SBIT Summit Bancshares

Summit Bancshares Announces Fourth Quarter and Year 2004 Results FORT WORTH, Texas, Jan. 25 /PRNewswire-FirstCall/ -- Summit Bancshares, Inc. (NASDAQ:SBIT), bank holding company for Summit Bank, N.A., today reported net income for fourth quarter 2004 of $2,919,000, or $0.23 per diluted common share, compared to $2,403,000, or $0.19 per diluted common share, for the comparable 2003 period, a 21% increase. Return on assets and return on shareholders' equity averaged 1.18% and 15.58%, respectively, compared to 1.21% and 13.93%, respectively, for the corresponding 2003 period. For the year ended December 31, 2004, net income totaled $10,762,000, or $0.85 per diluted common share, compared to $9,768,000, or $0.77 per diluted common share, for the corresponding 2003 period, a 10.4% increase. Return on assets and return on shareholders' equity averaged 1.16% and 15.04%, respectively, for the year ended December 31, 2004, compared to 1.32% and 14.43%, respectively, for the corresponding 2003 period. Summit completed its acquisition of ANB Financial Corporation and its subsidiary, Arlington National Bank, ("ANB"), effective May 1, 2004. The results of operations for this acquisition have been included in Summit's consolidated financial statements since the purchase date. Also, Summit completed on December 31, 2004, a two (2) for one (1) stock split payable in the form of a 100% stock dividend. Therefore, all historical per share data has been changed to reflect the split. Net interest income of $10.2 million for the fourth quarter 2004 improved $2.0 million, or 25.1%, over fourth quarter 2003. Average total interest earning assets increased 23.9% from fourth quarter 2003 to $925 million for fourth quarter 2004 in part due to the ANB purchase. The net interest margin, on a taxable-equivalent basis, on average total interest earning assets increased 5 basis points to 4.41% for the fourth quarter 2004 compared to the corresponding 2003 quarter. For the year ended December 31, 2004, net interest income totaled $37.4 million, reflecting a $6.3 million, or 20.1%, increase from the year of 2003. This increase resulted primarily from an increase of 24.6% in average total interest earning assets to $870 million for the year of 2004. The net interest margin, on a taxable-equivalent basis, on average total interest earning assets decreased 17 basis points to 4.31% for the year ended December 31, 2004 compared to the prior year period, primarily due to the lower interest rate environment in 2004 as compared to 2003. After declining for several quarters, the net interest margin has increased for the last two quarters of 2004 as prime rate has increased. A provision for loan losses of $290,000 for the fourth quarter 2004 was comparable to the provision for loan losses of $294,000 for the fourth quarter of 2003. Net charge-offs totaled $182,000 for the fourth quarter 2004, representing charge-offs to average loans for the quarter of 0.03%. As of December 31, 2004, the allowance for loan losses as a percentage of total loans was 1.45%, a level maintained for the last three quarters. For the year ended December 31, 2004, the provision for loan losses totaled $1,790,000, reflecting a $910,000 increase over the provision of the prior year period primarily driven by strong loan growth. Net charge-offs for the year were $641,000, or 0.10%, of average loans. Non-interest income of $1,811,000 for fourth quarter 2004 increased 32.1% over fourth quarter 2003, excluding the gain on sale of investment securities of $129,000 in the fourth quarter of 2003. Service charges on deposits amounted to $1,084,000 for fourth quarter 2004, an increase of 23% primarily due to the inclusion this year of the fees related to the Arlington locations. The higher earnings credit rate paid for commercial deposit accounts on analysis had a negative impact on service fees. Included in the increase of other income of $237,000 for the quarter were the following: a) an increase due to inclusion of the Arlington locations, and b) increases in insurance commission of $13,500, mortgage origination fees of $38,400, debit card fees of $33,000, recovered interest on loans previously on non-accrual of $65,800, and trust fees of $41,900. These increases were somewhat offset by $13,000 decrease in fees from investment services. For the year ended December 31, 2004, non-interest income totaled $7,210,000, reflecting an increase of $1,412,000, or 24.4%, over the year of 2003, excluding gains on investment securities of $32,000 and $230,000, respectively for the years of 2004 and 2003. Service charges on deposits increased $805,000, or 23.4%, for the year of 2004 compared to the year 2003. Excluding the contribution of ANB, the increase in service charges on deposits was 7.4%. Other income increased $607,000 or 25.8%. Contributing to this increase were increases in insurance commissions of $39,700, debit card and ATM income of $119,000, recovered interest on loans previously on non-accrual or charged-off loans of $65,800, fees from sales of personalized checks of $86,000, trust fees of $155,700, and income from sale of assets of $334,100 which included foreclosed assets and student loans. These increases in other income were somewhat offset by decreases in letter of credit fees of $77,600, mortgage origination fees of $92,000, and fees from investment services of $86,800. Non-interest expense of $7,202,000 for fourth quarter 2004 increased $1,448,000, or 25.2%, over fourth quarter 2003. Excluding the impact of the acquisition of ANB, the increase in expenses was $538,000, or 9.3%. Also contributing to the increase in non-interest expenses were the expenses related to the opening of a remote motor bank facility for the Hulen Branch and the opening of a new facility for the Euless branch, both opened in October. Also reflected in the fourth quarter 2004 expenses are costs related to compliance with the Sarbanes Oxley Act's Section 404 ("SOX 404"), which required additional expenditures for auditing and consulting fees in the amount of approximately $180,000. Some portion of this expense is considered a one time expenditure, but the future cost of compliance is yet to be determined. Non-interest expense of $26,190,000 for the year of 2004 increased $4,737,000, or 22.1%, compared to the year of 2003. Excluding the expenses related to the acquired Arlington locations the increase in expenses was $1,986,000 or 9.3%. As noted above, the opening of the new Hulen motor bank and the Euless Branch added expenses in 2004. Also, the additional expense for SOX 404 compliance for the year was approximately $350,000. The growth of Summit in 2003 and 2004 required increased expenditures for staff, support equipment, supplies, etc. The efficiency ratio was 58.6% for the year of 2004 compared to 57.6% for 2003. As the economy of scale of the Arlington acquisition is reflected for a full twelve months, as the newer branches continue to grow within their markets and facilities and as the net interest margin improves in a rising rate environment, the efficiency ratio is expected to improve. At December 31, 2004, loans totaling $2,587,000 were on non-accrual status and represented 0.37% of total loans outstanding. The allowances for loan losses represented 394% of the non-accrual loans. The dollar amount of non- accrual loans was similar to the level over the past four quarters. Summit files annual, quarterly and special reports, proxy statements and other information with the SEC. Investors may read and copy any of these reports, statements and other information at the SEC's public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Investors should call the SEC at 1-800-SEC-0330 for further information on the public reference room. The reports, statements, and other information filed by Summit with the SEC are also available free at the SEC's web site at http://www.sec.gov/ . You can also obtain a free copy of these reports, statements and other information from Summit's web site at http:///www.summitbank.net . The Company will host a conference call Wednesday, January 26, 2005 at 10:30 a.m. (CT) to discuss the Company's performance for the quarter and year ended December 31, 2004. To participate, please call (800) 406-5356 and enter confirmation code 7474413. If you are unable to participate, an audio playback of the call will be available starting Wednesday, January 26, 2005 at 2:00 p.m. (CT) through midnight February 9, 2005 (CT) by calling (888) 203-1112 and entering code 7474413. The 2005 Annual Meeting of Shareholders will be held on April 19, 2005 at 3:30 p.m. (CT) at Summit Bancshares, Inc. Corporate Headquarters, 3880 Hulen Street, Suite 300, Fort Worth, Texas. Certain statements contained in this press release that are not historical in nature, including statements regarding the Company's and/or management's intentions, strategies, beliefs, expectations, representations, plans, projections, or predictions of the future, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provisions for forward-looking statements contained in such Act. We are including this statement for purposes of invoking these safe harbor provisions. Forward-looking statements are based on assumptions involving certain known and unknown risks and uncertainties, many of which are beyond the Company's control, and other important factors that could cause actual results, performance or achievements to differ materially from the expectations expressed or implied by such forward-looking statements. These risks and uncertainties are listed from time to time in the Company's filings with the Securities and Exchange Commission, including but not limited to, those set forth under the heading "Factors That May Affect Future Results" in the Company's Annual Report on Form 10-K for the year ended December 31, 2003. SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands, except per share data) Quarter Ended Twelve Months Ended December 31, % December 31, % EARNINGS SUMMARY 2004 2003 Change 2004 2003 Change Interest income $12,995 $10,020 29.7% $46,857 $38,527 21.6% Interest expense 2,782 1,853 50.1% 9,506 7,437 27.8% Net interest income 10,213 8,167 25.1% 37,351 31,090 20.1% Provision for loan losses 290 294 -1.4% 1,790 880 103.4% Service charges on deposits 1,084 881 23.0% 4,248 3,443 23.4% Gain on Sale of Investment Securities --- 129 -100.0% 32 230 -86.1% Other Income 727 490 48.4% 2,962 2,355 25.8% Salaries and benefits expense 4,160 3,594 15.7% 15,329 12,926 18.6% Occupancy and equipment expense 1,237 983 25.8% 4,467 3,611 23.7% Other expense 1,805 1,177 53.4% 6,394 4,916 30.1% Earnings before income taxes 4,532 3,619 25.2% 16,613 14,785 12.4% Provision for income taxes 1,613 1,216 32.6% 5,851 5,017 16.6% Net earnings $2,919 $2,403 21.5% $10,762 $9,768 10.2% Basic earnings per share $0.23 $0.19 21.1% $0.87 $0.79 10.1% Basic weighted average shares outstanding 12,349 12,310 12,326 12,322 Diluted earnings per share $0.23 $0.19 21.1% $0.85 $0.77 10.4% Diluted weighted average shares outstanding 12,714 12,680 12,679 12,634 Average for Quarter Ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31, BALANCE SHEET SUMMARY 2004 2004 2004 2004 2003 Total loans $694,177 $678,915 $642,935 $573,862 $537,635 Total investment securities 226,530 218,831 196,972 187,988 205,162 Earning assets 924,557 914,595 871,084 767,274 746,066 Total assets 984,814 976,911 925,830 808,009 788,426 Noninterest bearing deposits 235,846 226,462 207,815 179,396 184,106 Interest bearing deposits 560,341 557,329 521,812 454,352 450,401 Total deposits 796,187 783,791 729,628 633,748 634,507 Other borrowings 109,713 118,083 121,193 101,349 82,160 Shareholders' equity 74,543 71,038 70,583 70,116 68,399 Average for Twelve Months Ended December 31, % BALANCE SHEET SUMMARY 2004 2003 Change Total loans $647,686 $504,520 28.4% Total investment securities 207,663 185,318 12.1% Earning assets 869,652 697,750 24.6% Total assets 924,202 739,658 24.9% Noninterest bearing deposits 212,482 172,784 23.0% Interest bearing deposits 523,652 436,017 20.1% Total deposits 736,134 608,801 20.9% Other borrowings 112,592 60,156 87.2% Shareholders' equity 71,577 67,673 5.8% Ending Balance Dec. 31, Sept. 30, June 30, March 31, Dec. 31, BALANCE SHEET SUMMARY 2004 2004 2004 2004 2003 Total loans $702,619 $689,906 $672,686 $593,271 $553,769 Total investment securities 223,351 219,264 214,991 181,879 195,959 Total earning assets 930,990 928,638 905,228 818,393 751,063 Allowance for loan losses (10,187) (10,079) (9,844) (8,320) (7,784) Premises and equipment 15,749 15,643 15,145 12,755 12,920 Total assets 989,117 990,406 969,708 860,361 795,478 Noninterest bearing deposits 235,399 232,586 218,343 186,198 192,877 Interest bearing deposits 556,865 558,938 557,347 470,186 448,504 Total deposits 792,264 791,524 775,690 656,384 641,381 Other borrowings 118,094 121,355 121,785 129,691 82,234 Total liabilities 914,627 916,858 901,009 788,786 726,794 Shareholders' equity 74,490 73,548 68,699 71,575 68,684 SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31, NONPERFORMING ASSETS 2004 2004 2004 2004 2003 Nonaccrual loans $2,587 $2,545 $2,832 $2,405 $2,351 Restructured loans --- --- --- --- --- Other real estate & foreclosed assets --- 4 369 7 --- Accruing loans past due 90 days or more 18 2,300 111 --- 55 Total nonperforming assets $2,605 $4,849 $3,312 $2,412 $2,406 Total nonperforming assets as a percentage of loans and foreclosed assets 0.37% 0.70% 0.49% 0.41% 0.43% Quarter Ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31, ALLOWANCE FOR LOAN LOSSES 2004 2004 2004 2004 2003 Balance at beginning of period $10,079 $9,844 $8,320 $7,784 $7,483 Balance acquired in Arlington National Bank Acquisition --- --- 1,254 --- --- Loans charged off (293) (415) (196) (137) (163) Loan recoveries 111 155 66 68 170 Net (charge-offs) recoveries (182) (260) (130) (69) 7 Provision for loan losses 290 495 400 605 294 Balance at end of period $10,187 $10,079 $9,844 $8,320 $7,784 Allowance for loan losses as a percentage of total loans 1.45% 1.46% 1.46% 1.40% 1.41% Allowance for loan losses as a percentage of nonperforming loans 393.82% 396.03% 347.60% 345.95% 323.57% Net charge-offs (recoveries) as a percentage of average loans 0.03% 0.04% 0.02% 0.01% 0.00% Provision for loan losses as a percentage of average loans 0.04% 0.07% 0.06% 0.11% 0.05% Quarter Ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31, SELECTED RATIOS 2004 2004 2004 2004 2003 Return on average assets (annualized) 1.18% 1.14% 1.13% 1.22% 1.21% Return on average equity (annualized) 15.58% 15.66% 14.79% 14.06% 13.93% Average shareholders' equity to average assets 7.57% 7.27% 7.62% 8.68% 8.68% Yield on earning assets 5.61% 5.39% 5.23% 5.36% 5.35% Cost of interest bearing funds 1.65% 1.49% 1.42% 1.39% 1.38% Net interest margin (tax equivalent) 4.41% 4.29% 4.18% 4.36% 4.36% Efficiency ratio 59.71% 59.23% 58.90% 55.94% 59.29% End of period book value per common share $6.03 $5.96 $5.57 $5.82 $5.59 End of period common shares outstanding 12,359 12,334 12,372 12,307 12,305 SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Three Months Ended December 31, 2004 December 31, 2003 Average Average YIELD ANALYSIS Balance Interest Yield Balance Interest Yield Interest Earning Assets: Federal funds sold & due from time $3,850 $31 3.18% $3,269 $6 0.76% Investment securities (taxable) 218,512 1,974 3.61% 198,302 1,932 3.87% Investment securities (tax-exempt) 8,018 104 5.20% 6,860 90 5.20% Loans 694,177 10,921 6.26% 537,635 8,031 5.93% Total Interest Earning Assets 924,557 13,030 5.61% 746,066 10,059 5.35% Noninterest Earning Assets: Cash and due from banks 29,282 25,387 Other assets 41,140 24,555 Allowance for loan losses (10,165) (7,582) Total Noninterest Earning Assets 60,257 42,360 Total Assets $984,814 $788,426 Interest Bearing Liabilities: Transaction and money market accounts $239,046 690 1.15% $197,375 509 1.02% Savings deposits 168,191 577 1.36% 128,319 394 1.22% Certificates and other time deposits 153,104 935 2.43% 124,707 740 2.36% Other borrowings 109,713 580 2.10% 82,160 209 1.01% Total Interest Bearing Liabilities 670,054 2,782 1.65% 532,561 1,852 1.38% Noninterest Bearing Liabilities: Demand deposits 235,846 184,106 Other liabilities 4,371 3,360 Shareholders' equity 74,543 68,399 Total Noninterest Bearing Liabilities 314,760 255,865 Total Liabilities and Shareholders' Equity $984,814 $788,426 Net Interest Income and Margin (tax equivalent) $10,248 4.41% $8,207 4.36% SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Twelve Months Ended December 31, 2004 December 31, 2003 Average Average YIELD ANALYSIS Balance Interest Yield Balance Interest Yield Interest Earning Assets: Federal funds sold & due from time $14,303 $170 1.19% $7,912 $81 1.02% Investment securities (taxable) 200,383 7,409 3.70% 179,539 7,106 3.96% Investment securities (tax-exempt) 7,280 395 5.43% 5,779 314 5.43% Loans 647,686 39,024 6.03% 504,520 31,171 6.18% Total Interest Earning Assets 869,652 46,998 5.40% 697,750 38,672 5.54% Noninterest Earning Assets: Cash and due from banks 28,620 26,295 Other assets 35,281 22,964 Allowance for loan losses (9,351) (7,351) Total Noninterest Earning Assets 54,550 41,908 Total Assets $924,202 $739,658 Interest Bearing Liabilities: Transaction and money market accounts $232,155 2,518 1.08% $193,841 2,108 1.09% Savings deposits 149,510 1,832 1.23% 119,851 1,581 1.32% Certificates and other time deposits 141,987 3,327 2.34% 122,325 3,121 2.55% Other borrowings 112,592 1,829 1.62% 60,156 627 1.04% Total Interest Bearing Liabilities 636,244 9,506 1.49% 496,173 7,437 1.50% Noninterest Bearing Liabilities: Demand deposits 212,482 172,784 Other liabilities 3,899 3,028 Shareholders' equity 71,577 67,673 Total Noninterest Bearing Liabilities 287,958 243,485 Total Liabilities and Shareholders' Equity $924,202 $739,658 Net Interest Income and Margin (tax equivalent) $37,492 4.31% $31,235 4.48% SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands, except per share data) Dec. 31, Dec. 31, LOAN PORTFOLIO 2004 % 2003 % Commercial and industrial $261,571 37.2% $219,805 39.7% Real estate: Commercial 224,720 32.0% 159,082 28.7% Residential 82,839 11.8% 67,635 12.2% Construction and development 93,558 13.3% 74,069 13.4% Consumer 39,931 5.7% 33,178 6.0% Total loans (gross) 702,619 100.0% 553,769 100.0% Unearned discounts --- 0.0% --- 0.0% Total loans (net) 702,619 100.0% 553,769 100.0% Dec. 31, Dec. 31, REGULATORY CAPITAL DATA 2004 2003 Tier 1 Capital $76,449 $67,996 Tier 1 Ratio 10.15% 11.45% Total Capital (Tier 1 + Tier 2) $85,874 $75,426 Total Capital Ratio 11.40% 12.70% Total Risk-Adjusted Assets $753,206 $594,044 Tier 1 Leverage Ratio 7.85% 8.62% Dec. 31, Dec. 31, OTHER DATA 2004 2003 Full Time Equivalent Employees (FTE's) 254 225 Stock Price Range (For the Quarter Ended): High $18.95 $14.48 Low $16.33 $13.23 Close $18.75 $13.81 http://www.newscom.com/cgi-bin/prnh/20041025/DASBANKLOGO http://photoarchive.ap.org/ DATASOURCE: Summit Bancshares, Inc. CONTACT: Bob G. Scott, COO of Summit Bancshares, Inc., +1-817-877-2660 Web site: http://www.sec.gov/ Web site: http://www.summitbank.net/

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