SANTA ROSA, Calif., April 30, 2019 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq: SSBI) today reported net income for the quarter ended March 31, 2019 of $1,425,000 and diluted earnings per share of $0.23. A quarterly dividend of $0.12 per share was declared for common shareholders.
Dividend
The Board of Directors declared a $0.12 per share quarterly dividend on April 29, 2019 to be paid on May 24, 2019 to shareholders of record on May 17, 2019.
Net Income and Results of Operations
For the quarter ended March 31, 2019, Summit State Bank (“Bank”) had net income of $1,425,000 and diluted earnings per share of $0.23 compared to $1,740,000 in net income and $0.29 diluted earnings per share for the same quarter in 2018.
Net income decreased $315,000 or 18% the first quarter of 2019 compared to first quarter of 2018. Net interest income increased to $5,547,000 in the first quarter of 2019 compared to $5,314,000 in the first quarter of 2018.
“When comparing our net income to first quarter 2018, the difference is a result of the Bank implementing its strategy to increase loans and total assets,” said Jim Brush, President and CEO. “We expanded our team of experienced staff which increased our salary-related expenses. We are also retaining more SBA loans instead of selling them given the decreasing premiums in the secondary market.”
Net loans and deposits also increased when comparing the first quarter of 2019 to first quarter of 2018; loans were $509,989,000 in 2019 compared to $457,256,000 in 2018 and deposits were $555,255,000 in 2019 compared to $503,858,000 in 2018. The net interest margin decreased from 3.80% for the first quarter of 2018 to 3.65% for the first quarter of 2019.
Annualized return on average assets for the first quarter of 2019 was 0.92% and annualized return on average equity was 9.3%. The Bank’s efficiency ratio was 69.7% and the net interest margin was 3.65% during the first quarter of 2019. The first quarter of 2018 had an annualized return on average assets of 1.22%, annualized return on average equity of 11.8%, efficiency ratio of 58.4% and net interest margin of 3.80%.
Non-interest income decreased in the first quarter of 2019 to $493,000 compared to $763,000 in the first quarter of 2018. The Bank recognized $167,000 in gains on sales of SBA guaranteed loan balances in 2019 and $292,000 in the first quarter of 2018. Rental income also decreased in the first quarter of 2019 to $90,000 compared to $147,000 in the first quarter of 2018; this decrease was due to less office space available to rent out caused by the increase number of staff personnel occupying the space.
There was a $670,000 or 19% increase in operating expenses between the first quarter of 2019 as compared to the first quarter of 2018. The increased expenses are primarily due to the increase in employees and related personnel and occupancy costs.
Total assets at March 31, 2019 were $626,290,000 compared to $576,983,000 at March 31, 2018. Total assets increased 9% or $49,307,000 between March 31, 2019 and 2018. Net loans increased 12% or $52,733,000 and total deposits increased 10% or $51,397,000 between March 31, 2019 and 2018.
“Our increasing balance sheet is a testament to our strategic plan becoming a reality,” according to Brush. “I am pleased to report net income ended the quarter within 1% of the plan and the balance sheet continues increasing in alignment with our strategic plan.”
“When we developed our 2019 plan, we anticipated continued pressure on our net interest margin. As we continue to manage our balance sheet growth, we are focused on making business decisions that shift assets from lower yielding investment securities to higher yielding loans while also managing deposit costs,” said Mr. Brush.
Nonperforming assets were $736,000 or 0.12% of total assets at March 31, 2019 compared to $2,679,000 or 0.46% at March 31, 2018. The nonperforming assets at March 31, 2019, consist of five loans which are predominantly secured by real property. The Bank had provision expense of $100,000 in the first quarter of 2019. The allowance for loan losses to loans was 1.19% at March 31, 2019 and was 1.21% at March 31, 2018.
About Summit State Bank
Summit State Bank, a local community bank, has total assets of $626 million and total equity of $63 million at March 31, 2019. Headquartered in Sonoma County, the Bank specializes in providing exceptional customer service and customized financial solutions to aid in the success of local small businesses and nonprofits throughout Sonoma County.
Summit State Bank is committed to embracing the diverse backgrounds, cultures and talents of its employees to create high performance and support the evolving needs of its customers and community it serves. At the center of diversity is inclusion, collaboration, and a shared vision for delivering superior service and results for shareholders. Presently, 82% of management are women and minorities with 60% represented on the Executive Management Team. Through the engagement of its team, Summit State Bank has received many esteemed awards including: Best Business Bank, Corporate Philanthropy Award and Best Places to Work in the North Bay. 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 earnings per share data) | |||||||||
| Three Months Ended | |||||||||
| March 31, 2019 | March 31, 2018 | ||||||||
| (Unaudited) | (Unaudited) | ||||||||
| Interest income: | |||||||||
| Interest and fees on loans | $ | 6,452 | $ | 5,310 | |||||
| Interest on deposits with banks | 101 | 69 | |||||||
| Interest on federal funds sold | - | 7 | |||||||
| Interest on investment securities | 590 | 614 | |||||||
| Dividends on FHLB stock | 54 | 54 | |||||||
| Total interest income | 7,197 | 6,054 | |||||||
| Interest expense: | |||||||||
| Deposits | 1,471 | 709 | |||||||
| Federal Home Loan Bank advances | 179 | 31 | |||||||
| Total interest expense | 1,650 | 740 | |||||||
| Net interest income before provision for loan losses | 5,547 | 5,314 | |||||||
| Provision for loan losses | 100 | 150 | |||||||
| Net interest income after provision for loan losses | 5,447 | 5,164 | |||||||
| Non-interest income: | |||||||||
| Service charges on deposit accounts | 190 | 194 | |||||||
| Rental income | 90 | 147 | |||||||
| Net gain on loan sales | 167 | 292 | |||||||
| Net securities gain | - | 7 | |||||||
| Other income | 46 | 123 | |||||||
| Total non-interest income | 493 | 763 | |||||||
| Non-interest expense: | |||||||||
| Salaries and employee benefits | 2,657 | 2,027 | |||||||
| Occupancy and equipment | 423 | 397 | |||||||
| Other expenses | 1,132 | 1,118 | |||||||
| Total non-interest expense | 4,212 | 3,542 | |||||||
| Income before provision for income taxes | 1,728 | 2,385 | |||||||
| Provision for income taxes | 303 | 645 | |||||||
| Net income | $ | 1,425 | $ | 1,740 | |||||
| Basic earnings per common share | $ | 0.23 | $ | 0.29 | |||||
| Diluted earnings per common share | $ | 0.23 | $ | 0.29 | |||||
| Basic weighted average shares of common stock outstanding | 6,067 | 6,059 | |||||||
| Diluted weighted average shares of common stock outstanding | 6,073 | 6,066 | |||||||
| SUMMIT STATE BANK AND SUBSIDIARY | ||||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| (In thousands except share data) | ||||||||||||||
| March 31, 2019 | December 31, 2018 | March 31, 2018 | ||||||||||||
| (Unaudited) | (1) | (Unaudited) | ||||||||||||
| ASSETS | ||||||||||||||
| Cash and due from banks | $ | 18,628 | $ | 21,693 | $ | 18,901 | ||||||||
| Federal funds sold | - | - | 2,000 | |||||||||||
| Total cash and cash equivalents | 18,628 | 21,693 | 20,901 | |||||||||||
| Investment securities: | ||||||||||||||
| Held-to-maturity, at amortized cost | 7,993 | 7,991 | 7,986 | |||||||||||
| Available-for-sale (at fair value; amortized cost of $71,610, | ||||||||||||||
| $72,716 and $76,892) | 70,690 | 70,174 | 74,502 | |||||||||||
| Total investment securities | 78,683 | 78,165 | 82,488 | |||||||||||
| Loans, less allowance for loan losses of $6,139, $6,029 and $5,590 | 509,989 | 504,549 | 457,256 | |||||||||||
| Bank premises and equipment, net (2) | 6,364 | 5,803 | 5,208 | |||||||||||
| Investment in Federal Home Loan Bank stock, at cost | 3,085 | 3,085 | 3,085 | |||||||||||
| Goodwill | 4,119 | 4,119 | 4,119 | |||||||||||
| Other Real Estate Owned | - | - | - | |||||||||||
| Accrued interest receivable and other assets (2) | 5,422 | 4,690 | 3,926 | |||||||||||
| Total assets | $ | 626,290 | $ | 622,104 | $ | 576,983 | ||||||||
| LIABILITIES AND | ||||||||||||||
| SHAREHOLDERS' EQUITY | ||||||||||||||
| Deposits: | ||||||||||||||
| Demand - non interest-bearing | $ | 117,870 | $ | 120,011 | $ | 131,243 | ||||||||
| Demand - interest-bearing | 62,140 | 65,652 | 73,605 | |||||||||||
| Savings | 26,503 | 25,817 | 29,905 | |||||||||||
| Money market | 112,553 | 104,060 | 109,226 | |||||||||||
| Time deposits that meet or exceed the FDIC insurance limit | 86,073 | 83,071 | 72,343 | |||||||||||
| Other time deposits | 150,116 | 102,578 | 87,536 | |||||||||||
| Total deposits | 555,255 | 501,189 | 503,858 | |||||||||||
| Federal Home Loan Bank advances | 4,700 | 56,800 | 11,200 | |||||||||||
| Accrued interest payable and other liabilities (2) | 2,970 | 2,595 | 2,202 | |||||||||||
| Total liabilities | 562,925 | 560,584 | 517,260 | |||||||||||
| Shareholders' equity | ||||||||||||||
| Preferred stock, no par value; 20,000,000 shares authorized; | ||||||||||||||
| no shares issued and outstanding | - | - | - | |||||||||||
| Common stock, no par value; shares authorized - 30,000,000 shares; issued | ||||||||||||||
| and outstanding 6,067,975, 6,066,475 and 6,066,475 | 36,974 | 36,967 | 36,967 | |||||||||||
| Retained earnings | 27,039 | 26,342 | 24,438 | |||||||||||
| Accumulated other comprehensive loss, net | (648 | ) | (1,789 | ) | (1,682 | ) | ||||||||
| Total shareholders' equity | 63,365 | 61,520 | 59,723 | |||||||||||
| Total liabilities and shareholders' equity | $ | 626,290 | $ | 622,104 | $ | 576,983 | ||||||||
| (1) Information derived from audited financial statements. | ||||||||||||||
| (2) ASU No. 2016-02 (Topic 842) was adopted January 1, 2019 using the modified retrospective approach at the beginning of the adoption period. This standard increases the transparency by recognizing the right-to-use lease asset for the lease term. As of March 31, 2019, the right-of-use asset was recorded for $1,209,000 and a lease liability was recorded for $1,212,000. | ||||||||||||||
| Financial Summary | |||||||||
| (In Thousands except per share data) | |||||||||
| At or for the | |||||||||
| Three Months Ended | |||||||||
| March 31, 2019 | March 31, 2018 | ||||||||
| (Unaudited) | (Unaudited) | ||||||||
| Statement of Income Data: | |||||||||
| Net interest income | $ | 5,547 | $ | 5,314 | |||||
| Provision for loan losses | 100 | 150 | |||||||
| Non-interest income | 493 | 763 | |||||||
| Non-interest expense | 4,212 | 3,542 | |||||||
| Provision for income taxes | 303 | 645 | |||||||
| Net income | $ | 1,425 | $ | 1,740 | |||||
| Selected per Common Share Data: | |||||||||
| Basic earnings per common share | $ | 0.23 | $ | 0.29 | |||||
| Diluted earnings per common share | $ | 0.23 | $ | 0.29 | |||||
| Dividend per share | $ | 0.12 | $ | 0.12 | |||||
| Book value per common share (2) | $ | 10.44 | $ | 9.85 | |||||
| Selected Balance Sheet Data: | |||||||||
| Assets | $ | 626,290 | $ | 576,983 | |||||
| Loans, net | 509,989 | 457,256 | |||||||
| Deposits | 555,255 | 503,858 | |||||||
| Average assets | 627,931 | 578,109 | |||||||
| Average earning assets | 616,014 | 567,341 | |||||||
| Average shareholders' equity | 62,388 | 59,761 | |||||||
| Nonperforming loans | 736 | 2,679 | |||||||
| Total nonperforming assets | 736 | 2,679 | |||||||
| Troubled debt restructures (accruing) | 2,472 | 1,610 | |||||||
| Selected Ratios: | |||||||||
| Return on average assets (1) | 0.92 | % | 1.22 | % | |||||
| Return on average common shareholders' equity (1) | 9.26 | % | 11.81 | % | |||||
| Efficiency ratio (3) | 69.74 | % | 58.35 | % | |||||
| Net interest margin (1) | 3.65 | % | 3.80 | % | |||||
| Common equity tier 1 capital ratio | 10.2 | % | 11.3 | % | |||||
| Tier 1 capital ratio | 10.2 | % | 11.3 | % | |||||
| Total capital ratio | 11.3 | % | 12.5 | % | |||||
| Tier 1 leverage ratio | 9.6 | % | 10.0 | % | |||||
| Common dividend payout ratio (4) | 51.09 | % | 41.84 | % | |||||
| Average shareholders' equity to average assets | 9.94 | % | 10.34 | % | |||||
| Nonperforming loans to total loans | 0.14 | % | 0.58 | % | |||||
| Nonperforming assets to total assets | 0.12 | % | 0.46 | % | |||||
| Allowance for loan losses to total loans | 1.19 | % | 1.21 | % | |||||
| Allowance for loan losses to nonperforming loans | 834.24 | % | 208.65 | % | |||||
| (1) Annualized. | |||||||||
| (2) Total shareholders' equity divided by total common shares outstanding. | |||||||||
| (3) Non-interest expenses to net interest and non-interest income, net of securities gains. | |||||||||
| (4) Common dividends divided by net income available for common shareholders. | |||||||||
Contact: Jim Brush, President and CEO, Summit State Bank (707) 568-4920