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 http://www.newscom.com/cgi-bin/prnh/20020410/SBITLOGO
http://photoarchive.ap.org/ DATASOURCE: Summit Bancshares, Inc.
CONTACT: Bob G. Scott, COO of Summit Bancshares, Inc.,
+1-817-877-2660 Web site: http://www.summitbank.net/
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