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Silver State Bancorp Reports Record Third Quarter Net Income.

Strong Balance Sheet and Credit Quality

HENDERSON, Nev. -- Silver State Bancorp (NASDAQ: SSBX) today reported record net income for the third quarter ended September 30, 2007 of $7.2 million, or $0.47 per share diluted, up 17.5% from $0.40 per share reported a year ago.

3rd Quarter 2007 Financial Highlights

* Net income of $7.2 million, an increase of $1.6 million or 27.8% from the third quarter 2006

* Diluted earnings per share of $.47, an increase of 17.5% compared to $.40 per share in the third quarter 2006

* Net interest income of $22.4 million, an increase of $7.9 million or 54.0% from the third quarter 2006

* Net interest margin of 5.83% for the quarter

* Net loan growth of $144.9 million or 11.2% for the quarter

* Return on average equity (annualized) of 20.0% and return on average assets (annualized) of 1.8%

* Non-performing loans represented 0.06% of gross loans at September 30, 2007

* Non-performing assets represented 0.06% of total assets at September 30, 2007

* Net charge-offs as a percentage of average loans were less than 0.01% for the quarter

* Efficiency ratio of 42.91% for the quarter

* Completed initial registered public offering of common stock on July 23, 2007 raising approximately $25.5 million of net proceeds

* Completed issuance of $30 million of trust preferred securities on July 24, 2007

Corey L. Johnson, President and Chief Executive Officer, said, "We are extremely pleased with the Company's financial results for the 3rd quarter considering the significant competitive pressures in the markets we operate. Our earnings and interest margins have continued to remain strong despite these challenging market conditions.

"The Company experienced the successful completion of our initial registered public offering of common stock in July raising approximately $25.5 million in net proceeds. In addition, the Company supplemented our capital through a $30 million trust preferred securities issuance. This expanded capital base will allow the Company to continue our strategic growth plans.

"Credit quality remains the top priority for management. To this end, we will continue to focus on quality earning asset generation. Through our underwriting guidelines and prudent lending measures, as well as the constant monitoring of our portfolio, there has been virtually no deterioration in our credit quality. In addition, during the third quarter we continued to build our loan loss provision commensurate with our portfolio growth.

"We are seeing weakness in the residential real estate lending market; however, we are still primarily a commercial real estate lender and do not see a significant downturn in the primary commercial real estate markets in which we lend.

"With regard to expansion, we are optimistic about our strategic growth plan and look forward to the opportunities we have to expand our presence in both Nevada and Arizona. In our view, these locations represent two of the most attractive markets in the United States."

Income Statement

Silver State Bancorp reported net income of $7.2 million for the three months ended September 30, 2007, representing an increase of 27.8% when compared to net income of $5.6 million for the third quarter of 2006. Diluted earnings per share were $.47 for the three months ended September 30, 2007, an increase of 17.5%, when compared to $.40 for the corresponding period of 2006.

For the nine months ended September 30, 2007, net income was $19.0 million, representing an increase of 24.8% when compared to net income of $15.2 million for the first nine months of 2006. Diluted earnings per share were $1.31 for the nine months ended September 30, 2007, an increase of 17.0%, when compared to $1.12 for the corresponding period of 2006.

Total interest income was $38.8 million for the quarter ended September 30, 2007 compared to $23.8 million for the corresponding period of 2006. This increase of $15.0 million or 63.2% was primarily the result of significant growth in our average earning assets. Our average earning assets, driven by an increase in our average loans, increased $606.7 million or 66.1% for the third quarter of 2007 compared to the corresponding period of 2006. The average yield on earning assets decreased to 10.09% for the quarter ended September 30, 2007 compared to 10.27% for the corresponding period of 2006.

Total interest expense increased $7.2 million or 77.8% to $16.4 million for the quarter ended September 30, 2007 compared to the corresponding period of 2006. The increase in total interest expense was a result of an increase in the average balance of interest bearing liabilities, driven by an increase in our average deposits, of $564.2 million or 79.2% for the third quarter of 2007 compared to the third quarter of 2006. The average cost of interest bearing liabilities decreased to 5.09% for the quarter ended September 30, 2007 compared to 5.13% for the quarter ended September 30, 2006.

Net interest income was $22.4 million for the third quarter of 2007, up $7.9 million or 54.0% from $14.6 million in the third quarter of 2006. The net interest margin decreased to 5.83% for the third quarter of 2007 compared to 6.29% for the third quarter of 2006. This decrease is primarily attributable to a slight decrease in the average yield of our loan portfolio reflecting continued competitive pressures on the pricing of our loan products. During the third quarter of 2007, our net interest margin continued to show signs of stabilizing at 5.83% compared to 5.72% and 5.85% for the first and second quarters of 2007 respectively.

The Company's provision for loan losses was $2.4 million for the quarter ended September 30, 2007 as compared to $817,000 for the corresponding quarter of 2006. The increased provision is primarily due to the significant increase in our loan portfolio. In addition, the Company increased its provision related to residential family loans due to the weaknesses in the residential real estate markets in the Las Vegas and Phoenix metropolitan areas.

Total non-interest income was $1.9 million for the quarter ended September 30, 2007, an increase of $227,000 or 13.2% compared to the corresponding period of 2006. Total non-interest income represented 16.9% of income before income taxes for the third quarter of 2007 compared to 19.7% for the corresponding period of 2006. The increase in non-interest income was primarily the result of an increase in other bank fee income generated from our bank products and services.

Total non-interest expense increased $3.7 million or 55.0% to $10.5 million for the quarter ended September 30, 2007 compared to the corresponding period of 2006. The increase was primarily attributable to expenses associated with salaries and employee benefits due to the addition of new employees which is consistent with our overall growth. Full-time equivalent employees were 333 at September 30, 2007 compared to 245 at September 30, 2006. Occupancy expenses increased $225,000 or 31.1% to $949,000 for the quarter ended September 30, 2007 compared to the corresponding period of 2006 primarily as a result of the Company's number of full service branch offices increasing to 12 at September 30, 2007 from 9 at September 30, 2006. Professional fees increased $496,000 or 209.3% to $733,000 for the quarter ended September 30, 2007 compared to the corresponding period of 2006 due to increased legal, audit, accounting, and compliance fees attributed to the growth of the company and costs associated with being a public company. Depreciation and amortization expense increased $275,000 or 73.3% to $650,000 for the quarter ended September 30, 2007 compared to the corresponding period of 2006 due to increases in premises, equipment and other depreciable assets. Insurance expense increased $259,000 or 345.3% to $334,000 for the quarter ended September 30, 2007 compared to the corresponding period of the prior year, due primarily to an increase in FDIC deposit insurance assessments.

Balance Sheet

Total assets were $1.7 billion at September 30, 2007, an increase of $464.5 million or 38.4% from December 31, 2006. Total assets increased $163.4 million or 10.8% from June 30, 2007. This increase is due primarily to internally generated loan growth and reflects our ability to leverage our newly generated capital.

Net loans, excluding loans held for sale, totaled $1.4 billion at September 30, 2007, an increase of $437.6 million or 43.6% from December 31, 2006 and an increase of $144.9 million or 11.2% from June 30, 2007. Loans held for sale totaled $63.3 million at September 30, 2007, an increase of $29.2 million or 85.9% from December 31, 2006 and an increase of $11.2 million or 21.4% during the third quarter 2007. The majority of the loan growth was in construction and land loans which grew $365.6 million or 58.9% from December 31, 2006 and grew $117.0 million or 13.4% from June 30, 2007. Net loans represented approximately 86% of total assets at September 30, 2007 and June 30, 2007 compared to approximately 83% at December 31, 2006. The allowance for loan and lease losses represented 1.15% of gross loans at September 30, 2007 and 1.10% at December 31, 2006 and 1.09% at June 30, 2007. This increase is due to the Company increasing its allowance related to residential family loans due to the weaknesses in the residential real estate markets in the Las Vegas and Phoenix metropolitan areas.

Deposits totaled $1.4 billion at September 30, 2007, an increase of $369.8 million or 37.5% from December 31, 2006 and an increase of $110.8 million or 8.9% from June 30, 2007. The majority of our deposit growth occurred in interest bearing checking accounts which grew $97.0 million or 22.3% and time deposits which grew $256.6 million or 70.9% from December 31, 2006. Interest bearing checking accounts increased $16.0 million or 3.1% and time deposits grew $97.7 million or 18.7% from June 30, 2007. Federal Home Loan Bank advances were $76.6 million at September 30, 2007, an increase of $18.6 million or 32.1% from December 31, 2006 and $5.0 million or 7.0% from June 30, 2007. Both deposit liabilities and Federal Home Loan Bank advances are used as our primary funding sources to support our strong loan growth.

Junior subordinated debt totaled $69.6 million at September 30, 2007, an increase of $30.9 million or 80.0% from December 31, 2006 and June 30, 2007. Our junior subordinated debt, which is issued to our statutory trust subsidiaries that, in turn, issue trust preferred securities, is considered long term borrowing for financial reporting purposes but is included as a component of regulatory capital, subject to limitations.

Stockholders' equity increased $45.5 million or 42.6% from December 31, 2006 and $33.3 million or 28.1% from June 30, 2007. This increase was a result of the company's initial registered public offering of common stock completed in July 2007 which raised approximately $25.5 million of net proceeds, $19.0 million in net income for the nine months ended September 30, 2007, and stock option exercises. Total stockholders' equity represented 9.1% of total assets at September 30, 2007, compared to 8.8% at December 31, 2006 and 7.9% at June 30, 2007. Tangible book value per share increased to $8.67 at September 30, 2007 from $6.33 at December 31, 2006 and $7.20 at June 30, 2007.

Asset Quality and Capital Ratios

At September 30, 2007 non-performing loans were $835,000 and represented 0.06% of gross loans and non-performing assets were $945,000 and represented 0.06% of total assets. Net charge-offs were $36,000 for the quarter ending September 30, 2007 and as a percentage of average loans were less than 0.01% for the quarter ending September 30, 2007.

The Company is considered "well-capitalized" pursuant to regulatory capital definitions at September 30, 2007 with Tier 1 Risk-Based, Total Risked-Based and Leverage Ratios of 10.7%, 12.7% and 11.6%, respectively.

Conference Call

Silver State Bancorp will hold a conference call to discuss third quarter results on October 24, 2007 at 11:00 AM Eastern; 8:00 AM Pacific. Dial in number: 866.713.8567. International dial in: 617.597.5326. Passcode: 22938680. A replay will be available through October 31, 2007. Replay dial in: 888.286.8010. International dial in: 617.801.6888. Replay passcode: 38154139.

About Silver State Bancorp

Silver State Bancorp, through its wholly-owned subsidiaries, Silver State Bank and Choice Bank, currently operates eleven full service branches in southern Nevada and two full service branches in the Phoenix/Scottsdale market area. Silver State Bank also operates loan production offices located in Nevada, California, Washington, Oregon, Utah, Colorado and Florida. Please visit www.silverstatebancorp.com for more information.

Forward-Looking Statements

This press release contains forward-looking statements. Terms such as "will," "should," "plan," "intend," "expect," "continue," "believe," "anticipate," "seek," and similar expressions are forward-looking in nature and reflect management's view only as the date hereof. Actual results and events could differ materially from those expressed or anticipated and are subject to a number of risks and uncertainties including but not limited to fluctuations in interest rates, asset quality, government regulations, economic conditions and competition in the geographic and business areas in which Silver State Bancorp conducts its operations. We undertake no obligation to review or update any forward-looking statements, whether as a result of new information, future events, or otherwise.
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Publication:Business Wire
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Date:Oct 23, 2007
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