SANTA ROSA, Calif., Jan. 26, 2009 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported strong, continuing improvements in the bank's net income representing a 73% increase over the same quarter of 2007. "We continue to benefit from measured asset growth with smart community lending, improved net interest margins, greater efficiencies in operations, and excellent asset quality," said President & CEO, Thomas Duryea.
Dividend
On January 26, 2009, the Board of Directors declared a quarterly cash dividend of $0.09 per share on the Company's common Stock. The dividend is payable February 23, 2009 to shareholders of record as of the close of business on February 12, 2009. The Board of Directors also declared a $66,111 quarterly dividend payable on February 15, 2009, on the Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A, which was issued to the U.S. Department of the Treasury on December 19, 2008.
Net Income and Results of Operation
Net operating income was $764,000 or $0.16 per diluted share for the fourth quarter of 2008, reflecting an improved net interest margin, continuing strength in asset quality, and focus on operating efficiencies. This represented a $323,000 or 73% increase to net income of $441,000 or $0.09 per diluted share for the fourth quarter of 2007.
Before other than temporary impairment charges on investment securities (OTTI), net income was $842,000 in the fourth quarter 2008 representing a $401,000 or 91% increase over fourth quarter 2007.
The fourth quarter benefited from loan growth and further improvement in cost of funding, which increased net interest income to $3,343,000, a 23% increase over the fourth quarter of 2007. The net interest margin increased to 3.95% for the fourth quarter of 2008 compared to 3.36% for the fourth quarter of 2007.
"Loan growth of 12% from December 31, 2007 to December 31, 2008 added to interest earning assets. Moreover, the Bank benefited from continuing aggressive funds management that has reduced our funding costs to 2.71% in the fourth quarter of 2008 from 4.38.% for the same quarter in 2007," said Dennis Kelley, Chief Financial Officer.
The bank's efficiency ratio, excluding OTTI charges, improved to 54% at the fourth quarter of 2008 from 67% at the fourth quarter 2007.
For the year ended December 31, 2008, net income was $1,009,000 or $0.21 per diluted share, a 48% decline from the 2007 annual net income of $1,942,000 or $0.40 per diluted share due largely to other than temporary impairment charges (OTTI) primarily recorded in the third quarter due to the valuations of Fannie Mae and Freddie Mac preferred stocks and other corporate bond investments.
Before charges, including OTTI, employee severance and IT system conversion costs, net income was $2,770,000 in 2008 or 43 % higher than in 2007.
Total shareholders' equity was $55,561,000 at December 31, 2008, which includes the $8,500,000 in preferred stock and common stock warrants issued to the U.S. Department of the Treasury under the governments Capital Purchase Program (CPP). Book value per common share was $9.92 at December 31, 2008. The Bank's regulatory capital remains well above the required capital ratios with a Tier 1 capital leverage ratio of 14.8%; a Tier 1 risk-based capital ratio of 17.4%; and a Total risk-based capital ratio of 18.6% ranking in the top tier of local and national banks.
Nonperforming loans at December 31, 2008 were $1,046,000, of which $461,000 is guaranteed by the Small Business Administration and all are secured by real estate at conforming advances. The nonperforming assets to total assets ratio was 0.29% at December 31, 2008 and 0.23% after SBA guaranty. The bank's performing loan portfolio ranks favorably compared to peer banks. The Bank had one investment bond with a book value of $17,000 that had payments deferred.
The Bank had 0% of its loans past due 30 to 89 days for the sixth quarter out of the past seven, including all of 2008.
The bank had no REO (foreclosed properties) during 2008.
The provision for loan losses was $220,000 for the fourth quarter ended December 31, 2008 as compared to $259,000 in the fourth quarter of 2007 and $685,000 for the full year 2008 compared to $749,000 in 2007. The Bank had $142,000 in loan charge-offs and $57,000 in loan recoveries during the fourth quarter of 2008. At December 31, 2008, the allowance for loan losses was $4,016,000 and represented a ratio to gross loans of 1.32% and to nonperforming loans of 384%. These ratios compare to 1.34% and 779% at December 31, 2007.
Average earning assets were $336,161,000 for the fourth quarter of 2008, as compared to $321,172,000 for the same quarter of 2007. The annualized yield on average earning assets was 6.30% and the annualized cost of average interest-bearing liabilities was 2.71% for the fourth quarter of 2008, as compared to the annualized yield on average earning assets of 7.16% and annualized cost of interest-bearing liabilities of 4.38% for the same quarter of 2007. Total loans increased $15,365,000 during the fourth quarter of 2008, representing an annualized growth rate of 21% from the third quarter of 2008.
For the fourth quarter of 2008, non-interest expense decreased $44,000 or 2% to $1,972,000, compared to the same quarter in 2007. Non-interest expense increased to $8,639,000 for the year ended December 31, 2008 compared to $7,993,000, with the increase primarily attributable to the costs associated with conversion to a new data processor, employee severance expenses; and full year costs of a branch opened in July 2007.
The Bank recorded a non cash OTTI charge on Investments in the fourth quarter of $134,000 and for the year $2,457,000. The OTTI charge in the fourth quarter was the further write down of government agency preferred stocks and one trust preferred pooled security. The remaining recorded book value of these securities at December 31, 2008 was $46,000. In the third quarter the Bank recorded an OTTI charge on a GMAC bond with a par value of $500,000 and current book value of $263,000. The market value of the GMAC bond recovered to $375,000 at December 31, 2008.
Total assets were $364,333,000 at December 31, 2008, an increase of $24,140,000, or 7%, compared to $340,193,000 at December 31, 2007.
"We are pleased with the results of the fourth quarter and our operating earnings growth in 2008. We remain committed to driving stronger results in 2009 and beyond. We are on an upward trend in operating results and are entering 2009 with a net interest margin of 4%. The excellent asset quality ratios at year end are testament to our prudent underwriting standards employed by our strong, experienced credit team. With our strong capital position, we look forward to continuing to serve the banking needs of our community, so essential in these times," said Thomas Duryea, President & CEO.
About Summit State Bank
Summit State Bank has total assets of $364 million and total equity of $56 million at December 31, 2008. Headquartered in Sonoma County, the Bank provides diverse financial products and services throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit State Bank 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 for earnings per share data) Three Months Twelve Months Ended Ended ---------------- ---------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2008 2007 2008 2007 ------- ------- ------- ------- (Unaudited) (Unaudited) Interest income: Interest and fees on loans $ 4,726 $ 5,166 $18,848 $20,327 Interest on Federal funds sold -- 3 69 6 Interest on investment securities and deposits in banks 602 581 2,523 2,293 Dividends on FHLB stock 7 43 114 129 ---------------- ------- ------- Total interest income 5,335 5,793 21,554 22,755 ------- ------- ------- ------- Interest expense: Deposits 1,663 2,485 7,332 9,869 Securities sold under repurchase agreements -- -- -- 2 FHLB advances 329 587 1,879 2,033 ------- ------- ------- ------- Total interest expense 1,992 3,072 9,211 11,904 ------- ------- ------- ------- Net interest income before provision for loan losses 3,343 2,721 12,343 10,851 Provision for loan losses 220 259 685 749 ------- ------- ------- ------- Net interest income after provision for loan losses 3,123 2,462 11,658 10,102 ------- ------- ------- ------- Non-interest income: Service charges 94 96 404 352 Office leases 181 183 669 699 Gains on sales of loans -- -- -- 41 Securities Impairment (134) -- (2,457) -- Loan servicing, net 2 15 46 65 Other income 13 5 35 39 ------- ------- ------- ------- Total non-interest income 156 299 (1,303) 1,196 ------- ------- ------- ------- Non-interest expense: Salaries and employee benefits 946 1,061 4,343 3,974 Occupancy and equipment 443 436 1,735 1,624 Other expenses 583 519 2,561 2,395 ------- ------- ------- ------- Total non-interest expense 1,972 2,016 8,639 7,993 ------- ------- ------- ------- Income before provision for income taxes 1,307 745 1,716 3,305 Provision for Income taxes 543 304 707 1,363 ------- ------- ------- ------- Net income $ 764 $ 441 $ 1,009 $ 1,942 ======= ======= ======= ======= Less: Accretion of perferred stock discount (4) -- (4) -- ------- ------- ------- ------- Net Income available for common stock $ 760 $ 441 $ 1,005 $ 1,942 ======= ======= ======= ======= Basic earnings per share $ 0.16 $ 0.09 $ 0.21 $ 0.40 Diluted earnings per share $ 0.16 $ 0.09 $ 0.21 $ 0.40 Basic weighted average shares of common stock outstanding 4,745 4,805 4,745 4,831 Diluted weighted average shares of common stock outstanding 4,745 4,808 4,745 4,834 SUMMIT STATE BANK AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (In thousands) Dec. 31, Dec. 31, 2008 2007 -------- -------- (Unaudited) ASSETS Cash and due from banks $ 3,650 $ 5,695 Federal funds sold -- 7,110 -------- -------- Total cash and cash equivalents 3,650 12,805 Time deposits in banks -- 80 Available-for-sale investment securities - amortized cost of $41,089 in 2008 and $35,404 in 2007 41,183 35,426 Held-to-maturity investment securities - market value of $5,000 in 2007 -- 5,000 Loans, less allowance for loan losses of $4,016 in 2008 and $3,621 in 2007 299,645 267,067 Bank premises and equipment, net 7,816 8,463 Investment in Federal Home Loan Bank stock, at cost 2,695 2,850 Goodwill 4,119 4,119 Accrued interest receivable and other assets 5,225 4,383 -------- -------- Total assets $364,333 $340,193 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - non interest-bearing $ 10,773 $ 10,297 Demand - interest-bearing 13,597 12,421 Savings 10,068 12,460 Money market 26,123 29,858 Time deposits, $100,000 and over 84,751 103,995 Other time deposits 107,451 79,988 -------- -------- Total deposits 252,763 249,019 Federal Home Loan Bank (FHLB) advances 55,173 42,600 Accrued interest payable and other liabilities 836 859 -------- -------- Total liabilities 308,772 292,478 -------- -------- Shareholders' equity Preferred stock (net); 20,000 shares authorized; 8,500 issued at December 31, 2008 7,882 -- Common stock, no par value; shares authorized - 30,000; shares isssued and outstanding - 4,745 at December 31, 2008 and 2007 36,251 36,244 Common stock warrants 622 -- Retained earnings 10,752 11,455 Accumulated other comprehensive income (loss), net of taxes 54 16 -------- -------- Total shareholders' equity 55,561 47,715 -------- -------- Total liabilities and shareholders' equity $364,333 $340,193 ======== ======== (In Thousands Except Per share Data) Three Months Ended Twelve Months Ended ------------------ ------------------ Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2008 2007 2008 2007 ------- ------- ------- ------- (Unaudited)(Unaudited)(Unaudited)(Unaudited) Statement of Income Data: Net interest income $ 3,343 $ 2,721 $12,343 $10,851 Provision for loan losses 220 259 685 749 Total non-interest income 156 299 (1,303) 1,196 Total non-interest expense 1,972 2,016 8,639 7,993 Provision for Income taxes 543 304 707 1,363 ------- ------- ------- ------- Net income $ 764 $ 441 $ 1,009 $ 1,942 ======= ======= ======= ======= Selected per Share Data: Earnings per share - basic $ 0.16 $ 0.09 $ 0.21 $ 0.40 Earnings per share - diluted $ 0.16 $ 0.09 $ 0.21 $ 0.40 Book value per share (2) $ 10.05 $ 10.06 $ 10.05 $ 10.06 Nonperforming assets: Loans on non-accrual or past due more than 90 days $ 1,046 $ 465 $ 1,046 $ 465 Other nonperforming assets $ 17 $ -- $ 17 $ -- Selected Ratios: Return on average assets (1) 0.86% 0.52% 0.29% 0.59% Return on average equity (1) 6.36% 3.61% 2.12% 4.03% Return on average tangible equity (1) 6.96% 3.94% 2.32% 4.40% Net interest margin (1) 3.95% 3.36% 3.78% 3.49% Dividend payout ratio 56.18% 98.64% 56.18% 89.75% Average equity to average assets 13.55% 14.28% 13.88% 14.64% Leveraged capital ratio 14.76% 12.48% 14.76% 12.98% Efficiency ratio (3) 54.28% 66.75% 64.01% 66.35% Nonperforming loans to total loans (2) 0.34% 0.17% 0.34% 0.17% Nonperforming assets to total assets (2) 0.29% 0.14% 0.29% 0.14% Allowance for loan losses to total loans (2) 1.32% 1.34% 1.32% 1.34% Allowance for loan losses to nonperforming loans (2) 384% 779% 384% 779% (1) Annualized. (2) As of period end (3) Efficiency ratio is noninterest expenses divided by net interest income and noninterest income, excluding other than temporary impairment charges.