Summit Bank Corporation (NASDAQ: SBGA), parent company of The
Summit National Bank, announces fourth quarter 2005 earnings of
$1.87 million, or $0.33 diluted earnings per share, up 55.6% over
the $1.20 million, or $0.22 diluted earnings per share, for the
same period last year. For the year ended December 31, 2005,
earnings were $6.11 million, or $1.07 diluted earnings per share,
up 18.6% over the $5.15 million, or $0.91 diluted earnings per
share, for the twelve months ended December 31, 2004. Record
earnings were attained for both the quarter and the year to date
largely due to increased net interest income and international fees
and a decreased loan loss provision, partially offset by an
increase in operating expenses. Total assets decreased to $526.3
million at December 31, 2005 from $547.7 million at December 31,
2004 due partially to the reduction of temporary investments
resulting from the presence of $20 million of temporary deposits at
the end of last year. The other factor has been the de-leveraging
of the balance sheet in light of the flattening yield curve,
resulting in a decrease in the investment portfolio by $26.7
million and a corresponding reduction in borrowed funds by $31.3
million. However, total loans grew 5.5% over the past twelve months
from $339.2 million to $358.0 million at December 31, 2005.
Non-performing assets have continued to decline over the past
twelve months and totaled $1.2 million, or 0.33% of loans, at
December 31, 2005 compared to $2.8 million, or 0.84% of loans at
the end of last year. Approximately half of the non-performing
assets at December 31, 2005 were guaranteed by the SBA. The
allowance for loan losses totaled $4.6 million, or 1.27% of loans,
at December 31, 2005 compared to $4.5 million, or 1.34% of loans,
one year ago. Despite only a 1% increase in deposits from year-end
2004 to year-end 2005, average deposits increased from $396.4
million in 2004 to $429.6 million in 2005, an increase of 8.4%. In
addition, non-interest bearing deposit balances remained strong
increasing from 24.0% of total deposits last year to 24.8% of
deposits at December 31, 2005. The rising interest rate environment
and the increase in non-interest bearing deposits resulted in net
interest income increasing from $4.88 million for the fourth
quarter of 2004 to $5.52 million for the same period this year. Net
interest margin improved to 4.55% for the fourth quarter of 2005
from 4.04% for the fourth quarter last year. For the year ended
December 31, 2005, net interest income was $21.0 million, up from
$18.6 million for the same period a year ago. The net interest
margin for the twelve months ended December 31, 2005 was 4.31%, up
from 3.97% for the same period last year. Total noninterest income
was $789,000 for the fourth quarter 2005, down from $945,000 for
the fourth quarter last year primarily due to losses on the Bank's
low income housing tax credit investment and interest rate floor
that were both initiated in 2005. For the year ended December 31,
2005, noninterest income has slightly declined from $3.79 million
last year to $3.63 million this year. A 27.6% increase in
international fee income this year was offset by a decline in
deposit fees and the losses on the two new investments mentioned
above.(a) Noninterest expenses decreased from $3.89 million in the
fourth quarter 2004 to $3.62 million for the same period this year.
The decrease was primarily due to the $350,000 customer check fraud
expense recorded in the fourth quarter of last year and the
ultimate $240,000 partial recovery on that loss in the fourth
quarter of this year. For the year, noninterest expenses increased
13.4% to $15.58 million from $13.74 million for last year. The
increase was due to personnel and operating costs of two new
branches opened in the past year and a half, increased resources
for risk management and regulatory compliance efforts, increased
legal expenses and fraud expense for additional claims early in
2005 related to the customer check fraud previously mentioned.
Summit announced in December the signing of a definitive agreement
to purchase Concord Bank, N.A. in Houston, Texas. Concord has
approximately $112 million in assets. That transaction is expected
to close near the end of the first quarter of 2006. In addition,
Summit opened a loan production office proximate to the growing
Asian community in San Diego, California at the beginning of
January, 2006. Chief Executive Officer, Pin Pin Chau, said, "Our
strategy of managing our balance sheet to improve net interest
margin, our focus on asset quality and underwriting prudence in the
face of general relaxation of underwriting standards in the
competitive environment, and our ability to increase international
trade service income by increasing our import and export customer
base, have all paid off for us in 2005. We feel good about Summit's
core earnings as well as the opportunity to expand our foot print
with the Concord Bank, N.A. acquisition. We are confident that
given the fine management team at Concord and their excitement in
joining hands with us to offer the dynamic Houston ethnic market
expanded products and capabilities, Summit can look forward to
another rewarding year in 2006." Summit Bank Corporation is the
parent company of The Summit National Bank, a nationally chartered
full-service community bank specializing in the small business and
international trade finance markets. It currently operates six
branches in the metropolitan Atlanta area and two in the South Bay
area of San Francisco, California. This release contains
forward-looking statements including statements relating to present
or future trends or factors generally affecting the banking
industry and specifically affecting Summit's operations, markets
and products. Without limiting the foregoing, the words "believes,"
"anticipates," "intends," "expects," or similar expressions are
intended to identify forward-looking statements. These
forward-looking statements involve risks and uncertainties. Actual
results could differ materially from those projected for many
reasons, including, without limitation, changing events and trends
that have influenced Summit's assumptions, but that are beyond
Summit's control. These trends and events include (i) changes in
the interest rate environment which may reduce margins, (ii) not
achieving expected growth, (iii) less favorable than anticipated
changes in the international, national and local business
environments and securities markets, (iv) adverse changes in the
regulatory requirements affecting Summit, (v) greater competitive
pressures among financial institutions in Summit's markets and (vi)
greater loan losses than historic levels. Additional information
and other factors that could affect future financial results are
included in Summit's filings with the Securities and Exchange
Commission. -0- *T Selected Financial Information December 31, 2005
(In thousands, except per share data) December 31,
--------------------- % 2005 2004 Change ---------- ---------
------ Summary Balance Sheet: Cash and Short Term Investments $
18,775 $ 37,059 -49.3% Investments 125,187 151,891 -17.6%
Commercial Loans 300,609 282,149 6.5% SBA Loans 56,686 56,376 0.6%
Other Loans 691 680 1.6% Total Loans 357,986 339,205 5.5% Allowance
for Loan Loss (4,555) (4,549) 0.1% Net Loans 353,431 334,656 Other
Assets 28,909 24,102 19.9% Total Assets $ 526,302 $ 547,708 -3.9%
Demand Deposits - Noninterest-Bearing $ 108,601 $ 104,055 4.4% NOW
& MMA 84,031 97,836 -14.1% Savings & CDs 245,600 232,562
5.6% Total Deposits 438,232 434,453 0.9% Borrowed Funds 41,097
72,394 -43.2% Other Liabilities 10,334 6,232 65.8% Stockholders
Equity 36,639 34,629 5.8% Total Liabilities & Stockholders
Equity $ 526,302 $ 547,708 -3.9% Three Months Ended December 31, %
Summary Income Statement: 2005 2004 Change ---------- ----------
------- Interest Income (a) $ 8,335 $ 7,105 17.3% Interest Expense
2,819 2,221 26.9% Net Interest Income (a) 5,516 4,884 12.9%
Provision for Loan Losses 25 175 -85.7% Net Interest Income after
Provision for Loan Loss 5,491 4,709 16.6% Service Charges on
Deposits 330 376 -12.3% International Fee Income (a) 358 333 7.6%
BOLI 118 112 5.2% Other noninterest income/(loss) (17) 124 -113.5%
Total Noninterest Income 789 945 -16.5% Salaries & Benefits
2,092 1,921 8.9% Occupancy 366 293 25.0% Premises & Equipment
419 370 13.3% Other noninterest expense 747 1,307 -42.8% Total
Noninterest Expense 3,624 3,891 -6.8% Income before Tax 2,656 1,763
50.7% Income Tax Expense 783 559 40.1% Net Income $ 1,873 $ 1,204
55.6% Average Balances: Average Assets $ 527,123 $ 518,585 1.6%
Average Earning Assets 485,179 484,005 0.2% Average Total Loans
351,415 339,532 3.5% Average Deposits 436,283 411,117 6.1% Average
Total Funds 480,227 480,949 -0.2% Average Shareholder Equity 35,843
34,810 3.0% Per Share Data: Basic Earnings per Share $ 0.33 $ 0.22
50.0% Diluted Earnings per Share $ 0.33 $ 0.22 50.0% Dividend Per
Share $ 0.10 $ 0.10 0.0% Weighted - Average Shares Outstanding -
Basic 5,694,604 5,690,104 Weighted - Average Shares Outstanding -
Diluted 5,694,604 5,691,284 Common Shares Outstanding 5,694,604
5,690,104 Key Ratios: Return on Average Assets 1.42% 0.93% Return
on Average Shareholder Equity 20.90% 13.84% Yield on Earning Assets
(a) 6.90% 5.89% Cost of Funds (a) 2.35% 1.85% Net Interest Margin
(a) 4.55% 4.04% Noninterest Income as % of Average Assets 0.60%
0.73% Noninterest Expense as % of Average Assets 2.75% 3.00%
Efficiency Ratio 57.49% 66.76% ALLL as % of Total Loans 1.27% 1.34%
Nonperforming Assets as % of Total Loans and ORE 0.33% 0.84% Net
Chargeoffs(Recoveries) as % of Average Loans 0.09% 0.34% Twelve
Months Ended December 31, % Summary Income Statement: 2005 2004
Change ---------- ---------- ------ Interest Income (a) $ 31,261 $
26,828 16.5% Interest Expense 10,274 8,260 24.4% Net Interest
Income (a) 20,987 18,568 13.0% Provision for Loan Losses 539 1,090
-50.6% Net Interest Income after Provision for Loan Loss 20,448
17,478 17.0% Service Charges on Deposits 1,361 1,560 -12.7%
International Fee Income (a) 1,511 1,184 27.6% BOLI 461 437 5.6%
Other noninterest income/(loss) 300 609 -50.7% Total Noninterest
Income 3,633 3,790 -4.1% Salaries & Benefits 8,003 7,161 11.8%
Occupancy 1,359 1,082 25.6% Premises & Equipment 1,698 1,375
23.5% Other noninterest expense 4,523 4,119 9.8% Total Noninterest
Expense 15,583 13,737 13.4% Income before Tax 8,498 7,531 12.8%
Income Tax Expense 2,386 2,378 0.3% Net Income $ 6,112 $ 5,153
18.6% Average Balances: Average Assets $ 528,222 $ 501,766 5.3%
Average Earning Assets 487,455 468,269 4.1% Average Total Loans
341,961 330,531 3.5% Average Deposits 429,559 396,442 8.4% Average
Total Funds 484,758 465,864 4.1% Average Shareholder Equity 35,201
33,705 4.4% Per Share Data: Basic Earnings per Share $ 1.07 $ 0.91
17.6% Diluted Earnings per Share $ 1.07 $ 0.91 17.6% Dividend Per
Share $ 0.40 $ 0.40 0.0% Weighted - Average Shares Outstanding -
Basic 5,694,222 5,686,563 Weighted - Average Shares Outstanding -
Diluted 5,694,222 5,687,303 Common Shares Outstanding 5,694,604
5,690,104 Key Ratios: Return on Average Assets 1.16% 1.03% Return
on Average Shareholder Equity 17.36% 15.29% Yield on Earning Assets
(a) 6.43% 5.74% Cost of Funds (a) 2.12% 1.77% Net Interest Margin
(a) 4.31% 3.97% Noninterest Income as % of Average Assets 0.69%
0.76% Noninterest Expense as % of Average Assets 2.95% 2.74%
Efficiency Ratio 63.30% 61.84% ALLL as % of Total Loans 1.27% 1.34%
Nonperforming Assets as % of Total Loans and ORE 0.33% 0.84% Net
Chargeoffs(Recoveries) as % of Average Loans 0.16% 0.18% (a)
Bankers Acceptances Discount Income has been reclassified from
International Fee income to Interest Income effective this
reporting period. The reclassified amounts totaled $82,000 and
$57,000 for the fourth quarter of 2005 and 2004, respectively, and
$431,000 and $139,000 for the years 2005 and 2004, respectively. *T
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