Summit Bank (NASDAQ:SBGA)
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Summit Bank Corporation (SBGA) (NASDAQ: SBGA), parent
company of The Summit National Bank, announces first quarter 2006
earnings of $1.41 million, or $0.25 diluted earnings per share, up
7.9% over the $1.31 million, or $0.23 diluted earnings per share, for
the first quarter last year. Net income for the first quarter, 2006
represented a return on average shareholders' equity of 15.20%, an
increase over the 15.06% for the first quarter of last year. The
increase in earnings was attained largely due to increased net
interest income resulting from improvement in net interest margin and
loan growth.
Total assets increased to $553.7 million at March 31, 2006 from
$525.9 million at December 31, 2005 and $522.3 million at March 31,
2005 primarily due to loan growth and $17.6 million of net proceeds
from the Company's recently completed common stock offering. Total
loans grew 8.5% over the past twelve months from $335.0 million at
March 31, 2005 to $363.4 million at March 31, 2006. During the first
quarter, loans grew $5.4 million, or 1.5%. Non-performing assets at
March 31, 2006 remained flat compared to year end 2005 at $1.2
million, or 0.32% of loans, but have declined from $2.4 million, or
0.72% of loans, at March 31, 2005. Approximately half of the
non-performing assets at March 31, 2006 were fully guaranteed by the
SBA. The allowance for loan losses totaled $4.8 million, or 1.33% of
loans, at March 31, 2006 compared to $4.6 million, or 1.27% of loans,
at December 31, 2005 and $4.4 million, or 1.31% of loans, one year
ago.
Deposits increased from $435.0 million at March 31, 2005 to $460.9
million at March 31, 2006, an increase of 5.9%. During the first
quarter, deposits grew $22.6 million, or 5.2%. Borrowed funds have
declined from $44.1 million at March 31, 2005 to $40.7 million at
December 31, 2005 and $25.9 million at March 31, 2006 as part of the
deleveraging strategy the Company has deployed. Shareholders' equity
has increased from $34.1 million at March 31, 2005 to $36.6 million at
December 31, 2005 and $54.9 million at March 31, 2006 due to earnings
and the common stock offering, the net proceeds of which were used on
April 1, 2006 to fund the $23.7 million Concord Bank, N.A.
acquisition.
The rising interest rate environment over the past year resulted
in net interest income increasing from $5.04 million for the first
quarter of 2005 to $5.49 million for the same period this year. Net
interest margin improved to 4.50% for the first quarter of 2006 from
4.08% for the same quarter last year. For the fourth quarter ended
December 31, 2005, net interest income was $5.52 million, representing
a net interest margin of 4.55%.
Total noninterest income was $796,000 for the first quarter of
2006, down from $933,000 for the first 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 after the first quarter
of 2005. The former was offset by federal income tax credit benefit
and the latter has only a remaining $61,000 book value should the
instrument remain ineffective going forward. Noninterest income for
the fourth quarter of 2005 was $789,000.
Noninterest expenses increased 5.5% from $3.87 million in the
first quarter of 2005 to $4.09 million for the same period this year.
The increase was primarily due to increased salaries and benefits and
occupancy and equipment partially due to one new branch opened in the
past year and increased temporary staffing and accrued incentive
expense. Noninterest expense for the fourth quarter of 2005 was only
$3.62 million primarily due to a $240,000 fourth quarter recovery on a
2004 loss.
Summit Bank completed the purchase of Concord Bank, N.A. in
Houston, Texas on April 1, 2006. Concord had approximately $120
million in assets, $96 million in loans and $108 million in deposits
at the closing date. The integration of Concord is presently taking
place and the results of the combined banks will be reported at the
end of the second quarter.
Chief Executive Officer, Pin Pin Chau, said, "We are pleased with
the result of the common stock offering and we believe that the
proceeds have been applied to a good use which will reward all of our
shareholders. The integration of Concord with Summit has been very
smooth thus far and we anticipate a very effective combination of two
solid organizations. We can look forward to Concord's continued
success in the vibrant Houston market."
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 five branches in the metropolitan
Atlanta area and two in the South Bay area of San Francisco,
California. Concord Bank now operates as a division of Summit Bank in
one location in Houston, Texas. Summit also operates a loan production
office in San Diego, California and a representative office in
Shanghai, China.
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, (vi) greater loan losses than historic levels, a
(vii) difficulties in integrating the operations of Concord Bank, N.A.
with those of Summit, and (viii) difficulties in expanding into a new
geographic market. Additional information and other factors that could
affect future financial results are included in Summit's Annual Report
on Form 10-K and its filings with the Securities and Exchange
Commission.
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Selected Financial Information
March 31, 2006
(In thousands, except per share data)
March 31, December 31,
--------------------- -------------
%
2006 2005 Change 2005
---------- --------- ------- --------
Summary Balance Sheet:
Cash and Short Term
Investments $ 41,513 $ 18,408 125.5% $ 18,775
Investments 123,871 144,494 -14.3% 125,187
Commercial Loans 304,355 278,336 9.3% 300,609
SBA Loans 58,101 55,657 4.4% 56,686
Other Loans 925 1,047 -11.7% 691
Total Loans 363,381 335,040 8.5% 357,986
Allowance for Loan Loss (4,848) (4,373) 10.9% (4,555)
Net Loans 358,533 330,667 353,431
Other Assets 29,825 28,700 3.9% 28,529
Total Assets $ 553,742 $ 522,270 6.0% $525,922
Demand Deposits -
Noninterest-Bearing $ 104,542 $ 112,135 -6.8% $108,600
NOW & MMA 80,432 86,175 -6.7% 84,032
Savings & CDs 275,886 236,700 16.6% 245,600
Total Deposits 460,860 435,010 5.9% 438,232
Borrowed Funds 25,922 44,143 -41.3% 40,717
Other Liabilities 12,067 9,010 33.9% 10,334
Stockholders Equity 54,893 34,107 60.9% 36,639
Total Liabilities &
Stockholders Equity $ 553,742 $ 522,270 6.0% $525,922
Three Months Ended
March 31,
%
Summary Income Statement: 2006 2005 Change
---------- -----------------
Interest Income $ 8,760 $ 7,336 19.4%
Interest Expense 3,268 2,300 42.1%
Net Interest Income 5,492 5,036 9.0%
Provision for Loan Losses 300 264 13.6%
Net Interest Income after
Provision for Loan Loss 5,192 4,772 8.8%
Service Charges on Deposits 325 342 -4.9%
International Fee Income 356 332 7.3%
BOLI 121 122 -0.6%
Other noninterest
income/(loss) (6) 137 -104.7%
Total Noninterest Income 796 933 -14.6%
Salaries & Benefits 2,240 2,000 12.0%
Occupancy 356 298 19.3%
Premises & Equipment 448 397 12.8%
Other noninterest expense 1,042 1,178 -11.5%
Total Noninterest Expense 4,086 3,873 5.5%
Income before Tax 1,902 1,832 3.9%
Income Tax Expense 493 526 -6.2%
Net Income $ 1,409 $ 1,306 7.9%
Average Balances:
Average Assets $ 530,427 $ 531,437 -0.2%
Average Earning Assets 487,620 494,221 -1.3%
Average Total Loans 361,485 340,292 6.2%
Average Deposits 447,307 437,228 2.3%
Average Total Funds 482,914 492,111 -1.9%
Average Shareholder Equity 37,088 34,689 6.9%
Per Share Data:
Basic Earnings per Share $ 0.25 $ 0.23 8.7%
Diluted Earnings per Share $ 0.25 $ 0.23 8.7%
Dividend Per Share $ 0.10 $ 0.10 0.0%
Weighted - Average Shares
Outstanding - Basic 5,708,493 5,693,054
Weighted - Average Shares
Outstanding - Diluted 5,710,724 5,699,227
Common Shares Outstanding 6,944,604 5,694,604
Key Ratios:
Return on Average Assets 1.06% 0.98%
Return on Average
Shareholder Equity 15.20% 15.06%
Yield on Earning Assets 7.21% 5.95%
Cost of Funds 2.71% 1.87%
Net Interest Margin 4.50% 4.08%
Noninterest Income as % of
Average Assets 0.60% 0.70%
Noninterest Expense as % of
Average Assets 3.08% 2.92%
Efficiency Ratio 64.98% 64.92%
ALLL as % of Total Loans 1.33% 1.31%
Nonperforming Assets as % of
Total Loans and ORE 0.32% 0.72%
Net Chargeoffs(Recoveries)
as % of Average Loans 0.01% 0.52%
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