<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 1998
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 (IRS 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 1, 1998
----- -------------------------------
Common Stock. $.0l par value 1,815,363
The Exhibit Index Appears on Page 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) 1998 1997
- -------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 10,371 $ 8,091
Federal funds sold 11,935 1,200
Interest-bearing deposits in other banks 571 69
Investment securities available for sale, at fair value 91,339 61,396
Other investments 1,314 1,566
Loans, net of unearned income 125,277 95,473
Loans held for sale 3,588 3,419
Less: allowance for loan losses (2,767) (1,468)
- -------------------------------------------------------------------------------------
Net loans 126,098 97,424
- -------------------------------------------------------------------------------------
Premises and equipment, net 4,534 4,461
Customers' acceptance liability 1,552 1,397
Deferred income taxes 2,008 134
Goodwill, net 1,770 --
Other assets 3,705 4,558
- -------------------------------------------------------------------------------------
Total assets $ 255,197 $ 180,296
=====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Non-interest-bearing demand $ 43,187 $ 35,193
Interest-bearing:
Demand 44,836 34,348
Savings 7,889 6,681
Time, $100,000 and over 35,018 23,595
Other time 81,327 44,978
- -------------------------------------------------------------------------------------
Total deposits 212,257 144,795
- -------------------------------------------------------------------------------------
Obligation under capital lease 50 81
Federal Home Loan Bank advance 10,000 10,000
Other borrowed funds 4,422 2,756
Acceptances outstanding 1,552 1,397
Other liabilities 2,360 1,489
- -------------------------------------------------------------------------------------
Total liabilities 230,641 160,518
- -------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common stock 18 15
Additional paid-in capital 16,178 12,933
Retained earnings 8,118 6,658
Accumulated other comprehensive income 242 172
- -------------------------------------------------------------------------------------
Total stockholders' equity 24,556 19,778
- -------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 255,197 $ 180,296
====================================================================================
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
<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) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Loans, including fees $ 3,299 $ 2,401 $ 8,566 $ 7,128
Interest-bearing deposits in other banks 5 2 11 4
Federal funds sold 223 82 390 234
Investment securities-taxable 516 288 1,326 859
Mortgage-backed securities 852 572 2,090 1,632
- -----------------------------------------------------------------------------------------------------------------
Total interest income 4,895 3,345 12,383 9,857
- -----------------------------------------------------------------------------------------------------------------
Interest expense
Time deposits, $100,000 and over 532 360 1,290 1,017
Other deposits 1,421 875 3,404 2,648
Federal Home Loan Bank advance 126 137 376 203
Short-term borrowings and obligation
under capital lease 65 46 143 98
- -----------------------------------------------------------------------------------------------------------------
Total interest expense 2,144 1,418 5,213 3,966
- -----------------------------------------------------------------------------------------------------------------
Net interest income 2,751 1,927 7,170 5,891
Provision for loan losses 90 135 445 395
- -----------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 2,661 1,792 6,725 5,496
- -----------------------------------------------------------------------------------------------------------------
Non-interest income
Fees for international banking services 306 327 882 895
SBA loan servicing fees, net 65 90 202 312
Service charge income 99 71 246 197
Overdraft and NSF charges 134 100 424 310
Gains on sales of loans 95 110 468 318
Net gains on sales of investment securities 29 114 77 133
Other 107 101 328 275
- -----------------------------------------------------------------------------------------------------------------
Total non-interest income 835 913 2,627 2,440
- -----------------------------------------------------------------------------------------------------------------
Non-interest expenses
Salaries and employee benefits 1,135 913 3,104 2,725
Equipment 201 138 543 445
Net occupancy 196 127 474 377
Other operating expenses 854 577 2,194 1,819
- -----------------------------------------------------------------------------------------------------------------
Total non-interest expenses 2,386 1,755 6,315 5,366
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes 1,110 950 3,037 2,570
- -----------------------------------------------------------------------------------------------------------------
Income tax expense 380 343 1,063 894
- -----------------------------------------------------------------------------------------------------------------
Net income $ 730 $ 607 $ 1,974 $ 1,676
- -----------------------------------------------------------------------------------------------------------------
Basic net income per common share $ .40 $ .42 $ 1.12 $ 1.18
Diluted net income per common share and
common share equivalents $ .40 $ .37 $ 1.09 $ 1.03
- -----------------------------------------------------------------------------------------------------------------
Weighted-average shares outstanding - basic 1,815,363 1,451,864 1,762,139 1,422,721
Weighted-average shares outstanding - diluted 1,817,620 1,629,292 1,805,920 1,622,773
- -----------------------------------------------------------------------------------------------------------------
Dividends declared per common share $ .10 $ .09 $ .29 $ .26
=================================================================================================================
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE> 4
SUMMIT BANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months
ended September 30,
(In thousands) 1998 1997
Cash flows from operating activities:
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income $ 1,974 $ 1,676
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of premises and equipment 333 308
Net amortization of premiums/discounts on
investment securities 180 58
Amortization of goodwill 22 --
Amortization of negative goodwill (82) (83)
Provision for loan losses 445 395
Gains on sales of loans (468) (318)
Net gains on sales of investment securities (77) (133)
Changes in other assets and liabilities:
Decrease (increase) in other assets 1,210 (123)
Increase in other liabilities 621 199
- --------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 4,158 1,979
- --------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from maturities of investment securities available for sale 22,210 5,000
Principal collections on investment securities available for sale 8,810 4,520
Proceeds from sales of investment securities available for sale 9,875 20,057
Purchases of investment securities available for sale (56,641) (43,663)
Loans made to customers, net of principal collected on loans (9,519) (10,496)
Purchases of premises and equipment (332) (128)
Purchase of California Security Bank, net of cash and cash equivalents acquired (518) --
- --------------------------------------------------------------------------------------------------------
Net cash used in investing activities (26,115) (24,710)
- --------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in demand and savings deposits 7,199 (3,043)
Net increase in time deposits 23,907 7,549
Principal payments for obligation under capital lease (31) (28)
Dividends paid (515) (369)
Issuance of common stock upon exercise of warrants and options 3,248 527
Net increase in borrowed funds 1,666 10,924
- --------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 35,474 15,560
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 13,517 (7,171)
Cash and cash equivalents at beginning of period 9,360 23,417
- --------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 22,877 $ 16,246
========================================================================================================
Supplemental disclosures of cash paid during the period:
Interest $ 4,869 $ 3,875
Income taxes $ 1,226 $ 700
========================================================================================================
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE> 5
SUMMIT BANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The consolidated 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, 1997, included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
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 (inactive.) 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, 1997.
3. ACQUISITION
On June 30, 1998, the Company acquired all of the issued and outstanding
common stock of California Security Bank ("CSB"), a single-office
California state chartered bank located in San Jose, California, for a
cash price of $6,198,000, including acquisition costs. The acquisition was
recorded by the Company under the purchase method of accounting.
Originally, goodwill of $3.3 million was recorded in connection with the
purchase. In the third quarter, several adjustments were made to the
recorded assets and liabilities which affected goodwill previously
recorded based on the preliminary evaluation of the acquired assets and
liabilities. The two largest adjustments consisted of an additional
allowance of $400,000 relating to a subsequently charged off loan and a
reduction of $1.9 million of CSB's valuation allowance for deferred tax
assets representing a benefit relating to the acquisition. The adjusted
goodwill balance of $1.8 million is being amortized over 20 years. The
adjusted fair values of assets acquired and liabilities assumed were as
follows:
<TABLE>
<CAPTION>
In thousands
------------
<S> <C>
Cash and due from banks $ 1,845
Federal funds sold 3,835
Investment securities available for sale 13,948
Loans, net 18,742
Premises and equipment 74
Deferred tax asset 1,902
Other assets 748
Deposits (36,356)
Other liabilities (332)
---------
Fair value of net assets acquired 4,406
--------
Cash paid to shareholders 6,000
Acquisition costs 198
---------
Total purchase price 6,198
--------
Cost over fair value of net assets acquired $ 1,792
========
</TABLE>
The net cash paid was $518,000.
<PAGE> 6
The following is proforma information for the nine months ended September
30, 1998 and 1997 as if the acquisition had been consummated on January 1,
1998 and 1997, respectively. The proforma information is not necessarily
indicative of the combined financial position or results of operations
which would have been realized had the acquisition been consummated as of
the dates assumed in the proforma presentation:
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30, 1998 September 30, 1997
(in thousands, except for per share data) Historical Proforma Historical Proforma
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Net interest income $ 7,170 $ 7,964 $ 5,891 $ 6,590
Net income 1,974 1,965 1,676 1,568
Basic net income per share 1.12 1.12 1.18 1.10
Diluted net income per share 1.09 1.09 1.03 .97
</TABLE>
4. ACCOUNTING PRONOUNCEMENTS
In September 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130"). This statement establishes standards
for reporting and displaying of comprehensive income and its components in
a full set of general purpose financial statements. SFAS 130 requires all
items that are required to be recognized under accounting standards as
components of comprehensive income be reported in an annual financial
statement that is displayed in equal prominence with the other annual
financial statements. For interim period financial statements, enterprises
are required to disclose a total for comprehensive income in those
financial statements. The term "comprehensive income" is used in SFAS 130
to describe the total of all components of comprehensive income including
net income. "Other comprehensive income" refers to revenues, expenses,
gains, and losses that are included in comprehensive income but excluded
from earnings under current accounting standards. Currently, "other
comprehensive income" for the Company consists solely of items previously
recorded as a component of stockholders' equity under SFAS 115,
"Accounting for Certain Investments in Debt and Equity Securities". The
Company has adopted the interim-period disclosure requirements of SFAS 130
effective January 1, 1998 and will adopt the annual financial statement
reporting and disclosure requirements of SFAS 130 effective December 31,
1998.
Total comprehensive income for the three months and nine months ended
September 30, 1998 was $906,000 and $2,044,000 compared to $718,000 and
$1,736,000 for the three months and nine months ended September 30, 1997.
In September 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" ("SFAS 131"). SFAS 131 is effective for financial
statements for years beginning after December 15, 1997. The Company does
not have any separate segments that are considered material.
In September 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"). SFAS 133 is effective for financial statements
for fiscal quarters of fiscal years beginning after June 15, 1999. The
Company has not made an assessment on the expected impact that SFAS 133
will have on its financial statements.
5. RECLASSIFICATIONS
Certain 1997 amounts have been reclassified for comparative purposes in
order to conform the prior period to the 1998 presentation.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Performance Overview
Summit Bank Corporation and Subsidiaries (collectively, the "Company") reported
net income of $730,000 for the third quarter of 1998 compared to earnings for
the same period last year of $607,000. The increase in earnings is attributable
to the higher level of earning assets this year which has resulted from the
acquisition of California Security Bank in San Jose, California as well as from
strong core deposit growth in Atlanta. Net earnings per share for third quarter
1998 were $.40 (diluted) as compared to $.37 (diluted) for third quarter 1997.
Basic earnings per share for the respective third quarters of 1998 and 1997 were
$.40 and $.42. Current year to date net income through September 30 was
$1,974,000, an 18% increase over 1997 year to date earnings of $1,676,000.
Diluted earnings per share for the nine-month periods of 1998 and 1997 were
$1.09 and $1.03, respectively while basic earnings per share for the same
periods were $1.12 and $1.18, respectively. The annualized return on average
stockholders' equity for the 1998 nine-month period was 11.2% versus 12.8% for
the 1997 nine-month period, while the returns on average assets for the
comparable periods were 1.22% and 1.38%, respectively. Book value per share was
$13.53 at September 30, 1998 compared to $13.28 at December 31, 1997 and $12.89
at September 30, 1997. The decline in earnings per share and return on average
shareholders' equity in 1998 year to date compared to the same period in 1997
was due to the issuance of an additional 408,000 shares of common stock
resulting from the exercise of organizers' warrants issued in 1988 and stock
options granted during the Company's first ten years of operations. In third
quarter 1998, the Company paid a dividend of $.10 per share to its shareholders.
Total assets for the Company at September 30, 1998 increased to $255 million, an
increase of 48% during the last twelve months and 42% since year-end 1997. Just
over half of the growth, $40 million, in total assets this year was due to the
CSB acquisition effective June 30, 1998. Total loans were $129 million at
September 30 compared to $99 million at year-end 1997, an increase of 30%. In
addition to the contribution of $19 million in loan outstandings acquired in the
CSB acquisition, the loan portfolio has grown $11 million this year, net of the
sale of $6 million in guaranteed Small Business Administration ("SBA") loans.
Total deposits have grown $75 million, or 54%, during the last twelve months and
$67 million, or 47%, since December 31, 1997. The acquisition contributed $36
million of deposits to the Company's deposit base, $6 million of which were
non-interest-bearing deposits. The deposit base has remained stable since the
acquisition.
Net interest income increased 43% to $2.8 million during third quarter 1998
compared to the same period in 1997, primarily due to a higher volume of
interest earning assets as previously discussed. For the nine-month periods of
1998 and 1997, net interest income increased 22% to $7.2 million. The Company's
net interest margin through September 30, 1998 declined to 5.01% from 5.34% for
the comparable period in 1997 due primarily to a higher cost of funds and the
declining rate environment.
The provision for loan losses decreased to $90,000 from $135,000 for the
respective third quarters of 1998 and 1997 due to reduced charge-off activity
this year. Gross charged off loans for the quarter ended September 30, 1998 were
$462,000 while recoveries for the period were $502,000, resulting in an
annualized net recovery rate of .06% of total loans for the current year to date
compared to an annualized net charge-off rate for the year to date 1997 of
1.03%. Net loan charge-offs were 1.08% of total loans for the year ended
December 31, 1997.
Total non-interest income of $835,000 for third quarter 1998 was down 9%
compared to the same period in 1997, due primarily to fewer net gains on sales
of investment securities. Gains on sales of SBA loans for third quarter 1998 and
1997 were $95,000 and $110,000, respectively. Although service charge income and
overdraft fees were higher by $62,000, comparing third quarter 1998 to the same
period in 1997, international fees and SBA loan servicing fees were down in the
comparable quarters $21,000 and $25,000, respectively. The increase in service
charge fees were a result of higher demand deposit volumes. The decline in net
SBA loan servicing fees was due in part to the decrease in servicing rates
received on sold loans as a result of heightened competition over the past year,
in addition to the increase in the offsetting amortization expense of the
related servicing asset. Year to date non-interest income was $2.6 million, an
8% increase over 1997 year to date non-interest income. This increase was
primarily due to the sale of SBA loans in first quarter 1998 while no SBA loans
were sold in first quarter 1997.
Non-interest expenses increased $631,000, or 36%, in the third quarter of 1998
as compared to the same period last year. A portion of the increase was due to
the costs allocated to ensure that the Bank is ready for Year 2000 within the
time frame set by the Office of the Comptroller of the Currency. In third
quarter, an additional $45,000 was
<PAGE> 8
incurred, and the Bank completed the task of replacement of computer hardware to
Year 2000 compliant equipment and establishment of a computer lab to test all
software used by the Bank. Personnel costs of $1.1 million also increased from
third quarter 1997 by $222,000 primarily due to additional branch personnel in
the San Jose office as well as higher temporary employee expenses. At September
30, 1998 there were 18 employees in the San Jose office. Occupancy and equipment
costs increased $63,000 and $69,000, respectively, for the comparable third
quarters as a result of the acquisition. Other operating expenses increased
$277,000, or 48%, to $854,000 for third quarter 1998 compared to the same
quarter last year. The increases in other operating expenses are due to growth
of the Bank, including but not limited to the CSB acquisition, and stronger
marketing efforts to publicize our strengths in small business and ethnic
banking services. The areas recording significant cost increases for the quarter
compared to third quarter 1997 were data processing expenses, marketing costs,
and legal fees, with respective increases of $69,000, $33,000, and $53,000. The
Company's efficiency ratio for the three-month period of 1998 was 66.5%,
considerably higher than the ratio for the same period last year of 62%,
primarily due to the temporary increase in non-interest expenses as a result of
incorporating the new California office into the Bank. Year to date non-interest
expenses increased 18% from 1997 to the current year total of $6.3 million. The
increase was, again, primarily due to higher personnel costs and other operating
expenses such as non-capitalizable equipment (for Year 2000 costs), data
processing, marketing and legal fees. In late September, the data processing
system for the San Jose branch was converted to the Atlanta system which should
result in notable savings in future periods.
Asset Quality
Non-performing assets declined slightly during third quarter to $2,550,000 at
September 30, 1998 compared to $2,696,000 at June 30, 1998, although the balance
remains higher than the year-end 1997 total of $1,777,000. Non-performing assets
represented 1.98% of total loans as of September 30, 1998 compared to 1.80% at
December 31, 1997. The increase was due to addition of three credits including
one credit resulting from the CSB acquisition. Subsequent to the acquisition of
California Security Bank on June 30, 1998, one of the acquired non-performing
loans, totaling $515,000, was charged-off. The loan loss reserve was charged for
$115,000 of the loss, and the purchase price of the institution adjusted
accordingly for the balance of the loan. The applicable credit acquired from CSB
was a commercial loan totaling $474,000 which was reclassified at the time of
acquisition as a non-performing and restructured loan due to a below-market
interest rate. This loan is collateralized with a first mortgage on real estate
and is performing under the workout plan. Other non-performing loans at
September 30, 1998 consist of two fully guaranteed SBA credits, one real estate
credit of $713,000 for which the Bank believes it is well secured, and two
commercial credits also collateralized with first or second mortgages on real
property. One of the SBA credits included in non-accrual loans at December 31,
1997 was restructured in January 1998 with interest rate, term, and collateral
modifications. Management believes the restructuring of the loan has enhanced
its collectibility even though the loan will remain non-performing.
Additionally, the loan is fully guaranteed by the SBA.
<PAGE> 9
NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
(Dollars in thousands) 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Loans on non-accrual
SBA guaranteed $ 634 $1,018
Non-SBA guaranteed 1,916 759
Other real estate -- --
- --------------------------------------------------------------------------------
Total non-performing assets $2,550 $1,777
================================================================================
Loans 90 days past due and still accruing interest $ -- --
Total non-performing assets as a
percentage of total loans and ORE 1.98% 1.80%
Loans ninety days past due and still accruing
interest as a percentage of total loans --% --%
</TABLE>
The allowance for loan losses increased to $2,767,000 at September 30, 1998 from
$1,468,000 at year-end 1997, an increase of 90%. The acquisition of California
Security Bank contributed to the addition of $814,000 to the Company's loan loss
allowance. Loan losses have also declined this year to date with gross
charge-offs of $462,000 offset by recoveries of $502,000, resulting in a net
annualized charge-off rate of -.06% of average total loans compared to 1.08% for
the entire year of 1997. The allowance for loan losses represented 2.15% and
1.48%, respectively, of total loans outstanding at September 30, 1998 and
December 31, 1997.
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES AT SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
- --------------------------------------------------------------------------------
Allowance for loan losses at December 31, 1997 $ 1,468
- --------------------------------------------------------------------------------
Charge-offs:
Commercial, financial, and agricultural 373
SBA 38
Real estate --
Installment loans to individuals 51
- --------------------------------------------------------------------------------
Total 462
- --------------------------------------------------------------------------------
Recoveries:
Commercial, financial, and agricultural 162
SBA 317
Real estate --
Installment loans to individuals 23
- --------------------------------------------------------------------------------
Total 502
- --------------------------------------------------------------------------------
Net recoveries (40)
- --------------------------------------------------------------------------------
Provision for loan losses charged to income 445
Adjustment due to acquisition of California Security Bank 814
- --------------------------------------------------------------------------------
Allowance for loan losses at September 30, 1998 $ 2,767
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
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 and internal credit ratings. Based on this analysis,
management considers the allowance for loan losses at September 30, 1998 to be
adequate to cover 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.
Recent developments in several Asian economies have caused some concern in the
U. S. banking sector. While some of Summit's customers import from or export to
Asia, Summit has no direct lending or investment activities to Asia, whether in
the private, financial institutions or sovereign sectors. Summit's primary
international activities consist of clearing U. S. dollar based import and
export trade documents for U. S. domestic companies. Where credit relationships
exist, they are to U. S. domiciled companies based on acceptable risks or on a
cash secured basis. The Company does not trade in foreign exchange and takes no
foreign exchange position nor does it accept any open and unhedged foreign
currency transactions on behalf of its customers. While the overall caution
demonstrated by the Company and its clients may have impeded further growth of
the international trade finance volume, revenue from international trade
transactions has remained stable. In light of the nature of the international
position, the stable nature of the fee income, and the size of international
revenue in relation to the Company's total revenue, management believes that
Summit's international activities do not constitute unacceptable risk.
Liquidity and Capital Adequacy
Liquidity has increased in the third quarter primarily due to the CSB
acquisition as compared to December 31, 1997. At September 30, 1998, the
Company's average net loan to deposit ratio was 59%, down from 67% at year end.
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, and available federal funds lines
to ensure that no potential shortfall exists. Additionally, the Bank has $16
million of borrowing capacity under a secured line of credit available from the
Federal Home Loan Bank of Atlanta, of which $10 million was being utilized at
September 30, 1998. Based on this analysis, management believes that the Company
has adequate liquidity to meet short-term operational requirements.
Stockholders' equity of the Company increased $5 million to $24.6 million at
September 30, 1998, an increase of 24% from December 31, 1997, and 30% from
September 30, 1997. In addition to normal earnings retention, stockholders'
equity increased $3.2 million since December 31, 1997 due to the issuance of
common stock from the exercise of warrants and options. The capital level of the
subsidiary Bank exceeds all prescribed regulatory capital guidelines for
adequate capitalization. Regulations require that the most highly rated 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 declined to
7.4% at September 30, 1998 compared to 9.6% at year end 1997 due to the
California Security Bank acquisition. Since the acquisition was a cash
transaction, stockholders' equity was not affected, while $40 million in assets
were consolidated into the Bank's total assets. Regulations require that the
Bank maintain a minimum total risk weighted capital ratio of 8% with 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, 1998, the Bank had a risk-weighted total
capital ratio of 12.2% and a Tier 1 risk-weighted capital ratio of 11.0%,
compared to year-end 1997 ratios of 15.6% and 14.3%, respectively.
Year 2000
The Company considers the Year 2000 computer processing risk to be a serious
risk for all businesses that depend on computer hardware and software to perform
the critical functions of their businesses. Year 2000 computer processing risk
is defined as the risk associated with computer hardware or software that fails
to process data or operate in the manner for which it was designed as a result
of century date changes.
<PAGE> 11
The Company's State of Readiness
The Company has established a Year 2000 Committee which is headed by senior
management, meets monthly and reports monthly to the Board of Directors. The
Committee's goal is to address Year 2000 technology issues so that they will not
materially adversely affect the Company's operations or customer service. The
Company engaged a third party to assist in the testing of any computer hardware
which was not Year 2000 compliant. A major milestone was reached on June 30,
1998 with the completion of hardware testing and necessary replacement.
The available hardware solutions were either to repair and upgrade existing
equipment or to replace the equipment. Due to the recent advancements in
hardware technology at affordable costs, the Company chose to replace all
personal computers throughout the organization. This decision has resulted in
better productivity at the workstations through the use of efficient technology,
and has allowed the Company to offer more advanced products to its customer
base.
The Company has not delayed any other projects related to information technology
as a result of Year 2000 actions. On the contrary, the Company has completed the
acquisition of another bank and converted that bank's entire data processing,
financial reporting and other computer systems to its own. In the third quarter,
the Bank implemented new, more efficient technology which provides deposit
customers with account statements containing check images. The Bank is also in
the process of adding a fourth language, Spanish, to its voice response system
and ATM's. This process will be completed in 1999.
The Company outsources its data processing and item processing services to third
party vendors. The completion of the Company's Year 2000 project and its ability
to adequately service its customers in 2000 largely depends on the compliance of
these third party vendors. The Company has monitored the progress of these
vendors in their efforts to become Year 2000 compliant over the past year, and
will address contingency plans for these systems in early 1999, if testing
proves the systems unsatisfactory. The Office of the Comptroller of the Currency
("OCC"), the regulatory authority of the Bank, has also reviewed the Company's
primary data processing service provider to ensure that the issue is being
addressed timely and effectively. Another critical system is utilized in the
Bank's international department to process customer letters of credit and other
trade finance products. This system has been certified as Year 2000 compliant by
the third party vendor and will be tested by the Bank before January 31, 1998.
The Company also recognizes the importance of ensuring that significant
borrowers are addressing the problem in a timely manner to avoid deterioration
of the Company's loan portfolio solely due to Year 2000 problems. The Company
has identified all material relationships, mailed relevant questionnaires to
assess the risk, and plans to work with each of these customers on a one-to-one
basis, as appropriate, to assist them with compliance. The methodology used to
determine the adequacy of the allowance for loan losses has been expanded to
include identification of customer risks associated with the failure to
adequately prepare for Year 2000 issues. The Company believes that the allowance
for loan losses at September 30, 1998 is sufficient to cover potential loan
losses resulting from both credit and Year 2000 risks, however, there can be no
assurances that additional amounts will not need to be added to the allowance
for loan losses specifically for Year 2000 exposure. Commercial and retail
deposit customer awareness is being addressed through mailings and statement
stuffers.
The Costs to Address the Company's Year 2000 Issues
Actual costs accrued or incurred to date for the Year 2000 project are
approximately $90,000. A testing plan for mission critical systems - systems
which are necessary to the ongoing operation of the Bank - has been developed,
and testing of these systems is underway. This portion of the project will
continue through second quarter 1999. An additional $45,000 of expenses are
anticipated and budgeted for fourth quarter 1998 relative to Year 2000. Costs to
be incurred in 1999 for the project are estimated to be approximately $65,000,
bringing the total estimated Year 2000 project costs to $200,000. The Company
does not expect the amounts required to be expensed to resolve Year 2000 issues
to have a material adverse effect on its financial position or results of
operations.
The Risks of the Company's Year 2000 Issues
The Year 2000 issue presents a number of risks to the business and financial
condition of the Company and the Bank. External factors, which include but are
not limited to electric, telephone, and water service, are beyond the
<PAGE> 12
control of the Company and the failure of such systems could have a negative
impact on the Company, its customers and third parties on whom the Company
relies for its day-to-day operations.
The Company believes that its internal systems and the software and the network
connections it maintains will be adequately programmed to address the Year 2000
issue. Based on information currently available, management does not believe
that the Company will incur significant additional costs in connection with the
Year 2000 issue. Nevertheless, there can be no assurances that all hardware and
software that the Company will use will be Year 2000 compliant, and the Company
cannot predict with any certainty the costs the Company will incur to respond to
any Year 2000 issues. Further, since the business of the Company's customers and
vendors may be negatively affected by the Year 2000 issue, any financial
difficulties incurred by the Company's customers and vendors in solving Year
2000 issues could negatively affect their ability to perform their agreements
with the Company. Therefore, even if the Company does not expect to incur
significant direct costs in connection with responding to the Year 2000 issue,
there can be no assurance that the failure or delay of the Company's customers,
vendors or other third parties in addressing the Year 2000 issue or the costs
involved in such process will not have a material adverse effect on the
Company's business, financial condition and results of operations.
The Company's Contingency Plans
As part of the Company's normal business practice, it maintains contingency
plans to follow in the event of emergency situations, some of which could arise
from Year 2000-related problems. The Company is in the process of formulating a
detailed Year 2000 contingency plan, which will assess several possible
scenarios to which the Company may be required to react. The Company's formal
Year 2000 contingency plan is expected to be completed by the end of 1998.
The foregoing are forward-looking statements reflecting management's current
assessment and estimates with respect to the Company's Year 2000 compliance
efforts and the impact of Year 2000 issues on the Company's business and
operations. Various factors could cause actual plans and results to differ
materially from those contemplated by such assessments, estimates and
forward-looking statements, many of which are beyond the control of the Company.
Some of these factors include, but are not limited to, representations by the
Company's vendors and counterparties, technological advances, economic
considerations, and consumer perceptions. The Company's Year 2000 compliance
program is an ongoing process involving continual evaluation and may be subject
to change in response to new developments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has not provided quantitative and qualitative disclosures about
market risk as required by Item 305 of Regulation S-K because it met the
requirements of a small business issuer. The Company will be required to provide
this disclosure for the year ended December 31, 1999.
<PAGE> 13
PART II. - OTHER INFORMATION
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
On November 3, 1998, the Company announced that its Board of Directors
has approved a stock repurchase plan. The plan authorizes the purchase
of up to 5% of the outstanding shares, or 90,000 shares, of the Company
over the next 12 months. The press release announcing the plan is filed
as Exhibit 99.1.
ITEM 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit
Number Exhibit
------ -------
2.1 Agreement and plan of merger by and between the Summit
National Bank and California Security Bank, dated March 27,
1998 (incorporated by reference to Exhibit 2.1 to the
Company's current report on Form 8-K dated April 7, 1998.)
3.1 Amended and Restated Articles of Incorporation of Summit Bank
Corporation (incorporated by reference to Exhibit 3.2 of
Summit Bank Corporation's Registration Statement on Form S-1,
Amendment No.3 (Registration Number 33-16366.)
3.2 Bylaws of Summit Bank Corporation, as amended (incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1987.)
4.1 The rights of security holders are defined in (i) Articles
Five, Six, Nine, Ten, Eleven, Thirteen, Fourteen, and Sixteen
of the Amended and Restated Articles of Incorporation of
Summit Bank Corporation and (ii) Articles Two, Three, Eight,
Ten, and Eleven of the amended Bylaws of Summit Bank
Corporation, (incorporated by reference to Exhibits 3.1 and
3.2 respectively, to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994.)
10.1 Summit Bank Corporation 1987 Key Employee Incentive Stock
Option Plan, as amended and restated as of February 28, 1989
(incorporated by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1991.)
10.2 Form of Summit Bank Corporation Organizer's Warrant Agreement
(incorporated by reference to Exhibit 10.4 of Summit Bank
Corporation's Registration Statement on Form S-1 (Registration
Number 33-16366.)
10.3 Lease Agreement dated December 3, 1993, between Baker Dennard
Co., Lessor, and Summit National Bank, Lessee (incorporated by
reference to Exhibit 10.4 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993.)
10.4 Lease agreement dated September 16, 1995, between ZML-Paces
Limited Partnership, Lessor and Summit National Bank, Lessee
(incorporated by reference to Exhibit 10.6 to
<PAGE> 14
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.)
10.5 Change in Control Agreement dated August 25, 1995 by and
between Pin Pin Chau, President of the Summit National Bank,
and the Summit National Bank (incorporated by reference to
Exhibit 10.7 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.)
10.6 Change in Control Agreement dated August 25, 1995 by and
between David Yu, Chairman of the Summit National Bank, and
the Summit National Bank (incorporated by reference to Exhibit
10.8 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.)
10.7 Change in Control Agreement dated August 25, 1995 by and
between Alec Dudley, Executive Vice President of the Summit
National Bank, and the Summit National Bank (incorporated by
reference to Exhibit 10.9 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995.)
10.8 Change in Control Agreement dated August 25, 1995 by and
between Gary K. McClung, Executive Vice President of the
Summit National Bank, and the Summit National Bank
(incorporated by reference to Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1995.)
10.9 Agreement to purchase real estate dated December 18, 1995
between SBC Properties, L.L.C. (as agent for the Summit
National Bank) and SunTrust Bank, Atlanta (incorporated by
reference to Exhibit 10.10 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995.)
10.10 Agreement to purchase real estate dated September 20, 1996
between The Summit National Bank and Nationsbank, NA.
(incorporated by reference to Exhibit 10.11 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1996.)
11.1 Statement Regarding Computation of Per Share Earnings.
27.1 Financial Data Schedule (for SEC use only)
27.2 Restated Financial Data Schedule (for SEC use only)
99.1 Press Release Announcing Stock Repurchase Plan
b) Reports on Form 8-K
On September 14, 1998, the Company filed an amendment to Current Report
on Form 8-K, originally filed on July 14, 1998. The item reported in
the amendment was "Item 7 - Financial Statements, Proforma Financial
Information and Exhibits."
<PAGE> 15
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
BY: /s/ David Yu
--------------------------------------
David Yu
President and Chief Executive Officer
BY: /s/ Gary K. McClung
--------------------------------------
Gary K. McClung
Executive Vice President
(Principal Financial Officer
and Principal Accounting Officer)
DATE: November 13, 1998
<PAGE> 16
INDEX TO EXHIBITS
Exhibit Page
2.1 Agreement and plan of merger by and between the Summit
National Bank and California Security Bank, dated March 27,
1998 (incorporated by reference to Exhibit 2.1 to the
Company's current report on Form 8-K dated April 7, 1998.)
3.1 Amended and Restated Articles of Incorporation of Summit Bank
Corporation (incorporated by reference to Exhibit 3.2 of
Summit Bank Corporation's Registration Statement on Form S-1,
Amendment No.3 (Registration Number 33-16366.)
3.2 Bylaws of Summit Bank Corporation, as amended (incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1987.)
4.1 The rights of security holders are defined in (i) Articles
Five, Six, Nine, Ten, Eleven, Thirteen, Fourteen, and Sixteen
of the Amended and Restated Articles of Incorporation of
Summit Bank Corporation and (ii) Articles Two, Three, Eight,
Ten, and Eleven of the amended Bylaws of Summit Bank
Corporation, (incorporated by reference to Exhibits 3.1 and
3.2 respectively, to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994.)
10.1 Summit Bank Corporation 1987 Key Employee Incentive Stock
Option Plan, as amended and restated as of February 28, 1989
(incorporated by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1991.)
10.2 Form of Summit Bank Corporation Organizer's Warrant Agreement
(incorporated by reference to Exhibit 10.4 of Summit Bank
Corporation's Registration Statement on Form S-1 (Registration
Number 33-16366.)
10.3 Lease Agreement dated December 3, 1993, between Baker Dennard
Co., Lessor, and Summit National Bank, Lessee (incorporated by
reference to Exhibit 10.4 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993.)
10.4 Lease agreement dated September 16, 1995, between ZML-Paces
Limited Partnership, Lessor and Summit National Bank, Lessee
(incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1995.)
10.5 Change in Control Agreement dated August 25, 1995 by and
between Pin Pin Chau, President of the Summit National Bank,
and the Summit National Bank (incorporated by reference to
Exhibit 10.7 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.)
10.6 Change in Control Agreement dated August 25, 1995 by and
between David Yu, Chairman of the Summit National Bank, and
the Summit National Bank (incorporated by reference to Exhibit
10.8 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.)
10.7 Change in Control Agreement dated August 25, 1995 by and
between Alec Dudley, Executive Vice President of the Summit
National Bank, and the Summit National Bank (incorporated by
reference to Exhibit 10.9 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995.)
<PAGE> 17
10.8 Change in Control Agreement dated August 25, 1995 by and
between Gary K. McClung, Executive Vice President of the
Summit National Bank, and the Summit National Bank
(incorporated by reference to Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1995.)
10.9 Agreement to purchase real estate dated December 18, 1995
between SBC Properties, L.L.C. (as agent for the Summit
National Bank) and SunTrust Bank, Atlanta (incorporated by
reference to Exhibit 10.10 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995.)
10.10 Agreement to purchase real estate dated September 20, 1996
between The Summit National Bank and Nationsbank, NA.
(incorporated by reference to Exhibit 10.11 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1996.)
11.1 Statement Regarding Computation of Per Share Earnings.
27.1 Financial Data Schedule (for SEC use only)
27.2 Restated Financial Data Schedule (for SEC use only)
99.1 Press Release Announcing Stock Repurchase Plan
<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,
-----------------------------------------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Basic earnings per share:
Weighted-average shares outstanding 1,815,363 1,451,864 1,762,139 1,422,721
Net income per share $ .40 $ .42 $ 1.12 $ 1.18
Diluted earnings per share:
Weighted average shares outstanding 1,815,363 1,451,864 1,762,139 1,422,721
Dilutive warrants -- 426,146 68,861 450,590
Dilutive stock options 20,000 34,138 24,228 38,837
Assumed repurchased under treasury
stock method (17,743) (282,856) (49,308) (289,375)
----------- ----------- ----------- -----------
Weighted-average common shares
outstanding and common share
equivalents 1,817,620 1,629,292 1,805,920 1,622,773
----------- ----------- ----------- -----------
Net income $ 730,000 $ 607,000 $ 1,974,000 $ 1,676,000
=========== =========== =========== ===========
Diluted net income per share $ .40 $ .37 $ 1.09 $ 1.03
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1998 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-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 10,371
<INT-BEARING-DEPOSITS> 571
<FED-FUNDS-SOLD> 11,935
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 91,339
<INVESTMENTS-CARRYING> 1,314
<INVESTMENTS-MARKET> 1,314
<LOANS> 128,865
<ALLOWANCE> 2,767
<TOTAL-ASSETS> 255,197
<DEPOSITS> 212,257
<SHORT-TERM> 14,473
<LIABILITIES-OTHER> 3,912
<LONG-TERM> 0
0
0
<COMMON> 18
<OTHER-SE> 24,538
<TOTAL-LIABILITIES-AND-EQUITY> 255,197
<INTEREST-LOAN> 8,566
<INTEREST-INVEST> 3,416
<INTEREST-OTHER> 401
<INTEREST-TOTAL> 12,383
<INTEREST-DEPOSIT> 4,694
<INTEREST-EXPENSE> 5,213
<INTEREST-INCOME-NET> 7,170
<LOAN-LOSSES> 445
<SECURITIES-GAINS> 77
<EXPENSE-OTHER> 6,315
<INCOME-PRETAX> 3,037
<INCOME-PRE-EXTRAORDINARY> 3,037
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,974
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.09
<YIELD-ACTUAL> 5.01
<LOANS-NON> 2,550
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,468
<CHARGE-OFFS> 462
<RECOVERIES> 502
<ALLOWANCE-CLOSE> 2,767
<ALLOWANCE-DOMESTIC> 2,767
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<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, EXCEPT FOR LINE 9-04(21) WHICH HAS BEEN
RESTATED TO CONFORM WITH THE ADOPTION OF FINANCIAL ACCOUNTING STANDARDS NO. 128.
</LEGEND>
<RESTATED>
<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> 3,995
<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> 1.18
<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>
<PAGE> 1
Exhibit 99.1
FOR IMMEDIATE RELEASE CONTACT: GARY McCLUNG
770-454-0400
SUMMIT BANK CORPORATION ANNOUNCES
STOCK REPURCHASE PLAN
ATLANTA, GEORGIA (NOVEMBER 3, 1998) -- Summit Bank Corporation (NASDAQ: SBGA),
announced today that its Board of Directors has approved a stock repurchase
plan. The plan authorizes the purchase of up to 5% of the outstanding shares, or
90,000 shares, of the Company over the next 12 months. The repurchases will be
made from time to time, in the open market as market conditions warrant.
President of the Company, Mr. David Yu, commented, "the Board continues to view
the Company's stock as an attractive investment. This action reflects
management's belief that the current price of the stock does not represent the
long term value of the Company relative to its potential for earnings growth."
In addition Mr. Yu went on to say, "The stock acquired under this program will
be used for general corporate purposes, including potential reissue in
conjunction with the Company's stock option plan."
The Summit National Bank, the wholly-owned subsidiary of Summit, is an
Atlanta-based community bank with full-service operations in the metropolitan
area of Atlanta, Georgia and also San Jose, California. Summit Bank's niche
specialties include international trade finance, small business lending and
serving various ethnic markets including Asian-, European- and Latin-American
individuals and businesses.
The foregoing contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are not
historical facts and include expression about our confidence and strategies and
our expectations about new and existing programs and products,
<PAGE> 2
relationships, opportunities, technology and market conditions. These statements
may be identified by such forward-looking terminology as "expect", "believe",
"anticipate", "may", "will", or similar statements or variations of such terms.
Such forward-looking statements involve certain risk and uncertainties,
including, but not limited to, the direction of interest rates, continued levels
of loan quality, origination volume, continued relationships with major
customers and referrals for sources of loans, the effect of economic conditions
and regulatory barriers; and the effect of tax and legal structures. Actual
results may differ materially from such forward-looking statements. The Company
assumes no obligation for updating any such forward-looking statements at any
time.
Summit Bank Corporation's shares (Symbol: SBGA) are listed on Nasdaq.
