Santa Rosa’s Summit State Bank reports 37% rise in Q1 net income

On a continued roll despite a pandemic, Summit State Bank (Nasdaq: SSBI) on Tuesday reported first-quarter net income increased 37% from a year before.

Quarterly earnings were $3.3 million, or 55 cents per diluted share, up from $2.4 million in the first quarter of 2020.

The strong showing for early 2021 comes after the Santa Rosa-based bank posted a 62% annual increase in fourth-quarter net income.

The bank did post a $694,000 decrease in non-interest income — derived by fees — and a 9% rise in operating expenses in this year’s first quarter.

But the continued growth outweighed all drops in earnings parameters.

Summit State Bank is still processing the second round of Paycheck Protection Program loans, which helped to fuel the growth through this past quarter.

President and CEO Brian Reed estimated the bank is handling about $35 million in loans from the round, as the flow of applications is going down “to a trickle.”

Even without the PPP funding for small businesses, Reed pointed out the bank has experienced a 17% year-over-year growth pattern.

The growth in the bank’s balance sheet has much to do with its ability to rake in high yields in lending. The economy is still churning, and those who are prudent and anticipate how to maneuver through a pandemic will consequently survive and thrive from, Reed explained.

Reed figured only 2% to 5% of the bank’s customers are “struggling” from pandemic restrictions imposed by government officials.

Moreover, the $7 trillion-plus pumped into the economy by federal and state governments has helped immensely with the region’s consumers and businesses.

“This is part of why we’re all doing OK. But you have to evaluate, what’s really going to happen?” he said. “You just evaluate the risks around you and hope the growth is done conservatively. There’s no reason to expect it won’t last.”

For now, Reed’s about 100 employees are more motivated than ever to help the bank’s customers negotiate these challenging times. He’s noticed it in their behavior.

“Their pride level is very high. It’s at a whole different level. We’re making a difference, and they know it,” he said. “This is really a testament to not only our strategic plan but the type of employees we have.”

It helps to prove a bank is doing a good job when it receives outside kudos.

The bank also learned on April 15 that out of 241 community banks it was recognized as one of the 25 top performing banks in the nation on assets between $500 million and $10 billion by the Raymond James Bankers Cup.

“We are humbled to be associated with other high performing banks and one of only three California banks,” Reed said in a statement.

The bank’s board of directors declared a 12 cent-per-share quarterly dividend to be paid on May 21.

Summit State Bank had $866 million in total assets at the end of the first quarter.

Susan Wood covers law, cannabis, production, energy, transportation, agriculture as well as banking and finance. For 25 years, Susan has worked for a variety of publications including the North County Times, now a part of the Union Tribune in San Diego County, along with the Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Reach her at 530-545-8662 or susan.wood@busjrnl.com