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