Summit State Bank Reports A 10% Increase In Net Income For 2015 And Declaration Of Dividend

SANTA ROSA, Calif., Jan. 26, 2016 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income for the year ended December 31, 2015 of $6,030,000, a 10% increase over 2014. Basic earnings per share increased to $1.24 in 2015 from $1.12 in 2014. 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 February 24, 2016 to shareholders of record on February 18, 2016.

Net Income and Results of Operations

"Summit continues to record strong operating performance as a result of the high quality of our community banking team and their deep commitment to our Sonoma County community and ability to attract and expand full banking relationships by providing the best customer service experience and customized financial solutions through The Summit Way brand of community banking. We are looking forward to another successful year in 2016," said Thomas Duryea, President and CEO.

The year ended December 31, 2015 had many accomplishments. Some of the financial highlights were:
  • 1.24% Return on Assets (ROA)
  • 9% dividend increase to 48 cents
  • 22% increase in net loan balances
  • 20% increase in demand deposits
  • 53.8% Efficiency ratio
  • 0.31% nonperforming asset ratio
  • Retirement of Small Business Lending Fund Preferred stock

For the year ended December 31, 2015, net income was $6,030,000, net income available for common stockholders, which deducts the preferred dividends, of $5,938,000, and $1.23 diluted earnings per share, compared to net income of $5,485,000, net income available for common stockholders of $5,347,000, and $1.11 diluted earnings per share, for the year ended December 31, 2014.

For the quarter ended December 31, 2015, Summit State Bank had net income and net income available for common stockholders of $1,284,000 and diluted earnings per share of $0.27 compared to $1,810,000 in net income, $1,776,000 net income available for common stockholders, or $0.37 diluted earnings per share, for the same period in 2014.

During the annual and fourth quarter periods of 2015 and 2014, there were isolated impacts to the results, predominantly due to the improvement of asset quality. In 2015, Summit State Bank reversed $800,000 for the year and no reversal in the fourth quarter, of allowance for loan losses and recognized a gain on the sale of foreclosed real estate of $1,125,000 for the year and no sales in the fourth quarter. In 2014, there was $1,400,000 for the year and $1,000,000 in the fourth quarter of reversal of the allowance for loan losses and gains on sale of foreclosed properties of $73,000 for the year and no sales in the fourth quarter. Without these items, net income would have increased for the 2015 year by 6% and between the fourth quarters by 5%.

Return on average assets improved in 2015 to 1.24% from 1.19% in 2014 and return on average common equity was 10.6% for 2015 compared to 10.4% in 2014. Without the positive impacts of the provision for loan loss reversals and gains on foreclosed property sales, the return on average assets and average common equity was 1.01% and 8.59% for the year ended December 31, 2015, compared to 2014 return on average assets and average common equity of 1.00% and 6.91%.

Total assets were $513,365,000 at December 31, 2015 compared to $459,675,000 at December 31, 2014, representing an annual increase of 11.7%.

The increase in assets was predominantly from a 22% increase in net loans.

"We are extremely pleased with our growth in 2015.  Our ability to attract and retain top quality clients in Sonoma County is a direct reflection of the excellent team we have and the 'can-do' Summit Way culture we stand for.  We are committed to Sonoma County and look forward to another great year of investing in it," said Brandy Seppi, Chief Credit Officer and Executive Vice President.

The asset growth was funded primarily by a $27,942,000 or 13% increase in Core relationship deposits - demand, savings and money market deposits - driven primarily by demand deposit increases, between December 31, 2015 and December 31, 2014. Demand deposits currently represent 39% of total deposits.

"We have achieved another year of strong results and remain ever committed to increasing our funding of loans through core deposit relationships, largely DDA, which drive franchise and shareholder value, and provide the proper foundation to continue to support and sustain our community's small businesses and nonprofits in 2016 and beyond," said Linda Bertauche, Chief Operating Officer and Executive Vice President.

About Summit State Bank

Summit State Bank, a local community bank, has total assets of $513 million and total equity of $57 million at December 31, 2015. 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, Napa, San Francisco, and Marin Counties.

Summit State Bank's workforce resembles the diverse community it serves.  Presently, 80% 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 by the Northbay Biz magazine; Best Places to Work in the North Bay by the North Bay Business Journal; Super Performing Bank by Findley Reports; and Top 75 Corporate Philanthropists in the San Francisco Bay Area by the San Francisco Business Times. 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   Year Ended  
  December 31, 2015   December 31, 2014   December 31, 2015   December 31, 2014  
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)  
                 
Interest income:                
Interest and fees on loans $   3,908     $   3,434     $   14,523     $   14,048    
Interest on federal funds sold     1         1         3         3    
Interest on investment securities and deposits in banks     904         919         3,720         3,696    
Dividends on FHLB stock     60         50         327         186    
Total interest income     4,873         4,404         18,573         17,933    
Interest expense:                
Deposits     212         194         757         849    
FHLB advances     40         43         179         167    
Total interest expense     252         237         936         1,016    
Net interest income before provision for loan losses     4,621         4,167         17,637         16,917    
Provision for loan losses      -         (1,000 )       (800 )       (1,400 )  
Net interest income after provision for loan losses     4,621         5,167         18,437         18,317    
Non-interest income:                
Service charges on deposit accounts     177         169         702         614    
Rental income     133         131         532         523    
Net securities gain     49         165         157         239    
Net gain on other real estate owned     -         -         1,125         73    
Loan servicing, net     4         3         10         12    
Other income      1         131         119         534    
Total non-interest income     364         599         2,645         1,995    
Non-interest expense:                
Salaries and employee benefits     1,429         1,377         5,646         5,530    
Occupancy and equipment      336         351         1,313         1,347    
Other expenses      1,035         961         3,864         4,105    
Total non-interest expense     2,800         2,689         10,823         10,982    
Income before provision for income taxes     2,185         3,077         10,259         9,330    
Provision for income taxes      901         1,267         4,229         3,845    
Net income $   1,284     $   1,810     $   6,030     $   5,485    
Less:  preferred dividends     -         34         92       138    
Net income available for common stockholders $   1,284     $   1,776     $   5,938     $   5,347    
                 
Basic earnings per common share $   0.27     $   0.37     $   1.24     $   1.12    
Diluted earnings per common share $   0.27     $   0.37     $   1.23     $   1.11    
                 
Basic weighted average shares of common stock outstanding   4,783       4,778       4,783       4,778    
Diluted weighted average shares of common stock outstanding   4,839       4,837       4,838       4,831    
                 

SUMMIT STATE BANK AND SUBSIDIARY  
CONSOLIDATED BALANCE SHEETS  
(In thousands except share and per share data)  
         
  December 31,   December 31,  
    2015       2014    
  (Unaudited)      
         
ASSETS        
         
Cash and due from banks $   15,583     $   21,313    
Federal funds sold     2,000         2,000    
Total cash and cash equivalents     17,583         23,313    
         
Time deposits with banks     744         1,240    
         
Investment securities:        
Held-to-maturity, at amortized cost     5,988         9,977    
Available-for-sale (at fair market value; amortized cost of $127,735 in 2015 and $123,503 in 2014)     128,599         124,723    
Total investment securities     134,587         134,700    
         
Loans, less allowance for loan losses of $4,731 in 2015 and $5,143 in 2014     343,217         279,798    
Bank premises and equipment, net      5,498         5,803    
Investment in Federal Home Loan Bank stock, at cost     2,701         2,701    
Goodwill     4,119         4,119    
Other Real Estate Owned     -         4,051    
Accrued interest receivable and other assets     4,916         3,950    
         
Total assets $   513,365     $   459,675    
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
         
Deposits:        
Demand - non interest-bearing $   98,062     $   73,707    
Demand - interest-bearing     56,281         55,377    
Savings     27,644         25,587    
Money market     59,445         58,819    
Time deposits that meet or exceed the FDIC insurance limit     53,953         53,563    
Other time deposits     101,861         88,206    
Total deposits     397,246         355,259    
         
Federal Home Loan Bank (FHLB) advances     55,800         35,000    
Accrued interest payable and other liabilities     2,994         1,836    
         
Total liabilities     456,040         392,095    
         
Shareholders' equity         
Preferred stock, no par value; 20,000,000 shares authorized; Series B shares issued and outstanding - 0 in 2015 and 13,750 in 2014; per share redemption of $1,000 for total liquidation preference of $13,750     -         13,666    
Common stock, no par value; shares authorized - 30,000,000 shares; issued and outstanding 4,783,170 in 2015 and 4,778,370 in 2014     36,704         36,646    
Retained earnings     20,120         16,560    
Accumulated other comprehensive income (loss)     501         708    
         
Total shareholders' equity     57,325         67,580    
         
Total liabilities and shareholders' equity $   513,365     $   459,675    
         

 
Financial Summary  
(In Thousands except per share data)  
                   
                   
    Three Months Ended   Year Ended  
    December 31, 2015   December 31, 2014   December 31, 2015   December 31, 2014  
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)  
Statement of Income Data:                  
Net interest income   $   4,621     $   4,167     $   17,637     $   16,917    
Provision for loan losses        -         (1,000 )       (800 )       (1,400 )  
Non-interest income       364         599         2,645         1,995    
Non-interest expense       2,800         2,689         10,823         10,982    
Provision for income taxes        901         1,267         4,229         3,845    
Net income   $   1,284     $   1,810     $   6,030     $   5,485    
Less: preferred dividends       -         34         92         138    
Net income available for common stockholders   $   1,284     $   1,776     $   5,938     $   5,347    
                   
Selected per Common Share Data:                  
Basic earnings per common share   $   0.27     $   0.37     $   1.24     $   1.12    
Diluted earnings per common share   $   0.27     $   0.37     $   1.23     $   1.11    
Dividend per share   $   0.12     $   0.11     $   0.48     $   0.44    
Book value per common share (2)(3)   $   11.99     $   11.28     $   11.99     $   11.28    
                   
Selected Balance Sheet Data:                    
Assets   $   513,365     $   459,675     $   513,365     $   459,675    
Loans, net       343,217         279,798         343,217         279,798    
Deposits       397,246         355,259         397,246         355,259    
Average assets       504,628         461,514         485,396         460,774    
Average earning assets       495,866         447,769         474,751         445,977    
Average shareholders' equity       57,334         66,766         65,061         64,864    
Average common shareholders' equity       57,334         53,100         56,001         51,198    
Nonperforming loans       1,610         1,815         1,610         1,815    
Other real estate owned       -          4,051         -          4,051    
Total nonperforming assets       1,610         5,866         1,610         5,866    
Troubled debt restructures (accruing)       3,536         5,555         3,536         5,555    
                   
Selected Ratios:                  
Return on average assets (1)     1.01 %     1.56 %     1.24 %     1.19 %  
Return on average common equity (1)     8.89 %     13.27 %     10.60 %     10.44 %  
Efficiency ratio (4)     56.73 %     58.44 %     53.78 %     58.81 %  
Net interest margin (1)     3.70 %     3.69 %     3.72 %     3.79 %  
Common equity tier 1 capital ratio (5)     13.5 %       -        13.5 %       -     
Tier 1 capital ratio     13.5 %     18.3 %     13.5 %     18.3 %  
Total capital ratio     14.7 %     19.6 %     14.7 %     19.6 %  
Tier 1 leverage ratio     10.5 %     13.7 %     10.5 %     13.7 %  
Common dividend payout ratio (6)     44.70 %     29.62 %     38.67 %     39.31 %  
Average equity to average assets     11.36 %     14.47 %     13.40 %     14.08 %  
Nonperforming loans to total loans (2)     0.46 %     0.64 %     0.46 %     0.64 %  
Nonperforming assets to total assets (2)     0.31 %     1.28 %     0.31 %     1.28 %  
Allowance for loan losses to total loans (2)     1.36 %     1.81 %     1.36 %     1.81 %  
Allowance for loan losses to nonperforming loans (2)   293.86 %     283.39 %     293.86 %     283.39 %  
   
(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 equity tier 1 capital ratio requirement was effective January 1, 2015.  
(6) Common dividends divided by net income available for common stockholders.  
   

Thomas Duryea, President and CEO, Summit State Bank (707) 568-4920

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