SANTA ROSA, Calif., Jan. 30, 2008 (PRIME NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended and year ended December 31, 2007. Earnings and dividends per share information for all periods presented give effect to the 2-for-1 stock split issued in June 2006.
Net income for the year ended December 31, 2007 was $1,942,000 or $0.40 per diluted share compared to net income of $2,808,000 or $0.69 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 year ending December 31, 2007 over the prior year by 19%. The diluted earnings per share decline of $0.29 was comprised of a decline of $0.21 attributable to the decline in net income and $0.08 decline attributable to the increase in diluted weighted average shares outstanding.
The Bank had net income of $441,000 or $0.09 per diluted share for the quarter ended December 31, 2007. This compares to net income of $641,000 or $0.13 per diluted share for the fourth quarter of 2006.
The financial results for 2007 were impacted significantly by the increase in our cost of funds and resulting compression of the net interest margin. As expected, additional costs were incurred opening the Bank's fifth office in Petaluma.
Total shareholder equity was $47,715,000 at December 31, 2007 and per share book value was $10.06. The Bank completed its share repurchase program on January 2, 2008, with the purchase and retirement of 100,000 shares at an average market price of $8.80 per share.
Return on average assets and return on average equity was 0.59% and 4.03% for the year ended December 31, 2007, as compared to 0.92% and 7.64% for the prior year. Annualized return on average assets and return on average equity for the fourth quarter was 0.52% and 3.61% for 2007, as compared to 0.82% and 5.32% for 2006. Annualized return on average tangible equity was 4.40% and 3.94% for the year and three months ended December 31, 2007.
Net Interest Income
Net interest income increased $9,000 to $2,721,000 during the fourth quarter of 2007 compared to $2,712,000 for the same quarter of 2006. The annualized net interest margin declined to 3.36% for the fourth quarter of 2007, compared to 3.71% for the fourth quarter of 2006 and 3.45% for the third quarter of 2007. The Bank is liability sensitive, meaning that more liabilities reprice in the short-term than assets. As time deposits mature and are renewed at the current lower interest rates, the net interest margin should begin to increase.
Average earning assets were $321,172,000 for the fourth quarter of 2007, as compared to $290,720,000 for the fourth quarter of 2006. The annualized yield on average earning assets was 7.16% and the annualized cost of average interest-bearing liabilities was 4.38% for the fourth quarter of 2007, as compared to the annualized yield on average earning assets of 7.39% and annualized cost of interest-bearing liabilities of 4.32% for the fourth quarter of 2006.
Net interest income declined $180,000 or 2% to $10,851,000 during the year. The net interest margin declined to 3.49% in 2007 from 3.87% in 2006 as the higher cost of funds in the first three quarters of 2007 reduced the Bank's margin.
Non-interest Income
For the fourth quarter of 2007, total non-interest income was $299,000, as compared to $317,000 for the fourth quarter of 2006. For the years 2007 and 2006, non-interest income was $1,196,000 and $1,321,000. Fee income during 2007 was reduced most notably due to the decline in Small Business Administration guaranteed lending which were impacted by the higher market rates in 2007. The reduction in non-interest income was partially offset with an increase in deposit services fee income which had an increase of $22,000 or 30% for the fourth quarter of 2007 as compared to the same period in 2006 and a $15,000 or 4% increase year over year.
Non-interest Expense
Non-interest expense increased 7% for the quarter and 10% for the year, compared to the same periods in 2006. The opening of the Bank's fifth office was the main reason for the increase between the quarter and year end periods, however costs associated with loan collections also contributed to the increase.
Balance Sheet Activity
Total loans as of December 31, 2007 were $270,688,000, an increase of $14,092,000 or 5%, compared to total loans of $256,596,000 at December 31, 2006.
Total deposits were $249,019,000 at December 31, 2007, compared to $232,974,000 at December 31, 2006, a 7% increase.
Total assets were $340,193,000 at December 31, 2007, an increase of $27,243,000 or 9%, compared to $312,950,000 at December 31, 2006.
The Bank continues to exceed the "well capitalized" regulatory ratios with Total Risk Based Capital ratio of 16.4%, Tier 1 Capital to Risk Based Assets of 15.1%, and Regulatory leverage ratio of 13.0% at December 31, 2007.
Nonperforming Assets, Allowance and Provision for Loan Losses
Nonperforming assets at December 31, 2007, defined as loans past due 90 days or more, loans on nonaccrual status and other real estate owned, consisted of a two loans on nonaccrual of $465,000 or 0.17% of gross loans; of which $322,000 is current and the other is 75% SBA guaranteed.
The provision for loan losses was $259,000 for the fourth quarter and $749,000 for the year ended December 31, 2007. The provision reflects loan growth, net charge-offs and changes in the general economy. The Bank had zero loan charge-offs and recoveries during the fourth quarter of 2007. At December 31, 2007, the allowance for loan losses was $3,621,000 and represented a ratio to gross loans of 1.34% and to nonperforming loans of 779%. These ratios compare to 1.21% and 1010% at September 30, 2007 and 1.46% and 157% at December 31, 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 nor has the Bank purchased collateralized debt obligations..
Although the Bank has not experienced a substantial increase in nonperforming loans at year end, management has observed a negative trend in a number of economic indicators. The increase in the fourth quarter in provision for loan losses was in part attributable to that trend.
About Summit State Bank
Summit State Bank has total assets of $340 million and total equity of $48 million at December 31, 2007. The Bank provides diverse financial products and services which are marketed throughout Sonoma County and surrounding areas in 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 BALANCE SHEETS
(In thousands)
December 31,
2007 2006
--------- ---------
(Unaudited)
ASSETS
Cash and due from banks $ 5,695 $ 10,606
Federal funds sold 7,110 --
--------- ---------
Total cash and cash equivalents 12,805 10,606
Time deposits in banks 80 457
Available-for-sale investment securities
- amortized cost of $35,404 in 2007 and
$26,104 in 2006 35,426 25,829
Held-to-maturity investment securities
- market value of $4,999 in 2007 and
$4,868 in 2006 5,000 5,000
Loans, less allowance for loan losses of
$3,621 in 2007 and $3,736 in 2006 267,067 252,860
Bank premises and equipment, net 8,463 8,175
Investment in Federal Home Loan Bank
stock, at cost 2,850 1,699
Goodwill 4,119 4,119
Accrued interest receivable and
other assets 4,383 4,205
--------- ---------
Total assets $ 340,193 $ 312,950
========= =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand - non interest-bearing $ 10,297 $ 11,188
Demand - interest-bearing 12,421 12,623
Savings 12,460 19,331
Money market 29,858 47,335
Time deposits, $100,000 and over 103,995 80,160
Other time deposits 79,988 62,337
--------- ---------
Total deposits 249,019 232,974
Securities sold under repurchase agreements -- 257
Federal Home Loan Bank (FHLB) advances 42,600 31,460
Accrued interest payable and other liabilities 859 447
--------- ---------
Total liabilities 292,478 265,138
--------- ---------
Shareholders' equity
Preferred stock, no par value;
20,000 shares authorized; none issued
Common stock, no par value; shares
authorized - 30,000; shares issued and
outstanding - 4,745 at December 31, 2007 and
4,795 at December 31, 2006 36,244 36,698
Retained earnings 11,455 11,256
Accumulated other comprehensive income
(loss), net of taxes 16 (142)
--------- ---------
Total shareholders' equity 47,715 47,812
--------- ---------
Total liabilities and
shareholders' equity $ 340,193 $ 312,950
========= =========
SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for earnings per share data)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, December, 31
2007 2006 2007 2006
------- ------- ------- -------
(Unaudited) (Unaudited)
---------------- -------
Interest income:
Interest and fees on loans $ 5,166 $ 4,912 $20,327 $18,507
Interest on Federal funds
sold 3 25 6 297
Interest on investment
securities and deposits
in banks 581 430 2,293 1,536
Dividends on FHLB stock 43 41 129 114
------- ------- ------- -------
Total interest income 5,793 5,408 22,755 20,454
------- ------- ------- -------
Interest expense:
Deposits 2,485 2,354 9,869 8,040
Securities sold under
repurchase agreements -- 2 2 13
FHLB Advances 587 340 2,033 1,370
------- ------- ------- -------
Total interest expense 3,072 2,696 11,904 9,423
------- ------- ------- -------
Net interest income before
provision for loan losses 2,721 2,712 10,851 11,031
Provision for loan losses 259 -- 749 253
------- ------- ------- -------
Net interest income after
provision for loan losses 2,462 2,712 10,102 10,778
------- ------- ------- -------
Non-interest income:
Service charges 96 74 352 337
Office leases 183 177 699 658
Gains on sales of loans -- 37 41 99
Real estate exchange fees 2 6 10 42
Loan servicing, net 15 19 65 65
Other income 3 4 29 120
------- ------- ------- -------
Total non-interest income 299 317 1,196 1,321
------- ------- ------- -------
Non-interest expense:
Salaries and employee
benefits 1,061 979 3,974 3,675
Occupancy and equipment 436 354 1,624 1,350
Other expenses 519 555 2,395 2,213
------- ------- ------- -------
Total non-interest expense 2,016 1,888 7,993 7,238
------- ------- ------- -------
Income before provision for
income taxes 745 1,141 3,305 4,861
Provision for Income taxes 304 500 1,363 2,053
------- ------- ------- -------
Net income $ 441 $ 641 $ 1,942 $ 2,808
======= ======= ======= =======
Basic earnings per share $ 0.09 $ 0.13 $ 0.40 $ 0.70
======= ======= ======= =======
Diluted earnings per share $ 0.09 $ 0.13 $ 0.40 $ 0.69
======= ======= ======= =======
Basic weighted average shares
of common stock outstanding 4,805 4,795 4,831 4,030
======= ======= ======= =======
Diluted weighted average shares
of common stock outstanding 4,808 4,839 4,834 4,074
======= ======= ======= =======
Earnings Summary
(In Thousands Except Per share Data)
(Unaudited)
Three Months Ended Twelve Months Ended
----------------- -----------------
December 31, December 31,
2007 2006 2007 2006
------- ------- ------- -------
Statement of Income Data:
Net interest income $ 2,721 $ 2,712 $10,851 $11,031
Provision for loan losses 259 -- 749 253
Total non-interest income 299 317 1,196 1,321
Total non-interest expense 2,016 1,888 7,993 7,238
Provision for Income taxes 304 500 1,363 2,053
------- ------- ------- -------
Net income $ 441 $ 641 $ 1,942 $ 2,808
======= ======= ======= =======
Selected per Share Data:
Earnings per share - basic $ 0.09 $ 0.13 $ 0.40 $ 0.70
Earnings per share - diluted $ 0.09 $ 0.13 $ 0.40 $ 0.69
Book value per share (2) $ 10.06 $ 9.97 $ 10.06 $ 9.97
Selected Ratios:
Return on average assets (1) 0.52% 0.82% 0.59% 0.92%
Return on average equity (1) 3.61% 5.32% 4.03% 7.64%
Return on average tangible
equity (1) 3.94% 5.82% 4.40% 8.60%
Net interest margin (1) 3.36% 3.71% 3.49% 3.87%
Dividend payout ratio 98.64% 68.02% 89.75% 52.21%
Average equity to average assets 14.28% 15.42% 14.64% 12.10%
Leveraged capital ratio 13.01% 14.29% 13.01% 14.29%
Efficiency ratio (noninterest
expenses to net interest income
and noninterest income) 66.75% 62.33% 66.35% 58.60%
Nonperforming loans to total
loans (2) 0.17% 0.93% 0.17% 0.93%
Nonperforming assets to total
assets (2) 0.14% 0.76% 0.14% 0.76%
Allowance for loan losses to
total loans (2) 1.34% 1.46% 1.34% 1.46%
Allowance for loan losses to
nonperforming loans (2) 779% 157% 779% 157%
(1) Annualized.
(2) As of period end