Summit State Bank · NASDAQ:SSBI

Summit State Bank — Q3 2023 Earnings Presentation

22 slides from Summit State Bank's earnings presentation, 2023

  1. Slide 1: Investor Presentation Q3 2023

    Investor Presentation Q3 2023 1

  2. Slide 2: Company Overview

    Company Overview  Summit State Bank is a commercial bank headquartered in Santa Rosa, CA with $1.14 billion in assets, 5 branch locations and more than 120 employees  Bank formed in 1982  Listed on NASDAQ in 2006 under the ticker symbol “SSBI”  Summit Way Service Standards -Dedicated to serving

  3. 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

  4. 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

  5. Slide 5: Our Leadership Team

    Our Leadership Team Brian Reed Genie Del Secco Brandy Seppi Camille Kazarian Michael Castlio President & CEO EVP & Chief Operating Officer EVP & Chief Lending Officer EVP & Chief Financial Officer EVP & Chief Credit Officer 38 Years in the Industry 32 Years in the Industry 28 Years in the Industry 2

  6. Slide 6: Financial Trends

    Financial Trends  Rate increases combined with our strategy to significantly increase liquidity have put downward pressure on Net Interest Margin ultimately resulting in reduced Return on Average Assets  Non-interest Income decreased to $4.9MM YTD Q3 2023 from $5.4MM YTD Q3 2022. This is due to: 

  7. Slide 7: Loan Growth & Asset Quality

    Loan Growth & Asset Quality  Loan Growth has declined from prior periods due to higher rates  Strong Reserves (Allowance for Loans & Lease Losses – ACL)  ACL is 1.69% without PPP Loans, which Carry a Zero-Risk Weighting and excluding unsold guaranteed portion of SBA loans  Elevated Non-Performin

  8. Slide 8: Interest Income & Interest Expense Management

    Interest Income & Interest Expense Management  NIM compression and Net Interest Income decline observed due to planned deposit growth, increased interest rates, and lower Loan to Deposit ratio  NIM and Net Interest Income are compressing as deposits reprice faster than the loan portfolio 8

  9. Slide 9: Maintaining the Infrastructure to Deliver Results

    Maintaining the Infrastructure to Deliver Results  Efficiency Ratio increased due to lower Net Operating Income as discussed on previous slide  Focused on maintaining Portfolio Credit Quality and Loan Yield resulting in lower Loan Originations impacting the Efficiency Ratio in 2023 9

  10. Slide 10: Assets Trends

    Assets Trends  Focused Growth on Conventional CRE and SBA Guaranteed Loans with Targeted Yield at 7.50%  Portfolio Loan Yield as of 2023Q3 at 5.70%  Elevated Cash trend related to our Strategy to increase liquidity while growing our Balance Sheet  Focused on Organic Loan Growth through Strong Re

  11. Slide 11: Loan Composition

    Loan Composition CRE Loan Portfolio Concentration: Total Loan Portfolio Investment & Owner Occupied  Diversified Portfolio with Manageable Risk  Total Portfolio LTV 46% (ex C&I); CRE LTV 45.6%  CRE Portfolio: Investment 68%, DSCR 1.90x; Owner Occupied 32%, DSCR 2.29x  CRE LTV 49% for Property Ty

  12. Slide 12: SBA Loan Program

    SBA Loan Program  Dedicated Small Business Lending Group Created in 2017  Floating Rate Yields ~ 11.3% (October 2023 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

  13. Slide 13: Liabilities Trends

    Liabilities Trends  Continued Focus on Managing Local Non-Maturity Deposit Growth to match Loan Growth  3Q2023 Average Cost of Funds at 2.22%  Deposit growth from 2018 to 3Q2023:  Local Non-Maturity Deposits went from 57% to 64% of Total Deposits  Total Local Deposits went from 89% to 96% of To

  14. Slide 14: Deposit Composition

    Deposit Composition  Organic Deposit Growth through Strong Relationship Practices  Focused Local Deposit Growth  3Q2023 Average Cost of Deposits at 2.23% 14

  15. Slide 15: Focus on Liquidity and Quality as of Q3 2023

    Focus on Liquidity and Quality as of Q3 2023  $160MM of Available Primary Liquidity  Including Cash and Investments Available for Sale  Primary Liquidity is 14%  $350MM of Available Secondary Lines  Including FHLB, Federal Reserve Bank, and Fed Funds lines  Secondary Liquidity is 31%  $205MM

  16. Slide 16: 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

  17. Slide 17: Consistent Dividend Return

    Consistent 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) 17

  18. Slide 18: Stock Total Return Outperforms Bank Indices

    Stock Total Return Outperforms Bank Indices Total Return vs Bank Indices as of Q3 2023 18

  19. Slide 19: Awards and Accolades

    Awards and Accolades Best Places to Work North Bay Business Journal Best Business Bank North Bay biz magazine Top Performing Banks ICBA Raymond James Bankers Cup Raymond James Super Premier Performance Findley Reports Bank & Thrift Sm - All Stars Piper Sandler Corporate Philanthropy Award SF Busines

  20. Slide 20: 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  Stable Dividend Strategy  Strong Total Return to Shareholders Compared to I

  21. Slide 21: Private Securities Litigation Reform Act of 1995

    Private Securities Litigation Reform Act of 1995 Statements made during this presentation and in response to questions may constitute Forward Looking Statements within the meaning of the Private Securities Litigation Reform Act of 1995 and any such statements are subject to risks and uncertainties t

  22. Slide 22: 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 22

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