SSBI - Summit State Bank Reports 11% Increase in Net Income for 2019 and Declaration of Dividend

SANTA ROSA, Calif., Jan. 28, 2020 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq: SSBI) today reported net income for the year ended December 31, 2019, of $6,477,000 and diluted earnings per share of $1.07.  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 January 27, 2020 to be paid on February 21, 2020 to shareholders of record on February 14, 2020.

Net Income and Results of Operations

For the year ended December 31, 2019, Summit State Bank (“Bank”) had net income of $6,477,000 and diluted earnings per share of $1.07 compared to net income of $5,827,000 and $0.96 diluted earnings per share for the year ended December 31, 2018, an 11% increase in net income and diluted earnings per share.

For the quarter ended December 31, 2019, the Bank had net income of $1,834,000 and diluted earnings per share of $0.30 compared to $1,122,000 of net income and $0.18 diluted earnings per share, for the same period in 2018, a 64% increase in net income and a 67% increase diluted earnings per share.

Summit has consistently paid quarterly dividends to its shareholders for over 13 consecutive years with its last dividend change occurring February 13, 2015; at that time dividends increased to $0.12 per share per quarter. Summit’s 2019 average share price for the quarter ended December 31, 2019 was $12.42 and for the year ended December 31, 2019 was $11.94. When compared to 2018, Summit’s average share price for the quarter ended December 31, 2018 was $13.00 and for the year ended December 31, 2018 was $14.18.

A portion of the increase in net income is related to non-interest income. In 2019 non-interest income was $2,662,000 compared to $2,309,000 in 2018. The primary difference between years was the Bank sold more SBA loans in 2019 generating $1,253,000 in gain on sale compared $748,000 in gain on sale in 2018.  

“Summit spent the past three years implementing a strategic plan that, in the beginning, focused the Bank to restructure its balance sheet and increase its payroll costs in order to grow assets and earnings,” said Jim Brush, President and CEO. “We have been successful in making this strategy a reality and the Bank’s performance in the second half of 2019 is a testament to this. We also added a productive SBA lending department to our infrastructure which is now consistently contributing to our income.”                                       

Net interest income increased to $30,001,000 in 2019 compared to $25,572,000 in 2018 and $20,713,000 in 2017. This was an increase of 17% from 2018 and 45% from 2017 and reflects increases in both average loans outstanding and average yield.

Total loans increased when comparing 2019 to 2018 and 2017. Net loans increased 14% to $576,548,000 at December 31, 2019 compared to $504,549,000 at December 31, 2018 and 32% when compared to $437,594,000 at December 31, 2017.

“We are experiencing consistent growth in our loan portfolio,” said Brush. “It is important to highlight that our growth is organic and not through a merger or acquisition. Our growth is a direct result from enhancements we made to our core operations, in accordance with our plan.”

The 2019 net interest margin was 3.66%, return on average assets was 1.00% and return on average equity was 9.99%. The 2018 net interest margin was 3.75%, return on average assets was 0.99% and return on average equity was 9.66%.

“Because Summit is liability sensitive, the rising rate environment in 2017 and 2018 presented several challenges that compressed our net interest margins,” explained Brush. “There was a turning point halfway into 2019 where our headwinds turned into tailwinds due to the three Fed rate decreases. This worked to Summit’s advantage because we began stabilizing our cost of funds which improved our net interest income.”

There was a $706,000, or 5%, increase in operating expenses in 2019 compared to 2018. The increase is primarily related to salary and benefits.

“In addition to our improved margins, we have also seen non-interest expenses stabilize in the second half of 2019. We expect our efficiency ratio will continue improving into 2020,” said Brush. “Our strategic plan is beginning to take hold and Summit is poised for continued improvement in its financial performance into 2020 and beyond.”

Nonperforming assets were $315,000, or 0.05%, of total assets at December 31, 2019 compared to $2,124,000, or 0.34%, at December 31, 2018. The nonperforming assets at December 31, 2019 consist of loans which are predominantly secured by real property. The Bank had a loan loss provision expense of $700,000 in 2019 compared to $530,000 in 2018. The allowance for loan losses to loans was 1.16% at December 31, 2019 compared to 1.18% at December 31, 2018.

About Summit State Bank

Summit State Bank, a local community bank, has total assets of $696 million and total equity of $67 million at December 31, 2019. 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, 75% 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