Summit State Bank Reports 44% Increase in Net Income to $2,954,000 for Third

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SANTA ROSA, Calif., Oct. 28, 2020 (GLOBE NEWSWIRE) — Summit State Bank (Nasdaq: SSBI) today reported net income for the quarter ended September 30, 2020 of $2,954,000 and diluted earnings per share of $0.49.  This compares to net income of $2,045,000 and diluted earnings per share of $0.34 for the same quarter in 2019.  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 27, 2020 to be paid on November 20, 2020 to shareholders of record on November 13, 2020.

Net Income and Results of Operations

Net income increased by $909,000 or 44% in the third quarter of 2020 compared to the third quarter of 2019.

For the first nine months of 2020, net income increased by $2,946,000 (63%) to $7,588,000 compared to $4,642,000 in the first nine months of 2019. Net interest margin increased to 3.78% for the first nine months of 2020 compared to 3.64% for the first nine months of 2019.

“Net income for the third quarter 2020 and year-to-date 2020 represents records earnings for the bank driven by an increase in our balance sheet,” said Brian Reed, President and CEO. “We are continuing to realize the benefits of our managed growth.”

The annualized return on average assets for the third quarter of 2020 was 1.41%, the annualized return on average equity was 16.05% and the efficiency ratio was 47.44%. The third quarter of 2019 had an annualized return on average assets of 1.24%, an annualized return on average equity of 12.32% and an efficiency ratio of 54.44%.

Net interest income increased to $7,740,000 in the third quarter of 2020 compared to $5,773,000 in the third quarter of 2019.  The increase in net interest income is primarily attributable to increases in loan balances with a lesser portion of this increase driven by the Paycheck Protection Program (“PPP”) loans.

“We are very fortunate to have employees who truly care about our customers and go the extra mile to provide support through the many challenges this pandemic presents,” said Reed. “To date we funded $97,000,000 of PPP loans to over 600 businesses, this balance represents 13% of the Bank’s loan portfolio as of September 30, 2020.”

Total loans and deposits increased when comparing the third quarter of 2020 to third quarter of 2019; loans were $726,859,000 in 2020 (includes $96,710,000 of PPP loans) compared to $554,122,000 in 2019 and deposits were $688,026,000 in 2020 compared to $605,130,000 in 2019. The net interest margin increased to 3.77% for the third quarter of 2020 compared to 3.60% for the third quarter of 2019.

Non-interest income increased in the third quarter of 2020 to $1,188,000 compared to $1,001,000 in the third quarter of 2019. The Bank recognized $786,000 in gains on sales of SBA guaranteed loan balances in the third quarter of 2020 compared to $639,000 in gains on sales of SBA guaranteed loans balances in the third quarter of 2019.

There was a $546,000 or 15% increase in operating expenses in the third quarter of 2020 compared to the third quarter of 2019. The increase in expenses is primarily due to an increase in employee expenses and occupancy costs. The Bank is leveling off from a growth trend in operating expenses since the middle of 2019; this results in an improvement in the efficiency ratio by 7.00% when comparing 47.44% for the third quarter of 2020 to 54.44% for the third quarter of 2019.

Nonperforming assets were $267,000 or 0.03% of total assets on September 30, 2020 compared to $592,000 or 0.09% on September 30, 2019. Nonperforming assets on September 30, 2020 consist of one loan that is secured by real property and another loan that has a guarantee from the State of California. The Bank had a provision expense of $500,000 in the third quarter of 2020. The…