• Summit State Bank Reports 29% Increase in Net Income to $3,796,000 for Third Quarter 2021 and Declaration of Dividend

    Source: Nasdaq GlobeNewswire / 27 Oct 2021 08:00:02   America/Chicago

    SANTA ROSA, Calif., Oct. 27, 2021 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq: SSBI) today reported net income for the quarter ended September 30, 2021 of $3,796,000 and diluted earnings per share of $0.63. This compares to net income of $2,954,000 and diluted earnings per share of $0.49 for the quarter ended September 30, 2020. 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 October 26, 2021 to be paid on November 18, 2021 to shareholders of record on November 11, 2021.

    In September the Bank announced that its Board of Directors declared a 10% stock dividend to be paid on or about November 4, 2021 to shareholders of record as of the close of business on October 29, 2021. Each shareholder of the Bank will receive one additional share of stock for every ten shares owned on the record date of October 29, 2021. Cash will be paid in lieu of fractional shares based on the closing price of the common stock on the record date. These stock dividends will also receive a $0.12 per share quarterly dividend to shareholders of record on November 11, 2021 to be paid on November 18, 2021.

    Net Income and Results of Operations

    Net income increased $842,000 or 29% the third quarter of 2021 compared to third quarter of 2020. Net interest income increased to $9,585,000 in the third quarter of 2021 compared to $7,740,000 in the third quarter of 2020.

    “Last month the Bank announced that it will be issuing a 10% stock dividend to each shareholder of record as of the close of business on October 29, 2021,” said Brian Reed, President and CEO. “We are pleased to see that the Bank’s ongoing financial performance can deliver meaningful returns like this to our shareholders. We are optimistic about the Bank’s long-term outlook as we see many local businesses recovering from the impacts of COVID and we continue growing in our communities through strong banking relationships.”

    The net interest margin for the third quarter of 2021 was 4.31%, annualized return on average assets was 1.68% and annualized return on average equity was 18.54%. In the third quarter of 2020, net interest margin was 3.77%, annualized return on average assets was 1.41% and annualized return on average equity was 16.05%. The Bank is experiencing growth in its margin due to a reduction in cost of funds; this reduction was caused by repricing high-cost maturing deposits and an increase in low-cost, non-maturing deposit volume.

    Interest income increased to $10,601,000 in the third quarter of 2021 compared to $9,170,000 in the third quarter of 2020, this was an increase of 16%. The change is attributable to a $1,513,000 increase in interest income from growth in the Bank’s core loan portfolio and a $109,000 decrease in interest income net of fees and costs due to reduction of Paycheck Protection Program (“PPP”) loan payoffs. The fees collected from all SBA PPP loans are amortized over the life of the loan and upon forgiveness the remaining fee income, net of cost, is taken into interest income. In the third quarter of 2021, the Bank recorded $632,000 in PPP fees net of costs; the Bank has $565,000 in remaining PPP fees net of costs left to amortize.

    “Since the onset of the pandemic, the Bank funded over 860 PPP loans totaling $134,000,000. We have actively worked with our customers who received over $101,900,000 in forgiveness from the SBA to date,” said Reed. “We are diligently assisting our customers to request forgiveness from the SBA for the remaining balance of PPP loans that are on our books. Currently the Bank has approximately $32,100,000 in SBA loans remaining to be forgiven.”

    Loans increased 8% to $792,504,000 at September 30, 2021 compared to $726,859,000 at September 30, 2020. Excluding PPP loans, loans increased 21% to $760,378,000 at September 30, 2021 compared to $630,149,000 at September 30, 2020. Total deposits increased 9% to $749,007,000 at September 30, 2021 compared to $688,026,000 at September 30, 2020.

    Non-interest income increased in the third quarter of 2021 to $1,359,000 compared to $1,188,000 in the third quarter of 2020. The Bank recognized $951,000 in gains on sales of SBA guaranteed loan balances in the third quarter of 2021 compared to $786,000 in gains on sales of SBA guaranteed loans balances in the third quarter of 2020.

    Operating expenses increased $1,316,000 or 31% in the third quarter of 2021 to $5,550,000 compared to $4,234,000 in the third quarter of 2020. The increase in expenses is primarily due to a $533,000 increase in Stock Appreciation Rights benefits, a $305,000 increase in commissions directly related to the Bank’s loan portfolio growth, a $207,000 increase in salaries and benefits net of deferred fees and costs, a $127,000 increase in marketing and donations, and an $80,000 increase in reserve for undisbursed loans. The Bank’s efficiency ratio increased from 47.44% for the third quarter of 2020 to 50.72% for the third quarter of 2021.

    Nonperforming assets were $416,000 or 0.05% of total assets at September 30, 2021 compared to $267,000 or 0.03% on September 30, 2020. The nonperforming assets on September 30, 2021 consist of 2 loans that are secured by real property and another loan that has a State of California guarantee.

    The Bank had no provision expense in the third quarter of 2021. The allowance for credit losses to total loans including SBA-guaranteed PPP loans was 1.42% on September 30, 2021 and 1.14% on September 30, 2020. Excluding $32,126,000 of PPP loan balances, the non-GAAP financial measurement ratio of allowance for credit losses increases to 1.48% and 1.31% on September 30, 2021 and 2020, respectively. The Bank also maintains an allowance for credit loss on unfunded loan commitments, the balance is $536,000 at September 30, 2021 compared to $381,000 at September 30, 2020.

    Since the onset of the COVID pandemic, the Bank processed Credit Relief requests for 120 loans totaling $176,230,000. As of September 30, 2021, all deferred loans are now current and customers are paying on those loans as agreed with the exception of one which is still on principal and interest deferral. This loan totals $992,000 or 0.1% of the loan portfolio excluding PPP loans, has a loan to value of 56%, and is real estate secured.

    Reed further explains “we remain diligent about providing support to our customers as we navigate in the uncertain post-pandemic times. Our ability to maintain improved financial performance in our core operations is a testament to our unwavering support of our customers, communities and employees.”

    About Summit State Bank

    Summit State Bank, a local community bank, has total assets of $923 million and total equity of $82 million at September 30, 2021. 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 the 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, 65% 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.

                
    SUMMIT STATE BANK
    STATEMENTS OF INCOME
    (In thousands except earnings per share data)
                
                
         Three Months Ended Nine Months Ended
         September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
         (Unaudited) (Unaudited) (Unaudited) (Unaudited)
                
    Interest income:       
     Interest and fees on loans$10,159 $8,753 $29,752 $24,903
     Interest on deposits with banks 11  10  25  61
     Interest on investment securities 360  364  1,139  1,126
     Dividends on FHLB stock 71  43  176  189
       Total interest income 10,602  9,170  31,092  26,279
    Interest expense:       
     Deposits 720  1,138  2,471  3,927
     Federal Home Loan Bank advances 202  198  589  632
     Junior Subordinated Debt 94  94  281  281
       Total interest expense 1,015  1,430  3,341  4,840
       Net interest income before provision for credit losses 9,586  7,740  27,751  21,439
    Allowance for credit losses (1) -  500  335  1,600
       Net interest income after provision for credit losses 9,586  7,240  27,416  19,839
    Non-interest income:       
     Service charges on deposit accounts 227  201  638  593
     Rental income 89  89  264  264
     Net gain on loan sales 951  786  2,459  1,803
     Net securities gain -  3  56  874
     Other income 92  109  234  277
       Total non-interest income 1,359  1,188  3,652  3,811
    Non-interest expense:       
     Salaries and employee benefits 3,326  2,573  9,496  7,727
     Occupancy and equipment 394  415  1,227  1,222
     Other expenses 1,830  1,246  4,704  3,923
       Total non-interest expense 5,550  4,234  15,426  12,872
       Income before provision for income taxes 5,396  4,194  15,641  10,778
    Provision for income taxes 1,598  1,240  4,629  3,190
       Net income$3,798 $2,954 $11,013 $7,588
                
    Basic earnings per common share$0.63 $0.49 $1.81 $1.25
    Diluted earnings per common share$0.63 $0.49 $1.81 $1.25
                
    Basic weighted average shares of common stock outstanding 6,073  6,070  6,071  6,070
    Diluted weighted average shares of common stock outstanding 6,073  6,074  6,073  6,073
                
    (1) Allowance in 2021 reported with current expected credit loss ("CECL") method, all prior period allowance is reported in accordance with previous GAAP incurred loss method.
                


             
    SUMMIT STATE BANK
    BALANCE SHEETS
    (In thousands except share data)
             
             
        September 30, 2021 December 31, 2020September 30, 2020
        (Unaudited) (Unaudited) (Unaudited)
             
    ASSETS     
             
    Cash and due from banks$37,772 $30,826 $24,257
       Total cash and cash equivalents 37,772  30,826  24,257
             
    Investment securities:     
     Available-for-sale (at fair value; amortized cost of $68,507,     
      $66,335 and $58,390) 68,803  67,952  60,001
       Total investment securities 68,803  67,952  60,001
             
    Loans, less allowance for credit losses of $11,453, $8,882 and $8,393 (1) 792,504  745,939  726,859
    Bank premises and equipment, net 5,772  5,994  6,129
    Investment in Federal Home Loan Bank stock, at cost 4,320  3,429  3,429
    Goodwill  4,119  4,119  4,119
    Accrued interest receivable and other assets 9,302  7,595  9,014
             
       Total assets$922,592 $865,854 $833,808
             
    LIABILITIES AND     
    SHAREHOLDERS' EQUITY     
             
    Deposits:      
     Demand - non interest-bearing$229,557 $199,097 $200,352
     Demand - interest-bearing 115,253  88,684  76,694
     Savings 47,251  42,120  37,132
     Money market 163,640  167,113  140,008
     Time deposits that meet or exceed the FDIC insurance limit 31,279  35,765  35,160
     Other time deposits 162,027  193,516  198,680
       Total deposits 749,007  726,295  688,026
             
    Federal Home Loan Bank advances 80,000  53,500  61,300
    Junior subordinated debt 5,887  5,876  5,873
    Accrued interest payable and other liabilities 5,715  4,554  5,185
             
       Total liabilities 840,609  790,225  760,384
             
    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 6,077,100, 6,069,600 and 6,069,600 37,014  36,981  36,981
     Retained earnings   44,761  37,510  35,309
     Accumulated other comprehensive income, net 208  1,138  1,134
             
       Total shareholders' equity 81,983  75,629  73,424
             
       Total liabilities and shareholders' equity$922,592 $865,854 $833,808
             
    (1) Allowance in 2021 reported with current expected credit loss ("CECL") method, all prior period allowance is reported in accordance with previous GAAP incurred loss method.
             


    Financial Summary
    (Dollars in thousands except per share data)
             
      As of and for the As of and for the
      Three Months Ended Nine Months Ended
      September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
      (Unaudited) (Unaudited) (Unaudited) (Unaudited)
    Statement of Income Data:        
    Net interest income $9,585  $7,740  $27,751  $21,439 
    Provision for credit losses (5)  -   500   335   1,600 
    Non-interest income  1,359   1,188   3,651   3,811 
    Non-interest expense  5,550   4,234   15,427   12,872 
    Provision for income taxes  1,598   1,240   4,629   3,190 
    Net income $3,796  $2,954  $11,011  $7,588 
             
    Selected per Common Share Data:        
    Basic earnings per common share $0.63  $0.49  $1.81  $1.25 
    Diluted earnings per common share $0.63  $0.49  $1.81  $1.25 
    Dividend per share $0.12  $0.12  $0.36  $0.36 
    Book value per common share (1) $13.51  $12.10  $13.51  $12.10 
             
    Selected Balance Sheet Data:         
    Assets $922,592  $833,808  $922,592  $833,808 
    Loans, net (5)  792,504   726,859   792,504   726,859 
    Deposits  749,007   688,026   749,007   688,026 
    Average assets  898,680   830,976   886,794   771,638 
    Average earning assets  881,444   814,013   870,288   754,749 
    Average shareholders' equity  81,234   73,018   78,109   70,528 
    Nonperforming loans  416   267   416   267 
    Total nonperforming assets  416   267   416   267 
    Troubled debt restructures (accruing)  2,146   2,203   2,146   2,203 
             
    Selected Ratios:        
    Return on average assets (2)  1.68%  1.41%  1.66%  1.31%
    Return on average common shareholders' equity (2)  18.54%  16.05%  18.85%  14.33%
    Efficiency ratio (3)  50.71%  47.44%  49.22%  52.81%
    Net interest margin (2)  4.31%  3.77%  4.26%  3.78%
    Common equity tier 1 capital ratio  10.14%  10.65%  10.14%  10.65%
    Tier 1 capital ratio  10.14%  10.65%  10.14%  10.65%
    Total capital ratio  12.25%  12.90%  12.25%  12.90%
    Tier 1 leverage ratio  8.54%  8.10%  8.54%  8.10%
    Common dividend payout ratio (4)  19.20%  24.64%  19.85%  28.80%
    Average shareholders' equity to average assets  9.04%  8.79%  8.81%  9.14%
    Nonperforming loans to total loans  0.05%  0.04%  0.05%  0.04%
    Nonperforming assets to total assets  0.05%  0.03%  0.05%  0.03%
    Allowance for credit losses to total loans (5)  1.42%  1.14%  1.42%  1.14%
    Allowance for credit losses to total loans excluding PPP (5)* 1.48%  1.31%  1.48%  1.31%
    Allowance for credit losses to nonperforming loans (5) 2756.36%  3146.32%  2756.36%  3146.32%
         
    (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) Allowance in 2021 reported with current expected credit loss ("CECL") method, all prior period allowance is reported in accordance with previous GAAP incurred loss method.
             
    *Non-GAAP Financial Measures:        
    This news release contains a non-GAAP (Generally Accepted Accounting Principles) financial measure in addition to results presented in accordance with GAAP for the allowance for credit losses to total loans excluding PPP loans. The Bank has presented this non-GAAP financial measure in the earnings release because it believes that it provides useful information to assess the Bank’s allowance for credit loss reserves. This non-GAAP financial measure has inherent limitations, is not required to be uniformly applied, and is not audited. Further, this non-GAAP financial measure should not be considered in isolation or as a substitute for the allowance for credit losses to total loans determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other financial institutions. Reconciliation of the GAAP and non-GAAP financial measurement is presented below.


                 
        September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020
        (In thousands)
                 
    Allowance for Credit Losses (ACL) on loans to Loans receivable, excluding SBA PPP loans
                 
    Allowance for credit losses on loans (1)  $11,453  $11,482  $11,476  $8,882  $8,393 
                 
    Loans receivable (GAAP)   $803,957  $765,461  $761,416  $754,820  $735,252 
         Excluding SBA PPP loans 32,126   48,166   32,032   69,583   96,710 
    Loans receivable, excluding SBA PPP (non-GAAP)$771,831  $717,296  $729,384  $685,237  $638,542 
              
    ACL on loans to Loans receivable (GAAP) 1.42%  1.50%  1.51%  1.18%  1.14%
    ACL on loans to Loans receivable, excluding SBA PPP loans (non-GAAP) 1.48%  1.60%  1.57%  1.30%  1.31%
                 
    (1) Allowance in 2021 reported using current expected credit loss ("CECL") method, all 2020 and prior periods' allowance are reported in accordance with previous GAAP using the incurred loss method.
                 

    Contact: Brian Reed, President and CEO, Summit State Bank (707) 568-4908


    Primary Logo

Share on,