SSBI Summit State Bank

Summit State Bank (Nasdaq: SSBI) today reported net income for the quarter ended March 31, 2022 of $3,935,000 and diluted earnings per share of $0.59. This compares to net income of $3,317,000 and diluted earnings per share of $0.50 for the quarter ended March 31, 2021. Additionally, 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 on April 25, 2022 to be paid on May 19, 2022 to shareholders of record on May 12, 2022.

Net Income and Results of Operations

Net income increased $618,000 or 19% the first quarter of 2022 compared to first quarter of 2021. Net interest income increased to $9,882,000 in the first quarter of 2022 compared to $9,190,000 in the first quarter of 2021.

“The Bank is pleased to announce continued earnings growth in the first quarter of 2022,” noted Brian Reed, President and CEO. “Since the onset of the pandemic, the Bank placed equal focus on helping our customers through hardships while also growing our core operations. Most of our customers have adapted to a new normal with their operations showing positive trends. We are also adjusting to a new steady state and are seeing the benefits from investing time and resources into our business to make it stronger and more sustainable.”

The net interest margin for the first quarter of 2022 was 4.28%, annualized return on average assets was 1.66% and annualized return on average equity was 18.69%. The first quarter of 2021 had a net interest margin of 4.35%, annualized return on average assets of 1.54% and annualized return on average equity of 17.80%.

Interest income increased to $10,879,000 in the first quarter of 2022 compared to $10,409,000 in the first quarter of 2021, this was an increase of 5%. The increase in interest income is attributable to a $1,296,000 increase in core loan interest yield primarily driven by increased volume, $27,000 increase in investment interest, and a $859,000 decrease in PPP loan volumes and forgiveness. Excluding PPP, core interest income increased to $10,681,000 in the first quarter of 2022 compared to $9,352,000 in the first quarter of 2021, this was a 14% increase.

Net loans and deposits increased when comparing the first quarter of 2022 to 2021. Net loans increased 9% to $817,618,000 at March 31, 2022 compared to $749,940,000 at March 31, 2021. Excluding PPP loans, net loans increased 15% to $804,341,000 at March 31, 2022 when compared to March 31, 2021. Total deposits increased 10% to $831,934,000 at March 31, 2022 compared to $747,350,000 at March 31, 2021. Most of the deposit increase is due to the Bank’s ongoing focus to organically grow local deposits.

Non-interest income increased in the first quarter of 2022 to $1,955,000 compared to $694,000 in the first quarter of 2021. The Bank recognized $1,546,000 in gains on sales of SBA guaranteed loan balances in the first quarter of 2022 compared to $348,000 in gains on sales of SBA guaranteed loans balances in the first quarter of 2021.

Operating expenses increased 30% in the first quarter of 2022 to $6,286,000 compared to $4,839,000 in the first quarter of 2021. The increase in expenses is primarily due to a $506,000 increase in salaries and benefits net of deferred fees and costs due to filling pandemic-related vacant positions from the prior year, a $380,000 increase in commissions directly related to the Bank’s loan portfolio growth, a $196,000 increase in Stock Appreciation Rights benefits, and $95,000 increase in marketing and donations.

There were no nonperforming assets at March 31, 2022 compared to $467,000 or 0.05% of total assets on March 31, 2021.

The Bank had a provision expense of $111,000 in the first quarter of 2022. The allowance for credit losses to total loans was 1.57% on March 31, 2022 and 1.51% on March 31, 2021. Most of the increase in the allowance for credit loss was due to the early conversion of the Current Expected Credit Loss (“CECL”) on January 1, 2021.

“Throughout the pandemic we were deliberate with our objective to continue growing core operations and are coming out of this unforgettable global crisis with a positive outlook,” states Reed. “We are cognizant of the challenges that lie ahead with the global economy. We plan to remain steadfast in our intention to serve our local community, remain a reliable resource for our customers, and continue to be focused on the longer-term growth of our Bank.”

About Summit State Bank

Summit State Bank, a local community bank, has total assets of $981 million and total equity of $84 million at March 31, 2022. 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 to customers and results for shareholders. Presently, 64% 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, Best Places to Work in the North Bay, Top Community Bank Loan Producer, Raymond James Bankers Cup, and Super Premier Performing Bank. 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:Brian ReedPresident and CEOSummit State Bank(707) 568-4908

SUMMIT STATE BANK
STATEMENTS OF INCOME
(In thousands except earnings per share data)
				Three Months Ended
				March 31, 2022			March 31, 2021
				(Unaudited)			(Unaudited)
Interest income:
	Interest and fees on loans			$	10,419		$	9,976
	Interest on deposits with banks				12			7
	Interest on investment securities				383			383
	Dividends on FHLB stock				65			43
			Total interest income		10,879			10,409
Interest expense:
	Deposits				710			933
	Federal Home Loan Bank advances				193			192
	Junior Subordinated Debt				94			94
			Total interest expense		997			1,219
			Net interest income before provision for credit losses		9,882			9,190
Provision for credit losses					111			335
			Net interest income after provision for credit losses		9,771			8,855
Non-interest income:
	Service charges on deposit accounts				209			203
	Rental income				79			86
	Net gain on loan sales				1,546			348
	Net securities gain				6			7
	Other income				115			50
			Total non-interest income		1,955			694
Non-interest expense:
	Salaries and employee benefits				3,964			3,018
	Occupancy and equipment				409			414
	Other expenses				1,913			1,407
			Total non-interest expense		6,286			4,839
			Income before provision for income taxes		5,440			4,710
Provision for income taxes					1,505			1,393
			Net income	$	3,935		$	3,317
Basic earnings per common share (1)				$	0.59		$	0.50
Diluted earnings per common share (1)				$	0.59		$	0.50
Basic weighted average shares of common stock outstanding (1)					6,685			6,677
Diluted weighted average shares of common stock outstanding (1)					6,685			6,677
(1) Adjusted for 10% stock dividend declared; effective October 29, 2021

SUMMIT STATE BANK
BALANCE SHEETS
(In thousands except share data)
				March 31, 2022			December 31, 2021			March 31, 2021
				(Unaudited)			(Unaudited)			(Unaudited)
ASSETS
Cash and due from banks				$	65,897		$	40,699		$	46,949
			Total cash and cash equivalents		65,897			40,699			46,949
Investment securities:
	Available-for-sale (at fair value; amortized cost of $69,131,
		$69,902 and $68,966)			63,332			69,367			68,973
			Total investment securities		63,332			69,367			68,973
Loans, less allowance for credit losses of $13,006, $12,329 and $11,476					817,618			820,987			749,940
Bank premises and equipment, net					5,584			5,677			5,943
Investment in Federal Home Loan Bank stock, at cost					4,320			4,320			3,429
Goodwill					4,119			4,119			4,119
Affordable housing investment					9,136			3,500			-
Accrued interest receivable and other assets					11,728			9,411			6,790
			Total assets	$	981,734		$	958,080		$	886,143
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
	Demand - non interest-bearing			$	256,253		$	234,824		$	220,197
	Demand - interest-bearing				152,823			147,289			111,646
	Savings				61,563			69,982			44,588
	Money market				174,447			168,637			164,621
	Time deposits that meet or exceed the FDIC insurance limit				29,585			29,255			37,147
	Other time deposits				157,263			161,613			169,151
			Total deposits		831,934			811,600			747,349
Federal Home Loan Bank advances					48,500			48,500			53,500
Junior subordinated debt					5,895			5,891			5,880
Affordable housing commitment					6,573			2,483			-
Accrued interest payable and other liabilities					5,124			5,324			3,904
			Total liabilities		898,026			873,798			810,634
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 6,684,759 6,684,759 and 6,676,509 (1)			37,014			37,014			36,981
	Retained earnings				50,777			47,644			38,524
	Accumulated other comprehensive income, net				(4,083			(376			4
			Total shareholders' equity		83,708			84,282			75,509
			Total liabilities and shareholders' equity	$	981,734		$	958,080		$	886,143
(1) Adjusted for 10% stock dividend declared; effective October 29, 2021

Financial Summary
(Dollars in thousands except per share data)
	As of and for the
	Three Months Ended
	March 31, 2022			March 31, 2021
	(Unaudited)			(Unaudited)
Statement of Income Data:
Net interest income	$	9,882		$	9,190
Provision for credit losses		111			335
Non-interest income		1,955			694
Non-interest expense		6,286			4,839
Provision for income taxes		1,505			1,393
Net income	$	3,935		$	3,317
Selected per Common Share Data:
Basic earnings per common share (5)	$	0.59		$	0.50
Diluted earnings per common share (5)	$	0.59		$	0.50
Dividend per share (5)	$	0.12		$	0.12
Book value per common share (1)(5)	$	12.52		$	12.44
Selected Balance Sheet Data:
Assets	$	981,734		$	886,143
Loans, net (5)		817,618			749,940
Deposits		831,934			747,350
Average assets		959,103			872,980
Average earning assets		935,736			856,663
Average shareholders' equity		85,405			75,554
Nonperforming loans		-			467
Total nonperforming assets		-			467
Troubled debt restructures (accruing)		2,112			2,176
Selected Ratios:
Return on average assets (2)		1.66%			1.54%
Return on average common shareholders' equity (2)		18.69%			17.80%
Efficiency ratio (3)		53.13%			48.99%
Net interest margin (2)		4.28%			4.35%
Common equity tier 1 capital ratio		9.36%			10.21%
Tier 1 capital ratio		9.36%			10.21%
Total capital ratio		11.30%			12.32%
Tier 1 leverage ratio		8.40%			8.10%
Common dividend payout ratio (4)		20.38%			21.95%
Average shareholders' equity to average assets		8.90%			8.65%
Nonperforming loans to total loans		0.00%			0.06%
Nonperforming assets to total assets		0.00%			0.05%
Allowance for credit losses to total loans		1.57%			1.51%
Allowance for credit losses to nonperforming loans	N/A				2458.47%
(1) Total shareholders' equity divided by total common shares outstanding.
(2) Annualized.
(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.
(5) Adjusted for 10% stock dividend declared; effective October 29, 2021