SANTA ROSA, Calif., Oct. 28, 2010 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended September 30, 2010 of $325,000 and declaration of $0.09 quarterly dividend.

Dividend

The Directors declared a $0.09 quarterly cash dividend to shareholders of record on November 11, 2010 and payable on November 23, 2010.

Net Income and Results of Operations

The Bank had net income of $325,000 and net income available for common stockholders, which deducts the preferred dividends, of $187,000, or $0.04 per diluted share, for the quarter ended September 30, 2010 compared to net income of $166,000 and net income available for common stockholders of $28,000, or $0.01 per diluted share, for the quarter ended September 30, 2009. Net income available for common stockholders and diluted earnings per share for the nine months ended September 30, 2010 were $957,000 and $0.20 compared to $1,353,000 and $0.28 for the same period in 2009.

"Our core operating performance continues to strengthen as our key initiative started in 2008, to reshape the Bank into a full relationship Bank is being firmly established. Our strong net interest margin, efficiency ratio, and core deposit growth, best demonstrate our successful transformation. Net earnings have been impacted by loan loss provisions to address former transaction orientation and the weak economy," stated Thomas Duryea, President and CEO.

The Bank's net interest margin was 4.52% for the three months ended September 30, 2010 compared to 4.47% for the three months ended September 30, 2009. Net interest income was stable at $3,840,000 during the third quarter of 2010 compared to $3,770,000 for the same quarter of 2009.

The Bank's efficiency ratio, which expresses operating costs as a percentage of revenues, was 58% for the third quarter in 2010 compared to 57% in the third quarter of 2009. The efficiency ratio includes expenses related to problem loan monitoring and resolution largely from former transaction orientation.

Core deposits, defined as demand, savings and money market deposits, increased 28% to $103,440,000 at September 30, 2010 from $80,532,000 at September 30, 2009, reflecting the Bank's key initiative to build full banking relationships with businesses in the Sonoma County community.

The Bank's regulatory capital remains well above the required capital ratios with a Tier 1 capital leverage ratio of 14.6%, a Tier 1 risk-based capital ratio of 18.3% and a Total risk-based capital ratio of 19.6% at September 30, 2010.

The provision for loan loss decreased with a provision of $1,150,000 for the third quarter of 2010 compared to $1,450,000 for the same quarter in 2009. The provision was $2,860,000 compared to $2,450,000 for the nine months ended September 30, 2010 and 2009. These provisions increased the ratios of the allowance for loan losses to 2.37% of total loans at September 30, 2010 from 1.62% at December 31, 2009.

"The ability for the Bank to increase its allowance for loan loss while still posting positive earnings, demonstrates the strength of the underlying earning power of the core banking operations," said Dennis Kelley, Chief Financial Officer.

Nonperforming loans at September 30, 2010 included $10,583,000 in loans on non-accrual, and $3,521,000 in loans past due more than 90 days but accruing and brought current in October. This compares to nonperforming loans of $10,683,000 at June 30, 2010 and $11,653,000 at December 31, 2009.

"We continue to work through the Bank's previous transaction emphasis and remain cautiously optimistic that a positive trend has been established. Given the historical downturn, however, we are acutely aware of the slow and uneven nature of our national economic recovery: Nonetheless, we continue to replace former transaction credits with full banking relationships strengthening our performance in both the short term, and, more importantly, long term," said Chief Credit Officer, Guy Dana.  

Total assets increased to $353,016,000 at September 30, 2010 compared to $340,400,000 at December 31, 2009, as the Bank increased its liquidity position.

 "Our strong commitment to the businesses in Sonoma County continues to drive our strong net interest margin, efficiency ratio, and core deposit growth, reflecting our gaining more and more full customer relationships attracted by our commitment to our Sonoma community," said Thomas Duryea.

About Summit State Bank

Summit State Bank has total assets of $353 million and total equity of $56 million at September 30, 2010. Headquartered in Sonoma County, the Bank provides diverse financial products and services throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit State Bank is Sonoma County's top rated bank, with the highest Bauer Financial rating of all Sonoma County-based banks. Summit State Bank received the Gold Medal award for Best Business Bank from the Northbay Biz Magazine and has also been recognized as one of the North Bay's Best Places to Work by the North Bay Business Journal. 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 Nine Months Ended
  September 30, September 30, September 30, September 30,
  2010 2009 2010 2009
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Interest income:        
Interest and fees on loans  $ 4,350  $ 4,726  $ 13,194  $ 14,315
Interest on Federal funds sold  11  --  19  --
Interest on investment securities and deposits in banks  343  403  1,041  1,447
Dividends on FHLB stock  3  6  7  6
         
Total interest income  4,707  5,135  14,261  15,768
         
Interest expense:        
Deposits   737  1,103  2,344  3,604
FHLB advances  130  262  402  820
         
Total interest expense  867  1,365  2,746  4,424
         
         
Net interest income before provision for loan losses  3,840  3,770  11,515  11,344
         
Provision for loan losses   1,150  1,450  2,860  2,450
         
         
Net interest income after provision for loan losses  2,690  2,320  8,655  8,894
         
Non-interest income:        
         
Service charges on deposit accounts  100  101  289  300
Office leases   140  124  401  462
Net securities gains  --  --  150  28
Loan servicing, net  10  10  31  48
Securities impairment  (24)  (17)  (24)  (17)
Other income   74  3  131  30
         
Total non-interest income  300  221  978  851
         
Non-interest expense:        
Salaries and employee benefits   1,201  1,079  3,620  3,252
Occupancy and equipment   410  423  1,201  1,272
Other expenses   774  757  2,375  2,284
         
Total non-interest expense  2,385  2,259  7,196  6,808
         
         
Income before provision for income taxes  605  282  2,437  2,937
         
Provision for income taxes   280  116  1,066  1,211
         
Net income  $ 325  $ 166  $ 1,371  $ 1,726
         
Less: preferred dividends 138  138 414  373
         
Net income available for common stockholders  $ 187  $ 28  $ 957  $ 1,353
         
Basic earnings per common share  $ 0.04  $ 0.01  $ 0.20  $ 0.29
Diluted earnings per common share  $ 0.04  $ 0.01  $ 0.20  $ 0.28
         
Basic weighted average shares of common stock outstanding 4,745 4,745 4,745 4,745
Diluted weighted average shares of common stock outstanding 4,783 4,794 4,777 4,768
SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
       
        
  September 30, 2010 December 31, 2009 September 30, 2009
  (Unaudited)   (Unaudited)
       
ASSETS      
       
Cash and due from banks  $ 5,119  $ 2,933  $ 3,096
Federal funds sold  12,835  --  --
Total cash and cash equivalents  17,954  2,933  3,096
       
       
       
Available-for-sale investment securities - amortized cost of $29,640 at September 30, 2010, $27,393 at December 31, 2009, and $31,460 at September 30, 2009  31,260  27,400  31,844
       
       
Loans, less allowance for loan losses of $6,864 at September 30, 2010, $4,737 at December 31, 2009,  and $4,758 at September 30, 2009  282,748  288,277  291,211
Bank premises and equipment, net   7,403  7,721  7,796
Investment in Federal Home Loan Bank stock, at cost  2,723  2,942  2,942
Goodwill  4,119  4,119  4,119
Accrued interest receivable and other assets   6,809  7,008  6,069
       
Total assets  $ 353,016  $ 340,400  $ 347,077
       
LIABILITIES AND      
SHAREHOLDERS' EQUITY      
       
Deposits:      
Demand - non interest-bearing  $ 27,558  $ 15,706  $ 15,080
Demand - interest-bearing  25,021  22,206  21,316
Savings  12,809  12,783  11,755
Money market  38,052  43,489  32,381
Time deposits, $100 thousand and over  111,411  97,855  93,692
Other time deposits  69,041  72,214  88,310
Total deposits  283,892  264,253  262,534
       
Federal Home Loan Bank (FHLB) advances  12,000  20,120  27,650
Accrued interest payable and other liabilities  887  522  999
       
Total liabilities  296,779  284,895  291,183
       
Shareholders' equity       
       
       
Preferred stock, no par value; 20,000,000 shares authorized; shares issued and outstanding - 8,500 in 2010 and 2009; per share redemption of $1,000 for total liquidation preference of $8,500  8,085  7,989  7,958
       
       
Common stock, no par value; shares authorized - 30,000,000 shares; issued and outstanding 4,744,720 at June 30, 2010, December 31, 2009 and September 30, 2009  36,300  36,275  36,267
Common stock warrant  622  622  622
Retained earnings  10,291  10,615  10,824
Accumulated other comprehensive income (loss), net of taxes   939  4  223
       
Total shareholders' equity  56,237  55,505  55,894
       
Total liabilities and shareholders' equity  $ 353,016  $ 340,400  $ 347,077
             
        Earnings Summary
(In Thousands)
         
         
  Three Months Ended Nine Months Ended
  September 30,  September 30, September 30, September 30,
  2010 2009 2010 2009
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Statement of Income Data:        
Net interest income  $ 3,840  $ 3,770  $ 11,515  $ 11,344
Provision for loan losses   1,150  1,450  2,860  2,450
Non-interest income  300  221  978  851
Non-interest expense  2,385  2,259  7,196  6,808
Provision for income taxes   280  116  1,066  1,211
Net income  $ 325  $ 166  $ 1,371  $ 1,726
Less: preferred dividends  138  138  414  373
Net income available for common stockholders  $ 187  $ 28  $ 957  $ 1,353
         
Selected per Common Share Data:        
Basic earnings per common share  $ 0.04  $ 0.01  $ 0.20  $ 0.29
Diluted earnings per common share  $ 0.04  $ 0.01  $ 0.20  $ 0.28
Book value per common share (2)(3)  $ 10.15  $ 10.10  $ 10.15  $ 10.10
         
Selected Balance Sheet Data:         
Assets  $ 353,016  $ 347,077  $ 353,016  $ 347,077
Loans, net  282,748  291,211  282,748  291,211
Deposits  283,892  262,534  283,892  262,534
Average assets  354,936  351,523  350,706  357,271
Average earnings assets  336,709  334,976  332,886  341,602
Average shareholders' equity  56,480  56,021  55,927  56,251
Average common shareholders' equity  47,806  47,461  47,268  47,716
Nonperforming loans  14,104  9,293  14,104  9,293
Total nonperforming assets  14,104  9,293  14,104  9,293
         
Selected Ratios:        
Return on average assets (1) 0.36% 0.19% 0.52% 0.65%
Return on average common equity (1) 1.55% 0.23% 2.71% 3.79%
Return on average common tangible equity (1) 1.70% 0.26% 2.97% 4.15%
Efficiency ratio 57.61% 56.60% 57.60% 55.83%
Net interest margin (1) 4.52% 4.47% 4.62% 4.44%
Tier 1 leverage capital ratio 14.6% 14.8% 14.6% 14.8%
Tier 1 risk-based capital ratio 18.3% 18.2% 18.3% 18.2%
Total risk-based capital ratio 19.6% 19.5% 19.6% 19.5%
Common dividend payout ratio (4) 228.34% 74.26% 133.86% 63.12%
Average equity to average assets 15.91% 15.94% 15.95% 15.74%
Nonperforming loans to total loans (2) 4.87% 3.14% 4.87% 3.14%
Nonperforming assets to total assets (2) 4.00% 2.68% 4.00% 2.68%
Allowance for loan losses to total loans (2) 2.37% 1.61% 2.37% 1.61%
Allowance for loan losses to nonperforming loans (2) 48.67% 51.20% 48.67% 51.20%
         
         
 (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      
CONTACT:  Summit State Bank          Thomas Duryea, President and CEO           (707) 568-4920

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