Market Overview

Summit Bank Reports 2nd Quarter Earnings

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Summit Bank (OTC:SBKO) reported net income for the second quarter of $1.41 million or 25 cents per fully diluted share. Earnings for the comparable period one year ago were $1.35 million or 26 cents per fully diluted share. Year to date earnings were $2.38 million or 44 cents per fully diluted share, compared to $2.59 million or 49 cents that the Bank earned during the first six months of 2019. Increased average number of shares from our successful $8.0 million capital raise in the first quarter impacted earnings per share for the quarter and year-to-date.

The Bank was able to grow earnings despite elevated loan related losses in the Bank's small business commercial equipment finance portfolio as well as increased provision for future loan losses resulting from the ongoing impact of the COVID-19 pandemic. The focus of the SBA division on the Paycheck Protection Program (PPP) led to a decline in non-interest income for the quarter, as the Bank has historically booked and sold a portion of its traditional SBA loans in the secondary market. Net interest income for the six month period, excluding PPP activity, exceeded the similar period last year by $1.45 million, an increase of 13.1 percent as the Bank's core operations remain robust despite the challenging economic environment.

The Bank responded to the Federal SBA PPP during the second quarter by originating $114.2 million in loans to help our clients mitigate the impact of the COVID-19 pandemic. This lending activity combined with robust growth in deposits from existing and new clients expanded Summit's balance sheet significantly during the quarter with total loans increasing by $121.4 million or 26.1 percent during the quarter and $195.9 million or 50.3 percent over the previous year, and total deposits increasing by $88.2 million or 17.6 percent during the quarter and $179.0 million or 43.8 percent over the previous year. The Bank completed a successful common stock offering during the second quarter raising nearly $8 million in new capital that will be used to support the Bank's continued loan balance sheet growth.

"The effort by the entire team to get us through the PPP and support our communities was tremendous," said Craig Wanichek, President and CEO. "We are also very humbled by the confidence our communities have in Summit Bank by bringing nearly $8 million in new capital in one day."

The Bank's available liquidity was extremely strong during this period of uncertainty with $119.4 million of cash & short-term investments in securities as of June 30, 2020. This is more than twice the total of $58.5 million in similar assets held at June 30, 2019. Non-performing assets remain low with total non-performing assets at June 30, 2020 representing just 0.24 percent of total assets, a decrease from 0.28 percent at June 30, 2019.

"As a technology-focused bank," said Wanichek, "Summit was able to come together for the benefit of our clients and communities this quarter. As an essential business, Summit remained open throughout the pandemic and helped find ways to ease the financial burdens of our clients. Our bankers worked closely with business owners and nonprofit executives to understand their needs and tailor services accordingly. Our investment in technology including accessible remote and online banking enabled us to be ‘pandemic ready,' which allowed our bank to continue to serve all of our clients during lockdown."

With offices in Eugene, Central Oregon and downtown Portland, Summit Bank is a business bank that specializes in providing high-level service to professionals and medium-sized businesses and their owners. Summit Bank is quoted on the NASDAQ Over-the-Counter Bulletin Board as SBKO.

QUARTERLY FINANCIAL REPORT – JUNE 2020

(in thousands except per share data) Unaudited Unaudited
As of As of
Summary Statements of Condition Jun. 30, 2020 Jun. 30, 2019
Cash and short term investments

$

112,489

 

$

53,099

 

Securities

 

6,909

 

 

5,391

 

Loans:
Commercial

 

241,712

 

 

119,353

 

Commercial real estate

 

299,533

 

 

236,787

 

Other

 

56,531

 

 

40,905

 

Loan loss reserve and unearned income

 

(12,192

)

 

(7,330

)

Total net loans

 

585,584

 

 

389,714

 

Property and other assets

 

14,828

 

 

13,188

 

Repossessed property

 

289

 

 

435

 

Total assets

$

720,099

 

$

461,827

 

 
Deposits:
Noninterest-bearing demand

$

152,977

 

$

84,418

 

Interest-bearing demand

 

402,968

 

 

294,640

 

Certificates of deposit

 

32,003

 

 

29,891

 

Total deposits

 

587,948

 

 

408,950

 

Other liabilities

 

74,729

 

 

9,306

 

Shareholders' equity

 

57,422

 

 

43,572

 

Total liabilities and shareholders' equity

$

720,099

 

$

461,827

 

 
Book value per share

$

9.56

 

$

8.39

 

Unaudited Unaudited Unaudited Unaudited
For the six months
ending
For the six months
ending
For the three months
ending
For the three months
ending
Summary Statements of Income Jun. 30, 2020 Jun. 30, 2019 Jun. 30, 2020 Jun. 30, 2019
Interest income

$

13,939

 

$

12,726

 

$

6,968

 

$

6,580

 

Interest expense

 

(841

)

 

(1,643

)

 

(291

)

 

(872

)

Net interest income

 

13,098

 

 

11,083

 

 

6,677

 

 

5,708

 

Provision for loan losses

 

(2,499

)

 

(1,535

)

 

(1,063

)

 

(965

)

Noninterest income

 

464

 

 

1,109

 

 

197

 

 

833

 

Noninterest expense

 

(7,802

)

 

(7,095

)

 

(3,863

)

 

(3,700

)

Net income before income taxes

 

3,261

 

 

3,562

 

 

1,948

 

 

1,876

 

Provision for income taxes

 

(877

)

 

(973

)

 

(534

)

 

(523

)

Net income

$

2,384

 

$

2,589

 

$

1,415

 

$

1,353

 

 
Net income per share, basic

$

0.44

 

$

0.50

 

$

0.25

 

$

0.26

 

Net income per share, fully diluted

$

0.44

 

$

0.49

 

$

0.25

 

$

0.26

 

 

 

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