04 | $ 0.01 | $ 0.20 | $ 0.28 |
| Basic weighted average shares of common stock outstanding | 4,745 | 4,745 | 4,745 | 4,745 |
| Diluted weighted average shares of common stock outstanding | 4,783 | 4,794 | 4,777 | 4,768 |
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SUMMIT STATE BANK AND SUBSIDIARY |
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| CONSOLIDATED BALANCE SHEETS | |||
| (In thousands except share and per share data) | |||
|
September 30, 2010 |
December 31, 2009 |
September 30, 2009 |
|
| (Unaudited) | (Unaudited) | ||
| ASSETS | |||
| Cash and due from banks | $ 5,119 | $ 2,933 | $ 3,096 |
| Federal funds sold | 12,835 | -- | -- |
| Total cash and cash equivalents | 17,954 | 2,933 | 3,096 |
|
Available-for-sale investment securities - amortized cost of $29,640 at September 30, 2010, $27,393 at December 31, 2009, and $31,460 at September 30, 2009 |
31,260 | 27,400 | 31,844 |
|
Loans, less allowance for loan losses of $6,864 at September 30, 2010, $4,737 at December 31, 2009, and $4,758 at September 30, 2009 |
282,748 | 288,277 | 291,211 |
| Bank premises and equipment, net | 7,403 | 7,721 | 7,796 |
| Investment in Federal Home Loan Bank stock, at cost | 2,723 | 2,942 | 2,942 |
| Goodwill | 4,119 | 4,119 | 4,119 |
| Accrued interest receivable and other assets | 6,809 | 7,008 | 6,069 |
| Total assets | $ 353,016 | $ 340,400 | $ 347,077 |
| LIABILITIES AND | |||
| SHAREHOLDERS' EQUITY | |||
| Deposits: | |||
| Demand - non interest-bearing | $ 27,558 | $ 15,706 | $ 15,080 |
| Demand - interest-bearing | 25,021 | 22,206 | 21,316 |
| Savings | 12,809 | 12,783 | 11,755 |
| Money market | 38,052 | 43,489 | 32,381 |
| Time deposits, $100 thousand and over | 111,411 | 97,855 | 93,692 |
| Other time deposits | 69,041 | 72,214 | 88,310 |
| Total deposits | 283,892 | 264,253 | 262,534 |
| Federal Home Loan Bank (FHLB) advances | 12,000 | 20,120 | 27,650 |
| Accrued interest payable and other liabilities | 887 | 522 | 999 |
| Total liabilities | 296,779 | 284,895 | 291,183 |
| Shareholders' equity | |||
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Preferred stock, no par value; 20,000,000 shares authorized; shares issued and outstanding - 8,500 in 2010 and 2009; per share redemption of $1,000 for total liquidation preference of $8,500 |
8,085 | 7,989 | 7,958 |
|
Common stock, no par value; shares authorized - 30,000,000 shares; issued and outstanding 4,744,720 at June 30, 2010, December 31, 2009 and September 30, 2009 |
36,300 | 36,275 | 36,267 |
| Common stock warrant | 622 | 622 | 622 |
| Retained earnings | 10,291 | 10,615 | 10,824 |
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Accumulated other comprehensive income (loss), net of taxes |
939 | 4 | 223 |
| Total shareholders' equity | 56,237 | 55,505 | 55,894 |
| Total liabilities and shareholders' equity | $ 353,016 | $ 340,400 | $ 347,077 |
| Earnings Summary | ||||
| (In Thousands) | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30, | September 30, | September 30, | September 30, | |
| 2010 | 2009 | 2010 | 2009 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Statement of Income Data: | ||||
| Net interest income | $ 3,840 | $ 3,770 | $ 11,515 | $ 11,344 |
| Provision for loan losses | 1,150 | 1,450 | 2,860 | 2,450 |
| Non-interest income | 300 | 221 | 978 | 851 |
| Non-interest expense | 2,385 | 2,259 | 7,196 | 6,808 |
| Provision for income taxes | 280 | 116 | 1,066 | 1,211 |
| Net income | $ 325 | $ 166 | $ 1,371 | $ 1,726 |
| Less: preferred dividends | 138 | 138 | 414 | 373 |
| Net income available for common stockholders | $ 187 | $ 28 | $ 957 | $ 1,353 |
| Selected per Common Share Data: | ||||
| Basic earnings per common share | $ 0.04 | $ 0.01 | $ 0.20 | $ 0.29 |
| Diluted earnings per common share | $ 0.04 | $ 0.01 | $ 0.20 | $ 0.28 |
| Book value per common share (2)(3) | $ 10.15 | $ 10.10 | $ 10.15 | $ 10.10 |
| Selected Balance Sheet Data: | ||||
| Assets | $ 353,016 | $ 347,077 | $ 353,016 | $ 347,077 |
| Loans, net | 282,748 | 291,211 | 282,748 | 291,211 |
| Deposits | 283,892 | 262,534 | 283,892 | 262,534 |
| Average assets | 354,936 | 351,523 | 350,706 | 357,271 |
| Average earnings assets | 336,709 | 334,976 | 332,886 | 341,602 |
| Average shareholders' equity | 56,480 | 56,021 | 55,927 | 56,251 |
| Average common shareholders' equity | 47,806 | 47,461 | 47,268 | 47,716 |
| Nonperforming loans | 14,104 | 9,293 | 14,104 | 9,293 |
| Total nonperforming assets | 14,104 | 9,293 | 14,104 | 9,293 |
| Selected Ratios: | ||||
| Return on average assets (1) | 0.36% | 0.19% | 0.52% | 0.65% |
| Return on average common equity (1) | 1.55% | 0.23% | 2.71% | 3.79% |
| Return on average common tangible equity (1) | 1.70% | 0.26% | 2.97% | 4.15% |
| Efficiency ratio | 57.61% | 56.60% | 57.60% | 55.83% |
| Net interest margin (1) | 4.52% | 4.47% | 4.62% | 4.44% |
| Tier 1 leverage capital ratio | 14.6% | 14.8% | 14.6% | 14.8% |
| Tier 1 risk-based capital ratio | 18.3% | 18.2% | 18.3% | 18.2% |
| Total risk-based capital ratio | 19.6% | 19.5% | 19.6% | 19.5% |
| Common dividend payout ratio (4) | 228.34% | 74.26% | 133.86% | 63.12% |
| Average equity to average assets | 15.91% | 15.94% | 15.95% | 15.74% |
| Nonperforming loans to total loans (2) | 4.87% | 3.14% | 4.87% | 3.14% |
| Nonperforming assets to total assets (2) | 4.00% | 2.68% | 4.00% | 2.68% |
| Allowance for loan losses to total loans (2) | 2.37% | 1.61% | 2.37% | 1.61% |
| Allowance for loan losses to nonperforming loans (2) | 48.67% | 51.20% | 48.67% | 51.20% |
| (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 | ||||