Sonoma County’s Poppy Bank considers owning up to a quarter of Santa Rosa’s Summit State Bank

Poppy Bank’s parent company filed a legal notice Friday that it may buy a significant stake in Santa Rosa-based Summit State Bank.

Big Poppy Holdings’ legal notice published Friday in The Press Democrat said the privately owned bank aims to possibly purchase up to a quarter (24.99%) of Summit. The North Bay Business Journal confirmed that with Poppy Bank CEO Khalid Acheckzai on Friday morning.

Acheckzai said he wouldn’t rule out an outright acquisition of publicly traded Summit. But the two banks based in Santa Rosa have not established acquisition negotiations, he said.

“We might end up buying Summit State Bank. We may want to buy another bank, maybe down the road, but this (legal notice) was not an application to buy Summit (State Bank),” he said. “We’re just accumulating Summit (State) Bank shares.”

Much of that decision rides on Summit’s stock price. It closed Thursday at $15.19 a share, prompting Poppy Bank to consider purchasing up to 25% because it’s considered a good deal.

The price dipped 0.8% by the end of trading Friday, to $14.82.

Founded in 1982, Summit State Bank (Nasdaq: SSBI) on April 25 reported first-quarter earnings of $4.1 million, up 5% from a year before. It ended 2022 with $1.1 billion in assets, after continuous quarterly growth. The community bank has five branches.

Since Silicon Valley Bank’s collapse in March, banks have realigned for potential alliances and financial agreements. Acheckzai emphasized that Poppy Bank is in an ideal position for additional purchasing power, growing to about $6 billion in assets in the last six years.

Formed in 2005, Poppy Bank manages 23 locations and intends to add eight more by the end of 2023.

Poppy Bank has bought Summit State Bank’s stocks prior to this legal notification, accumulating an ownership stake of 4.9%. But as a general legal rule, whenever one bank owns over 5% of another, the U.S. Federal Reserve must be notified.

Summit State Bank President and CEO Brian Reed provided late limited comment, confirming the two banks have not conducted talks.

Public comments on Big Poppy Holding’s purchase plans for Summit stock may be made to the Federal Reserve Bank, P.O. Box 7702, San Francisco, 94120.

Susan Wood covers law, cannabis, production, tech, energy, transportation, agriculture as well as banking and finance. She can be reached at 530-545-8662 or susan.wood@busjrnl.com