SANTA ROSA, Calif., Oct. 27, 2026 (GLOBE NEWSWIRE) -- Summit State Bank (the “Bank”) (Nasdaq: SSBI) today reported a net loss of $1,098,000, or $0.16 loss per diluted share for the third quarter ended September 30, 2026, compared to net income of $818,000, or $0.12 earnings per diluted share for the third quarter ended September 30, 2025. The current quarter's results were impacted by a $5,688,000 provision for credit losses on loans. During the third quarter of 2026, the Bank also recognized $507,000 in gross charge-offs as part of a comprehensive review of certain higher-risk credits and obtaining new information pertaining to collateral values. These actions reflect the Board's and management's ongoing efforts to address identified credit risks and pursue appropriate resolution strategies.

Pre-tax, pre-provision income¹ was $4,031,000 for the quarter ended September 30, 2026, compared to $4,008,000 for the quarter ended September 30, 2025, and $3,957,000 for the quarter ended June 30, 2026. This trend of increasing pre-tax, pre-provision income is driven by improvement in net interest margin and management of expenses which offset declining asset balances.

“Our third quarter core operating profitability has remained strong as demonstrated by an improved net interest margin and continuing to manage operating expense levels.” said Brian Reed, President and Chief Executive Officer. “We did recognize charge-offs and increased provisions during the quarter as we worked to resolve several higher risk credits. These actions reflect our commitment to addressing problem assets decisively and strengthening the balance sheet. Based on our demonstrated strong net operating income coupled with our growth plans, makes us confident in our long-term strategy and intend to build on the core operating results, while reducing the level of problem assets.”

Third Quarter 2026 Financial Highlights (at or for the three months ended September 30, 2026)

• Net loss was $1,098,000, or $0.16 loss per diluted share, compared to net income of $818,000, or $0.12 earnings per diluted share, for the quarter ended September 30, 2025, and a net loss of $1,307,000, or $0.19 loss per diluted share for the quarter ended June 30, 2026.
• Pre-tax, pre-provision income was $4,031,000 for the quarter ended September 30, 2026, compared to $4,008,000 for the quarter ended September 30, 2025, and $3,957,000 for the quarter ended June 30, 2026.
• Net interest margin was 3.87% in the third quarter of 2026 compared to 3.51% in the third quarter of 2025 and 3.95% in the second quarter of 2026.
• Nonperforming assets were $20,676,000 at September 30, 2026, compared to $27,978,000 at September 30, 2025, and $20,757,000 at June 30, 2026.
• The Bank’s Tier 1 Leverage ratio increased to 11.03% at September 30, 2026, compared to 10.24% at September 30, 2025, and 10.84% at June 30, 2026.
• Annualized loss on average assets and annualized loss on average equity for the third quarter of 2026 were 0.46% and 4.24%, respectively. These compared to annualized return on average assets and annualized return on average equity for the third quarter of 2025 of 0.32% and 3.25%, respectively.
• The allowance for credit losses to total loans held for investment was 2.36% at September 30, 2026, compared to 1.65% at September 30, 2025, and 1.69% at June 30, 2026.
• The Bank maintained total liquidity of $427,221,000, or 45.6% of total assets as of September 30, 2026. This includes on balance sheet liquidity (cash and equivalents and unpledged available-for-sale securities) of $150,416,000 or 16.0% of total assets, plus available borrowing capacity of $276,805,000 or 29.5% of total assets.
• The Bank has been strategically managing its loan and deposit portfolios to reduce balance sheet risk and improve capital ratios, successfully reducing the overall size of its balance sheet as detailed below:
  • Net loans held for investment decreased 11% to $745,351,000 at September 30, 2026, compared to $838,402,000 at September 30, 2025, and decreased 0.1% compared to $746,099,000 at June 30, 2026.
  • Total deposits decreased 7% to $826,610,000 at September 30, 2026, compared to $888,784,000 at September 30, 2025, and decreased 2% when compared to $846,129,000 at June 30, 2026.
• Book value per share was $14.60 at September 30, 2026, compared to $14.73 at September 30, 2025, and $14.98 at June 30, 2026.
  
  

Operating Results

The Bank’s net interest margin was 3.87% in the third quarter of 2026 compared to 3.51% in the third quarter of 2025 and 3.95% in the second quarter of 2026. “Our net interest margin expanded 36 basis points compared to the third quarter of last year. This improvement was driven by a lower cost of funds, as we repriced deposits, along with the continued repricing of our loan portfolio at higher yields. A reduction in nonperforming loans also contributed, as fewer nonaccrual balances weighed on our interest income. These increases were partially offset by lower average loan balances during the third quarter. We believe the combination of disciplined funding costs and ongoing loan repricing positions us well to sustain margin performance,” said Reed.

Interest and dividend income decreased 6.2% to $13,344,000 in the third quarter of 2026 compared to $14,220,000 in the third quarter of 2025. The decrease in interest income is attributable to lower loan portfolio volume, which reduced interest and fees on loans by $1,185,000 and lower investment securities holdings, which decreased interest income by $43,000. This was offset by an increase in interest on deposits with banks of $338,000.

Interest expense decreased 21.0% to $4,388,000 in the third quarter of 2026 compared to $5,554,000 in the third quarter of 2025. The cost of deposits also decreased to 2.03% in the third quarter of 2026 compared to 2.38% in the third quarter of 2025. The decrease in interest expense is primarily attributed to a $1,101,000 decrease in interest expense on deposits resulting from lower cost of funds and lower volume of deposits.

Noninterest income decreased in the third quarter of 2026 to $714,000 compared to $887,000 in the third quarter of 2025. The decrease is primarily attributed to the Bank recognizing $230,000 in gains on sales of Small Business Administration (“SBA”) guaranteed loan balances in the third quarter of 2026 compared to $308,000 in gains on sales of SBA guaranteed loan balances in the third quarter of 2025 and a $100,000 decrease in service charges on deposit accounts.

Operating expenses increased in the third quarter of 2026 to $5,639,000 compared to $5,545,000 in the third quarter of 2025. “Operating expenses for the third quarter increased modestly compared to the same period last year, even though salaries and employee benefits were lower. On a linked quarter basis, expenses declined, as we began to realize efficiencies from our integration efforts and continued to make deliberate decisions about where we invest. These savings were achieved without compromising the level of service our customers expect from us. We remain committed to disciplined expense management, which we view as a key driver of improved operating leverage and long-term shareholder value,” said Reed.

Balance Sheet Review

During the third quarter of 2026, the Bank continued to strategically manage its loan and deposit portfolios to reduce balance sheet risk and improve liquidity and capital ratios. As a result, net loans held for investment decreased 11% to $745,351,000, and total deposits decreased 7% to $826,610,000 as of September 30, 2026, compared to September 30, 2025.

Net loans held for investment were $745,351,000 at September 30, 2026, an 11% decrease compared to $838,402,000 at September 30, 2025, and a 0.1% decrease compared to $746,099,000 at June 30, 2026. The Bank’s largest loan types are commercial real estate loans which comprise 79% of the portfolio and loans secured by farmland which make up 7% of the loan portfolio. Of the commercial real estate total, approximately 34% or $202,871,000 are owner occupied, and the remaining 66% or $399,530,000 are non-owner occupied. The Bank’s loan portfolio is well diversified between industries and product type. Office space loans total $89,973,000, representing 12% of the total loan portfolio, of which $34,123,000 or 38% are owner occupied and $55,850,000 or 62% are non-owner occupied.

Total deposits were $826,610,000 at September 30, 2026, compared to $888,784,000 at September 30, 2025, and decreased 2% compared to the prior quarter end. At September 30, 2026, noninterest bearing demand deposit accounts increased 3% compared to a year ago and represented 23% of total deposits; savings, NOW and money market accounts decreased 3% compared to a year ago and represented 54% of total deposits, and time deposits decreased 22% compared to a year ago and comprised 23% of total deposits.

Shareholders’ equity was $98,830,000 at September 30, 2026 compared to $99,728,000 at September 30, 2025, and $101,357,000 at June 30, 2026. The decrease in shareholders’ equity was primarily due to a $1,427,000 increase in accumulated other comprehensive loss compared to a year ago and the decrease compared to three months earlier was primarily due to a $1,478,000 increase in accumulated other comprehensive loss. At September 30, 2026, book value per share was $14.60 compared to $14.98 three months earlier, and $14.73 at September 30, 2025.

The Bank’s Tier 1 Leverage ratio continues to exceed the minimum of 5% necessary to be categorized as “well-capitalized” for regulatory capital purposes. The Tier 1 leverage ratio at September 30, 2026 was 11.03%, an increase compared to 10.24% at September 30, 2025.

Credit Quality

Nonperforming assets were $20,676,000, or 2.21% of total assets, at September 30, 2026. This compared to $20,757,000 in nonperforming assets at June 30, 2026, and $27,978,000 in nonperforming assets at September 30, 2025. The decrease from the prior quarter was due to gross charge-offs of $507,000 on two relationships offset by the addition of one new commercial relationship totaling $465,000. Nonperforming assets include $2,294,000 for one other real estate owned property at September 30, 2026, and June 30, 2026, compared to $4,437,000 for one other real estate owned property at September 30, 2025.

“We remain proactive in managing these exposures, and the remainder of our loan portfolio continues to demonstrate strong performance. Past due loans stood at 0.13% of total loans at September 30, 2026, compared to 0.12% at September 30, 2025,” said Reed.

There was $498,000 in net charge-offs during the three months ended September 30, 2026, compared to $8,655,000 net charge-offs during the three months ended June 30, 2026 and $1,800,000 in net charge-offs during the three months ended September 30, 2025.

For the third quarter of 2026, the Bank recorded a provision for credit losses on loans held for investment of $5,688,000, a $5,000 provision for credit losses for unfunded loan commitments and a $1,000 reversal of credit losses on investments. This compared to a $2,709,000 provision for credit losses on loans, a $49,000 provision for credit losses on unfunded loan commitments and a $21,000 reversal of credit losses on investments in the third quarter of 2025.

The allowance for credit losses to total loans held for investment was 2.36% on September 30, 2026, compared to 1.69% on June 30, 2026, and 1.65% on September 30, 2025. The allowance for credit losses reflects changes in nonperforming loan levels and overall portfolio size. The increase from June 30, 2026 to September 30, 2026 was driven by a $5,688,000 provision for credit losses on loans partially offset by $498,000 in net charge-offs.

About Summit State Bank

Founded in 1982 and headquartered in Sonoma County, Summit State Bank is an award-winning community bank serving the North Bay. The Bank serves small businesses, nonprofits, and the community, with total assets of $937 million and total equity of $99 million as of September 30, 2026. The Bank has built its reputation over the past 40 years by specializing in providing exceptional customer service and customized financial solutions to aid in the success of its customers.

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 the community it serves. Through the engagement of its team, Summit State 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 North Bay Business Journal, Corporate Philanthropy Award by the San Francisco Business Times, and Hall of Fame by North Bay Biz Magazine. Summit State Bank’s stock is traded on the Nasdaq Global Market under the symbol SSBI. Further information can be found at www.summitstatebank.com.

Cautionary Note Regarding Preliminary Financial Results and Forward-looking Statements

The financial results in this release are preliminary and unaudited. Final financial results and other disclosures will be reported in Summit State Bank’s quarterly report on Form 10-Q for the period ended September 30, 2026, and may differ materially from the results and disclosures in this release due to, among other things, the completion of final review procedures, the occurrence of subsequent events or the discovery of additional information.

Except for historical information, the statements contained in this release are forward-looking statements within the meaning of the “safe harbor” provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are non-historical statements regarding management’s expectations and beliefs about the Bank’s future financial performance and financial condition and trends in its business and markets. Words such as “expects,” “anticipates,” “believes,” “estimates” and similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could” are intended to identify such forward-looking statements. Examples of forward-looking statements include but are not limited to statements regarding future operating results, operating improvements, loan sales and resolutions, cost savings, insurance recoveries, and dividends. The forward-looking statements in this release are based on current information and on assumptions about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond the Bank’s control. As a result of those risks and uncertainties, the Bank’s actual future results and outcomes could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this release. Those risks and uncertainties include, but are not limited to, the risk of incurring credit losses; the quality and quantity of deposits; the market for deposits, adverse developments in the financial services industry and any related impact on depositor behavior or investor sentiment; risks related to the sufficiency of the Bank’s liquidity; fluctuations in interest rates; governmental regulation and supervision; the risk that the Bank will not maintain growth at historic rates or at all; general economic conditions, either nationally or locally in the areas in which the Bank conducts its business; the impacts of conflict in the Middle East on the national and local economy; risks associated with changes in interest rates, which could adversely affect future operating results; the risk that some or all of the loans under contract for sale may not be sold as or when expected; the risk that customers or counterparties may not perform in accordance with the terms of credit documents or other agreements due to a decline in creditworthiness, business conditions or other reasons; adverse conditions in real estate markets; and the inherent uncertainty of expectations regarding litigation, insurance claims and the performance or resolution of loans. Additional information regarding these and other risks and uncertainties to which the Bank’s business and future financial performance are subject is contained in the Bank’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and other documents the Bank files with the FDIC from time to time. Readers should not place undue reliance on the forward-looking statements, which reflect management’s views only as of the date of this release. The Bank undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

¹ Non-GAAP Financial Measures

This release contains a non-GAAP (Generally Accepted Accounting Principles) financial measure in addition to the results presented in accordance with GAAP. The non-GAAP financial measure is pre-tax, pre-provision income. We believe the presentation of this non-GAAP financial measure provides useful information to assess our financial condition and results of operations and to assist investors in evaluating our financial results relative to our historical results and those of our peers.

Not all companies use identical calculations or the same definitions of pre-tax, pre-provision income, so the presentation of this non-GAAP financial measure may not be comparable to other similarly titled measures used by other companies. This non-GAAP financial measure has inherent limitations, is not required to be uniformly applied, and is not audited. This non-GAAP financial measure should be taken together with the corresponding GAAP measure and should not be considered a substitute for the GAAP measure. A reconciliation of the most directly comparable GAAP measure to this non-GAAP financial measure is presented below.

Contact: Brian Reed, President and CEO, Summit State Bank (707) 568-4908