Summit Bancshares (NASDAQ:SBIT)
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Summit Bancshares Reports Second Quarter 2005 Earnings
FORT WORTH, Texas, July 18 /PRNewswire-FirstCall/ -- Summit Bancshares, Inc.
(NASDAQ:SBIT), a community-oriented bank holding company in Fort Worth,
reported second quarter earnings today. Philip E. Norwood, Chairman, President
and Chief Executive Officer stated, "We are pleased to report a positive
increase in earnings per share of 19.0% for the second quarter over earnings
per share for the same quarter of last year. The increase in market interest
rates that began a year ago has contributed significantly to this increase in
earnings."
He further stated, "Increases in the average balances of loans and deposits for
the second quarter of 2005 over the second quarter of the prior year were 12.5%
and 9.4%, respectively. These positive increases also contributed to the
overall earnings increase."
Results of Operations
For the quarter ended June 30, 2005, net income was $3,191,000 compared to
$2,596,000 for the same period in 2004. Net income per diluted share was $0.25
for the three months ended June 30, 2005, compared to $0.21 for the three
months ended June 30, 2004. All prior period per share data has been restated
for the two-for-one stock split that was effective December 31, 2004. Return on
average assets and return on average shareholders' equity for the second
quarter of 2005 were 1.27% and 16.71%, respectively. The Company's average
shareholders' equity-to-assets ratio was 7.6% for the quarter ended June 30,
2005.
Net income for the six months ended June 30, 2005 was $6,204,000 or $0.49 per
diluted share, compared to $5,047,000, or $0.40 per diluted share for the same
period last year, a 22.5% increase. Return on average assets and return on
average shareholders' equity for the six months ended June 30, 2005 were 1.25%
and 16.44%, respectively.
Financial Results
Net interest income (tax equivalent) for the second quarter of 2005 was $10.8
million compared to $9.1 million in the second quarter of last year, an 18.7%
increase. The increase reflects the inclusion of Arlington National Bank's
financial results for two months in the second quarter of 2004 versus three
months for the second quarter of 2005. Arlington National Bank was acquired
effective May 1, 2004. The net interest margin increased to 4.57% for the
second quarter of 2005 compared to 4.18% for the second quarter of the prior
year. The Company believes it is somewhat more sensitive to market interest
rate changes than other community banks due to its heavier commercial lending
focus. Since late June 2004, the Federal Reserve has increased the target rate
for Federal Funds by 225 basis points; and during this period, the prime
lending rate has increased from 4.00% to 6.25%. This increase in the prime
lending rate is reflected in an 89 basis point increase in the Company's yield
on earning assets and a 98 basis point increase in the yield on loans between
the second quarter of 2004 and the second quarter of 2005. The Company,
however, experienced an increase in the cost of interest bearing liabilities of
71 basis points during the same period.
The current rising interest rate environment also has had a positive impact on
net interest income for that portion of earning assets supported by the
Company's non-interest bearing deposits. For the second quarter of 2005
non-interest bearing deposits averaged 30.0% of total deposits. As the
Company's interest earning assets reprice to reflect the increased interest
rates in the market already experienced and if interest rates continue to rise
the Company believes that its interest rate sensitive position will increase
earnings. However, earnings may be somewhat impacted if rates on deposit and
other interest bearing liabilities increase significantly faster than interest
rates on earning assets.
Non-interest income increased $312,000 or 18.1% for the second quarter of 2005
compared to the same quarter in the prior year with positive increases in
merchant card income and investment service fees which were primarily due to
the acquisition in March 2005 of the investment group Dignum Financial
Services. In addition, in the second quarter of 2005, the Company realized a
gain of $169,000 on the sale of student loans. Growth of non-interest income
continues to be one of the areas of the Company's focus.
Non-interest expenses for the second quarter increased $1,208,000 or 19.0% over
the same quarter of the previous year. This increase includes the impacts of:
(a) the expenses of the Arlington locations being included in the Company's
financial results an additional month versus the same quarter last year; (b)
the inclusion in the second quarter of 2005 of the expenses of Dignum Financial
Services; (c) the expenses incurred in the new Hulen Motor Bank facility and
the permanent office for the Euless Branch, both of which were occupied in the
fourth quarter of 2004; and (d) certain staff additions in lending and support
functions.
The provision for loan losses was $225,000 in the second quarter of 2005. This
was a decrease of $175,000 over the same quarter last year. In the second
quarter of 2005, the Company had net loan recoveries of $54,000. The Allowance
for Loan Losses as a percent of outstanding loans was 1.50% (or 1.53% when
loans are reflected net of the guaranteed portion of SBA loans and guaranteed
student loans, which management believes is a more useful number because of the
loan guarantees) at June 30, 2005 as compared to 1.46% at the end of the second
quarter of 2004. For the first six months of 2005, the Company recorded net
recoveries of previously charged-off loans of $161,000.
Non-performing assets totaled $3.4 million ($2.0 million net of principal
guaranteed by the SBA), or 0.47% of loans and foreclosed assets at June 30,
2005, compared to $3.3 million, or 0.49% of loans and foreclosed assets, at
June 30, 2004. The Allowance for Loan Losses was 317% of non- performing loans
at June 30, 2005. The Company continues to maintain favorable measures of
asset quality.
The Company's loans were $721 million at June 30, 2005, an increase of $48
million, or 7.2%, from June 30, 2004. Deposits increased over the same period
from $776 million to $804 million, an increase of $28 million, or 3.7%.
Shareholders' equity at June 30, 2005 was $77.6 million.
The Company will host a conference call Tuesday, July 19th at 10:30 a.m. (CT).
To access the live call, please call (800) 289-0730 and enter code 1504863. A
toll free replay of the call will be available for two weeks beginning at 3:00
p.m. (CT), July 19, 2005 through midnight, August 2, 2005. You may access this
replay by calling (888) 203-1112 and entering code 1504863. Additional
information regarding the Company is available on the Company's website at
http://www.summitbank.net/ .
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 Six Months Ended
June 30, % June 30, %
EARNINGS SUMMARY 2005 2004 Change 2005 2004 Change
Interest income $14,378 $11,302 27.2% $27,751 $21,501 29.1%
Interest expense 3,656 2,274 60.8% 6,796 4,190 62.2%
Net interest income 10,722 9,028 18.8% 20,955 17,311 21.1%
Provision for loan
losses 225 400 -43.8% 450 1,005 -55.2%
Service charges on
deposits 990 1,078 -8.2% 1,972 1,984 -0.6%
Gain on sale of
investment securities --- --- 0.0% --- --- 0.0%
Other income 1,045 645 62.0% 1,943 1,306 48.8%
Salaries and benefits
expense 4,448 3,772 17.9% 8,717 7,140 22.1%
Occupancy and
equipment expense 1,231 1,117 10.2% 2,433 2,050 18.7%
Other expense 1,879 1,461 28.6% 3,660 2,690 36.1%
Earnings before income
taxes 4,974 4,001 24.3% 9,610 7,716 24.5%
Provision for income
taxes 1,783 1,405 26.9% 3,406 2,669 27.6%
Net earnings $3,191 $2,596 22.9% $6,204 $5,047 22.9%
Basic earnings per
share $0.26 $0.21 23.8% $0.50 $0.41 22.0%
Basic weighted average
shares outstanding 12,418 12,320 12,398 12,312
Diluted earnings per
share $0.25 $0.21 19.0% $0.49 $0.40 22.5%
Diluted weighted
average shares
outstanding 12,734 12,638 12,726 12,664
Average for Quarter Ended
June 30, March 31, Dec. 31, Sept. 30, June 30,
BALANCE SHEET SUMMARY 2005 2005 2004 2004 2004
Total loans $723,535 $706,902 $694,177 $678,915 $642,935
Total investment
securities 216,825 220,161 226,530 218,831 196,972
Earning assets 945,251 932,258 924,557 914,595 871,084
Total assets 1,007,680 993,154 984,814 976,911 925,830
Noninterest bearing
deposits 239,127 225,519 235,846 226,462 207,815
Interest bearing
deposits 558,905 559,853 560,341 557,329 521,812
Total deposits 798,032 785,372 796,187 783,791 729,628
Other borrowings 128,684 128,174 109,713 118,083 121,193
Shareholders' equity 76,575 75,602 74,543 71,038 70,583
Average for Six Months
Ended June 30, %
BALANCE SHEET SUMMARY 2005 2004 Change
Total loans $715,265 $608,398 17.6%
Total investment securities 218,484 192,480 13.5%
Earning assets 938,791 819,179 14.6%
Total assets 1,000,457 866,936 15.4%
Noninterest bearing deposits 232,361 193,603 20.0%
Interest bearing deposits 559,376 488,083 14.6%
Total deposits 791,737 681,685 16.1%
Other borrowings 128,430 111,271 15.4%
Shareholders' equity 76,091 70,350 8.2%
Ending Balance
June 30, March 31, Dec. 31, Sept. 30, June 30,
BALANCE SHEET SUMMARY 2005 2005 2004 2004 2004
Total loans $721,161 $716,714 $702,619 $689,906 $672,686
Total investment
securities 214,750 214,222 223,351 219,264 214,991
Total earning assets 945,661 939,934 930,990 928,638 905,228
Allowance for loan
losses (10,798) (10,519) (10,187) (10,079) (9,844)
Premises and equipment 15,563 15,462 15,749 15,643 15,145
Total assets 1,008,475 999,914 989,117 990,406 969,708
Noninterest bearing
deposits 241,643 232,556 235,399 232,586 218,343
Interest bearing
deposits 562,846 565,002 556,865 558,938 557,347
Total deposits 804,489 797,558 792,264 791,524 775,690
Other borrowings 122,203 124,007 118,094 121,355 121,785
Total liabilities 930,891 925,477 914,627 916,858 901,009
Shareholders' equity 77,584 74,437 74,490 73,548 68,699
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
NONPERFORMING ASSETS 2005 2005 2004 2004 2004
Nonaccrual loans $3,372 $3,294 $2,587 $2,545 $2,832
Restructured loans --- --- --- --- ---
Other real estate &
foreclosed assets --- --- --- 4 369
Accruing loans past due
90 days or more 36 --- 18 2,300 111
Total nonperforming
assets $3,408 $3,294 $2,605 $4,849 $3,312
Total nonperforming assets
as a percentage of loans
and foreclosed assets 0.47% 0.46% 0.37% 0.70% 0.49%
Quarter Ended
June 30, March 31, Dec. 31, Sept. 30, June 30,
ALLOWANCE FOR LOAN LOSSES 2005 2005 2004 2004 2004
Balance at beginning of
period $10,519 $10,187 $10,079 $9,844 $8,320
Balance acquired in
Arlington National Bank
Acquisition --- --- --- --- 1,254
Loans charged off (147) (84) (293) (415) (196)
Loan recoveries 201 191 111 155 66
Net (charge-offs)
recoveries 54 107 (182) (260) (130)
Provision for loan losses 225 225 290 495 400
Balance at end of period $10,798 $10,519 $10,187 $10,079 $9,844
Allowance for loan losses as
a percentage of total loans 1.50% 1.47% 1.45% 1.46% 1.46%
Allowance for loan losses as
a percentage of
nonperforming loans 316.84% 319.34% 393.82% 396.03% 347.60%
Net charge-offs (recoveries)
as a percentage of
average loans -0.01% -0.02% 0.03% 0.04% 0.02%
Provision for loan losses as
a percentage of
average loans 0.03% 0.03% 0.04% 0.07% 0.06%
Quarter Ended
June 30, March 31, Dec. 31, Sept. 30, June 30,
SELECTED RATIOS 2005 2005 2004 2004 2004
Return on average assets
(annualized) 1.27% 1.23% 1.18% 1.14% 1.13%
Return on average equity
(annualized) 16.71% 16.16% 15.58% 15.66% 14.79%
Average shareholders'
equity to average assets 7.60% 7.63% 7.57% 7.27% 7.62%
Yield on earning assets 6.12% 5.83% 5.61% 5.39% 5.23%
Cost of interest bearing
funds 2.13% 1.85% 1.65% 1.49% 1.42%
Net interest margin
(tax equivalent) 4.57% 4.47% 4.41% 4.29% 4.18%
Efficiency ratio 59.07% 59.69% 59.71% 59.23% 58.90%
End of period book value
per common share $6.25 $6.01 $6.03 $5.96 $5.57
End of period common
shares outstanding 12,421 12,390 12,359 12,334 12,372
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
Three Months Ended
June 30, 2005 June 30, 2004
Average Average
YIELD ANALYSIS Balance Interest Yield Balance Interest Yield
Interest Earning
Assets:
Federal funds sold &
due from time $4,891 $36 2.95% $31,177 $75 0.96%
Investment securities
(taxable) 208,367 1,914 3.67% 190,212 1,778 3.76%
Investment securities
(tax-exempt) 8,458 110 5.20% 6,760 88 5.26%
Loans 723,535 12,356 6.85% 642,935 9,391 5.87%
Total Interest
Earning Assets 945,251 14,416 6.12% 871,084 11,332 5.23%
Noninterest Earning
Assets:
Cash and due from
banks 30,139 28,813
Other assets 42,973 35,256
Allowance for loan
losses (10,683) (9,323)
Total Noninterest
Earning Assets 62,429 54,746
Total Assets $1,007,680 $925,830
Interest Bearing
Liabilities:
Transaction and money
market accounts $231,313 797 1.38% $238,697 637 1.07%
Savings deposits 162,065 704 1.74% 143,322 408 1.15%
Certificates and
other time deposits 165,527 1,151 2.79% 139,794 792 2.28%
Other borrowings 128,684 1,004 3.13% 121,193 437 1.45%
Total Interest
Bearing Liabilities 687,589 3,656 2.13% 643,006 2,274 1.42%
Noninterest Bearing
Liabilities:
Demand deposits 239,127 207,815
Other liabilities 4,389 4,426
Shareholders' equity 76,575 70,583
Total Noninterest
Bearing Liabilities 320,091 282,824
Total Liabilities
and Shareholders'
Equity $1,007,680 $925,830
Net Interest Income
and Margin (tax
equivalent) $10,760 4.57% $9,058 4.18%
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
Six Months Ended
June 30, 2005 June 30, 2004
Average Average
YIELD ANALYSIS Balance Interest Yield Balance Interest Yield
Interest Earning
Assets:
Federal funds sold &
due from time $5,042 $67 2.68% $18,300 $88 0.96%
Investment
securities
(taxable) 210,249 3,840 3.65% 185,701 3,496 3.77%
Investment
securities (tax-
exempt) 8,235 216 5.25% 6,779 178 5.27%
Loans 715,265 23,702 6.68% 608,398 17,805 5.89%
Total Interest
Earning Assets 938,791 27,825 5.98% 819,178 21,567 5.29%
Noninterest Earning
Assets:
Cash and due from
banks 30,099 26,975
Other assets 42,073 29,417
Allowance for loan
losses (10,506) (8,651)
Total Noninterest
Earning Assets 61,666 47,741
Total Assets $1,000,457 $866,919
Interest Bearing
Liabilities:
Transaction and
money market
accounts $233,490 1,514 1.31% $217,810 1,155 1.07%
Savings deposits 165,188 1,340 1.64% 137,301 793 1.16%
Certificates and
other time deposits 160,698 2,130 2.67% 132,972 1,530 2.31%
Other borrowings 128,430 1,812 2.85% 111,271 712 1.29%
Total Interest
Bearing Liabilities 687,806 6,796 1.99% 599,354 4,190 1.41%
Noninterest Bearing
Liabilities:
Demand deposits 232,361 193,605
Other liabilities 4,199 3,610
Shareholders' equity 76,091 70,350
Total Noninterest
Bearing Liabilities 312,651 267,565
Total Liabilities
and Shareholders'
Equity $1,000,457 $866,919
Net Interest Income
and Margin (tax
equivalent) $21,029 4.52% $17,377 4.27%
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands, except per share data)
June 30, June 30,
LOAN PORTFOLIO 2005 % 2004 %
Commercial and industrial $257,362 35.7% $249,230 37.0%
Real estate:
Commercial 236,142 32.7% 192,956 28.7%
Residential 86,558 12.0% 83,398 12.4%
Construction and development 105,256 14.6% 104,237 15.5%
Consumer 35,843 5.0% 42,865 6.4%
Total loans (gross) 721,161 100.0% 672,686 100.0%
Unearned discounts --- 0.0% --- 0.0%
Total loans (net) $721,161 100.0% $672,686 100.0%
June 30, June 30,
REGULATORY CAPITAL DATA 2005 2004
Tier 1 Capital $79,995 $72,430
Tier 1 Ratio 10.47% 10.02%
Total Capital (Tier 1 + Tier 2) $89,549 $81,478
Total Capital Ratio 11.74% 11.27%
Total Risk-Adjusted Assets $763,086 $723,022
Tier 1 Leverage Ratio 8.03% 7.91%
June 30, June 30,
OTHER DATA 2005 2004
Full Time Equivalent Employees
(FTE's) 257 262
Stock Price Range (For
the Quarter Ended):
High $18.65 $15.13
Low $16.00 $13.50
Close $17.30 $14.55
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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/