SANTA ROSA -- Summit State Bank (Nadsaq: SSBI) on Monday reported a 25 percent increase in net income last year.

Earnings were $4.32 million, or 85 cents per share, for the institution in 2013.

"We are pleased 2013 was our most successful year to date as our community banking team continued to grow earnings to a new high and further expand existing high-quality customer relationships," said Tom Duryea, president and chief executive, in a statement.

Summit ended the year with $282.67 million in loan volume, up 2.46 percent from the prior year. Net interest income increased 2 percent year-over-year to $16.57 million.

Nonperforming loans accounted for 1.95 percent of total loans as of Dec. 31, compared with 1.72 percent at the end of 2012. That $10.39 million portfolio includes $4.77 million in commercial real estate that is currently generating income, according to the bank.

The bank had a $50,000 loan loss provision expense in 2013, compared to $3.36 million in 2012.

"We have been able to sharply scale back our loan-loss provision expense as we prudently built the allowance for loan losses during the economic downturn and were able to resolve many problem loans without the use of the allocated reserves," said Bill Fogarty, senior vice president and chief credit officer, in a statement.

The bank cited the increase in relationship deposit accounts as a key strategy to improve its funding mix and provide stable cost for funding loans. Core deposits -- demand, savings and money-market accounts -- increased 12 percent to $188.46 million. Total deposits were $392.44 million, virtually unchanged at 0.08 percent higher than the prior year.

Summit had a 0.98 percent return on average assets last year, compared with 0.84 percent in 2012. Like many lenders who have seen net interest margins decline in the current low-interest-rate environment, the bank announced a 3.88 percent margin for 2013 versus 4.12 percent in 2012.

Total assets were $4.54 million as of Dec. 31, up 2.06 percent from the prior year.

The bank's board of directors approved an 11 cent dividend per share, payable on Feb. 24 to shareholders of record as of Feb. 18.

Prices for shares in Summit State Bank were unchanged on Monday at $10.65 each.