Summit State Bank of Santa Rosa sees profit fall in third quarter

Santa Rosa Bank entered its post-pandemic recovery period by reporting that net income was down 33% from the previous quarter and down 66% from a year earlier. This comes as the banking industry has been struggling for more than a year due to high interest rates in the country.

Summit State Bank (Nasdaq: SSBI) reported Wednesday that third-quarter net income fell more than 32% to $626,000 from the previous three months.

The main financial barometer also accounted for about a third of 2023 earnings in the third quarter.

Net interest income, which consists of the difference between income earned on interest-bearing assets and expense on liabilities, was $7.7 million for the most recent quarter, excluding a $1.3 million provision for credit losses on loans. After on-balance sheet lending expenses, revenue was $5.97 million, a 15% drop from the second quarter and nearly $200,000 less than the third quarter of 2023.

Net loans also fell $14.83 million to $917.36 million for the same 2023 period. But loan amounts rose when placed next to $913.51 million in the second quarter.

Noninterest income from fees presented another mixed picture in the third quarter, with $1 million transferred to a bank in Santa Rosa. In the previous quarter it was $801,000, and in the third quarter of 2023 it was $1.49 million.

Noninterest expense for the third quarter of 2024 ended Sept. 30 was $6.81 million, down more than 6% from expenses in the prior quarter. Last quarter’s figure was nearly $800,000 less than the third quarter of 2023.

Total deposits fell 3% to $1 billion, but were up from $966.58 million in the second quarter.

Banks have struggled for more than a year due to the nation’s high interest rates and the rebound from the pandemic, when the government pumped $9 trillion into the economy. This collective cash infusion was deposited into individual and business accounts across the country.

After Summit State Bank’s second-quarter results were released, profits fell 68%.

President and CEO Brian Reed, on behalf of the board of directors, pledged to go through a recovery period with an eye to the future.

“During this time of economic uncertainty, the board is focused on balancing its obligations to shareholders while also growing capital, enhancing liquidity and positioning the bank to create long-term value,” Reed said in a statement. “As such, the bank is not declaring a dividend for the third quarter of 2024.”

The announcement came just after the last quarter. Dividend of 4 cents per share the payment will be one third of the amount paid from the first quarter of 2024.

Founded in 1982, Summit State Bank reported assets of $1.1 billion at the end of the quarter, up about $30 million from the previous three-month period.

Susan Wood covers law, cannabis, manufacturing, transportation, agriculture, and banking and finance. She can be reached at 530-545-8662 or [email protected].