SBIT Summit Bancshares

Summit Bancshares Reports Second Quarter 2005 Earnings FORT WORTH, Texas, July 18 /PRNewswire-FirstCall/ -- Summit Bancshares, Inc. (NASDAQ:SBIT), a community-oriented bank holding company in Fort Worth, reported second quarter earnings today. Philip E. Norwood, Chairman, President and Chief Executive Officer stated, "We are pleased to report a positive increase in earnings per share of 19.0% for the second quarter over earnings per share for the same quarter of last year. The increase in market interest rates that began a year ago has contributed significantly to this increase in earnings." He further stated, "Increases in the average balances of loans and deposits for the second quarter of 2005 over the second quarter of the prior year were 12.5% and 9.4%, respectively. These positive increases also contributed to the overall earnings increase." Results of Operations For the quarter ended June 30, 2005, net income was $3,191,000 compared to $2,596,000 for the same period in 2004. Net income per diluted share was $0.25 for the three months ended June 30, 2005, compared to $0.21 for the three months ended June 30, 2004. All prior period per share data has been restated for the two-for-one stock split that was effective December 31, 2004. Return on average assets and return on average shareholders' equity for the second quarter of 2005 were 1.27% and 16.71%, respectively. The Company's average shareholders' equity-to-assets ratio was 7.6% for the quarter ended June 30, 2005. Net income for the six months ended June 30, 2005 was $6,204,000 or $0.49 per diluted share, compared to $5,047,000, or $0.40 per diluted share for the same period last year, a 22.5% increase. Return on average assets and return on average shareholders' equity for the six months ended June 30, 2005 were 1.25% and 16.44%, respectively. Financial Results Net interest income (tax equivalent) for the second quarter of 2005 was $10.8 million compared to $9.1 million in the second quarter of last year, an 18.7% increase. The increase reflects the inclusion of Arlington National Bank's financial results for two months in the second quarter of 2004 versus three months for the second quarter of 2005. Arlington National Bank was acquired effective May 1, 2004. The net interest margin increased to 4.57% for the second quarter of 2005 compared to 4.18% for the second quarter of the prior year. The Company believes it is somewhat more sensitive to market interest rate changes than other community banks due to its heavier commercial lending focus. Since late June 2004, the Federal Reserve has increased the target rate for Federal Funds by 225 basis points; and during this period, the prime lending rate has increased from 4.00% to 6.25%. This increase in the prime lending rate is reflected in an 89 basis point increase in the Company's yield on earning assets and a 98 basis point increase in the yield on loans between the second quarter of 2004 and the second quarter of 2005. The Company, however, experienced an increase in the cost of interest bearing liabilities of 71 basis points during the same period. The current rising interest rate environment also has had a positive impact on net interest income for that portion of earning assets supported by the Company's non-interest bearing deposits. For the second quarter of 2005 non-interest bearing deposits averaged 30.0% of total deposits. As the Company's interest earning assets reprice to reflect the increased interest rates in the market already experienced and if interest rates continue to rise the Company believes that its interest rate sensitive position will increase earnings. However, earnings may be somewhat impacted if rates on deposit and other interest bearing liabilities increase significantly faster than interest rates on earning assets. Non-interest income increased $312,000 or 18.1% for the second quarter of 2005 compared to the same quarter in the prior year with positive increases in merchant card income and investment service fees which were primarily due to the acquisition in March 2005 of the investment group Dignum Financial Services. In addition, in the second quarter of 2005, the Company realized a gain of $169,000 on the sale of student loans. Growth of non-interest income continues to be one of the areas of the Company's focus. Non-interest expenses for the second quarter increased $1,208,000 or 19.0% over the same quarter of the previous year. This increase includes the impacts of: (a) the expenses of the Arlington locations being included in the Company's financial results an additional month versus the same quarter last year; (b) the inclusion in the second quarter of 2005 of the expenses of Dignum Financial Services; (c) the expenses incurred in the new Hulen Motor Bank facility and the permanent office for the Euless Branch, both of which were occupied in the fourth quarter of 2004; and (d) certain staff additions in lending and support functions. The provision for loan losses was $225,000 in the second quarter of 2005. This was a decrease of $175,000 over the same quarter last year. In the second quarter of 2005, the Company had net loan recoveries of $54,000. The Allowance for Loan Losses as a percent of outstanding loans was 1.50% (or 1.53% when loans are reflected net of the guaranteed portion of SBA loans and guaranteed student loans, which management believes is a more useful number because of the loan guarantees) at June 30, 2005 as compared to 1.46% at the end of the second quarter of 2004. For the first six months of 2005, the Company recorded net recoveries of previously charged-off loans of $161,000. Non-performing assets totaled $3.4 million ($2.0 million net of principal guaranteed by the SBA), or 0.47% of loans and foreclosed assets at June 30, 2005, compared to $3.3 million, or 0.49% of loans and foreclosed assets, at June 30, 2004. The Allowance for Loan Losses was 317% of non- performing loans at June 30, 2005. The Company continues to maintain favorable measures of asset quality. The Company's loans were $721 million at June 30, 2005, an increase of $48 million, or 7.2%, from June 30, 2004. Deposits increased over the same period from $776 million to $804 million, an increase of $28 million, or 3.7%. Shareholders' equity at June 30, 2005 was $77.6 million. The Company will host a conference call Tuesday, July 19th at 10:30 a.m. (CT). To access the live call, please call (800) 289-0730 and enter code 1504863. A toll free replay of the call will be available for two weeks beginning at 3:00 p.m. (CT), July 19, 2005 through midnight, August 2, 2005. You may access this replay by calling (888) 203-1112 and entering code 1504863. 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 contain 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 the 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, 2004. SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands, except per share data) Quarter Ended Six Months Ended June 30, % June 30, % EARNINGS SUMMARY 2005 2004 Change 2005 2004 Change Interest income $14,378 $11,302 27.2% $27,751 $21,501 29.1% Interest expense 3,656 2,274 60.8% 6,796 4,190 62.2% Net interest income 10,722 9,028 18.8% 20,955 17,311 21.1% Provision for loan losses 225 400 -43.8% 450 1,005 -55.2% Service charges on deposits 990 1,078 -8.2% 1,972 1,984 -0.6% Gain on sale of investment securities --- --- 0.0% --- --- 0.0% Other income 1,045 645 62.0% 1,943 1,306 48.8% Salaries and benefits expense 4,448 3,772 17.9% 8,717 7,140 22.1% Occupancy and equipment expense 1,231 1,117 10.2% 2,433 2,050 18.7% Other expense 1,879 1,461 28.6% 3,660 2,690 36.1% Earnings before income taxes 4,974 4,001 24.3% 9,610 7,716 24.5% Provision for income taxes 1,783 1,405 26.9% 3,406 2,669 27.6% Net earnings $3,191 $2,596 22.9% $6,204 $5,047 22.9% Basic earnings per share $0.26 $0.21 23.8% $0.50 $0.41 22.0% Basic weighted average shares outstanding 12,418 12,320 12,398 12,312 Diluted earnings per share $0.25 $0.21 19.0% $0.49 $0.40 22.5% Diluted weighted average shares outstanding 12,734 12,638 12,726 12,664 Average for Quarter Ended June 30, March 31, Dec. 31, Sept. 30, June 30, BALANCE SHEET SUMMARY 2005 2005 2004 2004 2004 Total loans $723,535 $706,902 $694,177 $678,915 $642,935 Total investment securities 216,825 220,161 226,530 218,831 196,972 Earning assets 945,251 932,258 924,557 914,595 871,084 Total assets 1,007,680 993,154 984,814 976,911 925,830 Noninterest bearing deposits 239,127 225,519 235,846 226,462 207,815 Interest bearing deposits 558,905 559,853 560,341 557,329 521,812 Total deposits 798,032 785,372 796,187 783,791 729,628 Other borrowings 128,684 128,174 109,713 118,083 121,193 Shareholders' equity 76,575 75,602 74,543 71,038 70,583 Average for Six Months Ended June 30, % BALANCE SHEET SUMMARY 2005 2004 Change Total loans $715,265 $608,398 17.6% Total investment securities 218,484 192,480 13.5% Earning assets 938,791 819,179 14.6% Total assets 1,000,457 866,936 15.4% Noninterest bearing deposits 232,361 193,603 20.0% Interest bearing deposits 559,376 488,083 14.6% Total deposits 791,737 681,685 16.1% Other borrowings 128,430 111,271 15.4% Shareholders' equity 76,091 70,350 8.2% Ending Balance June 30, March 31, Dec. 31, Sept. 30, June 30, BALANCE SHEET SUMMARY 2005 2005 2004 2004 2004 Total loans $721,161 $716,714 $702,619 $689,906 $672,686 Total investment securities 214,750 214,222 223,351 219,264 214,991 Total earning assets 945,661 939,934 930,990 928,638 905,228 Allowance for loan losses (10,798) (10,519) (10,187) (10,079) (9,844) Premises and equipment 15,563 15,462 15,749 15,643 15,145 Total assets 1,008,475 999,914 989,117 990,406 969,708 Noninterest bearing deposits 241,643 232,556 235,399 232,586 218,343 Interest bearing deposits 562,846 565,002 556,865 558,938 557,347 Total deposits 804,489 797,558 792,264 791,524 775,690 Other borrowings 122,203 124,007 118,094 121,355 121,785 Total liabilities 930,891 925,477 914,627 916,858 901,009 Shareholders' equity 77,584 74,437 74,490 73,548 68,699 SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) June 30, March 31, Dec. 31, Sept. 30, June 30, NONPERFORMING ASSETS 2005 2005 2004 2004 2004 Nonaccrual loans $3,372 $3,294 $2,587 $2,545 $2,832 Restructured loans --- --- --- --- --- Other real estate & foreclosed assets --- --- --- 4 369 Accruing loans past due 90 days or more 36 --- 18 2,300 111 Total nonperforming assets $3,408 $3,294 $2,605 $4,849 $3,312 Total nonperforming assets as a percentage of loans and foreclosed assets 0.47% 0.46% 0.37% 0.70% 0.49% Quarter Ended June 30, March 31, Dec. 31, Sept. 30, June 30, ALLOWANCE FOR LOAN LOSSES 2005 2005 2004 2004 2004 Balance at beginning of period $10,519 $10,187 $10,079 $9,844 $8,320 Balance acquired in Arlington National Bank Acquisition --- --- --- --- 1,254 Loans charged off (147) (84) (293) (415) (196) Loan recoveries 201 191 111 155 66 Net (charge-offs) recoveries 54 107 (182) (260) (130) Provision for loan losses 225 225 290 495 400 Balance at end of period $10,798 $10,519 $10,187 $10,079 $9,844 Allowance for loan losses as a percentage of total loans 1.50% 1.47% 1.45% 1.46% 1.46% Allowance for loan losses as a percentage of nonperforming loans 316.84% 319.34% 393.82% 396.03% 347.60% Net charge-offs (recoveries) as a percentage of average loans -0.01% -0.02% 0.03% 0.04% 0.02% Provision for loan losses as a percentage of average loans 0.03% 0.03% 0.04% 0.07% 0.06% Quarter Ended June 30, March 31, Dec. 31, Sept. 30, June 30, SELECTED RATIOS 2005 2005 2004 2004 2004 Return on average assets (annualized) 1.27% 1.23% 1.18% 1.14% 1.13% Return on average equity (annualized) 16.71% 16.16% 15.58% 15.66% 14.79% Average shareholders' equity to average assets 7.60% 7.63% 7.57% 7.27% 7.62% Yield on earning assets 6.12% 5.83% 5.61% 5.39% 5.23% Cost of interest bearing funds 2.13% 1.85% 1.65% 1.49% 1.42% Net interest margin (tax equivalent) 4.57% 4.47% 4.41% 4.29% 4.18% Efficiency ratio 59.07% 59.69% 59.71% 59.23% 58.90% End of period book value per common share $6.25 $6.01 $6.03 $5.96 $5.57 End of period common shares outstanding 12,421 12,390 12,359 12,334 12,372 SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Three Months Ended June 30, 2005 June 30, 2004 Average Average YIELD ANALYSIS Balance Interest Yield Balance Interest Yield Interest Earning Assets: Federal funds sold & due from time $4,891 $36 2.95% $31,177 $75 0.96% Investment securities (taxable) 208,367 1,914 3.67% 190,212 1,778 3.76% Investment securities (tax-exempt) 8,458 110 5.20% 6,760 88 5.26% Loans 723,535 12,356 6.85% 642,935 9,391 5.87% Total Interest Earning Assets 945,251 14,416 6.12% 871,084 11,332 5.23% Noninterest Earning Assets: Cash and due from banks 30,139 28,813 Other assets 42,973 35,256 Allowance for loan losses (10,683) (9,323) Total Noninterest Earning Assets 62,429 54,746 Total Assets $1,007,680 $925,830 Interest Bearing Liabilities: Transaction and money market accounts $231,313 797 1.38% $238,697 637 1.07% Savings deposits 162,065 704 1.74% 143,322 408 1.15% Certificates and other time deposits 165,527 1,151 2.79% 139,794 792 2.28% Other borrowings 128,684 1,004 3.13% 121,193 437 1.45% Total Interest Bearing Liabilities 687,589 3,656 2.13% 643,006 2,274 1.42% Noninterest Bearing Liabilities: Demand deposits 239,127 207,815 Other liabilities 4,389 4,426 Shareholders' equity 76,575 70,583 Total Noninterest Bearing Liabilities 320,091 282,824 Total Liabilities and Shareholders' Equity $1,007,680 $925,830 Net Interest Income and Margin (tax equivalent) $10,760 4.57% $9,058 4.18% SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Six Months Ended June 30, 2005 June 30, 2004 Average Average YIELD ANALYSIS Balance Interest Yield Balance Interest Yield Interest Earning Assets: Federal funds sold & due from time $5,042 $67 2.68% $18,300 $88 0.96% Investment securities (taxable) 210,249 3,840 3.65% 185,701 3,496 3.77% Investment securities (tax- exempt) 8,235 216 5.25% 6,779 178 5.27% Loans 715,265 23,702 6.68% 608,398 17,805 5.89% Total Interest Earning Assets 938,791 27,825 5.98% 819,178 21,567 5.29% Noninterest Earning Assets: Cash and due from banks 30,099 26,975 Other assets 42,073 29,417 Allowance for loan losses (10,506) (8,651) Total Noninterest Earning Assets 61,666 47,741 Total Assets $1,000,457 $866,919 Interest Bearing Liabilities: Transaction and money market accounts $233,490 1,514 1.31% $217,810 1,155 1.07% Savings deposits 165,188 1,340 1.64% 137,301 793 1.16% Certificates and other time deposits 160,698 2,130 2.67% 132,972 1,530 2.31% Other borrowings 128,430 1,812 2.85% 111,271 712 1.29% Total Interest Bearing Liabilities 687,806 6,796 1.99% 599,354 4,190 1.41% Noninterest Bearing Liabilities: Demand deposits 232,361 193,605 Other liabilities 4,199 3,610 Shareholders' equity 76,091 70,350 Total Noninterest Bearing Liabilities 312,651 267,565 Total Liabilities and Shareholders' Equity $1,000,457 $866,919 Net Interest Income and Margin (tax equivalent) $21,029 4.52% $17,377 4.27% SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands, except per share data) June 30, June 30, LOAN PORTFOLIO 2005 % 2004 % Commercial and industrial $257,362 35.7% $249,230 37.0% Real estate: Commercial 236,142 32.7% 192,956 28.7% Residential 86,558 12.0% 83,398 12.4% Construction and development 105,256 14.6% 104,237 15.5% Consumer 35,843 5.0% 42,865 6.4% Total loans (gross) 721,161 100.0% 672,686 100.0% Unearned discounts --- 0.0% --- 0.0% Total loans (net) $721,161 100.0% $672,686 100.0% June 30, June 30, REGULATORY CAPITAL DATA 2005 2004 Tier 1 Capital $79,995 $72,430 Tier 1 Ratio 10.47% 10.02% Total Capital (Tier 1 + Tier 2) $89,549 $81,478 Total Capital Ratio 11.74% 11.27% Total Risk-Adjusted Assets $763,086 $723,022 Tier 1 Leverage Ratio 8.03% 7.91% June 30, June 30, OTHER DATA 2005 2004 Full Time Equivalent Employees (FTE's) 257 262 Stock Price Range (For the Quarter Ended): High $18.65 $15.13 Low $16.00 $13.50 Close $17.30 $14.55 http://www.newscom.com/cgi-bin/prnh/20041025/DASBANKLOGO 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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