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Summit State Bank Reports Third Quarter Operating Results and Declaration of Dividend

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SANTA ROSA, Calif., Oct. 25, 2016 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq: SSBI) today reported net income for the quarter ended September 30, 2016 of $1,198,000 and diluted earnings per share of $0.25. 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 to be paid on November 23, 2016 to shareholders of record on November 16, 2016.

Net Income and Results of Operations

The Bank had net income of $1,198,000 or $0.25 per diluted share, for the third quarter ended September 30, 2016, compared to net income of $1,280,000 or $0.26 per diluted share, for the quarter ended September 30, 2015.

Net income and diluted earnings per common share for the nine months ended September 30, 2016 and 2015 were $3,779,000 or $0.78 and $4,746,000 or $0.96.  The nine-month period in 2015 benefited from gains on sales of foreclosed properties of $1,125,000 and reversal from the allowance for loan loss of $800,000. There were net gains on investment securities of $669,000 and $108,000 for the nine months ended September 30, 2016 and 2015.

Return on average assets for the quarter and nine months ended September 30, 2016 were 0.95% and 0.98% compared to 1.03% and 1.32% for the same periods in 2016.

Return on average common equity for the quarter and nine months ended September 30, 2016 was 7.9% and 8.5% compared to 8.8% and 11.2% for the same periods in 2015.

"We are focused on the long-term success of our Bank employees, customers and community.  This strategy will continue to drive improved core operating performance and shareholder value," said Jim Brush, President and CEO.

Total assets were $513,666,000 at September 30, 2016 compared to $505,564,000 at September 30, 2015, representing an annual increase of 1.6%.  

The increase in assets was predominantly from a 10% increase in loans while investment securities declined 15%. This shift in assets from investments to loans has enabled the net interest margin to stay relatively stable at 3.70% for the nine months ended September 30, 2016 compared to 3.72% for the same period in 2015.

The asset growth was funded primarily by a $31 million or 22% increase in demand deposits between September 30, 2016 and 2015. Demand deposits currently represent 45% of total deposits at September 30, 2016 compared to 36% at September 30, 2015.

Nonperforming assets increased to $3,430,000 from $1,395,000 at September 30, 2016 compared to September 30, 2015. This represents a ratio of nonperforming assets to total assets of 0.67% compared to 0.28%. The increase in nonperforming assets was from increased nonaccrual loans which are secured by real estate.

The coverage of allowance for loan losses to gross loans was 1.29% at September 30, 2016 compared to 1.39% at September 30, 2015.  The decline was primarily from 10% loan growth between the dates.

Net interest income increased 0.8% and 7.6% for the three and nine month periods ended September 30, 2016, as loan volumes increased.

Non-interest operating expenses increased in the third quarter of 2016 compared to the same quarter of 2015 by 4.6% or $124,000, attributable to various other operating expenses, partially offset by a decline in salaries and employee benefits and occupancy expenses.

The efficiency ratios for the third quarters of 2016 and 2015 were 58% and 56%. For the nine month periods, the ratios were 62% in 2016 compared to 53% in 2015.

Summit State Bank continues to concentrate on its location in the heart of Sonoma Wine Country, which has provided a diverse economic base for its banking activities. Strategic plans have focused on supporting the net interest margin by lowering the Bank's cost of funds through increased funding of core or relationship-based deposit accounts. The net interest income generated by the increased earning asset base with loans as a greater percentage, has offset the decline in net interest margin that is being experienced in the industry.

About Summit State Bank

Summit State Bank, a local community bank, has total assets of $514 million and total equity of $60 million at September 30, 2016. 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's workforce resembles the diverse community it serves.  Presently, 60% of management are women and minorities with 50% represented on the Executive Management Team. Through the inclusion and engagement of its workforce, Summit State Bank has earned many prestigious awards including: Best Company to do Business with in Sonoma County; Best Places to Work in the North Bay; Super Performing Bank; and Top 75 Corporate Philanthropists in the San Francisco 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 Nine Months Ended 
     September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 
     (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
             
Interest income:        
 Interest and fees on loans$4,146  $3,766  $12,491  $10,615  
 Interest on federal funds sold 2   1   5   2  
 Interest on investment securities and deposits in banks 628   917   2,257   2,816  
 Dividends on FHLB stock 68   67   182   267  
   Total interest income 4,844   4,751   14,935   13,700  
Interest expense:        
 Deposits  209   192   654   545  
 FHLB advances 90   50   278   139  
   Total interest expense 299   242   932   684  
   Net interest income before provision for loan losses 4,545   4,509   14,003   13,016  
Provision for loan losses -   -   -   (800) 
   Net interest income after provision for loan losses 4,545   4,509   14,003   13,816  
Non-interest income:        
 Service charges on deposit accounts 193   188   564   525  
 Rental income 142   133   418   399  
 Net securities gain (loss) (20)  55   669   108  
 Net gain on other real estate owned -   -   -   1,125  
 Loan servicing, net 2   2   6   6  
 Other income 9   1   8   119  
   Total non-interest income 326   379   1,665   2,282  
Non-interest expense:        
 Salaries and employee benefits 1,399   1,499   4,965   4,217  
 Occupancy and equipment 309   327   896   976  
 Other expenses 1,128   886   3,379   2,831  
   Total non-interest expense 2,836   2,712   9,240   8,024  
   Income before provision for income taxes 2,035   2,176   6,428   8,074  
Provision for income taxes 837   896   2,649   3,328  
   Net income$1,198  $1,280  $3,779  $4,746  
Less:  preferred dividends -   23   -   92  
   Net income available for common shareholders$1,198  $1,257  $3,779  $4,654  
             
Basic earnings per common share$0.25  $0.26  $0.79  $0.97  
Diluted earnings per common share$0.25  $0.26  $0.78  $0.96  
             
Basic weighted average shares of common stock outstanding 4,814   4,783   4,801   4,783  
Diluted weighted average shares of common stock outstanding 4,840   4,838   4,827   4,838  
             

 

SUMMIT STATE BANK AND SUBSIDIARY 
CONSOLIDATED BALANCE SHEETS 
(In thousands except share data) 
          
          
    September 30, 2016 December 31, 2015 September 30, 2015 
    (Unaudited)   (Unaudited) 
          
ASSETS      
          
Cash and due from banks$20,090  $15,583  $24,286  
Federal funds sold 1,580   2,000   2,000  
   Total cash and cash equivalents 21,670   17,583   26,286  
          
Time deposits with banks 248   744   744  
          
Investment securities:      
 Held-to-maturity, at amortized cost 7,974   5,988   5,987  
 Available-for-sale (at fair value; amortized cost of $102,180,      
  $127,735 and $124,161) 104,564   128,599   125,681  
   Total investment securities 112,538   134,587   131,668  
          
Loans, less allowance for loan losses of $4,758, $4,731 and 4,664 363,336   343,217   330,325  
Bank premises and equipment, net 5,487   5,498   5,591  
Investment in Federal Home Loan Bank stock, at cost 3,085   2,701   2,701  
Goodwill  4,119   4,119   4,119  
Other Real Estate Owned -   -   -  
Accrued interest receivable and other assets 3,183   4,916   4,130  
          
   Total assets$513,666  $513,365  $505,564  
          
LIABILITIES AND      
SHAREHOLDERS' EQUITY      
          
Deposits:       
 Demand - non interest-bearing$114,077  $98,062  $93,988  
 Demand - interest-bearing 58,325   56,281   46,966  
 Savings  27,130   27,644   28,217  
 Money market 52,906   59,445   65,127  
 Time deposits that meet or exceed the FDIC insurance limit 52,140   53,953   53,988  
 Other time deposits 78,132   101,861   105,320  
   Total deposits 382,710   397,246   393,606  
          
Federal Home Loan Bank advances 67,500   55,800   52,000  
Accrued interest payable and other liabilities 3,177   2,994   2,969  
          
   Total liabilities 453,387   456,040   448,575  
          
Shareholders' equity      
 Preferred stock, no par value; 20,000,000 shares authorized;      
  Series B shares issued and outstanding - 0 in 2016 and 2015;      
  per share redemption of $1,000 for total liquidation preference of $13,750 -   -   -  
 Common stock, no par value; shares authorized - 30,000,000 shares; issued      
  and outstanding 4,814,380 in 2016 and 4,783,170 in 2015 periods 36,725   36,704   36,698  
 Retained earnings 22,171   20,120   19,410  
 Accumulated other comprehensive income 1,383   501   881  
          
   Total shareholders' equity 60,279   57,325   56,989  
          
   Total liabilities and shareholders' equity$513,666  $513,365  $505,564  
          

 

Financial Summary 
(In thousands except per share data) 
          
  At or for the At or for the 
  Three Months Ended Nine Months Ended 
  September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
Statement of Income Data:         
Net interest income $4,545  $4,509  $14,003  $13,016  
Provision for loan losses  -   -   -   (800) 
Non-interest income  326   379   1,665   2,282  
Non-interest expense  2,836   2,712   9,240   8,024  
Provision for income taxes  837   896   2,649   3,328  
Net income $1,198  $1,280  $3,779  $4,746  
Less: preferred dividends  -   23   -   92  
Net income available for common shareholders $1,198  $1,257  $3,779  $4,654  
          
Selected per Common Share Data:         
Basic earnings per common share $0.25  $0.26  $0.79  $0.97  
Diluted earnings per common share $0.25  $0.26  $0.78  $0.96  
Dividend per share $0.12  $0.12  $0.36  $0.36  
Book value per common share (2)(3) $12.52  $11.91  $12.52  $11.91  
          
Selected Balance Sheet Data:          
Assets $513,666  $505,564  $513,666  $505,564  
Loans, net  363,336   330,325   363,336   330,325  
Deposits  382,710   393,606   382,710   393,606  
Average assets  502,807   494,934   513,073   478,915  
Average earning assets  494,849   484,515   504,869   467,636  
Average shareholders' equity  60,087   65,559   59,096   67,666  
Average common shareholders' equity  60,087   56,498   59,097   55,552  
Nonperforming loans  3,430   1,395   3,430   1,395  
Other real estate owned  -   -   -   -  
Total nonperforming assets  3,430   1,395   3,430   1,395  
Troubled debt restructures (accruing)  3,395   3,585   3,395   3,585  
          
Selected Ratios:         
Return on average assets (1)  0.95%  1.03%  0.98%  1.32% 
Return on average common equity (1)  7.91%  8.83%  8.54%  11.20% 
Efficiency ratio (4)  57.98%  56.11%  61.60%  52.82% 
Net interest margin (1)  3.64%  3.69%  3.70%  3.72% 
Common equity tier 1 capital ratio  13.2%  13.7%  13.2%  13.7% 
Tier 1 capital ratio  13.2%  13.7%  13.2%  13.7% 
Total capital ratio  14.4%  14.9%  14.4%  14.9% 
Tier 1 leverage ratio  11.0%  10.6%  11.0%  10.6% 
Common dividend payout ratio (5)  48.25%  45.51%  45.73%  36.96% 
Average equity to average assets  11.95%  13.25%  11.52%  14.13% 
Nonperforming loans to total loans (2)  0.93%  0.42%  0.93%  0.42% 
Nonperforming assets to total assets (2)  0.67%  0.28%  0.67%  0.28% 
Allowance for loan losses to total loans (2)  1.29%  1.39%  1.29%  1.39% 
Allowance for loan losses to nonperforming loans (2) 138.72%  334.20%  138.72%  334.20% 
      
(1) Annualized     
(2) As of period end     
(3) Total shareholders' equity, less preferred stock, divided by total common shares outstanding     
(4) Non-interest expenses to net interest and non-interest income, net of securities gains     
(5) Common dividends divided by net income available for common shareholders     
      
Contact: Dennis Kelley, CFO, Summit State Bank (707) 568-6000

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