Summit State Bank · NASDAQ:SSBI
Summit State Bank — Q2 2024 Earnings Presentation
28 slides from Summit State Bank's earnings presentation, 2024
Slide 1: Investor Presentation Q2 2024
Investor Presentation Q2 2024 1
Slide 2: Company Overview
Company Overview Summit State Bank is a commercial bank headquartered in Santa Rosa, CA with $1.09 billion in assets, 5 branch locations and more than 115 employees Bank formed in 1982 Listed on NASDAQ in 2006 under the ticker symbol “SSBI” Summit Way Service Standards -Dedicated to serving
Slide 3: Summit State Bank Locations
Summit State Bank Locations Headquartered in Santa Rosa, CA Branch Locations Santa Rosa Main Healdsburg Santa Rosa Montgomery Village Rohnert Park Petaluma Regional Small Business Lending Group HQ in Roseville, CA 3
Slide 4: Market Area Highlights
Market Area Highlights Northern California Concentrated in Sonoma County Commercial Property Investment Inventory Remains Low due to limited construction over the past ten years. Diverse and Strong Economy: Healthcare, Manufacturing, Construction and Wholesale Trade Comprise > 40% of the Count
Slide 5: Our Leadership Team
Our Leadership Team Brian Reed Genie Del Secco Brandy Seppi Camille Kazarian Michael Floyd President & CEO EVP & Chief Operating Officer EVP & Chief Lending Officer EVP & Chief Financial Officer EVP & Chief Credit Officer 39 Years in the Industry 33 Years in the Industry 30 Years in the Industry 24
Slide 6: Financial Trends
Financial Trends Deposit rates repricing faster than loan portfolio has put downward pressure on Net Interest Margin ultimately resulting in reduced Return on Average Assets Non-interest income decreased to $1.7MM YTD Q2 2024 from $3.4MM YTD Q2 2023. This is due to: Reduced SBA Loan production
Slide 7: Loan Growth & Asset Quality
Loan Growth & Asset Quality 2024 Loan growth has slowed due to focus on quality and appropriate rate in a highly competitive market Strong Reserves (Allowance for Loans & Lease Losses – ACL) ACL is 1.53% and adequately covers the performing and non- performing portfolios Elevated Non-Perform
Slide 8: Non-Performing Assets and Loan Loss Reserve
Non-Performing Assets and Loan Loss Reserve Non-Performing Loans: 3 specific relationships make up 80% of non-performing assets as of Q2 2024 $2.8MM of specific reserves set aside for all Non-Performing loans General pool reserves remain at 1.27% (excluding specific relationships) Historical L
Slide 9: Interest Income & Interest Expense Management
Interest Income & Interest Expense Management NIM compression and Net Interest Income decline due to elevated cost of funds, lower volume of new higher priced loans and existing loans that have repriced slower than deposits NIM and Net Interest Income compression is slowing as deposit repricing
Slide 10: Yield on Earning Assets vs Cost of Liabilities
Yield on Earning Assets vs Cost of Liabilities Cost of Liabilities has risen faster than the Yield on Earning Assets Cost of Liabilities has been stabilizing in the past two quarters 10
Slide 11: Treasury Indexed CRE – Contracted Rate Resets
Treasury Indexed CRE – Contracted Rate Resets Most Treasury Indexed CRE Loans reprice every 5 years based on the corresponding Constant Maturity Treasury index Repriced rates reflect a snapshot of market rates as of 6/28/2024; Actual repricing rates can differ depending on market rates at the ti
Slide 12: Deposits & Loans Repricing by Maturity
Deposits & Loans Repricing by Maturity Majority of Interest-bearing Deposits may reprice within 1 year Only 19% of the Loan Portfolio contractually reprices within 1 year Reprices Immediately Reprices quarterly Reprices in 1 month to 1 year Reprices 1 year+ Fixed Rate 12
Slide 13: Managing Infrastructure Costs in an Inflationary Environment
Managing Infrastructure Costs in an Inflationary Environment Expenses as a % of Total Assets has seen modest increases since the Pandemic Expenses are actively managed yet are increasing due to inflationary pressures Increase in 2Q 2024 partially driven by reduction in Total Assets 13
Slide 14: Assets Trends
Assets Trends Focused Growth on Owner Occupied Conventional CRE and C&I Loans with Targeted Yield at 7.35% Focus on SBA Guaranteed Loans with Targeted Yield at 11.4% Portfolio Loan Yield as of 2024Q2 at 5.97% Focused on Organic Loan Growth amid challenging market conditions New Loan Origin
Slide 15: Loan Portfolio Composition
Loan Portfolio Composition Total Loan Diversified Portfolio with Manageable Risk Portfolio Total Portfolio LTV 45% (ex C&I) CRE Segment LTV 47% Commercial Real Estate (CRE) Portfolio: Investment: 67% of segment, DSCR 1.91x CRE Owner Occupied 32% of segment, DSCR 2.46x Concentration (Investme
Slide 16: Loan Composition
Loan Composition Total Loan Portfolio CRE Loan Portfolio Concentration: Investment & Owner Occupied 16
Slide 17: SBA Loan Program
SBA Loan Program Dedicated Small Business Lending Group Created in 2017 Floating Rate Yields ~ 11.4% (July 2024 adjustment) Decrease in Non-Interest Income through: Lower SBA Loan Sales Volume and Premiums Offset by increasing Servicing income Decreased Retained Balance driven by: Sell
Slide 18: Liabilities Trends
Liabilities Trends Continued Focus on Managing Local Non-Maturity Deposit Growth to match Loan Growth 2Q2024 Average Cost of Funds at 2.91% Deposit growth from 2018 to 2Q2024: Local Non-Maturity Deposits went from 57% to 68% of Total Deposits Total Local Deposits went from 89% to 93% of To
Slide 19: Deposit Composition
Deposit Composition Organic Deposit Growth through Strong Relationship Practices Focused Local Deposit Growth 2Q2024 Average Cost of Deposits at 2.89% 19
Slide 20: Focus on Liquidity and Quality as of Q2 2024
Focus on Liquidity and Quality as of Q2 2024 115MM of Available Primary Liquidity Including Cash and Investments Available for Sale Primary Liquidity is 11% $364MM of Available Secondary Lines Including FHLB, Federal Reserve Bank, and Fed Funds lines Total Liquidity (Primary + Secondary
Slide 21: Tangible Book Value Growth
Tangible Book Value Growth Tangible Book Value has improved 58% since 2018, or 11% annualized growth Tangible Book Value growth has solely been driven by retention of earnings 21
Slide 22: Consistently Delivering Strong Stock Value
Consistently Delivering Strong Stock Value Graph illustrates investment in 1 share of stock beginning in 2016 2016: One share of stock purchased 2017: A five-for-four stock split results in 1.25 shares outstanding 2021: A one time 10% stock dividend results in 1.38 shares outstanding Stock V
Slide 23: Dividend Return
Dividend Return Graph illustrates investment in 1 share of stock beginning in 2016 Dividend on Initial Investment relates to the original purchase of 1 share Additional Dividend Return of 37.5% is a result of: 5-for-4 stock split (2017) one time 10% stock dividend (2021) In September 2024 th
Slide 24: Stock Total Return Versus Bank Indices
Stock Total Return Versus Bank Indices Total 5-year Return vs Bank Indices as of Q2 2024 24
Slide 25: Awards and Accolades
Awards and Accolades Best Places to Work North Bay Business Journal Corporate Philanthropy Award SF Business Times Hall of Fame North Bay biz magazine Diversity in Business 25
Slide 26: Why Summit State Bank?
Why Summit State Bank? Experienced Executive & Management Team Commitment to a Culture of Success Focus on Organic Growth and Driving Core Customer Deposits Strategic Lending Platform Positioned to Deliver Results Stock Value Growth of 43% over the last 7.5 years Significant Growth in Ta
Slide 27: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995, including forward-looking statements regarding our expectations and beliefs about our future financial performa
Slide 28: Mailing Address and Contact
MAILING ADDRESS 500 Bicentennial Way Santa Rosa, CA 95403 CONTACT Barbara Gradman VP, Corporate Secretary bgradman@summitstatebank.com (707) 568 6000 28