SANTA ROSA, Calif., Oct. 30, 2007 (PRIME NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended September 30, 2007 and the declaration of 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 October 29, 2007, the Board of Directors declared a quarterly cash dividend of $.09 per share on the Company's common Stock. The dividend is payable November 21, 2007 to shareholders of record as of the close of business on November 13, 2007.
Net Income
The Bank had net income of $509,000 or $0.10 per diluted share for the quarter ended September 30, 2007. This compares to net income of $734,000 or $0.16 per diluted share for the third quarter of 2006. Net income for the nine months ended September 30, 2007 was $1,501,000 or $0.31 per diluted share compared to net income of $2,167,000 or $0.57 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 third quarter and nine months ending September 30, 2007 over the same periods in 2006 by 5% and 27%, respectively. The diluted earnings per share decline in the third quarter of $0.06 was comprised of a decline of $0.05 attributable to the decline in net income and $0.01 decline attributable to the increase in diluted weighted average shares outstanding. The diluted earnings per share decline for the nine month periods of $0.26 was comprised of a decline of $0.17 attributable to the decline in net income and $0.09 decline attributable to the increase in diluted weighted average shares outstanding.
Total shareholder equity was $48,232,000 at September 30, 2007 and per share book value was $9.96.
Annualized return on average assets and annualized return on average equity was 0.61% and 4.20% for the three months ended September 30, 2007, as compared to 0.96% and 6.63% for the same period one year ago. Annualized return on average assets and return on average equity for the nine months period was 0.62% and 4.17% for 2007, as compared to 0.96% and 8.77% for 2006. Annualized return on average tangible equity was 4.60% and 4.56% for the quarter and nine months ended September 30, 2007.
Net Interest Income
Net interest income declined $96,000 or 3% to $2,731,000 during the third quarter of 2007 compared to $2,827,000 for the same quarter of 2006. The annualized net interest margin declined to 3.45% for the third quarter of 2007, compared to 3.96% for the third quarter of 2006. After three quarters of fighting ever-tightening margins, we are beginning to see positive trends going forward. Once the 50 basis point drop in the Federal Discount Rates has a chance to flow through our Deposits and adjustable rate Loans, there should be a positive impact on the Net Interest Margin.
Average earning assets were $314,341,000 for the third quarter of 2007, as compared to $283,233,000 for the third quarter of 2006. The annualized yield on average earning assets was 7.35% and the annualized cost of average interest-bearing liabilities was 4.51% for the third quarter of 2007, as compared to the annualized yield on average earning assets of 7.36% and annualized cost of interest-bearing liabilities of 3.95% for the third quarter of 2006.
Net interest income declined $190,000 or 2% to $8,130,000 during the first nine months of 2007. The net interest margin declined to 3.54% from 3.93% for the nine month periods.
Non-interest Income
For the third quarter of 2007, total non-interest income was $290,000, as compared to $345,000 for the third quarter of 2006. For the nine month periods, non-interest income was $897,000 at September 30, 2007 and $1,002,000 at September 30, 2006. The higher interest rates and the current real estate environment has negatively impacted the volume of Small Business lending and real estate exchange activities, which has reduced the gains on sale of loans and real estate exchange fee income during 2007.
Non-interest Expense
For the third quarter of 2007, non-interest expense increased $103,000 or 5% to $1,995,000, compared to the same quarter in 2006. Salaries and employee benefits expense increased $27,000 or 3% to $957,000. Occupancy and equipment expenses increased $96,000 or 29% and other expenses decreased $20,000 or 3% for the third quarter of 2007 as compared to the third quarter of 2006. For the nine month periods, non-interest expense was $5,977,000 in 2007, a 12% increase compared to $5,350,000 in 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.
Loan and Deposit Activity
Total loans as of September 30, 2007 were $278,139,000, an increase of $25,857,000 or 10%, compared to total loans of $252,282,000 at September 30, 2006.
Total deposits were $246,686,000 at September 30, 2007, compared to $224,751,000 at September 30, 2006, a 10% increase.
Total assets were $338,017,000 at September 30, 2007, an increase of $34,471,000 or 11%, compared to $303,546,000 at September 30, 2006.
Nonperforming Assets, Allowance and Provision For Loan Losses
Nonperforming assets at September 30, 2007 consisted of a single loan on nonaccrual of $333,000 or 0.12% of gross loans. This loan was restructured in 2006, and is current as to the restructured terms. At June 30, 2007, the Bank had other real estate owned ("OREO") of $921,000 which was sold during the third quarter with a net loss of $4,000.
The provision for loan losses was $159,000 for the third quarter ended September 30, 2007 as compared to $31,000 in the third quarter of 2006. The provision reflects loan growth and changes in the general real estate economy. The Bank had zero loan charge-offs and $28,000 in loan recoveries during the third quarter of 2007. At September 30, 2007, the allowance for loan losses was $3,362,000 and represented a ratio to gross loans of 1.21% and to nonperforming loans of 1010%. These ratios compare to 1.48% and 350% at September 30, 2006.
The Bank's lending focus has been on commercial lending, commercial real estate and construction lending. Residential home mortgage lending has been minimal over the past several years and the Bank has not made loans that would be classified as subprime mortgage loans.
About Summit State Bank
Summit State Bank has total assets of $338 million and total equity of $48 million at September 30, 2007. The Bank provides diverse financial products and services which are marketed throughout Sonoma County and surrounding areas, 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. 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 for earnings per share data) Three Months Ended Nine Months Ended -------------------- ---------------------- Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2007 2006 2007 2006 -------- -------- -------- -------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest income: Interest and fees on loans $ 5,213 $ 4,771 $ 15,161 $ 13,595 Interest on Federal funds sold 1 27 3 271 Interest on investment securities and deposits in banks 580 429 1,712 1,106 Dividends on FHLB stock 28 28 86 73 -------- -------- -------- -------- Total interest income 5,822 5,255 16,962 15,045 -------- -------- -------- -------- Interest expense: Deposits 2,613 2,059 7,384 5,684 Securities sold under repurchase agreements -- 4 2 11 FHLB Advances 478 365 1,446 1,030 -------- -------- -------- -------- Total interest expense 3,091 2,428 8,832 6,725 -------- -------- -------- -------- Net interest income before provision for loan losses 2,731 2,827 8,130 8,320 Provision for loan losses 159 31 490 253 -------- -------- -------- -------- Net interest income after provision for loan losses 2,572 2,796 7,640 8,067 -------- -------- -------- -------- Non-interest income: Gains on sales of loans -- 40 41 63 Service charges 76 100 256 262 Office leases 184 163 516 481 Real estate exchange fees 1 12 8 35 Loan servicing, net 21 15 50 46 Other income 8 15 26 115 -------- -------- -------- -------- Total non-interest income 290 345 897 1,002 -------- -------- -------- -------- Non-interest expense: Salaries and employee benefits 957 930 2,913 2,696 Occupancy and equipment 431 335 1,187 996 Other expenses 607 627 1,877 1,658 -------- -------- -------- -------- Total non-interest expense 1,995 1,892 5,977 5,350 -------- -------- -------- -------- Income before provision for income taxes 867 1,249 2,560 3,719 Provision for Income taxes 358 515 1,059 1,552 -------- -------- -------- -------- Net income $ 509 $ 734 $ 1,501 $ 2,167 ======== ======== ======== ======== Basic earnings per share $ 0.11 $ 0.16 $ 0.31 $ 0.57 Diluted earnings per share $ 0.10 $ 0.16 $ 0.31 $ 0.57 Basic weighted average shares of common stock outstanding 4,845 4,579 4,840 3,772 Diluted weighted average shares of common stock outstanding 4,853 4,625 4,848 3,817 SUMMIT STATE BANK AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (In thousands) Sept. 30, Sept. 30, 2007 2006 ---------- ---------- (Unaudited) (Unaudited) ASSETS Cash and due from banks $ 4,224 $ 4,865 Federal funds sold -- -- ---------- ---------- Total cash and cash equivalents 4,224 4,865 Time deposits in banks 160 457 Available-for-sale investment securities - amortized cost of $35,209 in 2007 and $26,470 in 2006 34,910 26,131 Held-to-maturity investment securities - market value of $4,930 in 2007 and $4,845 in 2006 5,000 5,000 Loans, less allowance for loan losses of $3,362 in 2007 and $3,736 in 2006 274,777 248,546 Bank premises and equipment, net 8,577 8,290 Investment in Federal Home Loan Bank stock, at cost 2,203 1,876 Goodwill 4,119 4,119 Accrued interest receivable and other assets 4,047 4,262 ---------- ---------- Total assets $ 338,017 $ 303,546 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - non interest-bearing $ 11,015 $ 11,060 Demand - interest-bearing 12,299 12,803 Savings 11,484 18,748 Money market 33,670 32,807 Time deposits, $100 thousand and over 91,922 86,811 Other time deposits 86,296 62,522 ---------- ---------- Total deposits 246,686 224,751 Securities sold under repurchase agreements 4 638 Federal Home Loan Bank (FHLB) advances 42,370 29,920 Accrued interest payable and other liabilities 725 646 ---------- ---------- Total liabilities 289,785 255,955 ---------- ---------- Shareholders' equity Preferred stock, no par value; 20,000 shares authorized; none issued Common stock, no par value; shares authorized - 30,000; shares isssued and outstanding 4,845 at September 30, 2007 and 4,795 outstanding at September 30, 2006 36,957 36,724 Retained earnings 11,449 11,047 Accumulated other comprehensive loss, net of taxes (174) (180) ---------- ---------- Total shareholders' equity 48,232 47,591 ---------- ---------- Total liabilities and shareholders' equity $ 338,017 $ 303,546 ========== ========== Earnings Summary (In Thousands) Three Months Ended Nine Months Ended --------------------- --------------------- Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2007 2006 2007 2006 --------- --------- --------- --------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Statement of Income Data: Net interest income $ 2,731 $ 2,827 $ 8,130 $ 8,320 Provision for loan losses 159 31 490 253 Noninterest income 290 345 897 1,002 Noninterest expense 1,995 1,892 5,977 5,350 Provision for Income taxes 358 515 1,059 1,552 --------- --------- --------- --------- Net income $ 509 $ 734 $ 1,501 $ 2,167 ========= ========= ========= ========= Selected per Share Data: Basic earnings per share $ 0.11 $ 0.16 $ 0.31 $ 0.57 Diluted earnings per share $ 0.10 $ 0.16 $ 0.31 $ 0.57 Book value per share(2) $ 9.96 $ 9.93 $ 9.96 $ 9.93 Selected Ratios: Return on average assets(1) 0.61% 0.96% 0.62% 0.96% Return on average equity(1) 4.20% 6.63% 4.17% 8.77% Return on average tangible equity(1) 4.60% 7.31% 4.56% 10.02% Efficiency ratio 66.04% 59.65% 66.21% 57.39% Net interest margin(1) 3.45% 3.96% 3.54% 3.93% Dividend payout ratio 85.66% 58.45% 87.14% 47.72% Average equity to average assets 14.43% 14.48% 14.76% 10.95% Nonperforming loans to total loans(2) 0.12% 0.42% 0.12% 0.42% Nonperforming assets to total assets(2) 0.10% 0.35% 0.10% 0.35% Allowance for loan losses to total loans(2) 1.21% 1.48% 1.21% 1.48% Allowance for loan losses to nonperforming loans(2) 1009.61% 350.14% 1009.61% 350.14% (1) Annualized (2) As of period end