<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 205492
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, 2000
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, 2000
----- -------------------------------
Common Stock, $.0l par value 1,647,063
The Exhibit Index Appears on Page 12
Page 1 of 14
<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) 2000 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 12,594 $ 16,721
Federal funds sold 5,000 14,440
Interest-bearing deposits in other banks 264 446
Investment securities available for sale, at fair value 64,750 69,269
Other investments 1,395 1,171
Loans, net of unearned income 180,003 164,144
Loans held for sale 3,834 3,575
Less: allowance for loan losses (3,136) (2,525)
------------------------------------------------------------------------------------------------------------
Net loans 180,701 165,194
------------------------------------------------------------------------------------------------------------
Premises and equipment, net 3,255 4,351
Customers' acceptance liability 1,633 2,030
Goodwill, net 1,644 1,708
Other assets 6,788 5,938
------------------------------------------------------------------------------------------------------------
Total assets $ 278,024 $ 281,268
============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand $ 57,488 $ 53,958
Interest-bearing:
Demand 40,580 44,310
Savings 9,569 8,648
Time, $100,000 and over 52,974 53,498
Other time 62,372 72,527
------------------------------------------------------------------------------------------------------------
Total deposits 222,983 232,941
------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank advance 17,000 10,000
Other borrowed funds 9,686 11,371
Acceptances outstanding 1,633 2,030
Other liabilities 1,901 2,111
------------------------------------------------------------------------------------------------------------
Total liabilities 253,203 258,453
------------------------------------------------------------------------------------------------------------
Minority interest in non-bank subsidiary 18 29
STOCKHOLDERS' EQUITY:
Common stock 18 18
Additional paid-in capital 13,409 13,498
Retained earnings 12,655 10,565
Accumulated other comprehensive loss (1,279) (1,295)
------------------------------------------------------------------------------------------------------------
Total stockholders' equity 24,803 22,786
------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 278,024 $ 281,268
============================================================================================================
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
Page 2 of 14
<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) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Loans, including fees $ 4,908 $ 3,929 $ 13,728 $ 10,714
Interest-bearing deposits in other banks 5 3 12 8
Federal funds sold 24 39 216 243
Investment securities 460 269 1,224 1,117
Mortgage-backed securities 648 771 2,086 2,288
------------------------------------------------------------------------------------------------------------------------------
Total interest income 6,045 5,011 17,266 14,370
------------------------------------------------------------------------------------------------------------------------------
Interest expense
Time deposits, $100,000 and over 805 522 2,215 1,526
Other deposits 1,179 1,110 3,390 3,510
Federal Home Loan Bank advance 276 133 581 380
Short-term borrowings and obligations under capital lease 135 88 393 203
------------------------------------------------------------------------------------------------------------------------------
Total interest expense 2,395 1,853 6,579 5,619
------------------------------------------------------------------------------------------------------------------------------
Net interest income 3,650 3,158 10,687 8,751
Provision for loan losses 200 200 825 624
------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 3,450 2,958 9,862 8,127
------------------------------------------------------------------------------------------------------------------------------
Non-interest income
Fees for international banking services 352 334 1,072 951
SBA loan servicing fees 42 63 156 199
Service charge income 131 126 418 359
Non-sufficient funds charges 143 162 470 445
Gains on sales of loans 78 -- 78 79
Net losses on sales of investment securities (74) (122) (128) (127)
Other 187 113 676 400
------------------------------------------------------------------------------------------------------------------------------
Total non-interest income 859 676 2,742 2,306
------------------------------------------------------------------------------------------------------------------------------
Non-interest expenses
Salaries and employee benefits 1,369 1,241 3,961 3,648
Equipment 175 196 514 546
Net occupancy 217 203 634 583
Other operating expenses 910 902 2,888 2,688
Minority interest in non-bank subsidiary (6) -- (11) --
------------------------------------------------------------------------------------------------------------------------------
Total non-interest expenses 2,665 2,542 7,986 7,465
------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,644 1,092 4,618 2,968
------------------------------------------------------------------------------------------------------------------------------
Income tax expense 582 387 1,634 1,048
------------------------------------------------------------------------------------------------------------------------------
Net income $ 1,062 $ 705 $ 2,984 $ 1,920
------------------------------------------------------------------------------------------------------------------------------
Basic net income per common share $ .64 $ .42 $ 1.80 $ 1.11
Diluted net income per common share and
common share equivalents $ .64 $ .42 $ 1.80 $ 1.11
------------------------------------------------------------------------------------------------------------------------------
Weighted-average shares outstanding - basic 1,653,382 1,701,045 1,654,625 1,732,844
Weighted-average shares outstanding - diluted 1,653,382 1,701,045 1,654,625 1,732,844
------------------------------------------------------------------------------------------------------------------------------
Dividends declared per common share $ .18 $ .12 $ .54 $ .35
==============================================================================================================================
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
Page 3 of 14
<PAGE> 4
SUMMIT BANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months
ended September 30,
-------------------------------
(In thousands) 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,984 $ 1,920
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of premises and equipment 362 384
Net amortization of premiums on investment securities 193 511
Amortization of goodwill 64 64
Provision for loan losses 825 624
Proceeds from sales of loans 1,670 1,419
Gains on sales of loans (78) (79)
Losses on sales of other real estate owned -- 21
Net losses on sales of investment securities 128 127
Changes in other assets and liabilities:
Net (increase) decrease in loans held for sale (259) 557
(Increase) decrease in other assets (277) 1,339
(Decrease) increase in other liabilities (210) 132
----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 5,402 7,019
----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from maturities of investment securities -- 27,297
Principal collections on investment securities 4,814 15,345
Proceeds from sales of investment securities 9,973 15,017
Purchases of investment securities available for sale (10,775) (32,268)
Loans made to customers, net of principal collected on loans (17,665) (33,831)
Proceeds from sales of premises 824 --
Purchases of premises and equipment (685) (196)
----------------------------------------------------------------------------------------------------------
Net cash used in investing activities (13,514) (8,636)
----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase in demand and savings deposits 721 4,065
Net decrease in time deposits (10,679) (12,081)
Purchase of treasury shares (89) (2,039)
Dividends paid (894) (593)
Net increase in borrowed funds 5,315 3,072
Net decrease in minority interest in non-bank subsidiary (11) --
----------------------------------------------------------------------------------------------------------
Net cash used in financing activities (5,637) (7,576)
----------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (13,749) (9,193)
Cash and cash equivalents at beginning of period 31,607 21,440
----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 17,858 $ 12,247
==========================================================================================================
Supplemental disclosures of cash paid during the period:
Interest $ 6,742 $ 5,836
Income taxes $ 2,462 $ 977
Supplemental disclosures of noncash investing activities:
Transfer of branch office to other real estate owned $ 595 --
==========================================================================================================
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
Page 4 of 14
<PAGE> 5
SUMMIT BANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
Summit Bank Corporation (the "Company") prepared the consolidated
financial statements included herein, 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 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. You should read these
consolidated financial statements in conjunction with the Company's
audited financial statements and the notes thereto as of December 31,
1999, included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999.
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), as well as an
80%-owned subsidiary, CashMart, Inc. All intercompany accounts and
transactions have been eliminated in consolidation.
The Company primarily operates through one segment, providing a full range
of banking services to individual and corporate customers through its
subsidiary bank.
During 1999, the Company invested $120,000 in a newly created subsidiary,
CashMart, Inc. ("CashMart"), a check cashing company. In the first quarter
of 2000, the Company received regulatory approval for and began operation
of the subsidiary. CashMart's business plan is to provide payroll check
cashing services through several locations throughout metropolitan
Atlanta. CashMart generates revenues from fees charged to customers for
cashing payroll checks. The subsidiary currently operates from three
locations in metropolitan Atlanta, occupying leased space inside
convenience stores. CashMart's operations are wholly separate and apart
from the Bank's operations.
2. ACCOUNTING POLICIES
We refer to the Company's accounting policies 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, 1999.
3. COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130") establishes standards for reporting and
displaying of comprehensive income and its components in a full set of
general-purpose financial statements. The primary component of the
differences between net income and comprehensive income for the Company is
net unrealized gains and losses on investment securities. The total
comprehensive income for the nine months ended September 30, 2000 was
$3,000,000 compared to $827,000 for the nine months ended September 30,
1999. The total comprehensive income for the three months ended September
30, 2000 was $1,404,000 compared to a total comprehensive income of
$641,000 for the three months ended September 30, 1999.
Page 5 of 14
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This quarterly report contains forward-looking statements and information
relating to our subsidiaries and us. The words "believes," "expects," "may,"
"will," "should," "projects," "contemplates," "anticipates," "forecasts,"
"intends" or similar terminology identify forward-looking statements. These
statements reflect management's beliefs and assumptions, and are based on
information currently available to management. Because these statements reflect
the current views of management concerning future events, they involve risks,
uncertainties and assumptions. Actual results may differ significantly from the
results discussed in the forward-looking statements. We undertake no obligation
to update publicly any forward-looking statement for any reason, even if new
information becomes available.
Performance Overview
The Company reported net income of $1,062,000 for the third quarter of 2000,
compared to $705,000 in the third quarter of 1999. The 51% increase was
attributed to strong interest margins and containment of operating costs. The
net interest margin was 5.71% through September 2000 compared to 5.01% through
September 1999, due primarily to continued loan growth. Average total loans in
the third quarter of 2000 were $182 million compared to $159 million in the
third quarter of 1999. In addition to deposit growth, the Company sold loans and
investments in the third quarter to fund loan growth which contributed to other
income when compared to the same period last year. More details of these sales
are discussed below. Non-interest expenses only increased 5% to $2.6 million in
third quarter 2000 compared to the same quarter in 1999. Net earnings per share
for third quarter 2000 were $.64 (basic and diluted) compared to $.42 (basic and
diluted) for third quarter 1999.
Net earnings for the nine months ended September 30, 2000 were $2,984,000, a 55%
increase over net earnings of $1,920,000 through September 1999. Net earnings
per share for year to date 2000 were $1.80 (basic and diluted) compared to $1.11
(basic and diluted) for the same period in 1999. Consistent with the current
quarter, loan growth was also the main contributing factor in the strong
earnings increase over last year. While non-interest expenses increased 7%
during 2000 compared to the first nine months of 1999, this increase was largely
offset by higher non-interest income. The annualized return on average
stockholders' equity for the 2000 nine-month period was 17.1% versus 10.8% for
the 1999 nine-month period, and the return on average assets was 1.4% compared
to 1.0% in 1999. Book value per share was $15.04 at September 30, 2000 compared
to $13.76 at December 31, 1999 and $13.61 at September 30, 1999. In third
quarter 2000, the Company paid a cash dividend of $.18 per share compared to
$.12 per share for the same period last year.
Total assets at September 30, 2000 were $278 million compared to $256 million at
September 30, 1999, an increase of 8%, although a slight decline from December
31, 1999. Total assets at December 31, 1999 included higher cash and federal
funds sold levels than normal for liquidity purposes in preparation for the
century date change. The excess funds were reduced in January 2000. The
twelve-month increase in assets was largely due to growth in the loan portfolio
during that period. Total loans at the end of the current quarter were $184
million, reflecting a net increase of 3%, or $6 million, during the third
quarter of 2000 and a net increase of 12%, or $20 million, during the past
twelve months. This increase was net of $1.6 million in sales of Small Business
Administration ("SBA") loans. In addition to normal principal paydowns on
mortgage-backed securities, the Company sold $3.7 million of securities to fund
loan growth, as previously mentioned. At September 30, 2000, investment
securities totaled $66 million.
Total deposits have grown $12 million, or 6%, during the last twelve months, and
$3 million, or 1%, during the current quarter. Increases in time deposit
balances more than offset a $2.7 million decline in non-interest-bearing
deposits during third quarter 2000. However, non-interest-bearing demand
deposits were $57 million at September 30, 2000 compared to $50 million at
September 30, 1999. Average non-interest-bearing demand deposits for the year to
date represent over 26% of total deposits, a ratio that is considerably higher
than the Bank's peers. Due to the slower growth rate in deposits than loans, the
Bank increased its other borrowing position with the Federal Home Loan Bank.
Total advances at September 30, 2000 were $17 million compared to $10 million
one year ago. These advances have various maturities, and the rates are
comparable with time deposit rates currently paid by the Bank.
Net interest income increased 16%, or $500,000 in third quarter 2000, compared
to third quarter 1999 to a total of $3.7 million. The increase was due to the
increased volume of loans for the twelve months ended September 30,
Page 6 of 14
<PAGE> 7
2000. For the nine months ended September 30, 2000, net interest income
increased 22% compared to the same period in 1999, also due to strong loan
growth. Also related to this growth, the provision for loan losses for this year
to date was higher than last year by $201,000, for a total provision this year
of $825,000.
Non-interest income increased in third quarter 2000 to $859,000 compared to
$676,000 in the same period in 1999. The primary reason for the increase was due
to the change in net gains on sales of investment securities and SBA loans
during the third quarters of 2000 and 1999. In the third quarter of last year,
$122,000 in losses were recognized on sales of investment securities. During the
current third quarter, the Bank recognized a net gain of $4,000 on asset sales -
$78,000 in gains on sales of SBA loans and $74,000 in losses on sales of
investment securities. The international department of the Bank posted stronger
fee income of 5% in the current quarter compared with third quarter 1999, due to
higher transaction volume. Total international fee income for the year to date
was $1.1 million, a 13% increase over last year to date. There was no variance
in total net gains and losses on asset sales for the year to date. Year to date
non-interest income this year also included recoveries from a loan previously
charged-off in conjunction with the acquisition of California Security Bank in
1998. These recoveries totaled $325,000.
Non-interest expenses during third quarter 2000 were only 5% higher than third
quarter last year, as a result of management's continued efforts to control
costs and improve the overhead efficiency ratio. The increase was mainly due to
salaries and benefits costs, which increased 10% from third quarter last year.
As the labor market continues to tighten, the Bank has experienced its effects
in higher replacement salaries, adjustments to existing salaries to meet
competition and recruitment fees (reported in other operating expenses.)
Variances in equipment, occupancy and other operating expenses comparing the
same quarters were minimal. For the year to date, non-interest expenses
increased 7% over last year to date. In past years, the rate of increase in
non-interest expenses from year to year has been in the double digits. Salaries
and benefits for the year increased approximately $300,000, or 9%, also due to
the tightening labor market. The number of employees on staff at September 30,
2000 compared to one year ago only increased by 2 to 103. For the year to date
through September, the Company's efficiency ratio, defined as non-interest
expenses divided by net interest income plus non-interest income, improved
significantly to 59% from 68% for the same period last year. This was primarily
due to the stronger net interest income this year, as well as the control of
overhead costs.
In the third quarter of 2000, the Company announced a stock repurchase plan
indicating that up to 3%, or 50,000, of the current outstanding shares would be
purchased over the next twelve months. As of September 30, 2000, a total of
5,700 shares had been purchased under this plan at a cost of $89,200. Total
shareholders' equity reflects repurchased shares as a reduction of additional
paid in capital.
CashMart had a total net operating loss of $34,000 for the third quarter of
2000, of which 80%, or $27,000 was recorded as the Company's portion. Net losses
for the year to date through September were $55,000, of which $44,000 was
recorded as the Company's portion. Revenues of CashMart were negligible during
the quarter due to low, albeit building, transaction volume. Operating costs
consisted mainly of personnel costs and lease payments on space and equipment.
The third location opened at the end of October 2000.
Asset Quality
Asset quality has improved significantly this year compared to prior years.
Non-performing loans decreased to $295,000 at September 30, 2000 from $1.3
million at year-end 1999 and $1.7 million at September 30, 1999. Furthermore,
100% of the non-performing loans were fully guaranteed by the SBA. Total
non-performing assets also included the premises that housed the East Marietta
branch office until June 2000. The balance of $595,000 was reclassified as other
real estate owned at the time of closure. Including this other real estate
owned, total non-performing assets were $890,000 and represented .48% of total
loans and other real estate owned as of September 30, 2000 compared to .77% at
December 31, 1999. There were no loans past due 90 days or more as to principal
or interest payments and still accruing at September 30, 2000.
Page 7 of 14
<PAGE> 8
NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
(Dollars in thousands) 2000 1999
------------------------------------------------------------------------------------------
<S> <C> <C>
Loans on non-accrual
SBA guaranteed $ 295 $ 494
Non-SBA guaranteed -- 795
Other real estate 595 --
Restructured loans - SBA guaranteed -- --
------------------------------------------------------------------------------------------
Total non-performing assets $ 890 $1,289
==========================================================================================
Loans 90 days past due and still accruing interest $ -- $ --
Total non-performing assets as a
percentage of total loans and ORE .48% .77%
Loans 90 days past due and still accruing
interest as a percentage of total loans --% --%
</TABLE>
The allowance for loan losses increased to $3,136,000 at September 30, 2000 from
$2,525,000 at year-end 1999, an increase of 24%. The continued increase in the
allowance for loan losses reflects continued growth in the loan portfolio and an
overall concern regarding a general softening of the economy in the Company's
market. Loan losses were lower this year compared to the first nine months of
1999, with gross charge-offs of $484,000 offset by recoveries of $270,000,
resulting in a net annualized charge-off rate of .16% of average total loans.
This is a strong improvement over the first nine months of 1999, during which
the net annualized charge-off rate was .45%. The allowance for loan losses
represented 1.71% and 1.67%, respectively, of total loans outstanding at
September 30, 2000 and December 31, 1999.
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES AT SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
(In thousands)
------------------------------------------------------------------------
<S> <C>
Allowance for loan losses at December 31, 1999 $2,525
------------------------------------------------------------------------
Charge-offs:
Commercial, financial, and agricultural 386
SBA 91
Real estate --
Installment loans to individuals 7
------------------------------------------------------------------------
Total 484
------------------------------------------------------------------------
Recoveries:
Commercial, financial, and agricultural 118
SBA 124
Real estate --
Installment loans to individuals 28
------------------------------------------------------------------------
Total 270
------------------------------------------------------------------------
Net charge-offs 214
------------------------------------------------------------------------
Provision for loan losses charged to income 825
------------------------------------------------------------------------
Allowance for loan losses at September 30, 2000 $3,136
------------------------------------------------------------------------
</TABLE>
Page 8 of 14
<PAGE> 9
Management regularly analyzes our loan portfolio 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, 2000 to be
adequate to cover loan losses in the portfolio as of that date. However, because
of the inherent uncertainty of the assumptions we use in our loan analyses,
management cannot assure that loan losses in future periods will not exceed the
allowance for loan losses or that additional increases to the allowance will not
be required.
Liquidity and Capital Adequacy
Liquidity has decreased in the past few months as the growth rate for loans has
exceeded that of deposits. At September 30, 2000, the Company's average net loan
to average deposit ratio was 79%, up from 72% at year-end. The loan to deposit
ratio at September 30, 2000 was 81% compared to 77% at September 30, 1999. The
Bank has $25 million of borrowing capacity under a secured line of credit
available from the Federal Home Loan Bank of Atlanta, of which $17 million was
being utilized at September 30, 2000, up from $10 million at June 30, 2000. A
total of $5.3 million in investment securities and SBA loans were sold in
September to fund higher yielding loans. Management also analyzes the level of
off-balance sheet assets and liabilities 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. Based on this analysis, management believes
that the Company has adequate liquidity to meet short-term operational
requirements.
Stockholders' equity of the Company increased $1 million during third quarter
2000, to $25 million. This total also represented an increase of $2 million from
equity at September 30, 1999. The increase was due to normal earnings growth
since the amount to date of the repurchase of common stock under the Company's
current stock repurchase plan was minimal. Other comprehensive income increased
as well due to earnings during the trailing twelve months.
The capital level of the Bank exceeds all prescribed regulatory capital
guidelines. 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 increased to 8.4% at
September 30, 2000 compared to 7.6% at year-end 1999. 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, 2000, the Bank had a
risk-weighted total capital ratio of 12.9% and a Tier 1 risk-weighted capital
ratio of 11.7% which compares favorably to year end 1999 ratios of 12.5% and
11.2%, respectively.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of September 30, 2000, there were no substantial changes from the interest
rate sensitivity analysis or the market value of portfolio equity for various
changes in interest rates calculated as of December 31, 1999. The foregoing
disclosures related to the market risk of the Company should be read in
conjunction with the Company's audited consolidated financial statements,
related notes and management's discussion and analysis of financial condition
and results of operations for the year ended December 31, 1999 included in the
Company's 1999 Annual report on Form 10K.
Page 9 of 14
<PAGE> 10
PART II. - OTHER INFORMATION
ITEM 1. Legal Proceedings - Not Applicable
ITEM 2. Changes in Securities and Use of Proceeds
a) Not Applicable
b) Not Applicable
c) Not Applicable
d) 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
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 10 of 14
<PAGE> 11
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/ Pin Pin Chau
----------------------------------------
Pin Pin Chau
Chief Executive Officer
BY: /s/ Gary K. McClung
----------------------------------------
Gary K. McClung
Executive Vice President
(Principal Financial Officer
and Principal Accounting Officer)
DATE: November 9, 2000
-------------------------------------------
Page 11 of 14
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
------- ----
<S> <C> <C>
11.1 Statement Regarding Computation of Per Share Earnings 13
27.1 Financial Data Schedule (for SEC use only). 14
</TABLE>
Page 12 of 14
