Summit Bank Corporation (SBGA)(Nasdaq: SBGA), parent company of The
Summit National Bank, announces second quarter 2006 earnings of
$1.68 million, or $0.24 diluted earnings per share, up 24.4% over
the $1.35 million, or $0.24 diluted earnings per share, for the
second quarter last year. Net income for the second quarter, 2006
represented a return on average shareholders' equity of 11.88%
compared to 15.58% for the second quarter of last year. For the six
months ended June 30, 2006, earnings were $3.09 million, or $0.48
diluted earnings per share, an increase of 16.3% over the $2.66
million, or $0.47 diluted earnings per share, for the same period
last year. The return on average shareholders' equity for the first
six months of 2006 was 13.18% compared to 15.32% for the same
period last year. The increase in earnings for both the quarter and
year to date was attained largely due to increased net interest
income resulting from improvement in net interest margin and the
accretive effects of the acquisition of Concord Bank, N.A. The
decline in return on shareholders' equity from last year is
attributable to the $20.3 million of additional capital raised from
Summit's common stock offering earlier this year. Summit Bank
completed the purchase of Concord Bank, N.A. (Concord) in Houston,
Texas on April 1, 2006. Concord had approximately $120 million in
assets, $96 million in loans and $108 million in deposits at the
closing date. A total of $9.3 million of Goodwill and other
intangible assets were booked in conjunction with the Concord
acquisition, including approximately $55,000 of capitalized
acquisition costs. Consequently, Summit's total assets increased to
$656.7 million at June 30, 2006 from $553.7 million at March 31,
2006 and $528.1 million at June 30, 2005. Total loans increased
from $337.7 million at June 30, 2005 to $363.4 million at March 31,
2006 to $449.4 million at June 30, 2006. Non-performing assets at
June 30, 2006 were $5.1 million, or 1.12% of loans, an increase
over the balance at year end 2005 of $1.2 million, or 0.32% of
loans. The addition of two related non-accrual loans totaling $4.3
million accounts for the increase. These two loans are primarily
secured by two commercial real estate properties and inventories.
The remainder of the non-performing assets at June 30, 2006 were
fully guaranteed by the SBA. The Concord loan portfolio contained
no non-performing assets at April 1, 2006 or June 30, 2006. The
allowance for loan losses totaled $6.0 million, or 1.33% of loans,
at June 30, 2006 compared to $4.8 million, or 1.33% of loans, at
March 31, 2006 and $4.5 million, or 1.33% of loans, one year ago.
Deposits increased from $407.2 million at June 30, 2005 to $460.9
at March 31, 2006 to $569.9 million at June 30, 2006. Borrowed
funds have declined from $75.0 million at June 30, 2005 to $25.9
million at March 31, 2006 and $15.5 million at June 30, 2006 as
part of the deleveraging strategy the Company has deployed.
Shareholders' equity has increased from $35.5 million at June 30,
2005 to $54.9 million at March 31, 2006 and to $57.7 million at
June 30, 2006 due to earnings and the March, 2006 common stock
offering. The net proceeds were used on April 1, 2006 to fund the
$23.7 million Concord acquisition. The rising interest rate
environment over the past year resulted in net interest income
increasing from $5.14 million for the second quarter of 2005 to
$6.70 million for the same period this year. Net interest margin
improved to 4.49% for the second quarter of 2006 from 4.25% for the
same quarter last year. Summit's net interest margin for the second
quarter was consistent with the 4.50% recorded for the first
quarter of this year. For the six months ended June 30, 2006, the
net interest margin was 4.49%, up significantly over the 4.16% last
year. Total noninterest income was $799,000 for the second quarter
of 2006, down from $985,000 for the second quarter last year
primarily due to losses on the Bank's low income housing tax credit
investment and interest rate floor that did not significantly
impact the first quarter of 2005. The former is offset by federal
income tax credit benefits and the latter has only a remaining
$30,000 book value should the instrument remain ineffective going
forward. Noninterest income for the six months ended June 30, 2006
was $1.60 million, down from the $1.92 million last year for the
same reasons as above. Noninterest expenses increased from $4.14
million in the second quarter of 2005 to $4.73 million for the
second quarter of 2006. The increase was primarily due to increased
salaries and benefits, equipment and other expenses associated with
the operations of Concord acquired in April, 2006 and a northeast
Atlanta branch opened in April, 2005, as well as increases in
expenses associated with regulatory and risk compliance. These
increases were partially offset by a decline in fraud loss expense
from last year. Noninterest expense for the six months ended June
30, 2006 were $8.82 million, up from $8.01 million last year for
the same reasons as noted above. Chief Executive Officer, Pin Pin
Chau, said, "We are pleased with the results of the second quarter,
our first quarter of operations with Concord on board. Our
expectations of the successful integration and financial
contribution of Concord to our operations have been confirmed thus
far. We look forward to Concord's continued success in the vibrant
Houston market. We are also pleased with our deposit growth and net
interest margin. Like many other banks, we will work diligently to
achieve our desired loan growth over the remainder of the year."
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 five branches in the metropolitan
Atlanta area and two in the South Bay area of San Francisco,
California. Concord Bank now operates as a division of Summit Bank
in one location in Houston, Texas. Summit also operates a loan
production office in San Diego, California and 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, (vi)
greater loan losses than historic levels, a (vii) difficulties in
integrating the operations of Concord Bank, N.A. with those of
Summit, and (viii) difficulties in expanding into a new geographic
market. Additional information and other factors that could affect
future financial results are included in Summit's Annual Report on
Form 10-K and its filings with the Securities and Exchange
Commission. -0- *T Selected Financial Information June 30, 2006 (In
thousands, except per share data) June 30, ----------------- % 2006
2005 Change ------- ------- ------- Summary Balance Sheet: Cash and
Short Term Investments $29,470 $24,823 18.7% Investments 132,446
141,308 -6.3% Commercial Loans 387,752 282,868 37.1% SBA Loans
59,156 54,118 9.3% Other Loans 2,506 728 244.4% Total Loans 449,414
337,714 33.1% Allowance for Loan Loss (5,962) (4,495) 32.6% Net
Loans 443,452 333,219 Other Assets 51,334 28,703 78.8% Total Assets
$656,702 $528,053 24.4% Demand Deposits - Noninterest-Bearing
$109,081 $102,466 6.5% NOW & MMA 98,727 83,080 18.8% Savings
& CDs 362,041 221,648 63.3% Total Deposits 569,849 407,194
39.9% Borrowed Funds 15,450 75,026 -79.4% Other Liabilities 13,678
10,361 32.0% Shareholders' Equity 57,725 35,472 62.7% Total
Liabilities & Shareholders' Equity $656,702 $528,053 24.4%
Three Months Ended June 30, % Summary Income Statement: 2006 2005
Change ------- ------- ------ Interest Income $11,205 $7,575 47.9%
Interest Expense 4,504 2,440 84.6% Net Interest Income 6,701 5,135
30.5% Provision for Loan Losses 350 200 75.0% Net Interest Income
after Provision for Loan Loss 6,351 4,935 28.7% Service Charges on
Deposits 319 351 -9.1% International Fee Income 364 409 -10.9% BOLI
121 107 13.6% Other noninterest income/(loss) (5) 118 -104.2% Total
Noninterest Income 799 985 -18.8% Salaries & Benefits 2,429
1,902 27.7% Occupancy 445 330 34.8% Premises & Equipment 409
430 -5.0% Other noninterest expense 1,449 1,477 -1.9% Total
Noninterest Expense 4,732 4,139 14.3% Income before Tax 2,418 1,781
35.8% Income Tax Expense 738 430 71.6% Net Income $1,680 $1,351
24.4% Average Balances: Average Assets $657,230 $525,391 25.1%
Average Earning Assets 597,362 483,280 23.6% Average Total Loans
454,297 335,348 35.5% Average Deposits 568,146 418,693 35.7%
Average Total Funds 591,509 482,789 22.5% Average Shareholders'
Equity 56,573 34,695 63.1% Per Share Data: Basic Earnings per Share
$0.24 $0.24 0.0% Diluted Earnings per Share $0.24 $0.24 0.0%
Dividend Per Share $0.10 $0.10 0.0% Weighted - Average Shares
Outstanding - Basic 7,082,653 5,694,604 Weighted - Average Shares
Outstanding - Diluted 7,084,179 5,694,604 Common Shares Outstanding
7,132,104 5,694,604 Key Ratios: Return on Average Assets 1.02%
1.03% Return on Average Shareholders' Equity 11.88% 15.58% Yield on
Earning Assets 7.50% 6.29% Cost of Funds 3.05% 2.02% Net Interest
Margin 4.49% 4.25% Noninterest Income as % of Average Assets 0.49%
0.75% Noninterest Expense as % of Average Assets 2.88% 3.15%
Efficiency Ratio 63.08% 67.64% ALLL as % of Total Loans 1.33% 1.33%
Nonperforming Assets as % of Total Loans and ORE 1.12% 0.29% Net
Chargeoffs(Recoveries) as % of Average Loans 0.33% 0.09% Six Months
Ended June 30, % Summary Income Statement: 2006 2005 Change -------
------- ------ Interest Income $19,965 $14,911 33.9% Interest
Expense 7,772 4,740 63.9% Net Interest Income 12,193 10,171 19.9%
Provision for Loan Losses 650 464 40.1% Net Interest Income after
Provision for Loan Loss 11,543 9,707 18.9% Service Charges on
Deposits 644 694 -7.3% International Fee Income 720 741 -2.8% BOLI
242 228 6.0% Other noninterest income/(loss) (11) 255 -104.5% Total
Noninterest Income 1,595 1,918 -16.8% Salaries & Benefits 4,669
3,902 19.7% Occupancy 801 628 27.4% Premises & Equipment 857
827 3.5% Other noninterest expense 2,491 2,655 -6.2% Total
Noninterest Expense 8,818 8,012 10.0% Income before Tax 4,320 3,613
19.6% Income Tax Expense 1,231 956 28.8% Net Income $3,089 $2,657
16.3% Average Balances: Average Assets $594,180 $528,397 12.4%
Average Earning Assets 542,794 488,720 11.1% Average Total Loans
408,147 337,806 20.8% Average Deposits 508,060 427,909 18.7%
Average Total Funds 537,511 487,424 10.3% Average Shareholders'
Equity 46,884 34,692 35.1% Per Share Data: Basic Earnings per Share
$0.48 $0.47 2.1% Diluted Earnings per Share $0.48 $0.47 2.1%
Dividend Per Share $0.20 $0.20 0.0% Weighted - Average Shares
Outstanding - Basic 6,399,369 5,693,833 Weighted - Average Shares
Outstanding - Diluted 6,401,333 5,693,990 Common Shares Outstanding
7,132,104 5,694,604 Key Ratios: Return on Average Assets 1.04%
1.01% Return on Average Shareholders' Equity 13.18% 15.32% Yield on
Earning Assets 7.38% 6.11% Cost of Funds 2.89% 1.95% Net Interest
Margin 4.49% 4.16% Noninterest Income as % of Average Assets 0.54%
0.73% Noninterest Expense as % of Average Assets 2.97% 3.03%
Efficiency Ratio 63.95% 66.30% ALLL as % of Total Loans 1.33% 1.33%
Nonperforming Assets as % of Total Loans and ORE 1.12% 0.29% Net
Chargeoffs(Recoveries) as % of Average Loans 0.17% 0.31% *T
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