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Summit Bank sees profit in difficult economic time.

Byline: Ilene Aleshire The Register-Guard

Eugene-based Summit Bank reported a 4 percent increase in profits in the first quarter, at a time when many banks nationwide are reporting decreases.

Net income for the first quarter of this year was $99,000, or 10 cents per share, compared with $95,000, or 9 cents per share, a year ago. Assets, loans and deposits all grew compared with a year ago.

Total assets increased 19 percent, to $104.5 million this March compared with last. Net loans increased by 21 percent, to $86 million. Deposits have grown by 25 percent from the first quarter of 2008 through the first quarter of 2009, to $90 million.

"Earnings are not where we'd really like them to be," Chief Executive Officer Ann Marie Mehlum said. But, she added, Summit is only five years old and still growing.

The increased profits came despite setting aside an additional $67,000 for possible loan losses, and having to write down the value of Summit's sole foreclosed parcel of real estate by $100,000, Mehlum said. The bank now has an allowance of $1.21 million for loan losses, or 1.37 percent of the loans it had outstanding at the end of the quarter, she said.

"The bank's loan portfolio is holding up comparatively well as Summit's clients are successfully addressing economic challenges," Mehlum said. "The total amount of foreclosed real estate, nonperforming loans and past-due loans is higher than we would normally like to see," she said, but Summit is still out performing state and national averages for its peer group.

"We've been very careful with our loan portfolio, to be diversified and not take a lot of risk in any one area," Mehlum said. Small businesses and professionals are its core market - "We have a sizable medical portfolio, and professional services," she said. Summit did not go after residential development loans, which have been a trouble spot for many banks. And it was very careful about the development loans it did make, Mehlum said.

The bank was approved to receive $2.7 million from the U.S. Treasury's Capital Purchase Program but turned the money down, she said. The federal government invested money in banks, making cash available for loans, but attached conditions to the investment.

"Summit does not have immediate need for additional capital, and our board determined that the cost of the government program, together with the un certainty regarding the terms of the agreement, made this an unattractive source of capital for the bank," Mehlum said. "We're a profitable bank with money to lend and look forward to being part of our community's recovery."
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Title Annotation:Business; The five-year-old Eugene-based bank decided not to take government funds
Publication:The Register-Guard (Eugene, OR)
Article Type:Financial report
Date:Apr 21, 2009
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