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CST: 20/08/2019 19:34:09   

Summit State Bank Reports Net Income for Second Quarter 2019 and Declaration of Dividend

28 Days ago

SANTA ROSA, Calif., July 23, 2019 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq: SSBI) today reported net income for the quarter ended June 30, 2019 of $1,172,000 and diluted earnings per share of $0.19.  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 on July 22, 2019 to be paid on August 23, 2019 to shareholders of record on August 16, 2019.

Net Income and Results of Operations

For the quarter ended June 30, 2019, Summit State Bank (“Bank”) had net income of $1,172,000 and diluted earnings per share of $0.19 compared to net income of $1,461,000 and diluted earnings per share of $0.24 for the same quarter in 2018. Net income decreased $289,000 or 20% the second quarter of 2019 compared to the second quarter of 2018.

Net interest income increased to $5,499,000 in the second quarter of 2019 compared to $5,240,000 in the second quarter of 2018. This was an increase of $259,000 or 5% from the prior year.

Net loans, deposits and total assets also increased when comparing the second quarter of 2019 to second quarter of 2018. Loans increased 16% to $536,674,000 at June 30, 2019 compared to $463,856,000 at June 30, 2018, deposits increased 3% to $532,257,000 at June 30, 2019 compared to $517,318,000 at June 30, 2018, and total assets increased 8% to $635,622,000 at June 30, 2019 compared to $585,950,000 at June 30, 2018.

“In the past year, the Bank has seen significant growth in its loan portfolio, 16% for the current quarter compared to a year ago,” said Jim Brush, President and CEO. “It is rewarding to see our staff invest so much effort into making our strategy a reality, they are the heart of our operations and the key to our long-term success.”

For the second quarter 2019, the net interest margin was 3.64%, annualized return on average assets was 0.75% and annualized return on average equity was 7.36%. The second quarter of 2018 generated an annualized net interest margin of 3.69%, annualized return on average assets of 1.01% and annualized return on average equity of 9.79%.

Non-interest income decreased in the second quarter of 2019 to $340,000 compared to $542,000 in the second quarter of 2018. The Bank did not sell any loans in the second quarter of 2019 but recognized $155,000 in gains on sales of SBA guaranteed loan balances in 2018. Rental income also decreased in the second quarter of 2019 to $81,000 compared to $149,000 in the second quarter of 2018.

There was a $438,000 or 12% increase in operating expenses between the second quarter of 2019 as compared to the second quarter of 2018. The increase in expenses are primarily due to the increase in employees, benefits and occupancy costs.

“As expected, this type of growth comes with its own set of challenges like maintaining net interest margin,” said Brush. “We continue to make a deliberate focus to invest our money in local markets and this is having a positive impact on our loan and asset growth.”

“In the shorter term, we will continue managing the cost of deposits. In recent weeks we have seen several shifts in the deposit market that will improve margins and net income in the second half of this year,” Brush said. “We are disappointed the net profit was not higher this quarter but believe our earnings will rebound and end near target for 2019.”

Nonperforming assets were $715,000 or 0.11% of total assets at June 30, 2019 compared to $2,606,000 or 0.44% at June 30, 2018. The nonperforming assets at June 30, 2019, consist of five loans which are predominantly secured by real property. The Bank had provision expense of $180,000 in the second quarter of 2019. The allowance for loan losses to loans was 1.17% at June 30, 2019 compared to 1.23% at June 30, 2018. In June 2019, the Bank also completed the private placement of $6,000,000 in subordinated notes. These notes qualify as Tier 2 capital for regulatory purposes.

About Summit State Bank

Summit State Bank, a local community bank, has total assets of $636 million and total equity of $65 million at June 30, 2019. 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.


SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except earnings per share data)
                       
                       
            Three Months Ended       Six Months Ended  
          June 30, 2019   June 30, 2018   June 30, 2019   June 30, 2018
          (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                       
Interest income:              
  Interest and fees on loans $ 6,630     $ 5,399   $ 13,081     $ 10,709
  Interest on deposits with banks   32       58     133       126
  Interest on federal funds sold   -       8     -       14
  Interest on investment securities   476       601     1,066       1,215
  Dividends on FHLB stock   53       53     108       108
      Total interest income   7,191       6,119     14,388       12,172
Interest expense:              
  Deposits   1,581       818     3,052       1,526
  Federal Home Loan Bank advances   111       61     290       92
      Total interest expense   1,692       879     3,342       1,618
      Net interest income before provision for loan losses   5,499       5,240     11,046       10,554
Provision for loan losses   180       150     280       300
      Net interest income after provision for loan losses   5,319       5,090     10,766       10,254
Non-interest income:              
  Service charges on deposit accounts   219       194     409       387
  Rental income   81       149     172       296
  Net gain on loan sales   -       155     167       447
  Net securities (loss) gain   (7 )     9     (7 )     16
  Other income   47       35     92       158
      Total non-interest income   340       542     833       1,304
Non-interest expense:              
  Salaries and employee benefits   2,303       2,078     4,960       4,105
  Occupancy and equipment   434       387     857       784
  Other expenses   1,258       1,092     2,390       2,209
      Total non-interest expense   3,995       3,557     8,207       7,098
      Income before provision for income taxes   1,664       2,075     3,392       4,460
Provision for income taxes   492       614     795       1,259
      Net income $ 1,172     $ 1,461   $ 2,597     $ 3,201
                       
Basic earnings per common share $ 0.19     $ 0.24   $ 0.43     $ 0.53
Diluted earnings per common share $ 0.19     $ 0.24   $ 0.43     $ 0.53
                       
Basic weighted average shares of common stock outstanding   6,069       6,066     6,068       6,063
Diluted weighted average shares of common stock outstanding   6,075       6,074     6,071       6,070

 

SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
                 
                 
        June 30, 2019   December 31, 2018   June 30, 2018
        (Unaudited)    (1)   (Unaudited)
                 
ASSETS          
                 
Cash and due from banks $ 12,104   $ 21,693     $ 23,660  
Federal funds sold   -     -       -  
      Total cash and cash equivalents   12,104     21,693       23,660  
                 
Investment securities:          
  Held-to-maturity, at amortized cost   7,995     7,991       7,988  
  Available-for-sale (at fair value; amortized cost of $59,450,          
    $72,716 and $75,676)   59,853     70,174       72,921  
      Total investment securities   67,848     78,165       80,909  
                 
Loans, less allowance for loan losses of $6,328, $6,029 and $5,775   536,674     504,549       463,856  
Bank premises and equipment, net (2)   6,324     5,803       5,151  
Investment in Federal Home Loan Bank stock, at cost   3,341     3,085       3,085  
Goodwill     4,119     4,119       4,119  
Accrued interest receivable and other assets (2)   5,212     4,690       5,170  
                 
      Total assets $ 635,622   $ 622,104     $ 585,950  
                 
LIABILITIES AND          
SHAREHOLDERS' EQUITY          
                 
Deposits:            
  Demand - non interest-bearing $ 119,535   $ 120,011     $ 143,926  
  Demand - interest-bearing   65,227     65,652       71,476  
  Savings   25,419     25,817       27,298  
  Money market   99,585     104,060       101,106  
  Time deposits that meet or exceed the FDIC insurance limit   85,315     83,071       75,888  
  Other time deposits   137,176     102,578       97,624  
      Total deposits   532,257     501,189       517,318  
                 
Federal Home Loan Bank advances   29,300     56,800       6,800  
Junior subordinated debt   5,862     -       -  
Accrued interest payable and other liabilities (2)   3,462     2,595       1,633  
                 
      Total liabilities   570,881     560,584       525,751  
                 
Shareholders' equity          
  Preferred stock, no par value; 20,000,000 shares authorized;          
    no shares issued and outstanding   -     -       -  
  Common stock, no par value; shares authorized - 30,000,000 shares;          
    issued and outstanding 6,070,062, 6,066,475 and 6,066,475   36,974     36,967       36,967  
  Retained earnings   27,483     26,342       25,171  
  Accumulated other comprehensive income (loss), net   284     (1,789 )     (1,939 )
                 
      Total shareholders' equity   64,741     61,520       60,199  
                 
      Total liabilities and shareholders' equity $ 635,622   $ 622,104     $ 585,950  
                 
(1) Information derived from audited financial statements.
           
(2) ASU No. 2016-02 (Topic 842) was adopted January 1, 2019 using the modified retrospective approach at the beginning of the adoption period. This
standard increases the transparency by recognizing the right-to-use lease asset for the lease term. As of June 30, 2019, the right-of-use asset was
recorded for $1,179,000 and a lease liability was recorded for $1,187,000.
                 

 

Financial Summary
(Dollars in thousands except per share data)
                 
    At or for the   At or for the
      Three Months Ended       Six Months Ended  
    June 30, 2019   June 30, 2018   June 30, 2019   June 30, 2018
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Statement of Income Data:                
Net interest income   $ 5,499     $ 5,240     $ 11,046     $ 10,554  
Provision for loan losses     180       150       280       300  
Non-interest income     340       542       833       1,304  
Non-interest expense     3,995       3,557       8,207       7,098  
Provision for income taxes     492       614       795       1,259  
Net income   $ 1,172     $ 1,461     $ 2,597     $ 3,201  
                 
Selected per Common Share Data:                
Basic earnings per common share   $ 0.19     $ 0.24     $ 0.43     $ 0.53  
Diluted earnings per common share   $ 0.19     $ 0.24     $ 0.43     $ 0.53  
Dividend per share   $ 0.12     $ 0.12     $ 0.24     $ 0.24  
Book value per common share (2)   $ 10.67     $ 9.92     $ 10.67     $ 9.92  
                 
Selected Balance Sheet Data:                  
Assets   $ 635,622     $ 585,950     $ 635,622     $ 585,950  
Loans, net     536,674       463,856       536,674       463,856  
Deposits     532,257       517,318       532,257       517,318  
Average assets     622,883       580,611       625,393       579,366  
Average earning assets     606,280       568,851       609,179       568,100  
Average shareholders' equity     63,855       59,866       63,126       59,814  
Nonperforming loans     715       2,606       715       2,606  
Total nonperforming assets     715       2,606       715       2,606  
Troubled debt restructures (accruing)     2,449       1,591       2,449       1,591  
                 
Selected Ratios:                
Return on average assets (1)     0.75 %     1.01 %     0.84 %     1.11 %
Return on average common shareholders' equity (1)     7.36 %     9.79 %     8.30 %     10.79 %
Efficiency ratio (3)     68.34 %     61.61 %     69.05 %     59.94 %
Net interest margin (1)     3.64 %     3.69 %     3.66 %     3.75 %
Common equity tier 1 capital ratio     10.7 %     11.3 %     10.7 %     11.3 %
Tier 1 capital ratio     10.7 %     11.3 %     10.7 %     11.3 %
Total capital ratio     13.0 %     12.5 %     13.0 %     12.5 %
Tier 1 leverage ratio     9.5 %     10.0 %     9.5 %     10.0 %
Common dividend payout ratio (4)     62.12 %     49.83 %     56.06 %     45.49 %
Average shareholders' equity to average assets     10.25 %     10.31 %     10.09 %     10.32 %
Nonperforming loans to total loans     0.13 %     0.55 %     0.13 %     0.55 %
Nonperforming assets to total assets     0.11 %     0.44 %     0.11 %     0.44 %
Allowance for loan losses to total loans     1.17 %     1.23 %     1.17 %     1.23 %
Allowance for loan losses to nonperforming loans     885.39 %     221.60 %     885.39 %     221.60 %
         
(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 and losses.        
(4) Common dividends divided by net income available for common shareholders.        

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

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