Summit Bancshares (NASDAQ:SBIT)
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FORT WORTH, Texas, Jan. 23 /PRNewswire-FirstCall/ -- Summit Bancshares, Inc. (NASDAQ:SBIT), a bank holding company for Summit Bank, N.A., today reported net income of $3,516,000, or $0.28 per diluted common share for the fourth quarter of 2005, compared to $2,919,000, or $0.23 per diluted common share, for the comparable 2004 period, a 21.7% increase. Return on average assets and return on average shareholders' equity for the fourth quarter were 1.29% and 17.29%, respectively, compared to 1.18% and 15.58%, respectively, for the corresponding 2004 period.
For the year ended December 31, 2005, net income totaled $13,176,000, or $1.04 per diluted common share, compared to $10,762,000, or $0.85 per diluted common share, for the year of 2004, a 22.4% increase. Return on average assets and return on average shareholders' equity were 1.28% and 16.89%, respectively, for the year ended December 31, 2005, compared to 1.16% and 15.04%, respectively, for the year of 2004.
Philip E. Norwood, Chairman, President and Chief Executive Officer, stated, "We are very pleased with the earnings and growth performance for the fourth quarter and for the year of 2005. The Summit Bancshares/Summit Bank team of employees has worked very hard to make this such a successful year and they are to be commended for their efforts. The team and I are looking forward to a very productive and exciting 2006."
Net interest income (tax equivalent) of $12.1 million for the fourth quarter 2005 improved $1.8 million, or 17.8%, over fourth quarter 2004. Average total interest earning assets increased 10.0% from fourth quarter 2004 to $1.0 billion for fourth quarter 2005. The net interest margin, on a taxable-equivalent basis, on average total interest earning assets increased 30 basis points to 4.71% for the fourth quarter 2005 compared to the corresponding 2004 quarter.
For the year ended December 31, 2005, net interest income totaled $44.4 million, reflecting a $6.9 million, or 18.3%, increase from the year of 2004. This increase resulted primarily from an increase of 11.3% in average total interest earning assets to $968 million for the year of 2005. Also, the net interest margin, on a taxable-equivalent basis, on average total interest earning assets increased 27 basis points to 4.58% for the year ended December 31, 2005 compared to the prior year, reflecting rising interest rates in the market. Net interest margin has increased each quarter of 2005 over that of the immediately preceding quarter, again reflecting rising interest rates.
A provision for loan losses of $340,000 for the fourth quarter 2005 was 17.2% greater than the provision for loan losses of $290,000 for the fourth quarter of 2004 primarily reflecting loan growth. Net charge-offs totaled $263,000 for the fourth quarter 2005, representing net charge-offs to average loans for the quarter of 0.03%. As of December 31, 2005, the allowance for loan losses as a percentage of total loans was 1.45%, the same rate as of December 31, 2004. For the year ended December 31, 2005, the provision for loan losses totaled $1,105,000, a $685,000 decrease compared to the provision for the prior year primarily driven by lack of loan charge-offs in 2005. Net charge-offs for the year were only $84,000, or 0.01%, of average loans.
Non-interest income of $1,913,000 for fourth quarter 2005 increased 5.6% over fourth quarter 2004. Service charges on deposits amounted to $974,000 for fourth quarter 2005, a decrease of 10.1% primarily due to higher interest earnings credits paid on commercial deposit accounts that are under account analysis for charges. Included in the increase for other income of $212,000 for the fourth quarter of 2005 over the fourth quarter of 2004 were the following: a) an increase of $149,000 in fee income from investment services due to the addition of Summit Financial Partners in March; b) an increase of $53,000 in fees for trust services partly due to the addition of these services in May 2004; and c) an increase in insurance commissions of $22,000. These increases were somewhat offset by a decrease in mortgage origination fees of $23,000 and a decrease of $46,000 in recovery of interest income from loans charged-off in prior years.
For the year ended December 31, 2005, non-interest income totaled $8,004,000, reflecting an increase of $762,000, or 10.5%, over the year of 2004. Service charges on deposits declined $310,000, or 7.3%, for the year of 2005 compared to the year 2004 for the same reason noted above. Other income increased $1,104,000, or 37.3%. Contributing to this increase were increases in a) investment services fees of $454,000; b) insurance commissions of $56,000; c) trust service fees of $175,000; and d) merchant card service fees of $65,000. Also, in 2005 the increase in other income reflects a gain on sale of land previously held for expansion of $247,000 and a rebate of $211, 000 on a processing contract. In comparison, in 2004 there was a gain of $167,000 on the sale of an asset previously carried in Other Assets and a gain of $37,000 on the partial sale of land that had been held for future branch expansion.
Non-interest expense for the fourth quarter increased $1,009,000 over the same quarter of the previous year, a 14.0% increase. This increase includes the impacts of: a) staff additions to support the Company's continued growth; b) the inclusion in the fourth quarter of this year of the expense of Summit Financial Partners which was acquired in March 2005; c) loss of tenant rents at one bank facility along with an overall increase in utilities expense at all the locations; c) an increase in business development expense; and e) increased expenses for healthcare benefits for employees and for the annual incentive bonus. These increases were partially offset by reduced expenses, compared to the fourth quarter of the prior year, for compliance with Sarbanes Oxley regulatory requirements.
Non-interest expense for the year of 2005 was $30.7 million and reflected an increase of $4.5 million, or 17.1%. In considering this increase it should be noted that the acquisition of Arlington National Bank (ANB) was made in May of 2004 and Summit Financial Partners (SFP) was acquired in March 2005, both of these acquisitions would have a comparative impact on increases in personnel expense and occupancy and equipment expense for the year of 2005. Reflected in the increase in expenses was a 19.2% increase in personnel expenses and a 15.8% increase in occupancy and equipment expenses. Approximately 75% of the increase in personnel expense was attributed to salary and bonuses and reflects the addition of personnel, including ANB and SFP. The increase in occupancy and equipment expense also reflects ANB and SFP plus the loss of a tenant in September 2005 at one of the bank facilities. In Other Expenses there was an increase of $812,000, or 12.7%, which included increases in business development expense, professional fees, and miscellaneous other expenses.
At December 31, 2005, loans totaling $3,000,000 were on non-accrual status and represented 0.39% of total loans outstanding. The allowances for loan losses represented 374% of the non-accrual loans. The dollar amount of non-accrual loans was the lowest of the year at December 31, 2005.
Following the end of the year, a classified borrower with outstanding loan balances of approximately $9 million notified the Company that it was experiencing further financial distress. This borrower's credits had been identified by the Bank as weaker credits for approximately a year. As of December 31, 2005 the borrower was current as to principal and interest and was current as to loan terms. The borrower has asked for an extension of payments of principal for a period yet to be determined. Any loss on this credit is subject to many different factors and will not be determined for some time. Based on current information provided by the borrower as to collateral, the Company believes the allowance for loan losses is sufficient to cover the exposure of loss, if any, on the credit.
The Company's loans were $775 million at December 31, 2005, an increase of $72 million, or 10.3%, from December 31, 2004. Deposits increased $87 million in 2005 to $879 million at December 31, 2005, an increase of 10.9%. At December 31, 2005 shareholders' equity was $81 million or a book value per share of $6.54.
Summit files annual, quarterly and special reports, proxy statements and other information with the SEC. Investors may read and copy any of these reports, statements and other information at the SEC's public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Investors should call the SEC at 1-800-SEC-0330 for further information on the public reference room. The reports, statements, and other information filed by Summit with the SEC are also available free at the SEC's web site at http://www.sec.gov/ . You can also obtain a free copy of these reports, statements and other information from Summit's web site at http://www.summitbank.net/ .
The Company will host a conference call Tuesday, January 24, 2006 at 10:30 a.m. (CT) to discuss the Company's performance for the quarter and year ended December 31, 2005. To participate, please call (800)810-0924 and enter confirmation code 1674375. If you are unable to participate, an audio playback of the call will be available starting Tuesday, January 24, 2006 at 3:00 p.m. (CT) through midnight February 7, 2006 (CT) by calling (888)203-1112 and entering code 1674375.
The 2006 Annual Meeting of Shareholders will be held on April 18, 2006 at 3:30 p.m. (CT) at Summit Bancshares, Inc. Corporate Headquarters, 3880 Hulen Street, Suite 300, Fort Worth, Texas.
Certain statements contained in this press release that are not historical in nature, including statements regarding the Company's and/or management's intentions, strategies, beliefs, expectations, representations, plans, projections, or predictions of the future, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provisions for forward-looking statements contain in such Act. We are including this statement for purposes of invoking these safe harbor provisions. Forward-looking statements are based on assumptions involving certain known and unknown risks and uncertainties, many of which are beyond the Company's control, and the other important factors that could cause actual results, performance or achievements to differ materially from the expectations expressed or implied by such forward-looking statements. These risks and uncertainties are listed from time to time in the Company's filings with the Securities and Exchange Commission, including but not limited to, those set forth under the heading "Factors That May Affect Future Results" in the Company's Annual Report on Form 10-K for the year ended December 31, 2004.
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands, except per share data)
Quarter Ended Twelve Months Ended
December 31, % December 31, %
EARNINGS SUMMARY 2005 2004 Change 2005 2004 Change
Interest income $16,734 $12,995 28.8% $59,961 $46,857 28.0%
Interest expense 4,709 2,782 69.3% 15,768 9,506 65.9%
Net interest income 12,025 10,213 17.7% 44,193 37,351 18.3%
Provision for
loan losses 340 290 17.2% 1,105 1,790 -38.3%
Service charges
on deposits 974 1,084 -10.1% 3,938 4,248 -7.3%
Gain on sale of
investment securities --- --- --- --- 32 -100.0%
Other income 939 727 29.2% 4,066 2,962 37.3%
Salaries and benefits
expense 4,981 4,160 19.7% 18,277 15,329 19.2%
Occupancy and equipment
expense 1,431 1,237 15.7% 5,175 4,467 15.8%
Other expense 1,799 1,805 -0.3% 7,206 6,394 12.7%
Earnings before
income taxes 5,387 4,532 18.9% 20,434 16,613 23.0%
Provision for
income taxes 1,871 1,613 16.0% 7,258 5,851 24.0%
Net earnings $3,516 $2,919 20.5% $13,176 $10,762 22.4%
Basic earnings
per share $0.28 $0.23 21.7% $1.06 $0.87 21.8%
Basic weighted average
shares outstanding 12,442 12,349 12,414 12,326
Diluted earnings
per share $0.28 $0.23 21.7% $1.04 $0.85 22.4%
Diluted weighted average
shares outstanding 12,723 12,714 12,710 12,679
Average for Quarter Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
BALANCE SHEET SUMMARY 2005 2005 2005 2005 2004
Total loans $753,311 $735,109 $723,535 $706,902 $694,177
Total investment
securities 252,508 226,441 216,825 220,161 226,530
Earning assets 1,017,095 974,844 945,251 932,258 924,557
Total assets 1,082,477 1,038,628 1,007,680 993,154 984,814
Noninterest bearing
deposits 259,062 242,849 239,127 225,519 235,846
Interest bearing
deposits 608,863 590,390 558,905 559,853 560,341
Total deposits 867,925 833,239 798,032 785,372 796,187
Other borrowings 128,368 121,435 128,684 128,174 109,713
Shareholders' equity 80,684 79,053 76,575 75,602 74,543
Average for Twelve Months
Ended December 31, %
BALANCE SHEET SUMMARY 2005 2004 Change
Total loans $729,856 $647,686 12.7%
Total investment securities 229,065 207,663 10.3%
Earning assets 967,615 869,652 11.3%
Total assets 1,030,752 924,202 11.5%
Noninterest bearing deposits 241,735 212,482 13.8%
Interest bearing deposits 579,667 523,652 10.7%
Total deposits 821,402 736,134 11.6%
Other borrowings 126,651 112,592 12.5%
Shareholders' equity 77,995 71,577 9.0%
Ending Balance
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
BALANCE SHEET SUMMARY 2005 2005 2005 2005 2004
Total loans $774,886 $754,153 $721,161 $716,714 $702,619
Total investment
securities 256,842 236,544 214,750 214,222 223,351
Total earning assets 1,032,620 1,006,368 945,661 939,934 930,990
Allowance for loan
losses (11,208) (11,131) (10,798) (10,519) (10,187)
Premises and equipment 16,515 15,620 15,563 15,462 15,749
Total assets 1,099,735 1,074,261 1,008,475 999,914 989,117
Noninterest bearing
deposits 263,027 258,644 241,643 232,556 235,399
Interest bearing
deposits 615,749 607,384 562,846 565,002 556,865
Total deposits 878,776 866,028 804,489 797,558 792,264
Other borrowings 134,231 123,892 122,203 124,007 118,094
Total liabilities 1,018,402 994,534 930,891 925,477 914,627
Shareholders' equity 81,333 79,727 77,584 74,437 74,490
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
NONPERFORMING ASSETS 2005 2005 2005 2005 2004
Nonaccrual loans $3,000 $4,989 $3,372 $3,294 $2,587
Restructured loans --- --- --- --- ---
Other real estate &
foreclosed assets --- --- --- --- ---
Total nonperforming
assets $3,000 $4,989 $3,372 $3,294 $2,587
Total nonperforming assets
as a percentage of loans
and foreclosed assets 0.39% 0.66% 0.47% 0.46% 0.37%
Accruing loans past due
90 days or more $--- $2,178 $36 $--- $18
Quarter Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
ALLOWANCE FOR LOAN LOSSES 2005 2005 2005 2005 2004
Balance at beginning of
period $11,131 $10,798 $10,519 $10,187 $10,079
Loans charged off (286) (25) (147) (84) (293)
Loan recoveries 23 43 201 191 111
Net (charge-offs)
recoveries (263) 18 54 107 (182)
Provision for loan losses 340 315 225 225 290
Balance at end of period $11,208 $11,131 $10,798 $10,519 $10,187
Allowance for loan losses
as a percentage of
total loans 1.45% 1.48% 1.50% 1.47% 1.45%
Allowance for loan losses
as a percentage of
nonperforming loans 373.66% 223.11% 320.23% 319.34% 393.78%
Net charge-offs
(recoveries) as a
percentage of average loans 0.03% 0.00% -0.01% -0.02% 0.03%
Provision for loan losses
as a percentage
of average loans 0.05% 0.04% 0.03% 0.03% 0.04%
Quarter Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
SELECTED RATIOS 2005 2005 2005 2005 2004
Return on average assets
(annualized) 1.29% 1.32% 1.27% 1.23% 1.18%
Return on average equity
(annualized) 17.29% 17.34% 16.71% 16.16% 15.58%
Average shareholders' equity
to average assets 7.45% 7.61% 7.60% 7.63% 7.57%
Yield on earning assets 6.55% 6.32% 6.12% 5.83% 5.61%
Cost of interest bearing
funds 2.53% 2.38% 2.13% 1.85% 1.65%
Net interest margin (tax
equivalent) 4.71% 4.58% 4.57% 4.47% 4.41%
Efficiency ratio 58.70% 56.84% 59.07% 59.69% 59.71%
End of period book value per
common share $6.54 $6.41 $6.25 $6.01 $6.03
End of period common shares
outstanding 12,444 12,429 12,421 12,390 12,359
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
Three Months Ended
December 31, 2005 December 31, 2004
Average Average
YIELD ANALYSIS Balance Interest Yield Balance Interest Yield
Interest Earning Assets:
Federal funds sold &
due from time $11,276 $110 3.87% $3,850 $31 3.18%
Investment securities
(taxable) 241,656 2,369 3.92% 218,512 1,974 3.61%
Investment securities
(tax-exempt) 10,852 147 5.42% 8,018 104 5.20%
Loans 753,311 14,159 7.46% 694,177 10,921 6.26%
Total Interest
Earning Assets 1,017,095 16,785 6.55% 924,557 13,030 5.61%
Noninterest Earning
Assets:
Cash and due from banks 31,390 29,282
Other assets 45,173 41,140
Allowance for loan
losses (11,181) (10,165)
Total Noninterest
Earning Assets 65,382 60,257
Total Assets $1,082,477 $984,814
Interest Bearing
Liabilities:
Transaction and money
market accounts $249,910 1,028 1.63% $239,046 690 1.15%
Savings deposits 170,004 918 2.14% 168,191 577 1.36%
Certificates and
other time deposits 188,949 1,548 3.25% 153,104 935 2.43%
Other borrowings 128,368 1,215 3.76% 109,713 580 2.10%
Total Interest Bearing
Liabilities 737,231 4,709 2.53% 670,054 2,782 1.65%
Noninterest Bearing
Liabilities:
Demand deposits 259,062 235,846
Other liabilities 5,500 4,371
Shareholders' equity 80,684 74,543
Total Noninterest
Bearing Liabilities 345,246 314,760
Total Liabilities
and Shareholders'
Equity $1,082,477 $984,814
Net Interest Income
and Margin (tax
equivalent) $12,076 4.71% $10,248 4.41%
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
Twelve Months Ended
December 31, 2005 December 31, 2004
Average Average
YIELD ANALYSIS Balance Interest Yield Balance Interest Yield
Interest Earning Assets:
Federal funds sold &
due from time $8,694 $292 3.36% $14,303 $170 1.19%
Investment securities
(taxable) 219,751 8,281 3.77% 200,383 7,409 3.70%
Investment securities
(tax-exempt) 9,314 496 5.33% 7,280 395 5.43%
Loans 729,856 51,064 7.00% 647,686 39,024 6.03%
Total Interest
Earning Assets 967,615 60,133 6.21% 869,652 46,998 5.40%
Noninterest Earning Assets:
Cash and due from banks 30,620 28,620
Other assets 43,296 35,281
Allowance for loan
losses (10,779) (9,351)
Total Noninterest
Earning Assets 63,137 54,550
Total Assets $1,030,752 $924,202
Interest Bearing
Liabilities:
Transaction and money
market accounts $237,415 3,428 1.44% $232,155 2,518 1.08%
Savings deposits 168,507 3,124 1.85% 149,510 1,832 1.23%
Certificates and
other time deposits 173,745 5,111 2.94% 141,987 3,327 2.34%
Other borrowings 126,651 4,105 3.24% 112,592 1,829 1.62%
Total Interest
Bearing Liabilities 706,318 15,768 2.23% 636,244 9,506 1.49%
Noninterest Bearing
Liabilities:
Demand deposits 241,735 212,482
Other liabilities 4,704 3,899
Shareholders' equity 77,995 71,577
Total Noninterest
Bearing Liabilities 324,434 287,958
Total Liabilities and
Shareholders'
Equity $1,030,752 $924,202
Net Interest Income
and Margin (tax
equivalent) $44,365 4.58% $37,492 4.31%
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands, except per share data)
December 31, December 31,
LOAN PORTFOLIO 2005 % 2004 %
Commercial and industrial $277,827 35.9% $261,571 37.2%
Real estate:
Commercial 260,736 33.6% 224,720 32.0%
Residential 91,183 11.8% 82,839 11.8%
Construction and development 106,227 13.7% 93,558 13.3%
Consumer 38,913 5.0% 39,931 5.7%
Total loans (gross) 774,886 100.0% 702,619 100.0%
Unearned discounts --- 0.0% --- 0.0%
Total loans (net) $774,886 100.0% 702,619 100.0%
Dec. 31, Dec. 31,
REGULATORY CAPITAL DATA 2005 2004
Tier 1 Capital $85,377 $76,435
Tier 1 Ratio 10.64% 10.14%
Total Capital (Tier 1 + Tier 2) $95,240 $85,863
Total Capital Ratio 11.89% 11.40%
Total Risk-Adjusted Assets $802,309 $753,509
Tier 1 Leverage Ratio 7.97% 7.85%
Dec. 31, Dec. 31,
OTHER DATA 2005 2004
Full Time Equivalent Employees
(FTE's) 267 254
Stock Price Range
(For the Quarter Ended):
High $19.75 $18.95
Low $16.78 $16.33
Close $17.98 $18.75
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DATASOURCE: Summit Bancshares, Inc.
CONTACT: Bob G. Scott, COO of Summit Bancshares, Inc., +1-817-877-2660
Web site: http://www.summitbank.net/