Santa Rosa's Summit State Bank 1Q bottom line falls 18% amid plans to build loan portfolio

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Santa Rosa-based Summit State Bank (Nasdaq: SSBI) posted an 18.0% drop in first-quarter earnings from a year before.

The bank on April 30 announced quarterly net income clocked in at $1.425 million, compared with $1.74 million for the same quarter in 2018, a drop of $315,000. The institution attributed the dip to more hires, a long-term plan to increase loans and total assets, and no longer receiving as much income from the sale of SBA guaranteed loans.

“The plan was really predicated on building the infrastructure so that as we grew we provided good customer service which would foster further growth,” said Executive Vice President and Chief Credit Officer Brian Reed. “Sometimes that infrastructure comes ahead of the earnings growth.”

Reed added that part of the long-term plan was also to alter the bank’s loan-to-deposit ratio.

“The general sense is that we had a low loan-to-deposit ratio a couple of years back, and we were more heavily invested in investments that were lower-yielding,” he said.

Quarterly operating expenses were $670,000, up 19% from a year before. The bank primarily attributed that rise to its hiring surge and related personnel and occupancy costs.

Executive Vice President and Chief Financial Officer Camille Kazarian noted net income was up $300,000 from the quarter that ended in December and was within 1% of the planned projections.

Loans, assets and deposits ultimately did increase over from a year before.

Total assets at the end of March were $626.3 million, compared with $577.0 million a year before, an increase of 9%. During the same period, net loans jumped 12% to $510.0 million, and total deposits 10% to $555.3 million.

The bank board declared a 12 cent-per-share quarterly dividend, to be paid May 24 to shareholders of record on May 17.

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