Summit State Bank Reports 23% Increase in 2011 Net Income and Declaration of Dividend

News Release

For Immediate Release

Contact: Thomas Duryea, President and CEO, Summit State Bank [phone] Summit State Bank Reports 23% Increase in 2011 Net Income and Declaration of Dividend

SANTA ROSA, CA - (January 26, 2012) - Summit State Bank (Nasdaq: SSBI) today reported net income for the year ended December 31, 2011 of $2,228,000 a 23% increase over 2010. Earnings per share increased to $0.33 in 2011 from $0.26 in 2010. The quarterly dividend of $0.09 per share was declared payable on February 23 with a record date of February 15, 2012.

Net Income and Results of Operations

The Bank had net income of $2,228,000 and net income available for common stockholders, which deducts the preferred dividends, of $1,577,000, or $0.33 per diluted share, for the year ended December 31, 2011 compared to net income of $1,807,000 and net income available for common stockholders of $1,255,000, or $0.26 per diluted share, for the year ended December 31, 2010.

Net income, net income available for common stockholders and diluted earnings per share for the quarter ended December 31, 2011 were $552,000, $379,000 and $0.08 compared to $436,000, $298,000 and $0.06 for the same period in 2010.

"As a local community bank, we continue to attract new full banking relationships including core deposits that are reducing our cost of funds enabling us to provide new loans to small businesses and non profits that are strengthening our local Sonoma County community," said Thomas Duryea, President and CEO.

Net interest income was $15,750,000 for 2011, an increase of $417,000 compared to

2010 and the provision for loan losses expense declined by $210,000 to $3,650,000 in

2011 compared to $3,860,000 in 2010.

The Bank's net interest margin was 4.34% for the year ended December 31, 2011, compared to 4.55% in 2010. For the fourth quarter of 2011, the Bank's net interest margin was 3.82% compared to 4.45% for the fourth quarter of 2010. The declines in net interest margin in 2011 were primarily due to an increase in investment securities to augment the Bank's growth. Additionally, the fourth quarter net interest margin was further impacted with the reversal of interest from loans placed on nonaccrual status during the quarter.

The Bank's efficiency ratio, which expresses operating costs as a percentage of revenues, held steady at 58% for the year 2011 and 2010. The efficiency ratio also includes expenses related to problem loan monitoring and resolution. "We continue to

make ongoing adjustments and improvements to our operations to improve the Bank's operating efficiency in keeping with our "Summit Way" standards," said Linda Bertauche, Chief Operations Officer.

Core deposits, defined as demand, savings and money market deposits, increased 22% to

$124,421,000 at December 31, 2011 from $101,927,000 at December 31, 2010. "Our key commitment since 2008 to be a relationship based community bank, with core deposits as an essential part of any banking relationship, has resulted in core deposits increasing 106% in the last three years with the largest growth in Demand deposits which have increased from $24MM to $57MM during the three year period ending

12/31/11," said Dennis Kelley, Chief Financial Officer.

The Bank's regulatory capital remains well above the required capital ratios with a Tier

1 capital leverage ratio of 14.5%, a Tier 1 risk-based capital ratio of 18.6% and a Total risk-based capital ratio of 19.8% at December 31, 2011.

Nonperforming assets at December 31, 2011 included $12,292,000 in loans on non- accrual or past due 90 days or more, and $1,074,000 in foreclosed real estate. This compares to nonperforming assets of $13,958,000 at September 30, 2011 and

$13,472,000 at December 31, 2009. "Although nonperforming assets continue to be elevated, we are encouraged with the progress toward resolutions, said Bill Fogarty, Chief Credit Officer."

The allowance for loan losses was $5,411,000 at December 31, 2011 compared to

$6,058,000 at December 31, 2010. The ratio of the allowance for loan losses to total loans was 1.96% at December 31, 2011 compared to 2.53% of total loans at September

30, 2011 and 2.11% at December 31, 2010. Changes in the allowance for loan losses between December 31, 2011 and 2010 included provision for loan losses expense of

$3,650,000 and net loan charge-offs of $4,297,000.

Total assets increased to $387,625,000 at December 31, 2011 compared to $347,933,000 at December 31, 2010. "Our growth has primarily been fueled by the attraction of new deposit relationships largely core deposits.

We believe our commitment to strengthen the local Sonoma County community will continue to drive our profitable growth in the future." said Mr. Duryea.

About Summit State Bank

Summit State Bank has total assets of $388 million and total equity of $61 million at December 31, 2011. Headquartered in Sonoma County, the Bank provides diverse financial products and services throughout Sonoma, Napa, San Francisco, and Marin Counties. Summit State Bank is a Premier Performing Bank, earning the highest Findley Reports designation of all Sonoma County-based banks. Summit State Bank received the

2012 Community Bank Award from the American Bankers Association, the Gold Medal award for Best Business Bank from the Northbay Biz Magazine and has also been recognized as one of the North Bay's Best Places to Work by the North Bay Business Journal. Summit State Bank's stock is traded on the Nasdaq Global Market under the symbol SSBI. Further information can be found at www.summitstatebank.com.

Forward-looking Statements

Except for historical information contained herein, the statements contained in this news release, are forward-looking statements within the meaning of the "safe harbor" provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. This release may contain forward- looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, government regulations and general economic conditions, and competition within the business areas in which the Bank will be conducting its operations, including the real estate market in California and other factors beyond the Bank's control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. You should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. The Bank undertakes no obligation to publicly revise these forward- looking statements to reflect subsequent events or circumstances.

SUMMIT STATE BANK AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (In thousands, except for earnings per share data)

Three Months Ended Twelve Months Ended

December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010 (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Interest income:
Interest and fees on loans
$ 3,509 $
4,272 $
16,055 $
17,466
Interest on Federal funds sold - 7 5 26
Interest on investment securities and deposits in banks 785 343 2,611 1,384
Dividends on FHLB stock 2 3 7 10
Total interest income 4,296 4,625 18,678 18,886
Interest expense:
Deposits 594 712 2,589 3,056
FHLB advances 83 95 339 497
Total interest expense 677 807 2,928 3,553
Net interest income before
provision for loan losses 3,619 3,818 15,750 15,333
Provision for loan losses 650 1,000 3,650 3,860
Net interest income after
provision for loan losses 2,969 2,818 12,100 11,473
Non-interest income:
Service charges on deposit accounts 126 112 514 401
Office leases 139 128 534 529
Net securities gains 99 - 754 150
Net gain on sale of other real estate 75 - 75 - Loan servicing, net 6 9 26 40
Securities impairment - - - (24) Other income 5 36 23 167
Total non-interest income 450 285 1,926 1,263
Non-interest expense:
Salaries and employee benefits 1,288 1,168 5,135 4,788
Occupancy and equipment 387 397 1,601 1,598
Other expenses 801 792 3,498 3,167
Total non-interest expense 2,476 2,357 10,234 9,553
Income before provision for
income taxes 943 746 3,792 3,183
Provision for income taxes 391 310 1,564 1,376
Net income
$ 552 $
436 $
2,228 $
1,807
Less: preferred dividends 173 138 651 552
Net income available for common stockholders $
379 $
298 $
1,577 $
1,255
Basic earnings per common share
Diluted earnings per common share
$ 0.08 $
$ 0.08 $
0.06 $
0.06 $
0.33 $
0.33 $
0.26
0.26
Basic weighted average shares of
common stock outstanding 4,745 4,745 4,745 4,745
Diluted weighted average shares of
common stock outstanding 4,745 4,783 4,745 4,779

SUMMIT STATE BANK AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

December 31, December 31,

2011 2010 (Unaudited)

ASSETS

Cash and due from banks

$ 8,290

$ 4,542

Federal funds sold - 7,940

Total cash and cash equivalents 8,290 12,482

Available-for-sale investment securities - amortized cost of

$87,001 in 2011 and $33,472 in 2010

Loans, less allowance for loan losses of $5,411

in 2011 and $6,058 in 2010

88,660 33,642

269,963 280,398

Bank premises and equipment, net	6,731		7,304
Investment in Federal Home Loan Bank stock, at cost	2,190		2,614
Goodwill	4,119		4,119
Other Real Estate Owned	1,074		-
Accrued interest receivable and other assets	6,598		7,374

Total assets

$ 387,625

$ 347,933

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Demand - non interest-bearing	$ 31,022		$ 23,594
Demand - interest-bearing	25,743		24,421
Savings	20,201		15,849
Money market	47,455		38,063
Time deposits, $100 thousand and over	117,964		113,187
Other time deposits	69,673		64,863
Total deposits	312,058		279,977
Federal Home Loan Bank (FHLB) advances	13,750		12,000
Accrued interest payable and other liabilities	808		647
Total liabilities	326,616		292,624

Shareholders' equity

Preferred stock, no par value; 20,000,000 shares authorized;

shares issued and outstanding - 13,750 in 2011 and 8,500 in 2010;

per share redemption of $1,000 for total liquidation preference of $13,750 and $8,500 13,666 8,117

Common stock, no par value; shares authorized - 30,000,000 shares; issued

and outstanding 4,744,720 at December 31, 2011 and 2010	36,352		36,311
Common stock warrant	-		622
Retained earnings	10,030		10,161
Accumulated other comprehensive income, net of taxes	961		98
Total shareholders' equity	61,009		55,309
Total liabilities and shareholders' equity	$ 387,625		$ 347,933

Earnings Summary (In Thousands)

Three Months Ended

Twelve Months Ended

	December 31, 2011	December 31, 2010		December 31, 2011 December 31, 2010
	(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Statement of Income Data:
Net interest income	$ 3,619		$ 3,818		$ 15,750		$ 15,333
Provision for loan losses	650		1,000		3,650		3,860
Non-interest income	450		285		1,926		1,263
Non-interest expense	2,476		2,357		10,234		9,553
Provision for income taxes	391		310		1,564		1,376
Net income	$ 552		$ 436		$ 2,228		$ 1,807
Less: preferred dividends	173		138		651		552
Net income available for common stockholders	$ 379		$ 298		$ 1,577		$ 1,255
Selected per Common Share Data:
Basic earnings per common share	$ 0.08		$ 0.06		$ 0.33		$ 0.26
Diluted earnings per common share	$ 0.08		$ 0.06		$ 0.33		$ 0.26
Book value per common share (2)(3)	$ 9.98		$ 9.95		$ 9.98		$ 9.95
Selected Balance Sheet Data:
Assets	$ 387,625		$ 347,933		$ 387,625		$ 347,933
Loans, net	269,963		280,398		269,963		280,398
Deposits	312,058		279,977		312,058		279,977
Average assets	390,639		353,405		377,126		351,386
Average earnings assets	375,861		340,501		363,042		336,905
Average shareholders' equity	61,224		56,376		58,109		56,197
Average common shareholders' equity	47,558		47,752		47,287		47,540
Nonperforming loans	12,292		12,713		12,292		12,713
Total nonperforming assets	13,366		13,472		13,366		13,472
Selected Ratios:
Return on average assets (1)	0.56%		0.49%		0.59%		0.51%
Return on average common equity (1)	3.16%		2.48%		3.33%		2.64%
Return on average common tangible equity (1)	3.46%		2.71%		3.65%		2.89%
Efficiency ratio	60.85%		57.45%		57.90%		57.56%
Net interest margin (1)	3.82%		4.45%		4.34%		4.55%
Tier 1 leverage capital ratio	14.5%		14.6%		14.5%		14.6%
Tier 1 risk-based capital ratio	18.6%		18.6%		18.6%		18.6%
Total risk-based capital ratio	19.8%		19.8%		19.8%		19.8%
Common dividend payout ratio (4)	112.7%		143.29%		108.31%		136.10%
Average equity to average assets	15.67%		15.95%		15.41%		15.99%
Nonperforming loans to total loans (2)	4.46%		4.70%		4.46%		4.70%
Nonperforming assets to total assets (2)	3.45%		3.87%		3.45%		3.87%
Allowance for loan losses to total loans (2)	1.96%		2.11%		1.96%		2.11%
Allowance for loan losses to nonperforming loans (2)	44.02%		47.65%		44.02%		47.65%
(1) Annualized.
(2) As of period end
(3) Total shareholders' equity less, preferred stock, divided

by total common shares outstanding

(4) common dividends divided by net income available for common stockholders