Summit Bancshares (NASDAQ:SBIT)
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Summit Bancshares Reports Third Quarter 2004 Earnings
FORT WORTH, Texas, Oct. 12 /PRNewswire-FirstCall/ -- Summit Bancshares, Inc.
(NASDAQ:SBIT), a community-oriented bank holding company in Fort Worth,
reported third quarter earnings today. Philip E. Norwood, Chairman, President
and Chief Executive Officer stated, "We are pleased to again report positive
financial performance of the Company. The completion of the acquisition of
Arlington National Bank and the addition of a branch in Euless, Texas during
the second quarter of 2004, excellent internal growth from the Company's
existing locations and positive increases in market interest rates during the
third quarter were the catalysts of this positive performance. As of September
30th, the Company has twelve banking locations throughout Tarrant County
resulting in the Company's assets reaching $990 million as of the end of the
quarter, a $213 million or 27% increase in the last twelve months."
He further stated, "Earnings per diluted share for the quarter increased 12.8%
compared to the same quarter last year. The third quarter results reflect the
acquisition of Arlington National following purchase accounting rules,
therefore you will note double digit increases in most of the categories of
income and expense when comparing this quarter's results to prior quarters. In
addition, the Arlington locations made a positive contribution to the Company's
financial performance for the quarter."
Results of Operations
For the quarter ended September 30, 2004, net income was $2,796,000 compared to
$2,475,000 for the same period in 2003. Net income per diluted share was $0.44
for the three months ended September 30, 2004, compared to $0.39 for the three
months ended September 30, 2003. Return on average assets and return on
average shareholders' equity for the third quarter of 2004 were 1.14% and
15.66%, respectively. The Company's average shareholders' equity- to-assets
ratio was 7.3% for the quarter ended September 30, 2004. The Arlington
National acquisition was partially financed with the proceeds of the issuance
of $12 million of Trust Preferred securities giving the Company a Tier One
capital ratio of 10.0%.
Net income for the nine months ended September 30, 2004 was $7,843,000 or $1.24
per diluted share, compared to $7,365,000, or $1.17 per diluted share for the
same period last year. Return on average assets and return on average
shareholders' equity for the nine months ended September 30, 2004 were 1.15%
and 14.82%, respectively.
Financial Results
Net interest income (tax equivalent) for the third quarter of 2004 was $9.9
million compared to $7.9 million in the third quarter of last year. The
increase reflects the inclusion of Arlington National's financial results for
the entire quarter following its acquisition on May 1st. Since the Company is
somewhat more sensitive to market interest rate changes than other community
banks due to its heavier commercial lending focus, the net interest margin
declined to 4.29% for the quarter compared to 4.37% for the third quarter of
the prior year. However, the impact of the decline in the net interest margin
was partially offset by asset growth. The growth in net interest income
resulted from a 27.3% growth in average earning assets compared to the third
quarter of the prior year (primarily in higher yielding loans) and a 41 basis
points increase in the average prime lending rate for the quarter compared to
the same quarter of the prior year. The increase in prime lending rate is
positive to only a portion of the earning assets as less than 45% of earning
assets will benefit immediately from changes in market interest rates.
If market interest rates continue to rise, the Company believes that its
current asset sensitive position will enhance earnings growth assuming deposit
rates do not increase significantly faster than interest rates on earning
assets. Also, the Company believes that the impact on net interest income for
that portion of earning assets supported by the Company's high levels of non-
interest bearing deposits and shareholders' equity will improve.
Non-interest income increased $558,000 or 35.2% for the third quarter of 2004
compared to the same quarter of the prior year and includes the impact of the
Arlington National acquisition. This increase included a gain of $176,000 on
sale of student loans during the quarter. In addition, there were increases in
service charges on deposit accounts and increases in several other fee based
services, including trust fees which is a new service being offered to the
Company's customers as a result of the Arlington National acquisition. These
increases were somewhat offset by lower investment brokerage fees. Growth of
non-interest income continues to be one of the areas of the Company's focus.
Non-interest expenses for the third quarter increased $1,453,000 or 25.7% over
the same quarter of the previous year. This increase includes the impacts of:
a) the addition of Arlington National which contributed $1,103,000 of expense
to the current quarter and b) a full quarter of expense of opening the Euless
Branch in the second quarter of this year.
The provision for loan losses was $495,000 in the third quarter of 2004. This
was an increase of $449,000 over the same quarter last year. In the third
quarter, the Company had net loan charge-offs of $260,000. The Allowance for
Loan Losses as a percent of outstanding loans was 1.46% (or 1.52% when loans
are reflected net of the guaranteed portion of SBA loans and student guaranteed
loans) at September 30, 2004 as compared to 1.45% at the end of the third
quarter of 2003. For the first nine months of 2004, the Company recorded net
loan charge-offs of $459,000, or .07% of average loans.
Non performing assets totaled $4.8 million or 0.70% ($2.3 million of which was
collected after the close of the quarter) of loans and foreclosed assets at
September 30, 2004, compared to $1.5 million or .29% at September 30, 2003. The
Allowance for Loan Losses was 396% of non-performing loans at September 30,
2004. The Company believes that it continues to maintain positive measures of
asset quality.
The Company's loans were $690 million at September 30, 2004, an increase of
$172 million, or 33.2%, from September 30, 2003. Deposits increased over the
past year from $637 million at September 30, 2003 to $791 million at September
30, 2004, an increase of $154 million, or 24.2%. Shareholders' equity at
September 30, 2004 was $73.5 million, an increase of $5.5 million, or 8.1% from
a year ago.
The Company will host a conference call Wednesday, October 13th at 10:00 a.m.
(CT). To access the live call, please call (800) 289-0504 and enter code
847798. A toll free replay of the call will be available for two weeks
beginning at 1:30 p.m. (CT), October 13, 2004 through midnight, October 27,
2004. You may access this replay by calling (888) 203-1112 and entering code
847798. 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 contained 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 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, 2003.
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands, except per share data)
Quarter Ended Nine Months Ended
September 30, % September 30, %
EARNINGS SUMMARY 2004 2003 Change 2004 2003 Change
Interest income $12,361 $9,709 27.3% $33,862 $28,507 18.8%
Interest expense 2,533 1,834 38.1% 6,723 5,584 20.4%
Net interest income 9,828 7,875 24.8% 27,139 22,923 18.4%
Provision for loan
losses 495 46 976.1% 1,500 586 156.0%
Service charges on
deposits 1,180 914 29.1% 3,164 2,562 23.5%
Gain on Sale of
Investment Securities 32 89 -64.0% 32 101 -68.3%
Other Income 929 580 60.2% 2,235 1,865 19.8%
Salaries and benefits
expense 4,029 3,336 20.8% 11,169 9,332 19.7%
Occupancy and equipment
expense 1,180 1,064 10.9% 3,230 2,628 22.9%
Other expense 1,900 1,256 51.3% 4,590 3,739 22.8%
Earnings before income
taxes 4,365 3,756 16.2% 12,081 11,166 8.2%
Provision for income
taxes 1,569 1,281 22.5% 4,238 3,801 11.5%
Net earnings $ 2,796 $2,475 13.0% $ 7,843 $ 7,365 6.5%
Basic earnings per
share $ 0.45 $ 0.40 12.5% $ 1.27 $ 1.19 6.7%
Basic weighted average
shares outstanding 6,166 6,160 6,159 6,163
Diluted earnings per
share $ 0.44 $ 0.39 12.8% $ 1.24 $ 1.17 6.0%
Diluted weighted
average shares
outstanding 6,335 6,341 6,333 6,310
Average for Quarter Ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
BALANCE SHEET SUMMARY 2004 2004 2004 2003 2003
Total loans $678,915 $642,935 $573,862 $537,635 $503,936
Total investment
securities 218,831 196,972 187,988 205,162 199,367
Earning assets 914,595 871,084 767,274 746,066 718,601
Total assets 976,911 925,830 808,009 788,426 761,278
Noninterest bearing
deposits 226,462 207,815 179,396 184,106 176,478
Interest bearing
deposits 557,329 521,812 454,352 450,401 452,325
Total deposits 783,791 729,628 633,748 634,507 628,803
Other borrowings 118,083 121,193 101,349 82,160 61,199
Shareholders' equity 71,038 70,583 70,116 68,399 68,273
Average for Nine Months
Ended September 30, %
BALANCE SHEET SUMMARY 2004 2003 Change
Total loans $632,076 $493,361 28.1%
Total investment
securities 201,327 178,631 12.7%
Earning assets 851,216 681,468 24.9%
Total assets 903,851 723,223 25.0%
Noninterest bearing
deposits 204,638 168,968 21.1%
Interest bearing
deposits 511,333 431,169 18.6%
Total deposits 715,971 600,137 19.3%
Other borrowings 113,559 52,741 115.3%
Shareholders' equity 70,581 67,429 4.7%
Ending Balance
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
BALANCE SHEET SUMMARY 2004 2004 2004 2003 2003
Total loans $689,906 $672,686 $593,271 $553,769 $517,994
Total investment
securities 219,264 214,991 181,879 195,959 210,048
Total earning assets 928,638 905,228 818,393 751,063 728,766
Allowance for loan
losses (10,079) (9,844) (8,320) (7,784) (7,483)
Premises and equipment 15,643 15,145 12,755 12,920 13,237
Total assets 990,406 969,708 860,361 795,478 777,558
Noninterest bearing
deposits 232,586 218,343 186,198 192,877 180,765
Interest bearing
deposits 558,938 557,347 470,186 448,504 456,706
Total deposits 791,524 775,690 656,384 641,381 637,471
Other borrowings 121,355 121,785 129,691 82,234 69,230
Total liabilities 916,858 901,009 788,786 726,794 709,546
Shareholders' equity 73,548 68,699 71,575 68,684 68,012
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
NONPERFORMING ASSETS 2004 2004 2004 2003 2003
Nonaccrual loans $2,545 $2,832 $2,405 $2,351 $1,514
Restructured loans --- --- --- --- ---
Other real estate &
foreclosed assets 4 369 7 --- ---
Accruing loans past due
90 days or more 2,300 111 --- 55 ---
Total nonperforming
assets $4,849 $3,312 $2,412 $2,406 $1,514
Total nonperforming
assets as a percentage
of loans and foreclosed
assets 0.70% 0.49% 0.41% 0.43% 0.29%
Quarter Ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
ALLOWANCE FOR LOAN LOSSES 2004 2004 2004 2003 2003
Balance at beginning of
period $ 9,844 $9,574 $7,784 $7,483 $7,412
Loans charged off (415) (196) (137) (163) (24)
Loan recoveries 155 66 68 170 49
Net (charge-offs)
recoveries (260) (130) (69) 7 25
Provision for loan losses 495 400 605 294 46
Balance at end of period $10,079 $9,844 $8,320 $7,784 $7,483
Allowance for loan losses
as a percentage of total
loans 1.46% 1.46% 1.40% 1.41% 1.45%
Allowance for loan losses
as a percentage of
nonperforming loans 396.03% 347.60% 345.95% 323.57% 494.39%
Net charge-offs
(recoveries) as a
percentage of average
loans 0.04% 0.02% 0.01% 0.00% -0.01%
Provision for loan losses
as a percentage
of average loans 0.07% 0.06% 0.11% 0.05% 0.01%
Quarter Ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
SELECTED RATIOS 2004 2004 2004 2003 2003
Return on average assets
(annualized) 1.14% 1.13% 1.22% 1.21% 1.29%
Return on average equity
(annualized) 15.66% 14.79% 14.06% 13.93% 14.38%
Average shareholders'
equity to average assets 7.27% 7.62% 8.68% 8.68% 8.97%
Yield on earning assets 5.39% 5.23% 5.36% 5.35% 5.38%
Cost of interest bearing
funds 1.49% 1.42% 1.39% 1.38% 1.42%
Net interest margin (tax
equivalent) 4.29% 4.18% 4.36% 4.36% 4.37%
Efficiency ratio 59.23% 58.90% 55.94% 59.29% 59.57%
End of period book value per
common share $11.93 $11.14 $11.63 $11.17 $11.04
End of period common shares
outstanding 6,167 6,186 6,154 6,152 6,165
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
Three Months Ended
September 30, 2004 September 30, 2003
Average Average
YIELD ANALYSIS Balance Interest Yield Balance Interest Yield
Interest Earning Assets:
Federal funds sold & due
from time $16,849 $51 1.21% $15,298 $37 0.97%
Investment securities
(taxable) 211,298 1,939 3.65% 193,232 1,865 3.83%
Investment securities
(tax-exempt) 7,533 113 5.98% 6,135 82 5.27%
Loans 678,915 10,297 6.03% 503,936 7,762 6.11%
Total Interest
Earning Assets 914,595 12,400 5.39% 718,601 9,746 5.38%
Noninterest Earning Assets:
Cash and due from banks 31,213 26,189
Other assets 41,022 23,926
Allowance for loan
losses (9,919) (7,438)
Total Noninterest
Earning Assets 62,316 42,677
Total Assets $976,911 $761,278
Interest Bearing
Liabilities:
Transaction and money
market accounts $253,642 672 1.05% $207,787 566 1.08%
Savings deposits 154,980 462 1.19% 120,124 380 1.26%
Certificates and other
time deposits 148,707 862 2.31% 124,414 779 2.48%
Other borrowings 118,083 537 1.81% 61,199 109 0.70%
Total Interest
Bearing
Liabilities 675,412 2,533 1.49% 513,524 1,834 1.42%
Noninterest Bearing
Liabilities:
Demand deposits 226,462 176,478
Other liabilities 3,999 3,003
Shareholders' equity 71,038 68,273
Total Noninterest
Bearing
Liabilities 301,499 247,754
Total Liabilities
and Shareholders'
Equity $976,911 $761,278
Net Interest Income and
Margin (tax equivalent) $9,867 4.29% $7,912 4.37%
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
Nine Months Ended
September 30, 2004 September 30, 2003
Average Average
YIELD ANALYSIS Balance Interest Yield Balance Interest Yield
Interest Earning
Assets:
Federal funds sold &
due from time $ 17,813 $ 139 1.04% $ 9,476 $74 1.05%
Investment securities
(taxable) 194,295 5,435 3.73% 173,216 5,175 3.99%
Investment securities
(tax-exempt) 7,032 291 5.51% 5,415 224 5.53%
Loans 632,076 28,102 5.94% 493,361 23,139 6.27%
Total Interest
Earning Assets 851,216 33,967 5.33% 681,468 28,612 5.61%
Noninterest Earning
Assets:
Cash and due from banks 28,398 26,601
Other assets 33,314 22,428
Allowance for loan
losses (9,077) (7,274)
Total Noninterest
Earning Assets 52,635 41,755
Total Assets $903,851 $723,223
Interest Bearing
Liabilities:
Transaction and money
market accounts $229,841 1,827 1.06% $192,650 1,599 1.11%
Savings deposits 143,237 1,255 1.17% 116,997 1,187 1.36%
Certificates and other
time deposits 138,255 2,392 2.31% 121,522 2,380 2.62%
Other borrowings 113,559 1,249 1.47% 52,741 418 1.06%
Total Interest
Bearing
Liabilities 624,892 6,723 1.44% 483,910 5,584 1.54%
Noninterest Bearing
Liabilities:
Demand deposits 204,638 168,968
Other liabilities 3,740 2,916
Shareholders' equity 70,581 67,429
Total Noninterest
Bearing
Liabilities 278,959 239,313
Total Liabilities
and Shareholders'
Equity $903,851 $723,223
Net Interest Income
and Margin (tax
equivalent) $27,244 4.28% $23,028 4.52%
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands, except per share data)
September 30, September 30,
LOAN PORTFOLIO 2004 % 2003 %
Commercial and industrial $257,721 37.4% $211,616 40.8%
Real estate:
Commercial 198,796 28.8% 142,317 27.5%
Residential 81,318 11.8% 61,676 11.9%
Construction and
development 111,641 16.2% 69,840 13.5%
Consumer 40,430 5.8% 32,545 6.3%
Total loans (gross) 689,906 100.0% 517,994 100.0%
Unearned discounts --- 0.0% --- 0.0%
Total loans (net) 689,906 100.0% 517,994 100.0%
September 30, September 30,
REGULATORY CAPITAL DATA 2004 2003
Tier 1 Capital $ 74,338 $ 66,856
Tier 1 Ratio 9.99% 11.90%
Total Capital
(Tier 1 + Tier 2) $ 83,645 $ 73,887
Total Capital Ratio 11.25% 13.15%
Total Risk-Adjusted Assets $743,810 $562,020
Tier 1 Leverage Ratio 7.69% 8.78%
September 30, September 30,
OTHER DATA 2004 2003
Full Time Equivalent
Employees (FTE's) 253 218
Stock Price Range
(For the Quarter Ended):
High $33.25 $28.50
Low $28.60 $23.47
Close $33.25 $27.00
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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/