SSBI Summit State Bank

Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended June 30, 2018 of $1,461,000 and diluted earnings per share of $0.24.

Net Income and Results of Operations

For the quarter ended June 30, 2018, Summit State Bank (“Bank”) had net income of $1,461,000 and diluted earnings per share of $0.24 compared to $930,000 in net income and $0.15 diluted earnings per share for the same quarter in 2017. This represented an increase of 57% in net income between the periods.

Net income for the six months ended June 30, 2018 increased 77% compared to the same period in 2017, with net income of $3,201,000 or diluted earnings per share of $0.53 in 2018 compared to $1,812,000 or diluted earnings per share of $0.30 in 2017. 

“We continue to see good increases in core earnings driven by growth in loans and core deposits. Our market in Sonoma County is strong, including the rebuilding effort caused by last October’s fire disaster. The Bank’s capital has been leveraged to provide better performance in return on equity.  We believe we are in a good position to serve our local customers with superior service and products,” said Jim Brush, President and CEO.

Revenues, defined as net interest income and non-interest income, for the second quarter of 2018 increased 20% over same quarter of 2017 while operating expenses increased 10% between the two quarters. This resulted in an operating efficiency ratio of 61.6%.

The increase in revenues was a result of an improved net interest margin which was 3.69% for second quarter of 2018 compared to 3.48% during the same quarter in 2017. Additionally, non-interest income increased from gains on sales of SBA guaranteed loans of $155,000 during the second quarter of 2018 compared to no loan sales gains in the same quarter of 2017.

Net loans increased 27% or $98 million and total assets increased 9% or $48 million between June 30, 2018 and 2017. Total deposits increased 27% or $109 million between June 30, 2018 and 2017, with $90 million of the increase in demand, savings and money market deposits.

Annualized return on average assets for the second quarter of 2018 was 1.01% and annualized return on average equity was 9.79%. The annualized return on average assets for the six months ended June 30, 2018 was 1.11% and annualized return on average equity was 10.79%. The second quarter of 2017 had an annualized return on average assets of 0.71% and annualized return on average equity of 6.23%. The first six months of 2017 had an annualized return on average assets of 0.70% and annualized return on average equity of 6.15%.

“We continue to execute on our strategy and are focusing on our net interest margin during this period of rising interest rates,” said Dennis Kelley, Chief Financial Officer.

Nonperforming assets were $2,606,000 or 0.44% of total assets at June 30, 2018 compared to $2,616,000 or 0.49% at June 30, 2017. The nonperforming assets at June 30, 2018, consist of nine loans which are predominantly secured by real property. The Bank had provision expense of $150,000 in the second quarter of 2018 and $300,000 for the six month period. The allowance for loan losses to loans was 1.23% at June 30, 2018 and was 1.27% at June 30, 2017.

About Summit State Bank

Summit State Bank, a local community bank, has total assets of $586 million and total equity of $60 million at June 30, 2018. 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 is committed to embracing the diverse backgrounds, cultures and talents of its employees to create high performance and support the evolving needs of its customers and community it serves. At the center of diversity is inclusion, collaboration, and a shared vision for delivering superior service and results for shareholders. Presently, 79% of management are women and minorities with 40% represented on the Executive Management Team. Through the engagement of its team, Summit State Bank has received many esteemed awards including: Best Business Bank, Corporate Philanthropy Award and Best Places to Work in the North 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.

Contact: James E. Brush, President and CEO, Summit State Bank (707) 568-4920

 

SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except earnings per share data)
					Three Months Ended						Six Months Ended
					June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
					(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Interest income:
	Interest and fees on loans				$	5,399		$	4,014		$	10,709		$	7,954
	Interest on deposits with banks					58			42			126			69
	Interest on federal funds sold					8			4			14			7
	Interest on investment securities					601			868			1,215			1,660
	Dividends on FHLB stock					53			53			108			124
			Total interest income			6,119			4,981			12,172			9,814
Interest expense:
	Deposits					818			358			1,526			614
	Federal Home Loan Bank advances					61			136			92			262
			Total interest expense			879			494			1,618			876
			Net interest income before provision for loan losses			5,240			4,487			10,554			8,938
Provision for loan losses						150			-			300			-
			Net interest income after provision for loan losses			5,090			4,487			10,254			8,938
Non-interest income:
	Service charges on deposit accounts					194			172			387			342
	Rental income					149			141			296			285
	Net gain on loan sales					155			-			447			-
	Net securities gain					9			-			16			13
	Other income					35			2			158			5
			Total non-interest income			542			315			1,304			645
Non-interest expense:
	Salaries and employee benefits					2,098			1,707			4,164			3,448
	Occupancy and equipment					381			402			771			758
	Other expenses					1,078			1,111			2,163			2,294
			Total non-interest expense			3,557			3,220			7,098			6,500
			Income before provision for income taxes			2,075			1,582			4,460			3,083
Provision for income taxes						614			652			1,259			1,271
			Net income		$	1,461		$	930		$	3,201		$	1,812
Basic earnings per common share					$	0.24		$	0.15		$	0.53		$	0.30
Diluted earnings per common share					$	0.24		$	0.15		$	0.53		$	0.30
Basic weighted average shares of common stock outstanding						6,066			6,027			6,063			6,024
Diluted weighted average shares of common stock outstanding						6,074			6,059			6,070			6,056

 

SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
				June 30, 2018				December 31, 2017				June 30, 2017
				(Unaudited)					(1)			(Unaudited)
ASSETS
Cash and due from banks				$	23,660			$	68,814			$	20,175
Federal funds sold					-				2,000				1,720
			Total cash and cash equivalents		23,660				70,814				21,895
Investment securities:
	Held-to-maturity, at amortized cost				7,988				7,984				7,980
	Available-for-sale (at fair value; amortized cost of $75,676,
		$79,617 and $124,149)			72,921				78,770				124,774
			Total investment securities		80,909				86,754				132,754
Loans, less allowance for loan losses of $5,775, $5,236 and $4,702					463,856				437,594				366,259
Bank premises and equipment, net					5,151				5,279				5,411
Investment in Federal Home Loan Bank stock, at cost					3,085				3,085				3,085
Goodwill					4,119				4,119				4,119
Other Real Estate Owned					-				-				-
Accrued interest receivable and other assets					5,170				3,219				3,959
			Total assets	$	585,950			$	610,864			$	537,482
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
	Demand - non interest-bearing			$	143,926			$	190,861			$	110,509
	Demand - interest-bearing				71,476				65,742				62,539
	Savings				27,298				30,102				26,848
	Money market				101,106				79,564				53,829
	Time deposits that meet or exceed the FDIC insurance limit				75,888				68,927				59,008
	Other time deposits				97,624				98,317				95,298
			Total deposits		517,318				533,513				408,031
Federal Home Loan Bank advances					6,800				15,000				67,000
Accrued interest payable and other liabilities					1,633				2,674				2,012
			Total liabilities		525,751				551,187				477,043
Shareholders' equity
	Preferred stock, no par value; 20,000,000 shares authorized;
		no shares issued and outstanding			-				-				-
	Common stock, no par value; shares authorized - 30,000,000 shares; issued
		and outstanding 6,066,475, 6,041,475 and 6,027,100			36,967				36,847				36,785
	Retained earnings				25,171				23,427				23,292
	Accumulated other comprehensive gain(loss)				(1,939	)			(597	)			362
			Total shareholders' equity		60,199				59,677				60,439
			Total liabilities and shareholders' equity	$	585,950			$	610,864			$	537,482
(1) Information derived from audited financial statements.

 

Financial Summary
(In thousands except per share data)
		At or for the								At or for the
		Three Months Ended								Six Months Ended
		June 30, 2018				June 30, 2017				June 30, 2018				June 30, 2017
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Statement of Income Data:
Net interest income		$	5,240			$	4,487			$	10,554			$	8,938
Provision for loan losses			150				-				300				-
Non-interest income			542				315				1,304				645
Non-interest expense			3,557				3,220				7,098				6,500
Provision for income taxes			614				652				1,259				1,271
Net income		$	1,461			$	930			$	3,201			$	1,812
Selected per Common Share Data:
Basic earnings per common share		$	0.24			$	0.15			$	0.53			$	0.30
Diluted earnings per common share		$	0.24			$	0.15			$	0.53			$	0.30
Dividend per share		$	0.12			$	0.12			$	0.24			$	0.22
Book value per common share (2)		$	9.92			$	10.03			$	9.92			$	10.03
Selected Balance Sheet Data:
Assets		$	585,950			$	537,482			$	585,950			$	537,482
Loans, net			463,856				366,259				463,856				366,259
Deposits			517,318				408,031				517,318				408,031
Average assets			580,611				528,009				579,366				520,493
Average earning assets			568,851				516,746				568,100				509,374
Average shareholders' equity			59,866				59,877				59,814				59,445
Average common shareholders' equity			59,866				59,877				59,814				59,445
Nonperforming loans			2,606				2,616				2,606				2,616
Total nonperforming assets			2,606				2,616				2,606				2,616
Troubled debt restructures (accruing)			1,591				3,216				1,591				3,216
Selected Ratios:
Return on average assets (1)			1.01	%			0.71	%			1.11	%			0.70	%
Return on average common shareholders' equity (1)			9.79	%			6.23	%			10.79	%			6.15	%
Efficiency ratio (3)			61.61	%			67.06	%			59.94	%			67.92	%
Net interest margin (1)			3.69	%			3.48	%			3.75	%			3.54	%
Common equity tier 1 capital ratio			11.3	%			13.2	%			11.3	%			13.2	%
Tier 1 capital ratio			11.3	%			13.2	%			11.3	%			13.2	%
Total capital ratio			12.5	%			14.3	%			12.5	%			14.3	%
Tier 1 leverage ratio			10.0	%			10.7	%			10.0	%			10.7	%
Common dividend payout ratio (4)			49.83	%			77.74	%			45.49	%			71.80	%
Average shareholders' equity to average assets			10.31	%			11.34	%			10.32	%			11.42	%
Nonperforming loans to total loans			0.55	%			0.71	%			0.55	%			0.71	%
Nonperforming assets to total assets			0.44	%			0.49	%			0.44	%			0.49	%
Allowance for loan losses to total loans			1.23	%			1.27	%			1.23	%			1.27	%
Allowance for loan losses to nonperforming loans			221.60	%			179.73	%			221.60	%			179.73	%
(1) Annualized.
(2) Total shareholders' equity divided by total common shares outstanding.
(3) Non-interest expenses to net interest and non-interest income, net of securities gains.
(4) Common dividends divided by net income available for common shareholders.