Summit State Bank Reports 6% Increase In Profitability And Declaration Of Dividend

SANTA ROSA, Calif., Oct. 28, 2014 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended September 30, 2014 of $1,183,000, a 6% increase over the quarter ended September 30, 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 November 25, 2014 to shareholders of record on November 17, 2014.

Net Income and Results of Operations

The Bank had net income of $1,183,000 and net income available for common stockholders of $1,149,000, or $0.24 per diluted share, for the quarter ended September 30, 2014 compared to net income of $1,121,000 and net income available for common stockholders of $1,087,000, or $0.23 per diluted share, for the quarter ended September 30, 2013. For the nine months ended September 30, 2014 and 2013 the net income available for common stockholders and diluted earnings per common share were $3,572,000 or $0.74 and $2,934,000 or $0.61.

"Our performance continues to be driven by our strong community banking team and its deep sense of care for our growing customer base of local small businesses, their owners, individuals, and nonprofits who are increasingly attracted to our high Summit Way customer service standards," said Tom Duryea, President and CEO.

Return on average assets for the quarter and first nine months of 2014 were 1.01% and 1.07% compared to 1.01% and 0.96% for the same periods in 2013. Return on average common equity for the nine months ended September 30, 2014 was 9.5% compared to 8.0% in the first nine months of 2013.

The net interest margin remained relatively unchanged at 3.81% compared to 3.82% between the third quarters of 2014 and 2013 and the nine month periods of 3.83% compared to 3.87% in 2013. However, net interest income increased 6% and 4% for the 2014 periods as loan and investment volumes increased 1.4% between September 30, 2014 and 2013.

"Net interest income increase is tied to the continuing growth in our lower cost Relationship or Core deposits – Demand, Savings, and Money Market deposits – from approximately $60,000,000 at the beginning of 2009 to nearly $210,000,000 at quarter end, reducing our cost of funds to approximately the 15 th percentile of Peer banks. This strong improvement has been primarily due to the increase in Demand Deposits from $24,000,000 in 2009 to $125,000,000 at quarter end, which now represents 34% of our total deposits, reflecting the many new quality relationships that our strong Summit team continues to attract," said Linda Bertauche, Chief Operating Officer.

Non-interest operating expenses increased in the third quarter of 2014 compared to the same quarter of 2013 by 8.9% primarily attributable to less deferred costs from loan originations. The efficiency ratios for the third quarters of 2014 and 2013 were 59.4% and 58.0%. For the nine month periods the ratios were 59.2% and 60.0% in 2014 compared to 2013.

Total assets were $463,376,000 at September 30, 2014 compared to $459,272,000 at September 30, 2013. The increase in assets was predominantly investments with a 4.4% or $5,643,000 increase. The asset growth was funded by a $14,780,000 or 13.4% increase in demand deposits between the quarters.

The coverage of allowance for loan losses to gross loans was 1.71% at September 30, 2014 compared to 2.06% at September 30, 2013. Nonperforming assets declined to $7,385,000 from $12,120,000 for September 30, 2014 compared to September 30, 2013. This represents a decline in the ratio of nonperforming assets to total assets to 1.59% compared to 2.64%. Nonperforming assets at September 30, 2014 included $3,334,000 in loans on non-accrual, primarily secured by commercial real estate, and $4,051,000 of income generating foreclosed property.

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 increased earning asset base has offset the decline in net interest margin that is being experienced in the industry. Continued focus on gaining greater operating efficiencies has resulted in period over period favorable comparisons and is aided with the ability to offer bank customers industry leading mobile and internet banking access.

"Summit has been able to control costs while increasing our assets despite the competition in the banking community and the challenges of a slowly improving local economy. We continue to attract commercial customer relationships based on our responsive and customer centric culture," said Dennis Kelley, Chief Financial Officer.

About Summit State Bank

Summit State Bank has total assets of $463 million and total equity of $66 million at September 30, 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 Nine Months Ended
  September 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Interest income:        
Interest and fees on loans  $ 3,612  $ 3,476  $ 10,614  $ 10,597
Interest on Federal funds sold  1  --  $ 2  --
Interest on investment securities and deposits in banks  926  870  2,778  2,612
Dividends on FHLB stock  49  32  135  64
Total interest income  4,588  4,378  13,529  13,273
Interest expense:        
Deposits  215  270  655  933
FHLB advances  43  30  124  77
Total interest expense  258  300  779  1,010
Net interest income before provision for loan losses  4,330  4,078  12,750  12,263
Provision for loan losses  --  --  (400)  50
Net interest income after provision for loan losses  4,330  4,078  13,150  12,213
Non-interest income:        
Service charges on deposit accounts  159  149  445  426
Rental income  130  130  392  386
Net securities gains  60  (7)  73  74
Net gain (loss) on other real estate owned  --  17  73  (31)
Loan servicing, net  3  3  9  10
Other income  188  158  403  340
Total non-interest income  540  450  1,395  1,205
Non-interest expense:        
Salaries and employee benefits  1,412  1,248  4,152  3,939
Occupancy and equipment  383  371  996  1,127
Other expenses  1,060  1,003  3,144  2,987
Total non-interest expense  2,855  2,622  8,292  8,053
Income before provision for income taxes  2,015  1,906  6,253  5,365
Provision for income taxes  832  785  2,578  2,212
Net income  $ 1,183  $ 1,121  $ 3,675  $ 3,153
Less: preferred dividends 34  34 103  219
Net income available for common stockholders  $ 1,149  $ 1,087  $ 3,572  $ 2,934
         
Basic earnings per common share  $ 0.24  $ 0.23  $ 0.75  $ 0.62
Diluted earnings per common share  $ 0.24  $ 0.23  $ 0.74  $ 0.61
         
Basic weighted average shares of common stock outstanding 4,778 4,754 4,778 4,751
Diluted weighted average shares of common stock outstanding 4,834 4,791 4,827 4,781
 
 
SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
       
  September 30, 2014 December 31, 2013 September 30, 2013
  (Unaudited)   (Unaudited)
       
ASSETS      
       
Cash and due from banks  $ 20,004  $ 16,128  $ 20,429
Federal funds sold  1,900  --  --
Total cash and cash equivalents  21,904  16,128  20,429
       
Time deposits with banks  1,240  1,985  1,985
       
Investment securities:      
Held-to-maturity, at amortized cost  13,951  15,558  15,558
Available-for-sale (at fair market value; amortized cost of $118,969, $116,947 and $114,844)  119,208  113,568  111,958
Total investment securities  133,159  129,126  127,516
       
Loans, less allowance for loan losses of $4,973, $5,412 and $5,991  285,809  282,667  284,598
Bank premises and equipment, net  5,880  5,505  5,209
Investment in Federal Home Loan Bank stock, at cost  2,701  2,578  2,578
Goodwill  4,119  4,119  4,119
Other Real Estate Owned  4,051  4,771  5,564
Accrued interest receivable and other assets  4,513  7,195  7,274
       
Total assets  $ 463,376  $ 454,074  $ 459,272
       
LIABILITIES AND      
SHAREHOLDERS' EQUITY      
       
Deposits:      
Demand - non interest-bearing  $ 73,224  $ 62,865  $ 66,937
Demand - interest-bearing  51,562  43,879  43,069
Savings  25,313  25,740  26,760
Money market  58,877  55,971  55,675
Time deposits, $100,000 and over  112,879  114,435  120,625
Other time deposits  43,041  38,378  38,978
Total deposits  364,896  341,268  352,044
       
Federal Home Loan Bank advances  31,000  48,500  43,200
Accrued interest payable and other liabilities  1,724  2,676  2,756
       
Total liabilities  397,620  392,444  398,000
       
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 4,778,370, 4,777,670 and 4,775,270  36,640  36,608  36,571
Retained earnings  15,311  13,316  12,710
Accumulated other comprehensive income (loss)  139  (1,960)  (1,675)
       
Total shareholders' equity  65,756  61,630  61,272
       
Total liabilities and shareholders' equity  $ 463,376  $ 454,074  $ 459,272
 
 
Earnings Summary
(In Thousands)
         
  Three Months Ended Nine Months Ended
  September 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Statement of Income Data:        
Net interest income  $ 4,330  $ 4,078  $ 12,750  $ 12,263
Provision for loan losses  --  --  (400)  50
Non-interest income  540  450  1,395  1,205
Non-interest expense  2,855  2,622  8,292  8,053
Provision for income taxes  832  785  2,578  2,212
Net income  $ 1,183  $ 1,121  $ 3,675  $ 3,153
Less: preferred dividends  34  34  103  219
Net income available for common stockholders  $ 1,149  $ 1,087  $ 3,572  $ 2,934
         
Selected per Common Share Data:        
Basic earnings per common share  $ 0.24  $ 0.23  $ 0.75  $ 0.62
Diluted earnings per common share  $ 0.24  $ 0.23  $ 0.74  $ 0.61
Dividend per share  $ 0.11  $ 0.11  $ 0.33  $ 0.31
Book value per common share (2)(3)  $ 10.90  $ 9.97  $ 10.90  $ 9.97
         
Selected Balance Sheet Data:        
Assets  $ 463,376  $ 459,272  $ 463,376  $ 459,272
Loans, net  285,809  284,598  285,809  284,598
Deposits  364,896  352,044  364,896  352,044
Average assets  466,107  439,417  460,523  437,466
Average earning assets  451,062  423,564  445,373  423,123
Average shareholders' equity  65,711  61,160  64,223  62,662
Average common shareholders' equity  52,044  47,494  50,557  48,996
Nonperforming loans  3,334  6,556  3,334  6,556
Other real estate owned  4,051  5,564  4,051  5,564
Total nonperforming assets  7,385  12,120  7,385  12,120
Troubled debt restructures (accruing)  4,960  4,742  4,960  4,742
         
Selected Ratios:        
Return on average assets (1) 1.01% 1.01% 1.07% 0.96%
Return on average common equity (1) 8.76% 9.08% 9.45% 8.01%
Efficiency ratio (4)(5) 59.36% 58.03% 59.23% 59.99%
Net interest margin (1) 3.81% 3.82% 3.83% 3.87%
Tier 1 leverage capital ratio 13.3% 13.5% 13.3% 13.5%
Tier 1 risk-based capital ratio 17.7% 17.1% 17.7% 17.1%
Total risk-based capital ratio 19.0% 18.3% 19.0% 18.3%
Common dividend payout ratio (6) 45.78% 48.30% 0.00% 50.27%
Average equity to average assets 14.10% 13.92% 13.95% 14.32%
Nonperforming loans to total loans (2) 1.15% 2.26% 1.15% 2.26%
Nonperforming assets to total assets (2) 1.59% 2.64% 1.59% 2.64%
Allowance for loan losses to total loans (2) 1.71% 2.06% 1.71% 2.06%
Allowance for loan losses to nonperforming loans (2) 149.17% 91.38% 149.17% 91.38%
         
(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 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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