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Summit State Bank Reports Continued Profitability; Strong Margins and Deposit Growth

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.
/ Source: GlobeNewswire

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 .

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: Thomas Duryea, President and CEO Summit State Bank (707) 568-4920