SANTA ROSA, Calif., April 27, 2009 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported stronger and continuing improvements in bank performance with net income increasing more than 100% over the same quarter of 2008. "We continue to benefit from improved net interest margins, greater efficiencies in operations, strong asset quality, and safe and smart lending into our community," said President & CEO, Thomas Duryea.
Summit State Bank (Nasdaq:SSBI) today reported net income of $847,000, or $0.16 per diluted common share for the quarter ended March 31, 2009 and the declaration of a dividend of $0.09 per share on the Company's common stock.
Dividend
On April 27, 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 May 21, 2009 to shareholders of record as of the close of business on May 11, 2009. Additionally, a dividend on the preferred stock of $106,250 was declared payable on May 15, 2009.
Net Income and Results of Operation
The Bank had net income of $847,000, or $0.16 per diluted common share for the quarter ended March 31, 2009. Net income available for common shareholders after preferred dividends was $751,000. This compares to net income of $230,000, or $0.05 per diluted common share for the first quarter of 2008. Net income in the first quarter of 2008 was negatively impacted by $189,000 in employee severance expense and $140,000 in expense related to a core data processor conversion. Adjusting for these expenses, net income increased by 101% between the first quarter of 2009 compared to first quarter 2008. Net income was positively impacted in 2009 by a continued improving net interest margin and controlled operating expenses.
Annualized return on average assets and annualized return on average equity was 0.95% and 6.24% for the three months ended March 31, 2009, as compared to 0.27% and 1.94% for the same period one year ago.
Net interest income increased 40% to $3,702,000 during the first quarter of 2009 compared to $2,647,000 for the same quarter of 2008. The annualized net interest margin increased to 4.33% for the first quarter of 2009, compared to 3.32% for the first quarter of 2008. The net interest margin improvement was largely attributable to the cost of funding strategies employed by the bank during the past year.
Average earning assets were $346,874,000 for the first quarter of 2009, as compared to $320,839,000 for the same quarter of 2008. The annualized yield on average earning assets was 6.25% and the annualized cost of average interest-bearing liabilities was 2.26% for the first quarter of 2009, as compared to the annualized yield on average earning assets of 6.82% and annualized cost of interest-bearing liabilities of 4.04% for the same quarter of 2008.
For the first quarter of 2009, total non-interest income was $406,000, as compared to $290,000 for the first quarter of 2008. The increase was primarily attributable to $75,000 in additional office lease income from the early termination of a lease in the first quarter of 2009 and net securities gains of $28,000.
For the first quarter of 2009, non-interest expense declined $155,000 or 6% to $2,235,000, compared to the same quarter in 2008. In the first quarter of 2008, the Bank incurred $189,000 of expenses associated employee terminations and $140,000 of expenses related to our core data processor change.
"Expense control and operating efficiencies continue to be a major focus," said Dennis Kelley, Chief Financial Officer
The bank's efficiency ratio improved from 69% before severance and core processing costs at the first quarter of 2008 to 54% at first quarter 2009.
Total shareholders' equity was $55,763,000 at March 31, 2009 and book value per common share was $9.96. The Bank's regulatory capital remains well above the required capital ratios with the Bank having some of the highest regulatory capital ratios in its market place.
Total loans were $302,223,000 at March 31, 2009, an increase of $31,692,000, or 12%, compared to total loans of $270,531,000 at March 31, 2008. "The Bank's sound condition has allowed us to continue to lend into the community and attract new customers," said Mr. Duryea.
Total assets were $362,104,000 at March 31, 2009, an increase of $27,885,000, or 8%, compared to $334,219,000 at March 31, 2008.
Nonperforming assets at March 31, 2009 consisted of $3,642,000 of loans on nonaccrual status and $40,000 in investment securities. The nonperforming loans are secured by real estate, of which $2,415,000 was for construction of a condominium project originated in the first quarter of 2006 and was added to nonperforming loans during the quarter. Nonperforming assets represented 1.02% of total assets comparing favorably to local, state, and national peer levels.
The bank had no REO (foreclosed properties) in 2008 and first quarter 2009.
The provision for loan losses was $450,000 for the first quarter ended March 31, 2009 as compared to $155,000 in the first quarter of 2008. The Bank had $24,000 in loan charge-offs during the first quarter of 2009. At March 31, 2009, the allowance for loan losses represented a ratio to gross loans of 1.47% and to nonperforming loans of 122%. These ratios compare to 1.40% and 263% at March 31, 2008. The increase in the provision resulted from the increased level of nonperforming loans in 2009 and management's assessment of the current economy.
The Bank's lending focus has remained on commercial lending and commercial real estate with reduced focus on 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. "The Bank's strategy to curtail construction lending at the end of 2006 has enabled us to avoid many of the problems currently facing other community banks," said Mr. Duryea.
"We are very proud of the team that we are building which has resulted in Summit State Bank receiving the highest bank rating in Sonoma County -- Five Star Superior -- by Bauer Financial, the industry's premier rating service. This superior rating provides our customers with the added comfort of knowing their deposits are safe and sound so important in these times," said Mr. Duryea.
About Summit State Bank
Summit State Bank has total assets of $362 million and total equity of $56 million at March 31, 2009. 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 Ended
------------------------
March 31, March 31,
2009 2008
----------- -----------
(Unaudited) (Unaudited)
Interest income:
Interest and fees on loans $ 4,744 $ 4,741
Interest on Federal funds sold -- 69
Interest on investment securities and
deposits in banks 598 599
Dividends on FHLB stock -- 33
----------- -----------
Total interest income 5,342 5,442
----------- -----------
Interest expense:
Deposits 1,352 2,292
FHLB advances 288 503
----------- -----------
Total interest expense 1,640 2,795
----------- -----------
Net interest income before provision for
loan losses 3,702 2,647
Provision for loan losses 450 155
----------- -----------
Net interest income after provision for
loan losses 3,252 2,492
----------- -----------
Non-interest income:
Service charges 101 113
Office leases 225 159
Net securities gains 28 --
Loan servicing, net 27 15
Other income 25 3
----------- -----------
Total non-interest income 406 290
----------- -----------
Non-interest expense:
Salaries and employee benefits 1,124 1,292
Occupancy and equipment 442 417
Other expenses 669 681
----------- -----------
Total non-interest expense 2,235 2,390
----------- -----------
Income before provision for income taxes 1,423 392
Provision for Income taxes 576 162
----------- -----------
Net income $ 847 $ 230
=========== ===========
Less: preferred dividends 96 --
----------- -----------
Net income available for common stock $ 751 $ 230
=========== ===========
Basic earnings per common share $ 0.16 $ 0.05
Diluted earnings per common share $ 0.16 $ 0.05
Basic weighted average shares of common
stock outstanding 4,745 4,745
Diluted weighted average shares of common
stock outstanding 4,745 4,747
SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
March 31, December 31, March 31,
2009 2008 2008
------------ ------------ ------------
(Unaudited) (Unaudited)
ASSETS
Cash and due from banks $ 2,675 $ 3,650 $ 5,240
------------ ------------ ------------
Total cash and cash
equivalents 2,675 3,650 5,240
Available-for-sale
investment securities -
amortized cost of $41,708
at March 31, 2009 and
$41,088 and 43,034 at
December 31, and March 31,
2008 41,563 41,183 43,041
Loans, less allowance for
loan losses of $4,442 at
March 31, 2009 and $4,016
and 3,776 at December 31,
and March 31, 2008 297,781 299,645 266,755
Bank premises and equipment,
net 7,695 7,816 8,291
Investment in Federal Home
Loan Bank stock, at cost 2,942 2,942 2,546
Goodwill 4,119 4,119 4,119
Accrued interest receivable
and other assets 5,329 5,225 4,227
------------ ------------ ------------
Total assets $ 362,104 $ 364,580 $ 334,219
============ ============ ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand - non interest-
bearing $ 11,647 $ 10,773 $ 11,634
Demand - interest-bearing 17,142 13,597 12,479
Savings 11,302 10,068 11,167
Money market 26,461 26,123 33,657
Time deposits, $100
thousand and over 94,110 84,751 99,172
Other time deposits 89,338 107,451 66,806
------------ ------------ ------------
Total deposits 250,000 252,763 234,915
Federal Home Loan Bank
(FHLB) advances 52,320 55,420 50,781
Accrued interest payable and
other liabilities 4,021 850 1,021
------------ ------------ ------------
Total liabilities 306,341 309,033 286,717
------------ ------------ ------------
Shareholders' equity
Preferred stock (net), no
par value; 20,000,000
shares authorized; shares
issued and outstanding
8,500 at March 31, 2009
and December 31, 2008;
per share redemption of
$1,000 7,898 7,868 --
Common stock, no par value;
shares authorized -
30,000,000; shares issued
and outstanding 4,744,720
at March 31, 2009,
December 31, 2008 and
March 31, 2008 36,256 36,251 36,238
Common stock warrants 622 622 --
Retained earnings 11,076 10,752 11,258
Accumulated other
comprehensive income
(loss), net of taxes (89) 54 6
------------ ------------ ------------
Total shareholders'
equity 55,763 55,547 47,502
------------ ------------ ------------
Total liabilities and
shareholders' equity $ 362,104 $ 364,580 $ 334,219
============ ============ ============
Earnings Summary
(In Thousands)
Three Months Ended
------------------------
March 31, March 31,
2009 2008
----------- -----------
(Unaudited) (Unaudited)
Statement of Income Data: (000)
Net interest income $ 3,702 $ 2,647
Provision for loan losses 450 155
Non-interest income 406 290
Non-interest expense 2,235 2,390
Provision for income taxes 576 162
----------- -----------
Net income $ 847 $ 230
=========== ===========
Less: preferred stock dividends 96 --
----------- -----------
Net income available for common stock $ 751 $ 230
=========== ===========
Selected per Share Data:
Basic earnings per common share $ 0.16 $ 0.05
Diluted earnings per common share $ 0.16 $ 0.05
Book value per common share(2)(3) $ 9.96 $ 10.01
Selected balance sheet data: (000)
Assets $ 362,104 $ 334,219
Loans, net $ 297,781 $ 299,645
Deposits $ 250,000 $ 252,763
Average assets $ 362,846 $ 338,091
Average earnings assets $ 346,874 $ 320,839
Average equity $ 55,092 $ 47,788
Nonperforming loans $ 3,642 $ 1,438
Total nonperforming assets $ 3,682 $ 1,438
Selected Ratios:
Return on average assets(1) 0.95% 0.27%
Return on average equity(1) 6.24% 1.94%
Return on average tangible equity(1) 6.74% 2.12%
Efficiency ratio 54.41% 81.38%
Net interest margin(1) 4.33% 3.32%
Common dividend payout ratio 56.86% 185.65%
Tier 1 leverage capital ratio 14.41% 13.00%
Tier 1 risk-based capital ratio 17.68% 15.38%
Total risk-based capital ratio 18.93% 16.50%
Nonperforming loans to total loans(2) 1.21% 0.53%
Nonperforming assets to total assets(2) 1.02% 0.43%
Allowance for loan losses to total loans(2) 1.47% 1.40%
Allowance for loan losses to nonperforming
loans(2) 121.98% 262.59%
(1) Annualized.
(2) As of period end
(3) total shareholders' equity less $8,500 liquidation value of
preferred stock divided by total common shares outstanding