Devoted to our community
for over 40 years.
Annual Report
2024
Letter to our Shareholders
2
This past year we faced several challenges including a continued high-interest
rate environment which affected funding costs, decreased deal volume, and
increased competition. Also, the Bank took significant charge offs and
provisions for credit losses in the fourth quarter of 2024 as a proactive step
towards resolving its problem loans. As a result, our net income was impacted,
and we experienced a decline in financial performance, generating a net loss of
$4.2 million, or $.62 loss per diluted share.
Despite the loss, the Bank ended the year with improved regulatory capital
ratios. We continue to focus on maintaining strong capital levels and did that
effectively in 2024 by strategically managing the balance sheet and suspending
cash dividends. As such, the Board determined it will also suspend cash
dividends in the first quarter of 2025 so that we can build capital, increase
liquidity, and position the Bank to create long-term value for our shareholders.
The largest impediment to the Bank’s performance in 2024 was a result of the
heightened level of non-performing assets. We have been aggressively
pursuing solutions and have reduced our non-performing loans by $9.2 million
in the fourth quarter of 2024. In addition, collateral on two of the three non-
performing loans are in contract to be sold in the first six months of 2025, which
will further reduce non-performing loans by $18.2 million.
The Bank remains committed to driving cost efficiencies and improving our
operational effectiveness. As part of this commitment, we have implemented
numerous cost-saving initiatives. This includes reducing headcount at the Bank,
leveraging existing staff and technologies to reduce third-party expenses,
suspending bonuses, re-structuring employee benefits Bank-wide, decreasing
director fees, and reducing the size of the board. These measures will
contribute to our financial recovery and long-term growth.
Letter to our Shareholders
Dawn M. Ross
Interim Chair of the Board
Brian J. Reed
President and CEO
3
As we head into 2025, we feel positive about our prospects based on our
notable progress in resolving problem loans. We continue to maintain our well
capitalized status and sufficient liquidity after having realized successive
quarters of improved net operating income results. The Bank is also focused
on expanding net interest margin in 2025. With the Federal Reserve rate cuts
in late 2024, we have experienced a decline in the cost of funds and many
deposits have yet to be repriced. In addition, significant loan repricings to
higher rates are scheduled to begin occurring in 2025.
On behalf of the Board of Directors and our executive management team, we
thank you for your support and continued investment in Summit State Bank.
Executive Leadership
Our experienced Executive Leadership Team led through some challenging times
this year, having to make difficult decisions that affected our employees,
customers, community and shareholders. Drawing on more than 170 years of
collective experience, they guided the strategic vision and maintained transparent
communication with employees to ensure alignment toward the Bank’s common
goals.
As a community bank, decisions are made locally, and we remain steadfast to
uphold the Bank’s core values which guides our attitudes, actions, and decision-
making. Our core values support both our mission and vision and shape our
company culture. These guiding principles are Integrity, Collaboration, Respect,
Adaptability, and having a Can-Do Attitude.
The Executive Leadership Team is engaged in the community by volunteering,
serving on local nonprofit boards and providing financial expertise. Each leader
brings their diverse expertise and knowledge, both inside and outside the Bank,
to collaboratively create a strong and versatile Executive Leadership Team.
Genie Del Secco, Brian Reed and Michael Floyd accept the Hall of Fame Award from the Northbay Biz
Magazine.
4
Executive Leadership
Genie Del Secco
Executive Vice President and
Chief Operating Officer
Genie has 35 years of industry experience.
10 years at Summit State Bank.
Genie serves as the Vice President of the Board of Directors of Our Village Closet.
Camille Kazarian
Executive Vice President and
Chief Financial Officer
Camille has 26 years of industry experience.
7 years at Summit State Bank.
Camille serves on the Board of Directors for Committee on the Shelterless (COTS).
Brandy Seppi
Executive Vice President and
Chief Lending Officer
Brandy has over 30 years of experience in the industry.
10 years at Summit State Bank.
Brandy is a member of the North Bay Angels, St. John the Baptist Catholic
Church and the Italian Catholic Federation in Healdsburg.
Brian Reed
President and Chief Executive Officer
Brian has over 40 years of industry experience.
9 years at Summit State Bank.
Brian serves on the Board of Directors of Free to Be, Children & Family Circle
and is a Rotarian.
Michael Floyd
Executive Vice President and
Chief Credit Officer
Michael has over 40 years of industry experience and joined the Bank in 2024.
Michael served on the Loan Committee of California Community Reinvestment
Corporation and the Housing Trust for Santa Barbara County.
5
Board of Directors
Our board members are selected not only for their expertise and business acumen
but also for their unwavering ethical standards and integrity. These core values
shape our decision-making processes and ensure that our actions align with the
Bank’s mission statement.
Each member contributes a unique perspective, valuable insight, and distinct
skillset, all of which play a vital role in achieving our business objectives. Their
diverse viewpoints and collective commitment are fundamental to the continued
success of our organization.
Dawn M. Ross
Interim Chair of the Board
Former Managing Partner
Carle, Mackie, Power & Ross LLP
Todd R. Fry
Interim Vice Chair of the Board
Chief Accounting Officer
Installed Building Products, Inc.
Brian J. Reed
President and CEO
Summit State Bank
Nick J. Rado
President
Rado Consulting
Douglas V. Reynolds
President and CEO
Energy Services of America
Sharon S. Wright
Governmental Affairs and
Public Relations Consultant
James A. Finley
Owner and President of
Treasure Creek Minerals, LLC
and Regional Finance Manager
at Clean Harbors
Jeffrey B. Allen
President and Founder
Allen Land Design
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Board of Directors
Josh C. Cox, Jr. played a significant role in the Bank’s
success serving on the Board of Directors for more than
13 years, most recently as the Chairman of the Board.
Sadly, on December 10, 2024, Josh passed away.
He spent his career assisting banks with bank
management and profitability enhancement for over six
decades as the owner of Josh Cox & Associates.
We are grateful for his years of service and leadership.
In Memorium
Josh C. Cox. Jr.
Board of Director
2011 - 2024
Marshall T. Reynolds
Chairman and Chief Executive
Officer, Champion Industries, Inc.
John W. Wright
Business Consultant
Belinda S. Guadarrama
President and Chief Executive
Officer of GC Micro Corporation
Frank Chong, Ed. D.
Past Superintendent/President
of Santa Rosa Junior College
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In Memory of Josh Cox, Jr.
Community Commitment
Community service is a priority at Summit State Bank, and all
employees are encouraged to give back to the community
through volunteering. Employees engage in hands-on
involvement by participating in community events and activities
that they are passionate about. The Bank provides financial
support and offers financial education as part of our commitment
as a community bank. Below are some highlights from this
year's giving.
Summit Day of Service
Employees are granted a paid day off to serve in community
activities of their choosing. Activities include volunteering at a
local food bank, working at a local animal shelter, preparing tax
returns for low-income individuals or reading to a classroom of
students.
Community Involvement
Collectively, a total of 858 volunteer hours were served during
2024. In addition, we have 14 officers and employees serving on
community boards and committees for the betterment of our
community.
Our team can be found participating in community events such
as the Healdsburg FFA parade, walking in the Sonoma County
Human Race, or attending fundraising events that support our
local nonprofits.
Women in Conversation
For eight consecutive years, the Bank has been the Presenting
and Founding Sponsor of the Women in Conversation speaker
series in collaboration with The Press Democrat, a local media
company.
This year’s Spring event featured New York Times bestselling
author, Liz Murray, who wrote Homeless to Harvard and the Fall
event featured renowned Chef, Stephanie Izard.
The program strives to build a strong community of women who
support each other and spark important conversations:
connecting, empowering, and supporting women of all ages.
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Community Commitment
Nonprofit Partner Program
Summit State Bank’s Nonprofit Partner Program provides an
annual cash contribution to its nonprofit customers based on
average annual account balances. In 2024, the Bank
delivered 242 donation checks for a total of $608,001. Since
2009, the Bank has contributed over $6.5 million to local
nonprofits in our community.
North Bay Business Journal’s Best Places to Work
This annual award is based on an employee survey which
provides feedback and comments on how the Bank
appreciated and recognized them throughout the year. For
15 consecutive years, our employees have voted Summit
State Bank as one of the Best Places to Work in the North
Bay. We were among 15 other companies that share this
15-year designation.
NorthBay Biz Magazine’s Hall of Fame
Summit State Bank was among the inaugural class of the
Best of the North Bay Hall of Fame. This designation was
bestowed to 15 local businesses and organizations that have
consistently garnered one of the top two recognitions of
either “Best Of” or “Gold” award at least 15 times. We were
honored to be among three local financial institutions to
receive the Hall of Fame Business Bank award.
San Francisco Business Times’ Corporate
Philanthropy Award
This award celebrates the Bay Area’s most generous
corporate businesses and acknowledges the companies that
give their time, talent and resources in the community.
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Selected Financial Data
(in thousands except per share data)
Statement of Income Data
2024
2023
2022
2021
Net interest income
$29,476
$35,462
$42,427
$37,606
Provision for credit losses
7,915
332
2,541
1,294
Non-interest income
3,459
5,201
7,495
4,901
Non-interest expense
29,408
25,050
23,511
20,333
Provision for income taxes
(195)
4.459
6,902
6,182
($4,193)
$10,822
$16,968
$14,698
Balance sheet data:
Assets
$1,067,094
$1,122,508
$1,115,343
$958,080
Loans, net
905.075 938,626
913,707
820,987
Deposits
962,562 1,009,693
962,654
811,600
Average earning assets
1,058766 1,110,801
978,169
878,258
Average shareholders' equity
99,080 93,621
86,038
79,538
Nonperforming loans
32,191 44,206
3,756
487
Selected per common share data:
Basic earnings per common share (5)
($0.62)
$1.62
$2.54
$2.20
Diluted earnings per common share (5)
($0.62)
$1.62
$2.54
$2.20
Common shares outstanding at year end (5)
6,777
6,784
6,733
6,685
Dividend per share (5)
$0.28
$0.48
$0.48
$0.44
Book value per common share (1)(5)
$13.53
$14.40
$13.15
$12.61
Selected ratios:
Return on average assets (2)
-0.38%
0.95%
1.69%
1.64%
Return on average common shareholders' equity (2)
-4.23%
11.56%
19.72%
18.48%
Efficiency ratio (3)
89.31%
61.60%
47.10%
47.91%
Net interest margin (2)
2.78%
3.19%
4.34%
4.28%
Common dividend payout ratio (4)
-45.20%
30.05%
19.01%
20.33%
Tier 1 leverage ratio
8.87%
8.85%
8.53%
8.65%
Nonperforming loans to total loans
3.02%
4.63%
0.40%
0.06%
Allowance for credit losses to total loans (6)
1.49%
1.60%
1.60%
1.48%
(1) Total shareholders' equity divided by total common shares outstanding.
(2) Annualized.
(3) Non-interest expenses to net interest and non-interest income, net of securities gains.
(4) Common dividends divided by net income available for common shareholders.
(5) Adjusted for 10% stock dividend declared: effective October 29, 2021.
(6) Allowance beginning 2021 are 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.
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:
Summit State Bank (the “Bank”) is an award-winning community bank operating
within our primary service area of Sonoma County, 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 operation as a California state-chartered saving and loan. On
January 15, 1999, the Bank received authority to convert its charter to a
California state-chartered 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.
The 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. Through the engagement of its
team, the Bank has received many esteemed awards including: Top Performing
Community Bank by American Banker, Best Places to Work in the North Bay
and Diversity in Business by the North Bay Business Journal, Corporate
Philanthropy Award by the San Francisco Business Times, and the Hall of
Fame by the Northbay Biz Magazine.
Information about Summit State Bank
11
Volunteering in our community is a natural extension of our work.
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
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
P.O. Box 43006
Providence, RI 02940-3006
Investor Information:
See "Investors" on our website:
SummitStateBank.com