SANTA ROSA, Calif., July 27, 2009 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported a 22% increase in net income for the second quarter ended June 30, 2009 over the same quarter in 2008. "We continue to benefit from our focus on providing our customers the best service experience, improving net interest margins, driving efficiencies in operations, & managing strong loan portfolio performance," said President and CEO, Thomas Duryea.
Net income was $713,000 for the quarter and $1,560,000 for the six months ended June 30, 2009. A dividend of $0.09 per share on the Company's common stock was declared.
Dividend
On July 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 August 21, 2009 to shareholders of record as of the close of business on August 11, 2009. Additionally, a dividend on the preferred stock of $106,250 was declared payable on August 15, 2009.
Net Income and Results of Operations
The Bank had net income of $713,000 and net income available for common stockholders, which deducts the preferred dividends, of $575,000 or $0.12 per diluted share for the quarter ended June 30, 2009 compared to $584,000, or $0.12 per diluted share for the quarter ended June 30, 2008. Net income for the six months ended June 30, 2009 was $1,560,000, and net income available for common stockholders was $1,325,000 or $0.28 per diluted share compared to $814,000, or $0.17 per diluted share for the same period in 2008.
"Our higher earnings were the result of improved net interest margin, our continued focus on gaining greater operating efficiencies resulting in our efficiency ratio improving from 64% to 57% over same quarter in 2008; and, above all, providing our growing customer base the top service experience," said President and CEO Thomas Duryea.
The Bank's regulatory capital remains well above the required capital ratios with a Tier 1 capital leverage ratio of 14.7%, a Tier 1 risk-based capital ratio of 17.7% and a Total risk-based capital ratio of 18.9% at June 30, 2009.
Annualized return on average assets and annualized return on average equity was 0.80% and 5.10% for the three months ended June 30, 2009, as compared to 0.70% and 4.92% for the second quarter of 2008.
Net interest income increased $810,000, or 26%, to $3,872,000 during the second quarter of 2009 compared to $3,062,000 for the same quarter of 2008. The annualized net interest margin increased to 4.53% for the second quarter of 2009, compared to 3.84% for the second quarter of 2008. The net interest margin continues to improve as the Bank lowered its funding costs by more than the decline in yields on earning assets.
"The Bank experienced a 14% increase in non time deposits since December 31, 2008, reflecting the level of confidence our growing customer base has in us, which will enhance longer term performance," said Dennis Kelley, Chief Financial Officer.
Non-interest income was $225,000 for the second quarter of 2009 compared to $221,000 for the second quarter of 2008. Office lease income declined to $114,000 for the current quarter compared to $150,000 for the same quarter in 2008, as new tenants leased space in the Bank's headquarters' building at lower lease rates. The second quarter of 2008 was negatively impacted from a $61,000 securities impairment charge.
Non-interest expense increased $203,000 or 10% for the second quarter of 2009 over the second quarter of 2008. The increase was primarily attributable to the increase in FDIC insurance premiums of approximately $245,000 including the special assessment of $153,000 for the quarter ended June 30, 2009.
Loans totaled $304,485,000 at June 30, 2009 representing a 10% increase compared to June 30, 2008.
Total assets declined $8.7 million or 2% to $355,919,000 at June 30, 2009 compared to December 31, 2008, as the Bank's investment portfolio experienced calls on its long-term government agency securities.
"With our strong balance sheet with high capital ratios and performing loan portfolio, Summit State Bank is able and willing to lend unlike some banks; however, there is low loan demand in this current economy. Nonetheless, we continue to actively seek to provide loans in the communities we serve while maintaining our high lending standards. We will not grow for growth's sake, but will continue to let available new loan credit quality determine our growth," said Mr. Duryea.
Nonperforming assets at June 30, 2009 were $3,927,000 compared to $3,682,000 at March 31, 2009. Nonperforming loans to gross loans was 1.28% at June 30, 2009 which compares favorably to the banking industry. The Bank only had one loan past due 30 to 89 days in the amount of $91,000 at June 30, 2009.
"Our loan portfolio continues to be well managed resulting in higher performing loan levels than our peers. This is due to our prudent lending standards, proactive efforts to address potential problems early, and to the caliber of our customers. The small amount of loans less than 90 days past due is a further example of our proactive portfolio management and collection efforts carried out by our strong, experienced lending team. Other than one past due loan of $91,000 representing less than 0.03% of our portfolio, the Bank had no 30-89 day past due loans for eight out of the past 10 quarters. Since 2007, Summit has had no foreclosed properties," said Chief Credit Officer, Guy Dana.
The provision for loan losses was $550,000 for the second quarter ended June 30, 2009 as compared to $180,000 for the second quarter of 2008. The Bank had $627,000 in loan charge-offs and recoveries of $50,000 during the second quarter of 2009. At June 30, 2009, the allowance for loan losses was $4,415,000 and represented a ratio to gross loans of 1.45% and to nonperforming loans of 114%. These ratios compare to 1.47% and 122% at March 31, 2009.
The Bank's lending focus has remained on business 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 early on and never doing subprime lending enabled us to largely avoid the first wave of credit problems currently facing other community banks. Like all businesses, we are not immune from the second wave coming from the sharpest economic downturn experienced in decades; however, we have fared better than most as our performance continues to rank favorable to our peers," said Mr. Duryea.
"We remain unwavering in our commitment to provide the ultimate customer service experience by which our customers, shareholders, and employees should continue to benefit. With essentially the same deposits and loan products as our peers, providing the best customer service experience will continue to distinguish us from our peers," said Mr. Duryea.
"We are very proud of our team, whose strong efforts have resulted in Summit State Bank remaining the only bank in Sonoma County to receive the highest bank rating -- Five Star Superior -- by Bauer Financial, the industry's premier rating service. The Five Star Superior rating, most importantly, provides our customers with the added comfort of knowing they are banking with a safe and sound bank," said Mr. Duryea.
About Summit State Bank
Summit State Bank has total assets of $356 million and total equity of $56 million at June 30, 2009. Headquartered in Sonoma County, the Bank provides diverse financial products and services throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit State Bank's 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 Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
--------- --------- --------- ---------
(Un- (Un- (Un- (Un-
audited) audited) audited) audited)
--------- --------- --------- ---------
Interest income:
Interest and fees on loans $ 4,845 $ 4,643 $ 9,589 $ 9,384
Interest on Federal funds
sold -- -- -- 69
Interest on investment
securities and deposits in
banks 446 658 1,044 1,257
Dividends on FHLB stock -- 35 -- 68
--------- --------- --------- ---------
Total interest income 5,291 5,336 10,633 10,778
--------- --------- --------- ---------
Interest expense:
Deposits 1,149 1,723 2,501 4,015
FHLB advances 270 551 558 1,054
--------- --------- --------- ---------
Total interest expense 1,419 2,274 3,059 5,069
--------- --------- --------- ---------
Net interest income before
provision for loan losses 3,872 3,062 7,574 5,709
Provision for loan losses 550 180 1,000 335
--------- --------- --------- ---------
Net interest income after
provision for loan losses 3,322 2,882 6,574 5,374
--------- --------- --------- ---------
Non-interest income:
Service charges on deposit
accounts 98 101 199 214
Office leases 114 150 339 309
Net securities gains -- -- 28 --
Loan servicing, net 11 19 38 34
Securities impairment -- (61) -- (61)
Other income 2 12 27 15
--------- --------- --------- ---------
Total non-interest income 225 221 631 511
--------- --------- --------- ---------
Non-interest expense:
Salaries and employee benefits 1,049 1,039 2,173 2,331
Occupancy and equipment 407 425 849 842
Other expenses 859 648 1,528 1,329
--------- --------- --------- ---------
Total non-interest expense 2,315 2,112 4,550 4,502
--------- --------- --------- ---------
Income before provision for
income taxes 1,232 991 2,655 1,383
Provision for Income taxes 519 407 1,095 569
--------- --------- --------- ---------
Net income $ 713 $ 584 $ 1,560 $ 814
========= ========= ========= =========
Less: preferred dividends 138 -- 235 --
--------- --------- --------- ---------
Net income available for
common stockholders $ 575 $ 584 $ 1,325 $ 814
========= ========= ========= =========
Basic earnings per common
share $ 0.12 $ 0.12 $ 0.28 $ 0.17
Diluted earnings per common
share $ 0.12 $ 0.12 $ 0.28 $ 0.17
Basic weighted average shares
of common stock outstanding 4,745 4,745 4,745 4,745
Diluted weighted average shares
of common stock outstanding 4,764 4,745 4,749 4,745
SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
June 30, June 30,
2009 2008
----------- -----------
(Unaudited) (Unaudited)
ASSETS
Cash and due from banks $ 2,364 $ 4,781
----------- -----------
Total cash and cash equivalents 2,364 4,781
Available-for-sale investment securities -
amortized cost of $32,699 at June 30, 2009
and $46,080 at June 30, 2008 32,050 45,412
Loans, less allowance for loan losses of
$4,415 at June 30, 2009 and $3,813 at
June 30, 2008 300,070 271,809
Bank premises and equipment, net 7,697 8,112
Investment in Federal Home Loan Bank stock,
at cost 2,941 3,098
Goodwill 4,119 4,119
Accrued interest receivable and other assets 6,678 4,467
----------- -----------
Total assets $ 355,919 $ 341,798
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand - non interest-bearing $ 12,722 $ 11,966
Demand - interest-bearing 17,905 12,294
Savings 11,479 10,795
Money market 26,958 22,304
Time deposits, $100 thousand and over 89,460 98,824
Other time deposits 97,831 73,454
----------- -----------
Total deposits 256,355 229,637
Federal Home Loan Bank (FHLB) advances 42,950 64,045
Accrued interest payable and other
liabilities 959 839
----------- -----------
Total liabilities 300,264 294,521
----------- -----------
Shareholders' equity
Preferred stock, no par value; 20,000,000
shares authorized; shares issued and
outstanding 8,500 in 2009 and 2008; per
share redemption of $1,000 for total
liquidation preference of $8,500 7,927 --
Common stock, no par value; shares
authorized - 30,000,000 shares; shares
issued and outstanding 4,744,720 at
June 30, 2009 and June 30, 2008 36,262 36,244
Common stock warrants 622 --
Retained earnings 11,223 11,415
Accumulated other comprehensive income
(loss), net of taxes (379) (382)
----------- -----------
Total shareholders' equity 55,655 47,277
----------- -----------
Total liabilities and shareholders'
equity $ 355,919 $ 341,798
=========== ===========
Earnings Summary
(In Thousands)
Three Months Ended Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
--------- --------- --------- ---------
(Un- (Un- (Un- (Un-
audited) audited) audited) audited)
--------- --------- --------- ---------
Statement of Income Data:
Net interest income $ 3,872 $ 3,062 $ 7,574 $ 5,709
Provision for loan losses 550 180 1,000 335
Non-interest income 225 221 631 511
Non-interest expense 2,315 2,112 4,550 4,502
Provision for Income taxes 519 407 1,095 569
--------- --------- --------- ---------
Net income $ 713 $ 584 $ 1,560 $ 814
======== ======== ======== ========
Less: preferred dividends 138 -- 235 --
--------- --------- --------- ---------
Net income available for
common stockholders $ 575 $ 584 $ 1,325 $ 814
========= ========= ========= =========
Selected per Share Data:
Basic earnings per common
share $ 0.12 $ 0.12 $ 0.28 $ 0.17
Diluted earnings per common
share $ 0.12 $ 0.12 $ 0.28 $ 0.17
Book value per common
share(2)(3) $ 10.06 $ 9.96 $ 10.06 $ 9.96
Selected Balance Sheet
Data:(000)
Assets $355,919 $341,798 $355,919 $341,798
Loans, net 300,070 271,809 300,070 271,809
Deposits 256,355 229,637 256,355 229,637
Average assets 357,568 336,891 360,192 337,491
Average earnings assets 343,185 319,759 349,291 320,299
Average equity 56,085 47,731 56,368 47,759
Nonperforming loans 3,886 267 3,886 267
Total nonperforming assets 3,927 267 3,927 267
Selected Ratios:
Return on average assets(1) 0.80% 0.70% 0.87% 0.49%
Return on average equity(1) 5.10% 4.92% 5.58% 3.43%
Return on average tangible
equity(1) 5.50% 5.39% 6.02% 3.75%
Efficiency ratio 56.50% 64.33% 55.45% 72.38%
Net interest margin(1) 4.53% 3.84% 4.37% 3.58%
Tier 1 leverage capital ratio 14.7% 12.9% 14.7% 12.9%
Tier 1 risk-based capital ratio 17.7% 16.5% 17.7% 16.5%
Total risk-based capital ratio 18.9% 15.2% 18.9% 15.2%
Common dividend payout ratio(4) 74.26% 73.12% 64.45% 104.91%
Average equity to average
assets 15.69% 14.17% 15.65% 14.15%
Nonperforming loans to total
loans(2) 1.28% 0.10% 1.28% 0.10%
Nonperforming assets to total
assets(2) 1.10% 0.08% 1.10% 0.08%
Allowance for loan losses to
total loans(2) 1.45% 1.38% 1.45% 1.38%
Allowance for loan losses to
nonperforming loans(2) 113.61% 1428.09% 113.61% 1428.09%
(1) Annualized.
(2) As of period end
(3) Total shareholders' equity less preferred stock divided by total
common shares outstanding
(4) common dividends divided by net income available for common
stockholders