SANTA ROSA -- Summit State Bank (NASDAQ: SSBI) today announced net income of $1.03 million for the quarter ended June 30, a 23 percent increase versus the same quarter last year.

Earnings per share of 21 cents represented a 50 percent increase over last year, with an 11 cent dividend declared today that will be payable on Aug. 23 to shareholders of record as of Aug. 15.

Interest income increased 2 percent comparing the same quarters in 2013 and 2012, at $4.06 million. While overall loan volume had declined 2.3 percent over the year, to $271.8 million, average earning assets increased more than 9 percent.

The bank had an annualized return on assets of 95 basis points at the end of the quarter, up from 84 basis points. Nonperforming assets represented 2.28 percent of the bank's portfolio as of June 30, down from 4.2 percent last year.

Core deposits represented 53 percent of total deposits, up from 46 percent last year and representing an increase of 20 percent compared to the same time in 2011.

"We continue to gain an increasing number of full banking relationships earned through our team's successful execution of the Summit Way service standards and deep support and care of our local Sonoma County community, resulting in increased profitability. A key part of these full banking relationships include core deposits that are an essential driver of the bank's long-term sustainability to properly support the needs of our clients and community, from which our shareholders will continue to be rewarded," said Tom Duryea, president and chief executive, in the announcement.

Linda Bertauche, chief operations officer, also noted in the release that the bank has made a concerted effort to pursue core deposits, typically defined as being from the local market and including checking and other stable accounts. She said that in 2008, core deposits represented less than one-quarter of depposits. "This positive change in the deposit mix will play a significant role as interest rates start to rise," she said.

The low-interest-rate environment was cited for a decline in the overall margin between interest income and interest expenses, with a 3.87 net interest margin announced at the end of the second quarter. That was compared to 4.16 percent in 2012.

Summit set aside $50,000 for its provision for loan losses, compared to $410,000 at the same period last year. Its allowance for loan losses was 2.2 percent, down from 2.46 percent.

Total assets have increased 6 percent over the year, now at $432 million.