SANTA ROSA, Calif., April 28, 2015 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended March 31, 2015 of $1,722,000, a 42% increase over the quarter ended March 31, 2014. A quarterly dividend of $0.12 per share was declared for common shareholders.
Dividend
The Board of Directors declared a $0.12 quarterly dividend to be paid on May 26, 2015 to shareholders of record on May 18, 2015.
Net Income and Results of Operations
The Bank had net income of $1,722,000 and net income available for common stockholders of $1,688,000, or $0.35 per diluted share, for the quarter ended March 31, 2015 compared to net income of $1,210,000 and net income available for common stockholders of $1,176,000, or $0.24 per diluted share, for the quarter ended March 31, 2014.
Net income for the first quarter of 2015 benefited from an after tax gain of $662,000 on the successful sale of foreclosed property. Without the gain on sale of foreclosed properties in the first quarters of 2015 and 2014, net income declined $107,000. This decline was attributable to a lower net interest margin and increased operating expenses related to increased lending staff commensurate with increased loan demand, partially offset by increased non-interest income.
Net interest income declined 2.7% or $115,000 for the first quarter of 2015 compared to the same quarter in 2014. The net interest margin was 3.75% for the first quarter of 2015 compared to 3.92% in the first quarter of 2014.
The cost of funds continued to have a favorable decline, as the Bank successfully increased the amount of funding from non-interest bearing and interest bearing demand deposit accounts (DDA), which provide the lowest cost of funds. Average demand deposits increased 17% or $19 million between the quarters. DDA now totals $139 million or 38% of total deposits for the first quarter 2015 compared to $119 million or 33% in the first quarter of 2014. Since the 2007 year end, cost of funds has dropped from the 81st percentile to the 15th percentile per the latest Uniform Bank Performance Report dated December 31, 2014.
"Building our core customer relationship based demand deposit accounts has been a key strategy for our community Bank," said Thomas Duryea, President and CEO. "We are experiencing a growing pipeline of new loan prospects and we are working towards further increasing the volume of earning assets after booking over $10 million near the quarter end."
Non-interest income increased 7% without the gain on sale of foreclosed properties in the first quarter of 2015 compared to the first quarter of 2014. The increase was primarily attributed to higher service charge income on deposit accounts due to the increased demand deposits.
Operating expenses or non-interest expense, increased 3.6% between the first quarters, which was attributable to higher employee benefit costs and implementation of strategic initiatives. The number of full time equivalent employees remained at 61 for the two quarter ends. The Bank's efficiency ratio, which expresses operating costs as a percentage of revenues, was 49% for the first quarter of 2015 compared to 56% for the same quarter in 2014. Without the gain on sale of the foreclosed property, the efficiency ratio would have been 60.5% for the first quarter of 2015.
Total assets increased 3% to $474,375,000 at March 31, 2015 compared to $460,133,000 at March 31, 2014. The asset growth was funded by a $25,291,000 increase in demand, savings and money market deposits between March 31, 2015 and 2014. The mix of deposits changed between the quarters in favor of demand, savings and money market deposits, which now comprises 62% of total deposits at March 31, 2015 compared to 57% at March 31, 2014, with the majority of the growth in lowest cost relationship based demand deposits.
Return on average assets and average common equity for the quarter ended March 31, 2015 was 1.51% and 12.6% compared to 1.07% and 9.7% for the first quarter of 2014.
Gross loans were $297,547,000 at March 31, 2015 compared to $293,054,000 at March 31, 2014.
"Loan production and the loan pipeline have grown considerably in the first quarter. This is a result of both the strong efforts of our community banking team and the steady and continuing improvement of the Sonoma County economy," said Brandy Lee Seppi, Chief Credit Officer.
The Bank recorded no provision for loan losses for the first quarters of 2015 and 2014. The coverage of allowance for loan losses to gross loans was 1.77% at March 31, 2015 compared to 1.85% at March 31, 2014.
Nonperforming assets declined to $1,631,000 from $9,445,000 at March 31, 2015 compared to March 31, 2014. This represents a decline in the ratio of nonperforming assets to total assets to 0.34% compared to 2.05%.
About Summit State Bank
Summit State Bank, a community bank, has total assets of $474 million and total equity of $70 million at March 31, 2015. Headquartered in Sonoma County, the Bank specializes in providing exceptional services and solutions to aid in the success of local businesses and nonprofits throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit State Bank was again named to the Top 75 Corporate Philanthropists list by the San Francisco Business Times and received the Top Corporate Philanthropy Award by North Bay Business Journal. Summit has also been consistently recognized as a high performing bank by Findley Reports, 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 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 | ||
| March 31, 2015 | March 31, 2014 | |
| (Unaudited) | (Unaudited) | |
| Interest income: | ||
| Interest and fees on loans | $ 3,373 | $ 3,549 |
| Interest on federal funds sold | 1 | 1 |
| Interest on investment securities and deposits in banks | 956 | 936 |
| Dividends on FHLB stock | 48 | 43 |
| Total interest income | 4,378 | 4,529 |
| Interest expense: | ||
| Deposits | 179 | 222 |
| FHLB advances | 44 | 37 |
| Total interest expense | 223 | 259 |
| Net interest income before provision for loan losses | 4,155 | 4,270 |
| Provision for loan losses | -- | -- |
| Net interest income after provision for loan losses | 4,155 | 4,270 |
| Non-interest income: | ||
| Service charges on deposit accounts | 157 | 134 |
| Rental income | 133 | 132 |
| Net securities gain | -- | -- |
| Net gain on other real estate owned | 1,125 | 73 |
| Loan servicing, net | 2 | 3 |
| Other income | 126 | 120 |
| Total non-interest income | 1,543 | 462 |
| Non-interest expense: | ||
| Salaries and employee benefits | 1,412 | 1,368 |
| Occupancy and equipment | 309 | 292 |
| Other expenses | 1,047 | 1,013 |
| Total non-interest expense | 2,768 | 2,673 |
| Income before provision for income taxes | 2,930 | 2,059 |
| Provision for income taxes | 1,208 | 849 |
| Net income | $ 1,722 | $ 1,210 |
| Less: preferred dividends | 34 | 34 |
| Net income available for common stockholders | $ 1,688 | $ 1,176 |
| Basic earnings per common share | $ 0.35 | $ 0.25 |
| Diluted earnings per common share | $ 0.35 | $ 0.24 |
| Basic weighted average shares of common stock outstanding | 4,782 | 4,778 |
| Diluted weighted average shares of common stock outstanding | 4,838 | 4,821 |
| SUMMIT STATE BANK AND SUBSIDIARY | |||
| CONSOLIDATED BALANCE SHEETS | |||
| (In thousands except share and per share data) | |||
| March 31, 2015 | December 31, 2014 | March 31, 2014 | |
| (Unaudited) | (Unaudited) | ||
| ASSETS | |||
| Cash and due from banks | $ 22,421 | $ 21,313 | $ 18,193 |
| Federal funds sold | 2,000 | 2,000 | 1,631 |
| Total cash and cash equivalents | 24,421 | 23,313 | 19,824 |
| Time deposits with banks | 1,240 | 1,240 | 1,985 |
| Investment securities: | |||
| Held-to-maturity, at amortized cost | 6,981 | 9,977 | 15,558 |
| Available-for-sale (at fair market value; amortized cost of $130,875, $123,503 and $114,722) | 133,483 | 124,723 | 113,016 |
| Total investment securities | 140,464 | 134,700 | 128,574 |
| Loans, less allowance for loan losses of $5,270, $5,143 and $5,432 | 292,277 | 279,798 | 287,622 |
| Bank premises and equipment, net | 5,744 | 5,803 | 5,790 |
| Investment in Federal Home Loan Bank stock, at cost | 2,701 | 2,701 | 2,578 |
| Goodwill | 4,119 | 4,119 | 4,119 |
| Other Real Estate Owned | -- | 4,051 | 4,051 |
| Accrued interest receivable and other assets | 3,409 | 3,950 | 5,590 |
| Total assets | $ 474,375 | $ 459,675 | $ 460,133 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Deposits: | |||
| Demand - non interest-bearing | $ 72,987 | $ 73,707 | $ 70,752 |
| Demand - interest-bearing | 65,529 | 55,377 | 48,693 |
| Savings | 26,705 | 25,587 | 26,086 |
| Money market | 62,908 | 58,819 | 57,307 |
| Time deposits that meet or exceed the FDIC insurance limit | 54,160 | 53,563 | 54,125 |
| Other time deposits | 83,923 | 88,206 | 101,451 |
| Total deposits | 366,212 | 355,259 | 358,414 |
| Federal Home Loan Bank (FHLB) advances | 37,000 | 35,000 | 37,400 |
| Accrued interest payable and other liabilities | 1,627 | 1,836 | 1,062 |
| Total liabilities | 404,839 | 392,095 | 396,876 |
| Shareholders' equity | |||
| Preferred stock, no par value; 20,000,000 shares authorized; shares issued and outstanding - 13,750 Series B in 2015 and 2014; 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 4,782,770, 4,778,370 and 4,777,670 | 36,683 | 36,646 | 36,615 |
| Retained earnings | 17,674 | 16,560 | 13,966 |
| Accumulated other comprehensive income (loss) | 1,513 | 708 | (990) |
| Total shareholders' equity | 69,536 | 67,580 | 63,257 |
| Total liabilities and shareholders' equity | $ 474,375 | $ 459,675 | $ 460,133 |
| Financial Summary | ||
| (In Thousands) | ||
| Three Months Ended | ||
| March 31, 2015 | March 31, 2014 | |
| (Unaudited) | (Unaudited) | |
| Statement of Income Data: | ||
| Net interest income | $ 4,155 | $ 4,270 |
| Provision for loan losses | -- | -- |
| Non-interest income | 1,543 | 462 |
| Non-interest expense | 2,768 | 2,673 |
| Provision for income taxes | 1,208 | 849 |
| Net income | $ 1,722 | $ 1,210 |
| Less: preferred dividends | 34 | 34 |
| Net income available for common stockholders | $ 1,688 | $ 1,176 |
| Selected per Common Share Data: | ||
| Basic earnings per common share | $ 0.35 | $ 0.25 |
| Diluted earnings per common share | $ 0.35 | $ 0.24 |
| Dividend per share | $ 0.12 | $ 0.11 |
| Book value per common share (2)(3) | $ 11.68 | $ 10.38 |
| Selected Balance Sheet Data: | ||
| Assets | $ 474,375 | $ 460,133 |
| Loans, net | 292,277 | 287,622 |
| Deposits | 366,212 | 358,414 |
| Average assets | 463,475 | 457,628 |
| Average earning assets | 449,989 | 441,671 |
| Average shareholders' equity | 67,890 | 62,679 |
| Average common shareholders' equity | 54,224 | 49,014 |
| Nonperforming loans | 1,631 | 5,394 |
| Other real estate owned | -- | 4,051 |
| Total nonperforming assets | 1,631 | 9,445 |
| Troubled debt restructures (accruing) | 3,562 | 4,395 |
| Selected Ratios: | ||
| Return on average assets (1) | 1.51% | 1.07% |
| Return on average common equity (1) | 12.62% | 9.73% |
| Efficiency ratio (4) | 48.58% | 56.49% |
| Net interest margin (1) | 3.75% | 3.92% |
| Common equity tier 1 capital ratio | 14.3% | -- |
| Tier 1 capital ratio | 18.2% | 17.2% |
| Total capital ratio | 19.4% | 18.5% |
| Tier 1 leverage ratio | 13.9% | 13.3% |
| Common dividend payout ratio (5) | 34.00% | 44.73% |
| Average equity to average assets | 14.65% | 13.70% |
| Nonperforming loans to total loans (2) | 0.55% | 1.84% |
| Nonperforming assets to total assets (2) | 0.34% | 2.05% |
| Allowance for loan losses to total loans (2) | 1.77% | 1.85% |
| Allowance for loan losses to nonperforming loans (2) | 323.16% | 100.72% |
| (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, net of securities gains. | ||
| (5) Common dividends divided by net income available for common stockholders | ||