Making a Significant Impact
ANNUAL REPORT
2021
To be a successful community bank, we must be significant in the lives of those we
touch - our employees, customers and community. Significance is the legacy that is
left behind long after a leader leaves an organization. Their influences on values,
attitudes and culture will endure and their impact on peers, managers and followers
will last a lifetime. We believe it is our role to leave a lasting impression on our
community, today and into the future.
Our guiding principles provide direction and focus on our beliefs, values and goals,
which shape our company philosophy. It is the driver for everything that happens in
our organization. - Brian Reed, President and CEO
MISSION STATEMENT
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.
VISION STATEMENT
To be the community bank leader committed to providing superior service and
enriching the communities we serve, today and into the future.
CORE VALUES
Our core values support our vision and shape our company culture. The guiding
principles that drive our attitudes, actions, and decision-making are:
Integrity
Collaboration
Respect
Adaptable
Can-Do Attitude
Letter to the Shareholders
Letter to our Shareholders, Employees, Customers and Community
We are pleased to report that in 2021 the Bank reported record earnings and growth. Led by our
Executive and Management team, we channeled the strength and resiliency of our dedicated
employees to adapt and meet the needs of our customers and community.
The Bank increased its returns 40% by growing its net operating income at a greater rate than
overhead expenses. Earnings primarily grew in its core operations through loan and deposit growth,
both of which increased over 19%. In addition, growth in the SBA 7A lending portfolio allowed the
Bank to increase non-interest income. We also had an uplift in net income from recognizing interest
and fee income from PPP loans, but the majority of its gain in net income was in core operations,
which is a more sustainable form of revenue.
At Summit State Bank, we strive to achieve success. However, success is more than just record
earnings and growth. To leave a legacy, true success of an organization is making a significant impact
on others. Assisting others to accomplish their goals in life and business is a winning combination that
is far reaching and part of our mission. This year we engaged our team to evaluate the Bank’s guiding
principles including our Mission Statement, Vision Statement and Core Values. We fully embrace these
ideals at all levels of our company and use them to guide our attitudes, actions, and decision-making.
In collaboration with the Small Business Administration’s (SBA) Payroll Protection Program (PPP), our
team assisted over 860 customers and nonprofits with PPP loans totaling $134,000,000. Once the
loans were funded, we actively worked to assist and encourage customers to seek forgiveness on
those loans. In addition, we granted temporary payment deferrals on 148 loans totaling $207,000,000
to assist our customers weather the pandemic.
We take great pride in giving back to our community and continue that focus through our Nonprofit
Partner Program now in its thirteenth year. Since its inception, we have donated over $2,900,000 to
local nonprofits. In 2021, through this program and additional charitable contributions we donated
over $600,000 to over 200 local nonprofit organizations, which provide critical services such as food,
shelter, childcare, and other essential services. In the fall, we hosted our first North Bay Nonprofit
Event to deepen the relationship with our Nonprofit Partners by providing education, resources,
support, and fellowship. The speakers included several nonprofit experts who shared valuable
information to our nonprofit customers.
On behalf of the Board of Directors and management, we thank you, our customers, employees,
shareholders, and community for the confidence and trust you have placed in us. We are committed to
building A Better Sonoma County by encouraging sustainability and small business growth. – That’s
Our Business.
James E. Brush
Chairman of the Board
Brian J. Reed
President & CEO
(cid:22)
Executive Leadership
Our Executive Team stayed the course
managing our business along with monitoring
the ever-changing pandemic restrictions for the
second consecutive year. Like previous years,
they met consistently and communicated
regularly with our team on the latest health and
safety protocols. Their unwavering commitment
to ensure the welfare of our team, customers,
and community provided a secure environment
to conduct our business.
One of the biggest challenges brought on by the
pandemic was managing and maintaining
appropriate staffing levels. With competing
priorities of work and home life we were able to
provide schedule flexibility and a majority of our
more than 100 employees were able to work
from home or adopt modified work schedules
throughout the year.
Summit State Bank Executive Team: L to R: Michael Castlio, Brandy Seppi, Genie Del Secco, Camille Kazarian, and Brian Reed
(cid:3)
(cid:23)
(cid:3)
(cid:24)
Summit State Bank Executive Team: L to R: Michael Castlio, Brandy Seppi, Genie Del Secco, Camille Kazarian, and Brian Reed
(cid:3)
(cid:24)
Board of Directors
Our board members are carefully vetted to ensure
their values are in alignment with the Bank.
Individuals are selected based on their integrity,
business acumen, community involvement and
engagement. We live in a diverse community and
strive to emulate that diversity across our
organization. Each board member brings their
professional experience, knowledge and unique
views, which we believe makes our community
bank effective and successful.
To that end, in 2021 we added Belinda
Guadarrama, President and CEO of GC Micro, to
our Board of Directors. Belinda’s experience and
advocacy of small and minority businesses, and
dedication to the community, has earned her local
and national recognition through various
prestigious awards, including California State
Small Business Person of the Year by the Small
Business Association, and Hispanic Business
Woman of the Year by the United States Hispanic
Chamber of Commerce, making her an excellent
addition to our Board of Directors.
(cid:25)
Board of Directors
Our board members are carefully vetted to ensure
their values are in alignment with the Bank.
Individuals are selected based on their integrity,
business acumen, community involvement and
engagement. We live in a diverse community and
strive to emulate that diversity across our
organization. Each board member brings their
professional experience, knowledge and unique
views, which we believe makes our community
bank effective and successful.
To that end, in 2021 we added Belinda
Guadarrama, President and CEO of GC Micro, to
our Board of Directors. Belinda’s experience and
advocacy of small and minority businesses, and
dedication to the community, has earned her local
and national recognition through various
prestigious awards, including California State
Small Business Person of the Year by the Small
Business Association, and Hispanic Business
Woman of the Year by the United States Hispanic
Chamber of Commerce, making her an excellent
addition to our Board of Directors.
James E. Brush
Chairman of the Board
Business Consultant
Brian J. Reed
President and CEO
Summit State Bank
Jeffrey B. Allen
President and Founder
Allen Land Design
Josh C. Cox, Jr.
Banking Consultant
Josh Cox & Associates
Todd R. Fry
Chief Accounting Officer
Installed Building Products, Inc.
Belinda S. Guadarrama
President and CEO
GC Micro
Richard E. Pope
Environmental and
Engineering Consultant
Codding Investment, Inc.
Nicholas J. Rado
President
Rado Consulting Services
(cid:25)
(cid:26)
Marshall T. Reynolds
Chairman of the Board
Champion Industries, Inc.
Dawn M. Ross
Managing Partner
Carle Mackie, Power and Ross, LLP
John W. Wright
Business Consultant
Sharon S. Wright
Governmental Relations
and Public Affairs Consultant
Personal and Leadership Development
Nonprofit & Community Commitment
Keeping in step with our mission to hire and invest in
exceptional people, we continued to look for
opportunities to provide personal and professional
development for our employees. We know that investing
in our team is one of the many ways to attract and retain
the finest talent to ensure we achieve the best business
growth and performance outcomes.
We make every effort to promote inclusion where
employees have a voice, and their views and opinions are
heard and considered for the betterment of our
organization. We also understand that providing
professional growth and development is a critical
component of career satisfaction, retention, and
engagement of our workforce.
We hosted our inaugural North Bay Nonprofit Event in an
effort to deepen the relationships with our existing
Nonprofit Partners by providing education, resources,
support, and fellowship. The half day event included local
nonprofit experts who shared valuable information to the
attendees.
Sheridan Rapolla of LandPaths and
Phyllis Rosenfeld of Listening for a
Change, share a conversation at the
NBNE.
We take serving our community seriously and are committed to making
a difference. Some examples of our 2021 support include:
Contributed over $600,000 to over 200 local nonprofits through
our Nonprofit Partner Program
Invested in affordable housing
Helped to provide micro-loans to local underserved businesses
Volunteered 902 community service hours
16 Bank Officers and staff served on nonprofit boards or
committees
Provided Financial Literacy and Education
Contributed to Homeless Services, Food & Shelter
Linda Bohn
Learning and Development Specialist
We invest in our employees and
encourage leadership development
by offering programs such as:
Employee Activity Committee
Mentorship Program
Diversity, Equity & Inclusion
Committee
Leadership Training
Guest Speakers
Banking School
Ray Eggersgluss & Maggie Grover
Volunteering at the
Redwood Empire Food Bank
(cid:3)
(cid:27)
(cid:28)
Nonprofit & Community Commitment
We hosted our inaugural North Bay Nonprofit Event in an
effort to deepen the relationships with our existing
Nonprofit Partners by providing education, resources,
support, and fellowship. The half day event included local
nonprofit experts who shared valuable information to the
attendees.
Sheridan Rapolla of LandPaths and
Phyllis Rosenfeld of Listening for a
Change, share a conversation at the
NBNE.
We take serving our community seriously and are committed to making
a difference. Some examples of our 2021 support include:
Contributed over $600,000 to over 200 local nonprofits through
our Nonprofit Partner Program
Invested in affordable housing
Helped to provide micro-loans to local underserved businesses
Volunteered 902 community service hours
16 Bank Officers and staff served on nonprofit boards or
committees
Provided Financial Literacy and Education
Contributed to Homeless Services, Food & Shelter
Ray Eggersgluss & Maggie Grover
Volunteering at the
Redwood Empire Food Bank
(cid:28)
Accolades
BEST BUSINESS BANK
NORTHBAY biz Magazine
BEST PLACE TO WORK
North Bay Business Journal
TOP COMMUNITY BANK LOAN PRODUCER
Independent Community Bankers of America
SUPER PREMIER PERFORMANCE BANK
Findley Research
RAYMOND JAMES BANKERS CUP AWARD
(cid:20)(cid:19)
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
saving and loan. On January 15, 1999, the Bank received authority to convert its charter to a
California state-charted 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 related
regulations of the FDIC.
We provide a broad array of financial services to small to medium-size 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 customers’ needs. Our lending activities are primarily focused on commercial
real estate, construction, and business loans to our targeted clientele. We emphasize relationship
banking, and believe we offer our customers many of the management capabilities of a larger
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, 65% of management are women
and minorities with 60% represented on the Executive Management Team.
(cid:20)(cid:20)
Financials at a glance (in thousands)
Total Average Loans
$
$
$
$
$
$
$
$
$
$
$
Net Income
$
$
$
$
$
$
$
$
(cid:20)(cid:21)
Financials at a glance (in thousands)
Total Average Deposits
$
$
$
$
$
$
$
$
$
$
$
Non - Interest Income
$
$
$
$
$
$
(cid:20)(cid:22)
Selected Financial Data
(in thousands except per share data)
Income statement data:
Interest income
Year Ended December 31
2021
2020
2019
2018
$41,973
$36,425
$30,001
$25,572
Net interest income before provision for (reversal of) loan losses
37,606
30,261
22,976
21,622
Net income available to common shareholders
$14,698
$10,517
$6,477
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
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 (1)
Common shares outstanding at year end (1)
Cash dividends per share (1)
1,294
4,901
2,100
4,448
700
2,662
530
2,309
20,333
17,671
16,063
15,357
20,880
14,938
6,182
4,421
8,875
2,398
$14,698
$10,517
$6,477
$958,080
$865,854
$695,978
$622,104
820,987
745,939
576,548
942,518
851,341
680,607
811,600
726,295
573,837
48,500
84,282
53,500
75,629
45,600
67,344
$2.20
6,685
$0.44
$1.58
6,677
$0.44
$0.97
6,677
$0.44
8,044
2,217
$5,827
$5,827
504,549
609,956
501,189
56,800
61,520
$0.87
6,673
$0.44
$9.22
9.66%
0.99%
49.97%
3.75%
64.24%
9.86%
0.42%
1.18%
Book value per common share (1) (2)
$12.61
$11.33
$10.09
Selected ratios:
Return on average common shareholders' equity (3)
18.48%
14.68%
Return on average assets (3)
Common dividend payout ratio (4)
Net interest margin (3)
Efficiency ratio (5)
Tier 1 leverage capital ratio
Nonperforming loans to total loans (6)
Allowance for loan losses to total loans excluding PPP (7)*
1.64%
1.33%
20.33%
27.70%
4.28%
3.91%
47.91%
52.23%
8.65%
0.06%
1.51%
8.15%
0.03%
1.30%
9.99%
1.00%
44.97%
3.66%
62.64%
9.26%
0.05%
1.16%
(cid:20)(cid:23)
(1) Adjusted for 10% stock dividend declared; effective October 29, 2021.
(2) Total shareholders' equity divided by total common shares outstanding.
(3) Annualized.
(4) Common dividends divided by net income available for common shareholders.
(5) Non-interest expenses to net interest and non-interest income, net of securities gains.
(6) 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.
(7) Allowance in 2021 reported using current expected credit loss ("CECL") method, all 2020 and prior periods' allowance are reported in accordance with
previous GAAP using the incurred loss method.
*Non-GAAP Financial Measures:
In addition to results presented in accordance with GAAP, this Form 10-K contains a non-GAAP (Generally Accepted Accounting Principles) financial measure
for the allowance for credit losses to total loans excluding PPP loans. The Bank has presented this non-GAAP financial measure in the report because it
believes that it provides useful information to assess the Bank’s allowance for credit losses; interest and principal on PPP loans are fully guaranteed by the
SBA and are generally not subject to potential loss. 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 credit losses to total loans
determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other financial institutions. A reconciliation of this
non-GAAP financial measure to the allowance for credit losses to total loans is presented below in the “Allowance for credit losses to total loans excluding
PPP” section.
We are pleased to continue our support of
the speaker series Women in
Conversation, which we have been the
Presenting Sponsor since its beginning in
2016. Like many programs, it continued
on a virtual platform for most of 2021.
The topics presented this year included:
Motherhood & More, The Joy of Pets, and
Creating Your Calm. In the fall, we were
able to host the Women in Conversation
Experience in-person, featuring Olympians
- Kristi Yamaguchi, Kerry Walsh Jennings
and Brandi Chastain.
(cid:20)(cid:24)
Summit State Bank Petaluma Team: L to R: Kathy Moore, Guadalupe Gonzalez, Kimberly Bell, and Luz Pelayo
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
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