Summit State Bank Reports Record Earnings, a 62% Increase in Net Income to $10,517,000 for 2020 and Declaration of Dividend

Santa Rosa, California, UNITED STATES

SANTA ROSA, Calif., Jan. 26, 2021 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq: SSBI) today reported record net income for the year ended December 31, 2020 of $10,517,000 and diluted earnings per share of $1.73. This compares to net income of $6,477,000 and diluted earnings per share of $1.07 for the year ended December 31, 2019. Additionally, a quarterly dividend of $0.12 per share was declared for common shareholders.


The Board of Directors declared a $0.12 per share quarterly dividend on January 25, 2021 to be paid on February 19, 2021 to shareholders of record on February 12, 2021.

Net Income and Results of Operations

For the year ended December 31, 2020, Summit State Bank (“Bank”) had net income of $10,517,000 and diluted earnings per share of $1.73 compared to net income of $6,477,000 and $1.07 diluted earnings per share for the year ended December 31, 2019, a 62% increase in net income and diluted earnings per share.

“In late April 2020, I transitioned from CEO to Chairman of the Board and Brian Reed was promoted to CEO,” noted Jim Brush, Chairman. “We are pleased that this transition has gone so well during these turbulent economic times. The Bank is well poised to maintain its strong momentum going forward.”

For the quarter ended December 31, 2020, the Bank had net income of $2,929,000 and diluted earnings per share of $0.48 compared to $1,834,000 of net income and $0.30 diluted earnings per share, for the same period in 2019, a 60% increase in net income and diluted earnings per share.

The 2020 net interest margin was 3.91%, return on average assets was 1.33% and return on average equity was 14.68%. In 2019 net interest margin was 3.66%, return on average assets was 1.00% and return on average equity was 9.99%. The Bank is experiencing growth in its margin because its balance sheet is liability sensitive, this means when rates went down in 2020, the Bank’s cost of funds decreased faster than its yield on earning assets causing the net interest margin to improve.

“In 2020 we continue to experience record earnings for the Bank,” said Brian Reed, President and CEO. “We recently updated our 5-year strategic plan and remain on our path to grow core earnings by strategically managing our balance sheet growth.”

Interest income increased to $36,425,000 in 2020 compared to 30,001,000 in 2019, this was an increase of 21% from 2019. The increase in interest income is attributable to $4,671,000 from increases in loan balances, $2,377,000 from increases in income net of fees due to the Paycheck Protection Program (“PPP”) loans, and ($624,000) from decreases in investment income and deposits with Banks due to lower interest rates.

“In 2020 we funded almost $96,710,000 of PPP loans to over 600 businesses and have been actively working with our customers on the forgiveness process,” said Reed. “Through year-end $25,167,000 in PPP loans have been forgiven. We are actively working with our customers in 2021 to request forgiveness from the SBA for the remaining balance.”

Net loans and deposits increased when comparing 2020 to 2019. Net loans increased 29% to $745,939,000 at December 31, 2020 compared to $576,548,000 at December 31, 2019. Total deposits increased 27% to $726,295,000 at December 31, 2020 compared to $573,837,000 at December 31, 2019.

Non-interest income increased in 2020 to $4,448,000 compared to $2,662,000 in 2019. The Bank recognized $2,108,000 in gains on sales of SBA guaranteed loan balances in 2020 compared to $1,253,000 in gains on sales of SBA guaranteed loans balances in 2019; the gains primarily reflect the Bank’s continued growth in the SBA lending group. The Bank also recognized $874,000 in one-time investment security gains in 2020 caused by investments being called because of the reduced interest rate environment.

Operating expenses increased 10% in 2020 to $17,671,000 compared to $16,063,000 in 2019. The increase in expenses is primarily due to an increase in employee expenses and third-party service and professional fees. The Bank is leveling off from a growth trend in operating expenses since the middle of 2019 resulting in an efficiency ratio improvement of 10.41% when comparing 52.23% for 2020 to 62.64% for 2019.

Nonperforming assets were $264,000 or 0.03% of total assets on December 31, 2020 compared to $315,000 or 0.05% on December 31, 2019. Nonperforming assets on December 31, 2020 consist of one loan that is secured by real property and another loan that has a guarantee from the State of California. The Bank had a provision expense of $2,100,000 in 2020. The allowance for loan losses to total loans including SBA-guaranteed PPP loans was 1.18% on December 31, 2020 and 1.16% on December 31, 2019. Excluding $69,583,000 of PPP loans increases the ratio of allowance for loans losses to 1.30% on December 31, 2020 compared to 1.31% at September 30, 2020.

“Our staff has been focused on supporting our customers through this pandemic. They have worked long into the night and on weekends to provide our customers with the support they need and deserve,” notes Reed. “We feel fortunate to have navigated through the first round of the pandemic with few credit problems. With the resurgence of the stay-at-home order, we will continue monitoring trends in the economy and will be adjusting loan loss reserves as needed to account for any measured increase in risk of loss.”

As of December 31, 2020, 12 loans totaling $28,960,000 or 4% of the loan portfolio excluding PPP loans were in deferral. Of the loans in deferral, 9 of those loans totaling $22,833,000 are extended deferments. The deferral portfolio has an average loan to value ratio of 55% and 99% of the deferred loans are real estate secured.

During 2020, the Bank deferred payments on a total of 135 loans totaling $193,705,000 or 26% of loans in its portfolio due to the COVID-19 pandemic. The deferral process increases the total balance due on the loan and re-amortizes the monthly payment through the original maturity date.

Reed further explains “we are fortunate to have had stable financial performance during an unforgettable global crisis. With news of an indefinite stay at home order in Sonoma County and a new round of SBA PPP loans being released, we continue to be available to support our customers both through the existing forgiveness process and through a new wave of PPP loans.”

About Summit State Bank

Summit State Bank, a local community bank, has total assets of $866 million and total equity of $76 million at December 31, 2020. 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, 76% of management are women and minorities with 75% 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

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.

Contact: Brian Reed, President and CEO, Summit State Bank (707) 568-4908

(In thousands except earnings per share data)
    Three Months Ended Year Ended
    December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019
    (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest income:       
 Interest and fees on loans$9,731 $7,473 $34,633 $27,585
 Interest on deposits with banks4 46 65 251
 Interest on investment securities372 417 1,498 1,941
 Dividends on FHLB stock40 59 229 224
   Total interest income10,147 7,995 36,426 30,001
Interest expense:       
 Deposits1,030 1,643 4,956 6,422
 Federal Home Loan Bank advances201 101 833 414
 Junior subordinated debt94 94 375 189
   Total interest expense1,324 1,838 6,164 7,025
   Net interest income before provision for loan losses8,823 6,157 30,262 22,976
Provision for loan losses500 210 2,100 700
   Net interest income after provision for loan losses8,323 5,947 28,162 22,276
Non-interest income:       
 Service charges on deposit accounts215 233 808 869
 Rental income87 87 351 344
 Net gain on loan sales305 447 2,108 1,253
 Net securities gain (loss)- - 874 (6)
 Other income30 60 307 202
   Total non-interest income637 827 4,448 2,662
Non-interest expense:       
 Salaries and employee benefits2,975 2,522 10,748 9,836
 Occupancy and equipment383 420 1,605 1,693
 Other expenses1,441 1,226 5,318 4,534
   Total non-interest expense4,799 4,168 17,671 16,063
   Income before provision for income taxes4,161 2,606 14,940 8,875
Provision for income taxes1,231 772 4,421 2,398
   Net income$2,930 $1,834 $10,518 $6,477
Basic earnings per common share$0.48 $0.30 $1.73 $1.07
Diluted earnings per common share$0.48 $0.30 $1.73 $1.07
Basic weighted average shares of common stock outstanding6,070 6,070 6,070 6,069
Diluted weighted average shares of common stock outstanding6,074 6,074 6,074 6,074

(In thousands except share data)
    December 31, December 31,
    2020 2019
    (Unaudited) (Unaudited)
Cash and due from banks$30,826 $38,299
   Total cash and cash equivalents30,826 38,299
Investment securities:   
 Held-to-maturity, at amortized cost- 7,998
 Available-for-sale (at fair value; amortized cost of $66,335   
  in 2020 and $53,591 in 2019)67,952 54,241
   Total investment securities67,952 62,239
Loans, less allowance for loan losses of $8,882   
 in 2020 and $6,769 in 2019745,939 576,548
Bank premises and equipment, net5,994 6,301
Investment in Federal Home Loan Bank stock, at cost3,429 3,342
Goodwill 4,119 4,119
Accrued interest receivable and other assets7,595 5,130
   Total assets$865,854 $695,978
 Demand - non interest-bearing$199,097 $129,084
 Demand - interest-bearing88,684 69,383
 Savings42,120 28,359
 Money market167,113 128,377
 Time deposits that meet or exceed the FDIC insurance limit35,765 76,564
 Other time deposits193,516 142,070
   Total deposits726,295 573,837
Federal Home Loan Bank advances53,500 45,600
Junior subordinated debt5,876 5,862
Accrued interest payable and other liabilities4,554 3,335
   Total liabilities790,225 628,634
   Total shareholders' equity75,629 67,344
   Total liabilities and shareholders' equity$865,854 $695,978

Financial Summary 
(In thousands except per share data) 
  As of and for the  As of and for the 
   Three Months Ended    Year Ended  
  December 31, 2020  December 31, 2019  December 31, 2020  December 31, 2019 
  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited) 
Statement of Income Data:            
Net interest income $8,823  $6,157  $30,262  $22,976 
Provision for loan losses 500  210  2,100  700 
Non-interest income 637  827  4,448  2,662 
Non-interest expense 4,799  4,168  17,671  16,063 
Provision for income taxes 1,231  772  4,421  2,398 
Net income $2,930  $1,834  $10,518  $6,477 
Selected per Common Share Data:            
Basic earnings per common share $0.48  $0.30  $1.73  $1.07 
Diluted earnings per common share $0.48  $0.30  $1.73  $1.07 
Dividend per share $0.12  $0.12  $0.48  $0.48 
Book value per common share (1) $12.46  $11.09  $12.46  $11.09 
Selected Balance Sheet Data:             
Assets $865,854  $695,978  $865,854  $695,978 
Loans, net 745,939  576,548  745,939  576,548 
Deposits 726,295  573,837  726,295  573,837 
Average assets 848,900  675,015  791,059  644,618 
Average earning assets 831,481  658,667  774,037  628,311 
Average shareholders' equity 74,941  67,223  71,637  64,847 
Average common shareholders' equity 74,941  67,223  71,637  64,847 
Nonperforming loans 264  315  264  315 
Total nonperforming assets 264  315  264  315 
Troubled debt restructures (accruing) 2,189  2,578  2,189  2,578 
Selected Ratios:            
Return on average assets (2) 1.37% 1.08% 1.33% 1.00%
Return on average common shareholders' equity (2)15.55% 10.82% 14.68% 9.99%
Efficiency ratio (3) 50.73% 59.68% 52.22% 62.64%
Net interest margin (2) 4.22% 3.71% 3.91% 3.66%
Common equity tier 1 capital ratio 10.35% 10.38% 10.35% 10.38%
Tier 1 capital ratio 10.35% 10.38% 10.35% 10.38%
Total capital ratio 12.62% 12.61% 12.62% 12.61%
Tier 1 leverage ratio 8.15% 9.40% 8.15% 9.40%
Common dividend payout ratio (4) 24.86% 39.69% 27.70% 44.97%
Average common shareholders' equity to average assets8.83% 9.96% 9.06% 10.06%
Nonperforming loans to total loans 0.03% 0.05% 0.03% 0.05%
Nonperforming assets to total assets 0.03% 0.05% 0.03% 0.05%
Allowance for loan losses to total loans 1.18% 1.16% 1.18% 1.16%
Allowance for loan losses to total loans excluding PPP* 1.30% 0.00% 1.30% 0.00%
Allowance for loan losses to nonperforming loans3369.08% 2150.07% 3369.08% 2150.07%
(1) Total shareholders' equity divided by total common shares outstanding.       
(2) Annualized.       
(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.       
*Non-GAAP Financial Measures:            
This news release contains a non-GAAP (Generally Accepted Accounting Principles) financial measure in addition to results presented in accordance with GAAP for the allowance for loan losses to total loans excluding PPP loans. The Bank has presented this non-GAAP financial measure in the earnings release because it believes that it provides useful information to assess the Bank’s allowance for loan loss reserves. This non-GAAP financial measure has inherent limitations, is not required to be uniformly applied, and is not audited. Further, this non-GAAP financial measure should not be considered in isolation or as a substitute for the allowance for loan losses to total loans determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other financial institutions. Reconciliation of the GAAP and non-GAAP financial measurement is presented below. 

 December 31, 2020  September 30, 2020  June 30, 2020  March 31, 2020  December 31, 2019 
 (In thousands)
Allowance for Loan and Lease Losses (ALL) on loans to Loans receivable, excluding SBA PPP loans
Allowance for loan losses on loans$(8,882) $(8,393) $(7,881) $(7,375) $(6,769)
Loans receivable (GAAP)$754,820  $735,252  $709,689  $608,775  $583,317 
Excluding SBA PPP loans69,583  96,710  95,534  -  - 
Loans receivable, excluding SBA PPP (non-GAAP)$685,237  $638,542  $614,155  $608,775  $583,317 
ALLL on loans to Loans receivable (GAAP)1.18% 1.14% 1.11% 1.21% 1.16%
ALLL on loans to Loans receivable, excluding
    SBA PPP loans (non-GAAP)
1.30% 1.31% 1.28% 1.21% 1.16%