updated 4/28/2011 6:17:43 PM ET 2011-04-28T22:17:43

SANTA ROSA, Calif., April 28, 2011 (GLOBE NEWSWIRE) -- Summit State Bank (Nasdaq:SSBI) today reported net income for the quarter ended March 31, 2011 of $412,000 or $0.06 per common share.

Net Income and Results of Operations

The Bank had net income of $412,000 and net income available for common stockholders, which deducts the preferred dividends, of $274,000, or $0.06 per diluted share, for the quarter ended March 31, 2011 compared to net income of $540,000 and net income available for common stockholders of $402,000, or $0.08 per diluted share, for the quarter ended March 31, 2010.

"Our net income continues to be driven by our expanding relationship base, strong core operations, and focus on efficiencies. Our focus has resulted in continuing strong margins and efficiency ratios in the first quarter," stated Thomas Duryea, President and CEO.

Net interest income was level at $3,831,000 for the first quarter of 2011 compared to $3,880,000 for the same quarter in 2010. A 4.6% increase in average earning assets between the quarters offset the impact of a decline in the net interest margin to 4.53% for the first quarter of 2011 compared to 4.80% in the first quarter of 2010. The net interest margin however increased from 4.45% for the fourth quarter of 2010.

"Our margins continue to remain strong due largely to our key strategies introduced in the past few years," said CFO, Dennis Kelley.

Occupancy expense remained the same for the quarters; however, other operating expenses increased 17.6% or $132,000, predominantly due to $117,000 incurred in relation to repairs and maintenance of the head office building.

The Bank's efficiency ratio, which expresses operating costs as a percentage of revenues, was 63% for the first quarter of 2011 compared to 55% for the same quarter in 2010. Higher operating expenses also included increased credit collection costs and the addition of two full time employees from March 31, 2010 to 2011.

The provision for loan losses remained elevated at $800,000 for first quarter 2011 due to the weak economic conditions and addressing former transaction focus, further impacting profit levels, but did decline $210,000 between the first quarters of 2011 and 2010. Allowance for loan losses increased to $6,723,000 at March 31, 2011 from $6,058,000 at December 31, 2010, increasing the coverage of allowance for loan losses to gross loans to 2.34% from 2.11%. Nonperforming assets at March 31, 2011 included $13,826,000 in loans on non-accrual and $468,000 in foreclosed real estate. This compares to nonperforming assets of $11,442,000 at March 31, 2010 and $13,472,000 at December 31, 2010. "Nonperforming loans consist of ten borrowers and are primarily secured by real estate," said Guy Dana, Chief Credit Officer.

Total assets increased to $374,053,000 at March 31, 2011 compared to $347,933,000 at December 31, 2010.

Total deposits increased 7.2% for the quarter over December 31, 2010 to $300,108,000, with demand, money market and savings deposits increasing 11.8% to $113,990,000.

The Bank's regulatory capital remains well above the required capital ratios with a Tier 1 capital leverage ratio of 14.4%, a Tier 1 risk-based capital ratio of 17.3% and a Total risk-based capital ratio of 18.6% at March 31, 2011.

About Summit State Bank

Summit State Bank has total assets of $374 million and total equity of $55 million at March 31, 2011. Headquartered in Sonoma County, the Bank provides diverse financial products and services throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit State Bank is a Premier Performing Bank, earning the highest Findley Reports designation of all Sonoma County-based banks. Summit State Bank received the Gold Medal award for Best Business Bank from the Northbay Biz Magazine and has also been recognized as one of the North Bay's Best Places to Work by the North Bay Business Journal. 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 AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for earnings per share data)
     
  Three Months Ended
  March 31, 2011 March 31, 2010
  (Unaudited) (Unaudited)
     
Interest income:    
Interest and fees on loans  $ 4,133  $ 4,473
Interest on Federal funds sold  5  2
Interest on investment securities and deposits in banks  436  359
Dividends on FHLB stock  2  2
     
Total interest income  4,576  4,836
     
Interest expense:    
Deposits   658  820
FHLB advances  87  136
     
Total interest expense  745  956
     
Net interest income before provision for loan losses  3,831  3,880
     
Provision for loan losses   800  1,010
     
Net interest income after provision for loan losses  3,031  2,870
     
Non-interest income:    
     
Service charges on deposit accounts  117  93
Office leases   138  126
Net securities gains  --  150
Loan servicing, net  7  12
Other income   --  46
     
Total non-interest income  262  427
     
Non-interest expense:    
Salaries and employee benefits   1,322  1,242
Occupancy and equipment   390  389
Other expenses   880  748
     
Total non-interest expense  2,592  2,379
     
Income before provision for income taxes  701  918
     
Provision for income taxes   289  378
     
Net income  $ 412  $ 540
     
Less: preferred dividends 138  138
     
Net income available for common stockholders  $ 274  $ 402
     
Basic earnings per common share  $ 0.06  $ 0.08
Diluted earnings per common share  $ 0.06  $ 0.08
     
Basic weighted average shares of common stock outstanding 4,745 4,745
Diluted weighted average shares of common stock outstanding 4,794 4,762
 
SUMMIT STATE BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
 
  March 31,

2011
December 31,

2010
  (Unaudited)  
     
ASSETS    
     
Cash and due from banks  $ 9,486  $ 4,542
Federal funds sold  --  7,940
Total cash and cash equivalents  9,486  12,482
     
Available-for-sale investment securities - amortized cost of $60,841 in 2011 and $33,472 in 2010  61,084  33,642
Loans, less allowance for loan losses of $6,723 in 2011 and $6,058 in 2010  280,284  280,398
Bank premises and equipment, net   7,185  7,304
Investment in Federal Home Loan Bank stock, at cost  2,510  2,614
Goodwill  4,119  4,119
Accrued interest receivable and other assets   9,385  7,374
     
Total assets  $ 374,053  $ 347,933
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Deposits:    
Demand - non interest-bearing  $ 31,077  $ 23,594
Demand - interest-bearing  24,122  24,421
Savings  20,344  15,849
Money market  38,447  38,063
Time deposits, $100 thousand and over  129,898  113,187
Other time deposits  56,220  64,863
Total deposits  300,108  279,977
     
Federal Home Loan Bank (FHLB) advances  17,100  12,000
Accrued interest payable and other liabilities  1,605  647
     
Total liabilities  318,813  292,624
     
Shareholders' equity     
Preferred stock, no par value; 20,000,000 shares authorized; shares issued and outstanding - 8,500 in 2011 and 2010; per share redemption of $1,000 for total liquidation preference of $8,500  8,149  8,117
Common stock, no par value; shares authorized - 30,000,000 shares; issued and outstanding 4,744,720 at March 31, 2011 and December 31, 2010   36,322  36,311
Common stock warrant  622  622
Retained earnings  10,007  10,161
Accumulated other comprehensive income, net of taxes   140  98
     
Total shareholders' equity  55,240  55,309
     
Total liabilities and shareholders' equity  $ 374,053  $ 347,933
 
Earnings Summary
(In Thousands)
     
  Three Months Ended
  March 31, 2011 March 31, 2010
  (Unaudited) (Unaudited)
Statement of Income Data:    
Net interest income  $ 3,831  $ 3,880
Provision for loan losses   800  1,010
Non-interest income  262  427
Non-interest expense  2,592  2,379
Provision for income taxes   289  378
Net income  $ 412  $ 540
Less: preferred dividends  138  138
Net income available for common stockholders  $ 274  $ 402
     
Selected per Common Share Data:    
Basic earnings per common share  $ 0.06  $ 0.08
Diluted earnings per common share  $ 0.06  $ 0.08
Book value per common share (2)(3)  $ 9.92  $ 10.04
     
Selected Balance Sheet Data:     
Assets  $ 374,053  $ 350,148
Loans, net  280,284  284,890
Deposits  300,108  274,894
Average assets  357,169  344,689
Average earnings assets  343,008  327,788
Average shareholders' equity  55,500  55,864
Average common shareholders' equity  46,761  47,252
Nonperforming loans  13,826  11,442
Total nonperforming assets  14,294  11,537
     
Selected Ratios:    
Return on average assets (1) 0.47% 0.64%
Return on average common equity (1) 2.38% 3.45%
Return on average common tangible equity (1) 2.61% 3.78%
Efficiency ratio 63.33% 55.24%
Net interest margin (1) 4.53% 4.80%
Tier 1 leverage captial ratio 14.4% 15.08%
Tier 1 risk-based captial ratio 17.3% 18.29%
Total risk-based captial ratio 18.6% 19.53%
Common dividend payout ratio (4) 155.84% 106.22%
Average equity to average assets 15.54% 16.21%
Nonperforming loans to total loans (2) 4.82% 3.94%
Nonperforming assets to total assets (2) 3.82% 3.29%
Allowance for loan losses to total loans (2) 2.34% 1.87%
Allowance for loan losses to nonperforming loans (2) 48.63% 47.39%
     
(1) Annualized    
(2) As of period end    
(3) Total shareholders' equity less, preferred stock, divided by total common shares outstanding  
(4) Common dividends divided by net income available for common stockholders
CONTACT: Thomas Duryea, President and CEO
         Summit State Bank
         (707) 568-4920

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