SANTA ROSA -- Summit State Bank (NASDAQ: SSBI) today announced that net income for 2012 rose 55 percent versus 2011, with $3.45 million in earnings representing 62 cents per diluted share. The bank also announced that it would pay a quarterly shareholder dividend of 9 cents per share on Feb. 23 to shareholders of record as of Feb. 15.
"Our continuing profitability growth, with 2012 being the best year yet in our 38-year history of serving Sonoma County, is the result of our ongoing success in earning more and more full relationships through the high level of service and care our Summit team is providing our customers, and increasing referrals from our satisfied customers," said Thomas Duryea, Summit State Bank president and CEO, in the announcement.
Earnings for 2012 were boosted by a one-time legal settlement of $1.5 million in the third quarter. Excluding the settlement, the bank earned $4.4 million before taxes, compared to $3.79 million in pre-tax income during 2011. That income was 14.7 percent higher than the prior year.
Net interest revenue rose 3.2 percent for 2012, at $16.25 million. Summit cited growth in earning assets for part of that improvement, and announced that the bank's return on average assets rose to 0.84 percent from 0.59 percent.
The bank added more investments to its portfolio, with a 41 percent increase in securities available for sale now valued at $125.7 million and $2.97 million in time deposits. Loans grew 2.2 percent, to $275.9 million, and total assets grew 14.8 percent, to $444.9 million.
The increase in net interest income was also attributed to an increase in non interest-bearing deposits, which represented 17 percent of $341 million in total deposits as of Dec. 31. Those assets represented 10 percent of $326.6 million in deposits at the end of the prior year.
The total deposit-related interest expense fell 28.67 percent, to $1.8 million. Core deposits, including demand, savings and money market deposits, increased 35 percent, to $43 million.
Summit's efficiency ratio averaged 60.5 percent for the twelve months ended Dec. 31, nearly parallel with the prior year. The average net interest margin fell to 4.12 percent from 4.34 percent, driven by a low interest rate environment and an increase in investment securities.
Nonperforming assets declined to $9.7 million, a 27.5 percent decrease from the end of the prior year. Among those assets is a $4.1 million commercial property that is currently generating income for the bank, according to the announcement. Nonperforming loans constituted 1.72 percent of total loans at the end of 2012, compared to 4.46 percent of total loans at the end of the prior year.
The total provision for loan losses declined by 7.9 percent, to $3.36 million, comparing 2012 to 2011. The allowance for loan losses was $5.75 million at Dec. 31, compared to $5.4 million at the end of 2011. The increase for 2012 reflected the provision expense and net charge offs of $3 million.
Citing a decline in nonperforming loans, the bank did not make a provision for loan losses in the fourth quarter of the year, according to the announcement.
Summit's tier 1 capital leverage ratio was 13.4 percent as of Dec. 31, with a risk-based ratio of 17.1 percent and a total ratio of 18.4 percent.
Shares in Summit State Bank were valued at $7.70 at the close of trading today, down 2.9 percent from an opening price of $7.95.