Summit State Bank Reports 21% Increase In Profitability And Declaration Of Dividend

SANTA ROSA, Calif., April 29, 2014 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended March 31, 2014 of $1,210,000, a 21% increase over the quarter ended March 31, 2013. A quarterly dividend of $0.11 per share was declared for common shareholders.

Dividend

The Board of Directors declared an $0.11 quarterly dividend to be paid on May 23, 2014 to shareholders of record on May 15, 2014.

Net Income and Results of Operations

The Bank had net income of $1,210,000 and net income available for common stockholders of $1,176,000, or $0.24 per diluted share, for the quarter ended March 31, 2014 compared to net income of $1,002,000 and net income available for common stockholders of $862,000, or $0.18 per diluted share, for the quarter ended March 31, 2013.

"Our stronger earnings continue to be driven by the quality of our team and its deep commitment and hard work to support our growing portfolio of quality customer relationships resulting in our best quarter to date," said Tom Duryea, President & CEO.

Net interest income increased 3.8% at $4,270,000 for the first quarter of 2014 compared to $4,115,000 for the same quarter in 2013. The net interest margin was stable at 3.92% for the first quarter of 2014 compared to 3.93% in the first quarter of 2013.

Non-interest income was $462,000 in the first quarter of 2014 compared to $363,000 in the first quarter of 2013. The increase was primarily attributed to a gain realized on the sale of a foreclosed property.

Total assets increased 5% to $460,133,000 at March 31, 2014 compared to $438,266,000 at March 31, 2013. The asset growth was funded by a $29,207,000 increase in demand, savings and money market deposits. The mix of deposits changed between the periods in favor of demand, savings and money market deposits now comprising 57% of total deposits at March 31, 2014 compared to 51% at March 31, 2013.

Return on average assets and average common equity for the quarter ended March 31, 2014 was 1.07% and 9.73% compared to 0.93% and 7.06% for the first quarter of 2013.

Gross loans were $293,054,000 at March 31, 2014 compared to $280,172,000 at March 31, 2013. Loan growth between the periods was predominantly in commercial real estate lending.

"Loan production picked up in the first quarter with annualized growth of 7%. This is a result of both the strong efforts of our community banking team and the steady and continuing improvement of the Sonoma County economy" said Linda Bertauche, Chief Operating Officer

The Bank's efficiency ratio, which expresses operating costs as a percentage of revenues, was 57% for the first quarter of 2014 compared to 62% for the same quarter in 2013. Operating expense between the quarters declined 3.6% with $2,673,000 in operating expense in 2014 compared to $2,773,000 in 2013. The operating expense decline was due in part to lower occupancy costs and controlled overhead expenses.

The Bank recorded no provision for loan losses for the first quarters of 2014 and 2013. The coverage of allowance for loan losses to gross loans was 1.85% at March 31, 2014 compared to 2.13% at March 31, 2013. Nonperforming assets declined to $9,445,000 from $9,956,000 for March 31, 2014 compared to March 31, 2013. This represents a decline in the ratio of nonperforming assets to total assets to 2.05% compared to 2.27%. Nonperforming assets at March 31, 2014 included $5,394,000 in loans on non-accrual, primarily secured by commercial real estate, and $4,051,000 of income generating foreclosed property.

The Bank's regulatory capital remains well above the required capital ratios with a Tier 1 capital leverage ratio of 13.3%, a Tier 1 risk-based capital ratio of 17.2% and a Total risk-based capital ratio of 18.5% at March 31, 2014.

About Summit State Bank

Summit State Bank has total assets of $460 million and total equity of $63 million at March 31, 2014. Headquartered in Sonoma County, the Bank provides diverse financial products and services throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit has been recognized as one of the Top 75 Corporate Philanthropists in the Bay Area by the San Francisco Business Times and Top Corporate Philanthropist by the North Bay Business Journal. In addition, Summit State Bank received the 2013 Rising Star Award from the California Independent Bankers, the 2012 Community Bank Award from the American Bankers Association for its nonprofit work, and has been recognized as one of the North Bay's Best Places to Work by the North Bay Business Journal. Summit has also been consistently recognized as a high performing bank by Findley Reports. 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, 2014 March 31, 2013
  (Unaudited) (Unaudited)
     
Interest income:    
Interest and fees on loans  $ 3,549  $ 3,610
Interest on Federal funds sold  1  --
Interest on investment securities and deposits in banks  936  867
Dividends on FHLB stock  43  13
Total interest income  4,529  4,490
Interest expense:    
Deposits  222  351
FHLB advances  37  24
Total interest expense  259  375
Net interest income before provision for loan losses  4,270  4,115
Provision for loan losses  --  --
Net interest income after provision for loan losses  4,270  4,115
Non-interest income:    
Service charges on deposit accounts  134  139
Rental income  132  125
Net securities gains  --  2
Net gain on other real estate owned  73  --
Loan servicing, net  3  4
Other income  120  93
Total non-interest income  462  363
Non-interest expense:    
Salaries and employee benefits  1,368  1,432
Occupancy and equipment  292  408
Other expenses  1,013  933
Total non-interest expense  2,673  2,773
Income before provision for income taxes  2,059  1,705
Provision for income taxes  849  703
Net income  $ 1,210  $ 1,002
Less: preferred dividends 34  140
Net income available for common stockholders  $ 1,176  $ 862
     
Basic earnings per common share  $ 0.25  $ 0.18
Diluted earnings per common share  $ 0.24  $ 0.18
     
Basic weighted average shares of common stock outstanding 4,778 4,746
Diluted weighted average shares of common stock outstanding 4,821 4,776
 
SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
       
       
  March 31, 2014 December 31, 2013 March 31, 2013
  (Unaudited)   (Unaudited)
       
ASSETS      
       
Cash and due from banks  $ 18,193  $ 16,128  $ 14,888
Federal funds sold  1,631  --  --
Total cash and cash equivalents  19,824  16,128  14,888
       
Time deposits with banks  1,985  1,985  2,977
       
Investment securities:      
Held-to-maturity, at amortized cost  15,558  15,558  17,055
Available-for-sale (at fair market value; amortized cost of $114,722      
$116,947 and $104,908)  113,016  113,568  107,706
Total investment securities  128,574  129,126  124,761
       
Loans, less allowance for loan losses of $5,432, $5,412 and $5,967  287,622  282,667  274,205
Bank premises and equipment, net  5,790  5,505  5,009
Investment in Federal Home Loan Bank stock, at cost  2,578  2,578  2,265
Goodwill  4,119  4,119  4,119
Other Real Estate Owned  4,051  4,771  4,983
Accrued interest receivable and other assets  5,590  7,195  5,059
       
Total assets  $ 460,133  $ 454,074  $ 438,266
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
       
Deposits:      
Demand - non interest-bearing  $ 70,752  $ 62,865  $ 54,911
Demand - interest-bearing  48,693  43,879  39,237
Savings  26,086  25,740  23,272
Money market  57,307  55,971  56,211
Time deposits, $100,000 and over  116,576  114,435  120,762
Other time deposits  39,000  38,378  47,861
Total deposits  358,414  341,268  342,254
       
Federal Home Loan Bank advances  37,400  48,500  30,000
Accrued interest payable and other liabilities  1,062  2,676  2,579
       
Total liabilities  396,876  392,444  374,833
       
Shareholders' equity      
Preferred stock, no par value; 20,000,000 shares authorized; shares issued and outstanding - 13,750 Series B; per share redemption of $1,000 for total liquidation preference of $13,750  13,666  13,666  13,666
Common stock, no par value; shares authorized - 30,000,000 shares; issued and outstanding 4,777,670, 4,777,670 and 4,752,586  36,615  36,608  36,459
Retained earnings  13,966  13,316  11,685
Accumulated other comprehensive income (loss)  (990)  (1,960)  1,623
       
Total shareholders' equity  63,257  61,630  63,433
       
Total liabilities and shareholders' equity  $ 460,133  $ 454,074  $ 438,266
 
Earnings Summary
(In Thousands)
     
     
  Three Months Ended
     
  March 31, 2014 March 31, 2013
     
  (Unaudited) (Unaudited)
Statement of Income Data:    
Net interest income  $ 4,270  $ 4,115
Provision for loan losses  --  --
Non-interest income  462  363
Non-interest expense  2,673  2,773
Provision for income taxes  849  703
Net income  $ 1,210  $ 1,002
Less: preferred dividends  34  140
Net income available for common stockholders  $ 1,176  $ 862
     
Selected per Common Share Data:    
Basic earnings per common share  $ 0.25  $ 0.18
Diluted earnings per common share  $ 0.24  $ 0.18
Dividend per share  $ 0.11  $ 0.09
Book value per common share (2)(3)  $ 10.38  $ 10.47
     
Selected Balance Sheet Data:    
Assets  $ 460,133  $ 438,266
Loans, net  287,622  274,205
Deposits  358,414  342,254
Average assets  457,628  437,831
Average earning assets  441,671  424,328
Average shareholders' equity  62,679  63,201
Average common shareholders' equity  49,014  49,535
Nonperforming loans  5,394  4,973
Other real estate owned  4,051  4,983
Total nonperforming assets  9,445  9,956
Troubled debt restructures (accruing)  4,395  5,892
     
Selected Ratios:    
Return on average assets (1) 1.07% 0.93%
Return on average common equity (1) 9.73% 7.06%
Efficiency ratio (4)(5) 57.37% 61.95%
Net interest margin (1) 3.92% 3.93%
Tier 1 leverage capital ratio 13.3% 13.3%
Tier 1 risk-based capital ratio 17.2% 17.4%
Total risk-based capital ratio 18.5% 18.7%
Common dividend payout ratio (6) 0.00% 49.54%
Average equity to average assets 13.70% 14.44%
Nonperforming loans to total loans (2) 1.84% 1.78%
Nonperforming assets to total assets (2) 2.05% 2.27%
Allowance for loan losses to total loans (2) 1.85% 2.13%
Allowance for loan losses to nonperforming loans (2) 100.72% 119.99%
 
(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  
(5) Excludes net gains (losses) on securities and other real estate owned
(6) Common dividends divided by net income available for common stockholders
CONTACT: Thomas Duryea, President and CEO, Summit State Bank  (707) 568-4920

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