<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 000-21267
SUMMIT BANK CORPORATION
(Exact name of Registrant as specified in its charter)
GEORGIA 58-1722476
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4360 Chamblee-Dunwoody Road
Atlanta, Georgia 30341
(Address of principal executive offices, including Zip Code)
(770) 454-0400
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
-------- --------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of capital stock, as of the latest practicable date.
Class Outstanding at November 12, 1997
----- --------------------------------
Common Stock. $.0l par value 1,474,648
The Exhibit Index Appears on Page 13
PAGE 1 OF 15
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUMMIT BANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
(In thousands) 1997 1996
- ----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 8,370 $ 7,443
Federal funds sold 7,800 15,900
Interest-bearing deposits in other banks 76 74
Investment securities available for sale, at fair value 51,273 37,903
Other investments 1,568 681
Loans, net of unearned income 90,924 82,778
Loans held for sale 2,955 3,030
Less: allowance for loan losses (1,614) (1,931)
- ----------------------------------------------------------------------------------
Net loans 92,265 83,877
- ----------------------------------------------------------------------------------
Premises and equipment, net 4,394 4,574
Customers' acceptance liability 1,683 1,184
Other real estate -- --
Deferred income taxes 342 392
Other assets 4,388 2,220
- ----------------------------------------------------------------------------------
Total assets $ 172,159 $ 154,248
==================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand $ 31,291 $ 27,381
Interest-bearing:
Demand 32,480 39,487
Savings 6,342 6,288
Time, $100,000 and over 26,075 23,109
Other time 41,217 36,634
- ----------------------------------------------------------------------------------
Total deposits 137,405 132,899
- ----------------------------------------------------------------------------------
Obligation under capital lease 90 118
Other borrowed funds 12,581 1,657
Acceptances outstanding 1,683 1,184
Other liabilities 1,570 1,454
- ----------------------------------------------------------------------------------
Total liabilities 153,329 137,312
- ----------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common stock 16 14
Additional paid-in capital 12,648 12,123
Retained earnings 6,017 4,710
Net unrealized holding gains on investment securities
available for sale, net of income taxes 149 89
- ----------------------------------------------------------------------------------
Total stockholders' equity 18,830 16,936
- ----------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 172,159 $ 154,248
==================================================================================
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
PAGE 2 OF 15
<PAGE> 3
SUMMIT BANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
(Dollars in thousands, except share and per share amounts) 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Loans, including fees $ 2,401 $ 2,152 $ 7,128 $ 6,392
Interest-bearing deposits in other banks 2 1 4 3
Federal funds sold 82 70 234 160
Investment securities-taxable 288 188 859 480
Mortgage-backed securities 572 454 1,632 1,388
- ---------------------------------------------------------------------------------------------------------------
Total interest income 3,345 2,865 9,857 8,423
- ---------------------------------------------------------------------------------------------------------------
Interest expense
Time deposits, $100,000 and over 360 310 1,017 1,003
Other deposits 875 824 2,648 2,309
Short-term borrowings and obligation
under capital lease 183 22 301 50
- ---------------------------------------------------------------------------------------------------------------
Total interest expense 1,418 1,156 3,966 3,362
- ---------------------------------------------------------------------------------------------------------------
Net interest income 1,927 1,709 5,891 5,061
Provision for loan losses 135 99 395 386
- ---------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 1,792 1,610 5,496 4,675
- ---------------------------------------------------------------------------------------------------------------
Non-interest income
Fees for international banking services 327 248 895 806
SBA loan servicing fees 90 122 312 356
Service charge income 71 59 197 154
Overdraft and NSF charges 100 83 310 255
Gains on sales of loans 110 89 318 440
Net gains (losses) on sales of investment securities 114 (11) 133 105
Other 101 201 275 363
- ---------------------------------------------------------------------------------------------------------------
Total non-interest income 913 791 2,440 2,479
- ---------------------------------------------------------------------------------------------------------------
Non-interest expenses
Salaries and employee benefits 913 838 2,725 2,503
Equipment 138 127 445 348
Net occupancy 127 102 377 301
Other operating expenses 577 546 1,819 1,501
- ---------------------------------------------------------------------------------------------------------------
Total non-interest expenses 1,755 1,613 5,366 4,653
- ---------------------------------------------------------------------------------------------------------------
Income before income taxes 950 788 2,570 2,501
- ---------------------------------------------------------------------------------------------------------------
Income tax expense 343 297 894 943
- ---------------------------------------------------------------------------------------------------------------
Net income $ 607 $ 491 $ 1,676 $ 1,558
- ---------------------------------------------------------------------------------------------------------------
Net income per common share and common share equivalents $ .37 $ .31 $ 1.03 $ .97
- ---------------------------------------------------------------------------------------------------------------
Weighted-average common shares outstanding and
common share equivalents 1,629,292 1,630,610 1,627,604 1,630,610
- ---------------------------------------------------------------------------------------------------------------
Dividends declared per common share $ .09 $ .08 $ .26 $ .23
===============================================================================================================
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
PAGE 3 OF 15
<PAGE> 4
SUMMIT BANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months
ended September 30,
(In thousands) 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,676 $ 1,558
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of leasehold improvements 308 196
Deferred tax expense (benefit) 14 (177)
Net amortization of premiums/discounts on
investment securities 58 42
Amortization of negative goodwill (83) (82)
Provision for loan losses 395 386
Gains on sales of loans (318) (440)
Proceeds from sales of loans 2,189 3,772
Net gains on sales of investment securities (133) (105)
Changes in other assets and liabilities:
(Increase) decrease in other assets (137) 2,918
Increase (decrease) in other liabilities 199 (978)
- -------------------------------------------------------------------------------------------
Net cash provided by operating activities 4,168 7,090
- -------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from maturities of investment securities available for sale 5,000 1,850
Principal collections on investment securities available for sale 4,520 3,762
Proceeds from sales of investment securities available for sale 20,057 6,745
Purchases of investment securities available for sale (43,663) (17,876)
Loans made to customers, net of principal collected on loans (12,685) (9,550)
Purchases of premises and equipment (128) (1,711)
- -------------------------------------------------------------------------------------------
Net cash used in investing activities (26,899) (16,780)
- -------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net (decrease) increase in demand and savings deposits (3,043) 2,361
Net increase in time deposits 7,549 8,440
Principal payments for obligation under capital lease (28) (25)
Proceeds from issuance of common stock 527 --
Dividends paid (239) (211)
Dividends paid (369) (324)
Net increase in borrowed funds 10,924 1,511
- -------------------------------------------------------------------------------------------
Net cash provided by financing activities 15,560 11,963
- -------------------------------------------------------------------------------------------
Net (increase)decrease in cash and cash equivalents (7,171) 2,273
Cash and cash equivalents at beginning of period 23,417 10,805
- -------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 16,246 $ 13,078
===========================================================================================
Supplemental disclosures of cash paid during the period:
Interest $ 3,875 $ 4,214
Income taxes $ 700 $ 1,001
===========================================================================================
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
PAGE 4 OF 15
<PAGE> 5
SUMMIT BANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The financial statements included herein have been prepared by Summit
Bank Corporation and Subsidiaries (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally
included in consolidated financial statements prepared in accordance with
generally accepted accounting principles have been omitted, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of management, the
information furnished in the condensed consolidated financial statements
reflects all adjustments necessary to present fairly the Company's
financial position, results of operations and cash flows for such interim
periods. Management believes that all interim period adjustments are of a
normal recurring nature. These consolidated financial statements should
be read in conjunction with the Company's audited financial statements
and the notes thereto as of December 31, 1996, included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, The Summit National Bank (the "Bank")
and The Summit Merchant Banking Corporation. All intercompany accounts
and transactions have been eliminated in consolidation.
2. ACCOUNTING POLICIES
Reference is made to the accounting policies of the Company described in
the notes to consolidated financial statements contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
3. DERIVATIVES DISCLOSURES
In January 1997, the Securities and Exchange Commission approved rule
amendments (the Release) regarding disclosures about derivative financial
instruments, other financial instruments and derivative commodity
instruments. The Release requires inclusion in the footnotes to the
financial statements of extensive detail about the accounting policies
followed by a registrant in connection with its accounting for derivative
financial instruments and derivative commodity instruments. The
accounting policy requirements become effective for all registrants for
filings that include financial statements for periods ending after
September 15, 1997. The Company does not presently have any derivative
financial instruments or derivative commodity instruments as defined in
the Release.
4. OTHER BORROWINGS
The Company has a $16 million credit line with the Federal Home Loan Bank
on which it drew $10 million in July 1997 for a six month term. This
advance bears an interest rate of 5.75% and is fully collateralized by
investment securities owned by the Bank.
5. STOCKHOLDERS' EQUITY
The Company issued stock warrants to certain founding shareholders of the
Company in 1988 which mature in March 1998. The Company recently
completed a registration with the Securities and Exchange Commission for
the underlying shares of common stock into which the warrants are
exercisable. At September 30, 1997, 43,215 of the 463,225 warrants
originally issued were exercised at the option price of $10 per share,
resulting in $432,150 additional paid in capital for the Company. The
remaining warrants, if exercised, will generate up to $4.2 million of
additional capital for the Company by March 1998.
6. RECLASSIFICATIONS
Certain 1996 amounts have been reclassified for comparative purposes in
order to conform the prior period to the 1997 presentation
PAGE 5 OF 15
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For the three-month and nine-month periods ended September 30, 1997 and
1996
Performance Overview
Summit Bank Corporation and Subsidiaries (the "Company") reported net income of
$607,000 for the third quarter of 1997, representing a 24% increase over
earnings for the same period last year. The strong earnings improvement for the
quarter is attributed to an increase in interest income resulting primarily
from a higher volume of earning assets. Since September 30, 1996, the Company's
earning assets have grown $15 million, or 12%. Net earnings per share for third
quarter 1997 were $.37 as compared to $.31 for third quarter 1996. Nine-month
earnings for 1997 were $1,676,000 compared to $1,558,000 last year, an increase
of 8%. The annualized return on average stockholders' equity for the nine-month
period ending September 1997 was 12.8% compared to 13.2% for the 1996
nine-month period due to strong equity growth. The return on average assets for
the nine-month period was 1.4% compared to 1.5% in 1996. Book value per share
increased to $12.89 at September 30, 1997, from $12.03 at December 31, 1996.
Net interest income increased 13% in third quarter 1997 to $2 million compared
to the same period last year due to the Company's growth in earning assets. For
the nine month comparable periods, 1997 net interest income also reflected a
sharp increase of 16% to $6 million from $5 million. The Company's net interest
margin through September 30, 1997 declined slightly to 5.34% from 5.54%
compared to last year as a result of an increased volume of time deposits.
Provision for loan losses increased to $135,000 from $99,000 in the respective
third quarters of 1997 and 1996 as loan charge-offs increased in third quarter
of this year. Gross charged-off loans for the nine-months ended September 30,
1997 were $896,000, offset by recoveries of $184,000, resulting in an
annualized net charge-off rate of 1.03% of total loans. Net charge-offs for the
same period of 1996 were .22% of total loans. This year's charge-offs included
three loans which totaled $595,000, or 66% of the total charged off. These
loans were classified as substandard at the end of 1996 and, at that time, had
50% specific reserves allocated for them in the loan loss allowance.
Non-interest income increased sharply by 15%, to $913,000, in third quarter
1997 from $791,000 last year. Improvement in service charges on deposits,
including overdraft and NSF fees, accounted for $29,000 of this increase as the
Company's average non-interest bearing checking deposits grew 22% compared to
the third quarter of last year, coupled with increased service charge rates.
International fee income increased $79,000, or 32%, to $327,000 for third
quarter 1997 compared to the comparable period in 1996. Net gains from sales of
loans accounted for $21,000 of the increase in non-interest income, increasing
to $110,000 during the quarter, up from $89,000 for third quarter last year.
This improvement was the result of a higher volume of loans being sold in third
quarter 1997, $2 million, compared to $1.1 million sold in the same period last
year. For the nine-month comparable periods, non-interest income was relatively
flat at $2,479,000 compared to $2,440,000 last year. The decrease of $122,000
in gains on sales of loans during the nine-month comparable periods, attributed
to fewer cumulative sales of loans, was offset by a strong increase in deposit
service charge and overdraft fees of $98,000 over the comparable 1996
nine-month period. Fees for international banking services also reflected
improvement to $895,000 through September 30, 1997 compared to last year's
total to date of $806,000, an 11% increase, resulting from the Bank's new
business development efforts.
Non-interest expenses increased 9% to $1.8 million in the third quarter of 1997
as compared to the same period last year. This increase was mostly attributed
to higher personnel and operating costs resulting from branch expansion. Total
personnel costs increased $75,000 in 1997 over the comparable 1996 three-month
period and $222,000 over the comparable 1996 nine-month period primarily as a
result of additional staff positions. Equipment expenses did not significantly
increase in third quarter 1997 compared to the same period in 1996, although
equipment purchases, primarily for the new branches, increased year to date
expenses by $97,000 compared to last year. Occupancy expenses increased
$76,000, or 25%, for the nine-month comparable periods, also due mainly to
branch expansion. Other operating expenses only increased 6% for the
three-month period ended September 30, 1997 as compared to the same period in
1996 as a result of normal growth. For the nine-month comparable periods, other
operating expenses increased $318,000, or 21%, in 1997 to $1,819,000. Data
processing and telephone expenses in the
PAGE 6 OF 15
<PAGE> 7
aggregate have increased approximately $77,000 for the nine-month period of
1997 over 1996, also due in large part to the requirements of the additional
branches. Total legal and accounting fees for the year to date 1997 were
$85,000 higher than year to date 1996 fees due in part additional costs
incurred for exploring new business opportunities. The Company's efficiency
ratio for the nine-month period of 1997 was 64% compared to 62% for the same
period last year. Total assets at September 30, 1997 increased to $172 million,
an increase of 22% during the last twelve months and 12% since year end 1996.
Deposits grew to $137 million, reflecting an increase of $17 million, since
September 30, 1996, or 14%, and a $5 million increase since December 31, 1996.
Time deposits have grown $7.5 million since year end while demand deposits have
decreased $3 million. Since opening in 1996, the Bank's two newest branches
have generated a total of $18 million in deposits and have expanded our
presence in Cobb County as well as providing more awareness of our organization
in Gwinnett County. Net loans increased $8.4 million to $92 million at
September 30, 1997, representing a 10% increase since December 31, 1996. During
the last twelve months net loans have increased 12%, or $10 million, from $82
million at September 30, 1996. The Bank originated $9.1 million and $6.6
million in SBA loans during the first nine-months of 1997 and 1996,
respectively, while selling $4.1 million and $3 million of SBA guarantees in
these respective periods. In third quarter 1997, the Company had $10 million
borrowed under an advance from the Federal Home Loan Bank. This advance matures
in January, 1998. Other assets increased to $4.4 million at September 30, 1997
from $2.2 million at year-end 1996 which includes a recorded receivable from
the sale of $2 million in SBA guarantees.
Asset Quality
Non-performing assets increased to $1,996,000 at September 30, 1997 compared to
$922,000 at year end 1996. Non-performing assets represented 2.17% of total
loans as of September 30, 1997 compared to 1.07% at December 31, 1996. While
higher than historic levels, total non-accrual loans at September 30, 1997
included $1,101,000 of loans that are fully guaranteed by the SBA, and one
conventional loan of $746,000 that is fully secured by commercial real estate.
The increase in SBA non-accrual loans is attributed to temporary delays by the
SBA to timely process guarantee liquidations and is not reflective of overall
change in portfolio quality. Six (6) SBA loans in non-accrual status
representing $600,000 are expected to be fully liquidated during fourth quarter
1997. The Company had $1,126,000 of loans 90 days or more past due at September
30, 1997, all of which were on non-accrual status. At September 30, 1996, the
Company had no loans 90 days or more past due.
NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
(Dollars in thousands) 1997 1996
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Loans on nonaccrual $ 1,996 $ 922
Other real estate -- --
Restructured loans -- --
- --------------------------------------------------------------------------------------------------------
Total non-performing assets $ 1,996 $ 922
========================================================================================================
Loans 90 days past due and still accruing interest $ -- --
Total non-performing assets as a
percentage of total loans and ORE 2.17% 1.07%
Loans ninety days past due and still accruing
interest as a percentage of total loans --% --%
</TABLE>
The allowance for loan losses was $1,614,000 at September 30, 1997 compared to
$1,931,000 at year end 1996, a decrease of 16%. This was as a result of the
recognition of higher net charge-offs for which the Bank had reserved earlier.
As previously mentioned, $595,000 of loans charged off had allocations of 50%
specific reserves prior to January 1, 1997, and $52,000 were fully guaranteed
by the SBA. The allowance for loan losses represented 1.76% of total loans
outstanding at September 30, 1997 compared to 2.30% in 1996. Gross charge-offs
of $896,000 offset by recoveries of $184,000, resulted in a net annualized
charge-off rate of 1.03% of average total loans compared to .22% for the entire
year of 1997.
PAGE 7 OF 15
<PAGE> 8
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES AT SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
(In thousands)
- -----------------------------------------------------------------------
<S> <C>
Allowance for loan losses at December 31, 1996 $1,931
- -----------------------------------------------------------------------
Charge-offs:
Commercial, financial, and agricultural 858
Real estate --
Installment loans to individuals 38
- -----------------------------------------------------------------------
Total 896
- -----------------------------------------------------------------------
Recoveries:
Commercial, financial, and agricultural 152
Real estate --
Installment loans to individuals 32
- -----------------------------------------------------------------------
Total 184
- -----------------------------------------------------------------------
Net charge-offs 712
- -----------------------------------------------------------------------
Provision for loan losses charged to income 395
- -----------------------------------------------------------------------
Allowance for loan losses at September 30, 1997 $1,614
- -----------------------------------------------------------------------
</TABLE>
The loan portfolio is periodically reviewed to evaluate the outstanding loans
and to measure both the performance of the portfolio and the adequacy of the
allowance for loan losses. This analysis includes a review of delinquency
trends, actual losses, nonperforming assets, internal credit ratings,
concentrations of credit, and economic trends. Based on this analysis,
management considers the allowance for loan losses at September 30, 1997 to be
adequate to cover possible loan losses in the portfolio as of that date.
However, because of the inherent uncertainty of assumptions made during the
evaluation process, there can be no assurance that loan losses in future
periods will not exceed the allowance for loan losses or that additional
allocations to the allowance will not be required.
Liquidity and Capital Adequacy
The liquidity of the Company is primarily dependent on the Bank. Because the
Company's principal operations are conducted throughout the Bank, the Company
generates cash to pay dividends on the Common Stock primarily through dividends
paid to it by the Bank. The Company is also dependent on dividends from the
Bank to service any debt and to conduct other activities. At September 30,
1997, the Company had no outstanding debt. The Bank's ability to pay dividends
to the Company is limited by certain legal and regulatory restrictions. The
Boards of Directors of the Company and the Bank presently intend that earnings
of the Bank will be retained by the Bank during the foreseeable future for the
purpose of enhancing the Bank's capital to support future growth, except to the
extent dividends must be paid to the Company to service its debt and pay its
operating expenses.
Liquidity has fluctuated during 1997 with changes in deposits balances, due in
part to the movement of temporary funds, yet loan growth has been steady. At
September 30, 1997, the Company's net loan to deposit ratio was 67.2%, up from
63.1% at year end. The Bank's liquid assets as a percent of total deposits were
50% at September 30, 1997 compared to 46% at December 31, 1996. Management also
analyzes the level of off-balance sheet assets such as unfunded loan
commitments and outstanding letters of credit as they relate to the levels of
cash, cash equivalents, liquid investments, available federal funds lines and
short-term borrowings to ensure that no potential shortfall exists.
Additionally, the Bank has $6 million of borrowing capacity under a secured
line of credit available from the Federal Home Loan Bank of Atlanta. Based on
this analysis, management believes that the Company has adequate liquidity to
meet short-term operational requirements.
PAGE 8 OF 15
<PAGE> 9
Stockholders' equity of the Company increased $1.9 million, or 11.2%, to $18.8
million at September 30, 1997, compared to the balance at December 31, 1996 and
increased 16.8% since September 30, 1996. The capital level of the Bank exceeds
all prescribed regulatory capital guidelines. Regulations require that most
highly rated national banks maintain a minimum Tier 1 leverage ratio of 3%, and
require other banks to maintain a minimum Tier 1 leverage ratio of 3% plus an
additional cushion of at least 1 to 2 percentage points. Tier 1 capital
consists of stockholders' equity less certain intangible assets. The Bank's
Tier 1 leverage ratio was 9.5% at September 30, 1997 compared to 9.3% at year
end 1996. Regulations require that the Bank maintain a minimum total risk
weighted capital ratio of 8% with 50%, or 4%, of this amount made up of Tier 1
capital. Risk-weighted assets consist of balance sheet assets adjusted by risk
category and off-balance sheet asset equivalents similarly adjusted. At
September 30, 1997, the Bank had a risk-weighted total capital ratio of 16.7%
and a Tier 1 risk-weighted capital ratio of 15.5% which compared favorably to
year-end ratios of 15.6% and 14.2%, respectively.
The Company issued stock warrants to certain founding shareholders of the
Company in 1988 which mature in March 1998. The Company recently completed a
registration with the Securities and Exchange Commission for the underlying
shares of common stock into which the warrants are exercisable. At September
30, 1997, 43,215 of the 463,225 warrants originally issued were exercised at
the option price of $10 per share, resulting in $432,150 additional paid in
capital for the Company. The remaining warrants, if exercised, will generate up
to $4.2 million of additional capital for the Company by March 1998. The Board
and management of the Company are currently pursuing several alternatives for
the best utilization of this capital.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
PAGE 9 OF 15
<PAGE> 10
PART II. - OTHER INFORMATION
<TABLE>
<S> <C>
Item 1. Legal Proceedings - Not Applicable
Item 2. Changes in Securities - Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable
Item 5. Other Information - Not Applicable
</TABLE>
PAGE 10 OF 15
<PAGE> 11
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit 11. 1
Statement Regarding Computation of Per Share Earnings
Exhibit 27.1
Financial Data Schedule (for SEC use only)
b) Reports on Form 8-K - none
PAGE 11 OF 15
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed by the undersigned,
thereunto duly authorized.
SUMMIT BANK CORPORATION
DATE: November 12, 1997 BY:/s/ David Yu
--------------------------- -----------------------------
David Yu
President and Chief Executive Officer
DATE: November 12, 1997 BY:/s/ Gary K. McClung
--------------------------- -----------------------------
Gary K. McClung
Executive Vice President
(Principal Financial Officer
and Principal Accounting Officer)
PAGE 12 OF 15
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
11.1 Statement Regarding Computation of Per Share Earnings 14
27.1 Financial Data Schedule (for SEC use only) 15
</TABLE>
PAGE 13 OF 15
<PAGE> 1
EXHIBIT 11.1
STATEMENT REGARDING COMPUTATION
OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Statement Regarding Computation of Three months Nine months
Per Share Earnings ended September 30, ended September 30,
- ---------------------------------- ----------------------------------------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings per share:
Weighted average shares outstanding 1,451,864 1,407,688 1,422,721 1,407,688
Net income per share $ .42 $ .35 $ 1.18 $ 1.11
Primary earnings per share:
Weighted average shares outstanding 1,451,864 1,407,688 1,422,721 1,407,688
Weighted average dilutive warrants 426,146 463,235 450,590 463,235
Weighted average dilutive stock options 34,138 41,225 38,837 41,225
Repurchased under treasury stock
method(1) (282,856) (281,538) (284,544) (281,538)
----------- ----------- ----------- -----------
Weighted average common shares
outstanding and common share
equivalents 1,629,292 1,630,610 1,627,604 1,630,610
----------- ----------- ----------- -----------
Net income $ 607,000 $ 491,000 $ 1,676,000 $ 1,558,000
Imputed interest income under the
treasury stock method (net of tax) -- 7,000 3,000 31,000
----------- ----------- ----------- -----------
Imputed net income 607,000 498,000 1,679,000 1,589,000
=========== =========== =========== ===========
Net income per share $ .37 $ .31 $ 1.03 $ .97
=========== =========== =========== ===========
</TABLE>
(1) Dilutive warrants and options calculated up to 20% of total shares
outstanding in the applicable periods.
PAGE 14 OF 15
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1997 10-Q FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 8,370
<INT-BEARING-DEPOSITS> 76
<FED-FUNDS-SOLD> 7,800
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 51,273
<INVESTMENTS-CARRYING> 1,568
<INVESTMENTS-MARKET> 1,568
<LOANS> 93,879
<ALLOWANCE> 1,614
<TOTAL-ASSETS> 172,159
<DEPOSITS> 137,405
<SHORT-TERM> 12,581
<LIABILITIES-OTHER> 3,343
<LONG-TERM> 0
0
0
<COMMON> 16
<OTHER-SE> 18,814
<TOTAL-LIABILITIES-AND-EQUITY> 172,159
<INTEREST-LOAN> 7,128
<INTEREST-INVEST> 2,491
<INTEREST-OTHER> 238
<INTEREST-TOTAL> 9,857
<INTEREST-DEPOSIT> 3,665
<INTEREST-EXPENSE> 3,966
<INTEREST-INCOME-NET> 5,891
<LOAN-LOSSES> 395
<SECURITIES-GAINS> 133
<EXPENSE-OTHER> 5,366
<INCOME-PRETAX> 2,570
<INCOME-PRE-EXTRAORDINARY> 2,570
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,676
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 1.03
<YIELD-ACTUAL> 5.34
<LOANS-NON> 1,996
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,931
<CHARGE-OFFS> 896
<RECOVERIES> 184
<ALLOWANCE-CLOSE> 1,614
<ALLOWANCE-DOMESTIC> 1,614
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
