Summit State Bank Reports Third Quarter Operating Results and Declaration of Dividend
SANTA ROSA, Calif., Oct. 25, 2016 (GLOBE NEWSWIRE) — Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended September 30, 2016 of $1,198,000 and diluted earnings per share of $0.25. 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 November 23, 2016 to shareholders of record on November 16, 2016.
Net Income and Results of Operations
The Bank had net income of $1,198,000 or $0.25 per diluted share, for the third quarter ended September 30, 2016, compared to net income of $1,280,000 or $0.26 per diluted share, for the quarter ended September 30, 2015.
Net income and diluted earnings per common share for the nine months ended September 30, 2016 and 2015 were $3,779,000 or $0.78 and $4,746,000 or $0.96. The nine-month period in 2015 benefited from gains on sales of foreclosed properties of $1,125,000 and reversal from the allowance for loan loss of $800,000. There were net gains on investment securities of $669,000 and $108,000 for the nine months ended September 30, 2016 and 2015.
Return on average assets for the quarter and nine months ended September 30, 2016 were 0.95% and 0.98% compared to 1.03% and 1.32% for the same periods in 2016.
Return on average common equity for the quarter and nine months ended September 30, 2016 was 7.9% and 8.5% compared to 8.8% and 11.2% for the same periods in 2015.
“We are focused on the long-term success of our Bank employees, customers and community. This strategy will continue to drive improved core operating performance and shareholder value,” said Jim Brush, President and CEO.
Total assets were $513,666,000 at September 30, 2016 compared to $505,564,000 at September 30, 2015, representing an annual increase of 1.6%.
The increase in assets was predominantly from a 10% increase in loans while investment securities declined 15%. This shift in assets from investments to loans has enabled the net interest margin to stay relatively stable at 3.70% for the nine months ended September 30, 2016 compared to 3.72% for the same period in 2015.
The asset growth was funded primarily by a $31 million or 22% increase in demand deposits between September 30, 2016 and 2015. Demand deposits currently represent 45% of total deposits at September 30, 2016 compared to 36% at September 30, 2015.
Nonperforming assets increased to $3,430,000 from $1,395,000 at September 30, 2016 compared to September 30, 2015. This represents a ratio of nonperforming assets to total assets of 0.67% compared to 0.28%. The increase in nonperforming assets was from increased nonaccrual loans which are secured by real estate.
The coverage of allowance for loan losses to gross loans was 1.29% at September 30, 2016 compared to 1.39% at September 30, 2015. The decline was primarily from 10% loan growth between the dates.
Net interest income increased 0.8% and 7.6% for the three and nine month periods ended September 30, 2016, as loan volumes increased.
Non-interest operating expenses increased in the third quarter of 2016 compared to the same quarter of 2015 by 4.6% or $124,000, attributable to various other operating expenses, partially offset by a decline in salaries and employee benefits and occupancy expenses.
The efficiency ratios for the third quarters of 2016 and 2015 were 58% and 56%. For the nine month periods, the ratios were 62% in 2016 compared to 53% in 2015.
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 net interest income generated by the increased earning asset base with loans as a greater percentage, has offset the decline in net interest margin that is being experienced in the industry.
About Summit State Bank
Summit State Bank, a local community bank, has total assets of $514 million and total equity of $60 million at September 30, 2016. 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 County.
Summit State Bank’s workforce resembles the diverse community it serves. Presently, 60% 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; Best Places to Work in the North Bay; Super Performing Bank; and Top 75 Corporate Philanthropists in the San Francisco Bay. 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, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Interest and fees on loans | $ | 4,146 | $ | 3,766 | $ | 12,491 | $ | 10,615 | ||||||||||||
| Interest on federal funds sold | 2 | 1 | 5 | 2 | ||||||||||||||||
| Interest on investment securities and deposits in banks | 628 | 917 | 2,257 | 2,816 | ||||||||||||||||
| Dividends on FHLB stock | 68 | 67 | 182 | 267 | ||||||||||||||||
| Total interest income | 4,844 | 4,751 | 14,935 | 13,700 | ||||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Deposits | 209 | 192 | 654 | 545 | ||||||||||||||||
| FHLB advances | 90 | 50 | 278 | 139 | ||||||||||||||||
| Total interest expense | 299 | 242 | 932 | 684 | ||||||||||||||||
| Net interest income before provision for loan losses | 4,545 | 4,509 | 14,003 | 13,016 | ||||||||||||||||
| Provision for loan losses | – | – | – | (800 | ) | |||||||||||||||
| Net interest income after provision for loan losses | 4,545 | 4,509 | 14,003 | 13,816 | ||||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Service charges on deposit accounts | 193 | 188 | 564 | 525 | ||||||||||||||||
| Rental income | 142 | 133 | 418 | 399 | ||||||||||||||||
| Net securities gain (loss) | (20 | ) | 55 | 669 | 108 | |||||||||||||||
| Net gain on other real estate owned | – | – | – | 1,125 | ||||||||||||||||
| Loan servicing, net | 2 | 2 | 6 | 6 | ||||||||||||||||
| Other income | 9 | 1 | 8 | 119 | ||||||||||||||||
| Total non-interest income | 326 | 379 | 1,665 | 2,282 | ||||||||||||||||
| Non-interest expense: | ||||||||||||||||||||
| Salaries and employee benefits | 1,399 | 1,499 | 4,965 | 4,217 | ||||||||||||||||
| Occupancy and equipment | 309 | 327 | 896 | 976 | ||||||||||||||||
| Other expenses | 1,128 | 886 | 3,379 | 2,831 | ||||||||||||||||
| Total non-interest expense | 2,836 | 2,712 | 9,240 | 8,024 | ||||||||||||||||
| Income before provision for income taxes | 2,035 | 2,176 | 6,428 | 8,074 | ||||||||||||||||
| Provision for income taxes | 837 | 896 | 2,649 | 3,328 | ||||||||||||||||
| Net income | $ | 1,198 | $ | 1,280 | $ | 3,779 | $ | 4,746 | ||||||||||||
| Less: preferred dividends | – | 23 | – | 92 | ||||||||||||||||
| Net income available for common shareholders | $ | 1,198 | $ | 1,257 | $ | 3,779 | $ | 4,654 | ||||||||||||
| Basic earnings per common share | $ | 0.25 | $ | 0.26 | $ | 0.79 | $ | 0.97 | ||||||||||||
| Diluted earnings per common share | $ | 0.25 | $ | 0.26 | $ | 0.78 | $ | 0.96 | ||||||||||||
| Basic weighted average shares of common stock outstanding | 4,814 | 4,783 | 4,801 | 4,783 | ||||||||||||||||
| Diluted weighted average shares of common stock outstanding | 4,840 | 4,838 | 4,827 | 4,838 | ||||||||||||||||
| SUMMIT STATE BANK AND SUBSIDIARY | |||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||
| (In thousands except share data) | |||||||||||||||
| September 30, 2016 | December 31, 2015 | September 30, 2015 | |||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||
| ASSETS | |||||||||||||||
| Cash and due from banks | $ | 20,090 | $ | 15,583 | $ | 24,286 | |||||||||
| Federal funds sold | 1,580 | 2,000 | 2,000 | ||||||||||||
| Total cash and cash equivalents | 21,670 | 17,583 | 26,286 | ||||||||||||
| Time deposits with banks | 248 | 744 | 744 | ||||||||||||
| Investment securities: | |||||||||||||||
| Held-to-maturity, at amortized cost | 7,974 | 5,988 | 5,987 | ||||||||||||
| Available-for-sale (at fair value; amortized cost of $102,180, | |||||||||||||||
| $127,735 and $124,161) | 104,564 | 128,599 | 125,681 | ||||||||||||
| Total investment securities | 112,538 | 134,587 | 131,668 | ||||||||||||
| Loans, less allowance for loan losses of $4,758, $4,731 and 4,664 | 363,336 | 343,217 | 330,325 | ||||||||||||
| Bank premises and equipment, net | 5,487 | 5,498 | 5,591 | ||||||||||||
| Investment in Federal Home Loan Bank stock, at cost | 3,085 | 2,701 | 2,701 | ||||||||||||
| Goodwill | 4,119 | 4,119 | 4,119 | ||||||||||||
| Other Real Estate Owned | – | – | – | ||||||||||||
| Accrued interest receivable and other assets | 3,183 | 4,916 | 4,130 | ||||||||||||
| Total assets | $ | 513,666 | $ | 513,365 | $ | 505,564 | |||||||||
| LIABILITIES AND | |||||||||||||||
| SHAREHOLDERS’ EQUITY | |||||||||||||||
| Deposits: | |||||||||||||||
| Demand – non interest-bearing | $ | 114,077 | $ | 98,062 | $ | 93,988 | |||||||||
| Demand – interest-bearing | 58,325 | 56,281 | 46,966 | ||||||||||||
| Savings | 27,130 | 27,644 | 28,217 | ||||||||||||
| Money market | 52,906 | 59,445 | 65,127 | ||||||||||||
| Time deposits that meet or exceed the FDIC insurance limit | 52,140 | 53,953 | 53,988 | ||||||||||||
| Other time deposits | 78,132 | 101,861 | 105,320 | ||||||||||||
| Total deposits | 382,710 | 397,246 | 393,606 | ||||||||||||
| Federal Home Loan Bank advances | 67,500 | 55,800 | 52,000 | ||||||||||||
| Accrued interest payable and other liabilities | 3,177 | 2,994 | 2,969 | ||||||||||||
| Total liabilities | 453,387 | 456,040 | 448,575 | ||||||||||||
| Shareholders’ equity | |||||||||||||||
| Preferred stock, no par value; 20,000,000 shares authorized; | |||||||||||||||
| Series B shares issued and outstanding – 0 in 2016 and 2015; | |||||||||||||||
| per share redemption of $1,000 for total liquidation preference of $13,750 | – | – | – | ||||||||||||
| Common stock, no par value; shares authorized – 30,000,000 shares; issued | |||||||||||||||
| and outstanding 4,814,380 in 2016 and 4,783,170 in 2015 periods | 36,725 | 36,704 | 36,698 | ||||||||||||
| Retained earnings | 22,171 | 20,120 | 19,410 | ||||||||||||
| Accumulated other comprehensive income | 1,383 | 501 | 881 | ||||||||||||
| Total shareholders’ equity | 60,279 | 57,325 | 56,989 | ||||||||||||
| Total liabilities and shareholders’ equity | $ | 513,666 | $ | 513,365 | $ | 505,564 | |||||||||
| Financial Summary | |||||||||||||||||
| (In thousands except per share data) | |||||||||||||||||
| At or for the | At or for the | ||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
| Statement of Income Data: | |||||||||||||||||
| Net interest income | $ | 4,545 | $ | 4,509 | $ | 14,003 | $ | 13,016 | |||||||||
| Provision for loan losses | – | – | – | (800 | ) | ||||||||||||
| Non-interest income | 326 | 379 | 1,665 | 2,282 | |||||||||||||
| Non-interest expense | 2,836 | 2,712 | 9,240 | 8,024 | |||||||||||||
| Provision for income taxes | 837 | 896 | 2,649 | 3,328 | |||||||||||||
| Net income | $ | 1,198 | $ | 1,280 | $ | 3,779 | $ | 4,746 | |||||||||
| Less: preferred dividends | – | 23 | – | 92 | |||||||||||||
| Net income available for common shareholders | $ | 1,198 | $ | 1,257 | $ | 3,779 | $ | 4,654 | |||||||||
| Selected per Common Share Data: | |||||||||||||||||
| Basic earnings per common share | $ | 0.25 | $ | 0.26 | $ | 0.79 | $ | 0.97 | |||||||||
| Diluted earnings per common share | $ | 0.25 | $ | 0.26 | $ | 0.78 | $ | 0.96 | |||||||||
| Dividend per share | $ | 0.12 | $ | 0.12 | $ | 0.36 | $ | 0.36 | |||||||||
| Book value per common share (2)(3) | $ | 12.52 | $ | 11.91 | $ | 12.52 | $ | 11.91 | |||||||||
| Selected Balance Sheet Data: | |||||||||||||||||
| Assets | $ | 513,666 | $ | 505,564 | $ | 513,666 | $ | 505,564 | |||||||||
| Loans, net | 363,336 | 330,325 | 363,336 | 330,325 | |||||||||||||
| Deposits | 382,710 | 393,606 | 382,710 | 393,606 | |||||||||||||
| Average assets | 502,807 | 494,934 | 513,073 | 478,915 | |||||||||||||
| Average earning assets | 494,849 | 484,515 | 504,869 | 467,636 | |||||||||||||
| Average shareholders’ equity | 60,087 | 65,559 | 59,096 | 67,666 | |||||||||||||
| Average common shareholders’ equity | 60,087 | 56,498 | 59,097 | 55,552 | |||||||||||||
| Nonperforming loans | 3,430 | 1,395 | 3,430 | 1,395 | |||||||||||||
| Other real estate owned | – | – | – | – | |||||||||||||
| Total nonperforming assets | 3,430 | 1,395 | 3,430 | 1,395 | |||||||||||||
| Troubled debt restructures (accruing) | 3,395 | 3,585 | 3,395 | 3,585 | |||||||||||||
| Selected Ratios: | |||||||||||||||||
| Return on average assets (1) | 0.95 | % | 1.03 | % | 0.98 | % | 1.32 | % | |||||||||
| Return on average common equity (1) | 7.91 | % | 8.83 | % | 8.54 | % | 11.20 | % | |||||||||
| Efficiency ratio (4) | 57.98 | % | 56.11 | % | 61.60 | % | 52.82 | % | |||||||||
| Net interest margin (1) | 3.64 | % | 3.69 | % | 3.70 | % | 3.72 | % | |||||||||
| Common equity tier 1 capital ratio | 13.2 | % | 13.7 | % | 13.2 | % | 13.7 | % | |||||||||
| Tier 1 capital ratio | 13.2 | % | 13.7 | % | 13.2 | % | 13.7 | % | |||||||||
| Total capital ratio | 14.4 | % | 14.9 | % | 14.4 | % | 14.9 | % | |||||||||
| Tier 1 leverage ratio | 11.0 | % | 10.6 | % | 11.0 | % | 10.6 | % | |||||||||
| Common dividend payout ratio (5) | 48.25 | % | 45.51 | % | 45.73 | % | 36.96 | % | |||||||||
| Average equity to average assets | 11.95 | % | 13.25 | % | 11.52 | % | 14.13 | % | |||||||||
| Nonperforming loans to total loans (2) | 0.93 | % | 0.42 | % | 0.93 | % | 0.42 | % | |||||||||
| Nonperforming assets to total assets (2) | 0.67 | % | 0.28 | % | 0.67 | % | 0.28 | % | |||||||||
| Allowance for loan losses to total loans (2) | 1.29 | % | 1.39 | % | 1.29 | % | 1.39 | % | |||||||||
| Allowance for loan losses to nonperforming loans (2) | 138.72 | % | 334.20 | % | 138.72 | % | 334.20 | % | |||||||||
| (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 dividends divided by net income available for common shareholders | |||||||||||||||||
