SBGA Summit Bank

Summit Bank Corporation (Nasdaq: SBGA), parent company of The Summit National Bank, announces third quarter 2005 earnings of $1.58 million, or $0.27 diluted earnings per share, up 18.3% over the $1.34 million, or $0.23 diluted earnings per share, for the same period last year. For the nine months ended September 30, 2005, earnings were $4.24 million, or $0.74 diluted earnings per share, up 7.3% over the $3.95 million, or $0.69 diluted earnings per share, for the nine months ended September 30, 2004. Earnings for both the quarter and the year to date have increased largely due to increased net interest income and international banking service fees and a decreased loan loss provision, all partially offset by an increase in operating expenses. Total assets increased to $534.2 million at September 30, 2005, up 6.6% from $500.9 million at September 30, 2004. Total loans grew 3.7% over the past twelve months from $333.6 million to a total of $346.0 million at September 30, 2005. Non-performing assets have continued to decline over the past twelve months and totaled $679,000, or 0.20% of loans, at September 30, 2005. The allowance for loan losses totaled $4.6 million, or 1.33% of loans, at September 30, 2005 compared to $4.7 million, or 1.40% of loans, one year ago. Deposits have grown 11.9% from $393.9 million at September 30, 2004 to $440.8 million at September 30, 2005. Non-interest bearing deposit growth remained strong increasing 21.0% to $104.9 million from $86.7 million a year ago. The rising interest rate environment and the significant increase in non-interest bearing deposits resulted in net interest income increasing from $4.57 million for the third quarter of 2004 to $5.19 million for the same period this year, an increase of 13.6%. Net interest margin improved to 4.26% for the third quarter of 2005 from 3.88% for the third quarter last year. For the nine months ended September 30, 2005, net interest income was $15.12 million, up from $13.60 million for the same period a year ago. The net interest margin for the nine months ended September 30, 2005 was 4.13%, up from 3.92% for the same period last year. Total noninterest income was $1.04 million for the third quarter 2005, up from $965,000 for the third quarter last year. For the nine months ended September 30, 2005, noninterest income has grown to $3.19 million from $2.93 million last year. These increases are both attributable to a significant increase in international banking service fees due to growth in our customer base and increased transaction volume. International banking service fees are up 61.1% on a year to date basis. Noninterest expenses increased 18.2% to $3.95 million in the third quarter 2005 compared to $3.34 million for the same period a year earlier. The increase was due to personnel and occupancy costs for new branches opened in the past twelve months and increased resources for risk management and regulatory compliance efforts. For the same reasons, year to date noninterest expenses increased 21.5% to $11.96 million from $9.85 million for the same period last year. The latter also included a $452,000 expense for customer check fraud loss that was recorded in the second quarter of this year arising out of continuing claims from a fraud that occurred in late 2004. No new claims have surfaced during the third quarter related to this case. Chief Executive Officer, Pin Pin Chau, said, "We have continued our disciplined approach to asset growth and focused on asset quality and deposit growth. As a result, we trimmed our balance sheet by reducing higher cost funding and at the same time, benefiting from the rising interest rate environment, we improved our third quarter net interest margin by 15 basis points over last quarter." 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 six branches in the metropolitan Atlanta area and two in the South Bay area of San Francisco, California. Summit also maintains 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 and (vi) greater loan losses than historic levels. Additional information and other factors that could affect future financial results are included in Summit's filings with the Securities and Exchange Commission. -0- *T Summit Bank Corporation Selected Financial Information September 30, 2005 (In thousands, except per share data) September 30, ------------------------ % 2005 2004 Change ------------ ----------- ------ Summary Balance Sheet: Cash and Short Term Investments $ 27,371 $ 15,612 75.3% Investments 135,964 133,145 2.1% Commercial Loans 289,531 275,293 5.2% SBA Loans 55,826 57,577 -3.0% Other Loans 661 747 -11.5% ------------ ----------- Total Loans 346,018 333,617 3.7% Allowance for Loan Loss (4,609) (4,657) -1.0% ------------ ----------- Net Loans 341,409 328,960 Other Assets 29,466 23,187 27.1% ------------ ----------- Total Assets $ 534,210 $ 500,904 6.6% ============ =========== Demand Deposits - Noninterest-Bearing $ 104,921 $ 86,713 21.0% NOW & MMA 90,344 72,019 25.4% Savings & CDs 245,532 235,200 4.4% ------------ ----------- Total Deposits 440,797 393,932 11.9% ------------ ----------- Borrowed Funds 45,797 67,461 -32.1% Other Liabilities 11,605 4,836 140.0% Stockholders Equity 36,011 34,675 3.9% ------------ ----------- Total Liabilities & Stockholders Equity $ 534,210 $ 500,904 6.6% ============ =========== Three Months Ended September 30, % Summary Income Statement: 2005 2004 Change ------------ ----------- ------ Interest Income $ 7,904 $ 6,665 18.6% Interest Expense 2,715 2,096 29.6% ------------ ----------- Net Interest Income 5,189 4,569 13.6% Provision for Loan Losses 50 250 -80.0% ------------ ----------- Net Interest Income after Provision for Loan Loss 5,139 4,319 19.0% ------------ ----------- Service Charges on Deposits 336 388 -13.3% International Fee Income 523 348 50.2% BOLI 115 109 5.2% Other noninterest income 63 120 -47.6% ------------ ----------- Total Noninterest Income 1,037 965 7.4% ------------ ----------- Salaries & Benefits 2,009 1,814 10.8% Occupancy 365 278 31.1% Premises & Equipment 452 350 29.0% Other noninterest expense 1,121 896 25.1% ------------ ----------- Total Noninterest Expense 3,947 3,338 18.2% ------------ ----------- Income before Tax 2,229 1,946 14.5% Income Tax Expense 647 609 6.3% ------------ ----------- Net Income $ 1,582 $ 1,337 18.3% ============ =========== Average Balances: Average Assets $ 529,041 $ 505,820 4.6% Average Earning Assets 487,309 471,035 3.5% Average Total Loans 340,683 331,172 2.9% Average Deposits 426,081 404,806 5.3% Average Total Funds 484,046 469,943 3.0% Average Shareholder Equity 35,561 33,123 7.4% Per Share Data: Basic Earnings per Share $ 0.27 $ 0.23 17.4% Diluted Earnings per Share $ 0.27 $ 0.23 17.4% Dividend Per Share $ 0.10 $ 0.10 0.0% Weighted - Average Shares Outstanding - Basic 5,694,604 5,689,876 Weighted - Average Shares Outstanding - Diluted 5,694,604 5,690,962 Common Shares Outstanding 5,694,604 5,690,104 Key Ratios: Return on Average Assets 1.20% 1.06% Return on Average Shareholder Equity 17.79% 16.15% Yield on Earning Assets 6.50% 5.66% Cost of Funds 2.24% 1.78% Net Interest Margin 4.26% 3.88% Noninterest Income as % of Average Assets 0.78% 0.76% Noninterest Expense as % of Average Assets 2.98% 2.64% Efficiency Ratio 63.39% 60.48% ALLL as % of Total Loans 1.33% 1.40% Nonperforming Assets as % of Total Loans and ORE 0.20% 0.86% Net Chargeoffs(Recoveries) as % of Average Loans -0.08% -0.04% Nine Months Ended September 30, % Summary Income Statement: 2005 2004 Change ----------- ----------- ------ Interest Income $ 22,577 $ 19,642 14.9% Interest Expense 7,455 6,039 23.5% ------------ ----------- Net Interest Income 15,122 13,603 11.2% Provision for Loan Losses 514 915 -43.8% ------------ ----------- Net Interest Income after Provision for Loan Loss 14,608 12,688 15.1% ------------ ----------- Service Charges on Deposits 1,030 1,184 -13.0% International Fee Income 1,502 932 61.1% BOLI 343 325 5.4% Other noninterest income 318 485 -34.5% ------------ ----------- Total Noninterest Income 3,193 2,926 9.1% ------------ ----------- Salaries & Benefits 5,911 5,240 12.8% Occupancy 993 789 25.8% Premises & Equipment 1,279 1,005 27.2% Other noninterest expense 3,776 2,812 34.3% ------------ ----------- Total Noninterest Expense 11,959 9,846 21.5% ------------ ----------- Income before Tax 5,842 5,768 1.3% Income Tax Expense 1,603 1,819 -11.9% ------------ ----------- Net Income $ 4,239 $ 3,949 7.3% =========== =========== Average Balances: Average Assets $ 528,615 $ 496,119 6.6% Average Earning Assets 488,245 463,008 5.5% Average Total Loans 338,776 327,509 3.4% Average Deposits 427,293 391,514 9.1% Average Total Funds 486,286 460,799 5.5% Average Shareholder Equity 34,985 33,333 5.0% Per Share Data: Basic Earnings per Share $ 0.74 $ 0.69 7.2% Diluted Earnings per Share $ 0.74 $ 0.69 7.2% Dividend Per Share $ 0.30 $ 0.30 0.0% Weighted - Average Shares Outstanding - Basic 5,694,093 5,685,374 Weighted - Average Shares Outstanding - Diluted 5,694,093 5,685,926 Common Shares Outstanding 5,694,604 5,690,104 Key Ratios: Return on Average Assets 1.07% 1.06% Return on Average Shareholder Equity 16.15% 15.80% Yield on Earning Assets 6.17% 5.67% Cost of Funds 2.04% 1.75% Net Interest Margin 4.13% 3.92% Noninterest Income as % of Average Assets 0.81% 0.79% Noninterest Expense as % of Average Assets 3.02% 2.65% Efficiency Ratio 65.31% 60.09% ALLL as % of Total Loans 1.33% 1.40% Nonperforming Assets as % of Total Loans and ORE 0.20% 0.86% Net Chargeoffs(Recoveries) as % of Average Loans 0.18% 0.12% *T