SBIT Summit Bancshares

FORT WORTH, Texas, April 12 /PRNewswire-FirstCall/ -- Summit Bancshares, Inc. (NASDAQ:SBIT), the bank holding company for Summit Bank, N.A., today reported net income for the first quarter of 2006 of $2,426,000, or $0.19 per diluted common share, compared to $3,013,000, or $.24 per diluted common share, for the comparable 2005 period, a 20.8% decrease in per share earnings. Philip E. Norwood, Chairman, President and Chief Executive Officer stated, "The fundamentals of the Company remain strong with double digit growth for both loans and deposits and an 18% increase in net interest income in the quarter compared to the first quarter of the prior year." He further stated, "However, as anticipated and discussed in the SEC 8K filing on February 13, 2006, an increased provision for loan losses was required to provide a reserve for loan losses that, in management's opinion based on information currently available to us, is adequate to cover the exposure to potential loan losses that might occur when considering the current level of non-performing loans." The provision for loan losses was $2,000,000 for the first quarter of 2006 while the provision for loan losses was $225,000 for the same quarter of 2005. As noted above, this is an extraordinary provision for loan losses compared to our provisions for the last several quarters. For the first quarter of 2006, the Company experienced net charged off loans of $116,000, which represented net charge offs to average loans for the quarter of 0.06%, annualized. As of March 31, 2006, the allowance for loan losses as a percentage of total loans was 1.62% and also represented 117% of non-performing loans. As of March 31, 2006, non-performing assets were $11.6 million, or 1.43% of total outstanding loans and foreclosed assets, an increase of $8.6 million from the balance at December 31, 2005. The increase reflects the addition in the quarter of credits totaling $9.3 million, involving two different borrowers, and a decrease of $0.7 million in the quarter of non-performing loans and foreclosed assets that were reported as of December 31, 2005. Net interest income (tax equivalent) of $12.1 million for the first quarter of 2006 improved $1.8 million, or 17.9% over the first quarter of 2005. Because the Company believes that it is somewhat more sensitive to market interest rate changes than other community banks due to its heavier commercial lending focus, net interest margin increased to 4.68% for the first quarter of 2006 compared to 4.47% for the first quarter of the prior year reflecting the recent increases in market interest rates and the increase in earning assets. Non-interest income for the first quarter of 2006 was $1,873,000, a $7,000 decrease over the first quarter of 2005. The decrease reflected declines in: a) service charges on deposit accounts of $61,000, partly due to higher interest earning credits paid on commercial deposit accounts that are under account analysis for charges and, b) an increase in other fees of $54,000 which includes higher insurance commissions and investment fees which more than exceeds an extraordinary income payment of $134,000 included in the first quarter of last year. Non-interest expenses of $8,136,000 for the first quarter of 2006 increased $884,000 compared to the first quarter of last year. This increase includes the impacts of: a) staff additions to support the Company's continued growth and increased cost of employee benefits; b) a full quarter's expense of Summit Financial Partners, which was acquired in late March 2005; and c) loss of tenants' rents at a bank facility along with generally higher occupancy expenses due to rent escalations and higher utility expense. Also included in the increase in 2006 expense was a $44,000 expense for stock options that was first recorded in this quarter as required by new accounting rules. These increases are net of the decrease in expenses for compliance with SOX 404 incurred in the first quarter of last year. The Company's loans were $809 million at March 31, 2006, an increase of 12.8% over March 31, 2005. Deposits increased 11.6% to $890 million at March 31, 2006. At March 31, 2006, shareholders' equity was $82 million or a book value of $6.60 per share. Return on average assets and return on average shareholders' equity were .88% and 11.91%, respectively, for the quarter ended March 31, 2006, compared to 1.23% and 16.16%, respectively, for the same quarter in 2005. Summit files annual, quarterly and special reports, proxy statements and other information with the SEC. Investors may read and copy any of these reports, statements and other information at the SEC's public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Investors should call the SEC at 1-800-SEC-0330 for further information on the public reference room. The reports, statements, and other information filed by Summit with the SEC are also available free at the SEC's web site at http://www.sec.gov/ . You can also obtain a free copy of these reports, statements and other information from Summit's web site at http://www.summitbank.net/ . The Company will host a conference call at 10:30 a.m. (CT) on Thursday, April 13, 2006 to discuss the Company's performance for the quarter ended March 31, 2006. To participate, please call (800) 310-1961 and enter confirmation code 8542806. If you are unable to participate an audio playback of the call will be available starting Thursday, April 13, 2006 at 3:00 p.m. (CT) through midnight, Thursday, April 27, 2006 (CT) by calling 888-203-1112 and entering confirmation code 8542806. The 2006 Annual Meeting of Shareholders will be held on April 18, 2006 at 4:00 p.m. (CT) at Summit Bancshares, Inc. Corporate Headquarters, 3880 Hulen Street, Suite 300, Fort Worth, Texas. 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, 2005. SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands, except per share data) Quarter Ended March 31, % EARNINGS SUMMARY 2006 2005 Change Interest income $17,566 $13,373 31.4% Interest expense 5,516 3,140 75.7% Net interest income 12,050 10,233 17.8% Provision for loan losses 2,000 225 788.9% Service charges on deposits 921 982 -6.2% Gain on sale of investment securities --- --- --- Other income 952 898 6.0% Salaries and benefits expense 4,893 4,269 14.6% Occupancy and equipment expense 1,430 1,202 19.0% Other expense 1,813 1,781 1.8% Earnings before income taxes 3,787 4,636 -18.3% Provision for income taxes 1,361 1,623 -16.1% Net earnings $2,426 $3,013 -19.5% Basic earnings per share $0.19 $0.24 -20.8% Basic weighted average shares outstanding 12,455 12,377 Diluted earnings per share $0.19 $0.24 -20.8% Diluted weighted average shares outstanding 12,739 12,718 Average for Quarter Ended March 31, Dec. 31, Sept. 30, June 30, March 31, BALANCE SHEET 2006 2005 2005 2005 2005 SUMMARY Total loans $793,536 $753,311 $735,109 $723,535 $706,902 Total investment securities 253,197 252,508 226,441 216,825 220,161 Earning assets 1,048,192 1,017,095 974,844 945,251 932,258 Total assets 1,116,659 1,082,477 1,038,628 1,007,680 993,154 Noninterest bearing deposits 251,034 259,062 242,849 239,127 225,519 Interest bearing deposits 608,619 608,863 590,390 558,905 559,853 Total deposits 859,653 867,925 833,239 798,032 785,372 Other borrowings 169,405 128,368 121,435 128,684 128,174 Shareholders' equity 82,609 80,684 79,053 76,575 75,602 Average for Three Months Ended March 31, % BALANCE SHEET SUMMARY 2006 2005 Change Total loans $793,536 $706,902 12.3% Total investment securities 253,197 220,161 15.0% Earning assets 1,048,192 932,258 12.4% Total assets 1,116,659 993,154 12.4% Noninterest bearing deposits 251,034 225,519 11.3% Interest bearing deposits 608,619 559,853 8.7% Total deposits 859,653 785,372 9.5% Other borrowings 169,405 128,174 32.2% Shareholders' equity 82,609 75,602 9.3% Ending Balance March 31, Dec. 31, Sept. 30, June 30, March 31, BALANCE SHEET 2006 2005 2005 2005 2005 SUMMARY Total loans $808,606 $774,886 $754,153 $721,161 $716,714 Total investment securities 247,882 256,842 236,544 214,750 214,222 Total earning assets 1,058,892 1,032,620 1,006,368 945,661 939,934 Allowance for loan losses (13,092) (11,208) (11,131) (10,798) (10,519) Premises and equipment 16,855 16,515 15,620 15,563 15,462 Total assets 1,121,269 1,099,735 1,074,261 1,008,475 999,914 Noninterest bearing deposits 262,087 263,027 258,644 241,643 232,556 Interest bearing deposits 627,810 615,749 607,384 562,846 565,002 Total deposits 889,897 878,776 866,028 804,489 797,558 Other borrowings 144,527 134,231 123,892 122,203 124,007 Total liabilities 1,038,928 1,018,402 994,534 930,891 925,477 Shareholders' equity 82,341 81,333 79,727 77,584 74,437 SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) March 31, Dec. 31, Sept. 30, June 30, March 31, NONPERFORMING ASSETS 2006 2005 2005 2005 2005 Nonaccrual loans $11,164 $3,000 $4,989 $3,372 $3,294 Restructured loans --- --- --- --- --- Other real estate & foreclosed assets 387 --- --- --- --- Total nonperforming assets $11,551 $3,000 $4,989 $3,372 $3,294 Total nonperforming assets as a percentage of loans and foreclosed assets 1.43% 0.39% 0.66% 0.47% 0.46% Accruing loans past due 90 days or more $--- $--- $2,178 $36 $--- Quarter Ended March 31, Dec. 31, Sept. 30, June 30, March 31, ALLOWANCE FOR LOAN LOSSES 2006 2005 2005 2005 2005 Balance at beginning of period $11,208 $11,131 $10,798 $10,519 $10,187 Loans charged off (257) (286) (25) (147) (84) Loan recoveries 141 23 43 201 191 Net (charge-offs) recoveries (116) (263) 18 54 107 Provision for loan losses 2,000 340 315 225 225 Balance at end of period $13,092 $11,208 $11,131 $10,798 $10,519 Allowance for loan losses as a percentage of total loans 1.62% 1.45% 1.48% 1.50% 1.47% Allowance for loan losses as a percentage of nonperforming loans 117.27% 373.66% 223.11% 320.23% 319.34% Net charge-offs (recoveries) as a percentage of average loans 0.01% 0.03% 0.00% -0.01% -0.02% Provision for loan losses as a percentage of average loans 0.25% 0.05% 0.04% 0.03% 0.03% Quarter Ended March 31, Dec. 31, Sept. 30, June 30, March 31, SELECTED RATIOS 2006 2005 2005 2005 2005 Return on average assets (annualized) 0.88% 1.29% 1.32% 1.27% 1.23% Return on average equity (annualized) 11.91% 17.29% 17.34% 16.71% 16.16% Average shareholders' equity to average assets 7.40% 7.45% 7.61% 7.60% 7.63% Yield on earning assets 6.82% 6.55% 6.32% 6.12% 5.83% Cost of interest bearing funds 2.88% 2.53% 2.38% 2.13% 1.85% Net interest margin (tax equivalent) 4.68% 4.71% 4.58% 4.57% 4.47% Efficiency ratio 58.20% 58.70% 56.84% 59.07% 59.69% End of period book value per common share $6.60 $6.54 $6.41 $6.25 $6.01 End of period common shares outstanding 12,484 12,444 12,429 12,421 12,390 SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Three Months Ended March 31, 2006 March 31, 2005 Average Average YIELD ANALYSIS Balance Interest Yield Balance Interest Yield Interest Earning Assets: Federal funds sold & interest bearing deposits $1,459 $16 4.45% $5,195 $31 2.40% Investment securities (taxable) 241,226 2,398 3.98% 212,152 1,926 3.63% Investment securities (tax-exempt) 11,971 160 5.35% 8,009 106 5.30% Loans 793,536 15,048 7.69% 706,902 11,346 6.51% Total Interest Earning Assets 1,048,192 17,622 6.82% 932,258 13,409 5.83% Noninterest Earning Assets: Cash and due from banks 33,404 30,059 Other assets 46,804 41,164 Allowance for loan losses (11,741) (10,327) Total Noninterest Earning Assets 68,467 60,896 Total Assets $1,116,659 $993,154 Interest Bearing Liabilities: Transaction and money market accounts $259,589 1,187 1.85% $235,691 717 1.23% Savings deposits 148,493 820 2.24% 168,346 636 1.53% Certificates and other time deposits 200,537 1,731 3.50% 155,816 979 2.55% Other borrowings 169,405 1,778 4.26% 128,174 808 2.56% Total Interest Bearing Liabilities 778,024 5,516 2.88% 688,027 3,140 1.85% Noninterest Bearing Liabilities: Demand deposits 251,034 225,519 Other liabilities 4,992 4,006 Shareholders' equity 82,609 75,602 Total Noninterest Bearing Liabilities 338,635 305,127 Total Liabilities and Shareholders' Equity $1,116,659 $993,154 Net Interest Income and Margin (tax equivalent) $12,106 4.68% $10,269 4.47% SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands, except per share data) March 31, March 31, LOAN PORTFOLIO 2006 % 2005 % Commercial and industrial $283,536 35.1% $266,782 37.3% Real estate: Commercial 268,365 33.2% 228,701 31.9% Residential 93,879 11.6% 85,293 11.9% Construction and development 125,926 15.6% 94,940 13.2% Consumer 36,900 4.5% 40,998 5.7% Total loans (gross) 808,606 100.0% 716,714 100.0% Unearned discounts --- 0.0% --- 0.0% Total loans (net) $808,606 100.0% 716,714 100.0% March 31, March 31, REGULATORY CAPITAL DATA 2006 2005 Tier 1 Capital $87,068 $77,487 Tier 1 Ratio 10.71% 10.10% Total Capital (Tier 1 + Tier 2) $97,263 $87,093 Total Capital Ratio 11.97% 11.35% Total Risk-Adjusted Assets $812,665 $767,540 Tier 1 Leverage Ratio 7.88% 7.80% March 31, March 31, OTHER DATA 2006 2005 Full Time Equivalent Employees (FTE's) 262 261 Stock Price Range (For the Quarter Ended): High $20.00 $20.50 Low $17.96 $16.40 Close $19.27 $17.05 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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