Summit Bancshares Inc.

1 2017 Annual ReportSummit Bancshares Bancshares , HIGHLIGHTSThe stock of the Company is not listed on any stock exchange but is publicly traded in limited and infrequent transactions in the over the counter market. According to information made available to the Company by the Market Maker, American Blue Chip, the range of high and low bids for such common stock for each calendar quarter since January 2016 is contained below. The following prices reflect retail mark-up and may not represent actual Company presently intends to continue the policy of paying regular semi-annual cash dividends. Future dividends will depend upon the earnings of the Company, management s assessment of the future needs for funds, and the regulatory limitations outlined in Footnote # THE YEAR ENDED20172016201520142013 Net Income$1,847,759 $2,037,603 $2,333,654 $2,915,310 $1,361,719 Earnings per common share$ $ $ $ $ Earnings per common share - assuming dilution$ $ $ $ $ AT YEAR END (in thousands)Deposits$230,128 $210,007 $198,696 $188,985 $165,674 Loans (Net)

2 150,371 115,973 133,804 120,278 113,863 Assets263,318 241,125 229,598 218,314 191,338 Shareholders Equity28,562 27,325 27,532 25,485 22,569 Non-performing Loans to Total to Non-performing - - - Equity Tier 1 1 DeclaredFirst Quarter$ $ $ Second Quarter Quarter Quarter $ 2016 First Quarter$ $ $ Second Quarter Quarter Quarter $ MARKET PRICE OF THE COMPANY S STOCK AND DIVIDENDS2 Summit Bancshares , was another successful one for Summit Bank and extended what is now our 35 year legacy of continuous annual and monthly profitability since we opened the doors in 1982.

3 Our after tax profit was $1,848,000 or $ per share. We are very proud of this long history of profitability and stability and consider it a tribute to the trust and confidence you placed in us when you became a was a year where Summit Bank received the following recognition. Super Premier Performing Bank by the Findley Reports Five Stars ranking as one of the strongest financial institutions in the country by Bauer Financial Top 200 Community Banks in the by American Banker magazine Top 100 Corporate Philanthropist in the Bay Area with our donations as percentage of profits ranked in the top 10 by San Francisco Business Times Excellence in Network Security award placing us in the top 2% of Digital Defense Clients in the country Most Influential Women in Bay Area Business awarded to our Chairman by the San Francisco Business Times 2017 saw our total

4 Assets grew from $241,125,000 to $263,318,000 representing in total growth. Our Return on Assets was compared to last year and Return on Equity was compared to in 2016. In 2017 , there was a one-time adjustment of $750,000 to the Deferred Tax Asset due to change in tax laws which caused a decrease in our net income compared to previous year. We are aware that the new tax laws will have an impact on our financial performance in the stock s book value increased from $ to $ and our Risk Based Capital Ratio of which is well in excess of the Regulatory standard of 10% for a Well Capitalized Bank.

5 In 2017 , the Company s subsidiary Summit Bank purchased a building at 1701 N. California Boulevard in downtown Walnut Creek where our branch will be relocated in appears that interest rates will continue to increase in the near future which will help to improve the interest margins and should have an immediate effect on interest income from loans. We expect that the interest rates on deposits will be increasing at a slower pace. We will continue to apply our conservative views to all aspects of banking fundamentals with a strong focus on prudent lending. We look forward to continuing to celebrate our 35th anniversary as we look to another successful year in 2018, with the full recognition that the new tax laws will impact our financial want to thank our Board members who provide oversight and direction of our policies and goals that further the success we have enjoyed for so many years.

6 Our Board has the right mix of background perspectives and can counsel on what is necessary with the daily challenges we face. Our Board is complemented with the best management group in the Bay Area. They have a wealth of knowledge about the bank and our clients. They are passionate about customer service and creating shareholder value. I sincerely thank all our employees for their hard work and dedication. SHIRLEY W. NELSONC hairman and CEODEAR FELLOW SHAREHOLDERS3 Summit Bancshares , matters addressed in this Annual Report, with the exception of the historical information presented, may incorporate certain forward-looking statements involving risks and uncertainties, including the risks discussed under the heading Certain Factors That May Affect Future Results and elsewhere in this section is a review of Summit Bancshares , Inc.

7 S (the Company ) results as reflected in the Consolidated Financial Statements. It discusses the principal items of income and expense and the factors affecting the Company s financial position. This discussion should be read together with the Selected Financial Data and Consolidated Financial Statements included elsewhere in the Annual Report. The Company s wholly owned subsidiary; Summit Bank (the Bank ) has conducted the business of a commercial bank since 1982. It provides commercial credit and various checking and savings account products for small and mid-sized businesses and for professionals as well as individual of EarningsThe Company s net income for 2017 was $1,848,000 compared to $2,038,000 in 2016, and $2,334,000 in 2015.

8 The decrease in the year 2017 s net income from the year 2016 was caused primarily due to the change in tax laws which caused an adjustment of $750,000 to the Deferred Tax Asset. The net income of $1,848,000 for 2017 represents diluted earnings per share of $ which compared to diluted earnings per share of $ in 2016, and diluted earnings per share of $ per share in Interest Income The primary source of income for the Company is Net Interest Income or Gross Margin which is the difference between interest earned on loans and investments and interest paid on deposits and other liabilities. In general, net interest income is affected by a change in interest rates.

9 As interest rates rise or fall, so will the Company s net interest income, excluding changes in total assets. The primary reason for this is that the Company s investment portfolio earns income on a fixed interest rate basis while a majority of the lending portfolio earns income on a floating interest rate basis because loans are tied to the prime-lending rate. In addition, investments are held to maturity while 100% of the federal agency investments mature within one year. Regarding loans, approximately 31% of the loans outstanding mature within one year, while the longest maturity is ten years.

10 In a rising interest rate environment, interest income on loans will generally rise faster than the investment income and vice versa. To offset any decline in interest income due to a declining interest rate environment, the Company monitors closely its interest expense on deposits. Of the total time certificates of deposit outstanding at year-end, approximately 12% matures after one year while 41% matures within 90 days. Thus the Company is able to minimize the effects of a declining interest rate environment by repricing these instruments on a more frequent basis than if the average maturity were longer than one interest income for 2017 was $9,402,000, an increase from $8,626,000 posted in 2016 and an increase as compared to $8,434,000 in 2015.