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Summit State Bank annual report

By: Summit State Bank
October 26, 2018

Summit State Bank reports 50 percent increase in Quarterly Profitability. Summit State Bank (Nasdaq: SSBI) today reported net income for the quarter ended Sept. 30, 2018 of $1,505,000 and diluted earnings per share of $0.25.  A quarterly dividend of $0.12 per share was declared for common shareholders.


The Board of Directors declared a $0.12 per share quarterly dividend on Oct. 22, 2018 to be paid on Nov. 27, 2018 to shareholders of record on Nov. 20, 2018.

Net Income and Results of Operations

For the quarter ended Sept. 30, 2018, Summit State Bank had net income of $1,505,000 and diluted earnings per share of $0.25 compared to $1,001,000 in net income and $0.17 diluted earnings per share for the same quarter in 2017. This represented a 50 percent increase in net income between the periods.

Net income for the first nine months of 2018 was $4,706,000 compared to $2,813,000 for the same period in 2017, a 67 increase. Diluted earnings per share for the respective nine-month periods were $0.78 and $0.46.

“Our increase in core operating income continues to be driven by incremental higher net interest income related to higher average loan balances and an increase in loans as a percentage of total assets,” said Jim Brush, President and CEO.

Net income for the quarter and nine months ended Sept. 30, 2018 benefited from a tax credit of $104,000 resulting from a cost segregation study performed on the bank’s head office building.

Net loans increased 22 percent or $86 million between Sept. 30, 2018 and 2017. The net interest margin increased from 3.39 percent for the third quarter of 2017 to 3.80 percent for the third quarter of 2018. The resulting increase in the net interest income was $960,000 or 21 percent between the quarters and $2,575,000 or 19 percent between the nine-month periods.

The additional loans and overall asset growth were funded by increasing the bank’s local deposits by 30 percent or $105 million and a reduction in the investment portfolio of $29 million between Sept. 30, 2017 and 2018. Additionally, institutional funding was reduced by $45 million with reductions in institutional deposits and FHLB borrowings.

Annualized return on average assets for the third quarter of 2018 was 1.02 percent and annualized return on average equity was 9.9 percent. The bank’s efficiency ratio was 65.3 percent and the net interest margin was 3.80 percent during the third quarter of 2018. The third quarter of 2017 had an annualized return on average assets of 0.73 percent, annualized return on average equity of 6.6 percent, efficiency ratio of 66.3 percent and net interest margin of 3.39 percent.

There was a $645,000, or 20 percent, increase in operating expenses between the third quarter of 2018 as compared to the third quarter of 2017. The increased expenses were primarily due to the increase in employees and related compensation and benefits expense related to management’s strategy of positioning the bank for loan growth.

“We are approaching a structure where we have improved efficiencies and processes so that our non-interest costs should increase more slowly than increases in net interest income from loan and core deposit production,” said Jim Brush, President and CEO.

Total assets at September 30, 2018 were $595 million compared to $539 million at September 30, 2017.

Nonperforming assets were $2,170,000 or 0.36 percent of total assets at September 30, 2018 compared to $3,142,000 or 0.58 percent at Sept. 30, 2017. The nonperforming assets at Sept. 30, 2018, consist of six loans which are predominantly secured by real property. The bank recorded net recoveries of previously charged off loans of $226,000 and had provision expense of $380,000 for the nine months ended Sept. 30, 2018. The allowance for loan losses to loans was 1.20 percent at Sept. 30, 2018 and was 1.22 percent at Sept. 30, 2017.