Annual Report
2020
A Year of Challenges,
Transition, Growth and
Record Earnings.
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Awards
Best Places to Work (NBBJ)
Best Business Bank (NorthBay biz)
Raymond James Bankers Cup Award
Super Premier Performance (Findley Reports)
Letter to the Shareholders
2020 was a year of inconceivable challenges and ended with record earnings. Led by our Executive and
Management team, we successfully adapted to meet the needs of our customers, employees and community,
with uninterrupted service.
It is with great pride that our diligent team of 100 employees, stepped up to support each other, our customers,
and community as an essential business when we were needed the most. While striving to maintain a safe environment
we collaborated with our small business customers and nonprofits so they could continue to provide vital services to
the community.
Our team worked tirelessly during the year to provide ongoing education, guidance, and access to loans through
the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). We processed and funded almost
$97 million PPP loans to over 600 businesses and have actively worked with customers on the loan forgiveness
process. In addition, we granted temporary payment deferrals on 26% of our loan portfolio to assist customers with
cash flow management. We are happy to report that well over 80% of those customers were no longer on deferral
as of year-end.
We maintained our community focus through our Nonprofit Partner Program, in its twelfth year, along with additional
charitable contributions, donating over $550,000 to local nonprofits. These funds supported over 200 nonprofit
organizations, which brought food, shelter, childcare, and other crucial services to our community.
We continually look for opportunities to align ourselves with programs that elevate and enrich the lives of our diverse
community. One such program includes the speaker series Women in Conversation. We have been the Presenting
Sponsor since its inception in 2016. Like many other events we were forced to pivot and successfully migrated to
a virtual platform renamed Women in Conversation at Home.
Summit State Bank recognizes its talented and diverse board of directors and workforce as a key competitive
advantage. We take pride in fostering a welcoming work environment where differences are accepted and celebrated.
We promote inclusion where employees have a voice, and their views and opinions are heard and considered for the
betterment of our organization. Our business success is dependent on our ability to attract and retain the finest talent
to ensure top business growth and performance. In addition to providing a collaborative and inclusive work culture,
we encourage professional growth and development as a means of career satisfaction, retention, and engagement
of our workforce.
Despite the challenges faced in 2020, Summit State Bank is pleased to share that we reported record results. The Bank
grew core loans and deposits by over 17%, all while increasing net interest margin by 25 basis points in a year where
margins were compressed. Additionally, our efficiency ratio improved significantly from 63% to 52%. The stable growth,
margin improvement, and efficiency gains all resulted in our record earnings. Our success is reflective of our focus on
effectively streamlining operational efficiencies and leveraging the talent of our team. This strategy allows us to
expand our capacity for growth, without substantially growing our operating expenses.
As we continue to navigate through these unpredictable times, we know that our team, customers, and community
will continue to adapt and thrive. We remain committed to our focus on the economic vitality of Sonoma County
encouraging small business growth and sustainability of our community today and well into the future.
A Better Sonoma County. That’s Our Business.
Sincerely,
James E. Brush
Chairman of the Board
Business Consultant
Brian J. Reed
President and
Chief Executive Officer
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Devoted Communi
to
Communittyy
Brian J. Reed
President and
Chief Executive Officer
Brandy A. Seppi
EVP & Chief Lending Officer
Genie M. Del Secco
EVP & Chief Operating Officer
Executive
Leadership
It was anything but business as usual
in 2020. The Executive Team met and
communicated on a regular basis providing
employees with continual updates on local
health and safety protocols including:
social distancing, wearing masks, proper
cleaning practices, daily self-check ins, travel
restrictions and quarantine guidance when
necessary. Management was also diligent
in coordinating appropriate staffing levels
since many team members required adjusted
schedules to care for their children or
parents. Approximately 51 percent of our
staff has a modified work schedule that
includes working from home either full
or part time.
Our experienced Executive Leadership
Team, whose collective years of experience
total over 138 years, have been challenged
by multiple natural disasters over the past
couple years, but the pandemic provided an
extraordinary leadership opportunity.
Communication has been key to keeping
the team abreast on the nuances of
managing our business.
For several consecutive years, the Bank
has given its employees a year-end bonus.
This year in addition to that bonus,
employees were awarded bonuses due
to the extraordinary income received for
processing the PPP loans. Instead of adding
the extra income to the bottom line, the
Executive Team shared it with our employees
to show appreciation for all their hard work.
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Camille D. Kazarian
EVP & Chief Financial Officer
Michael D. Castlio
EVP & Chief Credit Officer
Board of
Directors
We choose our board members carefully
and seek individuals who bring integrity,
honesty, financial responsibility, engagement,
business acumen and who are active in our
community. Given the dynamics of community
banking, continuing education, participation
with industry trade groups and regulatory
seminars are an integral part of ensuring a
competent and knowledgeable board. We
believe that the make-up and diversity of
experience, education, views and opinions
is a powerful component of what makes a
community bank effective and successful.
James E. Brush
Chairman of the Board
Business Consultant
Brian J. Reed
President & CEO
Summit State Bank
Dawn M. Ross
Managing Partner at Carle
Mackie, Power and Ross, LLP
Nicholas J. Rado
President
Rado Consulting Services
Jeffrey B. Allen
President
Allen Land Design
Sharon S. Wright
Governmental Relations and
Public Affairs Consultant
Josh C. Cox, Jr.
Banking Consultant
Josh Cox & Associates
Marshall T. Reynolds
Chairman of the Board
Champion Industries, Inc.
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Todd R. Fry
Chief Accounting Officer
Installed Building
Products, Inc.
John W. Wright
Business Consultant
Richard E. Pope
Environmental and
Engineering Consultant
Codding Investment Inc.
Culture, Diversity & Engagement
Now more than ever the focus on diversity, equity and inclusion is at the forefront of most value driven businesses.
At Summit State Bank, we recognize the importance of cultivating and fostering a culture of empathy, collaboration and
creating a work environment where employees can flourish and perform their best work. We know that maintaining a
happy, engaged, knowledgeable workforce translates to delivering a high level of customer service.
Brian Reed & Debbie Butwill
Kim August & grandson Ollie
Summit State Bank’s mission is to hire and invest in exceptional people, provide superior service and
solutions for our customers, increase value for our shareholders, and continuously support and enrich the
communities in which we serve. – Summit State Bank’s Mission Statement
We take pride in fostering a welcoming work environment where differences are accepted and celebrated.
We promote inclusion where employees have a voice, and their views and opinions are heard and considered
for the betterment of our organization. Our business success is dependent on our ability to attract and retain
the finest talent to ensure top business growth and performance. In addition to providing a collaborative and
inclusive work culture, we encourage professional growth and development as a means of career satisfaction,
retention, and engagement of our workforce. – Summit State Bank’s Diversity Statement
To be the community bank leader committed to providing superior service and enriching the community we
serve, today and into the future. – Summit State Bank’s Vision Statement
This past year we have taken a systematic approach
in reviewing our practices surrounding diversity and
inclusion. The process began by evaluating the
composition of our Board of Directors, Executive
Leadership Team and all our team members. Based
on the outcome of that assessment,
Dawn Ross and Sharon Wright joined the
Board of Directors, improving the gender
equity at the Board level.
Dawn M. Ross
Board Member
Managing Partner at Carle
Mackie, Power and Ross, LLP
Sharon S. Wright
Board Member
Governmental Relations and
Public Affairs Consultant
Reinforcing the Bank’s mission statement, the Executive Leadership Team engaged leadership expert, bestselling
author and world class speaker, Cindy Solomon, to present multiple training programs, the first of which called Leading
with Impact, included the entire management team and subsequent training included all employees and focused on
Customer Engagement.
We have a unique culture, where caring, belonging and participation is paramount. The Employee Activity Committee
played a significant role in coordinating fun and engaging ways to keep the team spirit up throughout the year including
those who were working from home. Some of those activities included interactive Bingo, Employee Appreciation Day,
where employees had the opportunity to recognize others in a meaningful way, and socially distanced holiday
festivities which almost always included food from one of our customers to lend community support.
Our employees are our most valuable resource and in 2019, we created a Mentoring Program designed to
cultivate opportunities for advancement and provide the right type of support for our future leaders. Senior leaders are
partnered with mentees, who are accepted into the program through an application process. The program continued
in 2020 through virtual and phone conversations, in lieu of in-person interactions. This program reinforces the Bank’s
commitment to employee satisfaction and career development.
Devoted Diversi
to
Diversittyy
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Information About Summit State Bank
Summit State Bank (the “Bank”) is a state-chartered commercial bank operating a traditional community
banking business within our primary service area of Sonoma County in California. We operate through five
depository offices located in Santa Rosa, Rohnert Park, Healdsburg and Petaluma. The Bank also has a loan
production office in Roseville, California. The Bank was incorporated on December 20, 1982 and commenced
operations as a California state-chartered savings and loan. On January 15, 1999, the Bank received authority
to convert its charter to a California state-chartered commercial bank. On July 13, 2006, the Bank completed
an underwritten initial public offering and listed its stock on the Nasdaq Global Market under the symbol SSBI.
The Bank’s deposits are insured by the FDIC in accordance with the Federal Deposit Insurance Act and the
related regulations of the FDIC.
We provide a broad array of financial services to small to medium-sized businesses and their owners and
employees, entrepreneurs, families, foundations, estates and individual consumers. We believe that our principal
competitive advantages are personal service, flexibility and responsiveness to customer needs. Our lending
activities are primarily focused on commercial real estate, construction, and business loans to our targeted
clientele. We emphasize relationship banking, and we believe we offer our customers many of the management
capabilities of a large financial institution, together with the resourcefulness and superior customer service of a
community bank. Through our branches and the use of technology, we offer a broad array of deposit products
and services for both commercial and consumer customers, including digital banking, cash management services
and bill payment. We provide a comprehensive set of loan products, such as commercial loans and leases, lines
of credit, commercial real estate loans, Small Business Administration, or SBA, loans, and construction loans.
We believe that local decision-making ensures that our lending process is fast, efficient, and focused on
maintaining our high credit quality and underwriting standards. Summit State Bank is committed to embracing
the diverse backgrounds, cultures, and talents of its employees to create high performance and support the
evolving needs of its customers and community it serves. At the center of diversity is inclusion, collaboration,
and a shared vision for delivering superior service and results for shareholders. Presently, 76% of management
are women and minorities with 60% represented on the Executive Management Team.
Family Works - L to R: Michele Corona, Michael Diehl, and Diana Wilkins
Nonprofit & Community Commitment
Traditional fundraising for local organizations has been
significantly altered by the pandemic. Most local nonprofits
hold annual events, sometimes more than one to sustain
the work they do in the community. At the onset of the
pandemic, in-person events were cancelled, and many
were never rescheduled. By the second quarter of the
year, virtual meetings became the new norm to include
virtual events.
We remained steadfast in our commitment to the
nonprofit community, especially those whose mission is
to provide basic human needs like food, shelter, and
childcare, to mention a few. The leadership of the Bank
reviewed our philanthropic program and made some
extraordinary donations throughout the year to human
services organizations such as the Redwood Empire Food
Bank, Catholic Charities, St. Vincent de Paul and Corazon
Healdsburg. In addition, the Bank was able to advocate
and secure match funding for the aforementioned
nonprofits through the Federal Home Loan Bank.
Through our Nonprofit Partner Program, we contributed
$309,866, to 182 of our nonprofit customers. Since its
inception in 2009, the Bank has contributed more than
$2 million to Sonoma County Nonprofits
through this program.
The Nonprofit Partner Program provides an annual cash
contribution to its nonprofit customers, above and beyond
the typical community donations, sponsorships and
volunteering that Summit and its employees provide
during the year.
In addition to the nonprofit community, tourism is another
large business segment that has endured significant loss
of revenue. Lodging, restaurants, wineries, breweries,
distilleries, and family entertainment are among the
industries impacted the most. Seeing many of our own
customers struggling the Executive Team gifted each
employee with a restaurant gift card at the end of the
year, purchased from a local establishment to increase
our community support. Through our Featured Partner
Program, we promoted and encouraged our team and
customers to support these related businesses.
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Financials at a glance (in thousands)
Total Average Loans
Total Average Deposits
2017
2018
2019
2020
2017
2018
2019
2020
Net Income
Non-Interest Income
2017
2018
2019
2020
2017
2018
2019
2020
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Selected Financial Data
(in thousands except per share data)
2020
2019
2018
2017
2016
Year Ended December 31
Income statement data:
Interest income
Net interest income before
provision for (reversal of) loan losses
Provision for (reversal of) loan losses
Total non-interest income
Total non-interest expense
Income before provision for income taxes
Provision for income taxes
Net income
Net income available to common shareholders
$10,517
$36,425
$30,001
$25,572
$20,713
$19,907
30,261
2,100
4,448
17,671
14,938
4,421
$10,517
22,976
700
2,662
16,063
8,875
2,398
$6,477
$6,477
21,622
530
2,309
15,357
8,044
2,217
$5,827
$5,827
18,572
520
1,715
13,845
5,922
2,630
$3,292
$3,292
18,673
-0
2.021
12,245
8,449
3,482
$4,967
$4,967
Balance sheet data:
Assets
Loans, net
Earning assets
Deposits
Federal Home Loan Bank advances
Shareholders’ equity
Selected per common share data:
Earnings per common share - basic
Common shares outstanding at year end
Cash dividends per share
Book value per common share
Selected ratios:
Return on average common shareholders’ equity
Return on average assets
Common dividend payout ratio
Net interest margin
Efficiency ratio (1)
Tier 1 leverage capital ratio
Nonperforming loans to total loans (2)
Allowance for loan losses to total loans
excluding PPP (3)
$865,854
$695,978
$622,104
$610,864
$513,704
745,939
851,341
726,295
53,500
75,629
$1.73
6,070
$0.48
$12.46
14.68%
1.33%
27.70%
3.91%
52.23%
8.15%
0.03%
576,548
680,607
573,837
45,600
67,344
504,549
609,956
501,189
56,800
61,520
$1.07
6,070
$0.48
$11.09
9.99%
1.00%
44.97%
3.66%
62.64%
9.26%
0.05%
$0.96
6,066
$0.48
$10.14
9.66%
0.99%
49.97%
3.75%
64.24%
9.86%
0.42%
437,594
599,619
533,513
15,000
59,677
$0.55
6,041
$0.46
$9.88
5.49%
0.62%
83.57%
3.55%
68.49%
10.23%
0.62%
354,638
502,121
384,251
68,900
58,622
$0.83
6,020
$0.38
$9.74
8.37%
0.97%
46.43%
3.72%
61.22%
11.08%
0.93%
1.30%
1.16%
1.18%
1.18%
1.33%
Devoted SeSerrvicevice
to
(1) Efficiency ratio is commonly used in the Banking industry and is defined as non-interest expenses to net interest and non-interest
income, net of securities gains (losses)
(2) Nonperforming loans is defined as loans on nonaccrual and accruing loans past due 90 days or more, Nonperforming assets is
defined as nonperforming loans and other real estate owned through foreclosure
(3) At December 31, 2020 the ratio of 1.30% is calculated by dividing the allowance for credit losses on loans of $8,882,000 by l
oans receivable of $754,821,000 less PPP loans of $69,583,000. There were no PPP loans reported prior to June 30, 2020 so this
calculation is not being provided for any time prior to June 30, 2020.
This is a non-GAAP (Generally Accepted Accounting Principles) financial measure in addition to results presented in accordance with
GAAP for the allowance for loan losses to total loans excluding PPP loans. The Bank has presented this non-GAAP financial measure
because it believes that it provides useful information to assess the Bank’s allowance for loan loss reserves. This non-GAAP financial
measure has inherent limitations, is not required to be uniformly applied, and is not audited. Further, this non-GAAP financial measure
should not be considered in isolation or as a substitute for the allowance for loan losses to total loans determined in accordance with
GAAP and may not be comparable to similarly titled measures reported by other financial institutions.
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Summit State Bank Healdsburg Team: - L to R: Kalie Jones, Matt Denny, Alyssa Cole, and Nicolette Crackbon
Company Contact Information
Nasdaq: SSBI
Summit State Bank
500 Bicentennial Way
Santa Rosa, CA 95403
707/568-6000
Corporate Secretary: Barbara Gradman
Transfer Agent:
Computershare
462 South 4th Street
Suite 1600
Louisville, KY 40202
800/962-4284
Investor Information:
See “Investor Relations” on our website:
SummitStateBank.com
Bicentennial
500 Bicentennial Way Suite 100
Santa Rosa, CA 95403 | 707/568-6100
Healdsburg
1001 Vine Street
Healdsburg, CA 95448 | 707/433-5959
Montgomery Village
2300 Midway Drive
Santa Rosa, CA 95405 | 707/568-4975
Petaluma
100 Petaluma Blvd. S. Suite A
Petaluma, CA 94952 | 707/283-1120
Rohnert Park
10 Raley’s Towne Centre
Rohnert Park, CA 94928 | 707/568-4955