SSBI Summit State Bank

Summit State Bank (Nasdaq:SSBI) today reported net income for the year ended December 31, 2016 of $4,967,000 and diluted earnings per share of $1.03. 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, 2017 to shareholders of record on February 17, 2017.

Net Income and Results of Operations

“2016 was a challenging year, as we dealt with management changes and volatility in the interest rate environment,” said Jim Brush, President and CEO. “We continued to improve our funding sources and finished 2016 with a strong potential loan pipeline. We have added to our quality staff to help execute our business plan to increase loan volume and earnings performance.”

Net income was $4,967,000 and $1.03 diluted earnings per share for the year ended December 31, 2016, compared to net income available for common shareholders of $5,938,000 and $1.23 diluted earnings per share, for the year ended December 31, 2015.

For the quarter ended December 31, 2016, Summit State Bank had net income of $1,188,000 and diluted earnings per share of $0.25 compared to $1,284,000 of net income and $0.27 diluted earnings per share, for the same period in 2015.

During 2015 there were isolated items impacting the results, primarily due to the improvement of asset quality. During 2015, Summit State Bank had $800,000 in reversed provisions for the allowance for loan losses and recognized a gain on the sale of foreclosed real estate of $1,125,000 for the year. These items along with increased non-interest expense in 2016, were the predominant reason for the decline in net income in 2016.

Return on average assets was 0.97% for 2016, compared to 1.24% in 2015 and return on average common equity was 8.4% for 2016 compared to 10.6% in 2015. The net interest margin was steady during 2016 and 2015 at 3.72%, as the Bank continued to manage its cost of funds with the continued attraction of non interest-bearing transaction accounts.

Total assets were $513,704,000 at December 31, 2016 compared to $513,365,000 at December 31, 2015. Net loans at December 31, 2016 were $354,638,000 compared to $343,217,000 at December 31, 2015.

The funding of the assets with non interest-bearing deposits increased to 21.9% at year end 2016 compared to 19.1% at year end 2015.

“We continue to improve the Bank’s funding with demand, money market and savings deposit accounts now comprising 50% of assets at the end of 2016 compared to 47% at the end of 2015,” said Dennis Kelley, Chief Financial Officer and Executive Vice President.

“We continue to attract a quality clientele in our Sonoma County market and have in place the staff capacity to handle increased lending in 2017. We will continue to concentrate on increasing the core deposit funding of the Bank. We are proud of the commitment to our community and the many nonprofit businesses that we serve.” said James Brush, President and CEO.

About Summit State Bank

Summit State Bank, a local community bank, has total assets of $514 million and total equity of $59 million at December 31, 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, 80% of management are women and minorities with 40% 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						Year Ended
					December 31, 2016			December 31, 2015			December 31, 2016			December 31, 2015
					(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Interest income:
	Interest and fees on loans				$	4,058		$	3,908		$	16,549		$	14,523
	Interest on federal funds sold					2			1			7			3
	Interest on investment securities and deposits in banks					737			904			2,994			3,720
	Dividends on FHLB stock					175			60			357			327
			Total interest income			4,972			4,873			19,907			18,573
Interest expense:
	Deposits					201			212			855			757
	FHLB advances					101			40			379			179
			Total interest expense			302			252			1,234			936
			Net interest income before provision for (reversal of) loan losses			4,670			4,621			18,673			17,637
Provision for (reversal of) loan losses						-			-			-			(800	)
			Net interest income after provision for (reversal of) loan losses			4,670			4,621			18,673			18,437
Non-interest income:
	Service charges on deposit accounts					184			177			748			702
	Rental income					141			133			559			532
	Net securities gain					23			49			692			157
	Net gain on other real estate owned					-			-			-			1,125
	Loan servicing, net					6			4			12			10
	Other income					1			1			10			119
			Total non-interest income			355			364			2,021			2,645
Non-interest expense:
	Salaries and employee benefits					1,597			1,429			6,562			5,646
	Occupancy and equipment					332			336			1,229			1,313
	Other expenses					1,075			1,035			4,454			3,864
			Total non-interest expense			3,004			2,800			12,245			10,823
			Income before provision for income taxes			2,021			2,185			8,449			10,259
Provision for income taxes						833			901			3,482			4,229
			Net income		$	1,188		$	1,284		$	4,967		$	6,030
Less:  preferred dividends						-			-			-			92
			Net income available for common shareholders		$	1,188		$	1,284		$	4,967		$	5,938
Basic earnings per common share					$	0.25		$	0.27		$	1.03		$	1.24
Diluted earnings per common share					$	0.25		$	0.27		$	1.03		$	1.23
Basic weighted average shares of common stock outstanding						4,815			4,783			4,804			4,783
Diluted weighted average shares of common stock outstanding						4,840			4,839			4,829			4,838

 

SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
				December 31,				December 31,
					2016				2015
				(Unaudited)				(Unaudited)
ASSETS
Cash and due from banks				$	24,231			$	15,583
Federal funds sold					2,000				2,000
			Total cash and cash equivalents		26,231				17,583
Time deposits with banks					248				744
Investment securities:
	Held-to-maturity, at amortized cost				7,976				5,988
	Available-for-sale (at fair value; amortized cost of $109,297
		in 2016 and $127,735 in 2015)			107,771				128,599
			Total investment securities		115,747				134,587
Loans, less allowance for loan losses of $4,765
	in 2016 and $4,731 in 2015				354,638				343,217
Bank premises and equipment, net					5,413				5,498
Investment in Federal Home Loan Bank stock, at cost					3,085				2,701
Goodwill					4,119				4,119
Other Real Estate Owned					-				-
Accrued interest receivable and other assets					4,223				4,916
			Total assets	$	513,704			$	513,365
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
	Demand - non interest-bearing			$	112,540			$	98,062
	Demand - interest-bearing				62,006				56,281
	Savings				26,584				27,644
	Money market				53,866				59,445
	Time deposits that meet or exceed the FDIC insurance limit				52,594				53,953
	Other time deposits				76,661				101,861
			Total deposits		384,251				397,246
Federal Home Loan Bank advances					68,900				55,800
Accrued interest payable and other liabilities					1,931				2,994
			Total liabilities		455,082				456,040
Shareholders' equity
	Common stock, no par value; shares authorized - 30,000,000 shares; issued
		and outstanding 4,815,880 in 2016 and 4,783,170 in 2015			36,726				36,704
	Retained earnings				22,781				20,120
	Accumulated other comprehensive income (loss)				(885	)			501
			Total shareholders' equity		58,622				57,325
			Total liabilities and shareholders' equity	$	513,704			$	513,365

 

Financial Summary
(In Thousands except per share data)
		At or for the Three Months Ended								At or for the Year Ended
		December 31, 2016				December 31, 2015				December 31, 2016				December 31, 2015
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Statement of Income Data:
Net interest income		$	4,670			$	4,621			$	18,673			$	17,637
Provision for (reversal of) loan losses			-				-				-				(800	)
Non-interest income			355				364				2,021				2,645
Non-interest expense			3,004				2,800				12,245				10,823
Provision for income taxes			833				901				3,482				4,229
Net income		$	1,188			$	1,284			$	4,967			$	6,030
Less: preferred dividends			-				-				-				92
Net income available for common shareholders		$	1,188			$	1,284			$	4,967			$	5,938
Selected per Common Share Data:
Basic earnings per common share		$	0.25			$	0.27			$	1.03			$	1.24
Diluted earnings per common share		$	0.25			$	0.27			$	1.03			$	1.23
Dividend per share		$	0.12			$	0.12			$	0.48			$	0.48
Book value per common share (2)(3)		$	12.17			$	11.99			$	12.17			$	11.99
Selected Balance Sheet Data:
Assets		$	513,704			$	513,365			$	513,704			$	513,365
Loans, net			354,638				343,217				354,638				343,217
Deposits			384,251				397,246				384,251				397,246
Average assets			504,146				504,628				510,829				485,396
Average earning assets			494,972				495,866				502,381				474,751
Average shareholders' equity			60,011				57,334				59,326				65,061
Average common shareholders' equity			60,011				57,334				59,326				56,001
Nonperforming loans			3,351				1,610				3,351				1,610
Other real estate owned			-				-				-				-
Total nonperforming assets			3,351				1,610				3,351				1,610
Troubled debt restructures (accruing)			3,348				3,536				3,348				3,536
Selected Ratios:
Return on average assets (1)			0.93	%			1.01	%			0.97	%			1.24	%
Return on average common equity (1)			7.85	%			8.89	%			8.37	%			10.60	%
Efficiency ratio (4)			60.06	%			56.73	%			61.22	%			53.78	%
Net interest margin (1)			3.74	%			3.70	%			3.72	%			3.72	%
Common equity tier 1 capital ratio			13.5	%			13.5	%			13.5	%			13.5	%
Tier 1 capital ratio			13.5	%			13.5	%			13.5	%			13.5	%
Total capital ratio			14.7	%			14.7	%			14.7	%			14.7	%
Tier 1 leverage ratio			11.1	%			10.5	%			11.1	%			10.5	%
Common dividend payout ratio (5)			48.65	%			44.70	%			46.43	%			38.67	%
Average equity to average assets			11.90	%			11.36	%			11.61	%			13.40	%
Nonperforming loans to total loans (2)			0.93	%			0.46	%			0.93	%			0.46	%
Nonperforming assets to total assets (2)			0.65	%			0.31	%			0.65	%			0.31	%
Allowance for loan losses to total loans (2)			1.33	%			1.36	%			1.33	%			1.36	%
Allowance for loan losses to nonperforming loans (2)			142.23	%			293.86	%			142.23	%			293.86	%
(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 stockholders.

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