SANTA ROSA, Calif., Jan. 29, 2019 (GLOBE NEWSWIRE) — 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. | ||||||||||||||||