SSBI Summit State Bank

Summit State Bank (NASDAQ: SSBI) today reported net income for the year ended December 31, 2018, of $5,827,000 and diluted earnings per share of $0.96.  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 26, 2019 to shareholders of record on February 19, 2019.

Net Income and Results of Operations

“We are in the third year of implementing Summit State Bank’s strategy to increase core deposits and loan volume and enhance earnings performance,” said Jim Brush, President and CEO.  “We continue to invest in highly qualified staff and this has allowed Summit to remain well poised for deliberate growth of our business in key areas. We are not growing just for the sake of growth, we are growing our business with the future in mind and making measured decisions that yield results that have a positive, lasting effect.”

Following are several key accomplishments in 2018:

• Net loans increased 15.3% for 2018 compared to 2017. 
• Net Interest Margin increased to 3.75% in 2018, up 20 basis points from 2017. 
• Efficiency Ratio of 64.24% in 2018, an improvement of 425 basis points from 2017.

Net income was $5,827,000 and $0.96 diluted earnings per share for the year ended December 31, 2018, compared to net income of $3,292,000 and $0.54 diluted earnings per share for the year ended December 31, 2017, a 77% increase in net income and diluted earnings per share.

For the quarter ended December 31, 2018, Summit State Bank (“Summit”) had net income of $1,121,000 and diluted earnings per share of $0.18 compared to $478,000 of net income and $0.08 diluted earnings per share, for the same period in 2017, a 135% increase in net income and a 125% increase diluted earnings per share.

Summit experienced a 4.8% increase in gross loans during the fourth quarter 2018 and a 15.3% increase for 2018. Summit recorded a provision for loan loss that was relatively flat to the prior year; $530,000 in 2018 versus $520,000 in 2017. This was due to improved credit quality mitigating some of the impact of the loan growth on the provision for loan loss.

Summit has minimized the impact a rising interest rate environment has had by increasing total loans as a percent of assets. In 2018 Summit’s net interest income increased by 16.4%, up to $21,622,000 in 2018 from $18,572,000 in 2017.

“As projected, the bank began seeing positive impacts on net interest income starting in the fourth quarter of 2017 and this trend continued through 2018,” according to Mr. Brush. “We are able to improve net interest income by increasing loans as a percentage of the Bank’s assets and responding to the rising interest rate environment by creating a balanced offering of deposits and loans at competitive rates.”

Summit’s return on average assets yielded a positive increase, up to 0.99% for 2018 compared to 0.62% for 2017. Its return on average common equity was also up to 9.66% for 2018 compared to 5.49% for 2017.

Total assets were $622,104,000 at December 31, 2018, up 1.8% when compared to December 31, 2017 and up a total of 21.1% when compared to December 31, 2016. The growth in 2018 was subdued by a one-time deposit of approximately $55 million made prior to December 31, 2017 and partially withdrawn after year end.

Summit’s balance sheet is liability sensitive and with economists projecting a continued rising rate environment Summit has stated it will maintain a balance between growing its high-quality loan portfolio with a core deposit portfolio that is competitive and meets its customer’s needs.

“Staying true to our commitment of improving long-term shareholder value as well as caring for our employees, customers and community we serve is at the center of our strategic focus. I am optimistic about the trajectory we are on to build sustainable growth,” said Mr. Brush.

About Summit State Bank

Summit State Bank, a local community bank, has total assets of $622 million and total equity of $62 million at December 31, 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, 82% of management are women and minorities with 60% 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: Jim 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							Year Ended
			December 31, 2018			December 31, 2017				December 31, 2018			December 31, 2017
			(Unaudited)			(1)				(Unaudited)			(1)
Interest income:
	Interest and fees on loans		$	6,101		$	4,947			$	22,663		$	17,176
	Interest on deposits with banks			62			50				247			162
	Interest on federal funds sold			-			5				14			17
	Interest on investment securities			582			656				2,382			3,126
	Dividends on FHLB stock			104			54				266			232
		Total interest income		6,849			5,712				25,572			20,713
Interest expense:
	Deposits			1,050			552				3,509			1,639
	Federal Home Loan Bank advances			241			80				441			502
		Total interest expense		1,291			632				3,950			2,141
		Net interest income before provision for loan losses		5,558			5,080				21,622			18,572
Provision for loan losses				150			350				530			520
		Net interest income after provision for loan losses		5,408			4,730				21,092			18,052
Non-interest income:
	Service charges on deposit accounts			196			166				765			695
	Rental income			109			144				553			574
	Net gain on loan sales			206			351				748			351
	Net securities gain			9			14				27			72
	Other income			31			3				216			23
		Total non-interest income		551			678				2,309			1,715
Non-interest expense:
	Salaries and employee benefits			2,628			2,564				9,151			7,788
	Occupancy and equipment			404			370				1,536			1,503
	Other expenses			1,334			1,162				4,670			4,554
		Total non-interest expense		4,366			4,096				15,357			13,845
		Income before provision for income taxes		1,593			1,312				8,044			5,922
Provision for income taxes				471			834				2,217			2,630
		Net income	$	1,122		$	478			$	5,827		$	3,292
Basic earnings per common share			$	0.18		$	0.08			$	0.96		$	0.55
Diluted earnings per common share			$	0.18		$	0.08			$	0.96		$	0.54
Basic weighted average shares of common stock outstanding				6,066			6,041				6,065			6,031
Diluted weighted average shares of common stock outstanding				6,074			6,064				6,072			6,059
(1) Information derived from audited financial statements.

 

SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
				December 31,			December 31,
				2018			2017
				(Unaudited)			(1)
ASSETS
Cash and due from banks				$	21,693		$	68,814
Federal funds sold					-			2,000
			Total cash and cash equivalents		21,693			70,814
Investment securities:
	Held-to-maturity, at amortized cost				7,991			7,984
	Available-for-sale (at fair value; amortized cost of $72,716
		in 2018 and $79,617 in 2017)			70,174			78,770
			Total investment securities		78,165			86,754
Loans, less allowance for loan losses of $6,029
	in 2018 and $5,236 in 2017				504,549			437,594
Bank premises and equipment, net					5,803			5,279
Investment in Federal Home Loan Bank stock, at cost					3,085			3,085
Goodwill					4,119			4,119
Other Real Estate Owned					-			-
Accrued interest receivable and other assets					4,690			3,219
			Total assets	$	622,104		$	610,864
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
	Demand - non interest-bearing			$	120,011		$	190,861
	Demand - interest-bearing				65,652			65,742
	Savings				25,817			30,102
	Money market				104,060			79,564
	Time deposits that meet or exceed the FDIC insurance limit				83,071			68,927
	Other time deposits				102,578			98,317
			Total deposits		501,189			533,513
Federal Home Loan Bank advances					56,800			15,000
Accrued interest payable and other liabilities					2,595			2,674
			Total liabilities		560,584			551,187
			Total shareholders' equity		61,520			59,677
			Total liabilities and shareholders' equity	$	622,104		$	610,864
(1) Information derived from audited financial statements.

 

Financial Summary
(In Thousands except per share data)
		As of and for the								As of and for the
		Three Months Ended								Year Ended
		December 31, 2018				December 31, 2017				December 31, 2018				December 31, 2017
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Statement of Income Data:
Net interest income		$	5,558			$	5,080			$	21,622			$	18,572
Provision for loan losses			150				350				530				520
Non-interest income			551				678				2,309				1,715
Non-interest expense			4,366				4,096				15,357				13,845
Provision for income taxes			471				834				2,217				2,630
Net income		$	1,122			$	478			$	5,827			$	3,292
Selected per Common Share Data:
Basic earnings per common share		$	0.18			$	0.08			$	0.96			$	0.55
Diluted earnings per common share		$	0.18			$	0.08			$	0.96			$	0.54
Dividend per share		$	0.12			$	0.12			$	0.48			$	0.46
Book value per common share (2)		$	10.14			$	9.88			$	10.14			$	9.88
Selected Balance Sheet Data:
Assets		$	622,104			$	610,864			$	622,104			$	610,864
Loans, net			504,549				437,594				504,549				437,594
Deposits			501,189				533,513				501,189				533,513
Average assets			601,871				552,312				586,978				534,534
Average earning assets			590,958				541,852				575,843				523,475
Average shareholders' equity			60,944				60,456				60,295				59,987
Nonperforming loans			2,124				2,730				2,124				2,730
Total nonperforming assets			2,124				2,730				2,124				2,730
Troubled debt restructures (accruing)			1,723				1,630				1,723				1,630
Selected Ratios:
Return on average assets (1)			0.74	%			0.34	%			0.99	%			0.62	%
Return on average common shareholders' equity (1)			7.30	%			3.14	%			9.66	%			5.49	%
Efficiency ratio (3)			71.57	%			71.31	%			64.24	%			68.49	%
Net interest margin (1)			3.73	%			3.72	%			3.75	%			3.55	%
Common equity tier 1 capital ratio			10.5	%			11.6	%			10.5	%			11.6	%
Tier 1 capital ratio			10.5	%			11.6	%			10.5	%			11.6	%
Total capital ratio			11.6	%			12.7	%			11.6	%			12.7	%
Tier 1 leverage ratio			9.9	%			10.2	%			9.9	%			10.2	%
Common dividend payout ratio (4)			64.88	%			151.67	%			49.97	%			83.57	%
Average common shareholders' equity to average assets			10.13	%			10.95	%			10.27	%			11.22	%
Nonperforming loans to total loans			0.42	%			0.62	%			0.42	%			0.62	%
Nonperforming assets to total assets			0.34	%			0.45	%			0.34	%			0.45	%
Allowance for loan losses to total loans			1.18	%			1.18	%			1.18	%			1.18	%
Allowance for loan losses to nonperforming loans			283.84	%			191.79	%			283.84	%			191.79	%
(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.