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Summit State Bank (SSBI-NASDAQ) |
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March 27, 2009 Issue |
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With Strong Improvement On Core Operating Results From 2008, Summit State Bank In Sonoma County, California Continues in 2009 As A Strong And Viable Institution |
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Summit State Bank has total assets of $364
million and total equity of $56 million at December 31, 2008. Headquartered
in Sonoma County, the Bank provides diverse financial products and services
throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit State
Bank stock is traded on the Nasdaq Global Market under the symbol SSBI.
Thomas Duryea became President
and CEO of Summit State Bank in February of 2008. He joined the Summit team
in 2001 and was appointed to Chief Credit Officer in 2006. Prior to coming
to Summit, he worked with California Bank and Trust, Union Bank of
California, and Wells Fargo. Mr. Duryea received his Bachelor of Arts in
Economic History from UC Berkeley in 1981 and in 1982 studied French
Language at La Sorbonne in Paris. In addition, Mr. Duryea is a graduate of
the Pacific Coast Banking School at the University of Washington in Seattle. |
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – March 27, 2009
Mr. Duryea: “First and foremost, my vision placed top priority on being a customer service-oriented community bank. Although our loans and deposits remain our foundation, providing elite customer service is an important part of our culture. We have what we call the Summit Way, which is a ten-point service standard that can be seen in all of our branches and on the desks of all of our bank personnel. We set very high goals for excellence that our customers know they can rely on. These tenets include returning phone calls within 24 hours, returning emails within 24 hours, saying thank you, treating your fellow workers with the same respect you treat your customers, and above all, ‘expect excellence from yourself.’ This vision of providing an exceptional level of customer service continues to be a well-recognized effort, as evidenced by our customer retention and feedback.”
CEOCFO: Will you give us a concrete example of what somebody might encounter in a particular situation at your bank that they might not get elsewhere? Mr. Duryea: “The biggest complaint I hear about banking is indifference or a lack of responsiveness. At Summit State Bank, we take pride in our ability to be exceptionally responsive, and our customers are able to feel confident and assured that their needs are our first priority. We return phone calls and emails the same day, and we are consistently complimented on our turnaround times for loan services. I am proud to hear feedback about how well branch staff treats our customers. We have an unwavering interest in creating partnerships with our clients and the community. This requires much more than simply running numbers or preparing documents. We have the commitment and focus to really earn the trust and respect of our customers.”
CEOCFO: Will you tell us about the geographic area you cover, and how are things in the area today? Mr. Duryea: “We are a Sonoma County based bank. We are headquartered in Santa Rosa, California. We do business in Sonoma County, neighboring the counties of Napa, Marin, and San Francisco. Sonoma County, which is one of the nine bay area counties, has been faring much better than the rest of the state. I believe, at last count, we are ranked as the fifth highest employment figure, meaning that our unemployment was comparatively low. We are fortunate to have a much more diversified economy, not only in Sonoma County, but also in the Bay Area. Of course, we are not immune to many of today’s economic challenges. When I was the chief credit officer, as a bank we made the strategic decision to exit spec-construction lending. Really, on the spec side, we still do mom-and-pop homeowners construction, but we got out of that marketplace when we felt we had “read the tea leaves.” Because we avoided construction and sub-prime lending, we were virtually unaffected by the first wave of staggering difficulties that many other banks are currently experiencing. Unfortunately, we are not immune to the next wave, which will be from the general decline of our economy. Currently, we have fared pretty well. For the last six of seven quarters, including all of 2008, we had zero percent of our loans thirty plus days past due. Our non-accruals are about .25% of our total loans, which rank 10 times higher than the national average. We are cautiously optimistic that we can maintain this, but we are also cognizant of the fact that things are getting tougher out there.”
CEOCFO: What is the breakdown between consumer and commercial, and would you like to see that change? Mr. Duryea: “We are a community bank with a focus on business customers. Typically, the consumer products that we offer are generally add-on products for our existing business customers. Mortgages, credit cards and car loans are mostly given to our business customers as an add-on, but these are not leading products with the bank. Our focus is on commercial products.”
CEOCFO: Are
there newer services you are providing or services you would like to add?
CEOCFO: How do you reach your new customers, and what has changed in that arena for you given the current scenario? Mr. Duryea: “We have really developed the marketing side of the bank; specifically, we have expanded our advertising and brand awareness. We have also done radio ads and, for the first time, we have billboard ads. Because of our earnings and increased marketing efforts, we have experienced an influx of favorable local press. We were recently named the Highest Rated Bank in Sonoma County, based on our Five-Star Bauer Rating and the www.TheStreet.com rating. We are trying to get our name out in the community and, especially in these difficult times, a strong rating for safety and soundness is really resonating with the public.”
CEOCFO: What about community involvement for the bank? Mr. Duryea: “Community involvement is another key focus of the bank. We are, first and foremost, a community bank; the operative word is ‘community.’ We have really expanded our partnerships with community organizations. Last year, we became the top-level sponsor of the Sixth Street Playhouse, which is an organization here in Santa Rosa that is an important community outlet for creativity, talent, and positive energy. We are their bank and they are our theater, as we like to say. We also have expanded our relationship with the local Boys and Girls Clubs. I really encourage staff to get involved and give back to organizations that match their own individual interests. We recently had a sponsorship where we taught Junior Achievement, and had quite a few people that were excited to devote their time to youth. It is also important to support organizations with which employees are involved. Employees will approach me for financial support or to ask for volunteer time for organizations they are passionate about, such as the American Heart Association or Legal Aid Society, and we are pleased to support and sponsor them in these efforts. It is a real win-win when the community is thriving, and we are proud to contribute.”
CEOCFO: You have reported strong numbers; what does the financial picture look like for the Bank?
Mr. Duryea:
“We have had good core earnings. On the yield side, obviously most of what
we have is going to be from loans. We focus on yields, and we use a
sophisticated pricing model that allows us the disciplined framework in
which to target a minimum acceptable ROEC and ROA. While the pricing model
is merely a tool to use in evaluating a loan, it does provide us the
discipline with which to make certain decisions on deals. The other thing we
are doing that is helping drive our results, is that we require compensating
deposit balances with every loan we do. At the end of the day, I need the
cash to provide the loan. The third, and this might even be our highest
priority, is that as a bank, we are trying to drive our cost of funds down
as much as we can. We are not only trying to grow our core deposits, which
drive franchise value, but we are also trying to drive down the cost down of
both our core and non-core deposits. The bank cannot benefit from paying 4%
on a money market account, which is considered a core deposit, when the
market is paying 2%. Thus, we are really focusing on our cost of funds.
CEOCFO: It sounds like a lot of focus is on the overall picture! Mr. Duryea: “It is. I have been at this bank since 2001, first as a commercial loan officer, then as a chief credit officer, and now as president and CEO. I envision better things for this bank, and I like where I live, I like the people I work with and I like the climate here. I like everything about it. I am thinking more long-term, and I think even greater results are here for this bank.”
CEOCFO:
In closing, why should potential investors put Summit State Bank on their
radar screen? |
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“Our core operating results from last year have shown very strong improvements with excellent asset quality and operating efficiencies. Even while facing this harsh economy, we have earned and proven our strength, and I expect that Summit State Bank will continue to be a safe, sound, and smart financial institution.” - Thomas Duryea |
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Thomas
Duryea, President and CEO