SANTA ROSA -- Citing an increase in income-generating assets and new loans, Summit State Bank (NASDAQ: SSBI) reported a 64 percent increase in net income for the first three months of 2013 and declared a larger quarterly dividend.

Net income increased by $1 million, or 18 cents per diluted share, from a year before.

"We are experiencing a noticeable pickup in quality loan inquiries over the past two-to-three months, particularly in real estate and construction, which typically has a positive multiplier effect on our local economy," said Bill Fogarty, chief credit officer, in the announcement.

"Our client's success drives our success," said Tom Duryea, president and chief executive.

The institution declared a 11 cent-a-share dividend, to be paid on May 23 to shareholders of record as of May 15, represents a 2 cent-a-share increase.

While Summit said it faces the same interest-rate crunch affecting lenders across the country -- including an interest margin that declined to 3.93 percent from 4.34 percent for the two quarters -- the bank had net interest income growth of 2 percent to $4.1 million.

The announcement credited a 14 percent increase in earning assets, now 96.8 percent of total assets on an annualized basis, as a large driver of that increase. Gross loans of $280.2 million were up 2.2 percent compared to the first quarter of 2012, though the bank noted that the increase was tempered by the elimination of problem loans in its portfolio over the course of last year.

Summit had no provision for loan losses in the first quarter, compared to $1.45 million set aside in the first three months of 2012. The allowance for losses was equivalent to 2.13 percent of total loans in the first quarter, down from 2.49 percent. Nonperforming assets were $10 million, down from $14.3 million.

The bank announced an 8 percent increase in total assets, now at $438.3 million. Deposits have increased 5.4 percent, to $342.3 million, with a $351,000 quarterly interest expense for deposits representing a decline of 33 percent.

Increased staffing was attributed to a 6.7 percent increase in operating expenses, but the returns of those efforts have meant that expenses as a cost of revenue -- current 62 percent -- were only up 3 percent.