Summit State Bank : Q3 2023 Investor Presentation

Investor

Presentation

Q3 2023

Company Overview

• Summit State Bank is a commercial bank headquartered in Santa Rosa, CA with $1.14 billion in assets, 5 branch locations and more than 120 employees
• Bank formed in 1982
• Listed on NASDAQ in 2006 under the ticker symbol "SSBI"
• Summit Way Service Standards -Dedicated to serving and giving back to its customers and communities by delivering the best service and solutions available

Building a Better Sonoma County, That's Our Business

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Summit State Bank Locations

Headquartered in Santa Rosa, CA

Branch Locations

• Santa Rosa Main
• Healdsburg
• Santa Rosa Montgomery Village
• Rohnert Park
• Petaluma

Regional Small Business Lending Group

• HQ in Roseville, CA

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Market Area Highlights

Northern California Concentrated in Sonoma

County

• Commercial Property Investment Inventory Remains Low due to limited construction over the past ten years.
• Diverse and Strong Economy:
• • Healthcare, Manufacturing, Construction and Wholesale Trade Comprise > 40% of the County's Earnings
  • Consistently Low Unemployment and High
    GDP
• Ranked 12th in Median Household Income across California

* 2022 Sonoma County GDP figures

unavailable
Note: Real Annual GDP Rate of change, not seasonally adjusted.	4
Source: https://fred.stlouisfed.org

Our Leadership Team

Brian Reed	Genie Del Secco	Brandy Seppi	Camille Kazarian	Michael Castlio
President & CEO	EVP & Chief Operating Officer	EVP & Chief Lending Officer	EVP & Chief Financial Officer	EVP & Chief Credit Officer
38 Years in the Industry	32 Years in the Industry	28 Years in the Industry	23 Years in the Industry	30 Years in the Industry
6 at Summit State Bank	7 at Summit State Bank	8 at Summit State Bank	4 at Summit State Bank	5 at Summit State Bank

	151 Years of Collective
5	Experience	5 of 19

Financial Trends

 Rate increases combined with our strategy to significantly increase liquidity have put downward pressure on Net Interest Margin ultimately resulting in reduced Return on Average Assets

 Non-interest Income decreased to $4.9MM YTD Q3 2023 from $5.4MM YTD Q3 2022. This is due to:

 Reduced SBA Loan production  Reduced SBA Loan Sales

 2023 Loan growth has been constrained due to current rate environment

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Loan Growth & Asset Quality

 Loan Growth has declined from prior periods due to higher rates

 Strong Reserves (Allowance for Loans & Lease Losses - ACL)

 ACL is 1.69% without PPP Loans, which Carry a Zero-Risk Weighting and excluding unsold guaranteed portion of SBA loans

 Elevated Non-Performing Loans are primarily comprised of a group of large relationships that are well collateralized, and our estimated loss is zero

Note: CECL Conversion as of January 1, 2021

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Interest Income & Interest Expense Management

 NIM compression and Net Interest Income decline observed due to planned deposit growth, increased interest rates, and lower Loan to Deposit ratio

 NIM and Net Interest Income are compressing as deposits reprice faster than the loan portfolio

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Maintaining the Infrastructure to Deliver Results

 Efficiency Ratio increased due to lower Net Operating Income as discussed on previous slide

 Focused on maintaining Portfolio Credit Quality and Loan Yield resulting in lower Loan Originations impacting the Efficiency Ratio in 2023

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Assets Trends

 Focused Growth on Conventional CRE and SBA Guaranteed Loans with Targeted Yield at 7.50%

 Portfolio Loan Yield as of 2023Q3 at 5.70%

 Elevated Cash trend related to our Strategy to increase liquidity while growing our Balance Sheet

 Focused on Organic Loan Growth through Strong Relationship Practices

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