Summit Bank Group Reports 2023 Year and 4th Quarter Earnings

Rhea-AI Summary

Summit Bank Group (SBKO) reported a net income of $8.92 million for fiscal year 2023, with a net loan growth of $175.0 million and deposit growth of $59.8 million. However, the net income for Q4 2023 decreased by 31% due to higher loan charge-off activity and losses on sale of collateral in the Small Commercial Equipment lending unit. The bank's net interest income increased by 2.3% in Q4 2023, but non-interest income decreased by $2.2 million year over year. Non-interest expenses increased by 22% in 2023, impacting the bank's financials. The bank maintained a highly liquid balance sheet with $135 million in cash and available for sale short-term securities, representing 12.5% of total assets. Despite the challenges, the bank continues to maintain capital levels in excess of the requirements to be categorized as 'well-capitalized.'

Positive

• Net income for fiscal year 2023 was $8.92 million
• Net loan growth of $175.0 million and deposit growth of $59.8 million
• Net interest income increased by 2.3% in Q4 2023
• The bank maintained a highly liquid balance sheet with $135 million in cash and available for sale short-term securities, representing 12.5% of total assets
• The bank continues to maintain capital levels in excess of the requirements to be categorized as 'well-capitalized'

Negative

• Net income for Q4 2023 decreased by 31%
• Non-interest income decreased by $2.2 million year over year
• Non-interest expenses increased by 22% in 2023

EUGENE, Ore.--(BUSINESS WIRE)-- Summit Bank Group (OTC Pink: SBKO)

• Fiscal year 2023 Net Income - $8.92 million or $1.15 per fully diluted share.
• Q4 2023 Net Income - $1.68 million or $0.22 per fully diluted share.
• Cash and securities total $135 million – 12.5 percent of assets.
• Year over year Net Loan Growth - $175.0 million or 23.6 percent.
• Year over year Deposit Growth - $59.8 million or 7.0 percent.

Summit Bank Group reported net income for the fourth quarter of $1.68 million, or $0.22 per fully diluted share. Comparable earnings for the quarter ended September 30, 2023 were $2.44 million, or $0.32 per fully diluted share, representing a decrease of 31 percent, or $0.11 to earnings and earnings per fully diluted share, respectively. Higher loan charge-off activity and losses on sale of collateral in the Bank’s Small Commercial Equipment lending unit reduced earnings per share during the fourth quarter by approximately $0.06 per share compared to the third quarter and higher provision for loan losses in the Bank’s other lending units accounted for an additional $0.04 per fully diluted share.

“The team was pleased with the growth of the Bank and our results in fourth quarter despite the challenges faced in one area of the Bank’s business. The Small Business Equipment lending unit continues to be affected by the difficult macro environment in the trucking industry,” said Craig Wanichek, President and CEO of Summit Bank. “Over the past 12 years in this business, the unit has been a historically very strong performer and highly accretive to Bank results. Many industry forecasts are calling for recovery in this market in the middle of next year.”

Results of Operation

The Bank has responded well to the dynamic banking environment during 2023, with new loan and deposit relationships added during the year and three consecutive quarterly increases in net interest income during the year. Net interest income for the fourth quarter of 2023 was $12.3 million, an increase of $270 thousand, or 2.3 percent, over the third quarter total of $12.0 million.

Net interest margin for the fourth quarter was 4.81 percent, a slight reduction from 4.85 percent for the third quarter. Net interest margin for the 2023 fiscal year was 4.80 percent, which was an improvement over the full year 2022 figure of 4.45 percent. The cost of client deposits for the fourth quarter was 2.11 percent; an increase of 13 basis points over 1.98 percent during the third quarter due to the higher interest rate environment.

Return on average equity for the fiscal year was 9.8%, which follows ten consecutive years for the Company producing a return on equity in excess of 10.0 percent. Return on average assets for the year was 0.86 percent.

Non-interest income for 2023 was $508 thousand, which was lower than the previous year by $2.2 million. Increased losses on sale of repossessed small equipment finance collateral comprised $1.9 million of the change year over year. Non-interest expense for 2023 totaled $26.0 million, an increase of $4.7 million, or 22 percent, over 2022. Personnel expenses associated with Bank growth accounted for $2.2 million of the year over year increase, with data processing, facilities costs and loan-related expenses accounting for an additional $1.4 million of the increase year over year.

Balance Sheet

The Bank continues to maintain a highly liquid balance sheet with cash and available for sale short-term securities of $135 million, which represents 12.5 percent of total assets as of December 31, 2023. “Summit Bank remains in a well-capitalized and robust liquidity position,” said Mr. Wanichek. “We have continued to win new clients and broadened relationships in all of our markets this quarter, as our new and existing clients are seeing the value of banking with Oregon’s premier business bank.” Additionally, the Bank maintains secured borrowing commitments from the Federal Home Loan Bank and the Federal Reserve Bank with total available borrowing capacity as of December 31, 2023 of $278 million. Combined, the Bank’s cash, AFS securities, and available secured borrowing as of December 31, 2023 totaled $349 million. This total is 32.4 percent of total assets and 118 percent of total estimated uninsured deposits as of December 31, 2023.

The securities portfolio ended the fiscal year at $63.6 million, a decrease of $3.4 million from the September 30^th total as principal payments and maturities reduced the portfolio during the quarter. The duration of the portfolio remains low at 2.0 years with the current market value of the portfolio increasing during the fourth quarter by $1.26 million, bringing the fiscal year end relative market value of the portfolio to negative $2.74 million, or 2.9 percent of total capital, as of December 31, 2023.

The Bank was successful in retaining client deposits during 2023 with total client deposits increasing by $8.9 million, or 1.0 percent, and $59.8 million, or 7.0 percent, during the fourth quarter and the trailing twelve months, respectively. Non-interest-bearing deposit balances remained relatively stable during 2023 with a slight decrease of 3.2 percent, ending the year at $175.7 million or 19 percent of total deposits. Core deposit balances represent 94 percent of total deposits as of December 31^st, 2023, compared to 95 percent as of the previous year end. Summit Bank reported $35.0 million in FHLB borrowings at December 31, 2023, compared to $36.5 million at September 20, 2023 and zero a year ago.

Total net loans as of December 31, 2023, were $915.2 million, which represented growth of $39.7 million or 4.5 percent during the fourth quarter and $175.0 million or 23.6 percent, since December 31, 2022. “Strong loan growth continues in the Eugene/Springfield market with significant year over year loan growth in Portland, as well as solid loan growth in Central Oregon,” said Mr. Wanichek.

Total shareholders’ equity ended the fourth quarter at $95.7 million, an increase of $11.0 million, or 13.0 percent, since December 31, 2022. As the Company completes its 20^th year of operations, net income for the most recent three years of $33.3 million is just slightly below the combined net income for the first 17 years’ total of $34.0 million. Summit Bank continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized,” with Tier 1 leverage capital as of fiscal year end of 10.7 percent and Total Capital to Risk Weighted Assets of 12.2 percent.

Asset Quality

Total non-performing assets as of December 31, 2023 increased slightly from previous recent quarters at 0.22 percent of total assets, increasing from 0.13 percent at December 31, 2022, with the increase resulting primarily from a single commercial loan relationship totaling $862,000.

The Bank’s allowance for credit loss at December 31, 2023 was 1.38 percent with increases during the fourth quarter in the small equipment finance portfolio resulting from a more conservative calculation for certain individually evaluated credits.

About the Company

Summit Bank Group Inc., through its wholly owned subsidiary Summit Bank, maintains offices in Eugene, Bend and Portland and specializes in providing high-level service to professionals and medium-sized businesses and their owners. The bank was voted for the third year in a row as one of Oregon’s “Top 100 Companies to Work For,” according to Oregon Business Magazine. The Bank was voted in 2023 as “Favorite Bank” in the Eugene Register-Guard’s annual Reader’s Choice Awards and “Best Bank” by Central Oregon’s Bend Bulletin. Summit Bank Group Inc. is quoted on the OTCPK as SBKO.

Forward-Looking Statement

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “target” and words of similar meaning. These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, demand for loan products, deposit flows, changes in the interest rate environment, the effects of inflation, potential recessionary conditions, general economic conditions or conditions within the securities markets, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the FRB, changes in the quality, size and composition of our loan and securities portfolios, changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio; changes in demand for our products and services, legislative, accounting, tax and regulatory changes, the current or anticipated impact of military conflict, terrorism or other geopolitical events, a failure in or breach of our operational or security systems or infrastructure, including cyberattacks that could adversely affect the Company’s financial condition and results of operations and the business in which the Company and the Bank are engaged, the failure to maintain current technologies and the failure to retain or attract employees.

You should not place undue reliance on forward-looking statements. We undertake no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

QUARTERLY FINANCIAL REPORT – DECEMBER 31, 2023

(in thousands except per share data)		Unaudited				Unaudited
		As of				As of
Summary Statements of Condition		Dec.  31, 2023				Dec.  31, 2022
Cash and short term investments		$	71,265			$	138,512
Securities			63,637				66,900
Loans:
Commercial			283,870				236,639
Commercial real estate			580,801				457,570
Other			61,002				54,274
Loan loss reserve and unearned income			(10,511	)			(8,337	)
Total net loans			915,162				740,145
Property and other assets			27,634				23,084
Repossessed property			672				343
Total assets		$	1,078,370			$	968,984
Deposits:
Noninterest-bearing demand		$	175,717			$	181,449
Interest-bearing demand			687,863				631,026
Certificates of deposit			53,363				44,644
Total deposits			916,943				857,119
Subordinated debt			19,675				19,634
Other liabilities			46,097				7,607
Shareholders' equity			95,655				84,624
Total liabilities and shareholders' equity		$	1,078,370			$	968,984
Book value per share		$	12.46			$	11.07

		Unaudited				Unaudited				Unaudited				Unaudited
		For the twelve months ended				For the twelve months ended				For the three months ended				For the three months ended
Summary Statements of Income		Dec.  31, 2023				Dec.  31, 2022				Dec.  31, 2023				Dec.  31, 2022
Interest income		$	65,222			$	45,450			$	17,619			$	14,046
Interest expense			(18,748	)			(4,208	)			(5,335	)			(2,295	)
Net interest income			46,474				41,242				12,284				11,751
Provision for loan losses			(8,754	)			(4,661	)			(2,672	)			(1,739	)
Noninterest income			508				2,760				(262	)			643
Noninterest expense			(26,008	)			(21,313	)			(6,943	)			(5,738	)
Net income before income taxes			12,220				18,028				2,407				4,916
Provision for income taxes			(3,299	)			(4,476	)			(728	)			(1,074	)
Net income		$	8,921			$	13,553			$	1,679			$	3,842
Net income per share, basic		$	1.16			$	1.78			$	0.22			$	0.50
Net income per share, fully diluted		$	1.15			$	1.76			$	0.22			$	0.50

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240124363222/en/

Craig Wanichek, President & Chief Executive Officer, 541-684-7500

Source: Summit Bank Group

FAQ

What was Summit Bank Group's (SBKO) net income for fiscal year 2023?

Summit Bank Group reported a net income of $8.92 million for fiscal year 2023.

What was the net loan growth for Summit Bank Group (SBKO)?

The net loan growth for Summit Bank Group was $175.0 million.

What was the impact of higher loan charge-off activity and losses on sale of collateral in Q4 2023 on Summit Bank Group's net income?

The net income for Q4 2023 decreased by 31% due to higher loan charge-off activity and losses on sale of collateral in the Small Commercial Equipment lending unit.

What was the change in non-interest income for Summit Bank Group (SBKO) year over year?

Non-interest income decreased by $2.2 million year over year.

What was the change in non-interest expenses for Summit Bank Group in 2023?

Non-interest expenses increased by 22% in 2023.

What percentage of assets did the cash and available for sale short-term securities represent for Summit Bank Group?

The cash and available for sale short-term securities represented 12.5% of total assets for Summit Bank Group.

What are Summit Bank Group's capital levels classified as?

The bank continues to maintain capital levels in excess of the requirements to be categorized as 'well-capitalized'.