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CST: 14/11/2019 11:19:48   

Summit State Bank Reports 77% Increase in Net Income for 2018 and Declaration of Dividend

288 Days ago

SANTA ROSA, Calif., Jan. 29, 2019 (GLOBE NEWSWIRE) -- Summit State Bank (NASDAQ: SSBI) today reported net income for the year ended December 31, 2018, of $5,827,000 and diluted earnings per share of $0.96.  A quarterly dividend of $0.12 per share was declared for common shareholders.

Dividend

The Board of Directors declared a $0.12 per share quarterly dividend to be paid on February 26, 2019 to shareholders of record on February 19, 2019.

Net Income and Results of Operations

“We are in the third year of implementing Summit State Bank’s strategy to increase core deposits and loan volume and enhance earnings performance,” said Jim Brush, President and CEO.  “We continue to invest in highly qualified staff and this has allowed Summit to remain well poised for deliberate growth of our business in key areas. We are not growing just for the sake of growth, we are growing our business with the future in mind and making measured decisions that yield results that have a positive, lasting effect.”

Following are several key accomplishments in 2018:

  • Net loans increased 15.3% for 2018 compared to 2017.
     
  • Net Interest Margin increased to 3.75% in 2018, up 20 basis points from 2017.
     
  • Efficiency Ratio of 64.24% in 2018, an improvement of 425 basis points from 2017.

Net income was $5,827,000 and $0.96 diluted earnings per share for the year ended December 31, 2018, compared to net income of $3,292,000 and $0.54 diluted earnings per share for the year ended December 31, 2017, a 77% increase in net income and diluted earnings per share.

For the quarter ended December 31, 2018, Summit State Bank (“Summit”) had net income of $1,121,000 and diluted earnings per share of $0.18 compared to $478,000 of net income and $0.08 diluted earnings per share, for the same period in 2017, a 135% increase in net income and a 125% increase diluted earnings per share.

Summit experienced a 4.8% increase in gross loans during the fourth quarter 2018 and a 15.3% increase for 2018. Summit recorded a provision for loan loss that was relatively flat to the prior year; $530,000 in 2018 versus $520,000 in 2017. This was due to improved credit quality mitigating some of the impact of the loan growth on the provision for loan loss.

Summit has minimized the impact a rising interest rate environment has had by increasing total loans as a percent of assets. In 2018 Summit’s net interest income increased by 16.4%, up to $21,622,000 in 2018 from $18,572,000 in 2017.

“As projected, the bank began seeing positive impacts on net interest income starting in the fourth quarter of 2017 and this trend continued through 2018,” according to Mr. Brush. “We are able to improve net interest income by increasing loans as a percentage of the Bank’s assets and responding to the rising interest rate environment by creating a balanced offering of deposits and loans at competitive rates.”

Summit’s return on average assets yielded a positive increase, up to 0.99% for 2018 compared to 0.62% for 2017. Its return on average common equity was also up to 9.66% for 2018 compared to 5.49% for 2017.

Total assets were $622,104,000 at December 31, 2018, up 1.8% when compared to December 31, 2017 and up a total of 21.1% when compared to December 31, 2016. The growth in 2018 was subdued by a one-time deposit of approximately $55 million made prior to December 31, 2017 and partially withdrawn after year end.

Summit’s balance sheet is liability sensitive and with economists projecting a continued rising rate environment Summit has stated it will maintain a balance between growing its high-quality loan portfolio with a core deposit portfolio that is competitive and meets its customer’s needs.

“Staying true to our commitment of improving long-term shareholder value as well as caring for our employees, customers and community we serve is at the center of our strategic focus. I am optimistic about the trajectory we are on to build sustainable growth,” said Mr. Brush.

About Summit State Bank

Summit State Bank, a local community bank, has total assets of $622 million and total equity of $62 million at December 31, 2018. Headquartered in Sonoma County, the Bank specializes in providing exceptional customer service and customized financial solutions to aid in the success of local small businesses and nonprofits throughout Sonoma County. 

Summit State Bank is committed to embracing the diverse backgrounds, cultures and talents of its employees to create high performance and support the evolving needs of its customers and community it serves. At the center of diversity is inclusion, collaboration, and a shared vision for delivering superior service and results for shareholders. Presently, 82% of management are women and minorities with 60% represented on the Executive Management Team. Through the engagement of its team, Summit State Bank has received many esteemed awards including: Best Business Bank, Corporate Philanthropy Award and Best Places to Work in the North Bay.  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.

Contact: Jim Brush, President and CEO, Summit State Bank (707) 568-4920

 

 

SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except earnings per share data)
                   
      Three Months Ended   Year Ended
      December 31, 2018   December 31, 2017   December 31, 2018   December 31, 2017
      (Unaudited)    (1)   (Unaudited)    (1)
                   
Interest income:              
  Interest and fees on loans $   6,101   $   4,947     $   22,663   $   17,176  
  Interest on deposits with banks     62       50         247       162  
  Interest on federal funds sold     -       5         14       17  
  Interest on investment securities     582       656         2,382       3,126  
  Dividends on FHLB stock     104       54         266       232  
    Total interest income     6,849       5,712         25,572       20,713  
Interest expense:              
  Deposits      1,050       552         3,509       1,639  
  Federal Home Loan Bank advances     241       80         441       502  
    Total interest expense     1,291       632         3,950       2,141  
    Net interest income before provision for loan losses     5,558       5,080         21,622       18,572  
Provision for loan losses      150       350         530       520  
    Net interest income after provision for loan losses     5,408       4,730         21,092       18,052  
Non-interest income:              
  Service charges on deposit accounts     196       166         765       695  
  Rental income     109       144         553       574  
  Net gain on loan sales     206       351         748       351  
  Net securities gain     9       14         27       72  
  Other income      31       3         216       23  
    Total non-interest income     551       678         2,309       1,715  
Non-interest expense:              
  Salaries and employee benefits      2,628       2,564         9,151       7,788  
  Occupancy and equipment      404       370         1,536       1,503  
  Other expenses      1,334       1,162         4,670       4,554  
    Total non-interest expense     4,366       4,096         15,357       13,845  
    Income before provision for income taxes     1,593       1,312         8,044       5,922  
Provision for income taxes      471       834         2,217       2,630  
    Net income $   1,122   $   478     $   5,827   $   3,292  
                   
Basic earnings per common share $   0.18   $   0.08     $   0.96   $   0.55  
Diluted earnings per common share $   0.18   $   0.08     $   0.96   $   0.54  
                   
Basic weighted average shares of common stock outstanding   6,066     6,041       6,065     6,031  
Diluted weighted average shares of common stock outstanding   6,074     6,064       6,072     6,059  
                   
(1) Information derived from audited financial statements. 
                   

 

SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
             
        December 31,   December 31,
        2018   2017
        (Unaudited)   (1 )
             
ASSETS      
             
Cash and due from banks $ 21,693   $ 68,814  
Federal funds sold   -     2,000  
      Total cash and cash equivalents   21,693     70,814  
             
Investment securities:      
  Held-to-maturity, at amortized cost   7,991     7,984  
  Available-for-sale (at fair value; amortized cost of $72,716      
    in 2018 and $79,617 in 2017)   70,174     78,770  
      Total investment securities   78,165     86,754  
             
Loans, less allowance for loan losses of $6,029      
  in 2018 and $5,236 in 2017   504,549     437,594  
Bank premises and equipment, net    5,803     5,279  
Investment in Federal Home Loan Bank stock, at cost   3,085     3,085  
Goodwill     4,119     4,119  
Other Real Estate Owned   -     -  
Accrued interest receivable and other assets    4,690     3,219  
             
      Total assets $ 622,104   $ 610,864  
             
LIABILITIES AND      
SHAREHOLDERS' EQUITY      
             
Deposits:        
  Demand - non interest-bearing $   120,011   $   190,861  
  Demand - interest-bearing     65,652       65,742  
  Savings     25,817       30,102  
  Money market     104,060       79,564  
  Time deposits that meet or exceed the FDIC insurance limit     83,071       68,927  
  Other time deposits     102,578       98,317  
      Total deposits     501,189       533,513  
             
Federal Home Loan Bank advances     56,800       15,000  
Accrued interest payable and other liabilities     2,595       2,674  
             
      Total liabilities     560,584       551,187  
             
      Total shareholders' equity     61,520       59,677  
             
      Total liabilities and shareholders' equity $   622,104   $   610,864  
             
(1) Information derived from audited financial statements.      
       

 

Financial Summary
(In Thousands except per share data)
                 
    As of and for the   As of and for the
      Three Months Ended       Year Ended  
    December 31, 2018   December 31, 2017   December 31, 2018   December 31, 2017
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Statement of Income Data:                
Net interest income   $   5,558     $   5,080     $   21,622     $   18,572  
Provision for loan losses        150         350         530         520  
Non-interest income       551         678         2,309         1,715  
Non-interest expense       4,366         4,096         15,357         13,845  
Provision for income taxes        471         834         2,217         2,630  
Net income   $   1,122     $   478     $   5,827     $   3,292  
                 
Selected per Common Share Data:                
Basic earnings per common share   $   0.18     $   0.08     $   0.96     $   0.55  
Diluted earnings per common share   $   0.18     $   0.08     $   0.96     $   0.54  
Dividend per share   $   0.12     $   0.12     $   0.48     $   0.46  
Book value per common share (2)   $   10.14     $   9.88     $   10.14     $   9.88  
                 
Selected Balance Sheet Data:                  
Assets   $   622,104     $   610,864     $   622,104     $   610,864  
Loans, net       504,549         437,594         504,549         437,594  
Deposits       501,189         533,513         501,189         533,513  
Average assets       601,871         552,312         586,978         534,534  
Average earning assets       590,958         541,852         575,843         523,475  
Average shareholders' equity       60,944         60,456         60,295         59,987  
Nonperforming loans       2,124         2,730         2,124         2,730  
Total nonperforming assets       2,124         2,730         2,124         2,730  
Troubled debt restructures (accruing)       1,723         1,630         1,723         1,630  
                 
Selected Ratios:                
Return on average assets (1)     0.74 %     0.34 %     0.99 %     0.62 %
Return on average common shareholders' equity (1)     7.30 %     3.14 %     9.66 %     5.49 %
Efficiency ratio (3)     71.57 %     71.31 %     64.24 %     68.49 %
Net interest margin (1)     3.73 %     3.72 %     3.75 %     3.55 %
Common equity tier 1 capital ratio     10.5 %     11.6 %     10.5 %     11.6 %
Tier 1 capital ratio     10.5 %     11.6 %     10.5 %     11.6 %
Total capital ratio     11.6 %     12.7 %     11.6 %     12.7 %
Tier 1 leverage ratio     9.9 %     10.2 %     9.9 %     10.2 %
Common dividend payout ratio (4)     64.88 %     151.67 %     49.97 %     83.57 %
Average common shareholders' equity to average assets     10.13 %     10.95 %     10.27 %     11.22 %
Nonperforming loans to total loans     0.42 %     0.62 %     0.42 %     0.62 %
Nonperforming assets to total assets     0.34 %     0.45 %     0.34 %     0.45 %
Allowance for loan losses to total loans     1.18 %     1.18 %     1.18 %     1.18 %
Allowance for loan losses to nonperforming loans     283.84 %     191.79 %     283.84 %     191.79 %
                 
(1) Annualized.                
(2) Total shareholders' equity divided by total common shares outstanding.            
(3) Non-interest expenses to net interest and non-interest income, net of securities gains.          
(4) Common dividends divided by net income available for common shareholders.        


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