SBIT Summit Bancshares

FORT WORTH, Texas, Oct. 16 /PRNewswire-FirstCall/ -- Summit Bancshares, Inc. (NASDAQ:SBIT), the bank holding company for Summit Bank, N.A., today reported net income for the third quarter of 2006 of $3,590,000, or $0.28 per diluted common share, compared to $3,456,000, or $0.27 per diluted common share, for the comparable 2005 period, a 3.7% increase in per share earnings. For the nine months ended September 30, 2006, net income was $9,539,000, or $0.75 per diluted common share, a 1.3% decrease over the same period of the prior year. This decrease for the nine months is attributable, in part, to the large provision for loan losses of $2,000,000 that was recorded in the first quarter of 2006. Philip E. Norwood, Chairman, President and Chief Executive Officer stated, "We believe that the fundamentals of the Company remain strong with a 14.7% increase in net interest income (tax equivalent) for the third quarter of 2006 compared to the same period of the prior year. Also, average loans and average deposits for the third quarter of 2006 increased 14.7% and 8.9%, respectively, from the third quarter of 2005." He further stated, "We are excited about the pending merger with Cullen/Frost Bankers, Inc. that was announced on July 3, 2006. The merger is expected to close on December 8, 2006. We are looking forward to joining the current Frost employees in Tarrant County and around the state in providing additional new products and services to our customers." Net interest income (tax equivalent) for the third quarter of 2006 was $12.9 million compared to $11.3 million in the third quarter of last year, a 14.7% increase. Contributing to this increase was an 11.6% increase in average earning assets and an increase in net interest margin of 13 basis points to 4.71%, comparing the third quarter of 2006 to the third quarter of 2005. For the nine months ended September 30, 2006, net interest income (tax equivalent) was $37.8 million, an increase of 17.0% over the first nine months of 2005. The Company believes that the increase in net interest margin reflects the increase in market interest rates that have occurred over the last twelve months and the Company's sensitivity to changes in market interest rates as well as the 11.6% increase in average earning assets in the third quarter of 2006 versus the same quarter last year. Non-interest income for the third quarter of 2006 was $2,101,000, a decrease of $75,000 over the third quarter of the prior year. This decrease resulted primarily from an extraordinary gain on sale of assets in the third quarter of 2005 in the amount of $247,000. In the third quarter of 2006 compared to the third quarter of 2005, there were positive increases in service charges on deposits, investment service fees, mortgage origination fees and debit card fees. For the nine months ended September 30, 2006, non- interest income was $6,170,000, an increase of 1.3% over the first nine months of 2005. Non-interest expenses of $8,957,000 for the third quarter of 2006 increased $1,320,000, or 17.3% compared to the third quarter of last year. Included in the third quarter 2006 total non-interest expense was the expense impact of a $524,000 check fraud loss representing approximately 40% of the increase for the quarter. Approximately 38% of the increase in non-interest expenses was due to increases in salaries and benefits of personnel and occupancy and equipment expenses directly related to the growth of the Company. Also, in the third quarter of 2006, there was a 68% increase in legal and professional fees compared to the third quarter of 2005. A portion of this increase is attributable to legal and consulting fees incurred in connection with collection efforts related to a problem credit that was reported in January 2006. Non-interest expense for the nine months ended September 30, 2006, was $25,377,000 compared to $22,447,000 for the same period in the prior year, an increase of 13.1%. This increase in non-interest expense is primarily due to the check fraud loss noted above and increases in salary and benefits expense and occupancy equipment expense. The provision for loan losses was $415,000 for the third quarter of 2006 compared to $315,000 for the same quarter of 2005. This increase is primarily attributable to a 13.7% increase in period-end loans from September 30, 2005 to September 30, 2006. In the first and second quarters of 2006, the Company recorded provisions for loan losses of $2.0 million and $1.1 million, respectively, in each case primarily related to the problem credit noted above. In the second quarter of 2006, net loan charge-offs of $4.2 million were recorded, primarily related to this problem credit. On October 5, 2006, the Company filed a report with the Securities and Exchange Commission reporting a $3.0 million loan charge-off recovery resulting from a cash payment of $4.5 million on this problem credit. It is anticipated that the recovery will result in a reduction in the provision for loan losses in the fourth quarter of 2006. The allowance for loan losses was 1.21% of total loans as of September 30, 2006. As of September 30, 2006, non-accrual loans were $9.3 million, or 1.08% of total loans. The Company's loans were $858 million at September 30, 2006, an increase of 13.7% over September 2005. Deposits increased 7.2% to $929 million at September 30, 2006. At September 30, 2006, shareholders' equity was $88.8 million, a book value of $7.04 per outstanding share. Return on average assets and return on average shareholders' equity was 1.23% and 16.40%, respectively, for the quarter ended September 30, 2006 and 1.12% and 15.08%, respectively, for the nine months ended September 30, 2006. Summit files annual, quarterly and current 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/ . 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 contained in the 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 other important factors that could cause actual results, performance or achievements to differ materially from those expressed or implied in such forward-looking statements. These risks and uncertainties are described 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 "Risk Factors" 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 Nine Months Ended September 30, % September 30, % EARNINGS SUMMARY 2006 2005 Change 2006 2005 Change Interest income $19,859 $15,476 28.3% $56,337 $43,227 30.3% Interest expense 7,015 4,263 64.6% 18,770 11,059 69.7% Net interest income 12,844 11,213 14.5% 37,567 32,168 16.8% Provision for loan losses 415 315 31.7% 3,515 765 359.5% Service charges on deposits 1,046 992 5.4% 2,968 2,964 0.1% Gain on sale of investment securities --- --- 0.0% --- --- 0.0% Other income 1,055 1,184 -10.9% 3,202 3,127 2.4% Salaries and benefits expense 4,895 4,579 6.9% 14,731 13,296 10.8% Occupancy and equipment expense 1,495 1,311 14.0% 4,343 3,744 16.0% Other expense 2,567 1,747 46.9% 6,303 5,407 16.6% Earnings before income taxes 5,573 5,437 2.5% 14,845 15,047 -1.3% Provision for income taxes 1,983 1,981 0.1% 5,306 5,387 -1.5% Net earnings $3,590 $3,456 3.9% $9,539 $9,660 -1.3% Basic earnings per share $0.28 $0.28 0.0% $0.76 $0.78 -2.6% Basic weighted average shares outstanding 12,591 12,420 12,533 12,405 Diluted earnings per share $0.28 $0.27 3.7% $0.75 $0.76 -1.3% Diluted weighted average shares outstanding 12,882 12,664 12,800 12,705 Average for Quarter Ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30, BALANCE SHEET SUMMARY 2006 2006 2006 2005 2005 Total loans $843,458 $830,097 $793,536 $753,311 $735,109 Total investment securities 242,428 242,468 253,197 252,508 226,441 Earning assets 1,087,761 1,073,869 1,048,192 1,017,095 974,844 Total assets 1,161,279 1,139,224 1,116,659 1,082,477 1,038,628 Noninterest bearing deposits 261,768 258,103 251,034 259,062 242,849 Interest bearing deposits 645,270 636,102 608,619 608,863 590,390 Total deposits 907,038 894,205 859,653 867,925 833,239 Other borrowings 161,058 155,510 169,405 128,368 121,435 Shareholders' equity 86,863 84,121 82,609 80,684 79,053 Average for Nine Months Ended September 30, % BALANCE SHEET SUMMARY 2006 2005 Change Total loans $822,546 $721,952 13.9% Total investment securities 245,991 221,165 11.2% Earning assets 1,070,085 950,940 12.5% Total assets 1,139,217 1,013,320 12.4% Noninterest bearing deposits 257,008 235,896 8.9% Interest bearing deposits 630,131 569,827 10.6% Total deposits 887,139 805,723 10.1% Other borrowings 161,960 126,073 28.5% Shareholders' equity 84,547 77,089 9.7% Ending Balance Sept. 30, June 30, March 31, Dec. 31, Sept. 30, BALANCE SHEET SUMMARY 2006 2006 2006 2005 2005 Total loans $857,840 $841,961 $808,606 $774,886 $754,153 Total investment securities 251,153 235,246 247,882 256,842 236,544 Total earning assets 1,110,008 1,084,382 1,058,892 1,032,620 1,006,368 Allowance for loan losses (10,399) (9,958) (13,092) (11,208) (11,131) Premises and equipment 16,613 16,791 16,855 16,515 15,620 Total assets 1,177,313 1,160,731 1,121,269 1,099,735 1,074,261 Noninterest bearing deposits 270,863 262,264 262,087 263,027 258,644 Interest bearing deposits 657,935 643,036 627,810 615,749 607,384 Total deposits 928,798 905,300 889,897 878,776 866,028 Other borrowings 153,742 165,848 144,527 134,231 123,892 Total liabilities 1,088,546 1,076,480 1,038,928 1,018,402 994,534 Shareholders' equity 88,767 84,251 82,341 81,333 79,727 SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Sept. 30, June 30, March 31, Dec. 31, Sept. 30, NONPERFORMING ASSETS 2006 2006 2006 2005 2005 Nonaccrual loans $9,289 $6,058 $11,164 $3,000 $4,989 Restructured loans --- --- --- --- --- Other real estate & foreclosed assets --- --- 387 --- --- Total nonperforming assets $9,289 $6,058 $11,551 $3,000 $4,989 Total nonperforming assets as a percentage of loans and foreclosed assets 1.08% 0.72% 1.43% 0.39% 0.66% Accruing loans past due 90 days or more $638 $--- $--- $--- $2,178 Quarter Ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30, ALLOWANCE FOR LOAN LOSSES 2006 2006 2006 2005 2005 Balance at beginning of period $9,958 $13,092 $11,208 $11,131 $10,798 Loans charged off (22) (4,311) (257) (286) (25) Loan recoveries 48 77 141 23 43 Net (charge-offs) recoveries 26 (4,234) (116) (263) 18 Provision for loan losses 415 1,100 2,000 340 315 Balance at end of period $10,399 $9,958 $13,092 $11,208 $11,131 Allowance for loan losses as a percentage of total loans 1.21% 1.18% 1.62% 1.45% 1.48% Allowance for loan losses as a percentage of nonperforming loans 111.95% 164.38% 117.27% 373.66% 223.11% Net charge-offs (recoveries) as a percentage of average loans 0.00% 0.51% 0.01% 0.03% 0.00% Provision for loan losses as a percentage of average loans 0.05% 0.13% 0.25% 0.05% 0.04% Quarter Ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30, SELECTED RATIOS 2006 2006 2006 2005 2005 Return on average assets (annualized) 1.23% 1.24% 0.88% 1.29% 1.32% Return on average equity (annualized) 16.40% 16.80% 11.91% 17.29% 17.34% Average shareholders' equity to average assets 7.48% 7.38% 7.40% 7.45% 7.61% Yield on earning assets 7.27% 7.09% 6.82% 6.55% 6.32% Cost of interest bearing funds 3.45% 3.16% 2.88% 2.53% 2.38% Net interest margin (tax equivalent) 4.71% 4.76% 4.68% 4.71% 4.58% Efficiency ratio 59.63% 55.46% 58.20% 58.70% 56.84% End of period book value per common share $7.04 $6.68 $6.60 $6.54 $6.41 End of period common shares outstanding 12,601 12,604 12,484 12,444 12,429 SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Three Months Ended September 30, 2006 Average YIELD ANALYSIS Balance Interest Yield Interest Earning Assets: Federal funds sold & interest bearing deposits $1,875 $24 5.08% Investment securities (taxable) 227,135 2,389 4.21% Investment securities (tax-exempt) 15,293 213 5.57% Loans 843,458 17,308 8.14% Total Interest Earning Assets 1,087,761 19,934 7.27% Noninterest Earning Assets: Cash and due from banks 34,114 Other assets 49,588 Allowance for loan losses (10,184) Total Noninterest Earning Assets 73,518 Total Assets $1,161,279 Interest Bearing Liabilities: Transaction and money market accounts $255,760 1,475 2.29% Savings deposits 163,024 1,198 2.92% Certificates and other time deposits 226,486 2,330 4.08% Other borrowings 161,058 2,012 4.96% Total Interest Bearing Liabilities 806,328 7,015 3.45% Noninterest Bearing Liabilities: Demand deposits 261,768 Other liabilities 6,320 Shareholders' equity 86,863 Total Noninterest Bearing Liabilities 354,951 Total Liabilities and Shareholders' Equity $1,161,279 Net Interest Income and Margin (tax equivalent) $12,919 4.71% SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Three Months Ended September 30, 2005 Average YIELD ANALYSIS Balance Interest Yield Interest Earning Assets: Federal funds sold & interest bearing deposits $13,294 $114 3.40% Investment securities (taxable) 216,541 2,073 3.83% Investment securities (tax-exempt) 9,900 133 5.37% Loans 735,109 13,203 7.13% Total Interest Earning Assets 974,844 15,523 6.32% Noninterest Earning Assets: Cash and due from banks 30,876 Other assets 43,824 Allowance for loan losses (10,916) Total Noninterest Earning Assets 63,784 Total Assets $1,038,628 Interest Bearing Liabilities: Transaction and money market accounts $232,640 886 1.51% Savings deposits 173,539 866 1.98% Certificates and other time deposits 184,211 1,433 3.09% Other borrowings 121,435 1,078 3.52% Total Interest Bearing Liabilities 711,825 4,263 2.38% Noninterest Bearing Liabilities: Demand deposits 242,849 Other liabilities 4,901 Shareholders' equity 79,053 Total Noninterest Bearing Liabilities 326,803 Total Liabilities and Shareholders' Equity $1,038,628 Net Interest Income and Margin (tax equivalent) $11,260 4.58% SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Nine Months Ended September 30, 2006 Average YIELD ANALYSIS Balance Interest Yield Interest Earning Assets: Federal funds sold & interest bearing deposits $1,548 $56 4.84% Investment securities (taxable) 232,074 7,084 4.07% Investment securities (tax-exempt) 13,917 569 5.45% Loans 822,546 48,827 7.94% Total Interest Earning Assets 1,070,085 56,536 7.06% Noninterest Earning Assets: Cash and due from banks 32,633 Other assets 48,262 Allowance for loan losses (11,763) Total Noninterest Earning Assets 69,132 Total Assets $1,139,217 Interest Bearing Liabilities: Transaction and money market accounts $259,503 4,041 2.08% Savings deposits 155,337 3,032 2.61% Certificates and other time deposits 215,291 6,136 3.81% Other borrowings 161,960 5,561 4.59% Total Interest Bearing Liabilities 792,091 18,770 3.17% Noninterest Bearing Liabilities: Demand deposits 257,008 Other liabilities 5,571 Shareholders' equity 84,547 Total Noninterest Bearing Liabilities 347,126 Total Liabilities and Shareholders' Equity $1,139,217 Net Interest Income and Margin (tax equivalent) $37,766 4.72% SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands) Nine Months Ended September 30, 2005 Average YIELD ANALYSIS Balance Interest Yield Interest Earning Assets: Federal funds sold & interest bearing deposits $7,823 $181 3.09% Investment securities (taxable) 212,369 5,913 3.71% Investment securities (tax-exempt) 8,796 349 5.29% Loans 721,952 36,905 6.83% Total Interest Earning Assets 950,940 43,348 6.09% Noninterest Earning Assets: Cash and due from banks 30,361 Other assets 42,663 Allowance for loan losses (10,644) Total Noninterest Earning Assets 62,380 Total Assets $1,013,320 Interest Bearing Liabilities: Transaction and money market accounts $233,203 2,400 1.38% Savings deposits 168,002 2,206 1.76% Certificates and other time deposits 168,622 3,563 2.83% Other borrowings 126,073 2,890 3.06% Total Interest Bearing Liabilities 695,900 11,059 2.12% Noninterest Bearing Liabilities: Demand deposits 235,896 Other liabilities 4,435 Shareholders' equity 77,089 Total Noninterest Bearing Liabilities 317,420 Total Liabilities and Shareholders' Equity $1,013,320 Net Interest Income and Margin (tax equivalent) $32,289 4.54% SUMMIT BANCSHARES, INC. (Unaudited) (Dollars in thousands, except per share data) September 30, September 30, LOAN PORTFOLIO 2006 % 2005 % Commercial and industrial $310,236 36.2% $270,807 35.9% Real estate: Commercial 281,107 32.8% 244,966 32.5% Residential 93,764 10.9% 89,487 11.9% Construction and development 135,992 15.8% 109,431 14.5% Consumer 36,741 4.3% 39,462 5.2% Total loans (gross) $857,840 100.0% $754,153 100.0% Sept. 30, Sept. 30, REGULATORY CAPITAL DATA 2006 2005 Tier 1 Capital $93,120 $82,621 Tier 1 Ratio 10.96% 10.45% Total Capital (Tier 1 + Tier 2) $103,519 $92,520 Total Capital Ratio 12.18% 11.70% Total Risk-Adjusted Assets $849,874 $790,653 Tier 1 Leverage Ratio 8.10% 8.04% Sept. 30, Sept. 30, OTHER DATA 2006 2005 Full Time Equivalent Employees (FTE's) 252 264 Stock Price Range (For the Quarter Ended): High $28.94 $19.28 Low $26.69 $17.16 Close $28.12 $18.37 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/

Copyright