Summit Financial Group Reports Third Quarter and First Nine Months 2015 Results

MOOREFIELD, W. Va., Oct. 26, 2015 (GLOBE NEWSWIRE) — Summit Financial Group, Inc. (“Company” or “Summit”) (NASDAQ:SMMF) today reported third quarter 2015 net income applicable to common shares of $3.66 million, or $0.34 per diluted share, compared to $3.14 million, or $0.35 per diluted share, for the third quarter of 2014, representing an increase in net income of 16.5 percent, but a 2.9 percent decrease in diluted earnings per share. Q3 2015 earnings compared to Q3 2014 were positively impacted by a $534,000 decline in write-downs of foreclosed properties and a $228,000 increase in net interest income. Increased common shares outstanding resulting from common stock issuances during the past year accounted for the $0.01 decline in quarterly year-over-year diluted earnings per share, despite the increase in earnings.

Excluding from third quarter 2015 (on a pre-tax basis) realized securities gains of $372,000, losses on sales of foreclosed properties of $35,000, and write-downs of foreclosed properties of $1.0 million, Q3 2015 core earnings approximated $4.11 million, or $0.38 per diluted share. Excluding from third quarter 2014 (on a pre-tax basis) realized securities gains of $128,000, losses on sales of foreclosed properties of $70,000, and write-downs of foreclosed properties of $1.58 million, Q3 2014 core earnings approximated $4.10 million, or $0.45 per diluted share.

For the nine months ended September 30, 2015, Summit recorded net income applicable to common shares of $11.96 million, or $1.12 per diluted share, compared with $7.58 million, or $0.85 per diluted share, for the comparable 2014 nine-month period, representing an increase of 57.8%, or 31.8% per diluted share.

Excluding from the nine month period ended September 30, 2015 nonrecurring items (on a pre-tax basis) comprised of realized securities gains of $1.02 million, a $176,000 Federal Home Loan Bank of Pittsburgh (“FHLB”)  special dividend, losses on sales of assets of $288,000, and write-downs of foreclosed properties of $1.78 million, and from the 2014 first nine-month period realized securities gains of $64,000, losses on sales of assets of $199,000, OTTI charges of $1,000 and write-downs of foreclosed properties of $3.47 million, core earnings for first nine months of 2015 were approximately $12.50 million, or $1.18 per diluted share, compared to $9.85 million, or $1.08 per diluted share, for the 2014 nine month period.

Highlights for Q3 2015 include:

  • Net interest margin contracted 8 and 6 basis points, respectively, as compared to that for Q2 2015 and Q3 2014.
  • Despite loans declining $2.2 million, or 0.8 percent (on an annualized basis) during the quarter, loans grew $42.6 million during the first nine months of 2015, or 5.5 percent (on an annualized basis).
  • Core revenues decreased 1.6 percent compared to the linked quarter, but remained relatively flat compared to the year ago quarter.
  • Recorded charges of $1.05 million to write-down foreclosed properties compared to such charges of $160,000 in Q2 2015 and $1.58 million in Q3 2014.
  • Nonperforming assets as a percentage of total assets increased slightly during the quarter to 3.07 percent compared to 3.05 percent for the linked quarter, but remains well below year end 2014 levels of 3.48 percent. Foreclosed properties are at the lowest level since Q2 2009.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, “Our results for the quarter just ended were mixed, as the robust loan growth we had experienced in the first half of 2015, stalled in the third quarter. This coupled with lower securities yields halted the quarter-over-quarter growth in core revenues and net interest margin improvement that we had enjoyed earlier this year. Despite this, we are very pleased by Summit’s considerable growth in both quarterly and year-to-date net income compared to the same periods of the prior year, giving us optimism as we look forward to the remainder of 2015 and beyond.”

Results from Operations

Total revenue for third quarter 2015, consisting of net interest income and noninterest income, grew 2.2 percent to $14.3 million compared to $14.0 million for the third quarter 2014. For the year-to-date period ended September 30, 2015, total revenue was $43.3 million compared to $39.8 million for the same period of 2014, representing an 8.6 percent increase.

Total core revenue (excluding nonrecurring items, enumerated above) was $13.9 million for both third quarter 2015 and the same prior-year quarter. For the first nine months of 2015, total core revenue (excluding nonrecurring items) was $42.1 million compared to $39.8 million for the comparable period of 2014, a 5.8 percent improvement.

For the third quarter of 2015, net interest income was $11.3 million, an increase of 2.1 percent from the $11.1 million reported in the prior-year third quarter and decreased $153,000 compared to the linked quarter. The net interest margin for third quarter 2015 was 3.41 percent compared to 3.47 percent for the year-ago quarter, and 3.49 percent for the linked quarter.

Noninterest income, consisting primarily of insurance commissions from Summit’s insurance agency subsidiary and service fee income from community banking activities, for third quarter 2015 was $2.99 million compared to $2.91 million for the comparable period of 2014. Excluding realized securities gains/losses and OTTI of securities, noninterest income was $2.62 million for third quarter 2015, compared to $2.79 million reported for third quarter 2014.

The third quarter 2015 and 2014 provision for loan losses totaled $250,000, compared to $500,000 for the linked quarter.

Core noninterest expense continues to be well-controlled. Total noninterest expense decreased 3.4% to $8.87 million compared to $9.19 million for the prior-year third quarter. Excluding from noninterest expense (on a pre-tax basis) losses on sales of foreclosed properties of $35,000 in Q3 2015 and $70,000 in Q3 2014 and write-downs of foreclosed properties of $1.05 million in Q3 2015 and $1.58 million in Q3 2014, noninterest expense would have approximated $7.79 million for Q3 2015 compared to $7.54 million for the comparable period of 2014. Noninterest expense for the first nine months of 2015 decreased 4.1% compared to the first nine months of 2014.

Balance Sheet

At September 30, 2015, total assets were $1.47 billion, an increase of $25.7 million, or 1.8 percent since December 31, 2014. Total loans, net of unearned fees and allowance for loan losses, were $1.06 billion at September 30, 2015, up $42.5 million, or 4.2 percent, from the $1.02 billion reported at year-end 2014.

At September 30, 2015, deposits were $1.07 billion, an increase of $10.8 million, or 1.0 percent, since year end 2014. During first nine months of 2015, checking and savings increased by $16.7 million and $5.6 million, respectively, or 5.2 percent and 2.2 percent, respectively, while time deposits decreased $11.5 million or 2.4 percent. Long-term borrowings and subordinated debentures declined by 16.0 percent since year end 2014, as the Company prepaid $16.8 million in subordinated debentures, which was funded by short-term borrowings.

Asset Quality

As of September 30, 2015, nonperforming assets (“NPAs”), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $45.2 million, or 3.07 percent of assets. This compares to $45.1 million, or 3.05 percent of assets at the linked quarter, and $58.5 million, or 4.10 percent of assets, at third quarter 2014.

Third quarter 2015 net loan charge-offs were $293,000, or 0.11 percent of average loans annualized; while adding $250,000 to the allowance for loan losses. The allowance for loan losses stood at $11.2 million, or 1.05 percent of total loans at September 30, 2015, compared to 1.08 percent at year-end 2014.

Capital Adequacy

Shareholders’ equity was $140.3 million as of September 30, 2015 compared to $140.1 million June 30, 2015 and $121.4 million at September 30, 2014. Tangible book value per common share increased to $12.45 at September 30, 2015 compared to $12.22 at June 30, 2015 and $11.81 at September 30, 2014.

At September 30, 2015, Summit’s and its depository institution’s, Summit Community Bank, Inc.’s (the “Bank’s”), regulatory risk-based capital ratios computed in accordance with the new Basel III regulatory capital guidelines effective January 1, 2015, were each well in excess of the regulatory minimum required ratio relative to each plus the respective applicable capital conservation buffer on a fully phased-in basis. Respectively, the Company’s and Bank’s Tier 1 leverage capital ratios were 10.5 percent and 10.7 percent at September 30, 2015 compared to 9.9 percent and 10.6 percent reported at December 31, 2014.

About the Company

Summit Financial Group, Inc. is a $1.47 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Northern and Shenandoah Valley regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates fifteen banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia.

FORWARD-LOOKING STATEMENTS

This press release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Words such as “expects”, “anticipates”, “believes”, “estimates” and other similar expressions or future or conditional verbs such as “will”, “should”, “would” and “could” are intended to identify such forward-looking statements.

Although we believe the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially.  Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; the impact of technological advances; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national and local economies.  We undertake no obligation to revise these statements following the date of this press release.

NON-GAAP FINANCIAL MEASURES

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America (“GAAP”).  Specifically, Summit adjusted GAAP performance measures to exclude the effects of realized and unrealized securities gains and losses, gains/losses on sales of assets, and write-downs of foreclosed properties to estimated fair value included in its Statements of Income.  Management deems believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of Summit’s core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

 

       
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)      
Quarterly Performance Summary — Q3 2015 vs Q3 2014      
       
     
   For the Quarter Ended   Percent 
Dollars in thousands  9/30/2015 9/30/2014  Change 
Condensed Statements of Income       
Interest income      
Loans, including fees $ 12,983   $ 13,033     -0.4 %
Securities   1,543     1,724     -10.5 %
Other     5       3     66.7 %
Total interest income     14,531       14,760     -1.6 %
Interest expense              
Deposits   2,106     2,288     -8.0 %
Borrowings     1,120       1,395     -19.7 %
Total interest expense     3,226       3,683     -12.4 %
Net interest income   11,305     11,077     2.1 %
Provision for loan losses     250       250     0.0 %
Net interest income after provision              
for loan losses     11,055       10,827     2.1 %
               
Noninterest income      
Insurance commissions   983     1,105     -11.0 %
Service fees related to deposit accounts   1,111     1,177     -5.6 %
Realized securities gains (losses)   372     128   n/m
Other income     527       503     4.8 %
Total noninterest income     2,993       2,913     2.7 %
Noninterest expense              
Salaries and employee benefits   4,479     4,026     11.3 %
Net occupancy expense   496     482     2.9 %
Equipment expense   582     520     11.9 %
Professional fees   402     380     5.8 %
FDIC premiums   300     480     -37.5 %
Foreclosed properties expense   168     298     -43.6 %
Loss on sales of foreclosed properties   35     70     -50.0 %
Write-downs of foreclosed properties   1,046     1,580     -33.8 %
Other expenses     1,364       1,350     1.0 %
Total noninterest expense     8,872       9,186     -3.4 %
Income before income taxes   5,176     4,554     13.7 %
Income taxes     1,515       1,218     24.4 %
Net income   3,661     3,336     9.7 %
Preferred stock dividends     –       193   n/m
               
Net income applicable to common shares $   3,661   $   3,143     16.5 %
                   

 

     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)    
Quarterly Performance Summary — Q3 2015 vs Q3 2014    
     
   For the Quarter Ended   Percent 
  9/30/2015 9/30/2014  Change 
Per Share Data       
Earnings per common share      
Basic $ 0.34   $ 0.42     -19.0 %
Diluted $ 0.34   $ 0.35     -2.9 %
       
Cash dividends $ 0.08   $   n/a
       
Average common shares outstanding      
Basic   10,703,526     7,457,222     43.5 %
Diluted   10,712,203     9,630,293     11.2 %
       
Common shares outstanding at period end   10,658,199     7,457,222     42.9 %
       
Performance Ratios       
Return on average equity   10.42 %   11.13 %   -6.4 %
Return on average tangible equity   11.01 %   11.90 %   -7.5 %
Return on average assets   1.00 %   0.93 %   7.5 %
Net interest margin   3.41 %   3.47 %   -1.7 %
Efficiency ratio (A)   52.93 %   51.19 %   3.4 %
       
NOTE (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
 

 

     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)    
Nine Month Performance Summary — 2015 vs 2014    
       
       
   For the Nine Months Ended   Percent 
Dollars in thousands  9/30/2015 9/30/2014  Change 
Condensed Statements of Income       
Interest income      
Loans, including fees $ 38,804   $ 37,764     2.8 %
Securities   5,122     5,403     -5.2 %
Other     7       7     0.0 %
Total interest income     43,933       43,174     1.8 %
Interest expense              
Deposits   6,251     6,864     -8.9 %
Borrowings     3,399       4,875     -30.3 %
Total interest expense     9,650       11,739     -17.8 %
Net interest income   34,283     31,435     9.1 %
Provision for loan losses     1,000       2,250     -55.6 %
Net interest income after provision              
for loan losses     33,283       29,185     14.0 %
               
Noninterest income      
Insurance commissions   3,191     3,377     -5.5 %
Service fees related to deposit accounts   3,159     3,291     -4.0 %
Realized securities gains (losses)   1,023     64   n/m
Other-than-temporary impairment of securities       (1 )   -100.0 %
Other income     1,619       1,670     -3.1 %
Total noninterest income     8,992       8,401     7.0 %
Noninterest expense              
Salaries and employee benefits   13,107     12,052     8.8 %
Net occupancy expense   1,483     1,528     -2.9 %
Equipment expense   1,677     1,599     4.9 %
Professional fees   1,109     978     13.4 %
FDIC premiums   950     1,477     -35.7 %
Foreclosed properties expense   534     780     -31.5 %
Loss on sales of foreclosed properties   288     198     45.5 %
Write-downs of foreclosed properties   1,779     3,471     -48.7 %
Other expenses     4,211       4,130     2.0 %
Total noninterest expense     25,138       26,213     -4.1 %
Income before income taxes   17,137     11,373     50.7 %
Income taxes     5,181       3,215     61.2 %
Net income   11,956     8,158     46.6 %
Preferred stock dividends     –       580   n/m
               
Net income applicable to common shares $   11,956   $   7,578     57.8 %
               

 

     
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)    
Nine Month Performance Summary — 2015 vs 2014    
     
   For the Nine Months Ended   Percent 
  9/30/2015 9/30/2014  Change 
Per Share Data       
Earnings per common share      
Basic $ 1.19   $ 1.02     16.7 %
Diluted $ 1.12   $ 0.85     31.8 %
       
Cash dividends $ 0.24   $   n/a
       
Average common shares outstanding      
Basic   10,069,374     7,455,952     35.1 %
Diluted   10,628,139     9,626,942     10.4 %
       
Common shares outstanding at period end   10,658,199     7,457,222     42.9 %
       
Performance Ratios       
Return on average equity   11.61 %   9.35 %   24.2 %
Return on average tangible equity   12.29 %   10.02 %   22.7 %
Return on average assets   1.09 %   0.77 %   41.6 %
Net interest margin   3.50 %   3.37 %   3.9 %
Efficiency ratio (A)   51.40 %   52.69 %   -2.4 %
       
NOTE (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
 

 

         
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)        
Five Quarter Performance Summary          
         
   For the Quarter Ended 
Dollars in thousands  9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014
Condensed Statements of Income           
Interest income          
Loans, including fees $ 12,983   $ 12,972   $ 12,848   $ 12,666   $ 13,033  
Securities   1,543     1,685     1,894     1,784     1,724  
Other     5       1       1       2       3  
Total interest income     14,531       14,658       14,743       14,452       14,760  
Interest expense                              
Deposits   2,106     2,074     2,071     2,130     2,288  
Borrowings     1,120       1,126       1,152       1,371       1,395  
Total interest expense     3,226       3,200       3,223       3,501       3,683  
Net interest income   11,305     11,458     11,520     10,951     11,077  
           
Provision for loan losses     250       500       250       –       250  
Net interest income after provision                              
for loan losses     11,055       10,958       11,270       10,951       10,827  
                               
Noninterest income          
Insurance commissions   983     1,080     1,128     1,023     1,105  
Service fees related to deposit accounts   1,111     1,072     976     1,113     1,177  
Realized securities gains (losses)   372     170     480     149     128  
Other-than-temporary impairment of securities                    
Other income     527       538       555       537       503  
Total noninterest income     2,993       2,860       3,139       2,822       2,913  
Noninterest expense                              
Salaries and employee benefits   4,479     4,442     4,187     4,133     4,026  
Net occupancy expense   496     489     498     495     482  
Equipment expense   582     560     535     487     520  
Professional fees   402     372     335     452     380  
FDIC premiums   300     320     330     315     480  
Foreclosed properties expense   168     158     208     239     298  
Loss on sales of foreclosed properties   35     103     150     628     70  
Write-downs of foreclosed properties   1,046     160     572     300     1,580  
Other expenses     1,364       1,457       1,389       2,061       1,350  
Total noninterest expense     8,872       8,061       8,204       9,110       9,186  
Income before income taxes   5,176     5,757     6,205     4,663     4,554  
Income taxes     1,515       1,747       1,920       1,464       1,218  
Net income   3,661     4,010     4,285     3,199     3,336  
Preferred stock dividends     –       –       –       191       193  
Net income applicable to common shares $   3,661   $   4,010   $   4,285   $   3,008   $   3,143  
                               

 

           
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)          
Five Quarter Performance Summary            
           
   For the Quarter Ended   
  9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014  
Per Share Data             
Earnings per common share            
Basic $ 0.34   $ 0.38   $ 0.49   $ 0.39   $ 0.42    
Diluted $ 0.34   $ 0.38   $ 0.41   $ 0.32   $ 0.35    
             
Cash dividends $ 0.08   $ 0.08   $ 0.08   $   $    
             
Average common shares outstanding            
Basic   10,703,526     10,667,892     8,815,961     7,796,508     7,457,222    
Diluted   10,712,203     10,676,474     10,493,323     9,963,214     9,630,293    
             
Common shares outstanding at period end   10,658,199     10,843,676     10,586,242     8,301,746     7,457,222    
             
 Performance Ratios             
Return on average equity   10.42 %   11.67 %   12.79 %   10.10 %   11.13 %  
Return on average tangible equity   11.01 %   12.36 %   13.56 %   10.76 %   11.90 %  
Return on average assets   1.00 %   1.09 %   1.18 %   0.89 %   0.93 %  
Net interest margin   3.41 %   3.49 %   3.59 %   3.42 %   3.47 %  
Efficiency ratio (A)   52.93 %   52.05 %   49.27 %   53.07 %   51.19 %  
 
NOTE (A) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
 

 

         
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)        
Selected Balance Sheet Data          
           
   For the Quarter Ended 
Dollars in thousands, except per share amounts  9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014
           
Assets           
Cash and due from banks $ 4,232   $ 3,988   $ 3,850   $ 3,728   $ 3,933  
Interest bearing deposits other banks   8,057     9,274     8,437     8,783     9,300  
Securities   272,127     276,661     282,135     282,834     282,401  
Loans, net   1,062,348     1,064,472     1,039,669     1,019,842     993,347  
Property held for sale   29,713     31,500     34,368     37,529     47,252  
Premises and equipment, net   20,457     20,490     20,208     20,060     20,132  
Intangible assets   7,548     7,598     7,648     7,698     7,748  
Cash surrender value of life insurance policies   37,482     37,222     36,961     36,700     36,417  
Other assets     27,340       28,764       27,216       26,394       28,139  
Total assets $   1,469,304   $   1,479,969   $   1,460,492   $   1,443,568   $   1,428,669  
                               
Liabilities and Shareholders’ Equity           
Deposits $ 1,072,091   $ 1,053,310   $ 1,058,308   $ 1,061,314   $ 1,054,454  
Short-term borrowings   145,291     174,599     148,985     123,633     127,432  
Long-term borrowings and          
subordinated debentures   95,648     98,625     101,602     113,879     114,855  
Other liabilities   15,985     13,363     15,708     13,098     10,566  
Shareholders’ equity     140,289       140,072       135,889       131,644       121,362  
Total liabilities and shareholders’ equity $   1,469,304   $   1,479,969   $   1,460,492   $   1,443,568   $   1,428,669  
                               
Book value per common share (A) $ 13.16   $ 12.92   $ 12.84   $ 12.60   $ 12.62  
Tangible book value per common share (A) $ 12.45   $ 12.22   $ 12.11   $ 11.86   $ 11.81  
Tangible equity to tangible assets   9.1 %   9.0 %   8.8 %   8.6 %   8.0 %
Tangible common equity to tangible assets   9.1 %   9.0 %   8.8 %   8.0 %   7.3 %
 
NOTE (A) – Assumes conversion of convertible preferred stock  
   

 

           
SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)          
Regulatory Capital Ratios (A)            
             
  9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014  
Summit Financial Group, Inc.            
CET1 Risk-based Capital   11.7 %   11.6 %   11.3 % n/a n/a  
Tier 1 Risk-based Capital   13.4 %   13.2 %   13.0 %   13.3 %   12.5 %  
Total Risk-based Capital   14.4 %   14.2 %   14.0 %   14.9 %   14.3 %  
Tier 1 Leverage Ratio   10.5 %   10.4 %   10.1 %   9.9 %   9.2 %  
             
Summit Community Bank, Inc.            
CET1 Risk-based Capital   13.6 %   13.4 %   13.5 % n/a n/a  
Tier 1 Risk-based Capital   13.6 %   13.4 %   13.5 %   14.2 %   14.4 %  
Total Risk-based Capital   14.6 %   14.4 %   14.5 %   15.3 %   15.5 %  
Tier 1 Leverage Ratio   10.7 %   10.6 %   10.5 %   10.6 %   10.5 %  
             
NOTE (A) – Computed in accordance with Basel III regulatory capital guidelines beginning January 1, 2015  
             

 

         
SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)        
Loan Composition            
             
Dollars in thousands 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014  
             
Commercial $ 89,250   $ 97,284   $ 89,928   $ 88,590   $ 83,762    
Commercial real estate            
Owner occupied   199,068     191,743     180,269     157,783     156,765    
Non-owner occupied   336,550     331,056     325,764     317,136     314,577    
Construction and development            
Land and development   66,164     64,435     66,558     67,881     61,088    
Construction   8,419     18,214     19,094     28,591     27,239    
Residential real estate            
Non-jumbo   222,739     220,199     219,938     220,071     218,125    
Jumbo   46,092     49,203     50,492     52,879     51,917    
Home equity   73,652     72,504     68,894     67,115     64,256    
Consumer   19,124     18,683     18,485     19,456     19,906    
Other     12,518       12,423       11,074       11,507       6,753    
Total loans, net of unearned fees   1,073,576     1,075,744     1,050,496     1,031,009     1,004,388    
Less allowance for loan losses     11,228       11,272       10,827       11,167       11,041    
Loans, net $   1,062,348   $   1,064,472   $   1,039,669   $   1,019,842   $   993,347    
                                 

 

         
SUMMIT FINANCIAL GROUP INC. (NASDAQ:SMMF)        
Deposit Composition            
               
Dollars in thousands 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014  
Non interest bearing checking $ 118,887   $ 113,256   $ 117,049   $ 115,427   $ 104,442    
Interest bearing checking   217,242     202,957     196,606     204,030     195,183    
Savings     259,185     246,949     257,687     253,578     255,880    
Time deposits     476,777       490,148       486,966       488,279       498,949    
Total deposits $   1,072,091   $   1,053,310   $   1,058,308   $   1,061,314   $   1,054,454    
                                   

 

         
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)        
Asset Quality Information          
           
   For the Quarter Ended 
Dollars in thousands  9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014
           
Gross loan charge-offs $ 774   $ 463   $ 782   $ 362   $ 297  
Gross loan recoveries     (481 )     (407 )     (192 )     (488 )     (82 )
Net loan charge-offs $   293   $   56   $   590   $   (126 ) $   215  
                               
Net loan charge-offs to average loans (annualized)   0.11 %   0.02 %   0.23 %   -0.05 %   0.09 %
                               
Allowance for loan losses $ 11,228   $ 11,272   $ 10,827   $ 11,167   $ 11,041  
Allowance for loan losses as a percentage          
of period end loans   1.05 %   1.05 %   1.03 %   1.08 %   1.10 %
                               
Nonperforming assets:          
Nonperforming loans          
Commercial $ 884   $ 1,065   $ 788   $ 392   $ 309  
Commercial real estate   5,294     2,421     1,340     1,844     936  
Commercial construction and development                    
Residential construction and development   5,345     5,627     5,333     4,619     4,592  
Residential real estate   3,881     4,433     4,491     5,556     5,257  
Consumer     53       45       65       83       146  
Total nonperforming loans     15,457       13,591       12,017       12,494       11,240  
Foreclosed properties                              
Commercial           110     110     110  
Commercial real estate   3,209     3,279     3,657     5,204     5,815  
Commercial construction and development   9,328     10,178     10,191     10,179     10,178  
Residential construction and development   14,965     15,839     17,590     19,267     20,431  
Residential real estate     2,211       2,204       2,819       2,769       10,718  
Total foreclosed properties     29,713       31,500       34,367       37,529       47,252  
Other repossessed assets     –       55       55       221       34  
Total nonperforming assets $   45,170   $   45,146   $   46,439   $   50,244   $   58,526  
 
Nonperforming loans to period end loans   1.44 %   1.26 %   1.14 %   1.21 %   1.12 %
Nonperforming assets to period end assets   3.07 %   3.05 %   3.18 %   3.48 %   4.10 %
           

 

                 
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)                
Average Balance Sheet, Interest Earnings & Expenses and Average Rates            
Q3 2015 vs Q3 2014                
  Q3 2015   Q3 2014  
  Average Earnings / Yield /   Average Earnings / Yield /  
Dollars in thousands Balances Expense Rate   Balances Expense Rate  
                 
ASSETS                
Interest earning assets                
Loans, net of unearned  interest                
Taxable $ 1,050,058   $ 12,855     4.86 %   $ 995,270   $ 12,944     5.22 %  
Tax-exempt   13,360     194     5.76 %     8,331     135     6.43 %  
Securities                
Taxable   208,473     933     1.78 %     208,891     1,084     2.06 %  
Tax-exempt   75,571     924     4.85 %     83,956     970     4.58 %  
Interest bearing deposits other banks                
and Federal funds sold     13,116       5     0.15 %       11,842       3     0.10 %  
Total interest earning assets   1,360,578     14,911     4.35 %     1,308,290     15,136     4.59 %  
                 
Noninterest earning assets                
Cash & due from banks   3,871           3,690        
Premises & equipment   20,502           20,229        
Other assets   93,563           112,103        
Allowance for loan losses     (11,521 )           (11,272 )      
Total assets $   1,466,993         $   1,433,040        
                                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                                
                 
Liabilities                
Interest bearing liabilities                
Interest bearing                
demand deposits $ 210,691   $ 61     0.11 %   $ 191,565   $ 55     0.11 %  
Savings deposits   251,932     450     0.71 %     251,401     430     0.68 %  
Time deposits   485,453     1,595     1.30 %     508,817     1,803     1.41 %  
Short-term borrowings   148,012     130     0.35 %     123,495     98     0.31 %  
Long-term borrowings and                
subordinated debentures     97,500       990     4.03 %       121,101       1,297     4.25 %  
Total interest bearing liabilities   1,193,588     3,226     1.07 %     1,196,379     3,683     1.22 %  
                 
Noninterest bearing liabilities                
Demand deposits   118,603           105,887        
Other liabilities     14,242             10,857        
Total liabilities   1,326,433           1,313,123        
                 
Shareholders’ equity – preferred             9,283        
Shareholders’ equity – common     140,560             110,634        
Total liabilities and                                
shareholders’ equity $   1,466,993         $   1,433,040        
                                 
NET INTEREST EARNINGS   $   11,685         $   11,453      
                         
NET INTEREST MARGIN       3.41 %         3.47 %  
                                 

 

             
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)            
Average Balance Sheet, Interest Earnings & Expenses and Average Rates          
YTD 2015 vs YTD 2014                
     
  YTD 2015   YTD 2014  
  Average Earnings / Yield /   Average Earnings / Yield /  
Dollars in thousands Balances Expense Rate   Balances Expense Rate  
                 
ASSETS                
Interest earning assets                
Loans, net of unearned  interest                
Taxable $ 1,044,010   $ 38,443     4.92 %   $ 977,336   $ 37,516     5.13 %  
Tax-exempt   12,801     547     5.71 %     7,262     376     6.92 %  
Securities                
Taxable   211,642     3,302     2.09 %     213,089     3,565     2.24 %  
Tax-exempt   75,685     2,759     4.87 %     80,814     2,785     4.61 %  
Interest bearing deposits other banks                
and Federal funds sold     9,395       6     0.09 %       9,737       6     0.08 %  
Total interest earning assets   1,353,533     45,057     4.45 %     1,288,238     44,248     4.59 %  
                 
Noninterest earning assets                
Cash & due from banks   3,842           3,790        
Premises & equipment   20,373           20,414        
Other assets   96,142           114,203        
Allowance for loan losses     (11,285 )           (11,887 )      
Total assets $   1,462,605         $   1,414,758        
                                 
LIABILITIES AND SHAREHOLDERS’ EQUITY              
                 
Liabilities                
Interest bearing liabilities                
Interest bearing                
demand deposits $ 205,749   $ 179     0.12 %   $ 189,581   $ 162     0.11 %  
Savings deposits   252,701     1,307     0.69 %     232,730     1,137     0.65 %  
Time deposits   485,939     4,765     1.31 %     520,937     5,566     1.43 %  
Short-term borrowings   149,177     368     0.33 %     92,963     209     0.30 %  
Long-term borrowings and                
subordinated debentures     101,245       3,030     4.00 %       151,541       4,665     4.12 %  
    1,194,811     9,649     1.08 %     1,187,752     11,739     1.32 %  
Noninterest bearing liabilities                
Demand deposits   116,057           101,006        
Other liabilities     14,371             9,609        
Total liabilities   1,325,239           1,298,367        
                 
Shareholders’ equity – preferred   2,388           9,286        
Shareholders’ equity – common     134,978             107,105        
Total liabilities and                                
shareholders’ equity $   1,462,605         $   1,414,758        
                                 
NET INTEREST EARNINGS   $   35,408         $   32,509      
                                 
NET INTEREST MARGIN       3.50 %         3.37 %  
                                 

             
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)            
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures        
               
   For the Quarter Ended     For the Nine Months Ended   
Dollars in thousands  9/30/2015 6/30/2015 9/30/2014   9/30/2015 9/30/2014  
               
               
Core earnings applicable to common shares $ 4,108   $ 4,069   $ 4,101     $ 12,503   $ 9,851    
               
FHLB special dividend                 176        
Applicable income tax effect                 (65 )      
Realized securities gains (losses)   372     170     128       1,023     64    
Applicable income tax effect   (138 )   (63 )   (47 )     (379 )   (24 )  
Gain (loss) on sale of foreclosed properties   (35 )   (103 )   (70 )     (288 )   (199 )  
Applicable income tax effect   13     38     26       107     74    
Other-than-temporary impairment of securities                     (1 )  
Applicable income tax effect                        
Write-downs foreclosed properties   (1,046 )   (160 )   (1,580 )     (1,779 )   (3,471 )  
Applicable income tax effect     387       59       585         658       1,284    
      (447 )     (59 )     (958 )       (547 )     (2,273 )  
GAAP net income applicable to common shares $   3,661   $   4,010   $   3,143     $   11,956   $   7,578    
                                   
               
               
Core diluted earnings per common share $ 0.38   $ 0.39   $ 0.45     $ 1.18   $ 1.08    
               
FHLB special dividend                 0.02        
Applicable income tax effect                 (0.01 )      
Realized securities gains (losses)   0.03     0.02     0.01       0.10     0.01    
Applicable income tax effect   (0.01 )   (0.01 )         (0.04 )      
Gain (loss) on sale of foreclosed properties       (0.01 )   (0.01 )     (0.03 )   (0.02 )  
Applicable income tax effect                 0.01     0.01    
Other-than-temporary impairment of securities                        
Applicable income tax effect                        
Write-downs of foreclosed properties   (0.10 )   (0.01 )   (0.16 )     (0.17 )   (0.36 )  
Applicable income tax effect     0.04       –        0.06         0.06       0.13    
      (0.04 )     (0.01 )     (0.10 )       (0.06 )     (0.23 )  
GAAP diluted earnings per common share $   0.34   $   0.38   $   0.35     $   1.12   $   0.85    
                                   

 

           
SUMMIT FINANCIAL GROUP, INC. (NASDAQ:SMMF)          
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures      
             
   For the Quarter Ended     For the Nine Months Ended 
Dollars in thousands  9/30/2015 6/30/2015 9/30/2014   9/30/2015 9/30/2014
             
Total core revenue $ 13,926   $ 14,148   $ 13,862     $ 42,076   $ 39,773  
             
FHLB special dividend                 176      
Realized securities gains/(losses)   372     170     128       1,023     64  
Other-than-temporary impairment of securities     –       –       –         –       (1 )
      372       170       128         1,199       63  
GAAP total revenue $   14,298   $   14,318   $   13,990     $   43,275   $   39,836  
                                 
             
Total core noninterest income $ 2,621   $ 2,690   $ 2,785     $ 7,969   $ 8,338  
             
Realized securities gains/(losses)   372     170     128       1,023     64  
Other-than-temporary impairment of securities     –       –       –         –       (1 )
      372       170       128         1,023       63  
GAAP total noninterest income $   2,993   $   2,860   $   2,913     $   8,992   $   8,401  
                                 
Total core noninterest expense $ 7,791   $ 7,798   $ 7,536     $ 21,469   $ 22,543  
             
(Gains)/losses on sales of foreclosed properties   35     103     70       198     199  
Write-downs of foreclosed properties     1,046       160       1,580         3,471       3,471  
      1,081       263       1,650         3,669       3,670  
GAAP total noninterest expense $   8,872   $   8,061   $   9,186     $   25,138   $   26,213  
                                 
CONTACT: Contact: 
Robert S. Tissue, Sr. Vice President & CFO
Telephone: (304) 530-0552
Email: rtissue@summitfgi.com

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