Summit Bancshares Reports Second Quarter 2004 Earnings FORT WORTH,
Texas, July 12 /PRNewswire-FirstCall/ -- Summit Bancshares, Inc.
(NASDAQ:SBIT), a community-oriented bank holding company in Fort
Worth, reported second quarter earnings today. Philip E. Norwood,
Chairman, President and Chief Executive Officer stated, "The
acquisition of Arlington National Bank, Arlington, Texas, was
completed effective May 1st. This acquisition brings with it four
banking locations and, as of June 30th, deposits of $99.7 million
and loans of $60.2 million. The acquisition plus the internal
growth of the Company has resulted in the Company's assets reaching
$970 million as of the end of the quarter, a $231 million or 31%
increase in the last twelve months. During the second quarter, we
also opened a new branch in Euless, Texas. To manage this location
we were able to hire the former CEO of an independent bank that was
purchased by an out of state regional bank. Expanding into the
Arlington & Euless markets has been a top priority for Summit
for the last several years. The addition of Arlington National Bank
and the Euless branch gives us an immediate resource in these
markets as we expand our branches throughout Tarrant County." He
further stated, "Earnings per diluted share for the quarter
increased 5.1% compared to the same quarter last year. The second
quarter results reflect the acquisition of Arlington National
following purchase accounting rules, therefore you will note double
digit increases in most of the categories of income and expense
when comparing this quarter's results to prior quarters. However,
after considering the accounting impacts of the acquisition, the
Company had a positive quarter of growth and earnings performance."
Results of Operations For the quarter ended June 30, 2004, net
income was $2,596,000 compared to $2,457,000 for the same period in
2003. Net income per diluted share was $0.41 for the three months
ended June 30, 2004, compared to $0.39 for the three months ended
June 30, 2003. Return on average assets and return on average
shareholders' equity for the second quarter of 2004 were 1.13% and
14.79%, respectively. The Company's average shareholders'
equity-to-assets ratio was 7.6% for the quarter ended June 30,
2004. The Arlington National acquisition was partially financed
with a $12 million Trust Preferred issue giving the Company a Tier
One capital ratio of 9.9%. Net income for the six months ended June
30, 2004 was $5,047,000 or $0.80 per diluted share, compared to
$4,890,000, or $0.78 per diluted share for the same period last
year. Return on average assets and return on average shareholders'
equity for the six months ended June 30, 2004 were 1.17% and
14.43%, respectively. Financial Results Net interest income for the
second quarter of 2004 was $9.0 million compared to $7.6 million in
the second quarter of last year. The increase reflects the
inclusion of Arlington National's financial results for two months.
Since the Company is somewhat more sensitive to market interest
rate changes than other community banks due to its heavier
commercial lending focus, the net interest margin declined to 4.18%
for the quarter compared to 4.53% for the second quarter of the
prior year. In addition, the net interest margin for the second
quarter was positively impacted by a modest decline in cost of
interest-bearing deposits, contributed to by Arlington National's
deposit base, and was negatively impacted by: a) a higher level of
liquidity in the quarter in anticipation of rising interest rates
with short-term investments averaging $31.2 million for the
quarter; b) a continuing decline in yields on investment securities
and loans as fixed rate securities and loans repriced in the lower
interest rate environment; and c) a higher cost of other borrowings
reflecting an increase in Federal Home Loan Bank borrowing and the
cost of financing the Arlington National acquisition. Also, the
current low interest rate environment has had a negative impact on
net interest income for that portion of earning assets supported by
the Company's high levels of non-interest bearing deposits and
shareholders' equity, as compared to results from periods when
market interest rates were higher. As market interest rates begin
to rise, the Company believes that its current asset sensitive
position will enhance earnings growth assuming deposit rates do not
increase significantly faster than interest rates on earning
assets. Non-interest income increased $125,000 or 7.8% for the
second quarter of 2004 compared to the same quarter in the prior
year with positive increases in service charges on deposit accounts
and increases in several other fee based services, including trust
fees which is a new service being offered to the Company's
customers as a result of the Arlington acquisition. These increases
were somewhat offset by lower mortgage origination fees and
investment brokerage fees. Growth of non-interest income continues
to be one of the areas of the Company's focus. Non-interest
expenses for the second quarter increased $1,104,000 or 21.0% over
the same quarter of the previous year. This increase includes the
impacts of: a) the addition of Arlington National which contributed
$764,000 of expense to the current quarter; and b) a full quarter
of expense of opening the Hulen Branch in June of last year and the
occupancy of the operations facility in May of last year. The
provision for loan losses was $400,000 in the second quarter of
2004. This was an increase of $160,000 over the same quarter last
year. In the quarter, the Company had net loan charge-offs of
$130,000. The Allowance for Loan Losses as a percent of outstanding
loans was 1.46% (or 1.53% when loans are reflected net of the
guaranteed portion of SBA loans and student guaranteed loans) at
June 30, 2004 as compared to 1.48% at the end of the second quarter
of 2003. For the first six months of 2004, the Company recorded net
charged-off loans of $199,000. Non performing assets totaled $3.3
million ($2.2 million net of principal guaranteed by SBA) or 0.49%
of loans and foreclosed assets at June 30, 2004, compared to $1.6
million or .32% at June 30, 2003. The Allowance for Loan Losses was
348% of non-performing loans at June 30, 2004. The Company
continues to maintain positive measures of asset quality. The
Company's loans were $673 million at June 30, 2004, an increase of
$173 million, or 34.5%, from a year ago. Deposits increased over
the past year from $612 million to $776 million, an increase of
$164 million, or 26.8%. Shareholders' equity at June 30, 2004 was
$68.7 million, the same as one year ago but reflects change in the
available-for-sale investment securities adjustment of $5.6 million
which lowered shareholders' equity. The Company will host a
conference call Tuesday, July 13th at 10:30 a.m. (CT). To access
the live call, please call (800) 310-1961 and enter code 253991. A
toll free replay of the call will be available for two weeks
beginning at 1:30 p.m. (CT), July 13, 2004 through midnight, July
27, 2004. You may access this replay by calling (888) 203-1112 and
entering code 253991. Additional information regarding the Company
is available on the Company's website at http://www.summitbank.net/
. Certain statements contained in this press release, which 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 Six Months Ended June 30, % June 30,
% EARNINGS SUMMARY 2004 2003 Change 2004 2003 Change Interest
income $11,302 $9,547 18.4% $21,501 $18,798 14.4% Interest expense
2,274 1,934 17.6% 4,190 3,750 11.7% Net interest income 9,028 7,613
18.6% 17,311 15,048 15.0% Provision for loan losses 400 240 66.7%
1,005 540 86.1% Service charges on deposits 1,078 890 21.1% 1,984
1,649 20.3% Gain on Sale of Investment Securities --- 12 -100.0%
--- 12 -100.0% Other Income 645 696 -7.3% 1,306 1,285 1.6% Salaries
and benefits expense 3,772 3,090 22.1% 7,140 5,995 19.1% Occupancy
and equipment expense 1,117 842 32.7% 2,050 1,564 31.1% Other
expense 1,461 1,314 11.2% 2,690 2,484 8.3% Earnings before income
taxes 4,001 3,725 7.4% 7,716 7,411 4.1% Provision for income taxes
1,405 1,268 10.8% 2,669 2,521 5.9% Net earnings $2,596 $2,457 5.7%
$5,047 $4,890 3.2% Basic earnings per share $0.42 $0.40 5.0% $0.82
$0.79 3.8% Basic weighted average shares outstanding 6,160 6,162
6,156 6,164 Diluted earnings per share $0.41 $0.39 5.1% $0.80 $0.78
2.6% Diluted weighted average shares outstanding 6,319 6,311 6,332
6,294 Average for Quarter Ended June 30, March 31, Dec. 31, Sept.
30, June 30, BALANCE SHEET SUMMARY 2004 2004 2003 2003 2003 Total
loans $642,935 $573,862 $537,635 $503,936 $499,545 Total investment
securities 196,972 187,988 205,162 199,367 165,600 Earning assets
871,084 767,274 746,066 718,601 676,834 Total assets 925,830
808,009 788,426 761,278 719,070 Noninterest bearing deposits
207,815 179,396 184,106 176,478 170,234 Interest bearing deposits
521,812 454,352 450,401 452,325 429,420 Total deposits 729,628
633,748 634,507 628,803 599,654 Other borrowings 121,193 101,349
82,160 61,199 48,866 Shareholders' equity 70,583 70,116 68,399
68,273 67,739 Average for Six Months Ended June 30, % BALANCE SHEET
SUMMARY 2004 2003 Change Total loans $608,398 $487,985 24.7% Total
investment securities 192,480 168,091 14.5% Earning assets 819,179
662,593 23.6% Total assets 866,936 703,880 23.2% Noninterest
bearing deposits 193,603 165,151 17.2% Interest bearing deposits
488,083 420,416 16.1% Total deposits 681,685 585,567 16.4% Other
borrowings 111,271 48,442 129.7% Shareholders' equity 70,350 67,000
5.0% Ending Balance June 30, March 31, Dec. 31, Sept. 30, June 30,
BALANCE SHEET SUMMARY 2004 2004 2003 2003 2003 Total loans $672,686
$593,271 $553,769 $517,994 $500,040 Total investment securities
214,991 181,879 195,959 210,048 178,241 Total earning assets
905,228 818,393 751,063 728,766 693,257 Allowance for loan losses
(9,844) (8,320) (7,784) (7,483) (7,412) Premises and equipment
15,145 12,755 12,920 13,237 13,391 Total assets 969,708 860,361
795,478 777,558 738,916 Noninterest bearing deposits 218,343
186,198 192,877 180,765 176,603 Interest bearing deposits 557,347
470,186 448,504 456,706 435,143 Total deposits 775,690 656,384
641,381 637,471 611,746 Other borrowings 121,785 129,691 82,234
69,230 55,627 Total liabilities 901,009 788,786 726,794 709,546
670,187 Shareholders' equity 68,699 71,575 68,684 68,012 68,729
SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) June 30,
March 31, Dec. 31, Sept. 30, June 30, NONPERFORMING ASSETS 2004
2004 2003 2003 2003 Nonaccrual loans $2,832 $2,405 $2,351 $1,514
$1,458 Restructured loans --- --- --- --- --- Other real estate
& foreclosed assets 369 7 --- --- 125 Accruing loans past due
90 days or more 111 --- 55 --- 14 Total nonperforming assets $3,312
$2,412 $2,406 $1,514 $1,597 Total nonperforming assets as a
percentage of loans and foreclosed assets 0.49% 0.41% 0.43% 0.29%
0.32% Quarter Ended June 30, March 31, Dec. 31, Sept. 30, June 30,
ALLOWANCE FOR LOAN LOSSES 2004 2004 2003 2003 2003 Balance at
beginning of period $9,574 $7,784 $7,483 $7,412 $7,365 Loans
charged off (196) (137) (163) (24) (272) Loan recoveries 66 68 170
49 79 Net (charge-offs) recoveries (130) (69) 7 25 (193) Provision
for loan losses 400 605 294 46 240 Balance at end of period $9,844
$8,320 $7,784 $7,483 $7,412 Allowance for loan losses as a
percentage of total loans 1.46% 1.40% 1.41% 1.45% 1.48% Allowance
for loan losses as a percentage of nonperforming loans 347.60%
345.95% 323.57% 494.39% 503.53% Net charge-offs (recoveries) as a
percentage of average loans 0.02% 0.01% 0.00% -0.01% 0.04%
Provision for loan losses as a percentage of average loans 0.06%
0.11% 0.05% 0.01% 0.05% Quarter Ended June 30, March 31, Dec. 31,
Sept. 30, June 30, SELECTED RATIOS 2004 2004 2003 2003 2003 Return
on average assets (annualized) 1.13% 1.22% 1.21% 1.29% 1.37% Return
on average equity (annualized) 14.79% 14.06% 13.93% 14.38% 14.55%
Average shareholders' equity to average assets 7.62% 8.68% 8.68%
8.97% 9.42% Yield on earning assets 5.23% 5.36% 5.35% 5.38% 5.68%
Cost of interest bearing funds 1.42% 1.39% 1.38% 1.42% 1.62% Net
interest margin (tax equivalent) 4.18% 4.36% 4.36% 4.37% 4.53%
Efficiency ratio 58.90% 55.94% 59.29% 59.57% 56.74% End of period
book value per common share $11.14 $11.63 $11.17 $11.04 $11.15 End
of period common shares outstanding 6,186 6,154 6,152 6,165 6,166
SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Three
Months Ended June 30, 2004 June 30, 2003 Average Average YIELD
ANALYSIS Balance Interest Yield Balance Interest Yield Interest
Earning Assets: Federal funds sold & due from time $31,177 $75
0.96% $11,689 $33 1.13% Investment securities (taxable) 190,212
1,778 3.76% 160,498 1,599 4.00% Investment securities (tax-exempt)
6,760 88 5.24% 5,102 71 5.62% Loans 642,935 9,391 5.87% 499,545
7,878 6.33% Total Interest Earning Assets 871,084 11,332 5.23%
676,834 9,581 5.68% Noninterest Earning Assets: Cash and due from
banks 28,813 27,970 Other assets 35,256 21,648 Allowance for loan
losses (9,323) (7,382) Total Noninterest Earning Assets 54,746
42,236 Total Assets $925,830 $719,070 Interest Bearing Liabilities:
Transaction and money market accounts $238,697 637 1.07% $192,773
570 1.19% Savings deposits 143,322 408 1.15% 114,259 411 1.44%
Certificates and other time deposits 139,794 792 2.28% 122,388 800
2.62% Other borrowings 121,193 437 1.45% 48,866 153 1.26% Total
Interest Bearing Liabilities 643,006 2,274 1.42% 478,286 1,934
1.62% Noninterest Bearing Liabilities: Demand deposits 207,815
170,234 Other liabilities 4,426 2,811 Shareholders' equity 70,583
67,739 Total Noninterest Bearing Liabilities 282,824 240,784 Total
Liabilities and Shareholders' Equity $925,830 $719,070 Net Interest
Income and Margin (tax equivalent) $9,058 4.18% $7,647 4.53% SUMMIT
BANCSHARES, INC. (Unaudited) (Dollars in thousands) Six Months
Ended June 30, 2004 June 30, 2003 Average Average YIELD ANALYSIS
Balance Interest Yield Balance Interest Yield Interest Earning
Assets: Federal funds sold & due from time $18,301 $88 0.96%
$6,517 $37 1.14% Investment securities (taxable) 185,701 3,496
3.77% 163,042 3,310 4.09% Investment securities (tax-exempt) 6,779
178 5.27% 5,049 142 5.69% Loans 608,398 17,805 5.89% 487,985 15,377
6.35% Total Interest Earning Assets 819,179 21,567 5.29% 662,593
18,866 5.74% Noninterest Earning Assets: Cash and due from banks
26,975 26,810 Other assets 29,433 21,667 Allowance for loan losses
(8,651) (7,190) Total Noninterest Earning Assets 47,757 41,287
Total Assets $866,936 $703,880 Interest Bearing Liabilities:
Transaction and money market accounts $217,809 1,155 1.07% $184,956
1,033 1.13% Savings deposits 137,301 793 1.16% 115,407 807 1.41%
Certificates and other time deposits 132,972 1,530 2.31% 120,053
1,601 2.69% Other borrowings 111,271 712 1.29% 48,442 309 1.29%
Total Interest Bearing Liabilities 599,353 4,190 1.41% 468,858
3,750 1.61% Noninterest Bearing Liabilities: Demand deposits
193,603 165,151 Other liabilities 3,630 2,871 Shareholders' equity
70,350 67,000 Total Noninterest Bearing Liabilities 267,583 235,022
Total Liabilities and Shareholders' Equity $866,936 $703,880 Net
Interest Income and Margin (tax equivalent) $17,377 4.27% $15,116
4.60% SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands,
except per share data) June 30, June 30, LOAN PORTFOLIO 2004 % 2003
% Commercial and industrial $249,230 37.0% $204,647 40.9% Real
estate: Commercial 192,956 28.7% 134,370 26.9% Residential 83,398
12.4% 54,594 10.9% Construction and development 104,237 15.5%
72,422 14.5% Consumer 42,865 6.4% 34,007 6.8% Total loans (gross)
672,686 100.0% 500,040 100.0% Unearned discounts --- 0.0% --- 0.0%
Total loans (net) 672,686 100.0% 500,040 100.0% June 30, June 30,
REGULATORY CAPITAL DATA 2004 2003 Tier 1 Capital $72,532 $65,394
Tier 1 Ratio 9.88% 12.09% Total Capital (Tier 1 + Tier 2) $81,716
$72,161 Total Capital Ratio 11.13% 13.35% Total Risk-Adjusted
Assets $734,032 $540,676 Tier 1 Leverage Ratio 7.92% 8.85% June 30,
June 30, OTHER DATA 2004 2003 Full Time Equivalent Employees
(FTE's) 262 209 Stock Price Range (For the Quarter Ended): High
$30.25 $25.40 Low $27.00 $18.95 Close $29.10 $23.48
http://www.newscom.com/cgi-bin/prnh/20020410/SBITLOGO
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.summitbank.net/
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