Summit Bancshares (NASDAQ:SBIT)
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FORT WORTH, Texas, Oct. 17 /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, "I am pleased to report a positive increase in earnings per diluted share of 22.7% for the third quarter over earnings per share for the same quarter of last year. The greatest contributor to the increase in earnings is a 14.1% increase in net interest income, which was aided by an increase in net interest margin and an increase in earnings assets."
He further stated, "We are very fortunate to be operating in a robust economic environment and to have such a strong position in an expanding Fort Worth/Tarrant County market."
Results of Operations - All prior year per share data has been restated for the two-for-one stock split that was effective December 31, 2004
For the quarter ended September 30, 2005, net income was $3,456,000 compared to $2,796,000 for the same period in 2004. Net income per diluted share was $0.27 for the three months ended September 30, 2005, compared to $0.22 for the three months ended September 30, 2004. Return on average assets and return on average shareholders' equity for the third quarter of 2005 were 1.32% and 17.34%, respectively. The Company's average shareholders' equity- to-assets ratio was 7.6% for the quarter ended September 30, 2005.
Net income for the nine months ended September 30, 2005 was $9,660,000, or $.76 per diluted share, compared to $7,843,000, or $.62 per diluted share, for the same period last year, an increase of 22.6% on a per share basis. Return on average assets and return on average shareholders' equity for the nine months ended September 30, 2005 were 1.27% and 16.75%, respectively.
Financial Results
Net interest income (tax equivalent) for the third quarter of 2005 was $11.3 million compared to $9.9 million in the third quarter of last year, a 14.1% increase. Since the Company believes it is somewhat more sensitive to market interest rate changes than other community banks due to its heavier commercial lending focus, the net interest margin increased from 4.29% for the third quarter of the prior year to 4.58% for the third quarter of this year. Since late June 2004, the Federal Reserve has increased the target rate for Federal Funds by 275 basis points from 1.00% to 3.75%. During this same period, the prime lending rate has increased from 4.00% to 6.75%. The average prime lending rate increased from 4.42% for the third quarter of 2004 to 6.43% for the third quarter of 2005, an increase of 201 basis points. A portion of this increase in the prime lending rate is reflected in a 93 basis point increase in the Company's yield on earning assets as well as a 110 basis point increase in the yield on loans between the third quarter of 2004 and the third quarter of 2005. The portion of the loan portfolio that has fixed rates and the investment securities portfolio, which also has fixed rates, accounted for the earnings asset yield not reflecting a greater portion of the referenced prime rate increase. The cost of interest bearing liabilities increased from 1.49% for the third quarter of last year to 2.38% for the third quarter of this year, an 89 basis point increase, which also reflected the increase in market interest rates referenced above.
The net interest margin did not increase as much in the third quarter as the Company had expected due to higher funding costs which were driven by competitive pressures in the market. 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 faster than interest rates on earning assets). Furthermore, the Company believes that continued market increases will have a positive impact on net interest income for that portion of earning assets supported by the Company's non-interest bearing deposits and shareholders' equity.
Non-interest income increased $35,000 for the third quarter of 2005 compared to the same quarter of the prior year. This increase included a gain of $247,000 on the sale of land previously held for expansion in the third quarter of 2005. In comparison, there was a gain of $176,000 on sale of student loans during the third quarter of 2004. In addition, increases were experienced in the third quarter of this year compared to third quarter of last year due to the acquisition in March 2005 of the investment group Dignum Financial Services (now, Summit Financial Partners) and also in merchant card and debit card activity. However, there was a decrease in service charges on deposits, primarily due to higher interest earning credits paid on commercial deposit accounts that are under account analysis for charges.
Non-interest expenses for the third quarter increased $528,000 over the same quarter of the previous year. This increase includes the impacts of: (a) the inclusion in the third quarter of 2005 of the expenses of Summit Financial Partners; (b) 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 (c) certain staff additions to support the Company's continued growth. These increases were partially offset by reduced expenses, compared to the third quarter of the prior year, for compliance with Sarbanes Oxley regulatory requirements.
The provision for loan losses was $315,000 for the third quarter of 2005 compared to $495,000 recorded in the third quarter of 2004. In the third quarter of 2005 the Company had net recoveries of previously charged-off loans of $18,000. The Allowance for Loan Losses as a percent of outstanding loans was 1.48% (or 1.52% when loans are reflected net of the guaranteed portion of SBA loans and student guaranteed loans) at September 30, 2005 as compared to 1.46% at the end of the third quarter of 2004. For the first nine months of 2005, the Company recorded net recoveries of $179,000.
Non-performing assets totaled $5.0 million, or 0.66% of loans and foreclosed assets, at September 30, 2005, compared to $4.8 million, or .70% at September 30, 2004. The Allowance for Loan Losses was 155% of non-performing loans at September 30, 2005. The Company believes that it continues to maintain positive measures of asset quality.
The Company's loans were $754 million at September 30, 2005, an increase of $64 million, or 9.3%, from September 30, 2004. Deposits increased over the past year from $792 million at September 30, 2004 to $866 million at September 30, 2005, an increase of $75 million, or 9.4%. Shareholders' equity at September 30, 2005 was $79.7 million, an increase of $6.2 million, or 8.4% from a year ago.
The Company will host a conference call Tuesday, October 18, 2005 at 10:30 a.m. (CT). To access the live call, please call (800) 481-7713 and enter confirmation code 8740000. A toll free replay of the call will be available for two weeks beginning October 18, 2005 at 3:00 p.m. (CT) through midnight, November 1, 2005. You may access this replay by calling (888) 203-1112 and entering confirmation code 8740000. 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 Nine Months Ended
September 30, % September 30, %
EARNINGS SUMMARY 2005 2004 Change 2005 2004 Change
Interest income $15,476 $12,361 25.2% $43,227 $33,862 27.7%
Interest expense 4,263 2,533 68.3% 11,059 6,723 64.5%
Net interest income 11,213 9,828 14.1% 32,168 27,139 18.5%
Provision for loan
losses 315 495 -36.4% 765 1,500 -49.0%
Service charges on
deposits 992 1,180 -15.9% 2,964 3,164 -6.3%
Gain on sale of
investment securities --- 32 -100.0% --- 32 -100.0%
Other income 1,184 929 27.4% 3,127 2,235 39.9%
Salaries and benefits
expense 4,579 4,029 13.7% 13,296 11,169 19.0%
Occupancy and equipment
expense 1,311 1,180 11.1% 3,744 3,230 15.9%
Other expense 1,747 1,900 -8.1% 5,407 4,590 17.8%
Earnings before income
taxes 5,437 4,365 24.6% 15,047 12,081 24.6%
Provision for income
taxes 1,981 1,569 26.3% 5,387 4,238 27.1%
Net earnings $3,456 $2,796 23.6% $9,660 $7,843 23.2%
Basic earnings
per share $0.28 $0.23 21.7% $0.78 $0.64 21.9%
Basic weighted
average shares
outstanding 12,420 12,332 12,405 12,319
Diluted earnings
per share $0.27 $0.22 22.7% $0.76 $0.62 22.6%
Diluted weighted
average shares
outstanding 12,664 12,670 12,705 12,667
Average for Quarter Ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
BALANCE SHEET SUMMARY 2005 2005 2005 2004 2004
Total loans $735,109 $723,535 $706,902 $694,177 $678,915
Total investment
securities 226,441 216,825 220,161 226,530 218,831
Earning assets 974,844 945,251 932,258 924,557 914,595
Total assets 1,038,628 1,007,680 993,154 984,814 976,911
Noninterest bearing
deposits 242,849 239,127 225,519 235,846 226,462
Interest bearing
deposits 590,390 558,905 559,853 560,341 557,329
Total deposits 833,239 798,032 785,372 796,187 783,791
Other borrowings 121,435 128,684 128,174 109,713 118,083
Shareholders' equity 79,053 76,575 75,602 74,543 71,038
Average for Nine Months
Ended September 30, %
BALANCE SHEET SUMMARY 2005 2004 Change
Total loans $721,952 $632,076 14.2%
Total investment
securities 221,165 201,327 9.9%
Earning assets 950,940 851,216 11.7%
Total assets 1,013,320 903,851 12.1%
Noninterest bearing
deposits 235,896 204,638 15.3%
Interest bearing
deposits 569,827 511,333 11.4%
Total deposits 805,723 715,971 12.5%
Other borrowings 126,073 113,559 11.0%
Shareholders' equity 77,089 70,581 9.2%
Ending Balance
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
BALANCE SHEET SUMMARY 2005 2005 2005 2004 2004
Total loans $754,153 $721,161 $716,714 $702,619 $689,906
Total investment
securities 236,544 214,750 214,222 223,351 219,264
Total earning assets 1,006,368 945,661 939,934 930,990 928,638
Allowance for loan
losses (11,131) (10,798) (10,519) (10,187) (10,079)
Premises and equipment 15,620 15,563 15,462 15,749 15,643
Total assets 1,074,261 1,008,475 999,914 989,117 990,406
Noninterest bearing
deposits 258,644 241,643 232,556 235,399 232,586
Interest bearing
deposits 607,384 562,846 565,002 556,865 558,938
Total deposits 866,028 804,489 797,558 792,264 791,524
Other borrowings 123,892 122,203 124,007 118,094 121,355
Total liabilities 994,534 930,891 925,477 914,627 916,858
Shareholders' equity 79,727 77,584 74,437 74,490 73,548
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
NONPERFORMING ASSETS 2005 2005 2005 2004 2004
Nonaccrual loans $4,989 $3,372 $3,294 $2,587 $2,545
Restructured loans --- --- --- --- ---
Other real estate &
foreclosed assets --- --- --- --- 4
Total nonperforming
assets $4,989 $3,372 $3,294 $2,587 $2,549
Total nonperforming assets
as a percentage of loans
and foreclosed assets 0.66% 0.47% 0.46% 0.37% 0.37%
Accruing loans past
due 90 days or more 2,178 36 --- 18 2,300
Quarter Ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
ALLOWANCE FOR 2005 2005 2005 2004 2004
LOAN LOSSES
Balance at beginning
of period $10,798 $10,519 $10,187 $10,079 $9,844
Loans charged off (25) (147) (84) (293) (415)
Loan recoveries 43 201 191 111 155
Net (charge-offs)
recoveries 18 54 107 (182) (260)
Provision for loan
losses 315 225 225 290 495
Balance at end of
period $11,131 $10,798 $10,519 $10,187 $10,079
Allowance for loan
losses as a percentage
of total loans 1.48% 1.50% 1.47% 1.45% 1.46%
Allowance for loan
losses as a percentage
of nonperforming loans 223.11% 320.23% 319.34% 393.78% 395.41%
Net charge-offs
(recoveries) as a
percentage of average
loans 0.00% -0.01% -0.02% 0.03% 0.04%
Provision for loan
losses as a percentage
of average loans 0.04% 0.03% 0.03% 0.04% 0.07%
Quarter Ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
SELECTED RATIOS 2005 2005 2005 2004 2004
Return on average assets
(annualized) 1.32% 1.27% 1.23% 1.18% 1.14%
Return on average equity
(annualized) 17.34% 16.71% 16.16% 15.58% 15.66%
Average shareholders'
equity to average
assets 7.61% 7.60% 7.63% 7.57% 7.27%
Yield on earning assets 6.32% 6.12% 5.83% 5.61% 5.39%
Cost of interest
bearing funds 2.38% 2.13% 1.85% 1.65% 1.49%
Net interest margin
(tax equivalent) 4.58% 4.57% 4.47% 4.41% 4.29%
Efficiency ratio 56.84% 59.07% 59.69% 59.71% 59.23%
End of period book
value per common share $6.41 $6.25 $6.01 $6.03 $5.96
End of period common
shares outstanding 12,429 12,421 12,390 12,359 12,334
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
Three Months Ended
September 30, 2005 September 30, 2004
Average Average
YIELD ANALYSIS Balance Interest Yield Balance Interest Yield
Interest Earning
Assets:
Federal funds sold &
due from time $13,294 $114 3.40% $16,849 $51 1.21%
Investment securities
(taxable) 216,541 2,073 3.83% 211,298 1,939 3.67%
Investment securities
(tax-exempt) 9,900 133 5.37% 7,533 113 5.98%
Loans 735,109 13,203 7.13% 678,915 10,297 6.03%
Total Interest
Earning Assets 974,844 15,523 6.32% 914,595 12,400 5.39%
Noninterest Earning
Assets:
Cash and due from
banks 30,876 31,213
Other assets 43,824 41,022
Allowance for loan
losses (10,916) (9,919)
Total Noninterest
Earning Assets 63,784 62,316
Total Assets $1,038,628 $976,911
Interest Bearing
Liabilities:
Transaction and money
market accounts $232,640 886 1.51% $253,642 672 1.05%
Savings deposits 173,539 866 1.98% 154,980 462 1.19%
Certificates and
other time deposits 184,211 1,433 3.09% 148,707 862 2.31%
Other borrowings 121,435 1,078 3.52% 118,083 537 1.81%
Total Interest
Bearing
Liabilities 711,825 4,263 2.38% 675,412 2,533 1.49%
Noninterest Bearing
Liabilities:
Demand deposits 242,849 226,462
Other liabilities 4,901 3,999
Shareholders' equity 79,053 71,038
Total Noninterest
Bearing
Liabilities 326,803 301,499
Total Liabilities
and Shareholders'
Equity $1,038,628 $976,911
Net Interest Income
and Margin
(tax equivalent) $11,260 4.58% $9,867 4.29%
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)
Nine Months Ended
September 30, 2005 September 30, 2004
Average Average
YIELD ANALYSIS Balance Interest Yield Balance Interest Yield
Interest Earning
Assets:
Federal funds sold &
due from time $7,823 $181 3.09% $17,813 $139 1.04%
Investment securities
(taxable) 212,369 5,913 3.71% 194,295 5,435 3.73%
Investment securities
(tax-exempt) 8,796 349 5.29% 7,032 291 5.51%
Loans 721,952 36,905 6.83% 632,076 28,102 5.94%
Total Interest
Earning Assets 950,940 43,348 6.09% 851,216 33,967 5.33%
Noninterest Earning
Assets:
Cash and due from
banks 30,361 28,398
Other assets 42,663 33,314
Allowance for loan
losses (10,644) (9,077)
Total Noninterest
Earning Assets 62,380 52,635
Total Assets $1,013,320 $903,851
Interest Bearing
Liabilities:
Transaction and money
market accounts $233,203 2,400 1.38% $229,841 1,827 1.06%
Savings deposits 168,002 2,206 1.76% 143,237 1,255 1.17%
Certificates and
other time deposits 168,622 3,563 2.83% 138,255 2,392 2.31%
Other borrowings 126,073 2,890 3.06% 113,559 1,249 1.47%
Total Interest
Bearing
Liabilities 695,900 11,059 2.12% 624,892 6,723 1.44%
Noninterest Bearing
Liabilities:
Demand deposits 235,896 204,638
Other liabilities 4,435 3,740
Shareholders' equity 77,089 70,581
Total Noninterest
Bearing
Liabilities 317,420 278,959
Total Liabilities
and Shareholders'
Equity $1,013,320 $903,851
Net Interest Income
and Margin
(tax equivalent) $32,289 4.54% $27,244 4.28%
SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands, except per share data)
September 30, September 30,
LOAN PORTFOLIO 2005 % 2004 %
Commercial and industrial $270,807 35.9% $257,721 37.4%
Real estate:
Commercial 244,966 32.5% 198,796 28.8%
Residential 89,487 11.9% 81,318 11.8%
Construction and development 109,431 14.5% 111,641 16.2%
Consumer 39,462 5.2% 40,430 5.9%
Total loans (gross) 754,153 100.0% 689,906 100.0%
Unearned discounts --- 0.0% --- 0.0%
Total loans (net) $754,153 100.0% 689,906 100.0%
September 30, September 30,
REGULATORY CAPITAL DATA 2005 2004
Tier 1 Capital $82,621 $74,338
Tier 1 Ratio 10.45% 9.99%
Total Capital
(Tier 1 + Tier 2) $92,520 $83,645
Total Capital Ratio 11.70% 11.25%
Total Risk-Adjusted Assets $790,653 $743,810
Tier 1 Leverage Ratio 8.04% 7.69%
September 30, September 30,
OTHER DATA 2005 2004
Full Time Equivalent Employees
(FTE's) 264 253
Stock Price Range
(For the Quarter Ended):
High $19.28 $16.63
Low $17.16 $14.30
Close $18.37 $16.63
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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/