SANTA ROSA -- Net assets at Summit State Bank grew 11 percent over the first nine months of the year to $429.72 million and loans increased 5 percent over the same period, to $283.3 million, the bank reported.
Revenue from a one-time legal settlement helped boost net income for Summit State Bank (NASDAQ: SSBI) for the quarter ended Sept. 30, .
The bank reported net after-tax income of $977,000 for the quarter, 139 percent higher than during the same period in 2011 and equal to 19 cents per diluted share. The bank's board of directors declared a nine-cent quarterly dividend for common stock that will be paid on Nov. 23 to shareholders of record on Nov. 15.
Excluding the settlement, valued at $1.36 million, the bank earned $984,000 before taxes, compared to $678,000 in pre-tax income during the third quarter of 2011. That income was 45 percent higher at the same period last year.
Net interest revenue for the first nine months of 2012 has declined 5.38 percent compared to last year, a combination of downward pressure on interest rates for new loans and a decreased yield on investments purchased to replace called investments from the prior quarter. The net interest margin was 3.96 percent as of Sept. 30 versus 4.11 percent at the same time in 2011, and the bank attributed that decline to higher income.
Those same pressures have also lead to lower interest expense, with $457,000 representing a 39.1 percent decrease in interest expense for the third quarter compared to the same three months last year.
"We have continued to reduce the bank's funding costs by actively opening new relationship deposit accounts which have a lower cost than time deposits to enhance our community banking franchise value and long-term sustainability to serve our community," said Tom Duryea, president and CEO of Summit State Bank.Non-interest income totaled $1.74 million for the third quarter, including the settlement. Excluding the settlement, a 25.67 percent increase in non-interest income was due in part to $117,000 in rental income from foreclosed properties.
Core deposits, including demand, money market and savings, increased 26 percent over the 12-month period. Non-interest bearing deposits grew 53 percent. Total deposits were $332.42 million, with core deposits representing 48 percent of that amount.
Nonperforming assets declined to 3 percent of total assets as of Sept. 30, compared to 4.2 percent in the prior quarter. Those assets included $8.2 million in non-accruing loans and $4.85 million in foreclosed real estate, compared to $12 million in loans and $5.1 million in foreclosed real estate in the prior quarter.
The provision for loan losses was $1.5 million for the third quarter and $3.36 million for the nine-month period, compared to $1.6 million for the quarter and $3 million for the first nine months of 2011. The bank conducted $1.89 million in charge offs during the quarter. The allowance for loan losses to total loans fell to 2.23 percent versus 2.53 percent at the same time last year.
Summit State Bank had a total risk-based capital ratio of 18 percent at the end of the quarter and a Tier 1 capital leverage ratio of 14 percent. The bank reported an efficiency ratio of 57.87 percent for the first nine months of the year, versus 59.90 percent during the same nine months in 2011.